ARCHIVES August October 2016
August October 2016 Blogs
All the blogs are published fortnightly, on Thursdays, usually at 09:00 London time.
Original url for this blog was ‘Interest-rates’ and not Carney, wrong
11th August 2016
The Bank of England under the auspices of Mark Carney has reduced interest rates down to their lowest level ever, or 0.5% just to clarify, half of one percent.
The reasoning is, to stop UK going into a recession.
since the Lehman Brothers crash
It is a strategy that satisfies only in the short term, and is wrong, as all the previous interest rates have done since the Lehman Brothers crash.
If Her Majesty’s Treasury, and hence the Bank of England wanted long term growth, then interest rates would have been handled in a completely different manner.
Certainly instead of cutting them, they should have gone up, and be ready to go up again, but that would have meant the Government having a long term strategy, it hasn’t, it’s short termism, so again wrong, and doing nothing for UK industrial and commercial growth.
The reasoning behind the B of E’s interest rate cuts, is to stimulate consumer spending and keep the economy from going into recession, it works, but does little for industrial growth.
It has been the policy of all Governments right back to 1945, but is now starting to run out of steam, the reason is simple, there are not enough savings, to invest in Capital spending.
H.M. Treasury is directed by the Government of the day
Mark Carney the Governor of the B of E, gets his direction from H.M. Treasury, and H.M. Treasury is directed by the Government of the day, and every man jack of them has followed the same, short to medium term policy, keep consumer spending going, to keep UK from hitting the recession buffers.
What utter codswallop, it leads to a lack of savings, so putting it on the wrong side of history, this can also translate into increased debt, again a wrong strategy, and with the UK it is the case.
At this point please note, most of what I write about UK also applies equally to USA, although American savings have been just a tad higher and the Trade deficit in percentage terms has not been quite so bad as UK, but US readers can draw the same conclusions, for B of E read the Federal Reserve, for Mark Carney read Janet Yellen, and for ISA read Roth IRA.
Now before we go further it must be pointed out, that at least there has been some attempts by the various Governments to increase savings, not least the ISA scheme, where at least one can save £15,400 per year, and not get hit by the regular taxes. Indeed you can have either a cash ISA, or a Shares ISA, and the shares side of it, has created a few £Millionaires, who have been very savvy with the particular stocks they have purchased, and made sure all the dividends are reinvested, and that is the trick. Keep re-investing the divis and interest starts to build on interest.
Pensions, these were first promoted enthusiastically, back in the mid 1970s, but the backing for pensions has been patchy, Gordon Brown famously stripping £Billions from them, by stopping tax relief, which meant either one paid extra with each monthly payment, or one received less in retirement, and this could be drastic, especially if you were in your 20s to 40s. Hence why Teachers got it wrong with the general public, and didn’t get the backing they thought was their due, when it was announced they would receive, 10% less pension when they retired, many private sector workers, who had paid into their pensions for years, thought, why didn’t I only having a paltry 10% cut?
doesn’t increase the amount individuals have in their rainy day kitty
So people in UK don’t have enough saved in their pensions, along with too few savings all round. Hence why the banks don’t have the cash to lend to industry? But the Government has supplied them the money to lend, I hear you cry. Well yes, but that doesn’t increase the amount individuals have in their rainy day kitty. It is this, that makes the difference, because, if you have Amy Ambitious, goes along to her bank to buy kit for her ~super duper gizmo company~ and has only her few savings, the bank is, quite rightly, going to want to know how much she can put up as collateral.
At this point I break the story, here is the alternative scenario, instead of an interest rate cut, increase interest rates.
Put interest rates up? Has the man gone bonkers?
It is one of the key avenues to stimulating savings, yes I realise the Government also needs to enact other incentives, like tax breaks, but increasing Interest rates can boost industrial investment, especially in Capital equipment. This leads to an increase in productivity, and hence to an increase in real wages. It also has the effect of lowering overall debt, and with an increase in commerce and trade, it can lead to a reduction in the trade deficit.
There is a downside, and that is a drop in consumer spending, but even this has a positive side, which is reduced imports, the whole reduces the trade deficit, and as I have previously posted, that should be high on the agenda.
In fact a prime reason for increasing interest rates, would be to increase investment in UK, but at the same time, this should also bolster, savings, which brings us back to Capital.
In Economic terms Capital is both savings, and can also refer to major company purchases, and here we hit one of the many economic conundrums. Let’s say Amy Ambitious’ super duper gizmo company, decides to buy in a new 3D printer, purchase cost £100,000 and then sack 50% of its staff. But the purchase of this piece of kit, makes the company much more efficient. What happens? Well they sell more product, but the nature of selling more product, more efficiently means more people can afford more ‘super duper gizmos’.
This is precisely what happened with Calculators, the first ‘All’ electronic calculator was built and sold by Sharp, the Japanese Electronics company, it retailed for around $240 which translated into just over 3 weeks wages in USA in 1968, when the machine went on sale.
One desktop calculator, three weeks wages?
