Extraordinary! Today's Times has a "Business briefing" on the retail sector that's awash with doom and self pity. No recovery in consumer spending until 2011, that sort of thing.
Yet just last week it was reported that retail sales rose 2% in February, the best increase for any month since May 2008, and are 3.5% higher than a year ago. See the Telegraph's coverage here for example.
It's well known that retailers are right up there with farmers and estate agents in their willingness to moan about absolutely everything, but this really does take the biscuit.
Monday 29 March 2010
Crossed signals
British Airways is on strike. Just over 100,000 people a day are affected. It is a private company and has dozens of competitors. Gordon Brown said at the weelend that the Government would do whatever it coould to bring the dispute to and end.
Network Rail faces a strike next week. Over 4 million people a day will be affected. It is a public company* and has a monopoly over a key piece of national infrastructure. The Government has said it has no role to play.
Is it just me....?
*(I'm ignoring the legal niceties, just as Stephen Byers did when he expropriated it from its former owners).
Network Rail faces a strike next week. Over 4 million people a day will be affected. It is a public company* and has a monopoly over a key piece of national infrastructure. The Government has said it has no role to play.
Is it just me....?
*(I'm ignoring the legal niceties, just as Stephen Byers did when he expropriated it from its former owners).
Thursday 25 March 2010
Making vases from shards
The dumbest possible criticism of Alastair Darling's budget, and hence by far the most common in the media, is that it's "political". (Or as the Times has it, with an American Beauty-influenced cartoon of a naked Mr Darling, "Nakedly Political"). There's a general election coming in six weeks or so, one that's likely to be the most closely-fought in years. How could the budget not be "political"?
Considering how little he had to work with, Darling actually didn't do badly, with a little something for a lot of people. Stamp duty relief for less well off homebuyers paid for by a higher duty for wealthier ones; a nod toward the long term with a "green" investment bank and a fund to help university-based businesses (just what we need: two more quangos); even something for the motoring lobby, with the planned fuel duty rise to be phased in more slowly and £100 million extra to fix potholes. The principal requirement for this budget was probably the Hippocratic imperative: "first, do no harm". Darling has done a bit better than that: no harm and maybe just a little bit of good.
From an economic standpoint, of course, the big and interesting questions revolve around the overall fiscal projections and the economic growth forecasts that underlie them.
In one respect, at least, Darling does seem to have responded to suggestions that he should follow the deficit-cutting techniques allegedly pioneered by Canada in the 1990s. This Canadian precedent is almost entirely an illusion, but leave that aside for the moment. One trick that Canada's then Finance Minister, Paul Martin, used repeatedly was to understate the likely improvement in the fiscal situation, as a way of keeping everyone (especially money-hungry government departments) focused on the task at hand. Darling seems to be doing the same. The £11 billion downward revision in the expected deficit for the current year, to £167 billion, is good news, but not enough to allow anyone to think that the crisis is over. But in fact, there's every possibility that the outcome will be better than that. To cite just one reason, robust retail sales data for February suggest that VAT receipts in the first quarter of 2010 (which is the final quarter of the fiscal year) will be very strong. And if the economy really is getting back on track, then the projection that the deficit will fall by only £5 billion in FY 2010/2011 is very likely to be bettered.
Looking further out, the Treasury expects GDP growth to accelerate from 1-1.25% this year to 3-3.5% in 2011. Similar growth in the "out years" will allow the Government to meet its existing target of cutting the deficit in half over the next five years. This growth forecast has been roundly criticised by the opposition and much of the media as unrealistic, but it has at least one strong defender. Unfortunately it's Anatole Kaletsky, whose forecasting has been the brunt of much criticism not only in this here blog but also in Private Eye and, if rumours peddled by the Eye are to be believed, among the clients of his pricey consulting service. I'm not sure if Kaletsky intends this to be faint praise or what: In his calm, methodical manner, the Chancellor offered a picture of the future that was at least internally coherent and consistent with reality in today’s Britain, even if it may turn out to be wrong. A bit like one of Kaletsky's own forecasts, then, aside from the "coherent and consistent" part.
Kaletsky argues that it's appropriate for Darling and the Treasury to count on a strong rebound in the economy:
...that is exactly what any sensible Chancellor in the present circumstances should do.
Historical experience and economic theory both suggest that the deepest recessions are followed by the strongest recoveries. When the economy starts an expansion phase with enormous amounts of excess capacity and under-utilised labour, as it does today, then very rapid growth is compatible with low inflation.
