Wednesday, 30 November 2011

A (very) modest proposal *

A fabulous person I know just got a cool new car. It’s pretty nippy, chic even and also very, practical, part of which stems from its small engine that consequently doesn’t incur as much tax compared to the one it replaced. Park that fact for a mo tho and have a look at the Institute for Fiscal Studies (IFS) updated view (see picture above), of what impact the Pre-Budget statement spending plans (and associated forecasts) will have on net incomes in 2012-13.

Now the IFS is cool cos it splits the population into 10 different income groups ranging from poor to rich. Looking at this its clear that - 9th decile and richest aside -the poorer you are the worst you’ll be affected. So we’re all in this together are we? Are we fuck.

Which brings us back to a fabulous person getting a new car. As already mentioned part of this chic mobile’s practicality stems from how in the differentiated tax regime established to influence consumption of this particular type of consumer durable, it’s a winner.

Now there’s an interesting principle especially if, like me, you enjoyed reading Thorstein Veblen’s Theory of the Leisure Class and are mindful of the existence of Veblen (or positional) goods i.e. things that for essentially cultural reasons are more attractive the more expensive they are or at the very least have inelastic demand curves.

Putting these two things together kinda makes you wonder why, in this unprecedented age of sustained austerity when I reckon social cohesion is preferable to teaching more police how to use rubber bullets, the existence of such goods isn’t acknowledged a bit more and taken advantage of by our fiscal lords and masters. More practically why is the VAT charged on Aston Martins the same as on a Kia?

So here’s a thought, howzabout adding say 2.5% to the VAT charged on every new car sold in Britain that costs more than double the median new car price? In fact lets go further, lets step outside the Harrods food hall for a sec and do the same to everything we find on the other floors be it Louis Vuitton handbags, Rolex watches, Hermes scarves and so on and so on (this is totally rule of thumb shit, like am guessing the principle set by stamp duty of charging more the more expensive something is could apply here also).

Now as the title of this post makes clear this is a (very) modest proposal, like adding 2.5% to the VAT charged on such “Veblen” cars as Rollers and Beamers and what no would only generate an additional few million in tax revenue per annum. But, exploiting the kind of fanny willing to happily shell out a bit more to buy something he can show off with strikes me as cool cos it would mean taking more tax off the rich in a way that’s actually in keeping with the “we’re all in it together” bollocks.

And when you think of some of the bollocks bigged up in the Pre-Budget bollocks, the millions the extra raised on handbags and watches and cars and what no is serious moolah compared with the no much to be spent per year on trying to avoid creating an entire generation of unemployable NEETS.

Oh-oh have just thought of a counter argument - this will adversely affect tourism. Except no not really because the non-EU Saudi and Russian dodgy blerks it’d hit can claim back the VAT on UK purchases anyhow. Another option, obviously, would be to eat the rich, except that was one fuckova shite Motorhead song compared to Deaf Forever.

* No babies were harmed in the production of this post

Tuesday, 29 November 2011

Dinna, dinna, dinna, dinna, dinna, dinna, dinna, dinna ......

Fuck Guy Fawkes, the Occupy London protest is actually more like batman; it gives you a good feeling knowing he/they’re out there fighting the good fight, just don’t think too hard about it or you’ll realise it’s a bunch of mentalists wearing their pants over their trousers.

I mean seriously, I had a nosey at the protests the other day and the first thing I came across was a cardboard sign claiming 9’11 was a conspiracy. Similarly, a vaguely interesting episode of the Radio 4 programme the Report (broadcast Nov 17th) described how attempts to get the Occupy London lot to support a Tobin/Robin Hood tax had failed because (a) every demand they make requires consensus and (b) as some of the protestors oppose the very existence of banks, a tax on financial transactions was irrelevant.

But, that kind of naïve/stupid/ideological purity at all costs regardless of it achieving nothing of any substance whatsoever/adolescent fucktardness isn’t the point. The actual point is to ignore pretty much anything the protestors say and focus instead on the broader cultural wave they’re riding.

To give just one example here is what a post in the Financial Times FT Alphaville blog said in advance of the Pre-Budget thingy - “The misery can be eased, and the populace comforted, if only Mr Osborne could find a way of making the fattest cats pay more. He underestimates the depth of feeling against this thin layer of full-fat atop the skimmed milk the rest of us are on at his peril. Pay rises to FTSE100 directors, bonuses for bankers at loss-making rescued banks, and rewards to departing failed executives (in both public and private sectors) all fuel the resentment. Austerity is bearable if everyone is paying. If some are seen to escape, then the likely result is something much worse than a few tents outside St Pauls.”

