Friday, 26 October 2012

Did Ramesh Patel Get Paid For This?

If you're active politically, you'll probably get sent this article today, from The Huffington Post. Ramesh Patel describes himself as

Economist, worked in media and the financial sector
Which means he studied economics at university and has worked in the financial sector. It doesn't mean he's got any understanding of macro-economics. His more detailed bio is as follows.
Ramesh Patel worked in finance from investments adviser with JMC Finacial Assets, to comodities brokers in metal and currencies with Capital Assets. As well as a CEO for Proactive Internet Marketing and Brown Pound Publishing. Current working on a book on the UK deficit Myth and the real agender from the right and left.
*Agenda* *Commodities* *Financial*. 3 Spelling mistakes in his Huffington Post BIO! How embarrassing  Which means he's barely literate, and I won't be buying his book. Anyway, enough of playing the man, let's get back to his article and play the ball. I'll fisk it so you don't have to. Basically it's a badly spelled rehash of Labour's claim that the UK public finances are OK because our stock of public debt is low by international standards.
CLAIM 1 The last government left the biggest debt in the developed world. After continuously stating the UK had the biggest debt in the world George Osborne admits to the Treasury Select Committee that he did not know the UK had the lowest debt in the G7? Watch: Also, confirmed by the OECD Those who use cash terms (instead of percentages) do so to scare, mislead and give half the story.
No-one credible is claiming that. True, politicians do have an unfortunate tendency to use "debt" and "deficit" interchangably, when it suits their purposes. Ed Balls is at least as guilty as Cameron and Osborne. The UK's debt is fine. The problem is that we are accruing debt faster than any country in the developed world and will almost certainly overtake Germany and possibly France before the crisis is resolved.
Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the global banking crises 2008 the debt had fallen to 35% - a near 22% reduction page 6 ONS Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling down?
These figures are simply wrong, and completely ignore context. In 1997, debt was, yes 42% and FALLING FAST the UK having come out of the recession of the mid 90's, reaching 35% or so at which point Gordon Brown ABANDONED TORY SPENDING PLANS. IN 2008, the stock of debt was RISING despite there having been 16 years of uninterrupted growth.
CLAIM 2 Labour created the biggest deficit in the developed world by overspending. Firstly, the much banded about 2010 deficit of over 11% is false. This is the PSNB (total borrowings) and not the actual budget deficit which was -7.7% - OBR Economic and Fiscal Outlook March 2012 page 19 table 1.2
It's difficult to untangle the syntax, but I think he's talking about the structural deficit. Whatever, he clearly doesn't have a clue what he's talking about. The UK has the biggest deficit in the developed world. From 2000, Gordon brown embarked on the biggest peace-time rise in taxation in British History. Tax as a share of GDP went from (depending on which stats you uses) 35% to 42% of GDP. This enormous tax rise happened during a long period of expansion. And all this extra tax on a strongly growing economy wasn't enough. Gordon Brown STILL ran deficits.  Government spending went from around 38% of GDP to over 50% in 13 years. So the idea that Labour didn't overspend is a simple, complete and absolute lie.The last Government was running a structural deficit. No question about that at all.
Claim 3 Our borrowing costs are low because the markets have confidence in George Osborne's austerity plan and without it the UK will end up like Greece. Yes, the markets have confidence in our austerity plan and that's why PIMCO the worlds largest bond holder have been warning against buying UK debt. The real reason why our borrowing costs have fallen and remained low since 2008 is because, savings have increased.
This is a half-truth. Every politician will claim (when in power) that low interest rates are a sign of market confidence. And they are - at least insofar as the markets remain convinced the UK will repay. But ultra-low interest rates are also a sign of economic weakness, as investors seek safe assets over risky ones. Bill Gross at PIMCO has been warning against US debt too. Not as a comment on Bernanke or Osborne, but merely that the economy will pick up, and negative real returns on low-risk assets are unsustainable. Yields will rise, so developed market debt is not a great place to be long-term.
Secondly, the UK is considered a safe heaven because, investors are reassured the Bank of England will buy up bonds in an event of any sell off - which increases the price of bonds and reduces the effective rate. Note, how rates fell across the EU recently when the ECB announced its bond buying program. Thirdly, because, we are not in the Euro we can devalue our currency to increase exports. Moreover, UK bonds are attractive because, we haven't defaulted on its debt for over 300 yrs.
Let's leave aside the mangling of the English tongue. The UK will not default because the Bank of England can print enough money to meet its needs. Trivially true. This does NOT mean the UK faces no limit on Government spending. Small truth, Ramesh, Big error.
David Cameron would like people to believe the markets lend in the same way as retail banks lend to you and I.
You and *ME*, Ramesh. All politicians use the household debt metaphor, to try to explain what is going on. Yes national debt is different to credit card debt. But most of the public will not understand why.
"If you tell a lie big enough and keep repeating it, people will eventually come to believe it" Joseph Goebbels
You mean like the lie that as National debt isn't like a credit card, there's no limit?

So what are the limits to national debt? Well there's the observation that debt burdens over 80% of GDP (Like Germany had for many years, and as France has now) seem to depress economic growth. When debt reaches 120% of GDP, which is where Italy is now, it seems to kill growth entirely. Japan when confronted with its asset bubble collapse, attempted to "stimulate" it's way out of stagnation. It failed, and growth has been negligible for 20 or more years, and she bears a debt burden of over 200% of GDP. The only reason this is sustainable at all is most of it is lent to Japanese citizens. For those countries whose debt is more likely to be held outside the country, like the UK, our ability to sustain debt is much lower.

