Why we’re in the shite, explained with 4 charts.

So here we are, double dip recession, slow growth, debt & deficit going up. Yes yes the rest of the world isn’t doing too great either, even China is slowing down… but we seem to be doing much worse. Why?

First, how did we get here? You hear politicians talk about our “unbalanced economy” – too much emphasis given to financial services etc and not enough to manufacturing, high tech etc. Long time followers of mine know I love stats & charts, so here is what it looks like:

Report for the City of London Corporation by Charles River Associates 2010

So what you say, must be good for the country right? Yes lots of tax for the Treasury to throw around. The significant growth of the financial services sector and light touch regulation also combined to provide lots of easy credit for us plebs. Great! Fabulous! “Please lend me more & more Mr Bank Manager & Mrs Building Society, it may be 9 times income for the 105% mortgage but boom & bust had been abolished (someone once said)”…

But easy credit leads to bubbles, perhaps, just maybe? What do you think? What DID our politicians think? Or thought but didn’t care. Well here are the bubbles in personal credit & property:

Credit Action. The National Money Education Charity

Credit Action. The National Money Education Charity.

So what you say, everyone else was borrowing, the boom & bust had been abolished. Yes but no but yes but here is what people of other countries were borrowing (including government, personal & company):

Yes, our total borrowing  is about £8 TRILLION or 500% of GDP.  Yes, that’s 5 times what this country produces every year.

So why aren’t we spending and pushing up GDP? If you look at the personal debt chart above, you can see we are “deleveraging” – paying down all kinds of debt. Companies are too.

Here is a chart to give the national picture:

That’s not too bad, is it? Well hold on a minute, the debt is now past the £1TN mark and is still going up. We pay more debt interest than we spend on defence. And we mustn’t forget those lovely off-balance sheet PFI projects. Compare the capital costs with the huge repayments below:

We, as in the country, UK companies & population collectively owe more than any other country in the world bar Japan (which has been in stagnation for decades).

PriceWaterhouseCoopers reckon the total UK debt will hit £10 TRILLION by 2015. That’s optimistic.

Just to whet your appetite for another blog post in the pipeline, we also have a public sector pension black hole of about £1.3TRILLION, there’s a chart for that🙂

The above is a quick illustration of the primary reasons why we are in the collective shite compared to other G20 countries. (Oh yes, I used 6 charts instead of 4, got carried away with chart porn. Bet you didn’t notice)

Government now wants us to spend, spend, spend, and borrow ££ to spend if necessary to improve GDP growth figures … No thank you Mr Prime Minister. That is how we got here in the first place.

Posted in Coalition Government, Economy, Politics, Uncategorized | 2 Comments

The Evil “Markets”

Our national debt is, give or take, around £1.1 TRILLION.

We hear about the “markets” and how they lend money to the UK government to make up for shortfalls between tax revenue & public spending costs every year (the annual deficit), and how the “markets” control the interest rate the government pays on its debts.

So to whom does the government owe the national debt? Are the “markets” made up of evil capitalists chomping on big cigars in smoke-filled rooms plotting the destruction of our societies?

Well, actually the “markets” in this case are primarily you & I.  We, mainly through our savings, life & endowment policy premiums, pensions contributions and even union subscriptions have lent about 75% of the national debt to our own government (the other 25% are lent by foreign institutions and governments)

Of course you & I didn’t write cheques to the government individually, but our banks, life & pension companies, unions etc, directly or indirectly, lent on our behalf.

In theory, we should tell the government not to cut public spending and borrow even more from us, and at higher interest rates.

Awkward, isn’t it?

Posted in Economy, Politics | 2 Comments

Companies abuse & shareholders don’t give a sh*t?

Twitter can be a bit like the Wild West where people shoot from the hip at anything that moves before they ask questions.  I came across the tweets below from someone with a large following (my emphasis):

“… private companies … just abuse because their loyalty is to shareholders.

Shareholders are usually a tiny minority of people who don’t give a shit so long as their dividend comes in”

You may think that is an emotive & inaccurate generalisation.  Here are some interesting stats from the Dept for BIS (Oct 2011):

There are 4.5 million small businesses in the UK (including 6,000 companies).

SMEs (up to 249 employees) account for 99 per cent of of all enterprise in the UK, 58.8 per cent of private sector employment and 48.8 per cent of private sector turnover.

SMEs employed an estimated 13.8 million people and had an estimated combined annual turnover of £1,500 billion

A vast majority of the SME companies/businesses are owner-operated, ie the owners/shareholders also work in them. The small family-owned butchers down the road, the IT consultant with a tax efficient corporate vehicle & a couple of employees, GP surgeries, Ken Livingstone …  Do they abuse & don’t give a sh*t?  Hmmm.

Aha, but what the top 1% of enterprises in the UK – the large companies, the multi-national corporations, the newspapers, oil companies, banks (you get the picture). Surely, they abuse & their shareholders don’t give a sh*t except about dividends, right?

You may be surprised some of these shareholders are not “a tiny majority of people who don’t give a shit” as tweeted above.  Quick examples – John Lewis, the obvious one.  Less obvious – both the Church of England Commissioners & the RMT Union have large share investments in banks, financial services companies, multi-national corps & oil companies. The Church also had £2 million worth of shares in Murdoch’s News Corp until recently (yes you read that right).

And who else are shareholders in these large enterprises?  Well, insurance, life & pension companies – eg. Standard Life, Prudential (shareholders in G4S)  – which manage life, endowment & pension policies on behalf of tens of millions of us.  Not sure tens of millions count as a “tiny minority”.

Don’t the shareholders give a sh*t?  Do private companies just abuse?

