Urgent need for UK consumers to review pensions and investments

Changes on their way mean that it's high time to review your insurance - and pensions.

Gender-neutrality law to increase costs for both men and women

By 21st December this year, the UK insurance industry will have to comply with the EU Gender Directive, which insists that men and women must be treated the same when setting rates. Up to now, by and large:

• women tend to pay less for car insurance (typically, safer driver behaviour than men's) and life insurance (on average, women live longer than men)
• men tend to get better annuity rates when taking benefits from their pensions, and pay less for income insurance

You might think that the fair thing to do, where gender-related pricing is concerned, is "meet in the middle", but that means the insurance company takes the risk that it may attract more business from the gender that will ultimately cost them more in payouts. So it could well be that the policy adopted will be to "level-up" premiums.

Time to get a product with guaranteed (i.e. fixed) premiums?

Taxation of life companies likely to increase premiums

But there's another change that will affect premiums, and it's to do with tax. Until now, life companies have been able to offset some of their insurance costs against gains on their investment business; this will stop from 1st January next year, so insurance premiums will no longer be subsidised by investment profits in this way. Actuaries have told HM Treasury (PDF) that this could raise premiums on some term insurances by around 10%.

Time to get a product with guaranteed (i.e. fixed) premiums?

Spouse cover and contracted-out pensions: better options now available

From April 6, 2012 the law on pensions has changed. Up to now, if you were married and some of your personal pension was built up using money from contracting-out of State top-up pensions (SERPS/S2P), that part of your pension fund had to provide a continuing income for your spouse if you died before him/her. This restriction has now been removed.

This means:

• you can have a bigger pension income for yourself, if you opt not to include spouse protection (it may be that your spouse already has good pension benefits of his/her own), but alternatively...
• if you prefer, you can IMPROVE spouse protection - before April 6, the spouse pension based on contracted-out monies HAD to drop to 50% of the income you were getting; now, it can be anything from 0% - 100% of yours.

For men who want a single-life annuity, this may also be a window of opportunity to get a better rate, before the gender-neutrality law comes into effect in December.

That said, there is also the question of what may happen on the stockmarkets (quite possibly affecting the value of your pension fund, unless you're in cash), and the bond markets (which influence annuity rates).

Time to review when you want to take your pension, what it's invested in at the moment, and how you ultimately intend to take the benefits?

I suggest you contact your adviser soon!

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Plain packaging for political parties: the debate continues

How it might look:

Is there a limit to wealth inequality?

What would happen if one person in the USA finally owned ALL its wealth?

Not possible, I suppose, because two of the three functions of money would be impossible: there would be nothing to act as a medium of exchange, or as a unit of account, until the omni-owner started to spend. And why would he spend? He would already own everything. Having no property, everyone else would be a slave.

So what is the theoretical maximum degree of financial inequality? And how close are we to that point?

Source: http://aattp.blogspot.co.uk/2012_01_01_archive.html

Is this why the stockmarkets are stalling - there's not much wealth left to transfer to the upper crust, and what there is, the middle class are desperate to hang onto? Is that why, according to Tyler Durden, there's $8.1 trillion in cash holding off from investment - the rich won't put it back in unless they can pull out again at a profit, and the rest don't want to fall for the trick?

Why Britain is utterly, terminally stuffed

I live in Birmingham (UK), where our car industry was taken over first by the Germans and then (partially, though they also tried to raid us for other paperwork and designs that weren't part of the deal) by the Chinese. More could have been saved earlier, but the Rover crisis came to a head as the then Labour Government, facing re-election, chickened out of accepting a venture capitalist plan from Alchemy, since this would mean admitting that the plant had to shrink. The politicians lied that the land the factory was built on couldn't be used for housing and retail, because of ground pollution; now, the land has been cleared for exactly those purposes. Trust the British Labour Party to betray workers in order to get workers' votes.

We have also recently seen philanthropic chocolate makers Cadbury's fall into American hands (a company headed by a lady who reminds me of the frightening nurse in Mel Brooks' "High Anxiety"). And HP (for Houses of Parliament, ironically) Sauce has been bought by the US (Heinz), production has been transferred to the Netherlands and the factory here has closed.

Birmingham looks different, these days.

In today's Daily Mail, Alex Brummer paints the bigger picture of the national garage sale that is UK plc. Company directors, bankers and hedge funds have all made out like bandits (to use a Matt Taibbi expression) and the UK government has been happy to let them do it, cheered by the prospect of short-term revenue and the illusion of economic prosperity as the new rich shovelled cash into the stockmarket after buying up the best bits of London and the South-East. Brummer traces the Dolorous Stroke back to the Tories in 1979 (Chancellor Howe's relaxation of foreign investment rules) and 1986 (the financial services sector's Big Bang). Trust the British Conservative Party to betray the middle and aspirant working classes in order to get their votes.

The downside of this prolonged boss' jolly is the loss of future income to overseas interests, the withering of our patent base (now 39% foreign owned) and R&D activity, the decline in industrial skills and, inevitably, our country's ultimate ruination.

Elsewhere in the same edition of the Mail (a paper hated by bien-pensant comedians) is the reported displeasure of Scottish National Party leader Alex Salmond (I sometimes call our cat I-Lick-Salmon) at a spoof in the Economist magazine, which suggests (as I have long thought) that independence for Scotland is a romantic and economically self-destructive dream. It's tempting to think that the rest of the nation would be financially better off without Salmond's land, but that's the same sort of flawed short-term analysis as the one Brummer describes. It's clear, is it not, that the EU plan for splitting and regionalizing the UK is a sort of long-brewed adolescent revenge for owing us their hastily cobbled-together postwar democracies, and they're now trying to haul us out of the jollyboat and onto the deck of the Euranic just after the funny-money (read Bill Black's latest) iceberg has slit their hull.

Action points:

• don't depend on the State being able to maintain public sector and State pensions in future
• prepare your children for life and a career abroad
• if you're young enough, consider leaving before the social compact falls apart

Syria and the Great Game

If all you go by is the radio and TV news here, President Assad is a bad man. This has only been discovered recently, which is why it's taken us until now to do something about it. Fortunately our friends in Turkey are joining in, and Gulf States are generously funding the struggle of the oppressed against him. The TV is showing us exciting but also horrid footage of things going bang, rifles being fired; please make it all go away so everyone can be nice to each other again, we say.

