Thought For The Day

In our town to celebrate the Diamond Anniversary of HM The Queen, also Head of the Church of England, a pedestrian area was created to host events and communal activities. 

It is called, astonishingly, Jubilee Square.

Adjacent to it is a disused furniture shop that has been closed a year or two now.  Application has been made to the Council for a change of use more in keeping with the developing needs of the community, as defined in the local council “Vision”.

Consistent with their existing policy the Council have had recommended to them a new tourist friendly centre and most councillors are set to fully welcome the proposal which is in keeping with recent changes.

It is for a lap dancing and strip club.

Mentioning this to my family one remarked that possibly the chief advantage was that the club would not have to change the name of the facility.

When selling furniture it was called “Loader and Payne”.

Old King Coal

As we lurch into yet another financial crisis or series of crises and pursue our current obsessions  on climate, oil, nuclear, wind turbines and the rest we forget that coal is still around and much used about the globe.

In the UK there are only a few remnants left of our once large and crucial coal industry.  It is possible that there are now more mining museums than there are working pits.  For us the coal industry is history, emotive and real for some, just another heritage thing for others.

It had its interesting features.  A hazard in one area was that for any new developments there could be unknown old workings not far below ground.  So as soon as the foundations or buildings went up then they would soon go down into a big hole.

A particular menace was the bell shaped pits dug by the monks at local monasteries.  If one was found then it would be inevitable that you would have a cluster of them on your hands. 

The council’s informal policy was simple.  Quietly fill them with rubble, put a covering of soil on top and sell off the land for private housing.

With a hat tip to the Oil Drum, here is an article from the Peak Prosperity blog that tells us about coal and its use around the world and that it remains a primary resource of key and continuing importance.  More and more is being mined and used and there is a lot more to be had.

It is a substantial article but with plenty of graphs and certainly enough to make one wonder whether we know the half of what the future may have in store.

http://www.peakprosperity.com/blog/78984/coal-ignored-juggernaut

At the bottom you will need to click on the Part II “Coal is the fuel for a world in decline” for the short ending.  The final sentence is:

Quote:

“It’s not surprising, therefore, that each time the global economy weakens and then rebounds, its hunger for coal advances more strongly.”

Unquote.

So our easy assumptions about much of the energy needs of the world and how they might be met on the basis of international agreements may be only a charade in the real productive world.  Coal, if not King, can still command a princely price.

The picture above is of the Hickleton Main Prize Band in the early years of the 20^th Century.  This colliery was located at Thurnscoe in the Dearne Valley.  My lady’s grandfather died there in 1912 in an accident.  He lies in the Orgreave Cemetery in Sheffield.

A Fleet Of Fools

The latest ructions in the UK banking sector are causing a flurry of activity in the media and politics.  Barclays probably along with others have been up to no good.  RBS sacked lots of IT and back office people, outsourced to India and then rediscovered Murphy’s Law (see Wikipedia).

But in all the “Extraordinary Delusions And Madness of Crowds” (see Wikipedia re Charles Mackay’s book of 1841) a number of lessons have been ignored.  Under my nose at present is a book “The General Theory of Employment, Interest and Money” published in 1936 by John Maynard Keynes.

He was a man of formidable intellect and analytical powers.  It was Keynes who argued that the Classical Economics which ruled much of academic and political thinking on the subject no longer worked.  His exact words in the brief Chapter One were:

“Moreover, the characteristics of the special case assumed by the classical theory happen, not be those of the economic society in which we actually live, with the result that its teaching is misleading and disastrous if we attempt to apply it to he facts of experience.”

The world has turned upside down more than once since he wrote those words.  Had he been spared two decades longer we can only guess at what revisions he might have made to the structure of his theories and the application of monetary policies that he might have suggested.

In 1936 he wanted to show that employment substantially rested on what interest charges were made and what money flows there were.  Investment followed from these and this would generate the spending that enabled employment.

If the markets could not arrange this or were failing, then given uncertainty and the rest it was up to government to manage its own rates of interest and money flows in such a way as to influence both markets and real activity. 

The underlying assumption was that governments could and would do that if they were to overcome their attachment to classical economics and face down those in business or elsewhere.  This also had the assumption that governments did have this control within their own nations.

What has become clear to some, but not all and especially to those still wedded to the ideas of Keynes, is that this assumption of governments being able and willing to act effectively is no longer tenable.  In short what Keynes said of classical theory now applies to his own.

