Monthly Archives: July 2011
Simple Economics of GDP.
GDP comprises of a number of elements and is usually summed up as follows
GDP (Y) = C + I +G + (X-M)
Private consumption which we are told is low due to poor confidence and belt-tightening due to VAT/ fuel / food price hikes.
This covers investment in plant & machinery by industry. UK businesses are sitting on Cash reserves at the moment of about 7% of GDP. This is normal in periods of uncertainty. Low consumer demand for products generally slows investment by firms. Low levels of savings also inhibit banks ability to lend to SME & new business start-ups, so investment is likely to be low for a while.
Government spending. (G)
This is the phoney war at the moment. The coalition is cutting spending right? Not really. It is not increasing the spending at the same rate as before and inflation is helping the cutting along (that is after the first year thump that George Osborne gave Public expenditure). There are huge cuts in many areas and initiatives cancelled but Govt spending will rise from £632bn in 2010 to £713bn in 2015. Apart from entirely unacceptable choices on how the public spending pie is cut it will have little impact on Govt section of GDP. I will say that these figures come from the Budget of Mr Osborne and his inability to count has been a hobby-horse of mine.
Balance of exports and Imports (X-M)
What we export less what we buy in. George Osborne wants to rebalance the economy to make up for his intention to reduce Govt consumption by massively increasing exports. My worry is this. Who are we going to export to? EU is struggling (about half of our exports), The USA is skint with a default week away (another huge market for us), Ireland (‘A significant and important partner’ GO) needed bailing out and loans which have been restructured (a default in another parlance).
Better hope China and India want to buy our goods then.
So overall, (and this whole post is a simplification) the main elements to deliver growth are struggling.
Consumption by households is (vat/pay freeze/inflation/fuel/food costs). Low confidence.
Investment by firms postponed
Government spending cut in real terms (too deep and too fast)
Exports sluggish due to world conditions.
Doesn’t make strong growth look very likely.
Plan B Mr Osborne, sooner rather than later if you please.
When Mrs Thatcher spent her days selling off everything that wasn’t nailed down and giving tax cuts to the wealthy Power was just one thing that was floated to the public. After selling off local authority homes and attempting to turn a generation into good little consumer capitalists it was a small step to flog the public utility services.
Selling off the energy companies may have made a raft of new share owning people but how long did it take until the early discounts were traded in and larger corporate investors began to snap up the overwhelming majority of shares? The answer, not long. Nowadays less than 2% of shares are held by small investors (up to 500 shares or about £1600) (Centrica)
£29bn was raised by using the not nailed down- sell it system and a further £18bn from sale of Local authority Housing. All of which were sold at knock down prices.
So the notion that creating lots of small shareholders would disperse any profit amongst the many resulted in huge corporate investors gobbling up little shareholders and concentrating the financial benefits among the few large investors who current comprise 90% of the shareholding (426 investors) (Centrica- British gas)
So again with an idea, the law of unintended consequences comes into play. As Mrs Thatcher was a devotee of Friedman and Hayek and their neo-liberal deregulation agenda, I am not entirely convinced that it was really an unintended consequence.
So What? An efficient market will sort itself out. Well apparently not as the power companies have become more and more concentrated in fewer and fewer companies. Oligopolistic behaviour is dominating the market resulting in massive price hikes and slower reductions when the wholesale price fluctuates.
Ofgem is hardly being effective as keeping the lid on top of the prices as they are fobbed of with wholesale price excuses.
Dont get me wrong Labour under Blair then Brown didn’t re-nationalise these industries. They tried to tinker with the beast and mitigate the impact with support for the most vulnerable sections of society. Cold weather payments, social tariffs and many other initiatives to offset some of the pain being felt as the energy generating firms made supernormal profits. Introductions of new taxes recoup some of the benefits but nowhere near enough.
By selling off the old state monopolies (to stimulate innovation -a la Friedman) we have saddled ourselves with an increasingly difficult situation going forward with fuel poverty for many the outcome.
