Archive for the ‘Uncategorized’ Category

Tits and bums

November 24, 2014

Oh, so now you’re paying attention.

In the past couple of weeks I have posted blogs that seemed to me important. About the Xi Jinping-Obama understanding on emissions that paves the way for a global deal to arrest climate change in Paris next year. And about Adair Turner’s argument that governments may have to print money to pay for fiscal expenditure and monetise part of their debts if we are to head off another asset bubble by raising interest rates while at the same time avoiding global economic depression.

Well, these momentous developments have garnered little more than the usual rate of traffic on this blog. So, looking at email addresses of the several hundred people who now subscribe to every single post (dear oh dear), I note that most of you are academics, researchers, money managers, NGO-types and ‘activists’. So it occurs that what you really want is a bit of gratuitous demi-porn to take the edge off your lives of monotonous intellectual mind-wrestling.

Fortunately I am in a position to indulge you. The peg is the recent APEC summit in Beijing, which was important not just for an apparent meeting of minds between the Chinese and US presidents, but also for an alleged pass made by the Russian president, Vladimir Putin, at Xi Jinping’s wife.

Personally, I don’t think there is much to it, although Putin is now officially a single man, which puts him (even more) firmly in the frame in terms of motive. However the extraordinary reaction of Chinese censors, who moved immediately to expunge any trace of Vlad’s let-me-get-your-coat-darling moment from the Chinese Interweb, reminds us that in Chinese Communist Party cultural terms Vlad was indeed on quite thin ice. Here, side by side, are the photo (similar to the one below) briefly posted by Chinese state news agency Xinhua and, to the right, the notice you got shortly after/still get at the same URL saying in Chinese that the page has been deleted.

Obama to Xi: 'Looks like Ukraine is not the only thing Vladimir wants to get into.'

Obama to Xi: ‘Looks like Ukraine is not the only thing Vladimir wants to get into.’

And here is a brief story from Foreign Policy about the whole incident, including a link to video if you really want more.

The Putin-Peng Liyuan (yes, she has a name) frisson got me thinking, as I am sure it has you, about the broader subject of global leaders hitting on other leaders, their wives and partners. So here, in no particular order, are some memorable moments I have been able to come up with:

 

1. Henry Kissinger’s ever-penetrating analysis. These must surely be among the most famous images of the genre, as Henry first enjoys a full frontal review of Lady Diana’s strategic assets, and then follows up from behind with a sly ass-check.

kissinger Di 1 kissinger Di 2

 

 

 

2. The Brezhnev. But did you know that back in 1973 Kissinger’s own date, former Bond girl Jill St. John, was subjected a famous occular eye-over by the leader of the Unfree World, Leonid Brezhnev? In the photo below you can almost see Brezhnev calculating out the potential upside of detente with the Americans. Coincidentally, it was in 1973 that Kissinger was quoted in the New York Times saying that: ‘Power is the ultimate aphrodisiac.’

Brezhnev Jill St John 1

 

 

 

 

 

 

 

 

Here is a shot that shows Kissinger (back to camera) and Jill as another guy (described in Walter Isaacson’s Kissinger biography as a ‘naval aide’) gives Jill’s ass a caressing gaze too.

Brezhnev and Jill St. John at Nixon Pool Party

 

 

 

 

 

 

 

 

3. Size doesn’t matter. Deng Xiaoping. There is no killer photo here, just various official ones like that below. However, when Ronald and Nancy Reagan visited China in 1984 and were received in the Great Hall of the People, Deng said to Nancy (in range of the foreign press corps): ‘I hope you’ ll come the next time and leave the president home.’ After translation, the ever-cool Ron batted the remark away.