The reality has been that governments ceded control over the quantity of money and the direction of its flows to unregulated markets that went global beyond any real control.  Moreover, it is now clear that the big banks who managed to survive did so by taking control of effective interest rates.

“Investment” is now muddled up with “consumption” and often any spending that adds to money circulation is deemed to be invested.  In any case we are all too aware that the main feature of much government and connected “investment” is a dead loss and has no economic return.

It is often just a series of short term popular “quick fixes” or delusions to keep the media happy.  Consequently, the type and amount of employment that results does not meet either the numbers or the real economic needs required.

So what we have been taught in the last few days, if we did not already realise it is that there cannot any longer be any “general” theory or coherent explanation of what is happening. 

Least of all can governments make any effective decisions because they are prisoners of the global markets which are controlled by nobody except the madness of crowds.  The City of London has become the Bedlam of banking.

The picture above is “The Ship of Fools” (see Wikipedia), painted by Bosch in the last decade of the 15^th Century.  It is an allegory now being quoted widely on the web.

How Not To Run A Bank In One Easy Lesson

On the 17^th September 1948 the Indian Army and Air Force launched an assault on the State of Hyderabad to dethrone the monarch, Asaf Jah VII, Mir Osman Ali Khan. 

It ended the resistance of one of the last major rulers of one of the Princely States of India who had direct allegiance to the British Crown.

The Nizam of Hyderabad (see Wikipedia) had perhaps hoped that other Princes and rulers would hold out against the new India and retain control over their territories and that the British would honour their various treaties and agreements of the past to support the Princes.

In February 1949 the Government of India finished the job by nationalising the estates of the Nizam and later dismantling its political structure into three separate parts. 

Neither the other Princes nor the British Government offered the Nizam any help or support.  The UK media was decidedly unsympathetic.

As this blog goes in for grim ironies and ghosts from the past to see that the problems at RBS/Nat West/Bank of Ulster are said to arise in Hyderabad from some botched IT work causing a cascade of breakdowns in their systems is another notch on the butt.

My mistake was to comment on this to someone close to me.  As this person has had long experience in banking notably in back office work and operations control strong opinions were forthcoming. 

Whilst the key error may have been made by a humble minor employee the view was that this major failure should not have happened. 

What was at fault was not just higher management in Hyderabad but the whole ethos and systems of management at the head office of the bank. 

The top management in its own field of activity in the past went catastrophically bust and clearly when it came down to the hard work, making sure the ordinary service banking bit worked, they proved to be useless.

It is no good calling for this lot to be nationalised.  They already have been.  This is “our” bank that failed in its basic functions. 

Is it time for a fundamental restructuring of this group of banks and should it be done as soon as possible?

Given the uncertainties plaguing the financial markets the failures at RBS etc. could have started a run on the bank.

Migration And Muddle

There has been comment that the Rio conference has gone for “economic growth” rather than the inconvenient 1992 decision to pursue the will o’ the wisp of “sustainability”. 

Well, of course as the population of the world rises and as more fiat money is pumped out to deal with the consequences all the figures will indeed show “growth”.  The trouble is that this will not be equally shared.  The other problem is that the “growth” may not be half enough to cope with the consequences.

Over a decade ago I was at a session at the LSE where someone expert in the study of the environment was trying to explain what he understood by “sustainability”.  He did this by using the idea of the “footprint” of major urban areas on the world and the amount of resources and effort needed to sustain each and any of them.

He suggested that the competition for the earth’s resources was likely to increase and as these were not distributed evenly this had implications.  Given the history of the world in the past this meant that uneven distributions of apparent wealth and access to resources generated activity that in many cases was far from peaceful.

In the absence of effective world government or any hope of it and given the rival needs and ideas in the existing political structure it was inevitable that a good many stresses would develop and conflicts arise of both states and interests within states.

One area of probable difficulty would be the movement of people and in some cases populations and the impact it might have.  He skirted this issue delicately, but did say that one way or another the nations heavily involved in foreign trade and finance would be at the centre of this, in short the UK had a problem.

During the questions up popped a lawyer from over the road at The Temple to declare that as far as the UK was concerned there should be no question of any control of immigration and that it should be unlimited.  This was in pursuit of the ideals of human rights and free movement.

