While the economy stagnates, and the debt stock explodes, parliament considers appointing a groceries adjudicator

Britain has already suffered four years of crisis, economic stagnation, and rapidly declining living standards. Imagine for a moment, that this becomes the norm; that Britain slides into a lost decade of zero growth.

It isn't so hard to imagine, is it?. That ghastly vision becomes more vivid by a quick examination of the recent economic history of Japan. In the 1980s, Japan enjoyed a massive asset bubble, and like all similar credit fuelled expansions, it was followed by an even bigger crash. For 20 years, the Japanese economy has limped along, occasionally recording growth of around 1 percent, but typically remaining flat.

Like Japan, Britain has many of the pre-requisites needed for a lost decade. It has bloated bankrupt and dysfunctional banks, an over-leveraged private sector and a public sector crippled with a massive debt stock. It also has an enfeebled political system that is happy to be distracted by irrelevant issues.

This latter point rarely gets enough attention. What are our legislators up to? Are they soberly confronting the massive divergence between tax revenues and public expenditures that threatens to ruin the country? Or are they fooling around?

Parliament is certainly busy. In the current parliamentary year, it has a colourful list of draft bills under consideration. Top of the agenda is the vitally important draft Groceries code Bill. This desperately needed legislation will create a Groceries Code Adjudicator that will enforce and oversee the Groceries Code "in the ways described in the Bill." Lets not worry about the public debt stock, which is now over a trillion quid. Britain needs at least one more public employee to watch over our groceries.

Parliament is also working towards a major reform of the House of Lords. However that reform goes down, it is a safe bet it will cost more money. But before we get to another round of fundamental constitutional reconstruction, there is need to pass the Third reading of House of Lords (Amendment) Bill. This crucial piece of legislation will "prevent members of the Armed Forces and those 'undertaking other public service' such as diplomatic service abroad from losing their membership of the House." Don't be fooled by the reference to the Armed Forces. This is an entirely self serving piece of legislation, allowing Lords to take on jobs in the public sector without leaving their cushy sinecures in the upper house.

The "Eradication of Slavery (UK Company Supply Chains) Bill" is also on the list of proposed legislation. No right minded person would be in favour of slavery, but this particular bill isn't really about that. It is about regulating and inconveniencing business.

This bill would require "retailers and manufacturers in the UK to make annual statements of measures taken by them to eradicate slavery and human trafficking and exploitation from their direct supply chains. UK firms would also have provide customers with information about measures taken by them to eliminate slavery and human trafficking and exploitation.

Finally, firms would have to provide victims of slavery with necessary protections and rights. I am not sure how that last provision squares with the legislation passed in 1831 that banned slavery throughout the British Empire. Lets leave that one to the lawyers.

Firms already have powerful incentives to disassociate themselves from exploitative labour practices.This act will only encumber firms with irritating and costly reporting requirements. Human trafficking and exploitation will doubtless continue, irrespective of mountains of paper generated by this bill here in the UK.

The legislative programme currently before parliament reveals much about the current state of British politics. Our legislators have given up. They no longer take politics seriously. Instead, they delve into irrelevant issues, and casually plaster the country with unnecessary regulations.

Successive parliaments meekly handed authority over the Brussels.  Stripped of power, parliamentarians now contents themselves with nonsense like bills to create groceries adjudicators, or passing self serving Acts such as House of Lords (Amendment) Bill. And when it is really bored, it tries to relive old glories by passing an Eradication of Slavery act. The fact that slavery was abolished 180 years ago is a minor detail. The main point is that the current parliament can piously protest that it is against slavery now.

Meanwhile, the economy stagnates, and a lost decade beckons.

Abraham Lincoln - Vampire Hunter

Based on a true story......

UK Business Investment slumps (again)

Where should we look for evidence that quantitative easing is working?

Quantitative easing is supposed to reduce interest rates. This should make it cheaper for firms to borrow and invest. Higher investment creates more productive capacity and the UK economy grows. Therefore, data on UK business investment should tell us if the Bank of England's money creation scam - sorry scheme - is working.

The BoE has had some success in the first part of that chain of cause and effect. Interest rates on government bonds are remarkably low, facilitating a further increase in public sector indebtedness. The chain breaks down in the private sector. Firms are repaying loans and reducing business investment. Unsurprisingly, the economy is not growing.

