Thursday, 21 March 2013

Departmental spending

Just for interest, here are the departmental spending totals from yesterday's budget, and for contrast those from last year's budget...

Note that to "tread water" a department would need a 3.5% uplift to compensate for inflation so where a cash reduction is being applied the cuts will be severe indeed.

It's worth a mention that "debt interest" at £51 billion is now our 4th biggest item.

Wednesday, 20 March 2013

Budget 2013

This afternoon George Osborne presented his 4th budget to parliament. Let us have a little look at the numbers.
               This     Last    Year     First
               Budget   Year    Before   Budget
Taxation       £612bn   £620bn  £588bn   £548bn
Borrowing      £108bn   £91bn   £122bn   £149bn
Spending       £725bn   £711bn  £710bn   £697bn
(In the 'last year' numbers the £28bn Royal
Mail Pension fund is counted as borrowing.)

As you see spending is up and borrowing is up and most prudence is out the window.

This year Osborne was not a confident speaker. He seems  to have adopted the Gordon Brown tactics of gabbling and missing out bad news. He rose and started with a litany of factoids showing how the UK was doing better than other countries before admitting that GDP was forecast only to be 0.6% this year. Last year he told us growth would be 2.0% this year.

For the record his new forecasts are:

            Year     GDP
            2013/14  +0.6%
            2014/15  +1.8%
            2015/16  +2.3%
            2016/17  +2.7%
            2017/18  +2.8%

As Miliband rightly pointed out in his response - the recovery always seems to be four years in the future, every year retreating by a year. In previous years Osborne has indicated when he expected the deficit to fall to zero and the budget to be balanced. In his first ever budget in 2010 he said balance would be achieved in 2015. There was no confirmation of this today. That particular goal seems to have flown out the window.

The deficit will be £108bn this year. That's a hefty chunk up on last year (£91bn) and will feel worse because the transfer of the Royal Mail pension fund to the government cushioned the blow to some extent last year.

Osborne then proceeded with some irrelevant waffle about the remit of the MPC, including the slightly disturbing revelation that they will be using "unconventional monetary instruments" in the future. What these are he did not say. Hopefully not a Cyprus style cash grab.

Then he covered spending: all departments will have a 1% cut in their budgets, apart from the usual schools & 'ospitals. Foreign aid is also protected. Public sector pay rises will be limited to 1% - apart from the military and police who can have more.

The give-aways comprise: 1p off a pint of beer (effect on consumer - nil) corporation tax reduced by 1% to 20% starting next year (effect on companies - nil if they are already using a good accountant) tax-free childcare for parents (effect - nice!) stamp duty cancelled on the AIM market (effect - actually could be good for small businesses) first £2,000 of employer's national insurance to be cancelled (effect - very good for very small companies; hiring employee number one could effectively be tax free, effect on most employers - nil) and some improved allowances about how much savings you can keep if you need social care.

The big spending commitment was a two-pronged plan called "Help to buy" which is clearly intended to stimulate the housing market. First, for new build houses only, £3.5bn will be allocated for shared equity interest-free loans. The buyer puts 5% down, the government then puts 20% down and a bank supplies the remaining 75% as a mortgage. When you sell you pay back the 20% government loan. (The interest-free period is only 5 years though.)

The second prong is for new build houses and also old houses. Osborne said the government will guarantee £130bn worth of mortgages, thus allowing the unmortgageable to get a home loan. However a perusal of the small print indicates he is not being quite that generous. The government is actually going to guarantee the first tranche of these mortgages with a £12bn bail-out fund. They think this will then enable £130bn of mortgages to be written which would not otherwise happen.

The first prong, which should stimulate house building, seems like an OK idea. The second prong (not available until next year anyway) looks like subprime is back in business. Giving mortgages to people the lenders don't think are credit-worthy can end badly!

That pretty much wrapped it up. Osborne did quite a lot of mumbling, garbling his words, stopping for a drink and name-checking other MPs to get some cheap cheers. This was not the polished peformance of previous years. And this year he was using verbal sleights-of-hand to conceal bad news. And he never even mentioned tobacco.

The Deputy Speaker than rose and messed up the resolutions. Some things had to be agreed without debate and the Speaker called for "ayes" which he got. But he forgot a second resolution and called Miliband before telling him to sit down again for some more "ayes". In fact Osborne omitted so much from his speech that the MPs saying "aye" didn't really know what they were voting for.