He was adamant that we could and should afford it.  The speaker made some generalised comments and moved on quickly to the next question.  The lawyer concerned was very well connected and it was wise not to offend him.

This appears to have been the mindset of the small group central in the Labour government of 1997 to 2010.  There are two key aspects to this.  One is that it did not seem to occur to any of them to run the numbers or look at the realities.  The other is that this occult wish fulfilment to transform us all was born from a long past.

If you take those areas of the world that were once the Empire, add up their populations and then add some other places from whom people may want to move for various reasons and you have a lot of people, call it between two or three billion.

Consequently if only quite small minorities from all these places head for the UK then this country is looking at some big figures relative to the size of its population.  The UK has a free on demand health service, a generous little controlled benefits system and a social housing policy that is attractive to incomers.

If the countries from which these minorities move do not have these advantages and on the whole are much poorer with limited urban and social facilities then the UK will have a strong attraction.  Once established the chances are that these minorities could then grow rapidly in numbers of incomers.

How we have arrived at the present situation has a long history.  It begins before Empire with the wars of religion when it was a matter of faith to welcome Protestants and others.  During Empire the education of our elite was based on the ideals of Ancient Rome and its ideas about citizenship.

Alongside this other political groups were attracted to ideas about internationalism and the working classes and in diversity of culture.  Some sixty years and more ago I became acquainted with these ideals through the Council for Education in World Citizenship. 

During the 50’s and into the 60’s many Conservatives were still bound by notions of Commonwealth, the Sterling Area, world influence and all the rest.  On the other hand many on the Left were committed to other ideas about internationalism.

Consequently, encouraging immigration appealed to many on both sides.  On one there was the added attraction of cheap labour undermining the Trade Unions and on the other the idea that the newcomers would necessary be socialist in their views and confirm the inevitability that the Left would win the class war.

From this the present muddle has arisen.  Especially in that in the last two to three decades the politicians have become increasingly unrepresentative of either the old working class or that middle middle and lower part of Britain and its commerce. 

It was in this situation that a small doctrinaire group of people bought by big money allowed the existing situation to develop. 

So in a state with a n adverse balance of trade, too dependent on the movement of hot money, that does not feed itself, is heading into an energy crisis and whose public finances can no longer cope with the increasing demands of social expenditure we do not really know what we are doing.

Or why, or what might happen, or when it will happen or how it will affect us.  One thing is certain and that is that the global economic “footprint” of London now is a lot greater than it was in 1997.

Lead Us Not Into Temptation

One of the occupational risks of being an Archbishop of Canterbury, who signs himself Cantuar by tradition,  is choosing as a role model Thomas Becket (see Wikipedia etc.) when you go about offering advice and making the odd moral judgement. 

Given that to be non-judgemental is a highly regarded feature of modern society this presents difficulties, especially when faced with uncomfortable facts and intractable problems of decision and behaviour.

Our current Cantuar, but not for much longer, Archbishop Dr. Rowan Williams, a very learned man, seems to have been spending a too long contemplating at the location of the long destroyed shrine of St. Thomas A’Beckett, also Thomas Becket.

In his valedictory book, he is said to have rubbished David Cameron’s vision of The Big Society and moreover blamed the savage spending cuts for all our present troubles. 

As one of the major areas of cuts is defence in order to keep up the NHS spending, personally my thought is that turning swords if not into ploughshares then into pharmaceutical products is a worthy aim. 

Especially when my prescription is due and I read that the NHS is selling off pills to balance the books at the cost of failing to supply them to its own patients.

This Big Society thing has been knocking about in political circles for some time now.  The Blessed Tony Blair genuflected to it, as did the Martyr Peter Mandelson, never mind Prebendary John Prescott or Canon Balls.  Cameron’s version is just as woolly and improbable as any of them.

The public sector spending and debt has been going up despite the attempted revisions in spending levels in some sectors.  These are not so much “cuts” as intended extra spending forgone or capping some spending or in some cases a retrenchment in other spending that has been increasing rapidly.

This is not the “cause” of the issues and debates.  What it derives from is one of major international financial crises in history which is ongoing and will be with for at least another decade and perhaps longer if events dictate it.

When we look back at the longer past it is too easy to do so on the basis of our recent experience and all the assumptions we make.  In the Middle Ages in Europe the Church, The City of God, then was the public sector with the monarchs and nobles agencies enabled by holy writ deal with the grubbier aspects of the City of Earth.