Just chew on that for a second – this is the Financial Times being used to warn the chancellor that he needs to do something about fat cats because of a widespread revulsion about how things are playing out. The Financial Times!

Tomorrow’s one day public sector strike similarly epitomises this broader cultural wave. So sure, sure, you can slag off public sector workers for not living in the “real” world as you make arrangements for getting your kids looked after. You could even compare and contrast “gold plated” public sector pensions with the private sector, ignoring in the process how that simply reflects the weakness of private sector trade unionism. But, again that, as with slagging off the Occupy lot as get a haircut, get a job, have a bath mentals, is to miss the point.

Rather, as at least one teacher has put it straightforwardly to me “why should I have to pay for the mess the bankers made?” It’s a fair question, one that simply isn’t getting asked with any meaning by any mainstream politicians of any significance and certainly doesn’t figure in any of their policies. It also taps into what I think (for which read hope going by the pathetic turnouts in the numerous strike votes) is a broader dissatisfaction with the way shit is wherein the legitimacy of established arrangements – we vote for a socio-economic-political elite to get more and more of everything it wants in exchange for us getting a decent pension, a job, a new telly and a future for our kids – is currently being got tae fuck in a fuck me and you, but never them kind of way.

P.S. No this isn't a plea to view things via some puerile end capitalism now vs give the job/wealth creators everything they want cos we’ll all benefit in the long run dichotomy, not least because in the long run we are all dead.

Tuesday, 22 November 2011

How to win the class war

The key to successful class rule is that to its subjects it feels effortless, painless and natural. So ideally then it should be conducted by charming and charismatic people, something Stewart Lee's recent routine about him and David Cameron at Oxford University* captures beautifully. Unfortunately, every so often some upper/ruling class numpty comes along and gives the game away.

And so it was with Dr Heather McGregor. I'd never heard of her before, but if you go here you'll hear her trying to defend the thousand-thousand percent increase in executive pay as exposed by the High Pay Commission. For McGregor the argument is something like having staff sit as pension trustees equals worker representation and anyway if you wanted a workers' co-operative you should go to Cuba. So that'll be artifically imposing a false dichotomy then to distract from what most people want, which is (a) not to have the pish ripped and (b) some real linkages made between performance and reward.

If you go here though, you realise Dr McGregor is (a) upper class and (b) a fucktard whose given the game away.

"Here" refers to the speech she gave to Rodean school in 2009, Rodean being the female equivalent of the Eton school*, which she presumably attended and where and I quote - "She advised the girls, ‘Leave with this sentence tattooed on your head: “I can’t do it alone”. What is very important is to reach back and pull up the people behind you – and especially the people you were at school with’.

So that's alright then. Democracy? Meritocracy? Equality of opportunity? Fair play even? Nope, for this executive head hunter i.e. one of the people that helps identify the UK PLC CEOs that've been the getting muti-thousand percent pay rises, its old school ties and old school chums all the mutha-fuckin way. Bit of an own goal that.

* S'funny. Writing this I originally referred simply to Oxford, Rodean and Eton because those ruling class making machines are so engrained in our national pysche there's no need to state the type of institutions they "actually" are. Naturally.

Monday, 14 November 2011


So are we moving from democracy to an era of technocracy? No not really, but it makes for better headlines than describing shit as simply the existing form of upper class rule is acquiring a slightly different public face in selected locales. So sure sure, the Webbs, those Fabian bods who founded the London School of Economics to produce better 'administrators, whether in commerce and industry, or in the national and municipal Civil Service' are probably doing cartwheels in their graves at what’s happening in Greece and Italy where terribly well qualified men (MEN!) well-versed in the ways of multinational bureaucracies are now in charge, its just on closer inspection so what?

The 2 good criticisms I've read of this swing to technocracy flow beautifully into each other. Oh hang on there’s a third that’s actually getting more attention about how it might challenge democratic institutions so lets deal with that one quickly; no it doesn’t. There will be elections in due course. The notion of DEMOCRATICALLY elected parties appointing technocrats being a threat to democracy is a fucking childish argument that distracts from far more serious critiques and anyone making it should shut the fuck up because they are a headline spewing, analytically incontinent fucktard.

Right back to the shit that actually matters.

