Thursday, 18 February 2016

Turkish, Kurdish, Russian mess

Master strategist, Russian President Vladimir Putin has again completely wrong-footed the West.

"Checkmate, America!"


See what he has achieved. He 'helped' the West fight ISIS in Syria by sending his bombers to flatten anyone opposed to the Assad regime. Not surprisingly Assad let him use the pleasant coastal city of Latakia, making Russia the only power with a base actually in Syria.

However the bombers focused mainly on the anti-Assad forces in the north, not the ISIS forces in the East. They were so successful in the north that they opened up a power vacuum which pro-Western Kurdish forces entered, up close to the Turkish border. This spooked the Turks so much they started long range shelling of the Kurds from over the border. That is, NATO-member Turkey actively shooting at NATO-ally, the Kurds.

Yesterday the Kurds retaliated by bombing a military convoy in Ankara, the Turkish capital, killing 21 people and injuring 61 more.

So basically Putin has got us fighting among ourselves.

Friday, 12 February 2016

Gravity waves detected

Gravity waves have been detected and this really is a big deal. It starts a new era in astronomy. For most of human history people just looked at the stars with the naked eye. This was good enough to make calendars, navigate ships, etc.

Then in 1610 approx the Italian scientist Galileo built himself a telescope and the era of optical astronomy was born. (He didn't invent the telescope though; no-one can be sure who invented the telescope as it was of extreme military significance and top secret, probably for a hundred years before Galileo ever pointed one at the sky.)

Galileo was initially supported by the Catholic Church but he wrote some rude things about the pope (Urban VIII) who put him under house arrest for life. Ironically it was during his house arrest that he actually wrote his discoveries down - without those writings he might today be obscure or even unknown.

The next Era of Astronomy started in the 1930s when the radio telescope was invented (by a Bell engineer trying to find the source of static interference in radio signals.) And until yesterday radio astronomy was state of the art.

Now gravity waves have been detected.  So we have gravity astronomy. We will need three gravity telescopes though, in order to triangulate the source of the waves, then a slew of new discoveries may rain down on us. There could be big stuff out there we just cannot see. Remember, at least 95% of the mass of universe is currently unexplained, ie not part of any stars we can see.

Where is the economy going?

There is much doom and gloom in the media at the moment. People seem to be fearing the worst. The banks seem to be taking the biggest hits with the majors losing up to 5% in market cap per day. The underlying reason is not because they are doing so badly but because the QE taps are being turned off and the free money going away. The world economy has about twelve trillion US dollars of QE money in it and has become addicted. The money is not being withdrawn yet but just the lack of new money is causing a slump.

Two obvious symptoms are the fall in oil prices and a slow down in the Chinese economy. In fact, for the UK these are not bad things: we burn more oil than we dig up so the cheap fill-ups at the gas station is a net positive for our economy, and China sells way more to us than we to them so the tat gets cheaper. But our big banks are global and no-one can see where their future profits are coming from, so the shares fall and the markets get gloomy.

Governments would normally offset these doldrums by lowering interest rates to give the economy a shot in the arm. However base rates are already so low that there is really no more medicine left to give out. The UK base rate is 0.5%, the USA is 0.25%, and the Eurozone a staggering 0.05%. The UK may have a little leeway, but the rest of the big players have nothing left to give.

So we come to the new territories of ZIRP and NIRP - Zero Interest Rate Policy, and Negative Interest Rate Policy. As far as most people are concerned ZIRP is what we already have. The halcyon days of the early 2000's when you could deposit some cash and get a 7% or 8% return are just a wistful memory and not coming back. But NIRP changes the whole landscape. Most people are resigned to getting next to nothing on their savings and are consoled by the fact that the cost of living is pretty much static as well, but when you deposit £100 and only get £99 back - that's a whole different ball game. Why would you bother? Sweden (-0.5%) and Japan (-0.1%) are already in ZIRP. Sweden announced they were going negative just this week. The market effect is not yet apparent because the new rate does not apply until the middle of next week. A cash flight seemly likely though.
 
The powers-that-be are cornered. They need to lower interest rates to stimulate the economy but they know that while people will put up with a low return they will not tolerate a negative return. They will take their money out of the banking system and so push the banks even closer to the edge. And these days all governments know that they have to bail out the banks; banks are dominoes - one falls they all fall, which is the way they like it. Everyone would like a government guarantee for their business.

Past form indicates that when the powers-that-be don't know what to do, they do nothing. So we will see a strong reluctance to cross the zero boundary on interest rates, with perhaps some very delicate toe dipping starting in the US later this year.

Doing nothing while Rome gently smolders means the economy will continue its gentle slide for much time to come. Cash will be king (again.)

Monday, 1 February 2016

Things you can do outside the EU

Switzerland has a proposal due to come up for national referendum which would expel any foreigner convicted of a criminal offence. Needless to say the usual bleeding hearts claim this violates European rules, to which the proposers of the referendum, the SVP (Swiss People's [Volk] Party), retort that Switzerland is not in the EU so no problem there.

Switzerland: Foreign crims not wanted
Meanwhile our "Dave" is schmoosing the Eurocracy trying to get the right for the UK not to pay in-work benefits to immigrants as soon as they turn up and take our jobs.  He thinks this will make us vote to stay in the giant kleptocracy come the plebiscite in the summer, or autumn if he wimps out of a summer vote.

Dave may not get the concessions he wants from Europe and even if he gets everything he asks for it will not be enough to make staying in worth while.

Hopefully we won't become as poor as Switzerland when we leave. (Switzerland is per capita the 10th richest country in the world, and the UK 23rd. And in most of the countries above Switzerland it's only the Sheikhs who have got the cash.)