So when King Henry II recommended to the Pope that Thomas Becket be Cantuar he may have thought his successful former Chancellor would be under his influence.  But it soon emerged that Becket had his own agenda and would be a man of the Church and God and not the earthly King.

Consequently, when The King wanted Becket to come to his court to explain what he was up to and Becket refused this triggered the expedition of the four knights to bring him in to answer a few questions.

An essential problem was that in its earthly operations the Church was just as predatory and grasping as any noble notably when it came to land and property. 

Cantuar had four palaces between Canterbury and London, each a day’s journey and each of those had to be maintained by the income from lands around.

Moreover when the cash came into Becket’s hands we was prone to parading around in front of the peasant pilgrims showering them with silver pennies.  This does not sound much but then one penny could be a years rent or dues. 

Taking money from those who earned it the hard way only to fling it at the undeserving claimants to gain support and popularity was not very popular with the taxpayers.  Does this sound familiar?

One of the knights, Reginald Fitz Urse, had land at Wrotham between the palaces at Otford and Maidstone which was taken from him by the Archbishop’s legal sharks, possibly faking documents at which the clergy were very skilled in property cases. 

The others, Hugh de Morville, Richard le Breton and William de Tracy each had their own issues.  As we know the attempted abduction was botched and in the ensuing fracas Thomas Becket was killed. 

The Church was quick to blame the King and he was faced with a prime public relations disaster and the risk of excommunication with all the problems of Church legal status that would follow from that for his family.

At present, with the Anglican Bishops at risk of losing their seats in the House of Lords this is not quite blood on the sanctuary floor but the Church of England and Cantuar in our rather little society are at risk of being one of the sideshows of history.

Unlike the Shrine of St. Thomas at Canterbury in the Middle Ages where it became a major profit centre and a good source of reliable cash flow into the Church sector.

Two Years And What Changes?

This is another retrospective post.  This one appeared in June 2010 under the heading of “Jumping Beans” commenting on the then Deputy Governor of the Bank of England and his suggestions about how we should beat the bust.

Not a lot seems to have changed in that time and it seems to be getting worse.

Quote:

In 1961 the year the Berlin Wall went up and “West Side Story” and “La Dolce Vita” hit the screens, Viv Nicholson of Castleford in Yorkshire won the pools for the huge amount of £152,000 (say 40 detached houses in Tunbridge Wells) and declared she would “Spend, spend, spend”. 

For this she was excoriated by the press and from pulpits.  Sound and moral men told her to save, exercise due economy and to invest wisely to gain a reliable income and by doing so set a good example to her class and community.

Evidently she was a lady ahead of her time.  Today she would be regarded as a potential member of the board of the Bank of England and Charles Bean, the Deputy Governor would be praising her economic wisdom and sense of moral purpose.  Vince The Mince and Ed The Red would be hanging on her every word.

Avoiding all the very obvious jokes about Mr. Bean I understand he has told us all to loosen up on spending, take on extra credit, forget saving or run down those you have and for that matter draw down on capital perhaps by extending mortgages or going in for some fancy equity release caper. 

All that is missing is a big poster with the little children looking up at a pensive father and asking “What did you do in the Great Recession, Daddy?”

Perhaps I should take Mr. Bean to a quiet room, play calming music (not Mozart or Beethoven, they both died broke) and explain things to him gently in a soft voice and gentle manner.  Then I might clobber him with the shillelagh I keep to welcome door to door salesmen and debt collectors just to make sure he gets the message.

Firstly, my income has suffered steady deterioration in the last few years almost entirely due to the relevant indexes being fiddled to understate real price rises for the bulk of the population. 

Also, the way in which major financial entities now govern how companies operate to achieve very high and ever increasing rates of return on their highly leveraged investments has impacted in all sorts of ways on many of our basic expenses. 

Mr. Bean and his little friends gave up the idea of regulation without realising how they would impair basic consumer spending and saving.

Secondly, despite not taking foreign or indeed any holidays recently my savings have also depreciated in real terms because interest rates governed by the Bank have not reflected the realities of the markets. 

The interest on any credit etc. that do relate to market conditions are still way too high for any rational man to take them on.

