Our friends in the North, those loveable Icelanders, are back in the headlines again. A couple of years ago their hilariously mismanaged "banks" played a small but pivotal role in bringing the financial system to its knees. A few months back their unpronounceable volcano closed down European airspace. Now they've turned their balefeul glance on the North Atlantic mackerel fishery.
Having mismanaged and fished-out their own whitefish stocks, Iceland's trawlermen are going after the mackerel in a big way. The country's approved quota for mackerel this year is 2,000 tonnes, but so far it's taken.....100,000 tonnes! And it plans to take a total of 130,000 tonnes before the year is out. (That amounts to half a tonne of mackerel per Icelander!) Along with the Faroe Islands, who are going along with this astounding bout of overfishing, Iceland could catch about one-third of all the North Atlantic's mackerel in just this one year, a depredation from which the stock may never recover.
Iceland is always a bit surreal (They don't have surnames! They have Bjork!!), but even by the country's own lights, the rationale for all this is truly bizarre. Iceland wants in to the EU, and seems to have come to the conclusion that the way to make its case is to massacre other people's mackerel stocks, promising to cease and desist once EU entry is approved. It's not exactly what you'd call a charm offensive. In fact, some curmudgeons at the EU, as well as some national governments, think that sanctions or even a 70s-style fishing war might be a more appropriate response.
Even if we can't quite blame the country for the volcano, just think of what Iceland has done to burnish its credentials for EU membership in recent years. Greed and astonishingly incompetent regulation meant that Iceland's banks punched far above their weight in triggering the financial meltdown, at huge cost to other governments, notably in the UK and Netherlands. The country's voters voted down an already-agreed deal to compensate those countries for their losses. And now they're trying to force their way into the EU by raping the already damaged North Atlantic fishery.
It seems clear that EU membership talks for Iceland should begin with appropriate despatch. As soon as talks on the accession of Iran, Myanmar and Somalia are concluded, Brussels should get right to it.
Friday, 27 August 2010
Thursday, 26 August 2010
More evidence of the dreaded double dip
Quite an upbeat survey of the retail sector today from the CBI, reported thus by The Guardian.
High street sales hit three-year high, says CBI
CBI survey reveals retail sales growing at fastest rate since April 2007, boosted by price reductions and warm weather. Julia Kollewe guardian.co.uk, Thursday 26 August 2010 12.00 BST
A CBI survey has revealed high street sales growing at their fastest pace since 2007 boosted by summer sales and warm weather. Photograph: Luke MacGregor/Reuters
Retail sales are growing at the fastest pace in three years, boosted by summer sales, warm weather and the school holidays.
The Confederation of British Industry's (CBI) monthly survey of retailers showed the sales balance rising unexpectedly this month to 35 from 33 in July, marking the highest reading since April 2007. City economists had expected the balance to fall to 20.
"Better sales growth continued in the high street in early August, and retailers are upbeat about prospects in the coming three months," said Lai Wah Co, head of economic analysis at the CBI.
"The summer sales, some warmer weather and the school holidays will no doubt have helped, lifting sales of clothing and shoes, and encouraging households to invest in some home improvements."
The CBI's quarterly survey showed an even stronger performance, with the rise in the retail business situation balance to 22 from 5 in May, giving the highest reading since May 2004.
"The survey suggests that the emerging slowdown in the wider economy has yet to spread to the high street," said Samuel Tombs at Capital Economics. "Nonetheless, we remain convinced that the fiscal squeeze will slow the consumer recovery further ahead."
Well balanced, I'd say. Looks good for the next few months (as it should with the VAT hike looming), but the fiscal squeeze could "slow" consumer spending further ahead.
Over at Gloom Central (aka The Times, led by economics correspondent Grainne Gilmore), they have a different take on it:
Retail surge eclipsed by inflation fears
Two-thirds of high street shops surveyed by the CBI reported a rise in prices compared to last year
High street sales were up to their highest level since April 2007 due to hot weather and hefty discounting, figures out today have revealed.
However, prices are rising at their fastest pace since 1992, according to the CBI distributive trades survey, leading to heightened fears over inflation.