Sharp started making big money, and large profits, and were soon joined in the game by other competitors. Who started to undercut Sharp, by offering slightly better designs, and improved ‘functions’.
this was all done with ever diminishing retail prices
The important thing to note is, this was all done with ever diminishing retail prices, but yet, companies were able to afford to borrow money to invest in capital equipment which gave huge profits, so there could be money for Research and Development (R & D), and this led to ever cheaper calculators, and drove some once profitable companies out of business, leading to people being sacked, or left unpaid for their work.
But these newer companies could trade on smaller prices, and still make large profits, all due to the fact people had saved, and so the banks had money to lend, that they needed to turn a profit on interest. In return the banks could pay their savers higher interest on their savings. And indeed, they lent to businesses who then invested in machines that could produce more products using fewer people. So much so, you can go into a Pound/Dollar shop and buy a calculator that has more functions than some computers in 1968?
Now here’s the conundrum, there are more people today, employed in manufacturing, pocket calculators, than back in 1968.
These people have a higher disposable income than those employed in 1968, even where some are paid only a pittance relative to UK/USA earnings? You can buy a calculator that will perform all the calculations you may need, all for less than a cup of coffee at a choke and puke café on the local by-pass, for US readers that translates as ‘Greasy spoon’ just off the freeway! But no conundrum, the percentage of the workforce with permanent employment, is highest where it is easiest to sack people.
On top of all this, the Bank of England has just started a new round of Quantitative easing, which has gone down like a lead balloon, and is not the stairway to heaven Mark Carney envisaged.
Now for those who don’t know, quantitative easing is where the Central banks buys large amounts of bonds from the Pension and Insurance funds, the bonds equate to debts, and the idea is, the funds can then use that money, which was previously debt and now translated into cash, to invest in buying stocks.
There is a problem, all pension funds, are required by Law, to have a spread of risk, but also to maximise its returns, now the rules are by nature complicated, because in the UK when you take out a pension, you can elect how much risk you wish to take, and then each pension fund, decides how to spread that risk, and which investments it will put YOUR money into. Along with its astronomical administration fees, the pension then grows, on top of the input, of monthly deposits you place into your pension pot.
Fred Karno, sorry Mr. Carney
So along comes Fred Karno, sorry Mr. Carney and the Bank of England Mark Carney SkyNews and they want to translate debt, into cash, so that the banks have money to lend to industry and commerce. They do this by buying long dated gilts, or Government debt, the famous National Debt, from the Insurance companies, Pension funds, and other large Financial organisations who invest on a large scale. Nice idea, but it has a fatal flaw, John and Jane Public aren’t saving more, so debts keep mounting. Yes it reduces the National Debt and translates that money into cash, but it avoids a fundamental, of the individual and their friends and family having more capital, and this is the true driving force of increasing GDP per capita.
GDP in UK should be higher, but more to the point should be improving faster than it is. It is stuck in a rut, and it is not dissimilar in USA, and the way out of that rut, is to sacrifice consumer spending for higher savings, this may well cause a temporary recession, but the upside more than compensates for the downside.
Quantitative easing is failing, because the Bank of England, has got it wrong, and is trying to get the big investment institutions to reduce their, returns on capital employed, which in fact breaks their contracts with the people they are their to serve, namely me and thee.
There is also the fact that buying long term gilts is trying to reduce the National Debt, but also the cost of repayments of those debts, nothing wrong with that, but why not boost savings, this will reduce consumer spending, which reduces imports. This combined with increasing the wealth of individuals, because they are saving more, and enables them to invest in a friend or family member who is trying to get the ‘Super duper Gizmo company’ or what ever their idea is, off the ground.
Will Mark Carney in the coming months look to increasing interest rates, stop it, he is a safe pair of hands, plus most important it is not in his remit, that is the new Chancellor of the Exchequer, Philip Hammond, and while he may well put some emphasis on savings, this will be tinkering, because the big push in increasing interest rates will not arrive.
This Government like all the Governments since 1945, will get it wrong.
Thursday 25th August 2016
So which twits in the Bank of England, and by extension the Treasury, think quantitative-easing is needed. Also what do they hope to achieve, because whatever it is, it’s failing big time. The Bank of England, has just had to pay a premium, for the purchase of Government bonds, of some of the latest stimulus package. Which raises the question, have either the BoE or the Treasury any idea what they are doing.
Contained within the quantitative-easing package is £100 billion of loans that the Banks can make to industry, it sounds a lot, however, it is chicken feed, compared to the deposits British people could raise, if instead of having cut interest rates, Mark Carney had raised them, and quantitative-easing would be unnecessary.
According to the Office for National Statistics, between 1988 and 1992 household savings ramped up from just below 4% to a smidgeon short of 12%, so a three-fold increase, now to just take the top 10% of savers who currently have around £60,000 in ready money (liquid as opposed to illiquid assets like pensions and bricks and mortar) I make that a cool £720 billion that would head for the banks if the Government were to raise interest rates, and guess, what?
a figment of imagination, for people with a lack of imagination
Savings lead to an expansion of industry and commerce, yes it is slow, but the increases in efficiency outweigh any slowness in action, the real impact from 1992 was seen by Gordon Brown five years later, who then promptly made a hash of it, but that is not the point, this idea that we need to keep interest rates low, to stimulate the economy to avoid a recession is all illusory. Mainly because we are not about to enter a recession, it is a figment of imagination, for people with a lack of imagination, the whole thing is not currently about to happen, that is at least eighteen months to two years down the line.
