The Irish bailout and why it is a good idea for Britain

December 12, 2010

I’d like to start this article by saying that I am not flying the flag of any political party, most leave a bad taste in the mouth as far as I am concerned, but I think Chancellor Osborne has got something right…

Ireland is being bailed out to the tune of £72 billion. It is estimated that the UK will be giving Ireland around £7 billion. I believe this is the right thing to do. For several reasons despite what many newspapers have been saying

1: Economically, and this is one of the best arguments. We will be lending this money to Ireland at a rate of about 5%. We can borrow at around 2.5%. This means that the UK, Lending 7 Billion to Ireland will make around 2.5% a year. Thats £175,000,000. Pretty nice really.

What’s that? You think Ireland will default? Not a chance. Angela Merkel recently talked about a system where countries would be able to default on bonds whilst being bailed out by other countries, but she has gone very quiet on that lately.

The countries of the Eurozone can not fail financially, it would destroy the Euro. This is why all countries which have the Euro, in my opinion will not be allowed to fail. I would argue that all Eurozone bonds should be trading at roughly equal amounts, whereas in reality Greece bond yields have to be far higher because people think they might default, but Germany, will once more foot the bill if problems arise.

The Irish, for all their faults, are one of the few countries in this world which we have a trade surplus with. This means they are one of the few countries where the value of all the things we send them is higher than all the things they send us. And that is very rare for the UK these days….

Social: Socially, Ireland is a very similar country to us, and a lot of the British see the Irish as their neighbours, and in some parts of the UK the Irish are favoured more than other regions of their own country!!!!

It’s a tough pill to swallow, but the UK will get their money back, with interest. They will also be helping out a neighbour, and a friend in need, is a friend indeed….


Student Tuition Fees, whats the big (bad?) deal?

December 12, 2010

Students and money. These are two words that have to be used very carefully in the same sentence.
Students, supposedly have no money, and get very upset if you try to take money from them.

One of the things which could be argued over the past few months is that students are amongst the most selfish people that we have in the UK, with self interest reigning supreme. Another person could just as easily argue that these are one of the few groups of people in society today who are not only willing to stand up for themselves, but also for the (mostly poorer) people of the nation, and good on them for doing so.
It’s a tough debate to have, as emotions seem to run high, and in some cases pure lack of emotional intelligence on the student’s part means that most grown up arguments result in abuse slinging (or fire extinguisher slinging) as the case may be.
So… Why are the students upset?
Their grievances’ are threefold, I would argue these are:
They are upset that tuition fees are rising (obviously)
They are furious that they have been “betrayed” (I will analyse this soon) by the Liberal Democrats, and
They are upset that there are cuts throughout wider society as a whole.
All 3 of these could be seen as logical grievances’, however, you can kick down 10 sand castles in the time it takes for you to build just one. None of the students seem to be offering a logical solution to their issues.
Does the state need a well educated workforce? Unquestionably. Will that workforce exist if tuition fees rise? I would argue so.
It can easily be argued that a well educated workforce is a happier, more productive workforce, however (and here is where I can see a few of you sticking a finger up to me) I would argue that if the degrees which this “well educated workforce” are committing themselves to are degrees such as home economics or media studies, then we may not in fact, have a well educated workforce after all.
It is easily arguable that you will earn a lot more in the future as a result of university education, and if you will not, then why go to university in the first place?

It could also, easily be argued that simply, far too many people go to university at the moment and the state can not afford it… But try telling that to the students, who feel that education is a “right.”
Education is a right, but rights are not always free, and it is subjective. In the UK, I would argue till the cows come home that it is a right to have free education up till the age of 16, where we can all get a comprehensive education in a wide area of topics, and if you don’t want that education, tough you have to have it. Free education up to the point of 18 I would also argue is very important, but I do not feel university is the same, and here is why?
One of the main things that the students have said is a reason for why tuition fees should not rise, or in many cases should be abolished is because it aids social mobility. University does aid social mobility, but these fee raises will not stop that. The fees are more flexible than ever and I would argue that, as is often the case with political reform over the past 15 years, it is the middle class who will foot the bill.
The absence of logic seems clear in the students minds, but the politicians could be accused of the same. Several economic analysts have predicted that there will be no real financial benefits to this plan which will be realised within the next 5 years. The government could also be accused of shifting public sector debt over to the private sector (students).
This is going to be a topic that I will return to, and as this is a blog, it will be up to date. This is just an overview of the scenario for now, I will be going into each of the main points in more depth over the coming weeks.

Electoral reform, a deal breaker or maker?