Maybe it's just me -- I mean, my economics degree was a good many years ago -- but isn't there the teensiest hint of a contradiction between "hefty discounting" and "prices rising at their fastest pace since 1992"? Still, you have to hand it to Ms Gilmore. Whether the future brings inflation or a nasty slump, she'll always be able to say "I told you so".
High street sales hit three-year high, says CBI
CBI survey reveals retail sales growing at fastest rate since April 2007, boosted by price reductions and warm weather. Julia Kollewe guardian.co.uk, Thursday 26 August 2010 12.00 BST
A CBI survey has revealed high street sales growing at their fastest pace since 2007 boosted by summer sales and warm weather. Photograph: Luke MacGregor/Reuters
Retail sales are growing at the fastest pace in three years, boosted by summer sales, warm weather and the school holidays.
The Confederation of British Industry's (CBI) monthly survey of retailers showed the sales balance rising unexpectedly this month to 35 from 33 in July, marking the highest reading since April 2007. City economists had expected the balance to fall to 20.
"Better sales growth continued in the high street in early August, and retailers are upbeat about prospects in the coming three months," said Lai Wah Co, head of economic analysis at the CBI.
"The summer sales, some warmer weather and the school holidays will no doubt have helped, lifting sales of clothing and shoes, and encouraging households to invest in some home improvements."
The CBI's quarterly survey showed an even stronger performance, with the rise in the retail business situation balance to 22 from 5 in May, giving the highest reading since May 2004.
"The survey suggests that the emerging slowdown in the wider economy has yet to spread to the high street," said Samuel Tombs at Capital Economics. "Nonetheless, we remain convinced that the fiscal squeeze will slow the consumer recovery further ahead."
Well balanced, I'd say. Looks good for the next few months (as it should with the VAT hike looming), but the fiscal squeeze could "slow" consumer spending further ahead.
Over at Gloom Central (aka The Times, led by economics correspondent Grainne Gilmore), they have a different take on it:
Retail surge eclipsed by inflation fears
Two-thirds of high street shops surveyed by the CBI reported a rise in prices compared to last year
High street sales were up to their highest level since April 2007 due to hot weather and hefty discounting, figures out today have revealed.
However, prices are rising at their fastest pace since 1992, according to the CBI distributive trades survey, leading to heightened fears over inflation.
Maybe it's just me -- I mean, my economics degree was a good many years ago -- but isn't there the teensiest hint of a contradiction between "hefty discounting" and "prices rising at their fastest pace since 1992"? Still, you have to hand it to Ms Gilmore. Whether the future brings inflation or a nasty slump, she'll always be able to say "I told you so".
Wednesday, 18 August 2010
Religion, race and hatred
That reasonable and self-effacing thinker, Richard Dawkins, will be back on our TV screens this evening with a programme called "Faith School Menace?". I'm not sure why the question mark is there, because Dawkins doesn't seem in much doubt about it. In fact, I'm wondering whether the programme will be broadcast in black and white, because that's how Dawkins sees most things these days. Consider this quote about Northern Ireland:
“If it wasn’t for religion, and especially religious education going on down the generations, you wouldn’t have a label by which to know who to oppress.”
Nice syntax, Richard! But leaving that aside, anyone who thinks that the conflict in Northern Ireland is basically religious doesn't have much grasp of history. Northern Irish Catholics never fought the Protestants for religious reasons: they fought them because they had been brought over to Ireland specifically to keep the Catholics under control.
Given that the schools in Northern Ireland are still almost entirely run on sectarian lines, I wonder how Prof. Dawkins explains the dramatic decline in sectarian violence over the past decade. The hatred has dissipated because most of the oppression -- the gerrymandering, the job discrimination and so on -- has been done away with. (By the way, looking further back, I also wonder how Prof Dawkins would explain the fact that some of the most important leaders of the Irish independence movement were Protestants).
