Saturday, 26 April 2008

Panic Now - avoid the rush

They are not making any more oil.

This is pretty obvious, but I'm just not hearing it from the pundits. They keep mouthing economic platitudes about the market finding a new level, short term fluctuations, and the like. Oh, and I don't mean go out and fill your tank - for how long will that solve your problem?

Buy land. They ain’t making any more of the stuff.
(Will Rogers 1879—1935).

This is the axiom that we need to consider when looking at the increasing price of food. That and, of course, the fact that some mistaken (stupid?) politicians have been convinced that the way out of the fuel shortage is to convert food stuffs into fuel for cars.

Food is going to get more expensive, fuel is going to get more expensive.

I have no doubt that this is correct. People, and politicians, need to understand and accept this and work out how they are going to respond to the impending crisis. I'm guessing that this is going to lead to similar the stagflation of the 1960s or the world-wide recession of the 1930s. So what are the likely impacts?

The poor

The poor are going to become poorer. In the developed world this is going to be uncomfortable and unpleasant. In the developing world this is going to be disastrous - watch for the Four Horsemen: War, Famine, Pestilence and Death. Please don't think I'm predicting the end of the world, but these four nightmares are the synthesis of wisdom from thousands of years of experience of poverty. You might like to note that only death is named in the Christian bible.

The middle class

The middle classes have two basic options:
  • try and keep up, or
  • re-evaluate and adapt.
Personally I'm going for the latter. Enough, by John Naish is a good read if you are thinking about this option. The middle class have the capital or income to cut back and yet improve their quality of life.

Those who try to maintain their current life style are risking running up huge debts.

The Wealthy

Those with considerable wealth run a risk of becoming exposed to the masses. At the moment, their difference is not that obvious. As we drive past their automatic gates we don't feel that jealous. As the gap between wealth and extreme poverty expands exponentially over the next few years they will become more obvious. Painfully obvious. Plus of course, the wealth of many of the people is built on the current economic model. If you are wealthy, my advice is get out of the system now. They won't listen, of course, as I guess that for most of them making money is what they do - and they won't change.

The Politicians

I have a low opinion of politicians. They seem stuck in a model that only looks at the next election at the most. They need to panic. There is cause for panic. Their model is bankrupt. Bankrupt financially, morally and economically. We need a change.

I'll close with a quote. Farewell to Kings...

When they turn the pages of history
When these days have passed long ago
Will they read of us with sadness
For the seeds that we let grow
We turned our gaze
From the castles in the distance
Eyes cast down
On the path of least resistance

Thursday, 24 April 2008

Farewell to the traditional pub?

As part of my work I have done a lot of driving around the West and East Midlands. One of the most depressing sights are the number of closed (and often vandalised) pubs. These stories are beginning to hit the media.

The general understanding is that they are closing because the smoking ban and tax increases on drinks have driven their customers away - presumably to drink and smoke at home.

So is this a conspiracy to destroy the last vestige of working class social life? Is this our current Prime Minister's Scottish Presbyterian frugality coming through? Are the supermarkets manipulating the policies to increase their sales?

Nope, its just another set of cock-ups from a government that just keeps intervening in our lives.

Tuesday, 22 April 2008

And now let's buy the banks

So we have another cockspiracy unwinding. The banks made an enourmous cock-up in lending money to those who were desperate to buy stupidly expensive houses. Make not mistake, this was about greedy misselling. The banks are now effectively broke - note the two rights issues in the last week totalling over £20 billions.

OK - 20 billions - sounds innocuous. Start counting now and in 600 years you might reach 20 billion... That is a big number. Add in the other £100 billion that the UK has stumped up to support the banks that is a stupendous number. I guess it is going to be over £2,000 for every man, woman and child in the UK. Add an average £7,000 to every family's debt in the UK and we might end up all being bankrupt.

Conspiracy to destroy our finances? No, just as sequence of cock-ups. You can just hear the treasury grunts saying - "We have to support the banks", no thought of the fact that it was their fault. The true depth of this cockspiracy will take at least 2 years to unwind.

Saturday, 19 April 2008

Government Stupidity

OK - place yourself as Chancellor of the Exchequer - yes I know it's an odd request. You want to appear to be on the side of the poor. So, you introduce a 10% introductory Income Tax rate. This is what Gordon Brown did in 1999. This is a cool idea, as it means that you reduce the impact of starting to pay Income Tax. As it happens, this caused problems with the Income Tax system, and ended up with incomprehensible tax statements, as there was a strange fiddle with it being shown as a 'tax credit'. I remember, because I couldn't work out what the hell was going on...

Now, you tell me what this clearly intelligent Chancellor (soon to be Prime Minister) was planning when he removed this Income Tax band.

So, take the cockspiracy view point. He wasn't planning to sting the poor but hardworking. He wasn't planning to commit political suicide. He was just not listening to anyone. He thought "I'm sure I've got this right". Conspiracy to rob those working hard on minimum wage? No. Just another cock-up.