July 8, 2010

A coalition is in place. Some would like you to believe that it will split at any moment, some would like you to believe that it is safe as houses (pre recession)

One of the key things that we will have forced on us in the near future is electoral reform, with a referendum supposedly being held next year, in May.

These will coincide with local elections in some parts of England, so seem like a natural day to do it. This will boost turnout both for the council elections (just look at the effect the general election had on council election turnout)

This will be the biggest referendum (in terms of those eligible to vote) since the United Kingdom European Communities Membership referendum, 1975, and some would argue more important, some would argue less important.

What are the implications? And what is the voting system?

The system proposed is something called the Alternate Vote (AV) system, and will already be familiar to those who are from London, as their mayor is already elected by the method of AV. The system basically “ensures that all MPs will be elected with more than half of the vote.” Which is in a way true, although that vote which takes them over could be from someone who more or less sees them as the best of a bad bunch (not very different to First Past the Post you might say!!!)

I have already discussed the pros and cons of FPTP to death in a previous post if you happen to be interested.

Nick Clegg, will naturally, as a Lib Dem be rallying for this voting reform as it is suspected to benefit the Lib Dems massively, it basically means that you rank your candidates by order of preference… But not as much as other systems.. I will give an example below, with candidates A To D, and to make it easier for you (me!) we will imagine that there are 10,000 voters.

First preference votes.

Candidate A. 4,000 votes (40%)

Candidate B. 3,500 votes (35%)

Candidate C. 1,500 Votes (15%)

Candidate D. 1,000 Votes (10%)

Now the way AV works, means that the leading candidate has to have over 50% (5,000) votes, which as we can see here has not happened. So, what happens next is, poor candidate D, is taken out of the running, and all the people who voted for him, would have (although not obliged to, we will pretend they did for the purposes of this example) their second preferences taken into account. So now…

Candidate A 4,100 (41%) +100

Candidate B 4,000 (40%) +500

Candidate C 1,900 (19%) +400

We are getting closer to a conclusion now. Candidate C is to be taken out of the running as he didn’t make the cut, with his second preference votes now going to the two remaining candidates, and (here’s where it gets a bit tricky) all of Candidate D’s 3rd preference votes (if their 2nd preference was for Candidate C) being taken into account.

Final run:

Candidate A 4,900 (49%)

Candidate B 5,100 (51%)

As we can see, Candidate B has shot from behind to be the new winner. This is an extreme case where everyone else has had to be knocked out, but it can happen. A likely scenario for example could be an area where the people who voted for candidate C are strong Labour supporters, but would do anything to keep the Tories out, and as a result they put a Lib Dem (Candidate B) down as their second preference.

This could realistically end tactical voting, which (amazing to think of this now) some parts of Labour (which included a certain leadership candidate named Ed Balls if memory serves) recommended that their voters to do in areas where Labour support was low, and it was close between Tories and Lib Dems…. I bet they regret that somewhat now…

David Cameron has come out and said that although he will be against electoral reform he “will not give up his day job.” I suppose it would be a bit damaging for the coalition if he actively rallied against a proposition which will leave us (marginally) more likely to have coalitions in the future…

The tabloids and ashamedly some broadsheets are trying to further the idea that this will lead to “the Tory party being in the blue for generations, with there being coalition after coalition” but that simply is not true. This system is a million miles away from Proportional Representation (PR) (which would lead to coalition after coalition). The Lib Dems have settled for AV, but had they gone for AV+, although a simple character’s difference in the name, the difference would be astonishing.

AV+ is a system which is much closer to PR for a simple reason, there is a “top up” system.

Under AV,+ you would elect your MP under the exact same method as I described above for AV, however, afterwards there would be a rebalancing, which would look at the proportion of votes… Lets say in the first round there are 500 MPs allocated under the AV system…

Party  Proportion of votes (%) Proportion of seats (%)  Seats

A                        35                                        60                              300

B                         30                                       25                                125

C                         25                                       15                                  75

D                         10                                        0                                    0

As you can see, there is a real issue here… Party A did not get that many more votes than Party B, but did get a lot more seats, the next 500 seats would look to rebalance that, and would lead to a result that would basically, end up with 35% of the vote representing 35% of the seats, where Party A would get 50 extra seats whilst party D would get 100.. (I drew a nice table but it was too big…)

As you can see, this reflects much greater what the people voted for, and is a substantial step towards PR but with a constituency link… The Scottish elections are run in this way and the European elections are a bit like this (but the first stage is a closed party list system)

So, will Cameron lose sleep at night over electoral reform in the form of AV? Maybe a little, but nowhere near as much as the political editors trying to make out that this is going to change the world as we know it. A report by the Jenkins Commission in 1998 recommended that AV+ be used, but the government, of course had absolutely no intention of implementing it, because they knew the problems it would cause them….