Deng XP Nancy R and Ron R

 

 

 

 

 


 

4. Obama-Gucci Helle. These images are so recently famous they hardly bear posting. Except to tee up the less well-known 5., below. Here Obama flirts with Danish prime minister Helle Thorning-Schmidt, known to her countrymen as Gucci Helle for her rather un-Danish love of branded designer clothing.

obama helle 1

 

 

 

 

 

 

 

And here is the US president after a bollocking from his wife, who was sitting on the other side of him all along. (There is another image of Brave Dave Cameron forcing his way into Helle and Obama’s selfie, but it is just too depressing to post.)

obama no-helle michelle

 

 

 

 

 

 

 

5. Obabma and Lil sis’ Yingluck. Now here is the collector’s item. It is Obama and Thaksin’s little sister Yingluck, who was running Thailand after Thaksin was thrown out in a coup, at least until Yingluck was also thrown out in a coup. What was that song about ‘One night in Bangkok’?

Obama Yingluck

 

 

 

 

 

 

 

 

 

To be fair to Obama, however, I think the story may have been that it was young Yingluck who was providing the come-on.

Obama Yingluck 2

 

 

 

 

 

 

 

Vacuous China

November 21, 2014

Xi Jinping’s anti-corruption campaign shows no sign of abating, with admirals and generals fearing for their futures as much as mere civilian bureaucrats and Party cadres. Meanwhile Xi’s vicious clamp-down on dissent goes on apace, with more human rights lawyers being themselves tried on trumped-up charges and Internet censors now firing blunderbusses at great swathes of the webosphere. Today, Ilham Tohti’s life sentence has been confirmed by an appeal ‘court’ that held its ‘hearing’ inside his detention centre.

So, what better time to discover a video of Chinese rich kid students in California flaunting their Bentleys, Maseratis, Porsches and more?

Are you watching, Mr Mao?

 

A little clear thinking

November 18, 2014

I am posting a number of documents by Adair Turner relating to the concept of ‘helicopter money’. The term was coined by Milton Friedman and refers to the idea of simply dropping money into an economy to expand the monetary base without any commitment by a government or central bank to ‘pay’ for the money. Indeed, the point is to increase money supply, possibly permanently, in order to pay for government expenditure.

Printing money to cover a government’s bills is never going to be an easy policy to sell. But Turner has bravely put this option on the table because the place to which the major economies of the world are heading under current policy may actually be worse.

How so? Turner’s point is that the policy of central banks expanding their balance sheets and flooding financial markets with cash to force down interest rates to zero is merely fuelling asset bubbles – in real estate, in stocks, and even now in things like fine art. What the world needs is a return to somewhat higher interest rates to head off another speculative bubble and bust (selling some Apple shares yesterday at 18 times earnings and more than four times what I paid for them reminds me we may already be in bubble territory). The problem, of course, is that higher interest rates cannot come at the expense of another collapse in the demand in the real economy and hence a spiral of 1930s-style deflation. Logically, as Turner argues, the only option may therefore be to expand the monetary base, create a bit of inflation to allow a meaningful rate of interest, and simultaneously use the printed cash pay off some government debt and fund expenditures that maintain real economic growth.

Such a policy would (probably) put the fiscal boot on the other foot compared with the past six years. Almost all UK and US policy since 2008 has favoured those with assets – real estate, stocks and bonds — as asset values have been restored by the near-zero interest rate policy. If rates rise, those who hold assets under leverage will pay more debt service and asset prices will come under pressure. On the other hand, a positive real interest rate gives those with only a bit of cash (the young, the poor) some return on their money in the bank, while money creation can pay for lower taxes on work and investment in things like infrastructure. In other words, such a policy tilts the table away from those with assets and towards those without assets but with a willingness to work for a living. You begin to see quite how outrageous this proposal is…

The proposition is indeed shocking. However it is a measure of the times in which we live that you really should read what Turner is saying. He is not a red, and nor are the economists (like Milton Friedman and Irving Fisher) whom he cites in support. Turner is pretty much an Establishment figure…

The lightest iteration of what Turner is saying is an FT opinion piece from last week. I have not done this before, but I am reproducing it in the hope the FT won’t pursue me for breach of copyright. (Having only been paid £250 for my recent opinion piece for them, perhaps they will decide they owe me a bonus; one notes that deflation is already haunting the Pink’Un.)