The supernormal profits generated by these oligarchs are a subsidy that prevents much of the investment in green energy that could have taken place by now which is only now (with other subsidies) beginning to bear some fruit.
As economics is scarcity and choice then perhaps we should choose to control our power generating companies. Perhaps by choosing a real mixed economy model (and not this neo-liberal free market model) we can prevent fuel poverty for more than a fifth of our population. Perhaps we can subsidise electricity and gas to all our citizens and make choices elsewhere that better reflect real priorities.
We can’t afford it you old trot! I have been told. But if we address the tax gap where those who should pay dont (to the tune of around £120bn a year) then a great many other choices are possible.
As an accountant I get frustrated at cuts to tax collectors amid rhetoric of being tough on tax evasion and avoidance. Then we up the vat rate to help the deficit when effective tax control would do a much better job.
A reform of the tax system I will leave for another day however.
Energy Deregulation, imagine the profits ploughed back into the public purse? or perhaps without a profit mark up there would be no fuel poverty?
At a time when Bankers received a bonus pool of £14bn maybe it is just time to start reclaiming the things that should be in public control for the public good.
One thing is for certain it should never be a choice between starve or freeze. Those are two choices that are not acceptable in the 6th largest economy in the world.
The Prime Minister managed to front his way through the bear pit that was a recalled parliament.
He managed to avoid answering a great many questions after a statement that really did little more than reiterate the home secretary’s statement of Monday. He did manage to pretend to want to collaborate with the house and used we’re all guilty of getting too close to News International.
That pretense didn’t last long.
A whole gang of smearers got to there feet and tried to muddy the waters with incipid, sycophantic, rehearsed and pre-supplied questions from the whips office.
It was all ‘Big Boy did it and ran away’ backed up by ‘I know nothing’, ‘Its all Labours fault’, and ‘I’ve answered that’ (when of course he hadn’t).
138 questions half of which he ducked, ignored or snorted at. the one’s well written by the whips office he used to maintain his smearing of Labour, Baldwin and Campbell.
Baldwin back fired as he was reporting to Michael Gove during his time at the times. (Gove still getting 5k a month as a retainer from NI).
Campbell has called on him to prove he (Campbell) doctored documents.
Apparently the external vetting that Dave had done on Andy Coulson is secret and he’s not telling. Why I have no idea, unless of course it was never actually done.
This whole debate was to get the smoking gun on the PM, and he has managed to avoid answering questions and therefore survive without calls for his head.
If the smoking gun does appear Dave will have to go.
And this I think will be the thrust of the 1922 committee this evening.
I am now very well-informed.
There are 174 ways to say, I know nothing.
There are 30 ways to say I’ll get the information to you.
And a great many ways to say a few hundred words to say I know nothing.
The only one missing was ‘Que? I from Barcelona.’
While the Murdoch clan managed to say nothing the Met boys managed to appear like bumbling fools.
On a day where a great many eyes were watching the #hackgate select committees, in the House of commons and elsewhere, announcements most newsworthy were barely being noticed.
Badger Culling, BSF appeals denied and NHS opening up to competition to the tune of £1bn.
So while the pages of tomorrows press are full of pictures and stories of Rupert Murdoch being custard pied and #hackgate suppositions and news, a few things will be sneaking out unannounced like little toxic farts.
The Government was using the last day of term to get out all sorts of announcements in the hope that if all the bad news came out together some of it will be missed. In some respects the Coalition will be thankful to Murdoch and #hackgate for giving them some cover. Liam Fox got a few things out yesterday too.
Hackgate might account for the PM but it wont be tomorrow. It might just be Ed Llewellyn that takes a fall after being dropped in it by Yates of the yard. Summer Recess has come at the right time to take the heat out of hackgate and Dave will manage to soldier on for a while.
(3/1 to go by the end of 2011 at paddy power).