The Bank of England has played this money creation game for close to 3 years. They have had at least 12 quarters of data to evaluate the impact of quantitative easing on investment. The evidence is blunt and unambiguous; business investment has never recovered to its 2007 peak. In the last quarter of 2011, business investment fell. Before you ask, yes, the data in a chart is seasonally adjusted.

After three years of abject failure isn't it time to rethink the gameplan?

How To Get On In Society

With the Brooks-Cameron networking malfunction firmly lodged on the front pages, I thought I should consult John Betjeman on social advancement strategies. He wrote a wonderful poem - How to Get On in Society. (Go on, read it out loud).

Just as Cameron was approaching the Brooks household, I wonder whether Rebekah turned to her partner and asked "Are the requisites all in the toilet?"

It takes more than cutlets, trifle and fish knives to progress in life these days.

How To Get On In Society

Phone for the fish knives, Norman
As cook is a little unnerved;
You kiddies have crumpled the serviettes
And I must have things daintily served.

Are the requisites all in the toilet?
The frills round the cutlets can wait
Till the girl has replenished the cruets
And switched on the logs in the grate.

It's ever so close in the lounge dear,
But the vestibule's comfy for tea
And Howard is riding on horseback
So do come and take some with me

Now here is a fork for your pastries
And do use the couch for your feet;
I know that I wanted to ask you-
Is trifle sufficient for sweet?

Milk and then just as it comes dear?
I'm afraid the preserve's full of stones;
Beg pardon, I'm soiling the doileys
With afternoon tea-cakes and scones.

When a great networking moment turns into a bad headline

Today, 10 Downing Street informed us that it was "likely" that the Prime Minister David Cameron rode the horse that Rebekah Brooks borrowed from the police. Thus, a strange story became even stranger.

The Telegraph voiced concerns "about the closeness between the Prime Minister and Mrs. Brooks". Labour MP Tom Watson offered a melodramatic interpretation of the issue: “This horse is becoming the symbol of this scandal. It shows how powerful media players and politicians got too close.” A horse as a symbol of corruption doesn't work for me. If I were you Tom, I would keep poor innocent dumb animals out of your sound bites. Nevertheless, the Telegraph feared that David Cameron would be damaged by his equine rendezvous with the disgraced journalist.

Personally, I'm not too worried about that. I was more interested in the relationship between Cameron and Brooks. When they were hanging out, or should I say riding out, did they actually enjoy each other's company? Or were they calculating the potential benefits that come from a relationship between a politician and a news editor? The first question is hard to answer, but the second question is a no-brainer. When Cameron came down to the farm, he went there to network. Mrs. Brooks invited in because she too wanted a high-powered friend. It was a Rolodex relationship.

I once heard an apocryphal story about George Bush senior. He was a phenomenal personal note writer. Whenever he met anyone, he would drop them a line saying how much he enjoyed their company. He never missed a birthday, or never fail to thank anyone. As he approached his run for the presidency, his note writing reached industrial levels. After 30 years of relentless networking he knew everyone in the Republican Party. When he ran for the presidency, he was everyone's friend. George Bush senior's address book also provided a powerful impetus his son's presidential bid.

That kind of networking is impressive, but what about the personal cost? It must be tedious to spend all one's time thinking how everyone you meet can further your career. Every personal relationship has a payoff. You can't dislike anyone or have any enemies. Life is one big forced smile. Evenings are spent at parties, proffering a sticky bucket of charm upon whoever you meet. To make it worse, everyone you meet is playing the same game. Everyone knows that everyone is using everyone.

The sad thing is that Mr. Cameron felt it necessary to spend time with Mrs. Brooks in order to be Prime Minister. I like to think that the time spent together was awkward. Each party understood the dishonest and self-seeking nature of the encounter. It was all smiles and cynicism. At the time, it might have seemed like an invaluable networking moment. In retrospect, it did neither party much good. Mrs. Brooks has fallen from grace, and it is extremely unlikely that she will be seen within 10 awkward metres of Mr. Cameron. For his part, Mr. Cameron is forced to answer surreal questions about the horses he rode and who he met when he was stomping across the countryside.

I find that an appealing thought.

Another great year for immigration

About a week ago, the ONS published the latest migration numbers for the year up to June 2011.

Here are the main points from the data release.

Long term immigration

The UK pulled in almost 593,000 migrants. This figure was 11,000 higher than in 2010. Every year since 2004, the UK has admitted around half a million new migrants.