Or is this part of a bigger picture? Russia resurgent, China emergent, America's problems getting urgent. Oil getting short, allies being bought, civil wars being fought in non-aligned states.

Great nations are foolish if they take each other on directly - the cost is so high economically and socially that the ruling classes risk overthrow from within. What you do instead is draw other countries into your team, and if their leaders insist on standing apart, you undermine them so they'll be replaced with someone more compliant.

Isn't that what happened in Libya, and is going on in Syria? Maybe Tunisia and Egypt, too?

Kill people and save money: a libertarian proposal

Day after day, I read the same thing: government is evil per se, and we shouldn't have to pay any taxes. The old and poor are a burden on the rest of us.

So are the sick and disabled, but the time for overt Nazism isn't quite yet. However, we are making encouraging progress.

Since 1967, some 7 million unborn British children have been killed. Some of them on grounds of "serious handicap" such as having a cleft palate (shame they didn't get Lord Byron, with his club foot) - but the overwhelming majority of abortions are simply because the child is inconvenient. That's against the law as it stands, but who cares?

This old-style-Oriental solution to problems (Stalin would surely have approved) is weighted towards the lower social classes so, as the authors of "Freakonomics" pointed out, it has a beneficial side effect, in that we're executing common criminals before their career can begin. And compared with the cost of arrest, trial, appeal, imprisonment etc a little fake-objective "pregnancy advice" and a swish of the scalpel are so much cheaper, quicker and final. After all, since 1965 we can't kill adult criminals and despite what Parliament was promised in return for giving up the death penalty, "life" doesn't mean life in jail except in the rarest of cases.

Like so much other bad law and practice, self-deception, poor logic and inconsistency bedevil our approach. Apparently it's okay to terminate a foetus under 24 weeks old, because it doesn't feel pain and is therefore not alive; so with the prior use of a really good anaesthetic, we could make inroads on the prison population right now.

We're doing this already for the sick and depressed, but first we have to send them to Switzerland, sometimes accompanied by a popular children's author who lards his work with references to death and total spiritual annihilation. However, the courts are winking indulgently at those who top their relatives here and are now paving the way for advance carte blanche so the doctors involved won't be prosecuted.

Really, criminals are the glaring exception to our enthusiasm for the short way with those who trouble us.

And after that, we can have a really good go at all those born with deformities (not just the ones whose mum doesn't want them), plus cripples, orphans etc.  Worldwide, there's something like 5 million new cases of people permanently disabled each year because of road accidents alone, so there's much to do. And we could always reinstitute forcible sterilization, which was a policy in many countries but which the Germans did so much more thoroughly, as they do everything. In short, let us off anyone who costs more in taxes than he's paying.

Yes, death is not the end, it's the answer. After we have rid ourselves in this way of all social and fiscal burdens, we shall have a thousand years of peace and prosperity. Those who still have life will have liberty, and only libertarians will live.

And money, dear money, the fount and origin of happiness, the fifth element that creates and sustains all, will be safe at last.

Greece has defaulted - Dagong

Chinese credit rating agency Dagong has re-rated Greece to "D":

"The Greek government bond exchange action in March 2012 violates the will of the holders of the Greek law governed bonds, and inflicts substantial losses to them. Accordingly, Dagong determines that the Greek government has defaulted."


Emperor's new clothes, and all that.

Fun with sport

Following the suspension of the Boat Race, what other events - sporting or otherwise - would YOU like to see interrupted by The Swimmer?

Thick as a brick? No, much thicker: how Samantha Brick mugged Daily Mail readers

All that fuss about Samantha Brick's April 3 article, "Why Women Hate Me For Being So Beautiful". Mail readers obviously didn't do any research at all before keying in their bilious online comments, for if they had they'd have come across one of hers from almost exactly a year ago: "I'll always be that fat girl: Samantha Brick has always obsessed about her weight... all because she was a chubby child".

The latest, controversial hit was published two days too late, for it's made fools out of millions.This is about beauty versus brains, and brains win hands down every time.

What clever Brummie (and there's another preconception exploded) Samantha has discovered is what Malcolm MacLaren said years ago: you can make much more exploiting yourself than exploiting others. I'd like to know who at the Mail gave her the space to do this one, but I guess it's enough of an obvious coat-trailer to justify publication on its own meretricious merits, without having to speculate on the possible use of her feminine wiles at the workplace, delicious journalistic follow-up though that might be.

Can men do the same? You may care to copy and paste her article, and swap the sexes to make a comic spoof. The exercise is comically revealing, because male attractiveness is measured differently in a woman's eyes.  They say a woman is what she is, and a man is what he does. He does confidence, action, aggression  - like Lord Flashheart in the Blackadder series:  



... and again here (from about 4:07 in):



Traditionally, the strategy for women is to have a sponsor, and to be set in a context of focused admiration, as Roger Vadim did for Brigitte Bardot in the cinematic launch vehicle "And God created woman":



But a young, slightly chubbier in those days Madonna broke the mould - it became "look at me", not "look at her", though again it's be piquant to know the who and how behind getting her the film deal:



Like Madonna, what's smart about Brick is her use of brash self-assertion - and if she hasn't really got the confidence, she's faked it very well for the purposes of her piece. She's played it the man's way.

Good luck to her.

Patenting the debt bomb

It's only occurred to me today that Collateralized Debt Obligations might actually have been patented, and thanks to Google's patent search option here's one, by George H Butcher III, which he sold to Goldman Sachs. The application was filed in 2000, but the patent was finally granted in September 2007.

And here's one of the drawings:

I suppose they patent Ebola-derivative viruses, too.

Guaranteed HUGE gain for UK investors!

 A repeat of last year's opportunity, but even better: postage stamps without a stated face value represent a great buying opportunity.

"From 30th April First Class stamps will go up by 30.4% from 46p to 60p and that Second Class stamps will rise by 38.9% from 36p to 50p." - Economic Voice.

This is at a time when interest rates on variable-rate cash ISAs are 3% or less, so even allowing for the opportunity cost of leaving money in secure, tax-free deposits, you can make a rock-solid net gain of 26.6% - 34.8%.

Buy NOW (I just did) for this year's birthdays, anniversaries and Christmas - and all your business postage.

INVESTMENT DISCLOSURE: None. Still in cash, and missing all those day-trading opportunities.

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.

"Lockerbie bomber" Al-Megrahi "innocent"

Back in 2009 (see here, here and here), as the authorities prepared to release the so-called Lockerbie Bomber to return to Libya, ostensibly on compassionate grounds, I came across a blog by Scottish law professor Robert Black. The latter, together with Jim Swire (father of one of the victims) smelt a rat.

