Wednesday, 1 October 2014

Anyone For Default?

This is a retrospective from this blog on Tuesday 10 November 2009.  For some reason it strikes a chord.  It was derived from The Bear’s Lair, by Martin Hutchinson on that day on his Prudent Bear web site, titled “Which Big Country Will Default First?”


Below are three extracts from an interesting article, dealing with the six major economies, the USA, Japan, Britain, Germany, China, and France.  They do not make happy reading for the UK.

Extract One

The worst budget balance of the three deficit countries is in Britain, where the forecast budget deficit for calendar 2009 is a staggering 14.5% of GDP. Furthermore, the Bank of England has been slightly more irresponsible in its financing mechanisms than even the USA Federal Reserve, leaving interest rates above zero but funding fully one third of public spending through direct money creation.

Governor Mervyn King has a reputation in the world's chancelleries as a conservative man of economic understanding. He doesn't really deserve it, having been one of the 364 lunatic economists who signed a round-robin to Margaret Thatcher in 1981 denouncing her economic policies just as they were on the point of magnificently working, pulling Britain back from what seemed inevitable catastrophic decline.

King's quiet manner may be more reassuring to skeptics than the arrogance of "Helicopter Ben" Bernanke, but the reality of his policies is little sounder and the economic situation facing him is distinctly worse.

Extract Two

Britain has two additional problems not shared by the United States and Japan. First, its economy is in distinctly worse shape. Growth was negative in the third quarter of 2009, unlike the modest positive growth in the U.S. and the sharp uptick in Japan.

Moreover, whereas U.S. house prices are now at a reasonable level, in terms of incomes (albeit still perhaps 10% above their eventual bottom), Britain's house prices are still grossly inflated, possibly in London even double their appropriate level in terms of income.

The financial services business in Britain is a larger part of the overall economy than in the U.S. and the absurd exemption from tax for foreigners has brought a huge disparity between the few foreigners at the top of the City of London and the unfortunate locals toiling for mere mortal rewards.

A recent story that the housing market for London homes priced above $5 million British pounds was being reflated by Goldman Sachs bonuses indicates the problem, and suggests that the further deflation needed in U.K. housing will have a major and unpleasant economic effect.

The other question to be answered for all three countries is that of political will. If as is certainly the case in Britain, deficits at the current levels will lead to default (albeit not for some years since the country's public debt is still quite low), then to avoid default tough decisions must be taken. Britain is in poor shape in this respect.

Its current prime minister, Gordon Brown, is largely responsible for the underlying budget problem, having overspent during the boom years, largely on added bureaucracy rather than on anything productive or value-creating.

However, the opposition Conservatives, likely to take power next spring, are led by a center-leftist with a background in public relations and no discernable backbone or principles.

Britain has a history of such leaders, which it has managed to survive – the ineffable Harold Macmillan, in particular, who wanted to abolish the Stock Exchange and contemplated nationalizing the banks when they raised interest rates, was a man of outlook and temperament very similar to David Cameron's.

Macmillan was notoriously prone to soft options that postponed economic problems, firing his entire Treasury team in pursuit of soft options in 1958 and leaving behind an appalling legacy of inflationary bubble on his retirement in 1963.

If Cameron is truly like Macmillan, his government's response to economic and financial disaster will be one of wriggle rather than confrontation.

With neither party providing solutions to an economic crisis, the British public is likely to discover that, unlike in the crisis of 1976, no solutions will be found. Default (doubtless disguised as with Argentina as "renegotiation") would in that case inevitably follow.

Extract Three

We'd all better hope the urge for fiscal responsibility hits London, Washington and Tokyo pretty damn soon.


Does anyone know where I can get hold of some cowrie shells?


The debts are now greater, the problems still there and there is talk of default in the air again.  The list has become a much longer one.

Tuesday, 30 September 2014

It's No Joke

Down the decades a lot of politicians have come and gone, few in glory, most gently or not so gently fading out into the mist and others who have departed as a result of one sensation or another.

Looking at the men on offer at the Conservative Conference has given the odd kick to the memory of persons of the past who might be claimed to be the intellectual heirs and embodiment of the most prominent individuals so far.

