Monetary Matters

The business of the Head of the International Monetary Fund, Dominique Strauss-Kahn, or DSK is keeping many people busy, not least Gordon Brown’s sidekicks. Given the track record of Gordon’s little friends it is no surprise that all sorts of stories are circulating around the media about DSK.

DSK is currently held on remand at Rikers Island in New York, its main penitentiary which has a lurid reputation. Remand does not presume guilt.

He is there because the court in which he first appeared took the view that he might do a bunk and was held to ensure his appearance to answer any allegations.

Nor does doing a bunk presume guilt either. The UK welcomes many people who have done a bunk from the home countries because they might face arrest for something we disagree with or have to spend a long time awaiting trial or indeed be faced by a court that is hostile to them.

In the meantime DSK has exercised his right to be represented by lawyers. If the reports are correct these are experts for whom many in their trade have a great deal of respect for their abilities in defending people on trial.

How things will go in court is not known nor can we estimate what the jury might make of it nor what guidance or views the judge may hold as the case proceeds.

As someone who was one of the very few who backed Featherstone Rovers to beat Hull in 1983 I am aware that a majority general received opinion may not be the best guide.

What happens, I ask, if DSK is found not guilty?

Why UK Growth Is Slow

Income can be generated and redistributed in many ways, not all to the benefit of the long term economy, most people or a particular nation state. Indeed there can be winners and losers and those who think they are winning are often hell bent to be losers, read the football pages if you do not believe this.

To begin with what most of us do, retailing and eating and drinking out became a key sector of the economy and much of it is owned by either firms or indirectly by financial interests that are outside the UK. It is not just those sectors, but in other now regarded as key activities, Finance, Tourism, Entertainment and Property amongst them.

This extends to most of our public utilities, transport, other commerce, industry and many of the minor activities. Referring to my classification of the structure of the economy as divided between the Taxable, The Alternative and The Illegal, then a great deal of the surpluses generated from the Taxable Economy alone find there way out of the UK.

Additionally, so much of ownership is vested in complicated structures of companies to govern and deal with the financial matters that the great majority of the real economy is seen as a basis for meeting financial targets. The monies extracted are then too often channelled into speculative or risk finance.

Consequently much of “growth” is paper growth, so who really benefits?. According to reports the distribution of this into individual incomes in the last decade or so is now becoming very different from the late part of the 20th Century.

Not only are the gaps between the incomes of those at the top compared to the ordinary employee far bigger but there is an increasing concentration of “wealth” into many fewer hands. A number of these in London, which is central to this, are not UK citizens and nor do they retain much of the money in this country for real investment for the future.

A good deal of public sector spending is alleged to be “investment” when it is not; it is consumption, some of it at the expense of productive investment. Also, much private spending is little better and very often is simply taking in each other’s washing. How many ordinary people put money into long term projects other than property, itself an unreliable form of wealth?

As I have commented before the more difficult issues arises from how much has gone into the Alternative and the Illegal Economies? My view is that in the last two decades a great deal has and the proportions have expanded substantially Neither of these areas of economic activity do much to create the basis of real growth and moreover remove what might have been real investment funds from the UK.

There are other areas where large sums go from the UK economy in ordinary spending amongst those with middling and lower incomes. In fact if you look at what household money is actually spent on a great deal comes from abroad, often including the chicken, potatoes and peas on the dinner plate.

If we compare all this to the actual real workings of other economies such as those of France and Germany and others it is easy to see why growth is sluggish. The nightmare is that the London Politics and Media see only the paper and debt fuelled consumption parts of the economy as a way of generating financial statistics that may look like growth but are far from in any true economic reality.

There is another and darker side to the way the financial potential for the future flows out of the UK. Bluntly it amounts to financial looting of the UK by others and this is inextricably linked with international corruption and a web of activity in jurisdictions that enable secrecy and associated malpractice to thrive.

Most of the undeveloped world has suffered from this and their problems are growing Back at home in the UK to put it at its simplest, trying to manage the economy on the same basis that most Premiership football clubs seem to be run is just not going to work.

Is the UK due for relegation?

Age Shall Wither

There is almost 2000 words below, a summary of the situation, then the Press Association story from the BMC Geriatrics Journal concerning a University of Newcastle study on provision for the oldest members of the population in Care Homes.