Chancellor debates. Winner and Losers?

March 29, 2010

Well, tonight saw all 3 potential future chancellors debating on Channel 4…

I must admit, I didn’t even know it was on, it must have passed me by, and from what I have heard so far, a lot of people had no idea it was coming…

Your humble preacher does not believe that a hung parliament is something that we are likely to see in the next election, and in the (in my opinion) unlikely scenario of a hung parliament, a general election will be called pretty soon after.

I do however know what happened in these debates, and it was obvious before they even started that this would happen.

Vince Cable, a man who is seen (and I would not argue against this) as somewhat of a moral pillar in a sordid and dirty Parliament. He comes up with a lot of ideas that a lot of people can agree with as well, which helps.

But that’s simply because, he can afford to.

Vince Cable can afford to sit on the sidelines and make as many ideas up as he wants, because he knows he will never be called upon to implement them. In the scenario where there is a coalition government I very much doubt that Mr Cable will be allowed to take the role of Chancellor which is the second (or one could even argue in this economic climate) the most important job in the country.

This doesn’t mean that he should not be fulfilling this role however, as it keeps both parties on their toes, and it is also possible that they can even steal some of his policies if they like them, cheeky, but still beneficial to the country…

Both of the parties with a real chance of forming government however could learn a lot from a straight talking man who is well respected for not using smoke and mirrors as one of his main political weapons…

A Boozer Busting Budget

March 27, 2010

Alastair Darling in his budget released the usual tax drinkers line, raising prices a couple of percent above inflation on beer and most other alcohols.
Nothing new?

Look again, he has also announced that tax on cider will rise at 10% above inflation to “bring cider prices in line with strong beers”

It’s an issue when it comes to taxation, the minority are ruining it for the majority. The people who drink irresponsibly have led to this 10% tax rise.

David Cameron came out quickly after this and said that this tax is ridiculous and will hit west country cider presses massively.

For once, I agree with him.

One of the large cider brands has already launched an advertising campaign announcing that they will absorb the 10% tax rise… Which sounds good on the face of it, but then you realise this is going against exactly what the Chancellor was targetting.
In effect it is an extra 10% tax on all revenue of that producer, but nothing to the kids who are smashing parks up at night…

On the other hand, the more respectable, and I would go so far as to say prestigious cider makers in the west country might find themselves in serious financial problems as a result of this tax. They are already, because of economies of scale, higher priced than the big pissed for a pound cider producers.

Now I am not saying for one minute that you can compare the two, I would go so far as to say that cider from somewhere such as Henry Westons can not even be classed as the same type of drink as something like white lightning.

But that extra 10% could be enough to push someone to get a bottle of wine instead.

The point is, something does have to be done, but this is not the answer.
On the spot fines for drinking in public areas, although draconian, seem to be somewhat effective in some areas.

There could also be stronger punishments for 15 year olds drinking cider on the street, instead of the current “pour down the gutter” punishment, which I am sure leaves them suitably punished until they get their hands on another pound….

The cynic in me of course is screaming that its just a cheap ploy to gain revenue, like the ploy of a 50% tax bracket was a cheap ploy to gain politcal capital.

Either way, don’t use the excuse of promoting social harmony for taxing the everyman on one of the few pleaseures we can still afford in this life…

Cuts: Tradition and Transition.

March 27, 2010

Now we all know what the stereotype is when we look at Conservatives and Labour.

Labour are the working class representatives, and as a result they will protect the welfare state till their dying breath.

The Conservatives are evil milk snatchers who benefit the rich by cutting services to the poor, thus reducing the tax bill.

These stereotypes are near impossible to get rid off, even if you have 20 foot high billboards with your face on spread across the UK.

Cuts, or whatever you want to call them in newspeak are a real reality in the near future, whatever party we vote in, that is out of the question, what is being questioned is how soon and how much…

Now stay with me for a moment here because this is where tradition is going to play into the hands of Labour.

Labour founded the NHS, the Liberals founded a lot of the earlier parts of the welfare state such as a state pension but long before the majority of us were born.

The NHS is Labour’s invention, and they are a lot more trusted with it than the Conservatives. This coupled with their fighting for the working class” status is something they will enjoy at the polls.

However, I put it to you that BECAUSE of this Labour will be a lot more able and likely to make cuts or “efficiency savings” in the NHS.