Some suspect that not only was the wrong man accused - the wrong country, even (the operation may have been Iranian) - but that there was a deliberate miscarriage of justice and a cover-up, and that Al-Megrahi was sent home to prevent a retrial that would blow the whole affair wide open.

Now (hat-tip: Ian Parker-Joseph) Scottish newspaper The Sunday Herald has published a 5-year-old, hitherto secret legal review of the case, which they say contains evidence that could well have led to Al-Megrahi's conviction being overturned. The link to the (slightly redacted) 800-page text is here.

This is a bad day for the reputation of the Scottish legal system, especially when (as Parker-Joseph does) one is tempted to rope in outstanding concerns about the 1996 Dunblane massacre and alleged child abuse victim Hollie Greig.

Time for a full public enquiry - no "safe pair of hands", please, no cripplingly narrow terms of reference, full power of subpoena, all evidence on oath and no prior indemnification against prosecution for perjury or other perversion of the course of justice. And later, possibly, a huge action for damages by Al-Megrahi and his family.

And then let's see what else needs to be cleared from the Augean stables.

Why the UK should join the EC immediately (look at St Kitts)

Matt Taibbi's "anti-Semitic" Goldman campaign

Would YOU remain a client?

I think this may be GS' "duckhouse moment": a word or phrase crystallises what is wrong, so that the common man can see it. Sensing this, the GS supporters overreact, e.g. Alex Brummer in the Daily Mail:

"The most enduring image of Blankfein era is that of the great, vampire squid drawn in an excoriating article in Rolling Stone magazine in 2010. What Rolling Stone does not seem to have realised is that this was a rerun of a notoriously anti-Semitic campaign by the late 19th-century polemicist ‘Coin’ Harvey against the Rothschild family.

Whatever mistakes Blankfein and Goldman may have made, it does not deserve that."

"Made mistakes... not deserve... anti-Semitic campaign..." Sounds like a panic reaction to me. Was, for example, betting - massively profitably - against your own product, a "mistake"?

According to Brummer's account, Loyd Blankfein is "determined not to leave until all the investigations hanging over the investment bank have been cleared up." I'll bet he is.

How about this memoir from Leo Kolivakis, formerly an analyst with a big Canadian pension fund manager:

Yes, they [GS] are an exceptional firm, attract some of the best, brightest and most interesting people, deliver exceptional service, but the crisis of 2008 exposed some serious conflicts of interests that have yet to be addressed.

Back in the summer of 2006, I wanted to short the hell of out structured credit products by shorting the ABX indexes. I had just completed research on CDO-squared and CDO-cubed and was certain the U.S. mortgage market was a disaster waiting to explode.

In November 2007, ABX indexes tied to the highest-rated subprime-mortgage bonds fell to new lows, a sign of deterioration in the perceived risk of the securities following a report showing home prices were declining in more than a third of U.S. cities but by that time, I had lost my job for speaking out on the risks of our credit portfolio.

What's the point? I remember a conversation with our Goldman client representative and some of their analysts where they kept asking me: "Why do you want to do this? Are you sure you want to do this?" It was actually annoying me and I told them "Yes, we are sure, just let me know what is the best way to go about this trade."

Well, we never put on the trade, but Goldman Sachs did and they made off like bandits shorting subprime mortgage bonds. They weren't alone. Some well known hedge funds like Paulson & Co. and a handful of others also made a killing. That whole sordid affair still bothers me to this very day. I lost my job, the pension fund lost billions, and Goldman made a killing!"

And back to Taibbi, specifically his famous 2009 "vampire squid" article - here is part of his section on GS's role in the great mortgage swindle:

"...Not that Goldman was personally at any risk. The bank might be taking all these hideous, completely irresponsible mortgages from beneath-gangster-status firms like Countrywide and selling them off to municipalities and pensioners — old people, for God's sake — pretending the whole time that it wasn't grade D horseshit. But even as it was doing so, it was taking short positions in the same market, in essence betting against the same crap it was selling. Even worse, Goldman bragged about it in public. "The mortgage sector continues to be challenged," David Viniar, the bank's chief financial officer, boasted in 2007. "As a result, we took significant markdowns on our long inventory positions … However, our risk bias in that market was to be short, and that net short position was profitable." In other words, the mortgages it was selling were for chumps. The real money was in betting against those same mortgages.

"That's how audacious these assholes are," says one hedge fund manager. "At least with other banks, you could say that they were just dumb — they believed what they were selling, and it blew them up. Goldman knew what it was doing."

If I had GS as my advisers, I'd want to know for sure if I was categorised as a favoured client, or as a "muppet" whose use was to buy GS "axes" and have my "eyeballs ripped out".

And perhaps Mr Brummer should seek to disprove Mr Taibbi's allegations, rather than spin them as the frothings of a racist/religious bigot. There are plenty of genuine anti-Semites and cheap gibes like the one he levels against Taibbi must ultimately serve to lower our guard against the real thing.

Maybe Brummer's sloppy dating - Taibbi's article appeared not in 2010 but 7 July 2009 - is an indication of his anxious haste, or that of whichever GS insider muppet ("it is my understanding", says the journalist, coyly hinting at his source) was briefing him about Blankfein's intentions.

UK youth unemployment almost as bad as Greece's

Here's the truth about those terrible youth unemployment statistics: the UK's is pretty much as bad as Greece's. In fact, two years ago, ours was significantly worse than theirs.

For the UK stats, see here; for discussion of Greek unemployment, see yesterdays' post here.

Greek youth unemployment overstated?

Reportedly, young Greeks are suffering especially badly in the economic collapse: 51.1% of youth were unemployed in December. (Spain is even worse than Greece, according to Zero Hedge.) But how are these percentages calculated, and which young people are we looking at?

The first tweak is age brackets. Across Europe, the statistical comparison takes into account youngsters aged 15 - 24, but here in the UK, since ROSLA (the Raising of the School Leaving Age) in 1972, our youth are only officially in the employment market from age 16 onwards.

Continuing with the UK, should we look at who is employed, or who is unemployed? As this ONS video explains, only 50% of UK 16-24s are employed,  which implies that the other 50% are unemployed. This is where sub-categories play a part: 36% of youth are "economically inactive" (not looking for work), leaving a mere 14% who are looking for a job but don't have one. However, the "unemployment rate" excludes the economically inactive and is expressed as the number of unemployed divided by (number unemployed plus employed), i.e. about 14/(14+50) = 22.2% in the last quarter of 2011.