November 10, 2014

Printing money to fund deficit is the fastest way to raise rates

By Adair Turner

No technical reasons exist for rejecting this, only the fear of breaking a taboo, writes Adair Turner

What is the right course for monetary policy? The International Monetary Fund seems to answer with forked tongue. Its latest World Economic Outlook urges that monetary policy should stay loose to stimulate growth. Yet its Global Financial Stability Review warns that loose monetary policy risks creating financial instability, which could crimp growth. In fact the best policy is to print money and raise interest rates. That sounds contradictory, but it is not.

The global economy is suffering the hangover from many decades of excessive private sector credit growth. In 1950 private credit in advanced economies was 50 per cent of gross domestic product; by 2007 it was 170 per cent.

After the 2008 crisis, households and companies began trying to pay back what they owed. This depressed consumption and investment, generating large fiscal deficits as tax revenues fell and social expenditure rose. It then seemed essential to balance public sector accounts, which has depressed growth further and made deleveraging harder.

Debt owed by the public and private sectors has actually increased as a proportion of GDP, from 170 per cent five years ago to 200 per cent today. Weak demand has led to below-target inflation in all major economies.

Economists agree that this is how we got into the current mess, but they disagree about how to get out of it. Some, such as Paul Krugman and Lawrence Summers, argue for more relaxed fiscal policies. Cutting taxes or increasing public expenditure is the most certain way to stimulate demand. In Milton Friedman’s words it is an injection directly “into the income stream”. But this route out of recession would increase public debt even further. It seems blocked.

Instead, most countries have opted to combine fiscal tightening with ultra-loose monetary policy, setting short-term interest rates close to zero and using quantitative easing to reduce long-term rates and boost asset prices.

There are no technical reasons to reject such measures, only the fear of breaking a taboo.

But there are dangers. Sustained low interest rates create incentives for highly leveraged financial engineering. They make it easier for uncompetitive companies to survive, which could stymie productivity growth. And they work by restarting growth in private credit – which is what led to our current predicament. The Bank for International Settlements therefore argues that monetary policy should be tightened as well as fiscal, but that would depress demand yet further.

We should indeed seek a swift return to higher interest rates, to remove the dangerous subsidy to high leverage. But paradoxically, the best way to do that, particularly in Japan and the eurozone, would be to deploy a variant of Friedman’s idea of dropping money from a helicopter. Government deficits should temporarily increase, and they should be financed with new money created by the central bank and added permanently to the money supply.

Money-financed deficits would increase demand without creating debts that have to be serviced. This would lift either real output or inflation and allow interest rates to return to normal more quickly. True, banks might amplify the stimulus by creating additional private credit, but they can be restrained with higher reserve requirements.

There are no technical reasons to reject this option, only the fear that once we break the taboo, money-financed deficits will be used on too large a scale.

Despite that fear, de facto monetisation is inevitable in some countries, even if policy makers deny it.

Japan’s official policy involves using sales tax increases to make government debts sustainable, while massive monetary stimulus spurs inflation and growth. In fact there is no believable scenario in which Japan will generate fiscal surpluses sufficient to pay back its debts, nor one in which the Bank of Japan will sell all its holdings of government debt back to the market.

All the same, the pretence undermines the effectiveness of the policy. Japan should either delay the next sales tax increase, or announce a temporary fiscal stimulus financed with new money. It should make clear that the debt the government owes the central bank will never need to be repaid, dispelling fears of a massive future fiscal tightening.

Orthodox theory sees helicopter money as risky. But current quantitative easing policies are at least as risky, and have produced adverse side effects. In the UK the Bank of England has bought £375bn of government bonds to try to stimulate the economy through swollen asset prices and rock-bottom interest rates. It could instead have created new money to finance a smaller one-off increase in the fiscal deficit. If it had done so, a return to normal interest rate disciplines would now be nearer.

