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.

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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.