Indeed, I have been on my own personal tax avoidance scheme and refusal to obey the advice of my masters.  We have simply stopped spending on almost all goods that carry VAT or not absolutely essential to basic functioning.  Also, we have cut our activities and therefore car and out and about expenses quite radically. 

We can manage quite well without all the heavily advertised consumer stuff that people are urged to fill up their supermarket trolleys with.  Yes we spend more time doing things that most people no longer do, like eating leftovers and preparing foods by hand rather than buying packaged versions. 

Economies and activity that were routine for earlier generations but forgotten now have been reinstated.  Threading needles and not throwing away is now something we are doing a lot more often.

Sorry, Mr. Bean, no can do.  We are already closer to the margins than we want to be.  If things go badly for us there will be no help from a shattered state machinery.  If I were fool enough to do as he suggests then I would in the same sort of trouble that so many have endured.

It was precisely the spending and credit ideas that he is recommending that have broken so many families, ruined so many others, caused so many repossessions, have put people into debt slavery for the rest of their lifetimes and reduced so many pensioners to penury.

Is this his vision for Britain’s future?

Unquote.

Can the expansion in the number of pawnshops and the scale of their activity be helping “economic growth”?

We do seem to be eating more beans.

Hearts And Minds

The article linked below from Science Daily offers the theory that love and romance and all that is all in the brain and the heart has nothing to do with it.

There you go then, another fond, if I may use that word, notion that us humans have entertained for a very long time turns out to be wrong.

Somehow if “You Are My Heart’s Delight” is now “You Are My Brain’s Delight” it doesn’t sound the same.

As for “My Heart Cries For You”, oh dear.

http://www.sciencedaily.com/releases/2012/06/120620101011.htm

If you really want to give the brain a workout preliminary to your next romantic venture try this one below for size, from Naked Capitalism on Quants Models and the Blame Game.

It is about how a love for shapely figures led to the disasters in the financial services markets.  The key statement in all this is that “Decision makers really want simple heuristics.” 

This is perhaps the point at which the two items find common ground.

http://www.nakedcapitalism.com/2012/06/quants-models-and-the-blame-game.html

They’ll be trying to tell us next that the blood circulates.

Filling Up The Tank

Apparently the Wall Street Journal (pay walled) yesterday commented on the G20 paper concerning the regulation of transactions and reporting in the oil markets.  The nub of it, according to Naked Capitalism was that the regulators had wimped out of taking the financial trader boys in oils on to assert the need for transparency.

The supply of oil is the bloodstream of the world economy.  It is a highly complex collection of businesses that are interdependent and function at a high level of interaction.  Beyond that both almost all agriculture and most industry is critically dependent on oil supplies and the relevant markets.

This means that the money is attracted to it and that the monetary systems of the world are integral to it in ways that very few people understand at all levels.  If within those monetary systems the trading in and therefore the pricing of oil is governed by a small number of expert traders and speculators there is ample opportunity for problems.

These can impact on everyone and all the economies and almost all human activity.  But in the turmoil of recent years the oil prices and their trading at times has been become chaotic in form.  This means that the dependent economic policies of very many states can also become chaotic.

One web site mentioned often in this blog is the Oil Drum where a number of experts in the field of oil production can publish their findings, opinions and theories.  There is a lot to debate and to disagree about and this is reflected in the content.

Very recently in the UK there has been a issue over the shutting down of the Coryton Refinery in Essex which entails the loss of many jobs at the site and others in the local and wider community. 

The UK main media has concentrated on this and whether the government should have nationalised the plant or bailed out the loss making owners.  There was less comment about the need for around £500 million pound of work needed for updating and safety reasons.

But the issues are much greater than that and much more complicated.  The link below is to a 4500 word article on European Refinery problems.  It is not easy reading but it tells you a lot.  Below that is a quote from the text that gives the key to the issues involved.

http://www.theoildrum.com/node/9193#more

Quote:

The Source of Pain for European Refining

What is wrong? What has happened? The malaise in European refining has not happened overnight. The reasons are deep rooted and come from a number of causes:

Lack of profitability and therefore under-investment over decades.

High end use pricing due to taxation making up more than 50% of retail cost of transport fuels The refiners have been unpaid tax collectors.

Changing fuel specification standards, especially with respect to sulphur and aromatics

Change in product mix which does not now fit the historic refinery configuration.