The "economically inactive" category includes students in further and higher education. So one factor worsening the "unemployment rate" is the growing trend for youngsters to stay on in education and become economically inactive. One way to improve the rate is through apprenticeship schemes. This has helped Austria's unemployment rate stay at only 7.3% and Germany's at 8.5%. Hence, I suppose, the recent British Government ad campaign for apprenticeships. 

How much difference does education make? Let's look what proportion of all British 24-year-olds who left the education system at different stages, are unemployed: 13% of those with only GCSEs, 7% of those who only got A-levels, and 5% of those who obtained degrees. So A-levels seem to make a difference, but is it worth staying economically inactive for a further 3 years after that, taking on an average £53,000 of student debt?

Now, back to Europe and especially Greece.

Comparing across Europe, the Office of National Statistics says our youth unemployment RATE (15 -24) is 21.8% as against an EU average of 21.5%; we're better off than Spain, Ireland, Italy or France, seen in this way. However, if we look at youth unemployment PROPORTION or RATIO (that is, number of young unemployed divided by total number of young people), the figures are lower but the ranking changes: the EU average is 9.1%, and the UK's figure is 12.7%. Spain's is far worse, at 19.5%  but Ireland, France and Italy are better than the UK.

The difference in "rate" and "ratio" is stark in Greece, also: in 2010 the rate was 32.9% but the ratio was 10%. I decode that as meaning that out of every 100 young Greeks, 10 were unemployed, c. 20 employed and almost 70% economically inactive. The rate in Q3 2011 rose to 45.8%, which if the numbers of economically inactive remained the same would mean an unemployment ratio of some 14%, i.e. one in seven youngsters, not half of them. Maybe it's one in six, now.

We need the raw data, not just dodgy, headline-grabbing percentages. 

For example, the Hellenic Statistical Authority's latest release, covering the whole labour force as at December 2011, shows (a) 3,899,319 employed, (b) 1,033,507 unemployed and (c) 4,424,562 "inactive". That means an unemployment rate - a/(a+b) - of 21%, but an unemployment ratio of 11%.

Year on year - Dec 2010 to Dec 2011 - the numbers of unemployed increased by 40.9%, but the number of employed decreased by only 7.9%. Plenty of room for spin there, negative or positive as one pleases. ("Inactives" increased by only 1.6%.)

In the case of the young, one would expect there to be a significant element of "inactives" aged 15-24, simply because of the numbers staying on in further and higher education. So although "inactives" account for some 47% of the whole labour market, they constitute (as I estimated above) about 70% of the 15-24 age group.

According to the same release, the youth unemployment rate for December in the years 2006 - 2009 were as follows: 28.4%, 24.5%, 26.3%, 28.9%. In December 2010 it jumped to 39.0% and by December 2011 it was 51.1%; so most of the damage has been done in the last two years.

Let's assume, for the sake of argument, that the number of 15-24-year olds and the percentage of young "inactives" has remained constant since 2006. Using the assumptions derived from the 10% ratio / 32.9% rate figures above, we get the following breakdown of the Greek youth labour market ratios:

Dec 2009: (a) employed 21.6%, (b) unemployed 8.8% and (c) inactive 69.6%
Dec 2011: (a) employed 14.9%, (b) unemployed 15.5% and (c) inactive 69.6%

... in other words, as I guessed earlier, one in six young people is unemployed.

Now if there is an increase in youngsters opting for further education to ride out the recession, the proportion of inactives increases and this worsens the unemployment rate. Similarly, if young people who are employed leave the country for better-paid work abroad, the total actively wanting work within Greece decreases and this enhances the proportion of unemployed.

As a general point, perhaps looking at the wrong figures leads us to make the wrong policy decisions. Using education to skew employment statistics has a dynamic balance of contradictory effects, as we have seen; and education post 18 is both costly and questionable in terms of cost-effectiveness.

To what extent should education be seen as a gateway to employment, as opposed to a consumer luxury? Wouldn't Shaw's Eliza Doolittle be better off setting up her flower shop, or teaching elocution, than getting an arts degree and a monster student loan?

Shouldn't we simply measure our success by how many young people are actually in work? I can see why policymakers don't, but shouldn't we?

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Greek youth unemployment overstated?

Reportedly, young Greeks are suffering especially badly in the economic collapse: 51.1% of youth were unemployed in December. (Spain is even worse than Greece, according to Zero Hedge.) But how are these percentages calculated, and which young people are we looking at?

The first tweak is age brackets. Across Europe, the statistical comparison takes into account youngsters aged 15 - 24, but here in the UK, since ROSLA (the Raising of the School Leaving Age) in 1972, our youth are only officially in the employment market from age 16 onwards.

Continuing with the UK, should we look at who is employed, or who is unemployed? As this ONS video explains, only 50% of UK 16-24s are employed,  which implies that the other 50% are unemployed. This is where sub-categories play a part: 36% of youth are "economically inactive" (not looking for work), leaving a mere 14% who are looking for a job but don't have one. However, the "unemployment rate" excludes the economically inactive and is expressed as the number of unemployed divided by (number unemployed plus employed), i.e. about 14/(14+50) = 22.2% in the last quarter of 2011.

The "economically inactive" category includes students in further and higher education. So one factor worsening the "unemployment rate" is the growing trend for youngsters to stay on in education and become economically inactive. One way to improve the rate is through apprenticeship schemes. This has helped Austria's unemployment rate stay at only 7.3% and Germany's at 8.5%. Hence, I suppose, the recent British Government ad campaign for apprenticeships. 

How much difference does education make? Let's look what proportion of all British 24-year-olds who left the education system at different stages, are unemployed: 13% of those with only GCSEs, 7% of those who only got A-levels, and 5% of those who obtained degrees. So A-levels seem to make a difference, but is it worth staying economically inactive for a further 3 years after that, taking on an average £53,000 of student debt?

Now, back to Europe and especially Greece.

Comparing across Europe, the Office of National Statistics says our youth unemployment RATE (15 -24) is 21.8% as against an EU average of 21.5%; we're better off than Spain, Ireland, Italy or France, seen in this way. However, if we look at youth unemployment PROPORTION or RATIO (that is, number of young unemployed divided by total number of young people), the figures are lower but the ranking changes: the EU average is 9.1%, and the UK's figure is 12.7%. Spain's is far worse, at 19.5%  but Ireland, France and Italy are better than the UK.