But let's not confine ourselves to local matters. Earlier this year I paid a brief visit to Estonia, and took a bus tour of Tallinn and its environs. The tour guide, a middle-aged woman, was the most bitter and bigoted person I have ever encountered. Everything bad in Estonia was the fault of the Russians -- even the design of the housing, which seemed to be a particular obsession. She especially resented the fact that the Russians had brought in people from all over the former USSR to take key jobs, something which I saw as a direct parallel to Northern Ireland. "There were Azerbaijanis, Uzbeks, Kazakhs" she said. Then she almost spat out: "But we knew who they were, because they all spoke Russian". In its own innocent-sounding way, that came across as one of the most racist things I've ever heard.
I commented to a historian I was travelling with that were it not for Mother Russia, Estonians (and perhaps a lot more people besides) might still be living under the yoke of the Nazis. His view was that for many Estonians, obviously including our tour guide, that would be just fine.
Estonia has endured more than its share of history over the centuries, pushed and pulled between Germany, Russia and Poland. I'm sure not all Estonians are as damaged by the past as our guide, but she certainly provided a very clear lesson in how oppression can breed hatred. Whether Richard Dawkins likes it or not, God has very little to do with it, in Ireland or Estonia, or in most other places for that matter.
“If it wasn’t for religion, and especially religious education going on down the generations, you wouldn’t have a label by which to know who to oppress.”
Nice syntax, Richard! But leaving that aside, anyone who thinks that the conflict in Northern Ireland is basically religious doesn't have much grasp of history. Northern Irish Catholics never fought the Protestants for religious reasons: they fought them because they had been brought over to Ireland specifically to keep the Catholics under control.
Given that the schools in Northern Ireland are still almost entirely run on sectarian lines, I wonder how Prof. Dawkins explains the dramatic decline in sectarian violence over the past decade. The hatred has dissipated because most of the oppression -- the gerrymandering, the job discrimination and so on -- has been done away with. (By the way, looking further back, I also wonder how Prof Dawkins would explain the fact that some of the most important leaders of the Irish independence movement were Protestants).
But let's not confine ourselves to local matters. Earlier this year I paid a brief visit to Estonia, and took a bus tour of Tallinn and its environs. The tour guide, a middle-aged woman, was the most bitter and bigoted person I have ever encountered. Everything bad in Estonia was the fault of the Russians -- even the design of the housing, which seemed to be a particular obsession. She especially resented the fact that the Russians had brought in people from all over the former USSR to take key jobs, something which I saw as a direct parallel to Northern Ireland. "There were Azerbaijanis, Uzbeks, Kazakhs" she said. Then she almost spat out: "But we knew who they were, because they all spoke Russian". In its own innocent-sounding way, that came across as one of the most racist things I've ever heard.
I commented to a historian I was travelling with that were it not for Mother Russia, Estonians (and perhaps a lot more people besides) might still be living under the yoke of the Nazis. His view was that for many Estonians, obviously including our tour guide, that would be just fine.
Estonia has endured more than its share of history over the centuries, pushed and pulled between Germany, Russia and Poland. I'm sure not all Estonians are as damaged by the past as our guide, but she certainly provided a very clear lesson in how oppression can breed hatred. Whether Richard Dawkins likes it or not, God has very little to do with it, in Ireland or Estonia, or in most other places for that matter.
Monday, 16 August 2010
Waste of space
A-level results are imminent, and already there are reports that the last-minute "clearing" process that matches applicants with places is going to fall far short of meeting the demand. Today's Times has three "case studies" of what you can do if you don't get the place you were hoping for. One of them is remarkable:
Rob Mortell is a veteran of the clearing process having gone through it twice. He exceeded his A-level predictions of three Cs with AAA. “I did some fast reassessments and decided not to stick with my plan of going to Bournemouth to study business.”
Mr Mortell, 24, contacted Cardiff University to study medicine. “It was not based on any desire to be a doctor — I watched too much ER!”
He secured an interview and was successful. But after two years he applied through clearing again for law. He phoned Leicester and Sheffield one week before the start of clearing and Leicester told him to “keep in touch”. The next week he was given a place. Mr Mortell praised the opportunities given by clearing. “You have to be confident and focused to get what you want.”