 

More. Turner for grown-ups:

Turner’s original CASS business school speech on this subject (2013)

And the slides that go with the CASS speech. (Lots of them, but many worth having if you live in the UK and are about to have people knocking on your door in the run-up to the May national elections asking you to vote for them. ‘Come in,’ you can say. ‘Have a seat and let’s look at the slides together!’)

A bit of Q&A with Turner and Michael Woodford from the Institute For New Economic Thinking blog.

Finally, on Thursday 20 November, the UK parliament will hold a backbench debate on the topic of ‘money creation and society’. It will be the first time that the issue has been addressed in a full debate in the House since the 19th century. You can watch here on Parliament TV and discover just how ill-equipped our politicians are to deal with the aftermath of the global financial crisis.

 

 

Dieting Fat Controller still loves a pork pie

November 8, 2014

 

 


osborne 2014 vs 2013

 

 

Britain’s Chancellor George Osborne has lost an impressive amount of weight in the past year. So much so that I was thinking I might have to stop calling him The Fat Controller.

Fat Controller in front of trains

It turns out, however, that George still loves a pork pie.

Witness the recent furore over Britain’s increased European Commission bill to reflect an upward revision to the estimated size of the British economy. The bill is linked to the size of the economy, then Britain gets a rebate (negotiated back in the 1980s) to reflect Britain’s relatively lower receipts of EU agricultural subsidies.

Anyhow, first Brave Dave Cameroon said he wasn’t going to pay the £1.7 billion extra charge. Then people slightly less dim than Cameron realised that Britain has to pay the bill, because there is nothing unusual or exceptional about it. It is just the regular bill, amended on the basis of statistical revisions that occur periodically in all statistical systems.

So now the Fat Controller is claiming in the press to have ‘halved’ the £1.7 billion bill. What he means is that because there is an automatic rebate, the bill is really only about £850 million. But George wants to pretend this represents him having ‘negotiated a deal’ with the EU on a trip to Brussels this week.

He has done no such thing. George’s trip secured some very marginal fiddling around with payment due dates, doubtless because EU officials just wanted to get him out of the building as fast as possible. But he hasn’t ‘negotiated’ anything of any substance. Whatsoever.

Instead, George is just telling bare-faced Porky Pies. Like some fantasist kid in a school playground.

And that is why I am going to continue to call him the Fat Controller. No matter how much weight he loses.

 

More:

The Guardian explains pretty clearly.

Menaced in a Cambridge pub

November 7, 2014

They say there is no crime in this town, but there could be.

I return from a drink with a Japanologist, and decide that one for my road is in order at the pub at the end of our road, the Red Bull in Newnham, Cambridge.

Inside is frequent bar-propper Rory McGrath, of television fame. I don’t know him, but various people I do do. Since he does a comedy telly programme about Three Men on a Boat (I have watched perhaps 10 mins, have no view on it), puttering around the UK on narrow barges talking about who knows what, I show him a couple of pics that I took of a narrow barge that was granted permission to come up among the colleges recently. I blogged about it.

All good so far. Then, I say: ‘Listen, I don’t know you, but I was very surprised about the idea that Griff Rhys Jones might be a closet Nazi.’ This seems to me like standard pub banter. If you haven’t followed the story, RJ gave a long interview to the Telegraph in which he said that if the next government introduces a ‘mansion tax’ he might emigrate. The point is that RJ is quite funny, and yet, confronted in middle age with a modest tax on the huge capital gain he has made on London property, he suggests he might move to somewhere where I suspect he does not even speak the language.

Well, this set Mr McGrath off on the kind of frighteningly aggressive one-on-one verbal assault that I have not seen since I complained about being short-changed, as a student, on a marijuana purchase in Ladbroke Grove in circa 1985. That earlier incident did involve a knife, but the bile from McGrath was very much the same. It made me wonder if even comedians fall into the stylised description of John Carey’s classic work in which the British intelligentsia is shown to be drearily self-interested, drunk, and small C conservative.