Companies buy stock out of cash generated by sales, but profits increase, when investment in Capital spending increases, for this, borrowing often helps, the more deposits banks receive, the more they lend to Businesses.
This also prompts the question, what happens when we hit recession, do we go into negative interest rate territory, and why, there is no need.
Janet Yellen looks to be playing a blinder, she was criticised for increasing US interest rates, the doom mongers came out in force, but they have been proved wrong, people in the States are starting to look at saving, and to continue saving. So where is the recession in the US markets, it aint there, simply because although the US economy is not steaming ahead, it aint flat on its back either. The first round of quantitative-easing, probably worked, mainly because the Fed, and BoE had not had the nerve to increase interest rates after Lehman brothers collapsed.
So Joe and Joan Public in the States are beginning to see their wealth grow, because they are starting to just save that little bit more, and the reason is simple. When they put their money in the bank or savings and loans companies, they see a small return. Meanwhile businesses in the US are being able to borrow money that is from the Public sector not Government.
fear of a recession that never quite happened
Now I already hear the Keynesian voices saying yes, but the US went into quantitative-easing big time over the last seven years. And so they did, but after the first round, it got them absolutely nowhere, it just inflated the Stock markets. It is argued that it avoided a recession, well sorry but that is tripe, the first round back in 2007/8 possibly did, but after that, what recession, it was again the fear of a recession that never quite happened, but importantly wasn’t going to happen.
Meanwhile the threat of the US economy imploding under the weight of debt is now receding, and receding fast, savings are starting to recover, and far from interest rate cuts, the betting is that the Fed will raise interest rates, and Yellen has said she would like to reverse the quantitative-easing process.
the main impact would be on savings
It is a shift that needs to happen this side of the Pond. Currently Sterling is depressed, and an interest rate increase, far from making the pound bounce up, would I suspect make it just shift up a tad, but then after the shock it would rise, as overseas investors started to look at their returns. But the main impact would be on savings, yes the high street would be hit, but quite honestly, so what.
All that means is, there are less imports, the major beneficiaries would be all the people who currently, hold a couple of hundred spare, or few thousand, it would mean that people would be better off financially.
Note an Economic conundrum, as efficiency kicks in and people are sacked to be replaced by a machine or some software, the number of people in employment rises. This is due to the fact that as companies make higher profits, other people invest in that type of business, to get a piece of the action. Also these expanding companies all use services, whether it is banking, advertising, accountants, solicitors, couriers, pizza delivery etc. etc. etc.
the vast majority muddle through
There is another of the many Economic conundrums here, most financial analysts immediately look at the impact on house borrowing and say, raising interest rates would hit first time homebuyers hardest, and within certain boundaries this is true. However, it is amazing what one can find to cut back on, with household spending when push comes to shove, and the vast majority muddle through any interest rate increases. Meanwhile the people who are struggling to get their foot on the first rung of the homeowner ladder, suddenly find, they have more money to put down as a deposit, for the simple reason they are saving more, why because the incentive of interest rates makes saving worthwhile. No quantitative-easing needed, the public are quite capable of investing their money, they just need the incentive, higher interest rates give them that.
So what on the face of it looks like it would be bad for first time buyers is actually good, plus overall the amount of debt in the economy reduces, again this is counter intuitive, because on the face of it increased lending is surely going to raise the debt levels. In fact it is percentages at play, namely the increased savings percentage.
Savings are currently less than 2%, so just raising them to 1988 levels of 4% would be a start, and this then decreases the percentage of debt, while as already pointed out, increases the overall amount available to lend.
the banks had so much money being deposited and hence sloshing around?
I bought a house around 1994, just as the hoo hah over negative equity was dying down, house sales were still in the doldrums, and I was amazed that the bank, were willing to give me a mortgage, at a tad below the base rate, which was around 6% and inflation around 3%, making the mortgage around less than 3%, which in the 1990s was excellent, in fact the bank manager (yes I still had one, a super chap called Richard Wharton) admitted they were having difficulty reaching lending targets, the banks had so much money being deposited and hence sloshing around?
Most of the money in savings went to businesses, and part of the reason when Gordon Brown took the helm at the Treasury, had such an easy time to start with, was the result of investment in business over the previous 5 years.
One would assume (always risky) that Teresa May would want a booming economy when she next stands for election. Well if she does, the investment needs to start now. And not piddling £100 billion of invented money, the Treasury could quite easily set new targets for the BoE, not least £1 trillion in savings, more to the point it wouldn’t be invented money, and would be invested more wisely, after all it belongs to someone somewhere.
There is another stimulus that is needed for house building, and that is the Town and Country planning act 1947, it needs scrapping, but that is for another day.