The difference in "rate" and "ratio" is stark in Greece, also: in 2010 the rate was 32.9% but the ratio was 10%. I decode that as meaning that out of every 100 young Greeks, 10 were unemployed, c. 20 employed and almost 70% economically inactive. The rate in Q3 2011 rose to 45.8%, which if the numbers of economically inactive remained the same would mean an unemployment ratio of some 14%, i.e. one in seven youngsters, not half of them. Maybe it's one in six, now.

We need the raw data, not just dodgy, headline-grabbing percentages. 

For example, the Hellenic Statistical Authority's latest release, covering the whole labour force as at December 2011, shows (a) 3,899,319 employed, (b) 1,033,507 unemployed and (c) 4,424,562 "inactive". That means an unemployment rate - a/(a+b) - of 21%, but an unemployment ratio of 11%.

Year on year - Dec 2010 to Dec 2011 - the numbers of unemployed increased by 40.9%, but the number of employed decreased by only 7.9%. Plenty of room for spin there, negative or positive as one pleases. ("Inactives" increased by only 1.6%.)

In the case of the young, one would expect there to be a significant element of "inactives" aged 15-24, simply because of the numbers staying on in further and higher education. So although "inactives" account for some 47% of the whole labour market, they constitute (as I estimated above) about 70% of the 15-24 age group.

According to the same release, the youth unemployment rate for December in the years 2006 - 2009 were as follows: 28.4%, 24.5%, 26.3%, 28.9%. In December 2010 it jumped to 39.0% and by December 2011 it was 51.1%; so most of the damage has been done in the last two years.

Let's assume, for the sake of argument, that the number of 15-24-year olds and the percentage of young "inactives" has remained constant since 2006. Using the assumptions derived from the 10% ratio / 32.9% rate figures above, we get the following breakdown of the Greek youth labour market ratios:

Dec 2009: (a) employed 21.6%, (b) unemployed 8.8% and (c) inactive 69.6%
Dec 2011: (a) employed 14.9%, (b) unemployed 15.5% and (c) inactive 69.6%

... in other words, as I guessed earlier, one in six young people is unemployed.

Now if there is an increase in youngsters opting for further education to ride out the recession, the proportion of inactives increases and this worsens the unemployment rate. Similarly, if young people who are employed leave the country for better-paid work abroad, the total actively wanting work within Greece decreases and this enhances the proportion of unemployed.

As a general point, perhaps looking at the wrong figures leads us to make the wrong policy decisions. Using education to skew employment statistics has a dynamic balance of contradictory effects, as we have seen; and education post 18 is both costly and questionable in terms of cost-effectiveness.

To what extent should education be seen as a gateway to employment, as opposed to a consumer luxury? Wouldn't Shaw's Eliza Doolittle be better off setting up her flower shop, or teaching elocution, than getting an arts degree and a monster student loan?

Shouldn't we simply measure our success by how many young people are actually in work? I can see why policymakers don't, but shouldn't we?

Why America has a future

I always enjoy reading James Howard Kunstler, and I'm sure he's right in saying - as he does again, today - that we're looking at a future in which basic food production will become a more significant part of the economy.

But America does have a future.

Everybody knows that the USA has by far the largest economy on the planet. And although her debts are huge, so are her assets. Seen in the context of net international investment position, America is in much less trouble than the PIGS, and a little less than the UK or Italy.

And here's the picture where population and food production are concerned:

I've just been watching a TV programme about the development of a new Chinese city 1,000 miles west of Beijing, and wondering why there is such a rush to urbanise, especially when it means building on productive farmland. It seems to me that one consequence must ultimately be an extra incentive to look for more resources in other people's countries.

But the USA still has enormous resources - land, capital, people and skills. So does Europe. If we can reform and wrest power from the greedy and incompetent uberclass, there is time to recalibrate without horrible disaster, at least for ourselves.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Drugs: et tu, "Brute"?

I note that Bruce Anderson wants to legalise drugs. The usual arguments: the war on them has failed,  and we could have all sorts of safeguards if we legalised them (I'm reminded of the New Labour stock phrase, "make sure").

Then the commenters weigh in: hey, just look at the damage done by alcohol and tobacco. They skate over the fact that the damage with A&T occurs despite all the ostensible safeguards.

Besides, the war on every crime has failed. Except possibly body-snatching.

Back in 2009, I reproduced an article by a doctor who really knows about drugs and alcohol, and addiction, and who is far from sure that legalisation would increase our liberty. I was even promised a reply / rebuttal by "Charon QC", who I'm sorry to say (he's a courteous man and argues fairly) never got around to it.

So here's the challenge: don't answer me - answer Anthony Daniels' arguments. Here they are, yet again.

Or at least explain the real agenda. Because I've yet to be convinced decriminalization would (taking all effects into account) save money, cause less inconvenience or improve health or productivity. We might like to think so, but it's funny how reality differs from our expectations.

Will somebody on the libertarian side please, finally, take the debate seriously?

Education's secret revolution

Peter Hitchens' column today includes, as side issue, the following:

"So millions of people can’t do simple sums? Of course they can’t. This is because so many snotty teachers, who think proper education is ‘authoritarian’ and ‘learning by rote’, refuse to make children chant their times tables.

I am no mathematician, but got every single one of the test questions right with ease, simply by using my tables."

I have submitted this comment for approval:

Re times tables: children ARE now taught to recite times tables - but in a different, and much less useful way. What follows may seem a little petty but there are, I think, wider implications.

In the bad old days, if asked "six sevens?" you'd reply "forty-two" straightaway, because the times table chant included the line "six sevens are forty-two". Simple association: say "Ant and..." and you get "Dec".

Now, the children I see have been trained in a sort of stepladder routine, climbing laboriously up all the rungs: "7, 14, 21, 28, 35, 42". Not only does this take longer, but they only have to misremember one of the rungs and it'll become "... 29, er, 36, er, 43". Or not infrequently, a petering out into a defeated silence.

This is partly to do with not enough practice: the item will have been ticked off the teacher's planning (as in  "we cover the apostrophe in Y4 Spring Term Week 5 Day Three"). God forbid you should bore children with dull, repetitive learning. But without anything else to link to, it's just a list of numbers with no obvious connexion - it may as well be the combination to a safe.

