My daughter turned 17 years of age on 4th February, and has been excited about the possibility of being able to drive for some time, apart from a period of concern when the British Government hinted at raising the driving age to 18. Fortunately that passed.
I likewise always wanted to drive and at age 17 moved from two wheels to four and in 10 days had passed my test. The car insurance giving nearly minimum cover was £26 a year, my first car having a 2.6 litre engine. The next was a Jaguar 2.4, and the third, another Jag, this time a 3.8 XK 150S, for which I probably had to pay an extra £10 a year, all while I was 17. (1969 ) Continue reading “What a con!”→
A looming low point in the long history of the Greek empire
It seems the EU is considering whether to bail out Greece, in danger of defaulting on its loans, so high is its debt.
Athens
A spokesman has been quoted as saying “it is unthinkable” that Greece should default and that “something would have to be done.”
I imagine the rest of the EU countries (their citizens at least, those who actually pay the taxes) are not exactly slavering over the prospect of their money being used to bail out yet another organism living beyond its means.
And this is the point, we ALL have to start living within our means: individuals, countries, the planet. ANY other course leads to doom. And as an EU taxpayer I feel very hesitant about bailing out ANY country. Not though lack of fellow-feeling (it could be us next time) but because IF you bail them out then they WON’T change their habits. We bailed out the banks; have you seen THEM change their habits? I certainly haven’t, except that they won’t lend small businesses (the TOTALLY INNOCENT VICTIMS of all this) any money. The obscene fat-cat “bonuses” are starting up all over again like mushrooms in the meadow. No, let them go bust; only that will concentrate their minds.
And let us not forget that Greece LIED about its finances in order to qualify for the EU in the first place! An end to lies! An end to the easy option. An end to my taxes bailing out an indisciplined over-spender!
Given the plethora of comments on banking bonuses recently our intrepid reporter has managed to get access to a bankers’ board meeting to establish exactly how targets and bonuses are planned. His transcript is highly revealing of a complex system tightly geared to the bank’s activities and designed to give maximum incentive to those at the highest level.
So here you have it …..
Board Meeting at FatGreedyBankers, Limited (extremely)
Hello chaps. We’re here to set the targets for this year’s bonuses.
Jolly good, Sir Tosser. What did you have in mind?
Well, if the bank doesn’t actually go bankrupt we all get £1,000,000 quid. This is our baseline. Got to have a baseline ….. Then we get an extra £1,000,000 bonus for every £10 profit we make. What do you think?
I must say these are pretty stiff targets, Sir. As you know, the chances of going bankrupt are very high.
Yes, but then we get bailout money so we don’t have to worry about that.
No Sir. Well, I’m sure we all relish a challenge, don’t we chaps? Let’s go for it!
How does a 7 year old contribute more in one day than most people contribute in a whole lifetime?
To give your time and effort to raise money for charity is noble and worthwhile, and many people do it for a variety of causes and for a variety of personal and public reasons.
To maximise the benefit of your efforts, however, is also important; anyone who has had difficulty finding sponsors for their swim, run or ride can tell you that!
Connecting with people
Charlie Simpson made a short video in his attempt to raise money for people of Haiti as they deal with the consequences of the earthquake there.
That video is clear, it is personal and I defy anyone who watches it not to feel a connection with this young boy from London.
He aimed for £500. At the time of writing, he has passed £118,000 !! You can give here
In this second of two posts on John Bougearel’s guest post at Naked Capitalism, Sherry Jarrell provides an economist’s response.
Response to “2010: Foreseeable and Unforeseeable Risks …”
In this wide-ranging and comprehensive piece, John Bougearel warns of the repercussions on the world economy of the steps taken to remedy the financial crisis. He warns of the impact of the Federal Reserve absorbing the toxic assets and shaky collateral on its balance sheet, and of the unsustainability of Social Security and Medicare in an aging demographic. On these basic facts, I agree.
One of the most difficult things for any writer to do when talking about economics and finance is to establish cause and effect. In trying to analyze past policy decisions and recommend future actions, however, it is absolutely imperative to distinguish cause and effect. In my view, Mr. Bougearel’s overview is either silent on this issue or implicitly assigns blame to the markets, when it belongs squarely on the doorstep of misguided government regulations. Continue reading “Establishing “cause and effect””→
In this first of two posts on John Bougearel’s guest post at Naked Capitalism, Paul Handover suggests that we read it and think about the implications.
A rather sobering reminder of the potential challenges for 2010
I am a subscriber to Naked Capitalism, thoroughly recommended by the way, and recently Yves published a guest post
John Bougearel
by John Bougearel, author of Riding the Storm Out and Director of Financial and Equity Research for Structural Logic.
I wrote to both Yves and John asking for permission to reproduce the article in full but, so far, no replies have been received. Therefore the following are some important quotes from the article which I recommend you read in full by going to Naked Capitalism.