Growing US gasoline exports making the European gasoline surplus more and more difficult to dispose of.

Biofuel blending especially with ethanol into the gasoline pool.

Carbon Emissions and ETS (emissions trading scheme).

Put together, the causes have made for a miserable 2011 and many refiners are either losing money or are barely profitable, and this is before they start paying for carbon emissions.

Unquote.

This is at the large scale end.  Down at local level there is the small scale, notably the filling stations owned by small businesses in less populated areas.  One good example of a closure last Autumn is this one in Scotland.

http://www.ellontimes.co.uk/community/local-businesses/ellon-garage-set-to-close-1-1905242

Ellon is in Aberdeenshire, just north of Aberdeen, the home town of the Scottish oil industry.  At present Scotland’s future is being predicated as a form of independence that will be funded by the oil industry and related financial operations.

This might not be as easy as the politicians suggest.  Moreover, for the Unionist’s there is another problem in that the Scottish oil industry in the not too distant future may turn out to be less of an asset and more of a liability.

If indeed the oil industry and the pricing of its products and management do go chaotic then nobody can know what can happen or where or what the effects may be.

It is said that there are now 50,000 Russians in Cyprus.  How did that happen?

The Debts Are Due

We are told that in the USA around half those recently graduated are either not in employment or engaged in work that does not require graduate status.  I know the feeling; at one time I was the highest qualified parcels porter on British Railways. But at least I was clear of debt.  


In those days credit was not available to the likes of me or my kind.  Unluckily, in the USA today it seems that the total student debt is running at $1 trillion or thereabouts. Quite what it is in the UK is less certain.  


However, the jobs market is not good at present for many graduates and there are few who do not have debt of some kind.  Apparently, there are many whose future in the next decade or two will be compromised by debt incurred as students. 


Allied to that are the reports that many UK household are one nasty or unexpected big bill away from trouble and the overall levels of purely personal debt are said to be a liability to increasing consumption or “investment” in motor cars or the latest gizmo’s to hit the market. 


It is not too difficult to see what may be happening and that is a sea change in the whole jobs market, the kind of jobs to be done and who are available for it.  Sadly, few of us do see this or accept that the world has turned upside down.
 Then there is government debt, much discussed and rising.  


Then there are the stratospheric levels of international debt and other states in difficulty.  Then there is all the banking and financial debt, much disguised.  To finish then there is all the corporate debt, the immensity of whose figures has yet to be revealed. 


In their widely read book “1066 And All That” Sellar and Yeatman stated categorically that “The National Debt is a very Good Thing and it would be dangerous to pay it off for fear of Political Economy”.  They were joking and the laughing soon stopped. 


Shakespeare in “The Tempest”, written around 1611 when the scale of the spending in London by King James VI of Scotland and I of England was becoming apparent has his own guarded comment.

James was fond of masques and theatrical entertainments based on fantasy and borrowed money.


 Quote: 


Our revels now are ended. These our actors,
As I foretold you, were all spirits and
Are melted into air, into thin air:
And, like the baseless fabric of this vision,
The cloud-capp'd towers, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit, shall dissolve
And, like this insubstantial pageant faded,
Leave not a rack behind. We are such stuff
As dreams are made on, and our little life
Is rounded with a sleep.

 Unquote.

Pictured above is The Debtors Prison by Hogarth from “The Rakes Progress”.  He knew Oliver Goldsmith, who knew the Marsh family, who were from the Cotswolds and married to the Aylesbury family who were married to the Somervilles who were Shakespeare’s best friends in Stratford. Like debt, all things are connected.  


Sleep well.

Illusions And Delusions Of Grandeur

On Wednesday 6 June, this blog in “The Government Is To Grow Turkeys” mentioned the idea of “Growth Bonds” being a kind of latter day “War Bonds” of unhappy memory.  It has taken nearly a fortnight, but today one of the Red Gobblers of the Left, Polly Toynbee has declared her support for the notion.

At the same time a division of opinion has arisen between our David Cameron, the Wayne Rooney of politics and President Francois Hollande, the Eric Cantona of the French.  It is that Dave suggests that increased taxes on the rich will have them fleeing to London for shelter, perhaps emulating the Huguenots’ of the past.

Francois demurs as the French do and claims that true patriots amongst the rich will pay up, perhaps crying “Aux Armes, Citoyens” on their way to the tax office.  Alas, for both of them, all the French rich that could move their wealth have long gone, perhaps crying “Marchons, marchons” as they did so.