The child may also sometimes climb correctly but go past the required answer because in this painfully slow recital he's lost count of how many rungs you've asked him to climb.

I'm not certain why we didn't simply reinstate the ancient method, but I have a suspicion that it might be something to do with not admitting that we've been wrong about this since somewhere in the 1970s; like phonics, grammar exercises, precis, comprehension and so on. Whatever is brought back is reinstated not only late, slowly and grudgingly, but in some revised form so that crusty teachers and grandparents can't say "I told you so."

I know of one case in the 70s where a departing secondary Head of English burned the department's coursebooks in a skip in the playground, to ensure that the bad old ways could never return; and I've heard of two others who did the same. We have had a revolution; and the revolutionaries (many now leading lights or self-employed consultants) are just now beginning to fade from the scene.

Equitable Life: climbing back up?

Equitable Life, the British mutual insurance company that burned its fingers very badly by offering high guaranteed annuity rates (in the period 1956 - 1988) as a marketing incentive to prospective pension investors, has announced a deal that will help it off the hook.

Canada Life will be offering annuities for maturing EL pensions in future (though EL will remind customers that they have the open market option also). This follows the 2006 deal in which Canada Life took over £4.6 billion-worth of existing EL annuity business.

It's not clear what Canada Life has paid or will pay EL for this linkup, or how.

EL's "intention is to stop writing Equitable Life annuities where possible" (PDF). Over time this arrangement will further reduce EL's outstanding annuity commitments and some of the freed capital is to be used to increase payouts by 12.5% on maturities and transfers.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Occupy St Paul's finally evicted, life to return to normal

Leave those poor bankers alone; haven't they suffered enough? Harry Mount seems to think so, at any rate: those oiks fair spoiled the view, so they did.

Of course, the modern thing is for the bankers to scourge the protestors. And since they're on the Board controlling St Paul's, they can. And a jolly good thing, too.

The news media: the cock crows on the dunghill

I think it was William Morris who said that the first step in literacy was being able to read a newspaper, and the second was not to read one.

Liz Jones gives cause why in the Mail on Sunday: fashion "journalists" at London Fashion Week are given seats of honour, or pent-up "some several hundred feet above the action", according to their willingness to toady; but a vengeful article by the victim gets results: "I was couriered a fabulous gift of perfume, shower gel, body lotion and chocolates (vegan, hopefully), and a handwritten note from Stella herself. Was this an apology? Or a bribe so I would play nicely next time?" (Both, obviously.) Sir Philip Greed gives her a light touch of the whip, saying he would have sent her a lovely olive coat for her review of TopShop - until he read the last para. Designer houses mark coverage by the glossies on a points system - nil for blacks and fatties - and so on, in a litany of bribery, schmoozing, banning and sacking. I think Jones is one to watch: when she finally tears her gaze away from her navel in the back pages of You magazine (there is a hopeful reticence about her human relationships this week), she might yet prove a Samson and bring the whole unholy edifice crashing down.

Meanwhile, Toby Young has taken the Murdoch shilling - as he boasts in the Spectator - and dutifully produced some wallpaperese in the new Sun on Sunday. His bet's on education sec Gove for PM, the free-schooler opines, entirely without any consideration of how (one of) his interests might in any way be congruent with Gove's (or Rupe's). Like so many of our modern celebs, Young has recognized the power of brazenness, adopting "@toadmeister" as his Twitter ID. And like former transport minister Stephen Byers, he's a "bit like a sort of cab for hire", only it's more acceptable in journalism, or so he seems to think: "(Go on Private Eye, stick me in Order of the Brown Nose. See if I care)", sez 'e in the Speccie, a magazine I now read principally because of Jeremy Clarke's luminous column (shame they let go Christopher Fildes and Mark Steyn, among other talent).

Young's is the authentic voice of the new Fourth Estate establishment: offensively triumphalist. Like the bankers who've ruined us, the yacht-visiting politicians who've sold us out, the rich who've looted us. These have learned how to manage news and opinion: dining with, leaking to, treating, flattering and employing the writers who (like the ancient bards) can foster or wither reputation. By and large, the newshounds have been luxuriously tamed, their necks enclosed in velvet collars with silver chains. There are exceptions, like Peter Hitchens, serving but to prove the rule; as "Anastasia" in his latest piece on Russia says, "The only rational conclusion is despair."

Tyler Durden, Greek bonds and "odious debt"

Here, Tyler Durden discusses at length issues around the process of restructuring Greek debt.

It seems that we have to take into account the difference between bonds issued under Greek law and those issued under don-domestic law. One of the technical points is whether all holders of the debt have to agree to a new deal, and whether or not a minority can hold the majority to ransom by refusing to agree.

If, in desperation, Greece is driven to outright default whatever its creditors might think, this tears up the rule book and anything could happen. Other European nations are also severely distressed by debt and might try to follow suit. The very rule of international law would be challenged.

But there is an angle that Durden has not explored in his essay: the principle of "odious debt". There is precedent for a country repudiating damaging obligations, e.g. Mexico after the fall of the Emperor Maximilian, and the USA itself in relation to Cuban debt incurred under the previous Spanish regime.

Could Greeks be justified in arguing that bailouts imposed by their new, undemocratic government are not binding on the people? Could this argument also apply to debts incurred previously, directly and indirectly and consequently, in the process of acquiring EU membership, which it now transpires was based on fraud, assisted by bent accounting by Goldman Sachs and quite possibly connived at by the other EU states?

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

The sound of Sunday

Newspaper pages being rapidly turned.

Greek debt: talks continue

Hercules slaying Augeas for non-payment of debt - the promised fee for cleaning the Augean stables. The statue, by Lorenzo Mattielli, stands outside the Hofburg Palace in Vienna.

At least Hercules had an excuse, having done some honest work, though to my eyes this particular depiction makes him seem simply a violent fat thug. What, by contrast, have the EU, international banking and the lucrative intermediation of Goldman Sachs done for Greece, aside from shoehorn the country into a club it should never have been allowed to join?

Euro MP and UKIP leader Nigel Farage has just told it straight yet again, to a parliament in which notable figures pointedly chat to each other while he berates them: the EU has driven poor Hellas to desperation and worse is to follow.

This chaos was foreseeable; my wife and I were in Corfu in May 2010 - the month in which three innocent Athenian bank employees were burned to death - and the goldsmith at Roda told us there would be a revolution within a year. Now, a whole government has been removed by outsiders and democracy is, apparently, merely an optional extra for peripheral nations.