Eventually Miliband was up and at them. After pointing out that the news was bad not good he launched into his party trick from last year: pointing at the government front bench and asking them to nod if they were benefiting from the abolition of the 50p tax rate. He played this out for several minutes to the delight of his own MPs while the government sat there in embarrassed silence. They really need to work out some sort of response to this or he will just keep doing it.

All in all, the budget was lackluster and the response funny but insubstantial.

Red book

Cyprus: Back from the brink

Looks like we won't have to send a gunboat to Cyprus after all, their MPs voted down the proposed cash grab. Even the government didn't vote for it. In fact not a single MP voted for it - although some abstained. Maybe they didn't fancy being torn apart by the mob outside the parliament building.

Let's have a quick recap of the Cyprus situation....

After the fall of the Soviet Union in the 1990's everything that wasn't nailed down was stolen by 'oligarchs' and sold to the West. This meant that while most Russians got poor some got very rich indeed. They needed somewhere to stash the cash a bit safer than Mother Russia and they also preferred to live outside Russia.

They moved all over the world of course, perhaps a quarter of a million came to the UK, but Cyprus was also attractive: good sunny weather; welcoming no-questions-asked banking system; only a 30 minute flight to Israel (a surprising number of oligarchs are Jewish) and a British-derived legal system you could actually trust - British courts still have ultimate jurisdiction over some aspects of Cypriot finance.This mess could still end up in the Strand at the Royal Courts of Justice.

So hot Russian money moved to Cyprus, along with the retired gangsters who owned it. They say about €20bn in all. The money was deposited in Cypriot banks who grew fat and powerful. These banks needed somewhere to invest this cash pile and Cyprus and Greece have close relations and share a common language and Greek bonds used to pay fantastically good returns so the Russian cash got invested in Athens.

Then last year, you will recall, the Greeks ran out of money and gave their bondholders a 75% haircut. The Cypriot banks were effectively bust - they couldn't pay back the Russian gangsters. Fortunately the European Central Bank stepped in with a line of credit to keep them in business.

That credit is all gone now. They need more. But the "troika" ie the ECB+EU+IMF said no more cash unless you find €5.8bn from your own resources, why don't you raid the cash deposits of your residents?

Hence yesterday's fiasco.

But what to do now that has failed? Well the Cypriots have some assets they could sell. They have a deep water port; they have some unexploited gas deposits they could sell 'futures' in. They also have the possibility of getting more loans from the Russian government. Unfortunately these would likely not add up to enough to satisfy the troika.

But they are already talking about using the 'nuclear' option - leaving the euro and restoring the Cyprus pound. Once they have their own currency they will be able to print as much of it as they like and perform an orderly default in which euro depositors get repaid in pounds of dubious value.

There isn't much time here. They've had their long bank holiday weekend. The banks were supposed to re-open yesterday, but they didn't. The banks cannot re-open until the crisis is resolved because they would be instantly ripped to pieces if they did. Every depositor would want to withdraw every cent.

There is a distinct possibility now that the banks will never actually re-open; not to do business in euros at least. However, with the Cypriot thumb poised over the nuclear button the troika may blink first and hand over the cash required.

We should know pretty soon.

Monday, 18 March 2013

Cyprus: Bank levy is act of war

Today in Cyprus the banks are closed, their websites are down, and the government is trying to push an Act through the national assembly which will confiscate 9.9% of almost all bank cash deposits above €100,000 and 6.7% of all bank deposits less than that. This "levy" is being referred to as a tax and so will not trigger statutory compensation although the losers will be given some bank equity of only notional value by way of mollification.

All bank accounts would be affected, except those belonging to Greek citizens. However the UK government has said it will compensate the 3,500 British soldiers on the island, and also the small number of diplomats. But the 25,000 ordinary Brits who live full time in Cyprus will get nothing.

The levy has been forced on the government by the EU and the IMF as a condition of receiving a €10bn loan so they can make their existing debt interest payments. (Borrowing to pay the interest on your existing debt is a terminal condition!) Making the ordinary Cypriot in the street feel some financial pain is mainly about appeasing German voters - there are major elections in Germany later this year and the Germans are fed up of subsidizing the Mediterranean members of the EU.