Thursday 8th September 2016
There really does appear to be a problem living in France these days, which must be the reason so many are heading for Calais. Once upon a time it was easy, learn to speak French, retaining a slight accent, plus the mandatory gallic shrug, and generally they took you to their hearts.
in built dislike of Johnny foreigner
So why are there packs of immigrants, in the Calais jungle, many of whom speak French, heading towards Britain? After all aren’t the English supposed to be racist, insular with an inbuilt dislike of Johnny foreigner, and our only saving grace is to be good mannered. Well the liars at the BBC would have us think that, but it seems all these immigrants at Calais disagree, except possibly about the manners. “I held a gun to this Englishman’s head, and he replied, ‘Sorry old chap but do you mind not pointing that peashooter in my direction, the bally thing might go off’, and then apologised that he wasn’t giving me any of the money I was demanding?”
There is one underlying reason Johnny Foreigner is heading for Britain, it is the same reason many head for Germany.
Ooh you’ve got a wicked tongue, as the 1940s comedian Rob Wilton, would have said. Alright many of the immigrants in Calais have weighed up the advantages of welfare, but they get welfare in France, it is the job opportunities that are lacking in la belle France.
As soon as Johnny Foreigner (I’m not hyphenating, for Johnny, read both sexes) hits our shores, he/she checks any welfare and somewhere to live, then gets a job. And how do they do that so easily, the same way I did with the temping agency ‘Flame’, they apply, then turn up on time?
Some years ago, the Union leader Paul Kenny accused the jobs agency Flame, of giving preference to Polish workers. They had advertised in Poland, probably because they were having success, and knew what they were doing. Unions of course have no idea on running businesses and hence cock up all the time, think Arthur Scargill, numpty. Now as it turned out, I had some months earlier worked for Flame, in the place where they were accused of only employing Polish workers. How had I got the job, I saw an ad online, for Flame Rotherham, I phoned up, only to be told I needed to be registered with them. Well I’m registered with the Wakefield branch, said I. Their reply, you need to be at South Elmsall within the hour, I got into my little car and tootled down to South Elmsall. I was hired, immediately, yes many were from Poland, but a few were not, how had they got jobs, they applied?
Yes Flame had advertised in Poland, so what, we were (and still are as I write) in the Common Market, what was the problem the Unions were having with this, simple, the puerile little minded socialists were excluded. They were not in control, well guess what.
western Europeans, question everything
The hordes in the Calais jungle like that idea, that no one is in total control of them, they are free to choose where they work. Many of course are Muslims, and have difficulty getting their heads around the idea that, having the freedom to get any job they wish, is bound in with freedom to question anything and everything. Part of the problem with many Muslims, is they have been led to believe, by Socialists, that they are immune to questioning, especially by any person with a sense of humour. In reality western Europeans, question everything, hence why Britain voted to leave the Common Market, 17 plus million people questioned the abilities of numpties like Jean Claude Junkers to be able to run a bath, let alone be answerable to the electorate. He failed in his abilities to be answerable to the electorate of Britain and was too dim to understand, that Brexit, meant #Brexit. The Muslims get upset that their God of peace, is seen as a joke, and certainly not a beacon of peace?
Britain stopped lopping off heads, just after we removed the bonce of King Charles I, for having the impertinence to suggest he could Tax us, without our having agreed to it. Big mistake Charlie, the peoples elected representatives in Parliament, decided they were the ones who should set the tax, and how much should be extracted. So for Charlie’s trouble, Oliver Cromwell, who was big in Parliament at the time, said orf with his head, and orf it came.
The current monarch ‘Her Maj’ decided she wasn’t going to risk it on the head lopping front, and decided she’d pay tax, but only on condition din dins for the Corgis was tax deductible. I made that last bit up, but it put a smile on my face penning it?
Personally I think Jean Claude Junker’s mother still has to feed him and wipe his bottom, he certainly doesn’t seem grown up enough to run a hot bath?
But it is the French Government, and its Socialist policies about work and the inability of companies to sack, or lay people off, that is one reason, France has high un-employment, make it easy to sack workers, and employment goes up? Get rid of the Euro, and that would also help unemployment in France fall, this would take some of the pressure away from Calais.
I notice Chuka Umunna has been getting hold of the wrong end of the stick, in a committee meeting, he was grilling some #Brexit bloke, and demanding that there should be a date for Europeans to become British and so be allowed to stay. Unfortunately the person at the receiving end of this didn’t have the nous to give the definitive answer, namely the courts will decide, once an arrangement has been decided.
stay in, mainly on the Economic points.
In fact in many ways Umanna summed up #Remain’s problem, they are fixated with the immigration question, when in fact most people voted about Democratic Sovereignty and Britain’s ability to self-determination of Law by Democratic process.
The ex-girlfriend ‘accidentally’ bumped into me yesterday, at my Mum’s, I asked her how she had voted, and it turned out to be Remain. She added that it was someone she had been talking to who had convinced her to vote to stay in, mainly on the Economic points. When I said I voted out on purely Democratic principles, in that there was a lack of them in Brussels. Her response was, she had since thought about the lack of Democracy and regretted not voting #Brexit.
