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Wednesday, 15 July 2015

Glass one sixteenth empty

The BBC shows its usual political bias by telling us that unemployment is up by 15,000, but curiously has no explanation for why salaries should be rising at a fast rate.

In fact it is obvious when you look at the figures a little more deeply than the BBC could be bothered to do. For indeed the number of people in work has actually increased by 265,000, with unemployment outside London actually falling and the numbers in part-time employment falling, switching to full-time.

Unemployment increased in London, but that is where most immigrants choose to settle on arrival in this country, and with an incremental workforce of 280,000 of whom only 5% are unemployed, that sounds like a very strong economy. 5% unemployment is lower than the unemployment rate of Oxford arts graduates.

Saturday, 9 May 2015

Pesto thickens

Some really poor logic/inherent bias in Robert Peston's analysis of tje election on the BBC website:

There are a few reasons.(for the rapid rise in the FTSE on opening on the day after the Conservative victory)

One (no surprise here) is that Labour's threat of breaking up banks and imposing energy price caps has been lifted. 

Fair enough, although that is only part of the FTSE

Second is that investors have been discounting days and weeks of wrangling after polling day over who would form the government - and so they are semi-euphoric that we already know who's in charge.

The media like the line that uncertainty depresses prices.  It doesn't do that per se. The possibility of bad news will depress prices, but uncertainty should create volatility around the expected price.

Third, many investors tend to be economically conservative and instinctively Conservative.

Well it may be true that investors are politically Conservative, but no investor is going to pay a penny more for a share si,ply because their preferred political party is in power.  What Peston could have said, but didn't, is the perception that The Conservatives treat business better than The Labour Party. But somehow his bias got in the way.

Thursday, 19 March 2015

If this is austerity ...

... God help us.

The UK National Debt is still rising at £5,170 per second.  That is the amount the government borrows because it is spending more than it raises in taxes.  To put that in perspective, the French borrow 2,665 euros per second, while the Gemran government manages to get by with a mere 1,556 euros on the never never. Allowing for exchange rates, our government is 4 times as profligate as the German government, who serve a larger population.

The simple fact is that the Conservative government has failed to reduce the deficit as they promised, but the idea that we are on some austerity drive is a pure fiction, mostly got up by those with a vested interest in the splurging of cash at the expense of your grandchildren, public sector workers, their unions and the Labour Party.

The truth is that we are still in the midst of the largest artificial stimulus in UK economic history, which is why employment levels are so high. Long may that last, but don't believe a word of the doom merchants warning against spending cuts. Can't happen soon enough, for all our sakes.

Thursday, 12 March 2015

Missed opportunity

Yesterday morning the interviewer on the Today programme got a good doing over by Lord Grade, not that he was gratuitously offensive or even at all agressive.  The issue was whether the PM should be obliged to appear in the television debates, and Lord Grade repeated the theme of his newspaper article, that it is up to the TV channels to propose the format of the debate and up to the politicians to decide whether they want to appear.

Lord Grade's point, as expounded in the papers, was that to threaten to empty chair the PM was a political act by the broadcasters, and it is contrary to the BBC's charter to do so.  Of course many people would like to see a televised debate, but it is up to the broadcasters to propose a format and for the politicians to decide whether they want to appear.  Of course the PM has the right to choose not to dignify the :eader of the Opposition with a 1-1 debate.  the broadcasters may not like it, but it is not for the BBC to act politically. Lord Grade won that "debate" 8-0 despite the splutterings of the interviewer.

But then the interviewer tried to switch the discussion to Clarkson, which Lord Grade swept aside, thereby missing an open goal.  If the BBC was willing to empty chair the PM, why wouldn't they empty chair Clarkson instead?

He could also have mentioned that Sue Inglish, the head of political programmes at the Corporation who is leading talks over the debates for the broadcasters, is married to John Underwood, who succeeded Peter Mandelson as the director of communications for the Labour Party.

Wednesday, 4 March 2015

Motes, eyes etc

I expect others receive the same number of calls from universities trying to gouge cash from their alumni. We probably get more than our fair share because with three grown daughters having fled the nest after graduating from Oxford, we get calls from their respective colleges who have not been given a forwarding address.

Well now I have a new brush off line. "The day when the Vice Chancellor of your university sacrifices so much of his pay that he is paid no more than the Prime Minister and donates the rest, is the day that I will donate to your student hardship fund."

Wednesday, 25 February 2015

Less than zero

You have probably never heard of Declan Costello. Elvis Costello (aka Declan McManus) maybe, but not Declan Costello. Apparently he is a pretty smart guy.

Declan Costello was born in Galway, Ireland in 1967. He has a Degree in Economics from Trinity College Dublin and a Masters Degree from the College of Europe in Bruges. He joined the European Commission in 1991 and has worked in DG ECFIN (barring a 9 month secondment to the Portuguese Ministry of Finance) as an economist up until 2012. More about him in a bit.

You may have noticed that the Greeks managed to get their budget reform proposals in by the midnight deadline. Midnight Hawaii time that was.  First Eurofudge, but the EU managed to read and consider the proposals remarkably quickly before announcing that they constituted a valid starting point for discussions.

