Wednesday, 30 November 2011

Autumn Statement, 2011

Yesterday, Chancellor George Osborne delivered his Autumn Statement to parliament. He did one last year as well, only back then he called it his “comprehensive spending review.” Last year he promised he’d have reduced the deficit to nil by 2014/15 – the last year in office for this government. However yesterday that fell by the wayside, he no-longer has any realistic prospect of stopping borrowing.

Yesterday, timed to coincide with the Statement, the Office of Budget Responsibility (OBR) released new forecasts for growth, and basically, they’ve been halved since the OBR last pronounced in March this year.

Our GDP is predicted to grow as follows:
    Year     Growth
    2011/12  +0.9%
    2012/13  +0.7%
    2013/14  +2.1%
    2014/15  +3.0%
    2015/16  +3.0%
Given the OBR was wrong by a straight 100% over the last eight months I think we can consign those figures to the trash without delay. However, the Chancellor did use them as the basis for his Statement. He noted with satisfaction that no recession is forecast.

The flip side of a GDP failing to grow is a deficit ballooning out of control. Here are Osborne’s new forecasts, as compared with his forecasts in the budget in March this year.
    Year         Autumn Statement      Budget 2011
    2011/12      £127bn                £122bn
    2012/13      £120bn                £101bn
    2013/14      £120bn                £70bn
    2014/15      £79bn                 £46bn
So that’s an extra £100bn of borrowing during the course of this parliament at the stroke of a pen.

George’s solution to our problems is simple: he has decided to cut spending even more, but then spend all the money saved - on infrastructure projects. He has taken a knife to the overseas aid budget; he’s going follow the current public sector wage freeze which expires in a year with a 1% cap, and he’s going to make public sector pay “responsive” to local job markets.

This last item sounds innocuous but has the potential to be massive. Past governments have relocated some of the labour intensive Whitehall departments to very poor areas of the country. Since civil servants are paid on nationally agreed rates you can get a big building with a thousand public sector workers inside acting as the anchor for a local deprived economy. A thousand guaranteed salaries are spent into the High Street of some poor Welsh town and that money keeps the town in business. Now it seems that Osborne intends to pay civil servants in poor areas a lesser wage. This is likely to be controversial. Labour greeted this remark with a sharp intake of breath.

Osborne also raised some cash by increasing the pension age from 66 to 67 for anyone born during the 1960s. That’s an extra year’s taxes from 10 million people, and an extra year he doesn’t have to pay them a pension. (Younger people already knew they were working until the age of 67.)

Then comes the spending. The Chancellor is going to “credit ease” to the tune of £44bn. He’ll be handing this money to the banks to be lent out to businesses with a turnover of less than £50 million. This is effectively “printed” money; it doesn’t come out of the budget.

He will also be funding 500 major infrastructure projects: roads, railways, bridges, power stations; comms networks – you name it, he’s building some.

Also, a lot of house building is going to happen. People renting council houses are to be allowed to buy the house in which they live for a 50% discount off the market rate. Osborne has pledged that for every house so sold another will be built. (People living in privately rented houses are wondering when they are going to be gifted half a house!)

The government will also provide mortgage guarantees to allow people with little cash to get on the housing ladder. You will be able to borrow 95% of the value of a house; finding only the 5% yourself, while the government guarantees the next 8% so the lender’s liability is only 87%. This applies to new build houses only.

Osborne renewed his pledge to look at merging National Insurance and Income Tax. So far every government since the year dot has tried but failed to do this.

There’s a new deal for unemployed young people. Hard on the heels of all the previous failed schemes: YOPS, TOPS, MOPS, etc we now have the “Youth Contract”. The government will pay for a job or apprenticeship for young people, and take away their benefits if they refuse to sign up.

George Osborne was on his feet for about 45 minutes. During this time Labour attempted to convey their disapproval. Miliband tried shaking his head and looking pensive, to no great effect. Shadow Chancellor Ed Balls did it better: he sat there the whole 45 minutes in open-mouthed, blank-faced incredulity at the sheer ineptitude of the government. Then as Osborne commended his Statement to the House and sat down, Balls rose to respond.

It was the usual gloat about how things weren’t going as well as expected and he trotted out his favourite cutting too far too fast message. Since everyone knows his government created the mess in the first place he was never going to get much traction.

So what does it all boil down to? Well, more austerity to start with; making people work longer, harder, for less. Sadly this is probably the right solution to our problems. There isn’t really any alternative.

The government is also stoking up housing. Right-to-buy with a 50% discount is a big, big incentive. The money will then be used to build more houses. There will also be mortgage indemnities for buying new build houses. Whenever a house changes hands there is a lot of ancillary spending: new furnishings, new kitchens and the like. This boosts the economy. However none of the government’s plans blow more air into the housing bubble. The subsidies apply only to new houses, or to houses which were previously in public ownership. This is vital – one of the major causes of our current economic problems was the house price bubble, and nothing should be done which sustains or re-inflates this bubble. Osborne seems to have understood this.