Anyone who know the Greeks knows they have a historical memory like the Irish. This will go deep and will not be forgiven.

Loathing corner

The Daily Mail reports its libel victory over the Lizard People. But looking at them, why are our politicians and financiers so unimpressive?

There is Oleg Deripaska, reminiscent of a toxic marmot, flanked (left) by millionaire Nat Rothschild looking like one of the people who stand behind John McCririck on Channel 4 Racing and seemingly nerving himself up to raise his thumb at the camera, and (right) by Peter Mandelson, rigidly relaxed and posing as a wannabe extra for a Blue Oyster club scene from "Police Academy".

If you must be star-struck, boys, at least don't worship a dark star.

I'm holding out for the Hollywood version, it'll be so much more credible. To quote Sir Philip Sidney, these people's "world is brazen, the poets only [i.e. only artists] deliver a golden".

International debt, in context

Data gets turned to the commentator's angle on it. Discussion of debt too often focuses on what government owes and ignores private liabilities, hence the crisis (which most professional economists failed to anticipate) that faces us now.

In its turn, debt is only a part of the picture. Watching the Greek economy implode, it's easy to run around panicking like Chicken Little about our own situation.

So let's look at the net international investment position of the PIIGS, USA and UK to see the problem through a wider-angle lens:

Yes, even in this wider definition of net obligations, we're all debtors; but the ratio of debt to GDP varies greatly, and if there is to be a domino effect, remember that one of the dominoes in the top graph is more like a skyscraper and much less easy to tip over.

Everything that makes up the above data is subject to change: what will bonds and equities be worth next year? How much could GDP change? How is the structure of the largest economies different from that of the small ones? Are we comparing whales and jellyfish?

And how much could the big help out the small? I'm reminded of the story of two men at their place of worship, praying for cash to get them out of a jam. "I need fifty thousand, Lord, or I'm going to lose this deal," begs a blue-suit, but keeps being interrupted by his ill-dressed neighbour calling "A hundred, Lord, a hundred for my family's rent and food". Finally, the businessman reaches into his pocket, pulls out $100 and gives it to the other, saying "Here, now shut up, he's listening to me."

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

UK back into slump

Since my previous post, the UK M4 bank lending figures in the quarter to end December have finally come in: negative 6.7% annualised, following on from negative 8.7% ending September.

Since the start of the credit crunch in 2007, UK M4 has done this:

That's 5 negative quarters out of the last 7 - the five lowest (and the only five negatives) since 1963.

This thing isn't over, and the air of normality and control is, I fear, fake.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Is money-lending approaching its tipping point?

Chartists are always trying to scry a pattern in markets. Here's one that doesn't seem too difficult to discern: the long-term deceleration in bank lending to the UK private sector.

It looks like a cycle of around 18 years, but rather than simply repeating, the pattern is progressive: lower peaks each time, and lower lows. And for the first time since 1963 (which is as far as the online BoE data goes), we are in negative territory. Previous highs of  c. 35%, 25% and 15% suggest that the next peak will be more of a hillock, at 5%.

Or maybe there will be a phase shift, into some disorderly deflation. Australian Economist Steve Keen has attempted to model macroeconomic change as debt increases, and one curious feature is that the model predicts an apparent tendency towards a moderate point, followed by a catastrophic breakdown in wages and profits - see for example the graphs on pages 43 and 44 of his paper entitled "Are we 'It' Yet?".

The economy is not a machine, of course. It is more like a game played with ever-varying rules, like Calvinball. But the value of Keen's observations is in showing that there must, in fact, be a change in the rules at some point, simply because without it the game breaks down altogether. 

Currently, our counters are cash notes, bank deposit statements, share certificates, bonds, Treasury promises and property deeds - plus the derivative contracts that outweigh everything else. Whether they will be freely accepted by all players in the next version of the game remains to be seen; perhaps they will suffer the fate of Continental and Confederate currency.

No wonder that many thinking persons are converting to tangible assets of various types, even if they seem overpriced according to the present system of reckoning.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Libertarians should consider commercial tyranny as well as political

I've just happened on a documentary screened on Russia TV (Freeview here in the UK), about the battle between a small Canadian farmer and Monsanto.

I think the fight for freedom is no longer solely against Big Brother. Libertarians should consider Big MD/Big CEO as a major threat, especially since multinational corporations are more powerful than many governments.

And I don't think I'm alone in feeling that patenting life itself is in some way an outrage.

The Royal Yacht and the pig-ignorant commentariat

Even Sunday Times journalists can be stunningly ignorant and stupid, it seems. Camilla Long ("never 'eard of 'er", as Harry Hill would say) opines - well, no, read the crap yourself, if you can stand it. The arch title is pretty much a précis of the whole article: "A yacht? Wouldn’t the Queen prefer a really nice soap?"

Perhaps it's the Murdoch connection, I don't know. But this anti-monarchical drivel is of a piece with the sniggering on Radio 4's News Quiz, which I heard driving home yesterday. The panel are usually OK making funnies about animals and human foibles, but when it comes to politics and economics they don't know sh*t.

Has it not occurred to all the pseudo-sophisticates in the media that

(a) The Queen is the Head of State (something Tony Blair was liable to forget).

(b) Show matters. If you don't understand the importance of symbol and pageantry, get out of the commenting game. The soi-disant Labourites understand, all right - why else would TB attempt to get himself a "Blair Force One", and Brown find a way to refuse it him?

(c) When the Royal Yacht was operational, before the Inglorious Revolution of 1997, it was not only a status symbol for our country, but a roving, floating venue for discreet diplomacy and business dealing - and may I suggest, rather less demimondaine than Oleg Deripaska's (the Queen K). Or Murdoch's own Rosehearty.

F****** idiots.

The trouble with economics

It's not a machine, model or mechanism. It's a game of Calvinball.

Sack all teachers who can't answer this

"Supergravity theories are often said to be the only consistent theories of interacting massless spin 3/2 fields.

Discuss."

There. That should sort out those baaaaad teachers. Did you know only 17 were struck off for "professional incompetence" in 10 years? (Shame about the Lord Charles-like pic of Michael Gove in that article.)

Erm, how many bad teachers SHOULD there be, then?

Or is this really about the naughty larrikins not wanting a second scything of their pension rights, "at a time when the whole country is suffering"? In prosperous times, they could've switched to a different career, if they were any good, which by definition they're not; in bad times, we simply can't afford to treat them decently.