I have been called insane, mad, deluded and many other unprintable names recently because I think David Cameron is on his way. They may, indeed, be right that my political antennae need retuned or I need to stop eating the mushrooms growing in the woods.
I think Dave will go. Not because #Hackgate happened to blow up on his watch, not because he hired Andy Coulson (against some advice and on advice of others) but because when it all kicked off he denied ever having asked Andy (his friend to whom he gave a second chance) if he knew about the hacking.
The ‘I didn’t ask’ defence isn’t credible given the vast array of sources saying they told PM & his staff that Andy Coulson was implicated. This wasn’t a minor question to be avoided, and it strikes at the core of the Prime minister’s judgement and integrity.
If he didn’t ask he was incompetent and if he did ask and subsequently denied it; he is complicit.
The PM will have to continue to deny that he knew, if he changes tack now he implicates himself.
When the questioning of Coulson, Brooks and many others starts to bite them a deal will let it all out. If he knew, it will come out in the wash. All it will take is someone saving their skin or a memo with the Prime ministers fingerprints all over it.
The close links with News International may look bad but that won’t be enough. His poor judgement over Coulson wont be enough, all those around him resigning and getting sacked wont be enough. After all Labour can be accused of very similair things.
It will be the lie that sinks David Cameron.
It smacks of Bill Clinton’s ‘I did not have sexual relations with that woman.’ unless you count……
So I think he’s going.
Who then for the conservatives? They will not want another election (neither do Labour if we have any sense) so the coalition will survive because the LD support is too low to see them jump from the coalition. They will, of course, get to flex their muscles over press reform and rightly so (they have been calling for it for years).
My best to lead the Tories Post David Cameron will be either William Hague (for whom last time was too soon) or David Davies (near miss in the run off with David Cameron).
The rest are just not likely. Gidders will be damned by association (and economy), May (not senior enough), IDS (nuff said), Landsley (mess of NHS no chance), Gove (about to lose role over 60k retainer from News international), Hammond (bombardier about to blow his hands off). Liam Fox (outside bet as he is usually not too bad but has just slashed the army so perhaps not). Ken Clarke (not very likely after sentencing mess). Redwood?
Hague or Davies it is then.
Perhaps Ed might manage to beat either of these.
The sentiment in the title states how laws should be applied in a society based on equality.
Unfortunately this isn’t always the case.
I am not a Lawyer, although I have some understanding of bits of it.
It struck me today after hearing that Charlie Gilmour got 16 months for his part in the rammy that occurred in London earlier this year – you know the ones about student fees and such.
Of course being anarchistic and destructive is not a new phenomenon but apparently when the ‘thuglets’ (little thugs) damaged Prince Charles’ royal motor then all hell broke loose and something had to be done.
An example must be set.
This is my very point. The law is not about examples. It is about justice and judges should know better. It matters not whether it is the labourer or the lord who is the transgressor the punishment has to fit the crime.
Examples of inappropriate sentences are rife and it seems that it is becoming more prevalent.
Expenses scandal has resulted in custodial sentences for a number of ex-mp’s and peers. Does that mean every fraudster gets a custodial sentence. Sheridan got done for perjury does that make all the people who lie in the dock will be incarcerated?
The reason for many of the problems in our legal system lie in its basic paradigm.
Our laws are focussed on punishing crimes against property much more severely than crimes against each other. I accept, however, that murder is penalised heavily (and rightly so).
We need to change the focal point and make the laws against each other more protective and more effectively punished and the crimes against things to be less important.
Take Gary Mckinnon (aspergers hacker) his crime is tiny but the punishment would be disproportionate. (100 years in jail) is his crime so much more serious than a sexual assault or rape? or an attempted murder? of course not but under the US legal system he will be locked up for the rest of his life. for hacking poorly secured computers to find out about aliens.
Below are some links to news stories to illustrate the uneven hand of the law at work. Punishment should fit the crime. No one is an example and judges need to remember this. (they might need a wee nudge now and then.)
These are just a few.