There are a number of growing issues here which are going to grow a great deal more. Below that are three comment items taken from the Yahoo page that illustrate differing personal perspectives.

With the public sector care homes diminishing in numbers and some major problems in the private sector, notably the tribulations of Southern Cross, financially on the brink and again a good deal of worries about what care at what price, this could soon be one of the many things that go bad.

There are some new private care homes being built but many are not ideal. One not far away from us is characteristic. It is beside a major traffic junction with heavy traffic more or less 18 hours a day, has no outside facilities or seating and limited parking for visitor. It is an ugly barrack block with minimal social or communal facilities and rooms of minimal size and provision.

This blog has said a lot about the Retirement Housing sector and the work of Carlex (dot org), the Campaign Against Residential Leasehold Exploitation with special reference to the retirement housing sector which is a mess which is going to cost a lot of trouble.

The government are repeating their mantra about Care in the Community. But who is doing the caring? Some have no family, others have families who have divorced and dispersed, others do have family but they need to work and have other commitments. Those that do not work rarely have the resources to give much effective support.
The result is that “care” depends on a horde of female part timers rushing about in and out with little training, less backup, and no discretion trying to tick the boxes that say what can be done or should be done. Much of it is barely workable. How the government can expect this sector to carry the load I do not know but the people needed are not there now and are unlikely to be in the future.

Moreover, for many staying in their own home is costly. If they cannot do DIY or ordinary maintenance then keeping it up can be very costly. Heating is a major cost problem and many of the most infirm cannot manage the full range of household tasks, notably food and basic hygiene. So there is a growing population in places they cannot afford to run who are increasingly cold and hungry.

With the current attrition of pension incomes and with many now entering retirement without the comparative level of retirement incomes of the past it is going to more difficult.

Between what is said by the government, Newcastle University, Carlex and vox populi of those who comment there seems to be little common ground and a totally different vision of the present and future.

Press Association Report:

A massive increase in the need for care home places is looming in the next 20 years because of the rising numbers of over-85s in Britain, academics warn. But a comprehensive survey of people in their late 80s showed that eight out of 10 of them happily live independently with no need for daily support from others.
The 85+ study was carried out by Newcastle University's Institute for Ageing and Health and although this is the fastest growing demographic in the country, it claims to be one of only a few studies worldwide into very old people.

According to the experts, in 2010 there were 2.6 million people aged over 80 and by 2030 that is expected to rise to 4.8 million. That means there is a need for an 82% increase in the number of care home places, 630,000 extra places, between now and 2030 in order to cope.

The survey found that 41% of those questioned never had help and a further 39% were supported to live independently but not every day. That meant one in five people aged over 85 needed either regular help or critical 24-hour care.

The findings, published in the BMC Geriatrics journal, indicated that with the massive increase in numbers in the older age group predicted in the coming years, more and more pressure will be placed on care services.

Professor John Bond, Professor of Social Gerontology and Health Services Research, said: "There are two ways to look at this. With your glass half full or half empty.

"We have found that 80% of people in this age group need little or no care which is great news. But on the other hand there needs to be some major investment to ensure that those who need help can access the care they need."

A Department of Health spokesman said: "Demand for care home places in recent years has been going down, not up. Most older people want to stay supported in their own homes for as long as possible and the extra £2 billion we have given to councils will help them care for older people in an environment that's best for them, not necessarily in a care home.

"We are determined to protect the most vulnerable members of our society and the extra investment in social care will act as a bridge towards a sustainable long-term solution to funding of adult social care. We know that the funding system for care and support needs to be reformed and have established an independent commission which will report in July."

Comment From A Carer:

As A carer I see both sides some of our clients now are pulling someones leg like the man we shower then he goes to town shopping or to his Daughters or the lady we shower then she takes her dog for a walk? Excuse me but if both can manage these,,,,,,,,,,,,,,, walking out on there own surely they can shower sat in safe council provide wet rooms with seats?

We see lots of financial abuse by there children who cant wait to get there hands on there money , but they dont want to have to do anything to help there parents live independantly as possible. It amazes me how when there parents were alive they didnt visit but as soon as they die they appear out of the woodwork and there parents house is emptied and on the market before you can say jack robinson.