A quick look at a map of Europe might suggest why.  Monaco is an enclave of France, not too far along the road from St, Tropez, Cannes or Nice and you can meet a good class of Russian there these days, albeit some of them have British hangers-on from Westminster on their yachts from time to time.

To the north is Luxembourg, recently featured because of its lovely tax wheeze for UK corporations in need of mega bonuses.  To the east is a larger place called Switzerland and to the south a smaller one, Andorra. 

These places are not stand alone entities.  They are part of a complicated network of other locations offering substantial tax advantages.  One key part of this is the City of London.  So much of the off shore French money may well be going through London in any case as it flits from one computer to another.

But Cameron is not thinking of this kind of investment.  To nobody’s surprise he is talking about the London property market.  As the UK does not have a property tax as such this is one advantage. 

Others are the ability to evade Stamp Duty, the paying of Council Tax, in any case loaded in favour of high value properties or indeed the need for the registration in the UK to divulge the real owner.  Add to that the real matter of which Probate Law and inheritance issues might apply the UK has great advantages.

In this context what Polly is proposing is fully in support of all this.  Basically, Growth Bonds will enable the Government to extract loans at one rate of interest to allow Quantitative Easing to banks at a lower one, who will buy up many of the bonds, thereby instantly reducing their liabilities, with the taxpayer as security.

Along with this will the encouragement of lending for “Growth”.  The major field for this will be housing and other sectors of the property market, which is where we came in.  The chattering classes as a whole are heavily committed to property. 

If Polly were to reveal her holdings of wealth we could then judge if she is one of them.  There is no more chance of that than finding out where David’s money is.  As for Francois it is claimed that he owns some flats on the Cote d’Azur but that story was quickly buried.

There is one major snag to all this.  Polly has said that Europe is awash with wealth that can be used as the backing for such bonds.  But that “wealth” is denominated in money terms. 

Indeed, much of it is invented, or fiat money and beyond that a host of financial instruments based on that illusionary money constitutes a huge theoretical “wealth”. that is supported by only a small proportion of identifiable holdings.

Everything else, property, savings, investments, goods, services and everything relates to its money value.  If the money values collapse, one way or another, then the “invented” wealth simply evaporates and what might be real wealth is sharply reduced both in money and real value.

This might be about to happen.  In the meantime at the G20 meeting in Mexico, one of the most corrupt and criminal states on the planet, Europe is blaming America for the problems.  As America is already blaming Europe it is understandable.  That not only both are to blame but a lot of others as well they are all wasting their breath.

“The charter of thy worth gives thee releasing;

My bonds in thee are all determinate.

For how do I hold thee but by thy granting?”

Shakespeare had property in Stratford upon Avon, some of it burned down later following a major fire that swept through the town.

I've Got A Gal In Kalamazoo

Tottering through town, stepping gently around the holes dug by essential services through all the expensive newly laid granite blocks in the costly revamp of the roads and pedestrian areas, it was impossible to avoid the windows of the estate agents.

The prices of properties are now one hundred times, roughly, what they were when I first looked in agents windows seeking a first home on what at the time was around average salary.  Do not mention the word “inflation” if you want a polite conversation.

As well as the amazement at the fortunes asked for some decidedly iffy homes there were investment opportunities.  Some were in the USA quoting a guaranteed rate of return of around 14% for the lucky buyer. 

Guaranteed, that is, depending on the rental being paid, relative pricing being secure, what might happen with local property taxes and above all, the comparative rates of inflation in the USA and the UK as well as the exchange value of the pound against the dollar.

The properties are located in the State of Michigan in the USA.  This is in the North and has the advantages of easy escape to Canada if necessary and should Prohibition be reintroduced unlimited scope for profitable enterprise.  In a decade you could become a second Joe Kennedy.

They were substantially built colonial styles houses, detached, with three bedrooms and a garage and decent sized gardens.  They looked to be the kind of very decent ordinary family homes that much of Middle America might aspire to.

Yet they were priced at £30,000 each.  Looking at comparative UK properties on sale through the same agent, depending on location and condition, you would expect to be paying £240,000 to £300,000.  That is eight to ten times more.  Also, mortgages were available.