Boris Johnson had them rolling in aisles with his wit and wisdom, or perhaps lack of it.  Waving a brick about he urged the audience on to a future of riches and happiness by building anywhere and everywhere.  His sponsors must have been very happy men.

But the memory that came to mind was that of Max Miller one of the great stand up comedians of the past.  Semi-literate at best, he made up for life's hard start by an aggressive and relentless attack on conventional thinking.

I saw him live only once around 1950 but once seen never forgotten.  But I would not have put him in charge of anything that required serious thought or effort.

It was George Osborne, who has lost two stone by adopting a more austere personal regime, that was more severe.  The person he reminded me of was Dr. Edith Clara Summerskill the leading Labour feminist from the 1930's to the 1960's.

She was a formidable lady of high intellect but the time I saw her in 1959 came over as dull, dogmatic and determined in her views.  She did not seem open to other ideas and did not like critical questioning.

Earlier in 1958 I had attended a talk given by  John Stonehouse.  He was introduced to the audience by Ralph Miliband, father of the present Ed and David, as a coming man in the Labour Party and an exemplar to the young and ambitious.

My companions and I looked at each other as he told his tale and shared the view that he was a shyster and best avoided.  Quite why he ever rose as he did and was regarded so highly I was never able to fathom.

Having already come across a few wrong 'uns, bells were ringing. What is worrying is that looking at Cameron, his way with words and his personal presentation, suddenly I was looking at Stonehouse again.

But then Ed Balls reminds me of Bessie Braddock another I recall.  What is forgotten about Jack, her husband Labour boss of Liverpool and Bessie, was that they ripped up one of the best tramway systems in Europe and replaced them by smaller and less frequent buses.

One of the curious features of that bit of business was that all involved in making the decision suddenly possessed splendid new Rover cars after it was made.

Not much changes.

Monday, 29 September 2014

Pass The Bucket

While the world enters into another unstable phase with its many dangers and risks, here in Britain we continue to study our own navel intently.  The Conservative Party Conference was intended to began well and hopefully avoid the descent into farce.

Instead it has begun with the farce and as it goes on we may stop laughing.  Cameron is taking his party into an election where his own failures have stacked the odds against his party with the real risk of a Labour led mixed coalition being in power.

The event is taking place at the Symphony Hall, Birmingham, home to the City of Birmingham Symphony Orchestra which has built up a reputation for music making of the highest standard.

Given the current quality of leadership in the government and the decision making and administrative skills they have displayed, perhaps a musical item might be chosen to illustrate their performance in office.

This nine minutes of Youtube you may well know.  If you do not it tells it own story simply and effectively.  It is the Disney film take on the Sorcerer's Apprentice composed by Dukas from around seventy years ago.  It has not lost its impact.

Many of our current politicians, it is said, like to claim they are fans of Wet Wet Wet.

Sunday, 28 September 2014

Singing For More Than Supper

One of the repeats on this page is the claim about how much has changed in the last decade or so and how much more is possible.  These bear on selling, buying, creating and a whole raft of activity.  All affect jobs, companies, economic structures and a great deal else.

Here is a choice example in Quartz dot com from the world of popular music.  This has been part of all our lives whether we like it or not.  For the very many who do it is about choice.  For the many who did not because of all the knock on and media effects it will still have an impact on what it out there.

The story has made some of the main media, but only on the basis of interest in the performer aspect and how they link to their fans and the wider public.  But not long ago in our town centre there were many music shops, now all gone.

With them has gone the best part of a major retailing and production sector that once offered jobs at all levels and was among the leading choices for school and college leavers.  In the few visits to the town centre the decline in other things is all too apparent.

In the remaining shop for TV and audio equipment I spent a little time looking at the latest products on offer.  They were a world away from the recent past.  The big question it raised for me was why bother any longer to attend live performances costing all that time and money to do so?

We are told there is a squeeze on middle incomes and that the future for many of the young is grim.  When will the full effect of change impact not just on recorded performance, but most of the live ones as well?

Saturday, 27 September 2014

Time To Watch The Wallet

Two hundred plus days to go before the General Election and battle is joined.  In go the bombers hitting the terrorists with million pound bombs released by £33,000 an hour aircraft (see Richard North) funded by quantitative easing.  It makes for better headlines than repairing potholes.