Exempting Greek citizens is simply to avoid the Greek army moving in and shooting everyone.

It is by no means certain that the measure will be passed. The government has 20 members in the 56 member Assembly. A lot of arm twisting must happen today.

There is an undercurrent of xenophobia in these proposals. The big deposits in Cypriot banks are owned by the Russian mafia. The second biggest chunk belongs to British ex-pats who have retired to the sun and have their pensions paid into a local bank for convenience. The German and the Cypriot governments are hoping to penalise these 'foreigners' - in fact the original German proposal was to exempt all accounts under €100,000 - which would pretty much exempt all Cypriots. However that would mean a much higher levy on the big accounts (the aim is to raise €5bn from the cash grab) and it looks like for some reason the members of the government were not keen on that.

Although this snatch is presented as a "tax", it clearly is not. The whole point of a tax regime is that you know what you are getting into upfront. You can see the rules and decide whether you want in or not. Closing the banks for a long weekend while you scalp bank accounts is not a lawful tax; it's a raid.

It is unlikely to be lawful under European law to dispossess people of their property in this way. Certainly treating citizens of one EU nation (Greece) more advantageously than citizens of the other EU nations is highly illegal. And when British citizens are dispossessed in this way it is effectively an Act of War. The UK already has a strong military presence on the island and a less spineless British government would already have made it abundantly clear to the Cypriot government that any attempt to seize the assets of British citizens would result in punitive military action. The Cypriots are not so stupid as to attempt to seize assets from Greeks - they know what would happen, but it seems the British government can be walked over with impunity.

It course it may not happen. The law may not pass. But one thing is now certain - there is going to be a run on the Cypriot banks. Money will be leaving as soon as they are open for business. A lot of it will be coming to London. The local politicians must be close to insane. As soon as the levy was mooted they made it certain there would be a bank run. No bank levy has ever been a good idea or solved any economic problem. Argentina did something similar two decades ago and still they have not recovered. They won't recover in living memory. No-one will ever trust them and after this no-one is ever going to trust Cyprus. The very best the local government can hope for is that it is more of a bank jog than a bank sprint and not too many of them are killed in the rioting.

Meanwhile Cameron and Osborne should grow a backbone fast.

BBC link

Thursday, 14 March 2013

Neanderthal eyes were too big

Another foray into science today...

Apparently Neanderthal "man" died out because his eyes were too big.

Supposedly Mr Neanderthal evolved in Africa with a brain as big as or even bigger than a modern human's brain. But then he moved to Europe where it is darker so his eyes grew bigger thus he had to dedicate more of his brain to visual processing and less to thinking so got out-competed by our ancestors which led to his extinction.

There is one immediate giant flaw in this theory. If the eyes got bigger in order to compensation for the lack of light then the amount of information reaching the brain is exactly the same as in the small eye/lots of light situation. The visual cortex would not enlarge because it would be processing the same amount of information as before. Duh!

And even if Neanderthals were a bit thick that would not be enough to render them extinct. Bears are not as intelligent as humans and they are not extinct. And judging by Neanderthal bone thickness they would have been five times stronger than humans and a lot faster runners, probably sustaining 20mph over broken ground (among humans only Olympic athletes can sustain 20mph, and that is on a track.)

The large eyes likely denote a nocturnal lifestyle. They probably had the tapetum lucidum, the crystalline layer behind the retina which gives night vision in most vertebrates, although not humans. (And that's a whole other story. Why did evolution deny us night vision, which frankly is very nearly essential to our survival and interdicts 12 hours out of every 24 to us. Was it because the crystalline layer makes the vision just slightly fuzzy and would make reading and writing impossible? If so, how did evolution know that 120,000 years later reading and writing would be important?)

Despite the Neanderthal imagery you will see all over the 'net, there is no evidence they wore any sort of clothing or used spears. And they probably had thick body hair. It is best to think of them as bipedal bears, occupying the same ecological niche - bears by day, Neanderthals by night. From more than a few tens of yards away you would be hard-pressed to distinguish a Neanderthal from a bear.

(Genetic research shows we share about 98% of our DNA with Neanderthals. We also share about 98% with chimpanzees. Neanderthals could be as different from humans as chimps are.)