Posted in Economy, Politics | Leave a comment

“I pay my fair share of taxes, others should pay more!”

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Really? You may pay your taxes but that doesn’t always mean you are contributing to the national coffers. You may be a “burden on the State” to use an unattractive & emotive term.

Bear in mind that some 60% of UK households receive more ££ in benefits & public services than the taxes they pay. They are the “net tax consumers”, and supported by the top 40% of households who are the “net tax contributors” and by no means the filthy rich.

The table below sets this out by using averages:

(Sources: ONS Statistics for 2009/10, BBC, PWC, IFS. If you want to examine more closely the various definitions & formulae used in the above table, look here. )

Surprised by these figures? Is your household a net tax contributor or consumer? Think about it next time you say I do my bit but others should do more. We are certainly not all in this tax thing together.

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Posted in Economy, Tax | 11 Comments

A Scandal! Theresa May, Prudential & G4S

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Apparently, according to some tweeps on Twitter (and the example below is only one example out of many), the fact that the Home Secretary Theresa May & her spouse own some shares in Prudential, which in turn owns some shares in G4S, is a scandal and somehow makes her “corrupt”.

Is it? Does it?

Here’s a recent announcement from G4S:

The directors have been notified of the following substantial shareholdings at 13 June 2012 in the ordinary capital of G4S plc:

Prudential: 89,325,538 (6.33%) – this includes the 80,962,276 (5.73%) notified separately by M&G Investment Funds.

Legal & General Group Plc: 42,320,310 (3.00%)

So it appears Theresa May & her spouse owns a small, non-controlling shareholding in Prudential, which in turns owns a small, non-controlling shareholding in G4S. As do hundreds of thousands of people who have Prudential AND Legal & General life policies and pensions. Crikey, it seems they are all scandalously corrupt!

By the way, May & her spouse bought the Prudential shares in 2002, quite a few years before the G4S got involved in the Olympics…

It is indeed a scandal. A scandal of many straws being grasped.

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Posted in Uncategorized | 6 Comments

Hope

About 18 days ago, I received some seriously bad news from Vancouver about my mum’s health.  She recently celebrated her 80th birthday but still thinks I’m her baby, regularly phoning to check I am having a balanced diet and advising me to find a woman who can cook (long story… the cooking bit, not the woman bit).

The bad news plunged me into some dark & horrid places; I have been in those places before, sometimes it feels like I have a season ticket (isn’t life great?).  But this time, it is about someone who gave me life, who taught me, who inspired me, who literally *made* me into who & what I am, who always loves me unconditionally and who, despite my late father’s passing over 20 years ago, being of advanced age and having 3 sons with successful careers, has nonetheless steadfastly remained the undisputed head of the family, the north of our emotional compasses, the focus of our futures and a rock to which we have tethered our hearts & souls.  So the bad news came as a thunderbolt and shattered my world which grew darker and darker…

But today, more news arrived and a light has appeared at the end of the tunnel. It is not the solution to the problem, far from it… but it means there is now much hope that she will be with us for much longer than we had dared to dream of.

Hope is all one can have now, hope is the source of strength and hope is what keeps our hearts warm.

But don’t rely on hope, tell your loved ones how you feel about them, right now.  For me, I hope for many more years of maternal nagging & her botched attempts at match-making.

Now, this thing about Ken’s tax avoidance….

Posted in Uncategorized | 1 Comment

Abortion and Counselling

I wholeheartedly agree that ultimately it is the woman’s right to choose whether to terminate her pregnancy and whether to seek counselling beforehand.   However, there is disturbing evidence of biased pre-abortion counselling advice (from both camps) – see this undercover story. Do read it.

The Dorries/Field amendments to the Health & Social Care Bill do not propose compulsory pre-abortion counselling, but seek to remove any counselling role from organisations who currently provide a time-saving “one-stop shop” service – from advice to medical assessment to abortion procedure.  Human nature being what it is, people seek the path of least resistance and a “one-stop shop” is often the easiest path to take.

These organisations have a financial interest as they are paid per abortion.  People say they are charities or “not for profit” organisations so they are not profit-driven.  However it cannot have escaped anybody’s notice that organisations like BPAS & Marie Stopes are run like businesses with marketing departments, large budgets and they have hundreds of jobs, from the well-paid CEO downwards, which depend primarily on the income stream from abortions. The same can be said for some of the large pro-life groups which offer pre-abortion counselling.

Worryingly, the Dorries/Field amendments do not stipulate that the counselling should be *impartial*.  Indeed there will be no restrictions on who can provide the service – indeed any pro-life, pro-choice or neutral groups can do so – as long as they do not perform abortions and are able to meet guidelines (currently set by the Royal College of Obstetricians and Gynaecologists, but may change to NICE under the amendments)

Will this create a messy “free for all” market? Will it become even more confusing and stressful for women who are already under tremendous emotional strain?  It is probable.

So how can we try to ensure that if a woman does want counselling, she has expedited access to an independent service which is impartial, free, expedient, supportive & readily available?

Why not offer such a service (within RCOG guidelines) on, or paid for by the NHS, staffed by public & private sector counsellors who are full & appropriately qualified members of the British Association for Counselling and Psychotherapy (BACP), who have no interest in whether a woman has the abortion eventually and whose sole aim is to help the woman by giving support and counselling.

Just a thought.

PS. I am not in either the pro-life or pro-choice camp, I am a man so I don’t presume to know what a woman feels or thinks, least of all second guess what is best for her. Mine is only a suggestion for an alternative, or an addition to what is available.

Posted in Uncategorized | 5 Comments