I still ended up in the doghouse, with the ex, something about the lack of snogging, while we nipped out for five minutes in my car? One time decades ago when I suggested lingering for a romantic moment, under one of the Gas Lights that Leeds Council still maintains in the City Centre. I was given the cold shoulder, with the explanation she didn’t want people looking at her, there wasn’t a soul about. Yesterday we were on one of the busiest arterial roads in Leeds?
Thursday 22nd September 2016
Labour appears to be in meltdown, all I can say is good riddance. However I would not write them off yet, or write them off forever, even if they take a severe knock now, after all they didn’t invent the idea of NHS, yes you read that correctly, they did not invent the idea of NHS. NHS Crisis 2004 They did however manage to convince UK public, NHS was affordable and their invention?
just look at those who play quidditch
People will always believe fantasy, just look at those who play quidditch, a fantasy game from a series of books about a fantasy world. In the books the participants ride broomsticks through the air. This doesn’t stop these enthusiasts from believing they can recreate the original on the ground?
And they do believe, hallelujah, praise be to Joanne Rowling, the philosopher who thought up the game, and is revered alongside Socrates, Hulme, Paine, Locke, and Francis Bacon. The last of whom, wrote a short story called ‘The New Atlantis’ from where Marx stole his ideas. The difference was, Bacon knew he was writing fantasy, with no basis in economic reality, Marx just ignored this and created a fantasy economic world as well. But Marx couched it in words that people could take to believe, so they do, and try and impose this fantasy Socialism, even when it is shown to be a total failure. This goes some way to explaining why UK public have such ‘Faith’ in a 3rd world standard NHS? NHS Crisis & Labour 2002
the total failure that is Socialism
Their argument every time is, well no one has tried Socialism properly, they promptly forecast the downfall of free trade or laissez faire, the latter hasn’t happened since the dawn of money, and the former in its short life has failed miserably every time. That is true belief, in a fantasy idea, the end of a stable reliable economy, that has been shown to work for thousands of years. To be replaced for the total failure that is Socialism that impoverishes, starves, leads to corruption and has no basis in reality?
The problems arise when this continues to be applied even to none Socialist ideas, like the NHS. William Beveridge was a Liberal, and an Economist, grounded in the real world, in November1942 the report he chaired was published on what he saw as the five giant evils facing the modern world. His report has been abused and re-appropriated by the Socialists in their fantasies ever since.
The two most misused are welfare of the family or squalor, and health. For reasons to do with dogma of the Socialists, the Politicians and supporters of many colours, have today this odious idea, that Politicians should meddle in the running of the home, and that they know best how to run all manner of things, that quite frankly have nothing to do with Parliament, or Government, squalor being the main one, after certain situations have been resolved, it is generally self-inflicted, I shall return to this in future blogs.
Which brings us back to NHS, NHS Crisis 2005 since when did the average M.P. know how best to run a Hospital, a health centre, a doctor’s surgery. The people keep up this fantasy that they do, and support four square the idea of the NHS?
So ask the simple question, would you prefer your local group of GPs to run your local health centre, or a collective of MPs to run it, and a clear message comes back, the MPs.
Except of course ask the question like that and one is laughed at, which is why Blair and Brown had such a field day, they could delegate a Labour M.P. to run the health department, and they in turn would dictate, what the policy was. And I use the word ‘dictate’ purposefully, dictate they did.
And then what uproar, when the Tories make changes to allow health professionals to be able to juggle the money and use it as they see fit? It is an improvement, but it is also fraught with faults.
Let’s start at 1947, NHS Nursing Times archives 1948 is structured all wrong, and will never work, plus it now covers items that have nothing to do with general health, and are specialist areas that should not be free.
The original setup just Nationalised all Hospitals, and the setup put all teaching Hospitals under the direct control of Aneurin Bevan, the person responsible for this farrago, and hence why it was such a shambles.
Also it is a different world, I regularly tweet there is no poverty in UK and get abuse, but the fact is, what we call poverty is merely people unable to handle the money they have, or just plain irresponsible, and nothing to do with Government. But the Socialists believe it is, and they are backed by a Tax funded propaganda media outlet called the BBC.
The NHS has been chaotic from day one. I came across this purely by accident more years ago than I care to admit to, but let’s say, the World Wide Web had not been invented. I’ve long forgotten what I was looking up, at the local Library, but I was going through the old Newspapers, on microfiche, they covered 1947, and one news story I came across on numerous occasions, were the queues and chaos in the newly formed NHS. Now this struck a chord, because I remember the chaos of the 1970s, in the NHS and funding crisis, I looked up the 1960s, well the stories lessened, but didn’t go away. Even with the Wilson Government, there were constant problems, mainly a shortage of money and queues, sound familiar.
The plain truth is, the NHS NHS Crisis 2001 again Labour? was set up wrong and had too wide a remit, today it is the ‘rights’ of this or that to drugs or procedures, gender change anyone, breast implants, gastric bands etc. etc. etc all free on the NHS, why?
because health is total
Here is the bit that the Socialists or any other economically ill-informed person will not wish to read. There isn’t enough money in the world to properly fund NHS, because health is total, and just like the speed of light, the nearer to complete funding, the more its requirements expand exponentially, and more in some cases, so there is never quite enough.