Ex PM Gordon Brown (who had already waded in to the NOTW (#Hackgate) row by spilling his own beans about News International and how they hacked/blagged/ obtained his and his son Fraser’s information.
I can honestly say that he was back to his best. Powerful and articulate and not hampered by the burden of being PM. He cracked jokes that were funny (not uncomfortable) and his smiles weren’t forced or like a rictus grin. Standing there in the third row of a crowded commons towering above those around him, he looked like the big clunking Labour fist that Tony Blair described him as.
The Government benches were filled too but were missing their Leader. The PM decided he had better things to do than answer any questions that might embarass him further.
PMQ’s and a clash with Ed Miliband over Coulson, a statement to the house about enquiries and he needed a wee lie down. I suppose it was too much to hope that he might take part in an open debate where there was no bell or limit to the questions that might be asked.
Add to that the Guardian editor stated that the PM’s answers during PMQ’s were misleading. So no real surprise that a commons baying for blood wouldn’t see the PM, just his patsy Jeremy Hunt.
There was some good stuff from Ed Miliband, Chris Bryant and others but the star of the show was Gordon Brown.
BskyB deal may be dead for the moment, and a judicial review making the issue go away for a while but Dave cannot rest easy. His jacket is most definately on a shaky peg.
One thing is for certain, the PM is mired in #NOTW muck and his hope that a judicial review would embarass Labour into backing off (after all we were in Govt for 13 years) looks like a failed strategy. Gordon is more than happy to defend his record.
I hope that this will see the return to the house of Gordon Brown, a true political colossus, his input and gravitas is very much missed.
I am so glad I watched it now, truly one of the best speeches / debates in a coons age.
This #hackgate gets more like #watergate everyday. see you later Dave.
Sticking his fingers in his ears and singing ‘lalala’ is the image I have of David Cameron in the kitchen at a ‘Chipping Norton set’ dinner party and going out of the room as soon as anyone mentions ‘Andy, phone and Hacking’ in the same sentence.
OK I know I am being ridiculous but the PM started it.
There is no way that the questions were never asked of Andy & Rebekah about the bad apple Mulcaire in the informal environment they associate in.
And it beggars belief to suggest that his ‘friend’ Andy never, ever mentioned it to David Cameron. And that Dave never asked over a beer or what have you.
‘Don’t ask, Don’t Tell’ looking a poor idea now.
David Cameron is an intelligent, articulate man and if he didn’t ask (for plausible deniability in the future) it was because the facts were self-evident. He didn’t ask because they all knew, they knew the hacking was widespread and it was just part of the business.
It is this failure to discuss and his closeness to these two News International bigwigs that will cause dave the most difficulty and damage over this.
When it creeps out (after weeks of revelations and scandals) that David Cameron did ask and was told by Andy Coulson (who will cop a deal) about the systematic law breaking, it is then that his position becomes untenable.
Punting the BskyB deal to the competition commission buys Dave some time to spread the mud among all the parties but it will come out in the end that he knew. After that, everything else pales into insignificance.
His defending of Coulson and slow reactions in this crisis show him as ineffectual and his press conference body language screamed ‘liar liar pants on fire.’
I didn’t have this conversation with Andy Coulson is beginning to sound like ‘I did not have sexual relations with that woman.’
Now for the one he doesn’t want.
It goes a little like this. A meeting set up by some grey suited elder statesmen within the Conservative party to discuss the current situation with the PM. Of course a few of these old boys are none too impressed with the Boy Cameron, and still do not understand how on earth he couldn’t win a majority.
After all it was against an unpopular government on its knees, a massive recession, buckets of Ashcroft money and a poor Labour campaign bereft of money.
They, like the country, and just not sure about Dave. And then of course he snuggled up to the enemy Clegg.
‘Prime minister, for the good of the party, you should think about stepping down.’ Words made of lead that David Cameron will live in dread of hearing.
After all he is either complicit (in which case he has to go) or incompetent (in which case he has to go).