Although Osborne was pretty straight forwards in his presentation; especially compared to the smoke and mirrors we are used to from Gordon Brown, he did fudge a couple of issues. At one point he stated that he would be up-rating pensions and benefits by 5.2% (September’s CPI number) and then said that although this was less than the RPI rise this was OK because inflation was expected to fall in the future. Does he not realise that the up-rating is to compensate for the loss of value in the pension or benefit which has already happened during the past year? Future falls in inflation will not offset the loss of value already incurred – barring actual deflation, which is not on the cards. I’m sure he does understand this; he’s not stupid, but he seemed to think his audience was.

He also fudged the issue of interest rates. He seems to regard keeping them very low as an achievement. He rightly remarked that every 1% rise in the mortgage rate would cost British mortgage payers an extra £10bn, but then went on to claim that thanks to his stewardship of the economy the UK still had its AAA credit rating and was borrowing on the bond markets at the same rate as Germany. In fact the bond rates and the BoE base rate are only very loosely connected. The base rate is 0.5%, and this acts as a base for mortgage rates, while the UK gilt bond rate (10 years) is about 2.3%. The two are not the same and don’t affect each other much. None of the parliamentarians in the House seemed to realise this when he took credit for keeping mortgage rates low.

All in all, Osborne is doing right thing. At least as right as he can get subject to the constraints he operates within. Of course a BNP government could and would create two million jobs pretty much overnight, by deporting immigrants, but the Tories are never going to do that.

GO now has no forecast for when he will stop borrowing and that is a bad thing. Stopping borrowing is a prerequisite for starting to pay down the national debt. We cannot just let the debt grow forever. If we did then one day all government spending would be dedicated to servicing the debt and there would be no public services at all. The government now seems to have settled on a lesser ambition of controlling the debt servicing cost rather than the debt itself. With future GDP growth, with a triple-A credit rating, with a following wind and some luck, they may actually keep the cost of the debt growing more slowly than our national income – which is something, I suppose.

Thursday, 17 November 2011

London schools majority ethnic

Fourteen years ago New Labour came to power and they opened the doors to mass immigration. The effects of this policy were first felt in the maternity wards, then the primary schools, and now the hoards have reached the secondary schools.

Above is the breakdown by borough of non-whites vs whites in London's schools. You can see that across all London the proportion of non-white pupils is 53.6%, up from 40.3% just ten years previously. And, although just published, the data is actually from 2009. Today the swamping will be even greater.

Pity the poor English boy or girl trapped in a classroom in Brent or Tower Hamlets. Their education will be blighted.

Bank of England already thinking about QE 3

Barely have they finished pumping the second round of printed money into the economy, £75bn in all, but the MPC have signalled that QE3 is on the cards.

Quantitative Easing is inflationary, and CPI is currently 5%, more than twice the target of 2%, but Mervyn King thinks he can see deflation ahead.
Sir Mervyn King, the governor, said on Wednesday that “inflation is more likely to be below than above the target” over the next two years, implying that the Bank believes more asset purchases will be necessary. The report’s central forecast shows inflation falling to far below the Bank’s 2 per cent inflation target towards the end of 2013, the forecast horizon the MPC considers when deciding whether or not to conduct further quantitative easing. (Link)
This is all very reassuring. Well, it would be, if back in August 2009 King hadn't said this:
"With Bank rate following the market yield curve and a stock of asset purchases of £175bn, inflation is more likely to be below the target than above it in the medium term." (Link)
So basically he hasn't a clue what he's talking about. Obviously he knows he hasn't a clue, which rather raises the question as to why he's printing money with such gay abandon? Surely, if you're uncertain as to the future, the watchword should be caution?

Apparently not: print and be damned.

(Mervyn King will retire in 2013 with an RPI-linked pension.)

Tuesday, 8 November 2011

Dispatches, the morning after

OK, so Dispatches last night was considerably more frank about who is grooming white girls, and it isn't white boys, than other programmes have been in the past. Journalist Tazeen Ahmad's agenda was showing through quite horribly though. She was desperate to redeem her fellow muslims. She talked to young muslim men who described frankly how they lured under-age white girls into a life of prostitution; starting with gifts, alcohol, drugs before turning nasty and demanding sex, first sex for themselves, then sex for all the men in the group. Ahmad heard that sex with a 13-year-old white girl typically cost about £10, but a virgin could go as high as £30. They're not big spenders, these muslims.

The girls themselves described how they were controlled: failure to perform would result in their mothers' being threatened with gang rape. One girl was anally raped for disobedience.

A horrified Tazeen went on to talk to elders of the muslim community in her search for redemption. One started out alright, by condemning the grooming of young girls before adding as a afterthought that it was actually their fault for dressing too provocatively and being out late at night. Clearly if a girl isn't wearing a burhka she's asking for it.

