Rotting from the core

Last October I wrote:

Which is why I see the whole of Apple going the same way.  In the latest reported figures, sales are up, but margins are down.  Increased sales are mostly of the iPhone 5C, a model designed for mass sales in the Chinese market, but net margins have fallen below 35%: still eye-wateringly high but decreasingly rapidly.  The number of fools willing to pay over the odds for so-so technology has its limits, and the Chinese appear to fall outside that category.

My forecast for Apple is that their ability to screw more money from a fairly limited product range is not going to be enough to sustain the current Market Cap.  In the long term we are all dead, but in 2014 expect the maggots to show in the Apple share price.

Yesterday shares in Apple fell close to 9% in after-hours trading after the firm reported flat profits of $13.1bn (£7.9bn) during the quarter ending 28 December. iPod sales have dipped: 52% down on this time last year, with further drops expected.

I keep telling people, that technology is just a tool, like a screwdriver, and fancy design is never going to get the *entire* population of the USA to spend over the odds to the tune of $1,000 (i.e. $1,000 *more* than they would otherwise have spent), which is what you need to justify a $455 billion market cap, after deducting the $150 billion pile of cash.

To put that in perspective, total iPod sales ever was 350 million.  At $40 profit per unit, call that $30 after tax (all my guesses), that would have been $10 billion of shareholder value, give or take a bit.  Hard to see where the future value that give a current discounted value of $455 billion are going to come from. If we have to wait a year, then that future dividend stream has to have a value next year of $500 billion. Personally, I don't see it happening.

The wheels on the bus go round and round

So Ed balls wants to put up the top rate of tax to 50%.  I don't have to much of an issue with that.  The purpose of taxation is to pluck the maximum amount of feathers from the goose with the minimum of hissing, and as has often been pointed out, democracy is a discussion between two foxes and a goose about what to have for dinner.

But if we are going to have a tax rate of 50% for any income over £150,000, there seems to be little point in paying *anybody* working for the government or the NHS or local government or any quango or or the BBC more than £150,000 if half of the extra just disappears back into the government's coffers.  You might just as well triple their pay and tax them at 85%.

Actually, there's an idea.  All government paid salaries above £150,000 get taxed at 100%..........

Spot the difference

The running order in this morning's news:

ITV News
1, 'Rosdeep Kular charged' in connection with son's death
2, British man killed in St Lucia after attack on a boat
3. Leaked inquiry: BBC 'turned a blind eye' to Savile abuse
4. Former aide to Nick Clegg quits Lib Dems over Lord Rennard row
5. Two Brits among 21 killed in Kabul suicide bomb blast
6. Ukip 'now Britain's favourite party'
7. Syrian political opposition agrees to peace talks
8. Two Britons among family of five killed in Utah, USA
9. Former Tory deputy chairman Lord McAlpine dies
10. France's First Lady 'leaves hospital'

Sky News 
1. Mikaeel Kular's Mother Charged Over His Death
2. British Man Murdered In St Lucia Attack
3. BBC Staff 'Turned Blind Eye' To Savile Abuse
4. Dennis Rodman In Rehab For Alcohol Abuse
5. Child Marriage 'Legitimises Lifetime Of Abuse'
6. Two Britons Among Five Dead In Murder-Suicide
7. UKIP To Purge Extreme Candidates Before Poll
8. Bomb Threat Forces Plane's Landing In Brazil
9. SAG Awards: American Hustle Hauls In Top Honour
10. Batman Vs Superman Film Delayed Until 2016

BBC News 
1. Mikaeel mother charged over death
2. US hails Syria opposition talks move
3. Ivanovic stuns Williams in Melbourne
4. British man murdered in St Lucia
5. Rennard could face new investigation
6. Deadly blast hits convoy in Pakistan
7. State school fees call for wealthy
8. Obama tries to allay German concerns
9. Defiant Ukraine protesters to rally
10. BBC World TV's Komla Dumor dies

Vacuous and tedious

With 1% knocked off the share price of the taxpayer owned banks, Ed Miliband shows us how he is going to wreck the economy if he ever gets into power.

I am no fan of the UK high street banks, but Miliband's pathetic posturing does no good. HSBC, Barclays, RBS, Santander and Lloyds Banking Group account for the majority of bank customers and lending.  This Mr Miliband thinks is a bad thing, so he proposes to force them to sell off soe of their branches to a "challenger bank".