I’d just like to point out here that I don’t want anyone coming and telling me what Brown or Darling has said because let’s be honest, we are far too intelligent to just believe what they say when it comes to budgets, all politicians for that matter. Every truth that can be twisted will be twisted to the edge of breaking point.

Nigel Lawson, former chancellor famously said “The NHS is the closest thing the people of Britain have to the NHS” and I couldn’t agree more. But in this sense, Labour are viewed as the Priests.

The point is, if cuts have to come in the NHS, Labour will be best placed to make them. Thatcher and Major did very little to fundamentally alter the NHS, not because they didn’t want to, but because they were scared.

In contrast Labour have privatised NHS logistics, and made alterations to fundamental parts of the NHS. Polyclinics are perhaps the biggest fundamental change the NHS has seen since its birth.

In contrast take the Conservatives, lets say they managed to cut 10% of the NHS budget, purely through efficiency, then put half of that saved 10% back in to increase productivity by 10%.

That is a 5% saving and a 10% increase in productivity.

Which part do you think would grab the headlines? The 5% poor person killing cut is what would grab the headline.

Labour are still in some places seen as working class heroes, and they have the ability to cut more from public services because of this, but the Tories have more will…

An Englishman’s Home: His Castle? Or His Prison?

January 23, 2010

Unless you have been living under a rock somewhere in recent weeks you would have heard about the extraordinary case of Munir Hussein. 

He came home, his family were tied up with knives tho their throats… He got away, and bashed one of their heads in with a cricket bat…. Whilst chasing them down the street…. 

Now, Munir Hussein and his brother were put in prison as a result of this attack. But should they have been? 

There are clear arguments for yes and no, and many people are calling for the law to be reviewed. 

Yes, the men clearly no longer posed an immediate threat to the Husseins, they had just run out of his house… However, who is not to say that next week they would have come back? Or that they would have done it to another family and heaven forbid this time actually used the knife? 

If this is the view you take you would no doubt feel that Hussein deserves a medal and the status of local hero. 

He did however break the cricket bat in 3 places, over a mans head, savagely beating him so that he was seriously disabled. 

Personally, I feel that if anyone came into my home, I would do the same, and I would want to make sure that I hurt him so bad that he would not be making a return in the near future. People that hold knives to the throats of people deserve everything they get.
Personally, I would have probably ended up with the cricket bat being broken in six places.
So hoorah, when we saw Sir Paul Stevenson, Chief of the Met, the most senior police officer in the land saying that we should, rather than threatening with prosecution, promote the idea of people fighting off these intruders. 

That’s where things get a bit tricky. 

A fair few people have died in the past few years trying to stop intruders, and these vigilantism, is something which could be abused.

People should do what they want, if they want to. If someone decides that they want to take the risk of fighting a knife wielding scumbag then let him, and good luck to him. One thing is for sure, if people are having a knife held to the throat of their loved one, they shouldn’t be told that because they hit the guy to a pulp that they are now being prosecuted more severely than the knife holder. 

Personally, I would like to thank Mr Hussein, I can now sleep, slightly safer, knowing that there is one less person running around holding knives to the throats of hard working members of society…

This recession: The death of the market system? Or the consequences of deception?

January 21, 2010

Capitalism, many people criticize it.

Nothing sums up these arguments better to me than a sign I saw being held by someone at an anti capitalist march. The sign read “Get rid of capitalism…. Replace it with something nicer.”

 What else is there?

Nowadays, there is no way to go, other than capitalism. Any country which does “well” without capitalism is the exception rather than the rule. Sure, you can point to China, an economic powerhouse, but I would not consider a country where human rights activists have their email accounts hacked a country which is doing “well.”

Capitalism is taking a lot of the flak for this recession… But I would suggest it, like many markets that fail, is the fault of the people inside it, rather than the concept itself.

My belief is that this entire mess that we are in is largely, although not solely down to something called Collateralized Debt Obligations (CDOs). Now, you will have a credit rating, you may or may not be aware of what this is. Your bank will lend to you at varying rates depending on your credit rating.

Now, a CDO is thousands of your mortgages put together. Basically, a CDO made out of AAA (safest) credit ratings would give you the lowest rate of return because it had a low risk, but at the same time was very reliable. One filled with CCC credit ratings would give you a much higher reward, if it didn’t collapse. This would be the reward for the risk that you took on.

 Now, let’s say I get 10,000 mortgages that I want to sell. I have a few AAA mortgages, but also a load of CCC ones that I want to get rid of. I pile them together in one big CDO. Next, I need to take it to the credit raters. A good example of this would be Standard and Poors. They take a look at my CDO and then brand it with a rating of its own.