Long term emigration

The traffic isn't going one way. Around 343,000 left the UK. This number was about 5,000 lower than 2010.

Net migration

On a net basis, we gained around a quarter of a million people last year. That is a little higher than normal. A typical year, the UK gains about 230,000.

New Commonwealth immigration

Last year was a record breaker for migrants from the New Commonwealth. We gained around 170,000. (Help me out here, what exactly is the New Commonwealth?)

Why do migrants come?

Around half of all migrants cite study as the primary reason for coming to the UK.

National Insurance numbers

In the year up to September 2011, 690,000 National Insurance numbers were allocated to non-UK nationals. That represented an increase of 11 per cent on the previous year.Why we issued more NI numbers than arrivals is a bit of a mystery.

What does it mean?

It is a matter of simple arithmetic that the island of Britain is being repopulated. Large numbers of citizens are leaving, while an even larger number of non-nationals are arriving and establishing permanent residence.

Why is it happening? Personally, I can't really say. I can only offer a few disparate observations about the decline of domestically produced citizens, a rapidly ageing population and the need to import a low wage workforce that is a prepared to do tasks that unskilled locals won't touch.

I don't see any coherent strategy behind this massive influx of people. Do we need more people because we have an ageing population? If so, it would make sense to restrict migration to young people. Are we looking for highly skilled people who can contribute significantly to UK output. Then perhaps we should restrict migration to those with valuable qualifications. Or are we looking for an unskilled docile workforce that UK businesses can employ at low wage rates? If so, we should discourage anyone with qualifications. Or perhaps it is bit of everything.

I wish someone would explain the plan. Why are we importing so many people?

What were you doing in late June 2007

Do you remember late June 2007? If the month invokes only hazy memories, the following date might provoke a response. On June 27, Gordon Brown became Prime Minister. As we all bitterly recall, He was never actually elected by the people, only a cabal of Labour party insiders ever had the privilege of voting for him.

Superficially, Brown took over as PM when the country appeared to be in fine shape. The economy was humming. It had recorded almost 2 decades of uninterrupted growth. Inflation had picked up slightly, but remained close to the two percent target. The same day he took office, the Land Registry published the house price inflation rate for the previous month. Prices rose by 0.7 percent in May, giving an average national house price of £180,594.

Nevertheless there were ominous signs that something was going wrong. The Land registry also provided data showing that annual house price inflation rate had dipped below double digits. ABN AMRO Bank issued a report indicating that UK property prices were 50 percent overvalued. Not that you would have noticed this in London, where the year-on-year house price inflation rate was 15.3 per cent. Earlier that week, the Building Societies Association announced that in May 2007 mortgage approvals fell by 13 percent compared to the same period the previous year. The Association also announced that actual lending also dropped by 17 percent year-on-year.

British Banks had also begun to wobble, though no one had any idea of the magnitude of the crisis that was brewing within the UK financial system. The day after Brown became PM, Northern Rock issued a profit warning, sending its shares down by over 10.0 percent. HBOS shares were also on the slide.

The Office of National Statistics reported that UK households owed about £1.3 trillion - a figure that had doubled in just seven years. The numbers were sufficiently alarming for Mervyn King to suggest to the Welsh CBI during a meeting that week that it was "unwise" for households to borrow so much on the assumption that interest rates would remain unchanged.

Brown seemed unaware of these dark auguries of impending doom. Brown’s leadership campaign promised a dizzying array of policies. He pledged that Britain would become a world leader in combating climate change, committing the country to huge cuts in carbon emissions. He promised to build 3 million homes by 2020. House planning restrictions would be relaxed. He wanted to build five new eco-towns. He said he would start a revolution in the NHS. Doctors would be forced open surgeries at weekends. He even suggested that polyclinics would be open to tender and possibly run by private companies.

Brown wanted to hold an all-party convention to look at Constitutional reform, and hinted that he would support a written Constitution and Bill of Rights. he was going to clean up sleaze in Westminster with a new ministerial code setting out clear stands behaviour for ministers. He was going to learn the lessons from mistakes made in Iraq. He was also going to strip the Prime Ministerial office of the powers conferred on it by royal prerogative, including the ability to declare war. Nevertheless, his desire for greater democracy did not extend to the question of Europe. He supported the EU reform treaty and ruled out any possibility of a referendum.