Also there is no local answerability, it is all central, when people go into Hospital and say how wonderful the NHS staff are they are living a lie, go into any Hospital around the world, whether India or USA, you will find dedicated staff, who work beyond what is expected. Speak to people in UK and they believe it is only NHS that provides this type of dedication, my brother living down in Spain disagrees, but then he’s only had to have the services of Spanish health and NHS, and wouldn’t want to be ill in UK?
Next where the money actually comes from, again the Socialists are in for a big shock, because I’m putting the figures, in an easy to understand format.
I will start with the wealth of the Nation, but first some ground rules, with populations I’m rounding to nearest tens of millions, for the purposes that will become clear, it doesn’t affect the outcomes. Income to the nearest $1k and it’s in Dollars for ease of comparison.
So population of UK 60 million, now here is the first shock, around 14 million in UK don’t earn any income, simply because they are under eighteen and dependents. According to the Office for National Statistics, the number of people employed in autumn 2015 was around 31.4 million.
These employed pay the majority of the taxes required to fund NHS. Mainly because the previous line of tax, was funded from tobacco, but that has been decimated, by Labour?
As people smoke less they become more of a burden on the health service, opposite to the lie expounded at the time by Labour, that stopping smoking would save the NHS £billions. Liars no it doesn’t, Labour you lied, but that is natural with Socialists. The burden to the Health service in UK is rising dramatically, as those who would have a happy life smoking their lives away, are now miserable sods who don’t have a good laugh and drop dead aged 72, from tobacco related disease. They moan, feel more put upon have less optimism because of the stress from not smoking, and suffer longer illness, while they live out their extended lives to 78? Also once over 66 they don’t earn as much, many are on pensions, whether State or private and even when on both contribute substantially less in taxes.
top 5% at around $33,000
This now brings us down to those earning, and here again there are some shocks, if you are earning more than £10,000 pa ($13,000) you are in the top 16% of earners in the world, in fact just living in UK puts you in the top 20% of richest in the world, that includes the none earning under sixteens, because they have access to wealth via their parents, etc. One of the prime movers for immigrants wanting to come to UK is the fact they are more likely to get regular work, and so put themselves in the top 8% of the world’s richest, and most look to the top 5% at around $33,000 (£25,000) by putting in the hours and hard work, welfare is seen as a fall-back or for the wife, we are talking mainly Muslims here.
Back in 2007 when the world was in chaos and Lehman brothers were collapsing, there was a teacher on the TV, she had a simple answer to the crisis, echoed by many, tax the bankers, oh how the Socialists chimed in agreement. If she was a Maths teacher, she should have been sacked on the spot for being useless and totally wrong.
Each Spring the Sunday Times newspaper publishes a rich list, unfortunately it doesn’t give annual income and is sometimes thought to be nearly correct about their wealth? However on the principle the top 10,000 people in the country earn over $650k (£500k), this gives a figure of $6.5 billion. Now unfortunately for our teacher, few of the 10,000 will be bankers, but let’s be generous, and say 1,000, or 10% of them are, now let make the pips squeak, and tax their income at 99%, if your ahead of me, and these easy figures you should be, the income to the treasury of the top 1,000 bankers would be $643 million, or £495 million, less than half a billion sterling, and that is with 100% efficiency, at 99% of their income.
Sorry how many tens $billions did the bailout require, but back to the original point the NHS 1978 NHS is the Winter of Discontent and health costs. Again assuming an average $6.5 billion income in the top 10,000 people in the country, and define income, I was a lowly shopkeeper, and could rarely tell you my actual earnings, only that they were offset by tax reductions and capital investment? At 40% with 100% efficiency in collection it still only amounts to $2.6 billion or about £2 billion.
Now here’s why Chancellors of all colours tax the poor, there are around 31,000,000 people in the work force, they contribute the bulk of the $200 billion (£155 Billion) in Income tax revenues. Hence why Gordon Brown and Labour were so keen on taxing the poor, 10,000,000 of the poorest still contribute a vast amount more than 10,000 of the richest, after all there are 1,000 times as many of them.
It was the Lib/Dems forced the hand of the Conservatives to increase the Tax allowance, from the 2005/6 rate of £4,895.
It is now £11,000 so much for Labour helping the poor? First they unload a 3rd world system of health, the NHS, and if any thing goes wrong, which it always does, blame everyone else, the irritating thing is, in the face of the facts, people believe Labour lies.
Thursday 6th October 2016
We arrive at the 1st #Brexit Conservative party conference, and new Prime Minister Teresa May, has been in full swing and full of confidence. Why not, she has played a blinder, while the Referendum soapbox was steaming ahead, she kept a low profile, nominally supporting her Prime Minister David Cameron, but at the same time leaving her options open by not criticising the #Brexit campaign, and keeping a low profile, and largely keeping schtum.
