Irish Mists In Economists

This story possibly has been going around in one form for another for a little while. As the one that arrived in my mail box was based in Ireland, I repeat it below.

It is something that might be told to each other by misty eyed Irish and other Keynesian economists in the hope that there are angels out there somewhere. But it is possible that the reality may differ.

So first I give the tale and then I give one which may be much nearer the truth in these difficult times. On BBC News a few minutes ago from Dublin dealing with new budgetary measures an Irish presenter commented “The government has a majority of roughly two.”

Quote:

The Tale Of A Tourist:

It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the pub.

The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

Unquote

In reality the course of events in Ireland would be more like this:

The hotelier uses agency staff paid cash up front. In any case the account manager at his Irish bank has laid down stringent conditions for the repayment of any credits and the butcher is low on the list.

The butcher is now a franchise in a just in time international meat firm. Unluckily the software supplied to him has crashed and he is unable to function. The firm sources its meat from Poland. It is flown into Knock where Hail Mary’s are said over the pallets and then repackaged as Organic Irish Vintage Meat.

The pig farmer is in difficulty. He knocked down the old house to replace it with a ten bedroom Florida style mansion on a mortgage of ten times his gross earnings from a Scottish bank funded from Iceland. He overstated his earnings to get the mortgage.

The farm is now a collection of intensive rearing sheds built on an EU grant coupled to a private equity deal. The financier was hoping for a 25% rate of return on the investment. The meat prices are now undercut by Polish and Venezuelan suppliers..

The Co-operative changed from being Mutual to a limited company. It was then taken over by a UK combine who sold it on to a New York property speculator who also sold it on. Ownership is now in dispute between a finance company in Hong Kong and an Australian Media Group looking to diversify.

The publican lost his trade because of smoking bans and high taxes on alcohol and his inn is now a clandestine money laundering and people trafficking centre.

The local prostitute has founded an employment agency which charges unusually high fees for supplying female secretarial assistants and personal aides to Members of Parliament in the United Kingdom.

This is the agency that also supplies the hotel staff.

The German tourist’s wealth which allows him to afford to travel in Ireland comes from the bonuses arising from his work as a consultant corporate lawyer in foreclosure and insolvency cases.

He tells the hotelier that he will be receiving a visit from the Russian Debt Collection agency he employs in difficult cases.

End

My Great Aunt Lily (born Elizabeth) ran a hotel in County Kildare when she married an Irish hotelier. So which version are you betting on?

Topshop Bottom Dollar

When the rent-a-crowd demonstrators and more modern flash mob media grabbers take to the streets, I often wish they did not because they more often confuse the issues and lead the debate into directions it should not go. The recent events relating to tuition fees for students and Sir Philip Green’s Topshop are both cases in point.

Polly Toynbee was amongst those at the Oxford Street Topshop but perhaps she was simply looking to get a good price on the Topshop offer of a Nude Love Panel Body, Animal Flippy Shorts and Pink Mesh Swirly Sequin Sleeveless Crop Top for the Guardian Winter Solstice Party.

The problem with tuition costs is university financing as a whole and the level of provision that there should be. The students and some politicians who really ought to know better who assert that it should be “free” are talking nonsense. Nothing is “free” in our modern money based world there are always costs that have to be paid.

The costs may not be obvious. The old economic concept of “opportunity cost” has been forgotten. The cost of me sitting here doing this is the other things I might have done, some of which might entail earning money or services or goods in exchange for whatever I did.

What the students and their supporters claim is that others should be paying for their university education either in full or in part. At the same time we have been led to believe that some 50% of our labour force should be graduates. So where was the money to come from? Not only should they be graduate, but it should be the norm for them to be away from home.

So they leave spare bedrooms back in one place and now large areas of rented housing are student dominated. Does nobody see the economic costs of this alone for broader society? We have the same people complaining about the shortage of housing, yet the size and nature of higher education is one of the factors in creating the shortage and driving up rentals.

Then there are the ghosts at the feast. There is little or no suggestion of any parental responsibility or for that matter of grandparents, some of whom are property rich as the beneficiaries of past inflation. Most students are “poor” in the sense that they have no earnings or title to wealth yet but in many cases the families are not.