His leadership manifesto was classic Gordon Brown. He was a master at pushing out a headline grabbing policy statement. He could project extraordinary dynamism, disorientating the opposition, and redirecting political debate onto issues that he wanted to discuss.

Four years on, we can also see the vacuous nature of his administration. Brown’s breathtaking policy agenda was never more than a series of bullet points on a press release. Where are the eco-towns? Where is the written Constitution and Bill of Rights? Where are the new homes? What happened to the revolution in the NHS?

There is an answer to these questions. Within a few weeks of assuming the premiership, Gordon Brown was faced with the greatest financial crisis in almost a century. The serial failure of British Banks derailed his reform agenda. Instead of building eco-towns, he was forced to save the country from a financial sector meltdown. Constitutional reform and revolutionary change in the NHS had to take a backseat as crisis management became the priority.

The rescue plan comprised of three components. He prevented the collapse of RBS and HBOS by injecting taxpayer resources into the financial system. He used fiscal policy to sustain aggregate demand. He achieved this through a temporary 2 percent cut in VAT rate and sharply increasing public expenditure. The Bank of England provided the third component. The bank rate was cut to 0.5 percent, the lowest rate in living memory.

Brown would repeatedly claim that these frantic policy shifts would save the UK economy from disaster. He pulled back from the brink and without his radical interventions we would all been hurled into abject poverty.

The problem with Brown's line of defence is that if Brown pulled back from the brink, he was the one who put us on the edge of catastrophe. He had been Chancellor for 10 years. He presided over the housing bubble; he weakened banking sector regulation by creating the financial services agency. The run up large deficits during the boom when he should have balanced the government accounts.

A counter factual is always impossible to disprove. Nevertheless, the economy failed to return to its pre-crisis growth trajectory. In absolute terms, UK GDP is about four percent lower today compared to 2007. The UK has stagnated while public debt and unemployment has exploded.


It is now almost 2 years since Brown lost the general election. In retrospect, his period office seemed rather chaotic and mercifully short. He bounced from one crisis to another; his promises of reform were unfulfilled.

While it is easy to conclude that his government was a failure, there is also danger that too much of responsibility for Britain's lamentable current state is placed at his feet. It wasn't Brown who signed the uncountable number of loan agreements that led to the UK household sector running up debt stock of £1.3 trillion. He wasn't responsible for the outrageous risk-taking that characterized the UK banking sector. For example, he had nothing to do with the calamitous RBS takeover of ABN Amro. To his credit, Brown kept us out of the Euro, and held his ground against the enormous pressure from Blair and Mandelsohn who wanted to join the ill-fated single currency.

Brown wasn't the only architect of our present predicament and we do ourselves a disservice to claim that he constructed this mess alone. He had help from business people, bankers, civil servants, journalists and academics,who went along with the New Labour charade. He was ably assisted by far too many of us who bought into his nonsense of no more boom and bust.

Blaming a cynical old hack like Brown gives far too many of us a free pass. We neatly transfer the full bill for this mess onto a man who has long left office. We need to remember more than the fateful moment when Brown became Prime Minister. We should also remember that it takes more than a single politican to create the greatest financial bubble in our history. It takes a gullible and deluded people to construct our present calamitous situation.

UK economy - still no recovery

The UK economy is still four percent off its 2007 peak.

Still, it would have been so much worse without quantitative easing and massive fiscal deficits.

The death of the West

Of the thirty countries with membership in the OECD at the beginning of the 21st century, all but two had total female fertility rates under 2.1. This number - 2.1 - is required in order to stabilize the population at its current level.

The exceptions were Turkey and Mexico.

Thirteen OECD countries had fertility rates below 1.5

Liberation for London

This is the age of self-determination. It is time that London caught up with the times and declared its independence from the oppressive rule of the Anglo-Scots. For far too long, London has been governed by outsiders. We need to take control of our own affairs and determine our own destiny.

At the heart of the case for independence is a straightforward idea. The people best placed to act in London's best interests are those who choose to live and work in London. At the moment, however, many of the key decisions which affect London are taken by outsiders elected in foreign lands such as Northern England, Wales and Scotland. Independence for London would end the sense of grievance on both sides - which has often afflicted the relationship between London and the rest of the UK.