He will hear them unless something worse comes along and diverts the heat off of his complicity over #hackgate.
After all, a new bum in the PM’s seat wont trigger a general election merely a change at the helm. Preferably one who isn’t entirely mired in News International muck.
While the Libdems are in single figures they will stick with the coalition to the death, however if they start to regain ground due to the liability of Dave and his little chums, a change will be in the offing.
Will the PM have to go? I think he will but it will take a few more smoking guns with his fingerprints on them before it is certain.
When the minimum wage was introduced it was hailed as a great step forward for working people everywhere. It was.
However, it was too low and had age bands built in, all to placate the business community and make it affordable. So those of us, on the left, were disgruntled from the off. Happy that the minimum wage was there unhappy that it was so low.
Fast forward a few years and the minimum wage has grown a bit, not enough, and only a little ahead of rising costs. We find that being in a minimum wage job needs to be topped up with benefits to a large degree to make it possible to live on. A government subsidy if you will to those firms making use of cheap labour.
Enter stage left ‘A living wage’ designed to up the ante and get employers to lift wage levels off the floor. Widely adopted? not bloody likely. adopted by Government departments (some did) after all it is public money so just another form of benefit / subsidy.
Minimum wage legislation is the right way forward, but the rate needs to be set at which people can afford to live on it, otherwise it is a failure before it starts.
The threat from business (which made Tony run for the hills) was that higher rate would mean less jobs. As if businesses could just make do with less staff, in the short term they can but if the work is there then the need for labour exists also. Capitalism is about those with the capital reaping the rewards of it, well maybe we should point out that if workers cannot live on the wages you offer they wont work for you, demand will be weak for your product, and this will slow your business.
Anyway, I digress, I wanted t relate a tale that got me very angry indeed. It involves my 20 year old Daughter who is looking for a job. She has just finished a degree in Interactive media but is generally looking for anything. Along comes a job interview for a marketing post (all good so far) then a second interview (lasting all day involving work trial).
Like most parents, I expect, I am at the end of the information chain. ‘All day?’ I query my wife who, knowing me well, gives me the look. I am now somewhat irked that I am off the pace on this. Add to this that the job is in Edinburgh (20 miles away) and she doesn’t drive, my level of dubiousness is growing. Fast forward to a happy daughter arriving (after 11pm) to tell me she has a job!!
I ask all about her day and find the following (spanish inquisition has nowt on me), that there is no basic pay (commission only), it is 6 days a week from 10 am to 8.30pm, it involves walking around door to door selling. The no basic pay was only made clear after a day long ‘trial’. Needless to say the conversation went downhill from there. I had the unhappy duty of bursting her balloon and explaining exploitation.
Having, myself, worked for £1.60/hour as a security guard (72hr wk) during John Major’s time I am an ardent supporter of the need for a minimum wage.
How these companies can get away with not paying the minimum wage is beyond me. It is law and therefore needs to be applied. No ifs no buts. I will be reporting the company when I work out exactly where to report it to.
I know that there is a provision for commission only (as long as the equivalent period meets min wage condition) but this is being flouted and I expect it only to get worse. Young people are preyed upon by these companies and it has to stop. Yes, times are hard but this exploitation is not the answer. I don’t expect action by Dave and the gang on this front. In fact the opposite is true as this amendment to Minimum wage act shows.
This will allow the Secretary of state to allow exemptions from minimum wage requirements as necessary.
Minimum wage and Working Time Directives are there to prevent callous abuse of workers from unscrupulous business owners. We should oppose any watering down of the minimum wage and push for a much better deal.
Remember that at 16 you can be married, have children, and run a home. So why does the minimum wage discriminate on grounds of age. Young people are badly discriminated against on many fronts this is just another.
Minimum wage was a hard-fought win in the UK and we had better gird our loins and fight to avoid its erosion and disappearance.
168 years of circulation pulled in an instant as damage control by Rupert Murdoch. Over the last few weeks few would have predicted this outcome.