I walked home thinking that McGrath must have some sort of point. But I can’t see it. Even if Rhys Jones spent 100% of purchase price fixing up his principal London home, he still made 4 million quid tax free. The mansion tax would be frivolous by comparison. Indeed it would be a much less rational tax, and a much lower tax, than one linked to capital appreciation. Andy Wightman sets out the numbers clearly on his blog.

These people — RJ — used to be our heroes. So what happened? I cannot even begin to imagine. To paraphrase, perhaps we are looking at: ‘All money corrupts, and lots of money corrupts a lot.’

Meanwhile Rory McGrath, was essentially trying to pick a physical fight with words of crushing violence. It appears he has form in this area. What do I say? I say: Fat. Drunk. And this evening ignorant. Sober up, my friend. I hope we will kiss and make up.

Singaporean takeaway

October 27, 2014

I failed to write anything the week ending 18 October despite an interesting trip to participate in the 10th anniversary of the Lee Kwan Yew School of Public Policy at the National University of Singapore. (They invited you, you’re thinking. Yes, they did. As Saul Bellow once wrote: ‘There is nothing too rum to be true.’)

I also had a wonderful side-visit that week across the causeway to Johor Bahru, about which I will say nothing more than that if you have never read Han Suyin’s classic novel And The Rain My Drink, you should get on and do so. The book is particularly recommended for Chinese, Indians, Malays, Japanese and assorted gweilos, all of whom feature amid the chaos of the Emergency in Malaya/Singapore. What is more, there is a new edition, published by Monsoon Books that contains two, new short forewords; one is by Han’s former ‘liberal’ Special Branch husband; and one is by a well-known Malaysian human rights lawyer. The forewords unlock a few secrets about the writing of and background to the book. The copy I picked up in Singapore has the cover contained in the previous link; the copy available on Amazon has a different cover but an online review indicates it has (at least) the additional foreword by Han Suyin’s second husband. The book is not a bad gift.

Aside from the trip to JB (the treatment of hundreds of thousands of Malaysians who cross the border for work each day is pretty shocking on both sides; waiting time is frequently hours), the week in Singapore gave me a chance to speak with a bunch of policy people and a couple of ministers, and so here are a few thoughts about a place I don’t often talk about:

 

Singapore menu du jour:

1. The Great Unwashed are becoming the Great Ungrateful. In the 2011 election, Harry Lee’s People’s Action Party (PAP) got, by Singapore standards, a kicking, hit by a negative vote swing of almost 7 percentage points which took it down to 60 percent of votes cast. More and more people have had enough of the PAP’s arrogance, its brutal elitism and its lack of the common touch. On top of this there is Singapore’s hideous inequality (Gini of income inequality at a record 0.54), the out-of-control immigration (including horrific numbers of dumb, fat gweilos), and the apparently congenital inability of PAP politicians to think in terms of the population’s interests as a whole. Back in the UK, the PAP makes me think of David Cameron and George Osborne on a really bad day.

2. Never underestimate Harry, or indeed Little Harry. The PAP remains a formidable machine when it comes to co-opting Singapore’s best and brightest. A reasonable example is chipper Minister for Culture, Community and Youth, Lawrence Wong, whom I had the pleasure to chat to. He is a big supporter of new PAP measures to curb real estate speculation and increase welfare transfers to the poor. It is not fundamental change, however it is change at the margin. The PAP’s logo may have been inspired by that of Oswald Mosley’s British Union of Fascists, but the PAP has enjoyed considerably more success and longevity.

Oswald

Oswald

 

 

 

Harry

Harry

 

 

 

 

 

 

 

 

3. So the big PAP trope just now is that the party is becoming much more touchy-feely and getting down with the labouring masses. At a public forum, many-times minister — most recently Foreign Minister — George Yeo, who became the most senior PAP figure since the 1960s to lose his seat in 2011 (‘arrogance’, said one of my taxi drivers), summed up the required shift in elegant philosophical terms. He said that Singapore must move on from ‘utilitarianism’ and seek policies that work for as many people as possible. In other words, the crude majority (assuming there even is one in the next election, in 2015) should no longer ride rough shod over the interests of minority groups, be they the very poor, Malays, whomever. He didn’t use the second philosophical designation, but what he meant is that Singapore needs to shift from utilitarianism to something more Pareto efficient, where policy gains for the majority do not come at the expense of other people.