Ramesh Patel doesn't mention the difference between internal and external debt. The UK has very, very high external debt. Nor does he mention the effect of debt burdens on growth. Nor does he put the snapshots he gives of the debt into context. He claims to not be a leftie but he's written pure Labour propaganda. His assertions amount to nothing more than a racist saying "some of my best friends...".

In short, there are plenty of good economic bloggers out there. Tim Worstall on the Right, Chris Dillow on the left. Ramesh Patel isn't one of them.

Update, I can confirm that No. Ramesh Patel did NOT get paid by Huffpo, who I think asked me to write a response. Not unless paid. I'm a vicious capitalist you see.

Saturday, 20 October 2012

Criminal Swimming.

This afternoon, I took my daughter, 3, to Danes Camp leisure centre in Northampton for a swim. She may be a toddler, but she's happy in the water, and can comfortably swim a length of a 25m pool. Her two great delights are sitting on my back "faster daddy, faster" and jumping into the water. Both of these are easier if the water is more than 2ft deep.

However I hadn't figured the health and safety implications. I was told by the life-guard that my daughter was not a "swimmer" and wasn't allowed in the deep water. While I was being informed of this fact, she jumped in and swam happily into the middle of the pool and back again.
I said.
"She can swim, and I am keeping an eye on her"
At this point, the life-guard went to fetch her manager. He repeated the allegation that my Daughter couldn't swim, ignoring the evidence of his own eyes as she splashed about happily, underneath signs warning of "danger" and listing things you're not allowed to do (have fun, mainly).
"You'll forgive me, if I pay more attention to my daughter than to you"
She was at this point about 5m from me, in deep water.
"It's the rules. She has to be able to swim 50m"
This is ridiculous. There are only a handful of 50m pools in the entire country.
"She can swim 50m, but not here, it's only 10m from one end to the other. You'd struggle to make her see the point of swimming 50m without getting out and jumping in, but she's more than capable of doing so"
Logic failing, our brave defender of child safety attempted to further define his rules
"but it's doggy-paddle, not a recognised stroke"
At this, ludicrous, desperate, surreal attempt by thwarted authority to re-assert itself in the face of someone saying "why?" and applying logic, I said
"we're finished. I am happy my Daughter is safe, and I shall ignore you from now on and enjoy my swim"
At this he mentioned banning me, like I give a shit or want to "swim" in his chav piss-puddle again, and calling the police.

And fuck me, if Terry Jones, our jumped up little leisure-centre gauleiter, wasn't as good as his word. Sure enough, when I left, there were two uniformed Police officers in the manager's office, looking like (short, young, slack-jawed) paramilitary gestapo in their assault vests and black shirts. To the officers' credit, they barely said a word and appeared rather embarrassed to be there.

The five-minute conversation is below.

"Why are they [police] here?"

"I have a right to call them, if I think, you know... rules... for your benefit... *mumble*"

What a mealy-mouthed, spineless little worm.

It's the sheer grotesque waste of police time that gets me. It's an abuse of the police to expect them to back up every petty authority like our low-rent Gordon Brittas here. On top of that, some pretty unpleasant allegations, child endangerment etc... were made, and I want an apology. I will keep you posted.

Terry Jones is another example of why Britain's horrible: The routine abuse of petty authority. When did we become so cowed, so deferent to stupid rules without question? The freedom to deliver a well-delivered "fuck off" to idiots abusing what little power they've been granted, will make the country very much happier.

Thursday, 11 October 2012

Young Nationalists

Wee Eck, in his personal life is a rather admirable man. He retired from front-line politics to look after his sick wife. He's reported to be amusing company, and has many friends amongst political opponents. He's a fearsome debater and a shrewd politician. However he is also an absolutely shameless operator. He knows he has one shot at an independence referendum, which will put the issue to bed for a generation. He knows that losing the referendum risks fracturing his party from those who will respect the result, from those who won't.

He is therefore seeking to rig the plebiscite  First by asking a clearly leading question, second by setting the date (rather pathetically) to coincide with the anniversary of Bannockburn, and immediately after the commonwealth Games, in which, unlike the Olympics, Scotland will compete as a separate nation to England. He must be devastated that Sir Chris Hoy has retired, and remains a unionist. On each issue, the SNP has attempted to secure the maximum likelihood of a "yes" vote, without consideration for whether this is right, fair, or reasonable, and when called out on this, usually by the independent Electoral Commission, the SNP cry 'Foul', having the rather chippy attitude that anything other than their view is "English arrogance".

Finally, the SNP have decided that 16-year olds should be allowed to vote, on the basis that they are slightly more likely to agree with the SNP than the general population. There is no principle to this whatsoever. Indeed, Salmond openly considered raising the age at which scots can buy alcohol from 18 to 21, suggesting he thinks they're mature enough to vote, get married and have sex, but not mature enough to have a beer on the way to the marital bed or polling station. Either that, or it's rank hypocrisy. It's a nakedly partisan move, contrary to almost all countries around the world who enjoy universal suffrage. Only in Bosnia Herzegovina (if employed), Austria, Jersey, Guernsey and the Isle of Man can spotty 16-year olds vote. A handful of countries, including Indonesia and (hilariously) North Korea allow votes at 17. Everywhere else on earth has the voting age 18 or higher. The SNP should not be allowed to choose their electorate for party political advantage. To do so smacks of banana republic, not the nation of Adam Smith and David Hume.

Have you met any teenagers? They know nothing. They're swayed by emotional arguments and have no experience of life on which to base the tough decisions of politics. They do not read papers, preferring to sit in dark rooms, masturbating furiously and sleeping. If Alec Salmond wants Scottish independence because some spotty herberts saw 'Braveheart' once, great. I'm just disappointed the UK Government fell for it.

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