And then we come to the "extinct" bit. Is there really any reason to suppose they are extinct? It's true we don't see them walking our streets, but let us not forget that the northern latitudes are girdled by a giant forest, north of the steppe, south of the tundra, called the Taiga. (Very approximately, tundra is Russian for "no trees" and taiga means "too many trees".)

In all probability Neanderthals continue to live in the unexplored taiga cutting across Siberia, Scandinavia and possibly the New World as well. (This land is genuinely unexplored. It has been flown over of course many times but it is impenetrable on foot. Given the difficulty of access and the nocturnal nature of the Neanderthal it would not be surprising if they lived on unremarked. Basically humans really only travel on roads and paths. We don't stray. We don't have the strength to get through the undergrowth. For example, no human can keep up with a gorilla in the forest. A ten-minute amble through the vegetation for a gorilla is half a day with a machete for a human.  Also, there have been sightings.)

All in all, this "eyes too big" story is just another bunch of scientists trying to shore up a rapidly crumbling "evolution" theory by jumping to unwarranted conclusions from a tiny amount of evidence, and of course being reported completely uncritically by the mainstream media.

Wednesday, 13 March 2013

Inspector Gadget has gone

One of the "recommended" blogs linked to from this blog is Inspector Gadget, a real-life police inspector with "Ruralshire Constabulary". He provided a fascinating insight into the true nature of policing today. But now the blog is gone, wiped clean. The publisher of his book, Wasting Police Time, comments here.

The blog was anonymous - no-one knew the inspector's real identity - just like few know mine. He did not post a final goodbye message, nor has he left available the enormous archive of posts, 2 or 3 a week since 2006, so one must suspect some sort of foul-play. He was a thorn in the side of police higher-ups and his identity may have been discovered and his job threatened unless he removed the blog.

So, another dissenter has been silenced. I will leave the link in case he comes back, and as a form of tribute.

Tuesday, 12 March 2013

Chris and Vicky jailed

Chris Huhne and Vicky Pryce have both been jailed for 8 months - which means they should be out by mid-July, possibly slightly earlier with an electronic tag. Long before then they will be in category C "open" prisons where inmates have the keys to their own "rooms" and are allowed out for shopping and work experience.

That said, the sentences seem somewhat perverse. They both got 8 months, despite Huhne having pleaded guilty, for which he received a 10% discount - nearly a month off. Had he pleaded guilty "at the earliest opportunity" he would have got a 33% discount and only be serving 6 months now. Vicky on the other hand got no discount because she pleaded not guilty.

The judge was scathing about both of them. Yet it seems strange that Huhne, the instigator of the crime, did not get a more serious sentence than Vicky who merely went along with it. Normally the person who conceives a crime is punished far more harshly than accomplices who just go along with it. As a first offence, and not one of her own initiative, Vicky should have been looking at a suspended sentence.

The sentence on Chris Huhne is also harsh. Previous cases would tend to indicate a 3 to 6 month prison term. They have both been punished for being in the public eye.

All that said, this blog, and nationalists generally, continue to abhor s172 of the Road Traffic Act. This is the section which violates a person's Right To Silence by requiring self-incrimination. Had Chris Huhne simply stood on his high horse and refused to name the driver (which would have gotten him 6 points on his licence and a driving ban) this blog would be applauding his principled stand. Perverting the course of justice though, we do not condone.

Thursday, 7 March 2013

Vicky is guilty

Vicky Pryce, former wife of former MP and former cabinet minister Chris Huhne, has been found guilty of perverting the course of justice at retrial, by a jury that did not send the judge a list of inane questions and cause him to despair of today's jurors.

She hasn't been sent down yet - but it's on the cards.

Chris Huhne hasn't been sentenced yet either. It looks like they are going to be done in a job lot. Both have been given the "bring your toothbrushes to court" warning.

This blog reckons they should get two years apiece - hers suspended, his not. They are both looking at £100,000 in costs as well.

RIP Christina Edkins

Another innocent is killed by an animal in human form. This is Christina Edkins...

Christina, 16: "Bright and popular"

She had been on the bus to school in Birmingham this morning for a mere five minutes when a "black male" stabbed her to death. Early indications are the black male in question did not know her and the search for a reason for her senseless killing is likely to prove futile.