The wages we get do not reflect the job we do most people gringe at the thought of doing personal care for someone else or emptying a . commode that has been sat there for hours . So next time you think we are overpaid think again would you do the job?

Most carers do the job because they do CARE about others there is no financial gain we get paid little to do a worthwhile job and we do it with a smile and compassion ,hoping that the people we care for feel better and and that someone ,even if its only the person who gets you up feeds and medicates you ,cooks you dinner , makes your tea and puts you to bed, who has nothing to gain but feels she or he has made a difference to your day chatting and helping you stay in your home where you want to be ,and often making excuses for your children who again haven’t bothered to pop in to see you or bring you a meal but they will be there when you die to go over your precious bits and pieces and often fall out over who gets what . What a wonderful society we live in.

Also we work 365 days a year every other week-end and the bosses want us to be available from 7am till 11pm tell me any other job where you need to be available for that amount of time?

Comment From a person in their 80’s:

We have worked very hard all our lives, saved for the future as reccomended by our parents , to do this we said no to holidays no to new furniture and saved all we could we were self employed for 40 years and retired retired and sold up.

10years ago my husband developed Dementia its a 24X7hard task, no life oF ones own but i am willing to do this because we are so close. However i need respite the cost 800pounds A WEEK yes 800, so watch out you savers you will see all your savings disapear and eventually when the last one dies a hefty bill.

Forget inhertance for the children, forget trying to keep the family home , we are both over 85yrs and struggle on no way will i allow my husband into a care home permantly and see our hard earned savings disapear.

WE were both in uniform during the War paid our dues and stamps but try and get help? all we are told is "you dont qualify you have savings.but our neibours who spent all in their lives get all the perks, who’s the fools?

From someone I think with an interest:
Council care homes are closing because of costs- to start with the costs of employing people is higher in the public sector than the private sector. yet the money allocated to say a care home in the public sector is less than the costs to keep it open.

If you compare a council care home with a private care home there is less investment in the council homes and they are often(but true not always) in a worse a state of repair.

I am not SAYING PRIVATE CARE HOMES are great- some are really bad- but many are very good and because of business people being in charge work more efficenty and effectively.

Problem is with council homes they are, or let me say were not working to a budget in costs, only in recent years when councils have had to look at cost have budgets being set and tightened up.
Now of course there is not the money to refurbish homes in the public sector costs for one home in my county were, for refurbishment over 500,000 and that was because over the years the council had not put any investment into the fabric of the homes and teneded to repair rather than rebuild.

The money was given to staff as wages to have a rise every year- many staff at council homes earn a lot more than private homes. Now the buildings are in need of total refurbishment the councils have not got the huge amounts of money to do that and or pay a lot more staff more and more each year(The staff at council homes was and probably still is a lot higher in numbers than a private one- the latter still have to have minimum staff on by law.

But some council homes have twice the staff and more of the private ones, that cannot be sustainable and many councils have found it is not sustainable to pay a lot of money out for a home when they merely have to give money to a private home and have no capitial costs themselves.

Yes it has gone down (the amount) but many councils are in the process of closing their own homes so the money will eventually flow for residents in a private home. BTW council homes have had no better inspection reports (some a lot worse)than many private homes so that excuse for keeping council homes is a none starter.

End.

Decisions, Decisions, And Kicking Donkeys

While we are all watching the football and passing fancies of the media there are places in the world where problems are arising which fall into the category “No Right Decisions” which broadly means to quote Armageddon dot org, “you are damned if you do and damned if you don’t.

http://www.armageddononline.org/Morganza-Spillway.html

The US Army Corps of Engineers who have the job of dealing with the nation’s waterways and their defences against flooding have to decide whether or not to open the Morganza Spillway, a barrier against Mississippi flooding central to the control of the river now in full flood.

If they do the waters go into the Atchafalaya Basin in Central Louisiana and will cause extensive flooding there affecting thousands and wiping out crops over a wide area. Many people will have their lives and finances ruined and the damage will take years to put right.

If they do not the waters will then flow further south and the State Capital Baton Rouge is at risk as well as New Orleans where huge efforts need to be made to add protection to the levees and avoid a repeat of the flooding of 2005. We think that it was Hurricane Katrina that was the cause then, but the sea storm surges came up against existing high river levels.