Avoiding a long analysis of incomes, conditions, the problems in the mortgage sector of the USA and a lot of other complex economic issues, all well discussed around the web, clearly there is something very badly wrong going on here.

How come the houses in Michigan cost so little that in the UK they are on sale at give away prices?  How come the cash prices in the UK are now so much that a middle income family may need six or seven times income to buy the British equivalent?  Fifty years ago they were more or less on a par at two to three times incomes.

So if you do not believe that economies and finances are now out of joint around the world this is a practical demonstration that they are and the implication is that one way or another there has to be another major reordering of the world economy soon.

So while the USA goes through a messy election campaign as the roof falls in, in the UK market the financial authorities are pushing as much money into the property market as possible with the added inputs of hot money from Europe and elsewhere.  Something has to break.

The picture above is of President Obama giving a speech at Kalamazoo Central High School, I could not resist the yawn. 

If you want entertainment go to the Youtube 7.43 clip of the Glenn Miller band doing the “I’ve Got A Gal In Kalamazoo” routine from the 1942 film “Orchestra Wives” which features an astonishing dance routine by the Nicholas Brothers.

Back then, most of us in the USA and the UK were renting with ownership just a dream.  Now most of us are dreaming again.

Trooping The Culandar

Needing a cup of tea and to check the news on text I realised that Trooping The Colour was on TV and thought to watch. 

Luckily, it was not long before  the marches “The Garryowen” followed by “Hieland Laddie” came up.  Later there was “Blaydon Races”, so that’s Newcastle United relegated next season

How many people spotted “Prussian Glory”, featured on this blog a while back referring the King Frederick The Great of Prussia?  Was this a secret message declaring to Angel Merkel von Mecklenburg support for her version of the Euro project?

It has been announced that the Army will be reduced to a target total of 82,000 troops together with other Defence “management” arrangements.  If this is correct then the Diamond Jubilee parade signals the end of the UK Army as an effective striking or defence force in any long term context.

An Army consists of those who are either in action or immediately available, equipped and organised to be deployed.  Then there are the units who have been in action or are being stood down for remanning, retraining and equipping.  If the Army has been seeing real action this latter group will be larger.

Before all that there are those who are in training and preparation for future deployment.  Today, this takes a lot longer than in the past because of the highly technical nature of much of the Army’s work and the complexity of the systems in use. 

Another group will be those doing and managing the training and equipping and beyond that yet another group doing a number of other tasks essential to the functioning of the whole.

Quite how many should be in each category is difficult to calculate and there is often a fine and variable balance.  Managing this successfully is a real challenge and accounts for the long chains of command and extensive needs. 

Additionally, an Army cannot be maintained on a “just in time” basis, so spare capacity is necessary at each level to cope with the potential and actual challenges.

So at the 82,000 level predicated by the Government the actual size of the active element will be only a small part of the whole.  During World War 2 it was common to suggest that for every seven men only one would be at the front.

Even allowing for out sourcing and some handing over of duties to civilians it means perhaps only ten to fifteen thousand active front line troops at any stage. 

This is not enough to defend the UK, especially if any are engaged in overseas missions of one kind or another.  Additionally, it means that in any venture abroad even relatively small numbers used will constitute a major commitment.

All this refers to outside action and commitments.  We forget history and that the Army once had a major internal commitment to maintain order in support of local police and volunteers.  We are assuming that there is not likely to be any problem when it is becoming clear in some districts that the armed gangs are taking over.

There are signs that this is not the case and in many areas police cover is not and cannot be enough to do the job if it really does get bad.  Some are calling for “armed police”, but these effectively are just an Army by another name.

Politically, however it is very difficult to either arm the police or admit that the situation in some districts may become so bad that force may be necessary to restore law and order.  I will not say protect property because the government has already given up on that objective.

A culandar is a word for a kitchen item that is essential for straining certain kinds of food and is more substantial than what is called a strainer.  The UK Army will soon become a useful but small and limited item in our system of government, with a limited function and unable to do the big jobs.

The picture above is “The Retreat To Corunna” which occurred in late 1808 and early 1809, the number of soldiers you see would now be a high proportion of the active numbers envisaged by the present government.

In the case of Corunna however, the British were soon back in Portugal and Spain with a much larger force under Arthur Wellesley, later Duke of Wellington.  In the 21^st Century as things stand the British will not return  anywhere.

Even in their own back yard.