What a shock. U.S. GDP is not growing at 3.5% per year, as originally reported, and celebrated with much fanfare from President Obama about how the stimulus program was working. It is not even growing at the revised 2.8% annualized rate reported a couple of weeks later. The latest re-revised figure is 2.2%.
Nearly the entire 2.2% annualized growth, or 3rd quarter growth of 0.55%, is driven by the cash for clunkers program, the government spending program (also called the stimulus program, but I have a big problem with that particular name), and the extended tax credit for first-time home buyers. As a result, this increase in GDP is not only entirely temporary and fleeting, it will cause lower GDP later.
The cash for clunkers program did not create more overall demand for cars; it simply pulled some of the future demand for a new car into today, all the while wasting millions of tax dollars on administering the program, and putting some dealerships out of business in the process.
The spending program simply shifted profits from businesses to support other segments of society, all of which is temporary and destroys the productive capacity of the economy for many periods to come.
The extended tax credit to first-time home buyers is a real head-scratcher. A curious time to redistribute funds from the producers in the economy to finance a program which lowers the cost to those home buyers who would not have the funds to buy a home in the first place….second wave of home mortgage foreclosures, anyone?
The heads of US mortgage giants Fannie Mae and Freddie Mac may each receive pay packages of up to $6m (£3.7m) for 2009, depending on company performance.
Now I’m not an American nor do I really understand the issues BUT when taxpayers put in $111,000,000,000 of THEIR money into these organisations (that’s $365 for every man, woman and child on the US Census!) and so many of those same US taxpayers are up the proverbial financial creek without a paddle, there has to be a better way of rewarding top bosses (of US publicly owned corporations) than the option of $6,000,000 each!
But the regulator which decided the pay levels said the awards were 40% lower than before the government bailout.
The sums involved reflected the need to attract and retain talent, it argued.
Frankly, I just don’t believe that there aren’t many other incredibly capable business leaders who would do these jobs for a fraction of six million dollars. (The present incumbents are Michael Williams at Fannie Mae and Charles E. Haldeman Jr. at Freddie Mac who will receive a base of $900,000 in 2010 with the opportunity to earn $5.1 more if “certain targets are met“.)
Read the article here – I’m going to lay down in a dark, quiet room for a while!
US still struggling to find a proper health care solution
We’ve all heard this definition of insanity: doing the same thing over and over again but expecting a different result.
Here, in a nutshell, is the insanity of the current U.S. health care debate:
Medicare, the government’s single-payer wealth redistribution health care program, is quickly going bankrupt. No one disputes this fact.
When President Obama refers to “cutting costs of healthcare,” he is referring to cutting the Medicare budget. Period. No increased efficiencies, no improved services, no reduced market-clearing prices. No, cutting costs refers to reducing the fraction of the U.S. government’s tax collections devoted to Medicare.
The new Health Care Plan is fundamentally a new Medicare program. Let’s call is Medicare 2.0.
Medicare 2.0 is being funded in large part by cutting the current Medicare budget item. We are supposed to ignore the fact that the funds cut from the current Medicare program will be spent on Medicare 2.0.
The Medicare 2.0 plan shifts as much as 25% of its (under)estimated costs (e.g. payments to physicians) to other accounts. The costs are still there; these obligations would still need to be paid by the government under the proposed legislation, but Congress is hoping the public won’t “count” the shifted costs if they slap another name on them, further fostering the illusion of “lowering costs of health care.”
Medicare 2.0 will also go bankrupt but, as a larger, more far-reaching entitlement program, the impact on the U.S. budget will be larger and more far-reaching.
A primer from Prof. Jarrell on this important subject
Macroeconomics is the study of aggregate supply and demand, and looks both internally to the workings of the economy and externally to how a domestic economy interacts with others worldwide.
Macro builds on the principles of microeconomics, which is the study of prices and quantities of individual goods and the markets where these goods are produced and sold.
In macro, “price” refers to some index of the prices of domestic goods and services, and “quantity” refers to some measure of the value of domestic production or “output.” One common measure of output is gross domestic product (“a measure of the productive activity of a country computed on the basis of the ownership of the factors of production”). A country’s standard of living is usually directly correlated with its real output, or the value of total output corrected for inflation.
John M Keynes
Unlike microeconomics, macroeconomics started with the idea that prices and markets do not continuously resolve all of the coordination requirements of a modern economy. Such “failures of coordination” (Keynes) seem likely when one views the economy as the collective sum of thousands of microeconomic markets.
For example, although most economies around the world have experienced generally positive trends in their gross domestic product, short run positive and negative deviations (recessions and, in more dramatic examples of the failure of coordination, depressions) around the trend line, or “business cycles,” are common.
Inflation is the rate of change of the average level of prices, where the price level is usually measured as a price index. Inflation rates are typically quoted in annualized percentages. In normal times, the inflation rate is procyclical: it rises in periods of high growth and declines in periods of slow growth. Unemployment, by contrast, is usually countercyclical. The U. S. inflation rate was as likely to be negative as it was positive before World War II; since then, price levels have risen fairly consistently.
Fortunately that passed.
Learning from Dogs 