In principle, therefore, the Treasury’s decision to base its fiscal forecasts on an assumption of 3 per cent growth next year and 3.25 per cent in the three years thereafter is actually quite conservative.
Well, maybe. There are already signs that inflation is stirring, and one of the surprises of the current slowdown has been how little unemployment has risen, so there may not be as much slack in the labour force as Kaletsky hopes, unless he is planning to lure all the Poles and Czechs back to the UK. Just as important, one of the strongest lessons provided by "historical experience" is that when a recession has been caused by a financial crisis, recovery tends to be difficult and gradual. The Government obviously hopes to remedy this by leaning on the banks to increase business lending, but it's far from certain that this will work.
So even if a revival in the economy will do some of the heavy lifting, there's still work to be done, and hard decisions to be made once the election is over. Although Darling didn't do a bad job yesterday, it's hard to see how he can have made much inroads against all of the other problems besetting the Government. And if the Budget does prove popular with the voters, the Tories and LibDems can always remind them that it was almost certainly Darling's last hurrah: if Labour gets re-elected, the awful Ed Balls is likely to get the keys to 11 Downing Street.
Considering how little he had to work with, Darling actually didn't do badly, with a little something for a lot of people. Stamp duty relief for less well off homebuyers paid for by a higher duty for wealthier ones; a nod toward the long term with a "green" investment bank and a fund to help university-based businesses (just what we need: two more quangos); even something for the motoring lobby, with the planned fuel duty rise to be phased in more slowly and £100 million extra to fix potholes. The principal requirement for this budget was probably the Hippocratic imperative: "first, do no harm". Darling has done a bit better than that: no harm and maybe just a little bit of good.
From an economic standpoint, of course, the big and interesting questions revolve around the overall fiscal projections and the economic growth forecasts that underlie them.
In one respect, at least, Darling does seem to have responded to suggestions that he should follow the deficit-cutting techniques allegedly pioneered by Canada in the 1990s. This Canadian precedent is almost entirely an illusion, but leave that aside for the moment. One trick that Canada's then Finance Minister, Paul Martin, used repeatedly was to understate the likely improvement in the fiscal situation, as a way of keeping everyone (especially money-hungry government departments) focused on the task at hand. Darling seems to be doing the same. The £11 billion downward revision in the expected deficit for the current year, to £167 billion, is good news, but not enough to allow anyone to think that the crisis is over. But in fact, there's every possibility that the outcome will be better than that. To cite just one reason, robust retail sales data for February suggest that VAT receipts in the first quarter of 2010 (which is the final quarter of the fiscal year) will be very strong. And if the economy really is getting back on track, then the projection that the deficit will fall by only £5 billion in FY 2010/2011 is very likely to be bettered.
Looking further out, the Treasury expects GDP growth to accelerate from 1-1.25% this year to 3-3.5% in 2011. Similar growth in the "out years" will allow the Government to meet its existing target of cutting the deficit in half over the next five years. This growth forecast has been roundly criticised by the opposition and much of the media as unrealistic, but it has at least one strong defender. Unfortunately it's Anatole Kaletsky, whose forecasting has been the brunt of much criticism not only in this here blog but also in Private Eye and, if rumours peddled by the Eye are to be believed, among the clients of his pricey consulting service. I'm not sure if Kaletsky intends this to be faint praise or what: In his calm, methodical manner, the Chancellor offered a picture of the future that was at least internally coherent and consistent with reality in today’s Britain, even if it may turn out to be wrong. A bit like one of Kaletsky's own forecasts, then, aside from the "coherent and consistent" part.
Kaletsky argues that it's appropriate for Darling and the Treasury to count on a strong rebound in the economy:
...that is exactly what any sensible Chancellor in the present circumstances should do.
Historical experience and economic theory both suggest that the deepest recessions are followed by the strongest recoveries. When the economy starts an expansion phase with enormous amounts of excess capacity and under-utilised labour, as it does today, then very rapid growth is compatible with low inflation.
In principle, therefore, the Treasury’s decision to base its fiscal forecasts on an assumption of 3 per cent growth next year and 3.25 per cent in the three years thereafter is actually quite conservative.
Well, maybe. There are already signs that inflation is stirring, and one of the surprises of the current slowdown has been how little unemployment has risen, so there may not be as much slack in the labour force as Kaletsky hopes, unless he is planning to lure all the Poles and Czechs back to the UK. Just as important, one of the strongest lessons provided by "historical experience" is that when a recession has been caused by a financial crisis, recovery tends to be difficult and gradual. The Government obviously hopes to remedy this by leaning on the banks to increase business lending, but it's far from certain that this will work.