One side note before we go further, on 14th October 1066 England underwent its greatest upheaval for centuries, the Normans, led by William Duke of Normandy successfully invaded and conquered the Country. There followed many years of upset, but basically the result was the Britain you see today, the next few decades will probably be decisive for the world?
Teresa May was quite right to take that line, and the reason being I suspect, she was like me, basically a ~don’t know~. Not a don’t know in the sense of I have no idea what is being debated, but a don’t know in the sense, do we really know what is going on, and what are the fundamental long term arguments.
it was Democracy that decided #Brexit
Many of my followers on Twitter, thought I was four square for #Brexit, not a bit of it, I was all for, what was best for the Democracy of UK. All my posts are still there, to check out, I was worried about Sovereignty and Democracy, with a smidgeon of the economic consequences, all the other arguments were confetti that would be blown away in the aftermath. I made my final decision to #Remain or #Brexit, in the voting booth, and it was Democracy that decided #Brexit, or more accurately the absence of any way of reflecting within the European Union, the will of the people in a Democratic manner. The EU is Fascist, oblique Socialist, in design, hence it fails to reflect the will of the people.
Jean Claude Juncker, a modern Mussolini, with his arrogant attitude, towards UK certainly put a few nails in the EU #Remain coffin. Here was some cretinous jerk, starting to make dark threats about the consequences of voting leave. But it was the fact he said nothing about the way the EU is constructed, and that we the people could not vote him out, along with its lack of representation of the will of the people, that I believe helped the #Brexit campaign win.
And here I suspect is the key to how many voted, a lack of any way the will of the people can be reflected. This manifested itself with most people as ‘give us our borders back, but also our ability to decide our own Laws. I say this with some confidence, purely because I have had a chat since the vote, with a couple of #Remain voters, neither will object to being labelled ~older~ ladies.
The first is called Annette, and her words were, “I voted #Remain, because I listened to what the younger people were saying. I voted for the future, they saw ahead.” However she now regretted it, purely because she had realised that Sovereignty and ability to have your voice heard by Government, counted just as much as the Economic argument, for being the member of an elite club. Most of this argument had surfaced after the Referendum, but none the less crystalised in her mind, that the people had made the correct decision.
The second (a beauty who shall remain nameless, purely so I am alive to write my next blog lol) is my ex Girlfriend, she voted for Economic reasons, she had been in conversation with someone, who had put the economic case very well. Here is where the #Remain side had their strongest case.
But she regretted her vote, not because she thought Britain would do better economically out of European Union, but simply because she thought that Brussels didn’t reflect the will of the people, put another way, Sovereignty over un-democratic processes. Again it was driven home forcefully after the Referendum, when various foreign dignitaries started to threaten Britain. The Ex is not one to fume, but Juncker and his ilk started to make her blood boil. Mrs May, whom the Ex was wary of, is starting to win over her confidence.
Just for the record, if Teresa May continues the way she has started, she will rank as one of our best Prime Ministers in recent times, it still doesn’t mean I’ll vote Tory?
how much leverage the #Remoaners can muster
Meanwhile the economic outlook is looking rosy, don’t be fooled, it will turn downwards. The FTSE is currently riding high, at around the 7,000 mark, but will take a dive once the actual reality sets in. How much, will depend on how much leverage the #Remoaners can muster, they still have sore heads and are biding their time to pounce.
The result might be choppy waters ahead, with the pound staying low. Even so, Mark Carney the Governor of the Bank of England, will still not raise interest rates, purely because his political masters will not ask for it. So far there has been no change in policy from Mrs. May regarding consumer spending and business investment. For further reading on this see my previous blogs on href=”http://www.johnashtone.com/pre-referendum-blogs/”>#Brexit.
The bright spot in all this, is the fact that any perceived downturn in Britain’s economy will be just that. Whilst perception is 90% of reality in most peoples (or Markets) minds, the reality of UK’s trading position will remain strong. Much to the annoyance of the #Remain faction, but the economy will remain fairly strong, but the downturn will give the BBC something to crow about, while the markets drop, and comment ‘Despite #Brexit’ will ring loud and clear from the Biased Broadcasting Corporation, but the results in the end will show #Brexit bringing more benefits than disadvantages.
But hey always remember, if it was on the Beeb, and about #Brexit, it was probably pessimistic a pack of lies to start with?
So Sterling has declined around 17% this year, mainly due to #Brexit, there is both good and bad to come out of this.
it will be ‘bad’ inflation
First let’s deal with the bad, Oil, which is priced in dollar$ and so is up, this has a knock on effect on all prices, due to the basic fact we need things moving from one place to another. So all goods in the shops will be negatively affected, in other words the price will edge upwards. Also all the goods being imported, will now cost the purchaser around 17% more, this doesn’t mean the cost in the shops will rise 17%, because the purchase price is only a percentage of a product’s overall cost. But it does mean prices of all imported goods will rise, this will hit inflation, also it will be ‘bad’ inflation, meaning it will affect “The Pound in your pocket”. This is a timely point to note that the £ Sterling being devalued is nothing new. On November 19th 1967 Harold Wilson made his famous speech, using the now infamous words, “The Pound abroad is worth 14% or so less in terms of other currencies.” ………“That doesn’t mean, of course, that the Pound here in Britain, in your pocket or purse, or in your bank, has been devalued”, yes it did Harold, you disingenuous little toe rag. https://www.youtube.com/watch?v=-IHVQU9BSks Also 16th September 1992 otherwise known to British Manufacturers as Golden Wednesday, (and needless to say to the wretched Socialist BBC as Black Wednesday) led to a resurgence in the export and manufacturing sectors of UK economy. However this is pointed out with a caveat, the Government didn’t back up this ‘Golden’ opportunity with macro economic stimulus to those parts of the UK economy.