The complications in any grant system are how much, to whom and on what basis. In the grants systems of the past, theoretically based on parental ability to pay, there were many curiosities. Those in regular PAYE and ordinary jobs would be supported according to size of income.

But this did not differentiate between those who had started with nothing who were caught when they most needed to save and those who already had certain holdings. Moreover, parents whose “income” was what their accountants said it was after some creative work could be made to be income poor.

I recall one landed family with a large estate whose student youngsters were on full grants as well as many business men who were either self employed or owners.

One way or another it involves the taxpayer, or rather those paying tax. This brings us to Topshop. Sir Philip Green, much admired for his business acumen, has been picked out for attention. He did well in riding the heights of our recent debt driven consumer boom. Now he is asked to help us all take the fall.

The trouble is that along with very large numbers of other wealthy people he has benefited from the money changing industry that has allowed the most wealthy to make tax payments in the UK largely optional. The distinction made, of which Pecksniff would be proud, between “avoidance” and “evasion” in this complicated field is technical.

Our previous government allowed the creation of a very large financial industry devoted to tax avoidance/evasion as well as encouraging foreign ownership of UK assets that had much the same effect. At the same time it did little about evasion amongst the very rich. The present one seems unlikely to impact on this.

The irony after the football fiasco in Zurich of Nestle moving its newly acquired subsidiary Cadbury top management elements to that town for tax purposes seems to have been lost on much of the media.

Because I recall the pernicious and damaging effects of high taxation of the post war period which lasted until the 1970’s I believe in the objective of low rates of taxation. But I believe in all those earning in the UK and from UK assets being obliged to pay their share for the common good.

If the high earners and the wealthy are absolved then clearly the lower income groups are going to have to endure rather higher levels. If this is the case then the implication of this is that the lowest earners, many non-graduate will be paying a disproportionate amount to support the higher education sector.

It is from this sector that some of the future wealthy is likely to emerge and on the present pattern a goodly proportion of them will not be paying much UK tax.

Something here does not quite fit. Paradoxically, amongst the demonstrators are many who are likely to benefit most from the situation at the expense of us all.

I hope Polly got a good discount on her store card. She would need it if she was paying interest on the account, which is one reason why Topshop was doing so well.

Chips Without Fish

In looking at those resources that have peaked in production and will either decline in terms of actual totals or in relation to expanding demand there is this 576 word item on fish.

The issue is not new; there have been anxieties and action in recent years that have had a major effect on the UK fishing and allied industries. What the article does is to claim that the catch has now reached its limit.

What is annoying is instead of sticking to the issue of sustainability in terms of the rate of extraction the article mentions climate change. This is another matter and can confuse the debate on the actual fisheries policy.

If any other issues are mentioned they might be what is happening to fresh water fisheries and the increasing levels of contamination in those and in the oceans.

Quote:

E Science News - Published: Thursday, December 2, 2010

'No fish left behind' approach leaves Earth with nowhere left to fish:

University of British Columbia researchers
Published: Thursday, December 2, 2010

The Earth has run out of room to expand fisheries, according to a new study led by University of British Columbia researchers that charts the systematic expansion of industrialized fisheries.

In collaboration with the National Geographic Society and published today in the online journal PLoS ONE, the study is the first to measure the spatial expansion of global fisheries.

It reveals that fisheries expanded at a rate of one million sq. kilometres per year from the 1950s to the end of the 1970s. The rate of expansion more than tripled in the 1980s and early 1990s – to roughly the size of Brazil's Amazon rain forest every year.

NB: View the study at http://dx.plos.org/10.1371/journal.pone.0015143.

Between 1950 and 2005, the spatial expansion of fisheries started from the coastal waters off the North Atlantic and Northwest Pacific, reached into the high seas and southward into the Southern Hemisphere at a rate of almost one degree latitude per year.

It was accompanied by a nearly five-fold increase in catch, from 19 million tonnes in 1950, to a peak of 90 million tonnes in the late 1980s, and dropping to 87 million tonnes in 2005, according to the study.

"The decline of spatial expansion since the mid-1990s is not a reflection of successful conservation efforts but rather an indication that we've simply run out of room to expand fisheries," says Wilf Swartz, a PhD student at UBC Fisheries Centre and lead author of the study.