So even if a revival in the economy will do some of the heavy lifting, there's still work to be done, and hard decisions to be made once the election is over. Although Darling didn't do a bad job yesterday, it's hard to see how he can have made much inroads against all of the other problems besetting the Government. And if the Budget does prove popular with the voters, the Tories and LibDems can always remind them that it was almost certainly Darling's last hurrah: if Labour gets re-elected, the awful Ed Balls is likely to get the keys to 11 Downing Street.
Tuesday 23 March 2010
Taxi for Mr Byers
So three former members of Tony Blair's cabinet -- Stephen Byers, Geoff Hoon and Patricia Hewitt -- have been suspended from the Parliamentary Labour Party in an influence peddling row. Hell guys -- at least the greedmeister himself had the sense and good grace to wait until he was out of office before pimping himself out to anyone with a fat wallet and a private plane. By comparison with Tony's millions, this lot are all so tawdry. Witness Byers' pathetic failure to realise he was being fitted up as he compared himself to a "cab for hire". Maybe he was just trying to say he was happy to work, but not if it meant he had to go south of the river.
Seriously, though, how much better can things get for David Cameron? Government seemingly powerless to do anything about the BA strike, railways and British Gas now facing their own walkouts, sleaze in the Labour ranks, and now the fragrant Mrs Cam announces she's gestating another bairn. Alastair Darling's budget is going to have to be pretty damn special to overcome that little lot.
Seriously, though, how much better can things get for David Cameron? Government seemingly powerless to do anything about the BA strike, railways and British Gas now facing their own walkouts, sleaze in the Labour ranks, and now the fragrant Mrs Cam announces she's gestating another bairn. Alastair Darling's budget is going to have to be pretty damn special to overcome that little lot.
Saturday 20 March 2010
Protect us from this!
Americans never make very convincing free traders. When the going gets tough, they're quick to blame their trading partners. There's been surprisingly little protectionist sabre-rattling during the current recession -- though you'd struggle to convince anyone from Airbus Industrie, who were robbed of a fairly-won contract for refuelling planes after frantic lobbying by Boeing -- but that may be about to change. Paul Krugman, the Nobel-winning economist, wants the US to adopt a hard line to force China to revalue its currency, the Yuan. You can read his arguments here; the article published on March 16 is the most complete exposition.
In brief, Krugman accuses China of running the most drastic mercantilist policy in history, one that's impoverishing the entire world. The underlying economics is the Keynesian "liquidity trap" concept. Saying "this has to stop now", Krugman wants the US to impose a 25% tariff on all imports from China, to force it to revalue. He envisages the EU following suit, in order to avoid becoming a dumping ground for China's surplus goods. And he envisages the Chinese crying "uncle" very quickly.
The undervalued Yuan is a problem all right. If only solving it could be as simple as Krugman suggests. The flipside of China's trade surpluses is an enormous capital outflow, much of which has found its way into the US Treasury market. Until now, China has been a model investor, adding to its holdings through thick and thin. Can it really be imagined that this would remain the case if the US suddenly tried to choke off the flow of imports from China? Beijing wouldn't have to sell many of its Treasuries to cause chaos in the US bond market -- in fact, just threatening to sell them would probably trash the market, with incalculable consequences.
China's "drastic mercantilist policy" finds its exact mirror image in the "drastic overconsumption binge" in the US, a binge which it has directly made possible. (The problem Krugman is trying to solve is actually the result of US monetary policy during the Bush years; it wasn't China that started this, as Krugman implies). It's unlikely that the great American public would take kindly to Krugman hauling all the cheap electronics out of Wal-Mart. Like all protectionists, of course, Krugman argues that domestic producers would take up the slack, and ridicules those who would dare to disagree in one of the most arrogant sentences I've ever read: "If you can’t think offhand of ways U.S. production might replace imports, that’s probably because you just don’t know enough". Well, I guess I don't know enough, and neither do the folks in Detroit who are seriously thinking of putting a quarter of the land area of the Motor City back into agricultural use. I'd refer Krugman to Bruce Springsteen's "Home town": "these jobs are going boys, and they ain't coming back". Time for a Nobel for The Boss?
Krugman has got the cart firmly in front of the horse here. For him, feckless, bankrupt, uncompetitive Americans aren't the problem -- it's the hard-working, solvent Chinese that have to adjust. Luckily, Krugman's outburst has received short shrift so far -- one commentator has compared him to Donald Rumsfeld, which has probably not pleased either man. But he's eloquent and influential, and in the US a protectionist is always preaching to the choir. This could get dangerous.