Much easier to make them keep their heads down with a steady fusillade of criticism, threats and insults. Serve them right, they forgot they were below stairs people.

Fred Goodwin is 53.

Pip pip!

Why history should be part of the core curriculum

Steve Keen: Dow to drop 35%, housing 40%?

Australian economist Steve Keen has previously argued that it is far more beneficial to bail out consumers than the banks, and now has made it part of a manifesto for avoiding a worse-than-the-1930s economic depression.

As part of his analysis, he looks at the Dow:

... and the US housing market:

If his exponential trend lines are correct, stocks will have to fall by a further 35% and houses 40%, ignoring overshoot.

If that seems overly pessimistic, consider James Howard Kunstler, who revisits his "Dow 4,000" mantra and modifies it to 1,000 by 2014. Unbelievable? Only if you think tomorrow will be no worse than yesterday, and ignore how freakish the whole period from the mid-1980s has been. I had a go at reading the patterns back in February 2011 and the next Dow low looked around 4,500 - adjusted for CPI, in view of our inflation-happy leaders.

What would I know about it, you may say. Well, what does anybody know, and more pertinently, what do they know?

I have to say that I may soon need to modify my investment disclosure, as it may be prudent to begin buying physical gold in regular small quantities, against the possibility of a serious market breakdown and savaging of the value of cash. The gold price is still rather rich for my taste, but what's the alternative?

Do you really think our politicians, bankers and economists have a credible plan to sort out the problems? I like Keen's, but I'll give you long odds against it ever happening. Still, better noble failure than dishonourable compromise, I think the Japanese would agree: 判官贔屓.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

Steve Keen: Dow to drop 35%, housing 40%?

Australian economist Steve Keen has previously argued that it is far more beneficial to bail out consumers than the banks, and now has made it part of a manifesto for avoiding a worse-than-the-1930s economic depression.

As part of his analysis, he looks at the Dow:

... and the US housing market:

If his exponential trend lines are correct, stocks will have to fall by a further 35% and houses 40%, ignoring overshoot.

If that seems overly pessimistic, consider James Howard Kunstler, who revisits his "Dow 4,000" mantra and modifies it to 1,000 by 2014. Unbelievable? Only if you think tomorrow will be no worse than yesterday, and ignore how freakish the whole period from the mid-1980s has been. I had a go at reading the patterns back in February 2011 and the next Dow low looked around 4,500 - adjusted for CPI, in view of our inflation-happy leaders.

What would I know about it, you may say. Well, what does anybody know, and more pertinently, what do they know?

I have to say that I may soon need to modify my investment disclosure, as it may be prudent to begin buying physical gold in regular small quantities, against the possibility of a serious market breakdown and savaging of the value of cash. The gold price is still rather rich for my taste, but what's the alternative?

Do you really think our politicians, bankers and economists have a credible plan to sort out the problems? I like Keen's, but I'll give you long odds against it ever happening. Still, better noble failure than dishonourable compromise, I think the Japanese would agree: 判官贔屓.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

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

The poisoned environment, the EU and the need for a more radical revision of democracy

"Endocrine disruptors can accentuate or inhibit the response to hormonal signals. They have been
implicated as one of the potential causes of the significant drop in male fertility observed in Europe over the last 50 years and as having negative impacts on the environment."


I'm not fond of being bossed-about, but clearly there are some matters that have to be addressed at a collective level and it seems that the EU has added this to the 2012 agenda (htp: Ian Parker-Joseph). If the science is right, then yes, I support action.

And while I also support those (especially UKIP) who resist our regional tryout of the New World Order, has anyone considered that if we did successfully disconnect from the EU political machine, we'd be left with the domestic dictators of Westminster and Whitehall, freshly energized and unshackled?

The democracy project has a lot more to do than tweak Rompuy's nose.

UPDATE: Coincidentally, Alastair Smith has just published an article in The Economist, explaining why those in power are never acting in our best interest. After an amusingly cynical analysis, he concludes:

It’s not possible to reform a system by imploring people to do the right thing. You have to know how it works. Dictators already know how to be dictators—they are very good at it. We want to point out how they do it so that it’s possible to think about reforms that can actually have meaningful consequences.

A mild defense of Dawkins

This is in response to Sackerson’s piece on Richard Dawkins. It is probably not my best work, given my lack of sleep.

I have read ‘The God Delusion’, and Anthony Flew’s review of it. Most of the former is concerned with the science of why religion appears to exist, based on the scientific evidence available. In his first major point, Flew chooses to focus on Dawkins’ discussion of Einstein, in which he says:

“But (I find it hard to write with restraint about this obscurantist refusal on the part of Dawkins) he makes no mention of Einstein’s most relevant report: namely, that the integrated complexity of the world of physics has led him to believe that there must be a Divine Intelligence behind it.”

The problem for Flew is that I have read Einstein’s writings and comments on the subject. The latter explicitly said that he did not believe in a deity, and that the most that could be said is to deify the structure of the Universe itself. This is not quite what Flew implies. The rest of his review does not address the science presented.

That being dealt with, I have far more interest in the reasons for the outspoken anti-religious tactics of Richard Dawkins, Sam Harris, P.Z. Myers and Christopher Hitchens.

It is my claim that they are a product of the current social forces.
Since I moved to the US in 1978, I have seen a rise in the loudness and power of the Religious Right, who have supplanted the fiscal conservatives as the core of the Republican Party. These people are not the pleasant vicars and church-goers of my youth. For my UK readers, I note that Ian Paisley was educated at Bob Jones University, a font of wisdom for the fundamentalist community. His style is representative of many in the movement.

This rise in power can be explained in part by the political and economic uncertainty from the gradual decline in the power of the US, and from the many scientific discoveries which show that emotionally-charged deeply-held beliefs (especially ‘no evolution’) are simply not supported by reality. As any psychologist will tell you, this conflict between the frontal lobe and amygdala results in anger, directed firmly at anyone who rejects their ‘correct’ beliefs. Some have coined this the Ameritaliban.

A few people, such as Pope John Paul II and Stephen Jay Gould, tried to make peace, by showing that religion and science could live in harmony. This has also been tried by the Templeton Foundation. These efforts were roundly rejected by the anti-science crowd, who continue to vilify the former two after death, and use every tactic possible to neuter science education and research.

Faced with a call of ‘no quarter’, is it any wonder that voices like these arose on the pro-science side?