Meanwhile, less than 0.1 per cent of the world's oceans are designated as marine reserves that are closed to fishing.

"If people in Japan, Europe, and North America find themselves wondering how the markets are still filled with seafood, it's in part because spatial expansion and trade makes up for overfishing and 'fishing down the food chain' in local waters," says Swartz.

"While many people still view fisheries as a romantic, localized activity pursued by rugged individuals, the reality is that for decades now, numerous fisheries are corporate operations that take a mostly no-fish-left-behind approach to our oceans until there's nowhere left to go," says Daniel Pauly, co-author and principal investigator of the Sea Around Us Project at UBC Fisheries Centre.

The researchers used a newly created measurement for the ecological footprint of fisheries that allows them to determine the combined impact of all marine fisheries and their rate of expansion.

Known as SeafoodPrint, it quantifies the amount of "primary production", the microscopic organisms and plants at the bottom of the marine food chain, required to produce any given amount of fish.

"This method allows us to truly gauge the impact of catching all types of fish, from large predators such as bluefin tuna to small fish such as sardines and anchovies," says Pauly.

"Because not all fish are created equal and neither is their impact on the sustainability of our ocean."

"The era of great expansion has come to an end, and maintaining the current supply of wild fish sustainably is not possible," says co-author and National Geographic Ocean Fellow Enric Sala.

"The sooner we come to grips with it, similar to how society has recognized the effects of climate change, the sooner we can stop the downward spiral by creating stricter fisheries regulations and more marine reserves."

Source: University of British Columbia

Unquote.

All the familiar human weaknesses are displayed here and we have started to pay the price already. By price I mean price because we have seen the substantial rise in cost of our routine fish buying, that has more than doubled recently.

Dancing To A Russian Tune

The blame game has started. It is alleged that it was disquiet about the London Media that made FIFA frit. Heaven forfend! Not only do we have ferocious libel laws with I suspect many of those involved already protected by fierce super injunctions but we have a media already remarkably shy of offending big money men.

In this weird world of London the paradox is that only media organisations with huge financial resources can stand the legal costs. One is Sky, and Rupert is not going to upset his friends. The other is the BBC, taxpayer funded. There is a deep irony in all this.

When I brought myself to watch a news programme, if only to see Orpington cut off from the world, the bit where Blatter, boss man of FIFA, did his Oscar routine was showed. The camera cut to the Russian group and centred on a couple doing a wild hug, as one does.

But tucked away in a corner was the owner of Chelsea and former Governor of Chukotka in Siberia (the only part of Russia to have a bit in the Western Hemisphere, adjacent to Sarah Palin’s Alaska) Ramon “When Did You Last Sack Your Manager” Abramovich who also owns a lot of central London.

He would have been well able to advise Mr. Putin about how to counter the bid from the English FA. But there was another face well known in London just behind who may not have been recognised by many viewers. A gentleman who knows Mr. Putin very well, indeed it is said that they are godfathers (literally) to each others children.

It was Valery Gherghiev of the Maryinsky, Kirov, London Symphony Orchestra and other major orchestras and opera houses around the world. The lady he hugged, who may well have been his wife, was of a build and deportment of that of a dancer.

Valery has had his issues with the London media, specifically those opinionated and difficult to control arty types who have expressed doubts about the effect of his very busy schedule and individual personal organisation on the quality of some of his performances.

This is far from madding crowd of the ordinary news or personalities that attract the most attention, but it is still unwelcome.

Ramon and Valery no doubt would have been well able to stoke up concern about what treatment might be handed out in London. They could certainly tell FIFA about the problems people have simply getting through airports when there is a security flap. Also, getting out again in one piece.

They could remind them of the burgeoning criminality on the streets, the mob riots police cannot fully control, the expense, the unreliability of services, the overall security issues and above all the increasing dirt and discomfort.

They would have advised of the insults, offensiveness and general lack of courtesy endemic in the capital and to be endured amongst its political and media elite.

Last but not least would have been the gentle hints that Russia (and Quatar) had oil, gas, other resources, wealth and influence well beyond that of the bust English and were much better people to be friends with in the difficult years to come.