In brief, Krugman accuses China of running the most drastic mercantilist policy in history, one that's impoverishing the entire world. The underlying economics is the Keynesian "liquidity trap" concept. Saying "this has to stop now", Krugman wants the US to impose a 25% tariff on all imports from China, to force it to revalue. He envisages the EU following suit, in order to avoid becoming a dumping ground for China's surplus goods. And he envisages the Chinese crying "uncle" very quickly.
The undervalued Yuan is a problem all right. If only solving it could be as simple as Krugman suggests. The flipside of China's trade surpluses is an enormous capital outflow, much of which has found its way into the US Treasury market. Until now, China has been a model investor, adding to its holdings through thick and thin. Can it really be imagined that this would remain the case if the US suddenly tried to choke off the flow of imports from China? Beijing wouldn't have to sell many of its Treasuries to cause chaos in the US bond market -- in fact, just threatening to sell them would probably trash the market, with incalculable consequences.
China's "drastic mercantilist policy" finds its exact mirror image in the "drastic overconsumption binge" in the US, a binge which it has directly made possible. (The problem Krugman is trying to solve is actually the result of US monetary policy during the Bush years; it wasn't China that started this, as Krugman implies). It's unlikely that the great American public would take kindly to Krugman hauling all the cheap electronics out of Wal-Mart. Like all protectionists, of course, Krugman argues that domestic producers would take up the slack, and ridicules those who would dare to disagree in one of the most arrogant sentences I've ever read: "If you can’t think offhand of ways U.S. production might replace imports, that’s probably because you just don’t know enough". Well, I guess I don't know enough, and neither do the folks in Detroit who are seriously thinking of putting a quarter of the land area of the Motor City back into agricultural use. I'd refer Krugman to Bruce Springsteen's "Home town": "these jobs are going boys, and they ain't coming back". Time for a Nobel for The Boss?
Krugman has got the cart firmly in front of the horse here. For him, feckless, bankrupt, uncompetitive Americans aren't the problem -- it's the hard-working, solvent Chinese that have to adjust. Luckily, Krugman's outburst has received short shrift so far -- one commentator has compared him to Donald Rumsfeld, which has probably not pleased either man. But he's eloquent and influential, and in the US a protectionist is always preaching to the choir. This could get dangerous.
Monday 15 March 2010
Balls to all that
I had a brief moment of hope when I saw this headline on the index page of the BBC website: "Balls criticises Bulger comments". Finally, I thought. The Education Minister has summoned up the courage to tell the mother of James Bulger (now known, as a result of remarriage, as Denise Fergus) to cool it. Since the news emerged that Jon Venables, one of James's killers all those years ago, had been returned to custody, Mrs Fergus has demanded to know what new offence Venables is alleged to have committed, demanded that his probation officers should be fired for incompetence, and now demanded that the Children's Commissioner, Maggie Atkinson, should be fired for suggesting that Venables and his fellow murderer Robert Thompsom had been too young to be tried in an adult court in the first place.
Once I opened up the story itself, my optimism evaporated. Having had a week to gauge public opinion, presumably by reading the Sun and the Mail, Balls had decided to come out on Mrs Fergus's side, and against Maggie Atkinson's calm and reasoned approach. The Commissioner has not at any point suggested that Venables and Thompson should have been treated with gretaer leniency, only that children charged with heinous offences should not be tried in an adult court unless they are at least 12 years old, as is the case in most other countries. With an election coming, however, Balls (who is, be it recalled, a close buddy of Gordon Brown) has gone unerringly for the populist option.
Few of us can claim to understand the depth of Mrs Fergus's grief, and I for one am grateful for that. But her anguish cannot be allowed to override basic principles of justice. Revealing the nature of Venables's latest crime would remove all possibility of his receiving a fair trial, if it comes to that. And firing the Children's Commissioner for expressing a view that would be uncontroversial in most of the world would send a very worrying signal about the future of the English justice system, which exists precisely to prevent eye-for-an-eye retribution.
Amazingly, while Balls plays to the crowd, it falls to a Philip Johnston, a leader writer at the far-from-liberal Daily Telegraph, to deliver arobust defence of the principle that children must be treated differently from adults in criminal trials. (Sorry, link won't work!) Good for you, Mr Johnston -- but I hope you're ready for the hate messages.