At present it is normally too early for any major tropical storm or hurricane to add to the worries and this year is supposed to be less active given La Nina, but there is really no “normal” in summer weather conditions in The Gulf. Hope and prayers are at present the only options.

As the year progresses the USA could have more problems. There are worries about the harvest already because of the unusual weather conditions. With so much land being removed from wheat production for corn for ethanol under government subsidies to keep down petrol costs, more corn for all the sweeteners helping Americans to grow so much and more corn again for force feeding cows and pigs for cheap meat for home and export it may all go badly wrong.

This will mean looking hard at the complicated structure of tax breaks and the rest that prop up so much of all this and from which such huge sums are ploughed (sic) back into US politics via the lobbying system to continue and extend this. In the meantime with so many now dependent on food stamps there is another kick in the donkey to quote an old Iowa proverb.

According to Science Daily the variations already known within the weather systems of the last 1000 years or so can and do shift in a way to cause major impacts on both ecology and the related patterns of human existence and ability to survive in numbers.

http://www.sciencedaily.com/releases/2011/05/110511131132.htm

So whether it is all about Global Warming Or Cooling or Change of Earth Mood if we are about to have another twitch of wind and water patterns a lot of people in a lot of places are going to have to make both group and individual decisions. Given the human history of the last 1000 years the consequences will not be welcome for those who want to live a contented and peaceful life of hedonistic consumerism, especially if the monsoons fail in the Sub Continent.

Meanwhile something else could be in the wind. While many places have cut back their air monitoring and other facilities, there are some still left and one is the Norwegian. According to their confidential assessments we may or may not be in for some extra sun tan this summer coming from Japan.

http://www.nakedcapitalism.com/2011/05/guest-post-simulation-shows-high-levels-of-radiation-hitting-the-west-in-may.html

Essentially, the radioactive iodine is up there and the question is how much and where it may turn up and who it might affect but the Norwegians do not want people to become excited. In any case they are more worried about the geophysical twitches going on in Iceland that might put their air monitoring in the news again.

Meanwhile the campaigns are beginning for the next Presidential elections in the USA whilst in the UK the Mexican Standoff that is our government policy continues.

So who will be making the decisions?

Iceland, Paperland, And Poverty

In general I prefer my posts to be on the easy side. This is because it makes them easier to write and means I can get back to volcano and earthquake watching. This brings me to Iceland whose territory is one of the most volatile on Earth.

The BBC has been doing Iceland in various ways this week. But they are sticking to the geography and the way they live and how different it is from Islington or Hoxton. The basic assumption is that they are strange and we are not which is something I am far from sure about.

But Iceland recently has been volatile in other ways notably in the World Money Crisis which is rolling on around the world in unexpected ways. Despite a population of only 320,000 by a series of accidents Iceland’s misfortunes became central to the whole financial collapse.

The Market Oracle covers a book on the subject, “Deep Freeze-Iceland’s Economic Collapse” by Phillipp Bagus and David Howden”, who have taken a long hard look at the whole business and how Iceland became Paperland.

It is a story, more or less, of Hagar The Horrible Becomes a Banker. In the link below Andy Duncan suggests that they make the story clear and explain why it all happened.

http://www.marketoracle.co.uk/Article28056.html

Reading down the article it is comforting to see many of the usual suspects lined up against the wall, albeit with different names. “Security mismatching” is our old friend lending long and borrowing short by different means. They really did think that could take on huge debts that might fall due for repayment before you could get your money back from those you had lent on to.

One reason for this was the invention of a wide range of financial devices to enable the stock of money to he increased on paper and sloshed around the world, often in secret by wheeling and dealing. That way it disguised the extent of imbalances between the borrowing and lending.

In effect it meant that the financial institutions, unleashed by politicians from earlier regulation or supervision effectively were given control over the money supply and creation. You may recall Meyer Rothschild’s dictum about if he controlled the money then nothing else mattered much.

How so much of this centred on Iceland arose from serious mispricing of interest levels in various places. In general rates of interest were far too low and the artificial discrepancies created in places like Iceland and Ireland meant that huge flows of money went there and then on to the Neverneverlands of borrowing.