Critique 1 is Professor Paul Krugman’s: The technocrats being given power to save the day are actually technically incompetent (“the trouble with the alleged technocrats we’re supposed to rely on isn’t just that they’re uninspiring — it is that they have been wrong about everything, again and again.”).

Critique 2 follows on from the above and was made in Private Eye issue 1301, which notes the new boss of the European Central Bank was previously a partner in Goldman Sachs while the new boss of the European Financial Stability Fund previously worked in hedge funds.

Putting both critiques together then the main qualifications the technocratic white knights now charged with saving the day appear to have is that they were the buggers who designed, tweaked and or worked within the fundamentally flawed system that is now fucking up on a monumental scale and when they weren’t doing that they were making themselves fortunes via the private financial products and financial institutions that fucked it up by exposing its fundamental flaws in the first place. Bonza!

A side note here is Professor John Kay’s neat wee note on how investment banker influence over the polity appears to have grown as the actual number of investment banks has declined, but that aside the wee interview with Sir Howard Davies, a former head of the Financial Services Authority and self-confessed technocrat, today on radio 4’s PM highlighted a range of interesting issues.

For Sir Howard, the good thing about technocrats is that they are people able to take the right or best, all things considered, decisions. Which is lovely I guess except it completely misses the point.

Sticking with Greece and Italy the actual point is not what decisions are taken, who takes them or even the decision-making process (as the third fucktard critique might fixate on), rather its whether decisions actually get implemented once taken.

Britain has an advantage here over Italy and Greece. As Daily Mail/Telegraph critiques of UK civil servants gold plating EU legislation makes clear, the British government tends or at least is more likely to be believed when it says that it will do something. By contrast, whereas the fiscally fucked Italian and Greek governments may be voting on however many austerity packages, a general view is simply aye right and we’ll believe it when tax dodging stops being a national past time.

Now, how appointing a technocrat will resolve that kinda ingrained, institutionalised, common-sense, mindset shit is beyond me given the nature of the political process. Like when a technocrat says raise taxes 20% who gives a fuck if the tax collectors choose to take a bribe instead regardless.

And resolving THAT kind of serious shit requires a clear, grown up view of politics which is that it’s not about technical competency, rather the art of the possible is about marshalling vested interests and interest groups, using patronage and bureaucratic power and authority. Now whereas a Vladimir Putin might say that, Sir Howard politely chose not to.

Alternatively, the approach being taken here is put in place some technocratic patsies who can in turn be blamed for taking nasty decisions no one likes so they can be voted out in due course (see, see, you threat to democracy fucktards?). Except, again that doesn’t matter if the implementation is a joke. But, if that is the case, then it fails to recognise that for patronage i.e. politics, to work you need to know the patron will still be there in a coupla years to hand out the patronage gravy, otherwise why do what he says?

Anyhoo, to summarise, the technocrats now being installed appear pretty shite on technical and moral grounds, we’re getting fed shite as to what them being appointed means, its not clear that the institutionalised issues underlying specific nation state problems are actually being addressed, appointing a technocrat has no impact whatsoever in itself on the fundamental role vested interests have in politics and how cool, being a blerk, must it have been to go to a Bunga Bunga party?

A wee P.S. here is provided by the Italian government’s latest debt sale. So there was me pointing out the difference between implied yields and reality in response to people going on about Italy having to pay more than 7%. Turns out they haven’t had to pay more than 7% after all. Boo, what a dull headline.

Plus, what does that say about the efficacy of markets given the above questions that can be raised about the technocrats who are otherwise being used to justify the reduction in borrowing costs? (here's a clue - that the people pricing this shit are stupid cunts for the most part who should be held at a remove from important decisions or anything that can impact government policies)

Thursday, 10 November 2011

Memory loss

Ideologically, the pro-occupy argument is so much more advanced in the US than it is here. Here, the we are the 99% riff gets played to be sure, but without much gusto cos there’s too much down with all bad things everywhere vagueness plus predictable Trots and what nots in the way. Hey ho.

But, I think something that appears to be missing from even the US schtick are memories of the Dot Com bubble. Remember that? You know, the period from 1995 to 2000 when there was a seemingly new paradigm on the horizon.

The thing about the Dot Com bubble was how it once again brought the following quote from the 1920s to life: “A visitor was being shown the wonders of the New York financial district, and his guide pointed out some handsome ships in the harbour. “Look, those are the bankers’ and brokers’ yachts.” “Where are the customers’ yachts?” asked the naïve visitor”.