Footnote: David Aaronovitch has also come out in favour of the rule of law in March 16th's Times. You have to hope that Ed Balls is reading some of this stuff.
Once I opened up the story itself, my optimism evaporated. Having had a week to gauge public opinion, presumably by reading the Sun and the Mail, Balls had decided to come out on Mrs Fergus's side, and against Maggie Atkinson's calm and reasoned approach. The Commissioner has not at any point suggested that Venables and Thompson should have been treated with gretaer leniency, only that children charged with heinous offences should not be tried in an adult court unless they are at least 12 years old, as is the case in most other countries. With an election coming, however, Balls (who is, be it recalled, a close buddy of Gordon Brown) has gone unerringly for the populist option.
Few of us can claim to understand the depth of Mrs Fergus's grief, and I for one am grateful for that. But her anguish cannot be allowed to override basic principles of justice. Revealing the nature of Venables's latest crime would remove all possibility of his receiving a fair trial, if it comes to that. And firing the Children's Commissioner for expressing a view that would be uncontroversial in most of the world would send a very worrying signal about the future of the English justice system, which exists precisely to prevent eye-for-an-eye retribution.
Amazingly, while Balls plays to the crowd, it falls to a Philip Johnston, a leader writer at the far-from-liberal Daily Telegraph, to deliver arobust defence of the principle that children must be treated differently from adults in criminal trials. (Sorry, link won't work!) Good for you, Mr Johnston -- but I hope you're ready for the hate messages.
Footnote: David Aaronovitch has also come out in favour of the rule of law in March 16th's Times. You have to hope that Ed Balls is reading some of this stuff.
Thursday 4 March 2010
Who'd've thunk it?
An e-mail arrives from ancestry.com, urging me to watch the new US series of "Who do you think you are?" Sadly, reception of NBC is pretty weak in my part of Hertfordshire, so I'll have to give it a miss.
However, Ancestry was kind enough to tease us with one of the key revelations from the first show, which features Sarah Jessica Parker. Here it is:
Watch as Sarah Jessica Parker discovers an ancestor accused of witchcraft during the Salem Witch Trials
As the saying goes, you couldn't make it up.
However, Ancestry was kind enough to tease us with one of the key revelations from the first show, which features Sarah Jessica Parker. Here it is:
Watch as Sarah Jessica Parker discovers an ancestor accused of witchcraft during the Salem Witch Trials
As the saying goes, you couldn't make it up.
Wednesday 3 March 2010
Gracias por nada
You'd think that by now we'd have figured out how the "special relationship" between the UK and the US works. I mean, it's not as though the US rushed to our side in either of the two world wars, and Conress made sure we paid the full price for all the wartime aid we received. So, just because we've fought alonsgide the US in two of their misbegotten wars over the past decade, we surely shouldn't be so naive as to expect that they might in any way support us now that Argentina is sabre-rattling again over the Falklands.
I have no time at all for colonialism. It's good that we gave back Hong Kong, and I'd be more than happy to see Gibraltar returned to Spain, or for that matter Ireland reunified. However, it has to be said that Argentina's claim to the Falklands is tenuous in the extreme. Before Britain finally established a proper settlement on the islands in 1833, nobody had spent any more time there than it took to plant a ceremonial flag. The archipelago is not even that close to the Argentine mainland, so it's hardly surprising that it's never in any meaningful sense formed part of Argentina, either politically or economically.
So it's downright nauseating to see Hillary Clinton making time for two hours of talks and well-photograped air-kissing with President Kerchner, and hinting heavily that the UK should agree to talks on the sovereignty of the islands. God forgive me for even thinking such a thing, but Washington's attitude couldn't be in any way connected to the possibility that there's rather a lot of oil in the vicinity, could it?
I have no time at all for colonialism. It's good that we gave back Hong Kong, and I'd be more than happy to see Gibraltar returned to Spain, or for that matter Ireland reunified. However, it has to be said that Argentina's claim to the Falklands is tenuous in the extreme. Before Britain finally established a proper settlement on the islands in 1833, nobody had spent any more time there than it took to plant a ceremonial flag. The archipelago is not even that close to the Argentine mainland, so it's hardly surprising that it's never in any meaningful sense formed part of Argentina, either politically or economically.
So it's downright nauseating to see Hillary Clinton making time for two hours of talks and well-photograped air-kissing with President Kerchner, and hinting heavily that the UK should agree to talks on the sovereignty of the islands. God forgive me for even thinking such a thing, but Washington's attitude couldn't be in any way connected to the possibility that there's rather a lot of oil in the vicinity, could it?
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