Wednesday, 16 December 2009

The very long arm of the law

Meet Tzipi Livni, former Israeli foreign minister and currently leader of an opposition party in Israel.

Tzipi Livni: war crimes?

At the weekend Palestinians living in London obtained an arrest warrant, for alleged war crimes during last year's Israel-Gaza conflict, from a London court when they discovered that Livni was planning a visit to England. Livni was tipped off and immediately cancelled her travel plans.

This is somewhat reminiscent of General Pinochet's arrest in London in 1998, on a warrant issued by a Spanish court for crimes allegedly committed in South America. Pinochet was eventually released two years later without having been convicted of any offence.

It is not at all obvious why any English court should consider itself competent to try a crime that did not take place on English soil. Courts have important powers to ensure that fair trials occur. One of the most important of these is the power to compel witnesses to attend court and testify. Clearly witnesses in a foreign land cannot be coerced into attendance.

Additionally there is the issue of legal domain. If a person is tried in an English court for a crime in a foreign land, which law applies - English law or the law of the foreign land? If Livni had been tried in England could she have defended herself using the small-print of Israeli law? Would an English court have to conduct its proceedings in Hebrew?

Clearly this would be a nonsense. English courts are now too big for their boots. At the moment they aren't even managing to keep our home-grown criminals off the streets; they should stop trying to police the world and do the job we pay them for.

Tuesday, 15 December 2009

Inflation is on the rise

The inflation numbers for November are out. CPI is 1.9%, up from 1.5% in October, and RPI has risen by a massive +1.1% in a single month at 0.3%, up from -0.8% in October.

And the big inflation boost we can expect in a couple of weeks, the raising of VAT from 15% to 17.5% hasn't even happened yet!

The time is approaching when the BoE will have to raise the base rate to choke off inflation, and since we aren't out of recession yet that won't be good for the economy.


Monday, 14 December 2009

Greece in trouble

Last week the ratings agency Fitch downgraded Greek sovereign debt from A- to BBB+ over fears that it will default on its payments. Two most steps and it's junk bond time. The Greek budget deficit is now running at 12% - the rules of EMU allow a maximum of 3%.

Of course most of the Med countries have broken the Euro rules now. Even Germany is slightly over. (Of course the UK is almost as bad as Greece, but we're not in the Euro so don't have to follow their rules.)

As a measure of how the markets regard Greece it costs over $200,000 to insure $10m of their debt, compared to $85,000 for the UK, or $25,000 for Germany. The markets seem to think default is a distinct possibility.

It doesn't help that the Prime Minster, George Papandreou, is a dyed-in-the-wool socialist who cannot countenance Irish-style pay cuts for public workers, or even wage freezes.

There is now a serious inter-generational war going on in Greece. Young people have few prospects of a job, while their parents' generation are in protected and secure employment, funded directly or indirectly by taxes. We have already seen rioting in the streets.

The ECB would like Greece to impose IMF-type austerity measures including mass-public sector pay cuts and redundancies. Usually the IMF would prescribe devaluation of the currency as well, but with Greece in the Euro that's not possible. The pain will all have to be taken on the chin.

So, either the Greek government cracks, cuts spending and is probably booted from office, or, Brussels cracks and starts giving money to Greece to continue living beyond its means (German taxpayers would love that!) or Greece simply leaves the euro, reverts to the drachma, and devalues - thus stoking their economy and reducing their debt.

My money is on some sort of fudged bail-out from Brussels.

Wednesday, 9 December 2009

Pre-budget report, December 2009

So that was the Pre-Budget report! Vince Cable called it a budget for Bingo and Boilers and bad for everything else; George Osborne said the Chancellor was attempting the physically impossible: ring-fencing a black hole.

Yes, bingo tax is down from 22% to 20% - I didn’t even know there was a bingo tax, just shows, this government has taxed everything. And there will be a boiler scrappage scheme to build on the success of cash-for-clunkers . The state pension will rise 2.5%, which could be a real-terms increase; an extra half a million kids will get free school meals, and that’s the end of the nice bits.

The VAT cut and the stamp duty holiday will both be reversed on the 1st of January next year, ie, in three weeks’ time. Everyone earning over £20K will be paying an extra 0.5% on their national insurance from April 2011.

The Chancellor has revised his forecast of the depth of the recession. Back in April he thought the UK economy would shrink 3.5% this year – now he reckons it will be more like 4.75%. Strangely he has only increased his borrowing estimate by £3bn to £178bn, despite the fact we can all add up and see that it’s more likely to be around £200bn. The good news is he only wants to borrow £176bn in 2010 and £140bn in 2011, falling to £96bn in 2013. Back in April he told us those numbers would be £173bn in 2010, £140bn in 2011, £118bn in 2012. So basically: denial all around here.

The truth is of course he won’t be around after May 2010 so he can say anything he likes; it’s not going to happen. At the moment all he is doing is pushing the pain into the future – ie, beyond the election – to preserve as many Labour seats in the House of Commons as possible; hence the few populist measures aimed at Labour voters. He flunked any attempt actually to fix our broken economy.

Perhaps his most popular measure is taxing bankers’ bonuses at 50%. But for banks which are already taxpayer-owned a 100% tax would seem more appropriate. Bob Diamond, CEO of Barclays Capital, £27m bonus this year, was mentioned by name (not by AD though) – it looks like he has been selected as the next whipping boy. I expect Fred “the shred” Goodwin will be relieved his turn is over.

The markets reacted to Alistair Darling’s speech by falling, but not by much, 30 points off the FTSE 100 and sterling lost half a penny against the euro during the course of AD’s presentation.

All in all it was just a holding measure to take us into next year.


Wednesday, 2 December 2009

243 sick babies, only 18 from the UK

At the Chelsea and Westminster Hospital neonatal ward for sick babies they have 243 patients – of whom only 18 are from the UK! One of those 18 patients, possibly disgusted at how the NHS was being abused, recently leaked this map on which each patient's mother had placed a red dot to show her country of origin.

People arguing in favour of immigration sometimes trot out the line that the NHS would be crippled without foreign workers; they claim as many as 45% of NHS workers are immigrants. Of course they forget to mention that many of those are cleaners who could easily be replaced by our own native unemployed.

But now we see that in this case at least 45% of staff may be foreign but 93% of patients are foreign.

Each of these 225 foreign babies potentially represents a lifetime of expense to the British taxpayer.

Daily Mail