The police referred to her killing as "sporadic". Sporadic means "occurring at random intervals" so they are probably correct.

Sadly death by hanging will not be available as a sentence for anyone convicted of her murder.

Postscript: 12 March 2013

Philip Simelane, 22, is to be charged with the murder of Christina. Simeland is currently in secure accomodation after being sectioned under the Mental Health Act.

Wednesday, 6 March 2013

What are the Tories up to?

It has got to be asked - what is the Conservative strategy? How do they plan to stay in government after May 2015?

If they did not realize it before, they must now after the Eastleigh by-election, that they are doomed if they stay on the current course. The Eastleigh results were, approximately and effectively, Lib Dems 13,000 votes (and winner), UKIP 11,000 (2nd place) and Cons 10,000 (3rd place).

The Lib Dems won the election despite their party being embroiled in two simultaneous scandals: the Chris Huhne perversion of justice case, and the Lord Rennard sexual allegations. Either of these should have locked them out of Eastleigh, but they squeaked in. The reason is obvious from the numbers. The right-wing, Eurosceptic vote was split close to 50/50 between the Tories and UKIP. Add their two results together and you get an easy victory for a theoretical Con-UKIP candidate.

So UKIP are currently playing the same role now that the Lib Dems played in the 1980s and 1990s. They are keeping the Tories out just like the Lib Dems (an offshoot of the Labour party) kept Labout out back then.

The Conservative High Command know this and you would have thought they would formulate a clear strategy to deal with the situation. But they have not. Cameron has tried a couple of feeble initiatives but got no traction. He promised an EU membership referendum, but not for ages. And he is looking at denying Romanian and Bulgarian immigrants immediate access to benefits when they acquire the right to work in the UK next year. Neither of these things is buying him votes because people just do not believe he will deliver. He promised a referendum on the Lisbon Treaty and it never happened. Why would he deliver on these other things?

We are left with two possibilities. First, the Conservatives are currently caught like rabbits in the headlights, unable to do anything of consequence, or second, they genuinely do not want to win the next general election. This second option may seem unlikely, but think on. They have never really behaved like a party that wanted to govern for the long term. When they came to power in 2010 they could have used their honeymoon period to overhaul radically our national situation. For a year or so they could have blamed everything bad on the previous Labour government and been believed. They could have stopped the borrowing, balanced the budget, and radically cut the size of the public sector. Instead they have carried on borrowing and only made some half-hearted in-roads into the giant kleptocracy that is local and central government.

They have kept interest rates ridiculously low and carried on the quantitative easing programme. As a result inflation is still over target, and has been for all their period in office and it looks likely that by 2015 they will have doubled the £700bn national debt they inherited. Certainly it is over one trillion pounds now.

The Tory attitude has largely been: do nothing radical, do not fix any of the major problems, just keep the old banger on the road until we can hand it back to Labour and they can take the blame when it finally dies.

At the time of the last general election the governor of the Bank of England, Mervyn King, injudiciously commented that whoever won the election would be out of office for a generation. By this he meant that the medicine the country needed is so bitter that whoever administered it would pay a high political cost. The Tories seem to have taken this to heart and have decided that it is not going to be them who pour the vile liquid down our throats. They have taken the view that Labour can come back and take the blame for what they did.

This, though, may not sit well with the Tory backbenchers. They do not mind so much being kicked out of government (frankly opposition is easier) but they would mind losing their seats. Seats mean salary, and expenses and pensions - these are the things they do care about. If it looks like the government's fatalistic attitude is going to cost a lot of seats then there will be rebellion in the ranks.

There has been no Tory backlash from missing the open goal in Eastleigh yet. They are waiting. Specifically they are waiting for March 20th, when George Osborne will deliver his next budget. The reaction to this budget will be the trigger for action, or inaction. Last year's budget was called an "omnishambles". This year Osbrown has to do better. If he does not he becomes vulnerable, and if he goes (Theresa May has already ordered her Economics for Dummies) then the Prime Minister becomes a lame duck in the cross-hairs. The Tory herd may decide that a different leader, one with better Eurosceptic credentials, would save them more seats, even if he cannot actually win them the next general election.

This dashing new leader would need to be put in office early enough to lure back the UKIP defectors but late enough not to have time to do any real damage to the country; mid-2014 would probably be about right.