Obviously Mr Miliband has never worked in banking nor has he done much banking on behalf of an organisation.  First of all, it doesn't matter much where branches are located these days, unless you have to go to the bank and make a lot of deposits as many businesses do.  If as a business your branch gets sold, then you have the choice of either transferring to the new bank (upheaval as you start to deal with people who don't know you or your business) or ou change to a new branch of the old bank (ditto). Either way bad news.

Ah, but says Mr Miliband, the major banks have too much power. Well blow me.  Let's not forget why one bank has 30 million personal accounts.  I seem to remember that Gordon Brown and Victor Blank thought it would be a good idea if Lloyds took over HBOS. But is it really that bad? With 5 major banks and quite a few more minor banks and building societies competing in every town, and often 2 or more from the same banking group.

Five not enough for you, or maybe that's actually ten in the town where you live?  Then you can always use one of the internet banks such as Egg (actually Yorkshire Building Society) or First Direct (HSBC), failing which you can always open an account at one of the banks operated by the Co-op, Tesco, Sainsbury's, M&S or Harrods, and if that still doesn't work for you there are a few dozen foreign banks operating in London that offer personal current accounts to anyone who wants one.  So that is a choice of about 50, and Mr Miliband thinks there is a lack of competition.

Mr Miliband says he wants to cut the size of banks because there is a law that does te same in the US.  Well not quite.  There is a proposal to restrict the amount of non-deposit liabilities that major banks can take on, which would address the liquidity issues that caused problems for many UK banks, but that means more deposit taking branches not fewer.

The US  used to have restrictions on "interstate banking", i.e. banks that accepted deposits in more than one state.  That (largely repealed) provision was designed to avoid the "too big to fail" issue and to restrict a banking collapse to a limited area.  But why was it repealed?  Because within a state the number of banks that could operate profitably was limited, and the result was a lack of consume choice.

Micro-brain

Ed Miliband is on the Andrew Marr show.  He says he wants to start two new banks.  He went to a micro-brewery last week and hey couldn't get a bank loan.

You want to know why?  Because micro-breweries sell mostly to pubs as guest ales, without the benefit of long term contracts.  They are relatively undifferentiated and the micro-brewery business has relatively low barriers to entry - the only thing keeping most of them afloat is the fact that it isn't easy for wannabe new entrants to get a loan.

But the worst factor is the decline of the English pub, largely as a result of the smoking ban introduced by the last Labour government.

French farce

I am not a completely heartless bastard, and I have a fair amount of sympathy for Valerie Trierweiler, although some might say that what goes around comes around, but I think we should all be grateful to her for one thing: shoing us the value and purpose of marriage.

Now, don't get me wrong.  Marriage isn't for everyone and I have no objection to those who in former times would have been described a "living in sin" or more recently as cohabiting.  I quite appreciate that some people just don't want to make a commitment (but please spare me the waffle about loving relationships: we all have those and not just with our pets).

But what gets my goat is when people who are not married attempt to wear the mantle of marriage.  At this point I should declare an interest. I have numerous siblings and siblings in law.  Some are married, most of the others are in some sort of relationship.  Some of the unwed relationships have borne children.  I have a simple rule.  The married partners are accorded the status of aunts and uncles and my daughters are their nieces, but the unwed partners are not. I, on the other hand, am the uncle of their children.  I can't help that. It is just a matter if the operation of the law, even if the reverse is not true. They are simply the boyfriend/ girlfriend of my sibling, very welcome etc, but not family.

Why do I do this?  Well you have to draw the line somewhere and in a big family, you can't treat one branch one way and another branch differently.  Not if you want to live long and prosper.  So I draw the line at the same point as the law, on the basis that if a couple doesn't manifest any binding commitment why should the rest of us treat them as a legal couple. They might not want to be and it isn't up to us to second guess these matters.

Which brings us back to Ms Trierweiler, who has been living it up in the Elysee Palace as the first lady of France. According to Ms T marriage is "a right not a duty", which as I mentioned above is a perfectly reasonable position to take.  But on the other hand, in my book without marriage Ms Trierwiler's right to spend thousands of euros of public money, to live in the Elysee while her non-husband is off canoodling on his scooter, and to be treated as a spouse at the meetings of world leaders looks extremely tenuous.

With marriage, her right to do so pro tem would have been maintained,although if the President wanted to go through the effort and expense of a divorce it might be short lived. But without marriage, the French tax payer would be entitled to insist that having been demoted to second lady she should be out of the house before er feet can touch the ground.

In short, if you can't show commitment, why should the rest of us do so?