Yes, the "confident and focused" Mr Mortell is now on his third choice of subject. He deprived an aspiring doctor of a place at Cardiff, and chances are he's now in the process of doing the same to an aspiring lawyer at Leicester. (Well, what odds would you give of him making it through law school?) At 24 he's spinning his wheels, presumably racking up massive debts that may or may not be repaid if he ever actually makes it into the workforce.
In the unlikely event that Mr Mortell ever reads this, I'd just like to say that he's a complete wa**er -- and if he assumes that means something other than "waster", that's fine with me.
Rob Mortell is a veteran of the clearing process having gone through it twice. He exceeded his A-level predictions of three Cs with AAA. “I did some fast reassessments and decided not to stick with my plan of going to Bournemouth to study business.”
Mr Mortell, 24, contacted Cardiff University to study medicine. “It was not based on any desire to be a doctor — I watched too much ER!”
He secured an interview and was successful. But after two years he applied through clearing again for law. He phoned Leicester and Sheffield one week before the start of clearing and Leicester told him to “keep in touch”. The next week he was given a place. Mr Mortell praised the opportunities given by clearing. “You have to be confident and focused to get what you want.”
Yes, the "confident and focused" Mr Mortell is now on his third choice of subject. He deprived an aspiring doctor of a place at Cardiff, and chances are he's now in the process of doing the same to an aspiring lawyer at Leicester. (Well, what odds would you give of him making it through law school?) At 24 he's spinning his wheels, presumably racking up massive debts that may or may not be repaid if he ever actually makes it into the workforce.
In the unlikely event that Mr Mortell ever reads this, I'd just like to say that he's a complete wa**er -- and if he assumes that means something other than "waster", that's fine with me.
Sunday, 15 August 2010
Money saving tips from a flamboyant billionaire
The Government's choice of Sir Philip Green as its advisor on how to cut spending is curious in the extreme. Sir Philip seems to be a good retailer, if your taste runs to cheaply-produced mass market clothing, but he's conspicuously not a man who shares the lifestyle of his customers or wears much of the stuff he sells in his stores.
There's no reason whatsoever to think that he has any great insight into saving money in the public sector. The people working in the public sector know better than anyone how to run it more efficiently -- they just need the incentives to do it. I suspect Sir Philip's money saving achievements in his own businesses have mostly involved moving production offshore, and that is (thankfully) a non-starter for most public services.
Sir Philip is also a long-term tax avoider, which I'd have thought makes him a risky partner for the new government as it tries to convince the taxpaying public that "we're all in this together". No offence meant, Sir Philip, but if we're going to look to a shopkeeper for help run the country, I'd prefer it to be one who lives above the shop.
There's no reason whatsoever to think that he has any great insight into saving money in the public sector. The people working in the public sector know better than anyone how to run it more efficiently -- they just need the incentives to do it. I suspect Sir Philip's money saving achievements in his own businesses have mostly involved moving production offshore, and that is (thankfully) a non-starter for most public services.
Sir Philip is also a long-term tax avoider, which I'd have thought makes him a risky partner for the new government as it tries to convince the taxpaying public that "we're all in this together". No offence meant, Sir Philip, but if we're going to look to a shopkeeper for help run the country, I'd prefer it to be one who lives above the shop.
Tuesday, 10 August 2010
Houses of cards
The doom and gloomsters in the UK media are having a field day with the July house prices report from the Royal Institute of Chartered Surveyors (RICS), which in the headline writers' interpretation shows that house prices fell in the month for the first time in a year. Actually, that's not what the survey says. This is one of those rather dodgy statistics in which respondents are asked what they think is happening, rather than anyone taking the trouble actually to measure what is happening; the risible monthly survey by the ever-shrill but rarely correct British Retail Consortium is another such.
What the RICS does is to ask a small sample of estate agents (fewer than 300 -- I think we have more than that in my town alone!) whether in the past month they have seen prices falling, rising or staying the same. The balance between those reporting rising and falling prices becomes the headline figure. (If you care, this sort of measure is called a "diffusion index"). In July 64% of the RICS's respondents saw no change in prices, with 11% seeing increases and 25% seeing falls. So the overall picture is slightly negative, though given the preponderance of "no change" readings, not unduly so -- which of course could never stop the doom mongers.