Many of us expected the NOTW to take a beating for a while, to claim contrition and pay some settlements. Maybe even to have been severely censured by the not-very-independent enquiry. Perhaps a spanking from the PCC. But closed down, not expected at all.
Of course, it may just have hastened the advent of a seven day Sun but spare a moment for those who have lost their jobs. They are bearing the brunt of earlier sins when the architects of those crimes are insulated from the effects of their actions. 200 staff to protect Rebekah Brooks.
Coulson it appears has been well and truly thrown to the wolves, detached from his political masters he is an easy target for the piranhas that fill the press pond. Of course the Scots legal system will want whats left after he gets beaten about for paying coppers for information. So a corrupt little liar he is then – allegedly.
Mr Murdoch after investing heavily in the conservative coffers over the years it appears is ready to take a minor hit to clear his way to the BSkyB deal. Eyes well and truly on the prize, as it were. He does nothing on a whim and when the time is right he’ll be prepared to plea bargain Rebekah for the takeover deal. Fit and proper person, of course not, but that will hardly matter.
The legal fallout will witter on for a while but essentially by giving up with one hand he hopes he can tighten a grip with the other. The NOTW was doomed the minute the Millie Dowler hack was known and then the whole can poured out into the light and we british just would accept no more. And once the public decide enough is enough, it is well and truly over.
So I say the end of the NOTW is a good thing, but its only a step along the road.
And so to Dave-call-me-dave. The PM. flashman. What does all of this do for him?
What he knew and what he didn’t will be causes of speculation for as long as he stays in office. This is the ticking time bomb that will see him sacrificed by his party to hang onto power.
The PM’s press conference today was telling by the evasiveness of his answers. He was shifty and trying to stick to the ‘second chance’ mantra that he has used since Coulson resigned earlier this year.
One of the reporters asked directly did you ask Andy Coulson about the hacking? Dave’s response was hopeless and led me to this conclusion. Dave didn’t ask because he already knew.
He had known, probably, and decided Coulson was a sufficiently useful ally that having him in number 10 was worth the risk. And besides the metropolitan police had already had an inquiry so the whole mess looked like it would be manageable.
However the tenacity of Tom Watson and the revelations leaking out here, there and everywhere changed the game.
The PMs judgement was brought into question. His ability to deny, deny, deny was compromised by the ludicrousness of his I never asked defence. Coulson is radioactive and he has rubbed off on Dave.
Add to that the real culprit (enter Ms Brooks) is just as close to Dave and Sam and the rest of their little dinner set. Dave never asked her either.
So both of Dave’s hands are smeared by his close association to the phonehackers.
Either this was an immense failure of judgement or a cover up of Watergate proportions. Complicit or ignorant?
The new defence of we are all to blame is bearing some fruit but by Sunday it will have rotted because the electorate will not accept that Dave didnt know.
They know he knew, or didn’t ask. Willfull ignorance is not plausible deniability.
‘Don’t Ask Don’t Tell’ is as much use as crossing one’s fingers as a contraceptive method.
David Cameron is beginning to look like the boy who got caught with his hand in the cookie jar.
The tory party grandees will be looking very carefully at the party leader, and when he starts to be a lame duck as the drip feed of scandal seeps onto the twitterverse, the blogosphere and the print media, they will act to have him go.
If only Clegg hadn’t ignore his briefing from the Guardian editor about Coulson he might have had a moral high ground to stand on. He did and he hasn’t. With his party in single digits there is no way he’ll work to break the coalition.
When the PM begins to look corrupt or a liability to the party (and it will look that way soon) he will have to go. Political parties are ruthless in their treatment of ailing leaders. They may cut their losses sooner rather than later.
The Tories may fancy going to the polls before Ed Miliband starts to gain traction and profile as leading on this issue and others.
An Election in the next 12 months would see a tory win I think (and so will they). Labour are not ready. No money and no real alternative policies fully in place.
One thing I think is apparent that Dave will not be leading the Tories at the next election in 2015