New paradigm or not (not) the self-same heads they win tails you lose thang was abundant during the Dot Com era. Venture capital houses raised dosh from investors then pissed it all away on utter dog companies. But, that’s all good cos the 2 + 20 of a 2% charge on all funds raised (and 20% of any eventual profit) meant it didn’t matter if the company was a flop cos the sheer act of raising a fund made those financiers mucho dosh.

Then there were the investment banks; to make the big money from a dot com thing you needed to go public i.e. sell shares to the public via an initial public offering or IPO. The investment banks made this happen, charging big fees in the process. Even better, investment bank analysts bigged up each IPO in public at the same time as telling people in private it was an utter dog to avoid. And so it was relatively average people pissed away millions investing in utter dogs.

Now d’ya see the common pattern emerging here? You invested in a venture capital fund. They make money if it’s a donkey or no.

Next, you bought shares in an IPO – and again the investment banks organising it make money if it’s an utter donkey or no.

Essentially, the Dot Com bubble was about transferring money from rubes/punters/schmucks to whoever set up the mickey mouse companies in the first place AND the financiers involved in sorting them out for an IPO, boosting their prospects and then selling them on with huge, hypocritical conflicts of interest all over the place.

For me the Dot Com bubble is another relatively recent example of how the sexier, higher paid end of the financial system tends to ass rape ordinary people while charging them a commission for the “pleasure”.

So sure, sure the assets and type of transactions were different and the fact the Dot Com bubble was about internet entrepreneurs and financiers fleecing a greedy middle class of its savings limited its economic impact. But, still a mentality was on display then that I reckon is still very much in place today to the point of being deeply institutionalised; these fuckers don’t give a fuck about consequence and will fuck you over raw to make themselves big money. As such I wonder to what extent the organisations involved should be considered an open threat to the actual economy and be treated as such as a result?

Wednesday, 9 November 2011

Not rocket science pt 2: Losing interest

Having spent the last wee while going thru another one of they “your job will not exist from this date onwards, but there’s these other lovely jobs you can apply for” reorganisation thingies, I've been too distracted to write anything vaguely coherent. Now I know the mortgage payments will be met for however long it is until the next reorganisation, I reckon its time to do another not rocket science thing, this time on bond yields and the Eurozone crisis.

First off the big thing here is the sheer volume of disinformation that’s going on. Like up until well the other morning really when Evan Davies on the Today show finally admitted he was confusing things, nearly all the mainstream media headlines about Italy and its cost of borrowing were a simplification of reality as distorting as they were out of context. Like seriously.

Not being a corporate financier I’ll also explain why in simplistic hypothetical terms, but hopefully ones less bollocks than those most people are using. Here goes;

Italy wants to borrow £100. It does so by issuing a five year bond for £100 that will pay whoever buys it i.e. whoever lends Italy £100, £5 or 5% a year for 5 years at the end of which the original £100 is fully repaid.

Oh oh, the original buyer of the bond sells it to someone else after a year because there’s a sovereign debt crisis going on and all of a sudden it’s not looking as likely as it once was that Italy will repay the original £100. Plus there’s only 4 more years worth of 5% payments to get as well.

So now I buy the £100 bond for less, a big chunk less, say £50. But hang on a mo this £50 has bought me an asset that yields an annual payment £5 i.e. the implied yield is 10%. Bonza! Just try getting that off a cash ISA these days.

In the meantime what do Italy care – it got the original £100 it was after, still has it for another 4 years and is still only paying 5% per annum. It was the original buyer who sold the bond for less that took the loss and felt the pain. And it’s the implied yields NOT Italy’s actual borrowing costs, that've just reached “crisis” levels.

The implied implication is that if Italy was to try and borrow more today, then it would have to pay current yield rates i.e. the 10%, except that cheeky wee word “if” highlights what’s actually going on here – the yield on existing debt doesn’t reflect Italy’s ACTUAL borrowing costs. What follows on from this is a number of things:

- The tenor of Italy’s debt is the crucial thing to be concerned about i.e. how much is maturing over the next 12 to 18 months and will need to be replaced with fresh bonds.

- The reporting of this has for the most part concentrated on generating distorted headlines, op-eds and articles that favour current English government economic policy (cut spending to save Britain’s AAA rating and so on) and the interests of bondholders.

- A fuck of a lot can happen in a week let alone 12 to 18 months.

One other wee sneaky bit that also warrants much, much more attention is the interest being taken in PIIGS government debt by speculators, hedge funds, vulture funds etc., This lot are already buying up cheap government debt because they’re taking a punt on being able to get high yields now and the thing completely repaid later (i.e. for more than they paid for it). Double whammy!