We have long been started on the Health debate.  Labour are bitterly complaining that the Tories have not cleared up the many and various disasters they left behind in 2010.  Also, in other political shopping places the picking of pockets is well under way.

One especially rewarding lift is property which is certain to get the shoppers worried and moving, if only in all the wrong directions.  When I first took out a mortgage well over fifty years ago, taxation of property was a dreadful mess and it has not got any better.

At each and every party conference then and since, the speakers from the platforms have repeated every promise made since the late 19th Century on the subject and are adding a few more made possible by modern technology.

Ed Miliband has been accused of dropping certain issues from his speeches, or forgetting them, make your choice.  These are the difficult issues which are complicated and unluckily mean that there will have to be some losers.

During an election campaign the likely losers have got to be made to think they might be winners in spite of all the evidence.  On the other hand those who are destined to win have to be persuaded that if the other lot get in then they will lose.

At one time in the regular media, if not TV, it was possible for voters to find out more and make informed judgments.  This is no longer the case.  It is possible by careful use of the net.  But many do not have the time for this luxury, a good many are not on the net and for most, notably the young, there are more interesting things to look at.

I spend time looking at Disused Railway Stations rather than in depth analyses of major issues.  At least it tells me that building railways is often a good way to lose vast amounts of money and go broke, or to saddle the taxpayer with new major burdens.

Oh, a break for tea and something new.  Mark Reckless, Conservative M.P. for Rochester and Strood, has turned up at the Doncaster Races to declare his money is on UKIP, having their conference there this week.  He has abandoned the Conservatives which will cause a terrible fuss.

Perhaps he could not face a week in Birmingham at the Tory conference, more likely he has been counting his local votes.  Many years ago I recall a conference at the same venue in Doncaster when Shirley Williams was the star turn.

I ran a book on how often she would either repeat herself or muddle her metaphors and cleaned up.  It was a much better bet than the horses usually found there.  These days her sort of wide eyed, if contrived, innocence is not to be found.

At the moment all bets are off for May 2015, there is too much going on, too little sense and no clear direction from any of them.  This is looking grim if another coalition in prospect and perhaps crippled by failures to decide or understand.

Then it will 2020 and time to check your pockets again.

Friday, 26 September 2014

Thirst Aid

With all the bad news around there are still a few scraps of good news to gladden the heart and giddy the head.

Belgium beats the traffic in order to improve the supply of beer to the public.

Surely the next step is to pipe it into homes instead of water?

Thursday, 25 September 2014

Calling The Doctor

The piece below, over 1300 words, was written in the year 2000, it is intriguing in the context of the chance that the 2015 Election will centre on the NHS.


Two years ago Local Authorities were chartering commercial freezer facilities to cope with the backlog of the deceased awaiting burial or cremation.  Part of the problem was the extra long holiday imposed for the Millennium, the more serious was the increased number of deaths arising from a widespread epidemic of influenza.  There has been a campaign this year to persuade the old and vulnerable to have their flu’ jabs in good time to reduce the risk, and this has had a measure of success.

But what if there is a particularly nasty or unexpected influenza virus about later this winter, and occurs at the same time as a longer than usual cold spell of weather?  The increase in the illness and casualty rate and the numbers needing urgent treatment may mean that in the hospitals there could be corpses in the corridors, and bed blocking on an unprecedented scale.

Along with this will be care establishments in trouble, and people dying in their beds at home waiting for the doctor or the ambulance, or a caring agency that never comes.  The spin will be probably that the casualties were old and demographics meant that an upward shift in the mortality rates was predictable statistically and only to be expected.  There may be an enquiry, but don’t bet on it.

One of the roots of the problem is the naivety of the British public in believing what they are told.  The engaging persuasiveness of the Ministry of Information propaganda films of the late 1940’s on behalf of the Attlee government on the one hand; and the bullying neurotic tantrums of Nye Bevan on the other; resulted in too many hopes being placed on a National Health Service created on the basis of a fundamental error.  A local clinic arrangement that had suited a valley in South Wales, Tredegar, which was Bevan’s own patch, was made the template of a single structure service for the whole nation, irrespective of the variety of practice, organisation, and the complex needs of the rest of the country.