So instead of Cameron and The Prince we might have been better off sending Sir Simon Rattle and Darcy Bussell. Dame Monica Mason would have put some backbone into the bid. They could not have done much worse and they may well have made a rather better team.

It is December and one of the traditional Arts items of the season is the ballet “The Nutcracker”, and the picture above is that of the Snowflakes scene from the Kirov DVD with Valery Gherghiev conducting.

The Royal Ballet are not doing it this year, to the grief of many of its fans. But Sky Arts did show their version for people to box.

Outside the snowflakes are falling and are not going to go away for some time.

Meanwhile in Zurich the English were nut crackered by Gherghiev and it hurt.

Football Fiasco

In a better and saner world Prince William’s handlers, along with the speechwriter, who made the nation squirm, would be confined to a hulk in the Thames awaiting transportation to New South Wales.

The business in Zurich was a fiasco and those who are in the Heads of State trade should keep away them, especially when they could see it coming if their people had enough wits to analyse the who, what, why, where and when. But they did not, being caught up in that weird strange media world of London where all is fantasy.

If Prince William was going to be seen out anywhere this week the place to be was in some kind of vehicle or conveyance that was defying the elements to help the sick, disabled and vulnerable in difficulties or perhaps helping to ferry medic’s and nurses to the hospitals.

It is becoming clearer by the week that the same kind of celebrity driven media bungling is attending the plans, correction shambles that is likely to be the Royal Wedding. This is not an accident waiting to happen it is a huge pile-up.

He and his fiancé have been an item for some time now. They do not need it. We do not need it. The wise way in 2011 is to have a low key, strictly limited family do in a village church.

The Cotswolds are littered with lovely little churches and if you want something a little bigger then there is one in Cirencester. My bet would be on the simplicity and quiet of somewhere like Edgeworth. If not then one place could be St. Andrew’s, it is where they met and at least Prince Andrew would be usefully occupied.

As for David Cameron, one of the worst things a politician can do is to be in the wrong place at the wrong time. He is beginning to have “form” on this which suggests that either his judgement or his media lackeys are at fault. Given the problems building up in the world he needs to start thinking.

Beckham did what he could but with others scoring own goals he was on a loser. He would have been better off with Sir Michael Parkinson, Nobby Stiles (with or without teeth) and a couple of leading lights from the present or recent England sides who are proficient in media work and can talk.

At least they could lay claim to a football pedigree.

Football Crazy? More Insanity And Stupidity

Am I mad, or just ordinarily deranged? I am looking out of my window at a main road that is now free of traffic. A couple of furlongs away is a railway line that is now silent. The local airports are all shut. The motorway up the road is blocked. The ports to which they go are severely disrupted.

This is not local, it is now happening across much of the UK as communications, communities, public services and ordinary work struggle to maintain any real activity. There is a real crisis here waiting to happen.

What is BBC and Sky telling me? There is a meeting in Zurich to fix the dates and locations for some football matches to be played in 2018 and 2022. In the news this has absolute priority and we are told what interest Spain and Portugal might have and who has spoken to who and which person has made promises to others.

The BBC is taxpayer funded. Why has it not used all its resources to maintain a rolling service of information and advice to the UK concerning the conditions across the country about what is happening where and what people need to know and think about?

It is simply not good enough to tell people to go to the web because what is there is not co-ordinated or full enough to do the job.

More to the point whilst nearly everyone has access to TV or radio very many people do not and cannot use the web. Also, many people on the move cannot use the web.

So what exactly is this meeting? It is being held in Zurich. See my “Racking And Rolling The Swiss” of Thursday 9 July 2009. It is a major tax haven within a tax haven. Many of the most vicious thieving elites of the world have transmitted their loot through here and adjacent Cantons.

Also it is where football’s governing body FIFA is located, made up of a number of self appointed people from…..say no more.

Where is our Prime Minister, David Cameron? Is he in London or Edinburgh or Cardiff or Belfast overseeing the efforts and direction of dealing with the present weather crisis and other crucial financial issues?

He is not, after a fleeting visit for Questions in the House of Commons he has returned to Zurich, not just to check out one of the family Trusts, but to butter up and grovel to the financial elite running FIFA to beg them to stage their football matches in England.