A couple of things follow on from this given the Greek example wherein billions of Eurozone taxpayer funds from other countries are already being handed over to Greece so it can repay holders of Greek government debt (i.e. its bondholders). One is that the speculators doing so are immoral cunts. The other is a nice neat straightforward demand – can a publically available record please be maintained that details:

1) Who buys any piece of government debt
2) How much they paid for it
3) When they bought it

Doing so would perform a VERY important risk management function cos it would enable anyone at any time to know who exactly was on the hook and for how much to whatever economy is in potential crisis.

Making that kind of info available would also do other sorts of mad stuff like make perfectly clear how rational (or not) markets were behaving and consequently whether crazy things like some government buying up its debt on the cheap to effectively cancel it out is an option e.g. the European Central Bank lends Italy £100 at 5%, Italy then uses this to buy 2 tranches of £100 5 year bonds currently trading at £50 each and hey presto its debt is halved.

It would also let us all know who the cunts were that were taking punts on national economies so we could pitch our tents up outside there head office. They will, in their defence refer to the “liquidity” they provide i.e. those wanting to offload Italian bonds can do so. Except so fucking what, like seriously, so fucking what. Head teachers here are about to go on strike for the first time ever because of the sacrifices they are being expected to make and some multi-millionaire cunt considers the ”liquidity” him taking a punt in the hope of making millions provides to be sufficient justification for taxpayer rape? Fuck off.

P.S. My understanding is Italian debt levels aren't really the issue here, rather its that the country is bent from the top down, which is scarey bsicuits because institutionalised bent-ness is awfy hard to remove due to all the vested interests it involves.

Tuesday, 1 November 2011

Labour party scum part 1

As light relief I thought I'd summarise what for me is one of the most loathsome aspect of the Labour party; its time served backwoodsmen. You can spot the sort a mile off usually because their all-expenses paid guts are bursting out over their belts and into your face.

Here are their typical characteristics;

Back in the day they might have been an apprentice in a factory, a mine or a shipyard, who, on realising manual labour is actually quite tiring, got into trade union politics and by their early 20s had started a life time obsession with doing everything they could to avoid actual work.

Nowadays they’re drawn from the public sector where they were unpromoted and unqualified mental health nurses, unpromoted and unqualified community workers, unpromoted and unqualified teachers and so on (or they might be the idiot child of a Labour party grandee too thick to make it as middle class, but with a yearning for a middle class way of life).

As things moved on they attach themselves to an MP as an agent, researcher, chief arse licker or whatever, basically anything but actual work (or they might have held a post as a regional trade union organiser). At this point those with a few brain cells, if they haven't got one already, typically do a degree in industrial relations, politics, economics, economic history and what no as a mature student. Sometimes this lot even have something interesting to say, like every 5 or so years.

Thereafter a few mickey mouse jobs typically follow – a charity's strategy officer, a quango policy manager, council equal rights co-ordinator and what note, typically combined with being a councillor somewhere. Fucking bollocks the lot of them and anyhow all they’re really doing is waiting for some dead man shoes to fill and them to finally get elected into a safe seat and become an MP and latterly an MSP and get the gravy.

For the most part the whole lot of them are a useless and disgraceful shower of shite. Too thick to ever have an idea or become actual ministers, too taken with the lure of a parliamentary wage they could never earn in the real world to rock the boat when things like principles pop up. Essentially it’s all about getting the cash and doing just enough to keep the local party happy before making an expenses claim. And fingers crossed there’s a retirement package  i.e. elevation to the house of lords, waiting if they keep their noses clean long enough.

Examples would be Tommy Graham, Jim Devine, Michael Martin, Paul Martin and Ian Davidson. Like you’ve Jim and his expenses and treatment of his office manager, Michael Martin and well him being Michael Martin, Tommy Graham and the Paisley shenanigans and latterly Ian Davidson threatening to gie some SNP MP bint a doin’.

Brilliant. So that’s what Labour party machine politics looks like and has done for decades. In the meantime, global economic crisis, rising unemployment, falling real wages, a potential assault on basic employment rights? Aye well, fuck that cos see that SNP bint she needs a doin’ (1).

(1) They are so utterly loathsome because they’ve betrayed the basic principles of the Labour party and are pathetic jokes compared to its founding fathers. They are also electoral liabilities who contribute fuck all to political life.