To be fair to the RICS, their own press release (you can read it here) is scrupulously balanced. They note that despite the small negative reading for July, most estate agents continue to look for some increase in house prices over the remainder of the year. While acknowledging that fears over the impact of public spending cuts and continuing restrictions on the availability of mortgage finance may be starting to weigh on the market, they suggest that the proximate cause of the fall in July may have been an increase in the supply of home son the market, as a result of the abolition of the ill-fated HIPs programme.
Many in the media, of course, want to believe otherwise, pointing the finger instead at the nasty banks and their unwillingness to open the lending taps again. One of the Sunday money supplements this past weekend used as a case study a young lady of 22, implausibly described as a "legal executive", who had been turned down for a mortgage because she had only a 10% deposit.
By implication, it's wrong for a bank to refuse to give someone with at best a short credit history and a small downpayment a loan equal to several times her annual salary. Funny, I thought it was exactly that kind of "Hail Mary" lending that got banks all around the world into so much trouble a couple of years back.
The former head of the FSA, Lord Turner, recently presented a remarkable paper in which he pointed out that well over 70% of lending by UK banks goes into either residential or commercial property. Even more surprising than the raw figure is the fact that very little of this goes into financing new development. It's almost all used for refinancing of existing properties. The clear implication of this is that the rising price of residential property in the UK for most of the past two decades had very little to do with supply and demand, and almost everything to do with the blind willingness of banks to lend against it. (I think this is an example of what George Soros has been trying to get at with his tortuous "reflexivity" theory).
Unless you think house prices are back to an equilibrium level of some sort (and if you do think that, you're pretty much on your own), it's hard to see how they can go much higher without a return to irresponsible lending by the banks. If we have a choice between a stagnant housing market and wobbly banks, I know which I'd prefer.
What the RICS does is to ask a small sample of estate agents (fewer than 300 -- I think we have more than that in my town alone!) whether in the past month they have seen prices falling, rising or staying the same. The balance between those reporting rising and falling prices becomes the headline figure. (If you care, this sort of measure is called a "diffusion index"). In July 64% of the RICS's respondents saw no change in prices, with 11% seeing increases and 25% seeing falls. So the overall picture is slightly negative, though given the preponderance of "no change" readings, not unduly so -- which of course could never stop the doom mongers.
To be fair to the RICS, their own press release (you can read it here) is scrupulously balanced. They note that despite the small negative reading for July, most estate agents continue to look for some increase in house prices over the remainder of the year. While acknowledging that fears over the impact of public spending cuts and continuing restrictions on the availability of mortgage finance may be starting to weigh on the market, they suggest that the proximate cause of the fall in July may have been an increase in the supply of home son the market, as a result of the abolition of the ill-fated HIPs programme.
Many in the media, of course, want to believe otherwise, pointing the finger instead at the nasty banks and their unwillingness to open the lending taps again. One of the Sunday money supplements this past weekend used as a case study a young lady of 22, implausibly described as a "legal executive", who had been turned down for a mortgage because she had only a 10% deposit.
By implication, it's wrong for a bank to refuse to give someone with at best a short credit history and a small downpayment a loan equal to several times her annual salary. Funny, I thought it was exactly that kind of "Hail Mary" lending that got banks all around the world into so much trouble a couple of years back.
The former head of the FSA, Lord Turner, recently presented a remarkable paper in which he pointed out that well over 70% of lending by UK banks goes into either residential or commercial property. Even more surprising than the raw figure is the fact that very little of this goes into financing new development. It's almost all used for refinancing of existing properties. The clear implication of this is that the rising price of residential property in the UK for most of the past two decades had very little to do with supply and demand, and almost everything to do with the blind willingness of banks to lend against it. (I think this is an example of what George Soros has been trying to get at with his tortuous "reflexivity" theory).