Kudos, one would think to the new Greek government, who armed with their meaningless (for these purposes) democratic mandate hadn't managed to negotiate any concessions out of the Troika, but had at least been permitted to submit their own proposals rather than taking a diktat from Brussels.

And an impressive list of reforms they are too.  Not so much in the content, but in the form of the drafting, displaying a remarkably dexterous use of the English language and financial terminology. You can download a copy from here.

But if you do download it and read it in Adobe reader, be sure to click on File/Properties and look at the author.

My Aim is True.

Thursday, 12 February 2015

Dodgy donors

By criticising tax avoidance — an entirely legal activity — Ed Miliband has opened up some of his own colleagues and donors to questions about their own tax affairs.

They include donor John Mills, who gave £1.65m to Labour in shares two years ago because it was the “most tax-efficient way of doing this”. The Labour leader may also see renewed scrutiny of the arrangements set up around the Miliband family home after the death of his father.

After Mr Mills donated shares in his company JML Limited he said he had been advised to do so. “It is the most tax-efficient way of doing this because, otherwise, you get no tax relief on donations to political parties,” he said.

During his visit to a north London school Mr Miliband was questioned about the arrangement used by his own family on a townhouse in north London. After Ralph Miliband died in 1994 his assets transferred to his wife, Marion. Soon afterwards his will was changed via a so-called “deed of variation” to give 20 per cent of the family home to each of his two sons.

The property was sold in 2004 to David Miliband: there was no liability for inheritance tax because his mother was still alive. Had she died before that sale the arrangement from a decade earlier would have minimised the family’s tax liabilities. That is because each individual has a tax-free threshold on which no inheritance tax is paid, currently set at £325,000. By sharing a property between several people a family can diminish the tax owed.

“The reason people use deeds of variation is to save inheritance tax,” according to John Whiting, former head of tax at PwC. On Thursday, the Labour leader said: “I paid tax on that transaction,” when asked about the deal. But he was referring to the 40 per cent capital gains tax he paid on the profits. “It can’t be tax avoidance if no tax was avoided,” said a Labour Party spokesman.

Ah, but it was. Miliband ended up paying a different amount of tax.

Mr Miliband can also expect fresh scrutiny of the tax affairs of other Labour MPs, donors and associates. Past major donors to the party include several with “non-domicile” status in Britain, meaning that they did not pay UK income tax or capital gains tax on international earnings.

These included Lakshmi Mittal, Sir Ronald Cohen and Lord Paul. Labour has also received £20,000 last August from Vitabiotics, a vitamins company owned by a holding group based in the British Virgin Islands. Andrew Rosenfeld, who died last weekend, gave nearly £1m to the Labour party and was based in Switzerland for five years after the sale of his stake in Minerva, a property company. Mr Rosenfeld has never denied accusations that he had moved to the low-tax Alpine country for tax reasons.

The public accounts committee, chaired by Labour MP Margaret Hodge, has accused PwC of “selling tax avoidance on an industrial scale”. At the same time, the Labour Party has received more than £500,000 of “donations” in the form of consultancy advice from PwC.

Hedge trimming

Ed Miliband wants hedge funds to pay tax on UK shares that they trade. Well they do already.  What he also wants them to do is to pay stamp duty on the positions that they take.  They avoid that because of some thing called "intermediaries relief".

Intermediaries relief was introduced in the 1990s to allow investment banks to act as so-called market makers, buying and selling shares for clients, to increase the amount of liquidity, or the ease of buying and selling, in the UK stock market by reducing transaction costs.

Labour argues that this exemption has been exploited by hedge funds, which frequently opt to enter into financial contracts with banks that give them an economic exposure to shares, rather than buying the underlying shares themselves.

Because the hedge funds enter into derivatives contracts with banks, the banks' share purchases qualify for intermediaries relief whereas the hedge funds trade only in derivatives, no stamp duty is payable.

The hedge fund's position seems fair enough.  they didn't buy any shares, so no changes to the sare register for their trades and therefore no stamp duty.

Couldn't hit a barn door with an elephant

Much hand-wringing at the BBC at the auction of 3 years of Premier League television rights for £5.1 billion. The dweebs at the beeb can hardly believe that anyone would pay so much for so little.

Needless to say that the thought probably hasn't crossed their minds that there wouldn't be such demand for footie on the box if Auntie didn't produce a never-ending nauseous stream of antique-cooking-celebrity chat-dance shows.

Monday, 19 January 2015

So now we know ...

... that Labour were covering up failing hospitals during the last government.

Last October, Health Secretary Jeremy Hunt accused his Labour predecessor, Andy Burnham of doing just that, and Burnham whined to anyone who would listen that he was consulting lawyers. Hunt and the Conservatives did not withdraw their allegations.

Now we know, because Burnham had to declare it in the Register of Parliamentary Interests that he was provided with  £16,665 worth of legal services offered by Steel & Shamash, the Labour Party’s solicitors, and £8,250 from Gavin Millar QC, a defamation specialist.

Burnham has not issued any proceedings, from which we can deduce that his very expensive advisors told him not to bother, and we can further presume that the allegations were correct.