HERE is where the problem lies.

Standard and Poors would be working on a commission, a AAA CDO is worth more than a CCC one, so they would have a clear incentive to give it that AAA rating. This means that a CDO might be given an AAA rating, when in fact; it should actually have a C rating for example

. This means that investors (banks) are paying a high price…. For a high risk, an unreliable one. AAA CDOs were seen as a sure bet. The thing is, a lot of the time, banks would combine CDOs and then pass them on, again and again. It was pass the bomb on a billion dollar scale…. This though, is why deception played a huge part, but so did greed.

 The people who are referred to as NINJAS (No Income No Job no Assets) were now having money lent to them… Why? Because, and this is where the CDOs kick in again…. If I was to lend you a load of money, I wouldn’t need to worry about if you could pay it, for all I care you could default on your mortgage in a month, by the time you stopped being able to pay, I would have sold your mortgage on and made my profit.

So, what do we need? Well, better regulation would surely pave the way. People at the Financial Services Authority are paid peanuts to work there compared to the CDO traders. Both would need to be of similar intelligence to do the job, so why would you want to take the FSA route when you could earn ten times as much?

 Furthermore, very few people understood how these CDOs worked, all people knew was that they made you very rich. They were actually devised by rocket scientists… Surely better regulation of financial products would have been helpful.

Capitalism isn’t dead, but the morals of the train of capitalism should be watched more closely, or the train could end up crashing…. Again…

The Poverty Trap… An escape in sight?

January 15, 2010

For years in Britain we have seen the issue of the Poverty Trap.

Basically, if you get (I’m not sure of the figures as I have never claimed) £100 a week for being unemployed.

You get a job, this means that you earn £120 a week.

You also get about £60 a week in various benefits (such as constantly having children). Once you get a job, these benefits are taken away. As a result, you now have £120 a week instead of £160.

Amazingly, despite the government’s tax credits, we have not yet seen an end to this poverty trap.

What is the answer? Is there one at all?

Surely, any answer has to start as a culture change. People are not able to appreciate the fact that just because they are earning less than they would on benefits now, that they won’t, through promotions and the like, earn more than those benefits in the near future.

People are even less able to appreciate the fact that just having a job means that, rather than being a net taker from society, you can actually begin to give a lot more, and with that comes a lot more self-respect. Lets not forget that unemployment often leads to depression and feelings of worthlessness.

The solution to this has to start at home. There are 2 schools of thought as to why the spiral of benefits continues. One is that the children see 3 generations of parents on benefits and as a result they decide that is what they are going to do themselves. The other is that children see their parents on benefit and decide that is no life they want for themselves.

I myself, would be massively inclined to the latter. If however, my parents had never told me the importance of education, and were barely educated themselves, I’m not so sure that I would have this viewpoint.

The poverty trap can only be solved through encouraging people to actually gain a work ethic in the first place. So many people in the UK, are, to put it bluntly, workshy layabouts who want to sponge off of the state until their dying day. And I can tell you one thing for sure, the majority of those people are not immigrants from Eastern Europe.

Firstly, parents need to take a lot more responsibility. Sure, you might have ruined your life by not going to school, that should mean that you never let your child make the same mistake. If your child does not end up properly completing their education, you messed up. If your child comes straight out of school at 16 and onto benefits. You messed up.

End the self perpetuating poverty cycle, which can only be done from within. The education system is there, even if you are not in a very good comprehensive, if you have a decent work ethic, you can get good grades, even if it is an uphill struggle.

But once you reach the top, you will have a much better view than from half way up.

Everyone is Equal… But some are more equal than others..

January 15, 2010

No surprise this week to see Harriet Harman get away with a measly fine of £350 for her crash and drive incident a few months ago.

I’m not sure what infuriated me more about this case. The fact that Harman got away with such a lenient punishment or the fact that she thinks so much of herself in the first place that she can just crash into someone and say “I’m Harriet Harman, you can find me at the Home Office”

This seems to encompass my (and presumably a few others) rage at the MPs over the past few months.

I know comparissons to 1984 have been done to death, but it’s as if there is an inner party, which is Parliament (and the rich and famous), who can get away with anything they want, look down on us like we need saving, whilst controlling us. Then there is your outer party, medium sized businesses who can get away with a fair bit but are still worth a lot more to the party than what the rest of us are. Common proles.

We can kick up a fuss every now and then but we are always talked over, never answered directly and only rarely able to properly hold the government to account. What is the point in voting out one bunch of crooks if only to be replaced by another?

If they want us to be governed by them, they must first be governed by the same rules as the proles.