Two thousand years of arrogant Anglo-Scottish rule has been a disaster for London. Through an oppressive tax regime, the wealth generated in London has been robbed of its citizens and distributed to outsiders. Londoners have also suffered from linguistic oppression. Speakers of Cockney have been systematically discriminated and made to feel ashamed of their native language. Many Londoners have forgotten how to speak their native tongue and are forced to speak English instead. More generally,  the Anglo-Scots never understood our cultural heritage of Dick Whittington, pie and mash and jellied eels.

A free London would also put an end to the outrageous discrimination against many of its citizens perpetrated by non-Londoners. Offensive language against bankers would become hate crime punishable by stiff prison sentences for offenders. Bank bonuses will be protected under the Constitution. The financial sector will be liberated from the shackles of FSA-inspired regulation. Londoners will be free to borrow and lend as they please.

An independent London would not be a marginalised city state. The economy of London is larger than Scotland, Wales and Northern Ireland. We have a culture and history which is renowned worldwide; an expertise in financial services which has been built up over generations; a world class university system that is unrivalled in Europe.

Once liberated from the shackles of the failed Anglo-Scottish state, London would be free to support economic growth and to create opportunities – especially for our young people. An independent London would no longer be inhibited by the high tax and spend policies of the Anglo-Scottish elite. With its eviable record of strong tax collection and low public expenditure, London could break away from the current UK Government’s obsession with austerity. A liberated London could reduce corporate income tax and keep income tax below 20 percent. VAT could be abolished along with unemployment benefits, comprehensive schools and the National Health Service. This low tax and minimal government regime will encourage massive foreign investment, particularly from Russia and other countries with governance issues.

London would also be free to join the Eurozone. Unlike their backward Northern neighbours, the city was always in favour of the Euro. The single currency would have consolidated the city's role as the premier global financial centre. Londoners would have benefited enormously from abandoning the discredited pound, with its inflation loving central bank. The quantitative easing irresponsibility of the Bank of England would be banished, probably to Birmingham

There will of course be difficult issues to resolve with whatever detritus was left of the United Kingdom. The most pressing issue would be the national debt. London could forcefully argue that it has been a net contributor to the Treasury since time immemorial. Therefore, that debt belongs to the Scots and the English. That ageless sequence of fiscal deficits had nothing to do with London. The UK government borrowed that cash to spend on Northerners and Celts. Londoners already paid more than enough. The UK national debt was created by he English and Scots, and not by Londoners. They can keep it.

London would also have to address the financial chaos left by years of mismanagement by English and Scottish overlords. Top of the agenda will be the Royal Bank of Scotland. As the name suggests, that problem belongs to the northern extremity of the island. It is their bank, they can keep it, along with the bad debts. Lloyds bank is an English bank, and likewise had nothing to do with London.

The time has come for London to take its place in the global community of independent states. London must leave the past to the Anglo-Scots, and look to a bright future of freedom and prosperity.

Liberation for London now!

EU take control of the Greek economy

The Europeans weren't joking when they said that they wanted to take over the economic management of Greece. The FT reported on the extent to which the EU are micro-managing things in Athens.

European creditor countries are demanding 38 specific changes in Greek tax, spending and wage policies by the end of this month and have laid out extra reforms that amount to micromanaging the country’s government for two years, according to documents obtained by the Financial Times.

The reforms, spelt out in three separate memoranda of a combined 90 pages, are the price that Greece has agreed to pay to obtain a €130bn second bail-out and avoid a sovereign default that the government feared would throw Greek society into turmoil.

They range from the sweeping – overhauling judicial procedures, centralising health insurance, completing an accurate land registry – to the mundane – buying a new computer system for tax collectors, changing the way drugs are prescribed and setting minimum crude oil stocks.


A lesson here for Scotland perhaps?

More evidence of the dramatic decline in newspapers sales

I found this story buried on the website of the Irish Times:

NEWSPAPER SALES in Ireland fell in the second half of 2011, with the morning market declining 6.4 per cent and the Sunday market down 9.1 per cent, according to figures released by the Audit Bureau of Circulations.

Sales of The Irish Times fell 6.2 per cent in July-December 2011 compared to the same period in 2010. Its circulation stands at 96,150, down from 102,543, a drop of 6,393. Some 92 per cent of the circulation is actively purchased.

Declines of 6.1 percent and 9.1 percent over just six months? Wow!

How long can these papers stay in business?