Where is Prince William? Is he out with the over stretched and vital Air Rescue Services we are told he is a key member of? Nope, he too is in Zurich and not just checking out some of the lesser known family bank accounts. He is doing even more grovelling and schmoozing than Cameron around these greasy grotesques.

Add to them the mob of other people, virtually all with serious financial interests in the matter and the well equipped brigade of BBC people, better equipped alas than any of our troops serving abroad and England certainly does expect some return for its money.

And, dear taxpayer, it is you and I who are paying for all this, as we are for the costs of the present weather situation. Also, if the games are allocated to England then we will be paying yet again. None of those doing the talking in Zurich will pay.

None of all the money launderers and other big money people running our Premiership will be paying. None of those very rich people or corporate representatives or politicians yelling Prestige and Economic Growth at us will be paying either.

I repeat, you will pay and the snow is still coming down.

The Eye Of The Needle

In the wonderful 1955 film “The Ladykillers”, see the picture above, set around Kings Cross the gang led by Professor Marcus tries to launder its stolen money through the use of Mrs. Wilberforce, a most respectable lady.

One of the themes is the thesis that the insurance companies won’t really mind, they will simply put up their premiums.

In this flight of fiction the gang ends up dead and Mrs. Wilberforce ends up rich. In our modern world it is not as simple as that.

The Tax Justice Network blog has an item on the subject of money laundering based around an interview of John Le Carre talking about his latest book “Our Kind Of Traitor”. This is featured on the link to Democracy Now dot org.

The interview lasts about an hour on the embedded video but the full text is given on that blog and can be read more quickly.

http://taxjustice.blogspot.com/2010/11/john-le-carre-on-laundering-havens-and.html

http://www.democracynow.org/2010/11/25/british_novelist_john_le_carr_on

Here are a couple of extracts below for anyone interested.

JOHN LE CARRÉ:

First

Now, this isn’t fiction. That part of it isn’t fiction. Money laundering is simply everywhere. On the grand scale, it’s endemic to banking. You have to bear in mind that when Lehman Brothers wasn’t going to function anymore and the big banks weren’t lending to one another, back at that terrible time, $352 billion of illegal money were then tacitly released upon the market, and that was about the only money people were lending to one another.

So, money laundering is not some distant fantasy. It’s actually how you handle the profits of extortion, tax evasion, criminal conspiracy and huge quantities of drug money, how you get that into the white sector. And what we are gradually learning from these little exposés that come to light is that there is almost no way of denying people, in the end, the profits of their crime, which is a tragedy.

And it’s also a frightful annoyance, because we pay vast sums of money across the way here to agencies that are supposed to stop money laundering. It doesn’t happen.

Second

Well, I think that my anger still stands. I can’t understand that Blair has an afterlife at all. It seems to me that any politician who takes his country to war under false pretenses has committed the ultimate sin. I think that a war in which we refuse to accept the body count of those that we kill is also a war of which we should be ashamed.

We’ve always got to be careful of that. I think that—I wasn’t speaking as a prophet, I was just speaking as an angry citizen, I suppose. I think it’s true that we’ve caused irreparable damage in the Middle East. I think we shall pay for it for a long time.

One of the problems, surely, is that victims never forget, and the winners do. And they forget very quickly.

If people knew basically, for example, what we had done in Iran when we ousted Mosaddeq through the CIA and the Secret Service here across the way and installed the Shah and trained his ghastly secret police force in all the black arts, the SAVAC, if people understood the extent to which we had humiliated Iran, then they would understand the later developments in Iran and Iran’s posture now.

If people would look at the map and see the extent to which Iran is encircled by nuclear powers, they wouldn’t take it perhaps quite so seriously that Iran is seeking to arm itself with—if it is—with nuclear weapons.

I remain terrified of the capacity of the media, the capacity of spin doctors, here and abroad, particularly the United States media, to perpetuate false lies, perpetuate lies. Mussolini, I think, defined fascism as the moment when you couldn’t put a cigarette paper between political and corporate power.

He assumed, when he offered that definition, that media power was already his. But I worry terribly that the absence of serious critical argument is going to produce a new kind of fanaticism, the new simplicities that are as dangerous as the ones which caused us to march against Iraq and as misunderstood.

Unquote.

So if London is one of the money laundering centres of the world then who has been and who is getting the benefit?