As I have said in other blogs, there needs to be a move away from consumer spending, to savings and investment in trade and commerce. There is the appetite for it, and look around and there are the signs the British economy keeps trying to expand into sectors deemed lost for ever, they aint.
Boaty McBoatface has had its keel laid, at the Cammell Laird Shipyard in Liverpool, an acorn planted to start building larger vessels in the UK again. The Raspberry Pi Computer, manufacturing has been moved from China to Pencoed in Wales. href=”https://www.raspberrypi.org/blog/made-in-the-uk/”>Raspberry PI These are just two examples and obviously nothing to do with #Brexit. It does show the desire and abilities are there, but also with Sterling down, UK can be so much more competitive.
Germany has benefited from an undervalued Euro since shortly after its inception. From the German perspective, the Euro is dirt cheap, and hence they can export at ridiculously low prices, and still make a profit. This is due the PIIGS Countries, Portugal, Italy, Ireland, Greece and Spain pressuring the Euro down, Greece especially. If Greece could be persuaded to leave the Euro, the knock on effect for UK would be the re-valuation of the Euro, with Greece out, the Euro would rise, at which point, Portugal, Spain, Italy would look to bailing out of the Euro, because their Economies wouldn’t stand it, Ireland would probably come out but for more and different reasons. At this point the Euro would be well past parity with the Pound, perhaps 90 cents, possibly as low as 80. How much your Beemer and Merc then? No such thing will happen in the short term of course. It would require too much imagination for any UK treasury official to think they could wreck the Euro, and make dosh underwriting a Drachma. But someone needs to, with un-employment so high, especially youth un-employment, the PIIGS countries need a break.
what a shed load of tripe
#Remoaners are now saying we must stay in the customs union, what a shed load of tripe, firstly why would Germany block vehicles going over to Germany, when all it would mean is German imports to UK stop. I think somehow Mercedes Benz, Audi, VW, BMW, Dortmunder Union Brewery, Dortmunder Action Brewery, multiple other Breweries, plus all the electrical, pumping, chemical, and engineering industries currently exporting to UK may have some objection to that? I’m sure the French wine industry will happily stop selling us there products?
The problem for #Remain, is they have no real argument, their main criteria to #Remain was economic, but it doesn’t add up, Japan does very nicely, by not having a single market agreement with any trading bloc, especially a trading bloc that is sclerotic, like Europe.
Now that Sterling is trading at much closer to where it should be, the Government needs to put Economic stimulus and incentives into boosting trade and commerce overseas. We need to cast off the shackles of inwards looking Europe and its Socialist dogma, and to start looking at the direction the world is going, and it’s a technological future, with more and different types of jobs. This is guaranteed, because there has just been a flurry of talk over how jobs will be lost due to robots doing all our work.
Yeh, right just the same as all the jobs that were lost, due to mechanisation back in the 18th and 19th centuries? Things are different this time I hear the cry. No they aren’t, efficiency pays wages and creates spare wealth, which always finds ways to spend that wealth. Dog walking anyone?
Meanwhile back on the inflation front, it means the amount of imported goods will either reduce, or go up in price, at which point UK industry will start to step in and produce alternatives. But the main benefit will be the trade deficit, it will drop. Unfortunately it won’t disappear, we haven’t the spare capacity to move from deficit to surplus, so quickly, however if Mark Carney were to start moving interest rates upwards, people would start saving more, which would mean there would be more money to lend to Industry and Commerce.
However we are then back to the fact that this Government does not look as though it will change policy from consumer spending, to trading and overseas commerce.
meaning it will hit your pocket
Inflation has so far, not been affected much by the Pounds decline, but it is building up, and as I said it is bad inflation, meaning it will hit your pocket, and those with least will be hit hardest, or correction, he says thinking of himself, it will hit those who spend money on consumer goods. A thing I’m notoriously bad at, why should I go and spend lots of money, when I can get pleasure from eating a slice of buttered toast?
The jobs market is booming at the moment, but this will slow dramatically as the uncertainty over where the UK will be in five years starts to dig in, but it will be short lived. Some of us have been here before, and it is small businesses that start up under these circumstances, a few people see opportunities while the majority are wondering what the hell is going on. It would be boosted were mark Carnage to increase interest rates by more than ¼ of 1%, in the next month. Any bets he won’t, and 3% by spring is a none runner, but the upside were he to do so, would be he would then have manoeuvring space, when inflation has run its course and deflation set back in.
He has been warned.