Unless you think house prices are back to an equilibrium level of some sort (and if you do think that, you're pretty much on your own), it's hard to see how they can go much higher without a return to irresponsible lending by the banks. If we have a choice between a stagnant housing market and wobbly banks, I know which I'd prefer.
Thursday, 5 August 2010
The end of the world is nigh (-ish) (possibly)
A few postings ago ("If it wasn't for bad news....) I took issue with the economics editor of The Times, who was enthusiastically talking up a double-dip recession for the UK even as evidence emerged of rapid growth, falling unemployment, rising car sales, etc etc. The Times is still at it, and today it's been joined by the Daily Telegraph. This headline appears in chunky type over an article in today's Telegraph business pages:
US economy 'on the road to deflation', warns Pimco boss El-Erian
But immediately below that -- immediately below, not separated by any tedious text or photos, it says in smaller type:
Mohamed El-Erian, the head the world's largest bond fund, has said the United States faces a one in four chance of suffering deflation and a double-dip recession.
And then after a picture of a US banknote, the article proper starts with this sentence:
“I do not think the deflation and double-dip is the baseline scenario, but I think it’s the risk scenario,” Mr El-Erian, chief executive officer at Pacific Investment Management Co. (Pimco), told reporters in Tokyo on Thursday.
So, pace the Telegraph's headline writer, El-Erian's forecast is in fact that the US economy is very likely to avoid the dreaded double dip, although there are some downside risks. As, of course, there always are.
What the hell kind of journalism is this? Mind you, El-Erian doesn't exactly help himself. Check this out: "If you wonder how meaningful 25pc is, ask yourself the following question: if I offered you that I would drive you back to work, but there's a one in four chance that I get into a big accident, would you come with me?"
Well actually, Mo, if you told me the odds of a big accident were 5%, I'm pretty sure I'd be taking the bus back to work, although I'm aware that public transportation is not exactly thick on the ground around Pimco HQ in Newport Beach, Ca. So I don't think that's a helpful analogy at all.
There's nothing new about gleefully gloomy press reporting on the economic outlook. It reminds me of the people you used to see on the streets carrying those "The end of the world is nigh" placards (nowadays they usually have "Giant golf sale" on the other side). One day one of those guys will be right, but that doesn't mean that everyone who's ever carried one of those placards can be counted as a good forecaster. The same goes for the business reporters of The Times and the Telegraph.
US economy 'on the road to deflation', warns Pimco boss El-Erian
But immediately below that -- immediately below, not separated by any tedious text or photos, it says in smaller type:
Mohamed El-Erian, the head the world's largest bond fund, has said the United States faces a one in four chance of suffering deflation and a double-dip recession.
And then after a picture of a US banknote, the article proper starts with this sentence:
“I do not think the deflation and double-dip is the baseline scenario, but I think it’s the risk scenario,” Mr El-Erian, chief executive officer at Pacific Investment Management Co. (Pimco), told reporters in Tokyo on Thursday.
So, pace the Telegraph's headline writer, El-Erian's forecast is in fact that the US economy is very likely to avoid the dreaded double dip, although there are some downside risks. As, of course, there always are.
What the hell kind of journalism is this? Mind you, El-Erian doesn't exactly help himself. Check this out: "If you wonder how meaningful 25pc is, ask yourself the following question: if I offered you that I would drive you back to work, but there's a one in four chance that I get into a big accident, would you come with me?"
Well actually, Mo, if you told me the odds of a big accident were 5%, I'm pretty sure I'd be taking the bus back to work, although I'm aware that public transportation is not exactly thick on the ground around Pimco HQ in Newport Beach, Ca. So I don't think that's a helpful analogy at all.
There's nothing new about gleefully gloomy press reporting on the economic outlook. It reminds me of the people you used to see on the streets carrying those "The end of the world is nigh" placards (nowadays they usually have "Giant golf sale" on the other side). One day one of those guys will be right, but that doesn't mean that everyone who's ever carried one of those placards can be counted as a good forecaster. The same goes for the business reporters of The Times and the Telegraph.
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