As a flexible, responsive, developing service the NHS was doomed from day one.  It began as a static model from the pre-antibiotic age, when a fester could be fatal.  It was not designed to cope with the pace of research, the new drugs, new surgical techniques, methods, radical changes in the rate of survival of serious cases, and the ageing of the population.  General Practitioners in the early 1950’s complained that they were conceived of as a kind of shunter, despatching patients to what tracks were available in the local hospital.

For them the practice of medicine was organised like the railway marshalling yard, but much worse, and in ignorance of the destinations of the trains.  The rush to impose the Tredegar Model also meant the creation of unwieldy and impenetrable bureaucracies from the outset, the characteristic feature of a Labour reform or reorganisation of any kind.  It was the professionalism of the nurses and doctors, and the dedication of so many other staff and voluntary workers, that kept the show on the road.

The belief that the NHS was the best in the world, like our athletes and football teams, made us reluctant to enquire too deeply about what we were getting for our money for too long. A good deal of the governments finance available went on other things.  When you see Concorde up in the sky, tell yourself that is where the money for NHS hospitals went in the 1960’s and 1970’s.  Concorde was a prestige project designed for the personal benefit of the elite; NHS hospitals were for the peasants, that telling word heard from the lips of our political and commercial masters in private so often during that age.

Governments of many hues and people came and went, only to add to the misery.  It is difficult to decide which of the many reshuffles have been the worst.  Possibly the one induced by Heath The Horrible in 1973-1974 takes the prize, inspired by the ideas on hospital organisation of John Garlick Llewellyn Poulson; but Puffer Clarke, the man who chucked it all in the air, runs him a close second.

There is awareness that all is not right in the hospitals, and the NHS is bracing itself for another upheaval.  One of the key problems is the bottlenecks in, out, and within, and this is directly related to the elimination of effective spare capacity under narrowly conceived costing procedures.  The shambles of the Accident and Emergency arrangements and the admission systems of so many hospitals is the direct consequence of pretty paper exercises and massaging the figures to fit the sums laid down at the centre that have taken no account of the realities.

We hear about the problem of many people being sent home before their time, but there is another.  Once in, it can be extraordinarily difficult to get out.  You have to wait for the system to function, and because of the strain on the hospitals it rarely does.  How many bed-days are lost because people are sitting around waiting for a doctor to tap them on the head as they walk past to say go, or the bit of paper needed cannot be found or has not been signed by the duty wizard or whoever?

If the basic model, and the essential constitution of the NHS has been badly flawed from the beginning how do we begin again?  Can any government inspired review ever bring round a system that cannot work?  Is it any longer possible for Britain to have health provision that matches its needs soon, and is able to keep pace with change?  Will the present NHS ever create enough operational capacity and flexibility to manage the ups and downs of demand during each day, never mind each year?

Beyond the hospitals, there is little appreciation of the disaster enfolding in the provision for the very old and sick.  New laws and regulations, uncoordinated, and brought in without thought for the long-term effects have severely reduced the provision in Residential and Nursing Homes at a time when the population in this category is rising.  This is impacting into Care in the Community now to a level when many services are at breakdown point.

A welter of restrictions arising from Health and Safety and other limitations has had all sorts of side effects.  When old Mrs. Smith falls over, wherever it is, if there is no one trained or qualified to hand to pick her up then she has to stay there until an ambulance crew arrives.  If she had a bit of a bump all too often this means that to cover themselves, the crew haul her off to the local A & E Department to help fill up the trolleys.

The assumption made in the calculations of the government that one way or another there would be enough local carers, voluntary or paid, was badly wrong, and the strains in the system are all too evident on the ground.

The extended family has long gone, the new aged had few children, and many of those are now old themselves or have been though divorce or difficulty that limit the numbers able to support their parents.  The dumping of the majority of the over fifties from the labour market has seriously impacted on the ability of most of that age group to help fund the support and provision for their parents.  It is a dreadful mess, and in one of the coming winters we will all find out just how bad it is going to be.

There will be no laws or regulations, and no public authority capable of dealing with the magnitude of the crisis.  The NHS will not be able to, because it is now at the point when it cannot help itself.  So what will Mr. Blair do?  Call in the Army to build the pyres again?


For Blair read Miliband?