The Irish situation had been dealt with splendidly by Morgan Kelly in the “Irish Times” in an article that has been well flagged around the serious web.

http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

Meanwhile, back in our own little grubby corner of the Atlantic Isles the Governor of the Bank of England has become Mr. Glum, we have a government castigated for cuts that is increasing spending and liabilities and too many of the population seems to be heading into the debt slavery forecast by the links above. For those with property the advertisements promising “Equity Release” seem enticing. If prices crash however, where will all those borrowers be?

As for the Icelandic connection, unluckily some of the Conservation Party’s major backers are now facing problems that arose from debts incurred from Icelandic credits, our government owned banks face failing to get the Icelanders to pay up and if international interest rates do lurch up as they might then all the Treasury sums may need to be done again.

Next time round, if it happens, we will begin to see some bigger cuts that will be far from better. I wonder if Iceland has facilities for economic refugees?

But historically, we have been here before. In 1772 The Heron (Ayrshire) Bank went down, lending long to its own directors and borrowing short in London. There the lenders had some very fancy arrangements notably in East India Company stock on very high rates of leverage. It all turned very badly.

Then it cost us the American Colonies, what might it cost this time?

Bumper To Bumper

With all the dangerous things happening in the wider world much of the UK media is spending a lot of the time looking at each other or giving blanket coverage to issues of little or no real importance except to themselves and their political servants.

A committee of the House of Commons spent hours with full coverage on the question of why the England football chiefs, with the Prime Minister and Prince William in tow, failed to have a football competition put on in a few years time. In a more robust age the advisers to the PM and the Prince would now have their heads spiked on London Bridge.

The answer to this was money and benefits and who bid the most. Instead of applauding this application of free market principles in a changing world we have heavy duty whining about the lack of moral fibre of Johnny Foreigner.

But the whole exercise may be a front for someone from somewhere to put in hand a breakaway from FIFA and set up another world football body. If England can rope in both the USA interests and their creditor Chinese they could be in with a shout. I will not name names but mutter quietly about TV rights being the key.

Meanwhile, the world economy is beginning to resemble the old Dodgems rink at Great Yarmouth in the happy days before Health and Safety. There a mechanic had discovered the means of upping the speed and bounce of the cars and it could be quite exciting, like football, if you were on the winning side.

But there will not be much attention paid to Parliament this summer because it will not be functioning much and when it does will be spending its time avoiding all the difficult issues. A major worry is that there are going to enough media frenzy news items coming that will cover all the announcements that the government or others do not really want us to know about but have to publish.

At present nothing makes any real sense and there is no indication that the people allegedly in charge are any wiser. The reason for this may be that those who make the real decisions and control the strings to the money bags are neither elected nor answerable to anyone.

But their world view is very narrow and critically they have little concept of how or why their actions can have consequences that damage both themselves and the rest of us. There are enough of them out there all going their own way to cause some really serious damage if they are not very careful.

Just like when one of the Great Yarmouth dodgems side swiped another, careered into one of the main pillars and the roof fell in. At the time, I believe, the mechanic was playing the hit record through the Tannoy called “Rock Around The Clock”.

Hear Ye! Hear Ye!

It is bad enough to see uncomfortable information and figures, especially when they relate to so much of your life and the modern economy. What is even more worrying is when you know the information and figures you are going to need to make critical decisions are not going to be available.

There are cuts and cuts but when they can lead to worse trouble in the future if you do not know what you are doing then it can all become very difficult. The Oil Drum site is one of the few that do attempt to allow a real discussion.

It does not like the closure of an agency of the USA that studies the supply and demand for oil and related products.

http://www.theoildrum.com/node/7874#more

Given the present instability around the commodity markets, in part about differences of perception about future supply and demand and in part because the loose money has to go somewhere, then the more and better information we have on real trends and from reliable sources the better.

To add to the issues about oil there are also the food commodity markets that need some clear information gathering and sensible analysis. This story below on the risk of drought impact on European wheat supplies is an example of an impending problem that might happen and we need to know about.

http://www.bloomberg.com/news/2011-05-06/europe-wheat-harvest-to-fall-on-drought-may-be-catastrophic-agritel-says.html

Given the UK has little or no functioning government machinery capable of working out what next or why in almost any sector of its activities the risks of us being hit hard by something expected but not seen or discussed are high.

The trouble is that we few, we unhappy few that do try to look beyond next week and scratch around looking for reliable information are regarded as trouble making types who just want to spoil the party.

What scares me is how much that can go wrong and how little we know about any of it.