Eventually Tazeen was able to find a group of muslims who, with just a little prompting, were prepared to stand in front of the camera and say grooming and raping children is wrong.

So with that under her belt Tazeen moved on to considering what should be done about the problem. The policeman from CEOP was useless. He couldn't quite bring himself to say, "It's the muslims what are doing it." Tazeen prompted him several times, but the words wouldn't come out of his mouth.

Tazeen herself had to resort to a little deception to maintain political correctness. During her voiceovers she freely interchanged the terms Pakistani and muslim, before then adding that some white men were perpetrators as well. Are there no white muslims in Tazeen's world? Apparently not. Of course we know that muslims from Eastern Europe are just as involved; immigrants from Albania, Bosnia, Romania, Chechnya, etc. There are also black-as-the-proverbial-ace-of-spades muslims from Somalia - no less guilty.

Tazeen then mused on why these crimes were being committed by Pakistanis particularly (again failing to note that it's muslims, not specifically Pakistanis.) But she couldn't come up with an answer to that question. Well, I'm sure she knows the answer, but she couldn't bring herself to say it out loud on TV: muslims rape under-aged white girls because their religion says they can. The prophet Mohammed enjoyed sexual relations with Aisha when she was nine years old - so why shouldn't his followers do likewise? Mo also enjoined his followers to take the women of the infidels for their own use. The whole religion is a perverts' charter. By their own standards the paedophile groomers are the very models of fine, upstanding believers.

Tazeen asked muslim elders what should be done about the problem. The answers were generally along the lines of, "what problem?" Vague suggestions about better education and telling people that rape is wrong were made! Surely everyone knows this. Strangely no muslim elder, nor the senior policeman, made the practical suggestion that banning the Islamic religion completely, and deporting anyone who defies the ban, would solve the problem.

So, to end, we conclude: Tazeen Ahmad did not duck most of the big questions. When you compare her programme with the episode of Newsnight where they spent the whole hour discussing the problem without once even alluding to the fact that the perpetrators might not all be bowler-hatted, umbrella-totting Englishmen, then Tazeen did good. Probably she did as good as she could. Obviously she doesn't want to completely trash her own religion - even if it must be very embarrassing for her that it's such a repulsive belief system. We must deduct marks for fudging the muslim versus Pakistani issue, but overall, a step in the right direction. I think the public is getting the message, slowly, and not yet the complete message, but we're getting there.

Monday, 7 November 2011

Dispatches, Ch4, tonight - Britain's Sex Gangs

Tonight at 10.30pm the Channel 4 Dispatches team has an hour-long programme on the endemic problem of grooming children for sex. Since the readers of this blog already know all about this, it will be worth watching just to see if they admit that it's muslims who are doing the grooming. On the BBC that would be taboo - on Channel 4 maybe we shall see some frank reporting.

The write-up on the prog is somewhat unpromising; it says...

Research suggests that thousands of children are potentially being sexually exploited by street grooming gangs. This may only be the tip of the iceberg, as experts believe many crimes of this nature go unreported.

Journalist Tazeen Ahmad investigates street grooming and hears from community leaders who say enough is enough and demand action on the issue. She meets victims of grooming and their parents, whose lives have been torn apart.

She hears how girls as young as 12 have been targeted by these gangs and so terrorised and brainwashed that they keep their ordeal secret for years.

In a particularly shocking encounter she talks to two young men who explain in detail how grooming by gangs is perpetrated, why virgins are more highly prized and how the commerce of this type of brutal sexual exploitation unfolds.

Wednesday, 2 November 2011

No to 70 million

Sir Andrew Green, founder of MigrationWatch, has started an epetition to ask parliament to debate the prospect of the UK population reaching 70 million.

All good nationalists should sign this petition. Click here.

Tuesday, 1 November 2011

MF Global gone tits up

Where "tits up" means Chapter 11 bankruptcy protection.

MF Global is (was?) a brokerage with significant operations in London and New York. They offered client services such as spread betting, savings, investments etc. Crucially though they also invested on their own behalf. This means they were gambling with their money and yours - and somewhere along the line the two seem to have gotten merged.

This can happen if you keep lots of different people's money in the same pot; before you realise it you can't tell which is yours and which is theirs. MF Global seem to have gotten confused and lost all their money followed by all their customers' money.


FSA and SEC asleep at the wheel again, and $40bn (I'm guessing here) has vanished into the ether. Quite what incomprehensible bet they made that went wrong I don't know. But the money is gone.

There was a time when it was illegal to gamble with your money and also keep customer money. But that was a while back. There are still brokerages which don't trade on their own account and arguably these are the only safe ones.

Of course there is some risk of contagion; firms they owe money to also going bust. The coming days will tell.

This is all a bit sub-Lehmans, but still significant.