Monday, 19 July 2010

NS&I withdraws index-linked savings certificates

With RPI inflation running at over 5% and the best High Street savings accounts offering 2 or 3 percent long term the only way to keep your savings safe and protected against inflation in the last few years has been National Savings Certificates which paid RPI plus a bonus.

Today the government has just cancelled them. They claim they are over-subscribed, which obviously they are as there is no other risk-free way of saving money at or over RPI inflation.

Nice! That really encourages saving--not. If your money loses value all the time the best thing you can do with surplus cash is spend it as fast as possible. If you wait until next year to spend it you'll just get less for your money. We are no-longer in an environment where money "grows". These days money shrinks.

The alternative is to take risk. You could buy gold, but there's no return and the price might fall. You could buy index-liked gilts but even though the coupon is index-linked and guaranteed the capital value can fall (although if you hold for the full 20 or 30 years you'll get back what it says on the certificate. Most people will want out before then.)

Why has the government closed this window? They still have an annual £150bn deficit to fund - they need our cash. Or do they? Are they thinking of restarting quantitative easing, aka money printing? QE is the solution to deflation. It's not appropriate with RPI running at over 5 percent. If you try QE when you already have inflation you get more inflation, lots more inflation. This is not a good idea.


Banning the burqa

Several European countries are in the process of "banning the burqa", where burqa is used here as a generic term for Islamic women's headdress.

In France a ban has just been approved by a substantial majority in the lower house of parliament, the National Assembly. It will go before the Senate in September and is generally expected to be passed into law at that time.

The Spanish parliament will debate a burqa ban later this week. There's cross-party agreement so the ban is likely to the implemented, probably by the end of the year. (The Spanish parliament has a long Summer break coming up.)

Meanwhile here in the UK, the Government, in the form of Immigration Minister Damian Green, has said banning certain items of clothing is un-British and the UK government will not do it. This is in response to an Early Day Motion (EDM) from Conservative MP for Kettering Philip Hollobone, which seeks to ban all face coverings in public places.

Let's have a little look at what we're talking about...

Clearly walking down the street in either of those garments is to make yourself an object of ridicule. And to be addressed by someone hiding behind a cloth screen would be insulting. Philip Hollobone has said he will not talk to women wearing these things at his MP's surgeries.

This is fair enough. Why should he be expected to try to communicate through a tiny grill? And why should anyone be expected to talk to someone whose identity is hidden.

But Philip Hollobone's EDM is not the answer, and Damian Green is right - it is un-British to ban certain items of clothing.

Hollobone goes too far with his EDM. He seeks to ban all facial coverings in public places. His net is too wide. He would criminalise brides on their way to church, children out trick-or-treating, motorcyclists, fencing enthusiasts, and anyone needing to wear protective equipment on their face such as people working with solvents.

The reason he goes too far is simple political correctness. He can't bring himself to say "ban the burqa and just the burqa". He feels he has to bring others into his proscription just so it doesn't look like he's picking on muslims, and he argues that the underlying reasoning is security; not because we don't like seeing a foreign religion paraded on our streets, which is the real reason.

So Damian Green is right, and Hollobone is wrong on this issue. What we should be banning is the Islamic religion itself. We should tackle the problem at source. Islam (strictly speaking, some strands of Islam) oppresses women, and that is more un-British than any mere garment. Britain, it should be remembered, extended the vote to all women before any other nation. (Some women were voting in North America before that, but this was prior to 1776 in areas that were still under British rule.) In the Islamic heartland, Saudi Arabia, women still can't vote.

The Koran calls upon its followers to treat unbelievers harshly, to behead them and cut off their fingertips! (Verse 8:12, it's not clear what the point of cutting off someone's fingertips after you've beheaded them is! Islam is not the most logical of religions.)

Preaching the Koran would be an illegal incitement to murder were it not implicitly protected by being a religion. Ironically the only good muslim is a bad muslim. If a muslim lives by the Koran he is a good muslim but a bad person, and he if disregards the Koran he is a good person but a bad muslim. And it should be noted that although we non-muslims can be at risk of fundamentalist Islamic violence, by far the greatest number of victims of Islamic fundamentalists are other muslims. Being a bad muslim (in the eyes of another muslim) can be far worse for your health than not being a muslim at all.

In short, it's time to get this alien religion out of our country. It is turning back the clock on freedom of conscience, on women's rights, and its tenets are not in accordance with our laws or historical customs.

So don't ban the burqa, just ban Islam.


Tuesday, 6 July 2010

Office for Budget Responsibility loses its head

When New Labour came to power in 1997 they "set the Bank of England" free; ie, created the Monetary Policy Committee so that interest rate decisions would become free of political interference.

When the coalition came to power two months ago today they created the Office for Budget Responsibility in order to take the politics out of economic forecasting.

The MPC is still going strong, but the OBR seems to have hit a pothole in the road. Sir Alan Budd the chairman, himself a former MPC member, has just quit.

Of course he was always intended to be "interim", but he should have lasted a bit longer than two months. It seems he took the whole "independent" thing a little too far and has had a falling out with his political masters.

Friday, 2 July 2010

There's been a food bubble

You probably remember back in early 2007 our TV screens were full of 3rd-worlders eating grass because food production was being converted to bio-fuel production and food prices were soaring beyond the means of the developing countries. I'm sure you felt guilty for a minute or two before channel hopping to something less gloomy.

Well, you're off the hook! It turns out that it wasn't you in your gas-guzzler starving those poor natives. It was the usual suspects, bankers, they were pulling their money out of real estate and needed somewhere else to stash it, so they bought agri-futures and in so doing pushed the price of food into the stratosphere.

Of course the laws of supply and demand cannot be bucked for ever and in 2009 food prices crashed back down again; no consolation to any African who starved to death in the mean time though.

Johann Hari in the Independent has the details.