4. Unfortunately I am a sceptic and I don’t believe the PAP will change its stripes – at least not fast enough to prevent even more trouble at the next election. At the same forum I commended George Yeo for calling for a move to a more mature, thoughtful policy framework. Then I asked him when he thinks Singapore will stop hanging people. (Singapore releases poor and patchy data, but in some years has had the highest per capita state execution rate in the world.) The response was interesting: no more new George/new PAP. He simply said that killing people has a deterrent effect and that most Singaporeans are in favour of it. This is the old PAP we know and love: not letting facts or logic get in the way of what it wants to do. First, there is no statistically robust evidence – and there are many studies – that capital punishment has a deterrent effect, so the claim to the contrary is disingenuous. Second, the logical case against capital punishment doesn’t hinge on the debate about deterrence anyway. Instead — at least for me — the sledgehammer argument against capital punishment is that you cannot guarantee in any legal system not to make mistakes; and when you do make a mistake, you cannot bring wrongly-hanged people back from the dead. I have looked in detail at miscarriage of justice cases in both the UK and the US, each of which has a better, more transparent legal system than Singapore. So when George offered the sop that he is open to looking for better ways to kill people, I wasn’t overly impressed. In reality of course, the PAP is sufficiently embarrassed at some level about its barbarism that the number of killings has fallen sharply as its political support has waned in the 2000s and 2010s; in 2012, the number of convictions subject to mandatory capital punishment was reduced.

Actually Dave, you are still rubbish

October 1, 2014

This feels cruel. But I have read Cameron’s ‘greatest ever’ speech to today’s party conference, and it is not very good.

Here is a late-night attempt to parse it and to translate it into plain English (pace Boris, who I don’t much like either).

 

Cameron puffycameron on housing estatecameron hague osborne

 

 

The full text is here.

1. ‘William Hague…greatest living Yorkshireman.’ Obviously not true. I plump lazily for David Hockney. Does he vote Tory?

2. ‘I am not a complicated man.’ This is the problem, Dave.

3. ‘I believe in some simple things.’ You mean simplistic things. File under ‘Farage’.

4. ‘It’s pretty simple really.’ No it is not. See above.

5. ‘The highest employment rate of any major economy.’ Try: the lowest productivity gains of any major economy.

6. ‘£25 billion is actually just 3% of what government spends each year.’ He is talking about proposed new welfare savings. The truth: yes, but you have already backloaded the cuts you promised in this parliament into the next parliament so you would need cut at least double what you are saying. It is undoable short of civil war.

7. We have a new new policy called ‘Starter Homes’. Dave, you are already providing this subsidy. It is growth by asset inflation. It is not sustainable in the absence of productivity gains. Ask George, at least he took a 101 economics course.

8. Some stuff about ‘My 3 young kids go to prole school, we are all in it together.’ Yes, Dave, but not for long. You will move them out of the National Education System at 13 and do your bit in undermining the Big Society you claim to represent.

9. The £41,900 tax-free plus lower-rate threshold will rise to £50,000. Already dealt with in today’s earlier blog post. As I said in the update it is somewhat devious/sloppy accounting. But the main point is that it is undeliverable in combination with a rise in the tax-free rate to £12,500 and all the other stuff that you and George have promised/are promising. George has already reneged on his deficit cutting plan so many times I cannot count and is now running the original Alastair Darling plan. It begins to seem as if all you care about is power, Dave, not honesty.

10. Ed Balls is… ‘a mistake’. This is in fact true.

11. Tristram Hunt, the shadow education secretary, went to a private school but does not agree with the existence of private schools in an optimal education system. That makes him — here is the key term — a ‘hypocrite’. No it doesn’t, Dave. It makes you either a retard or a liar. At least George has the dignity to send his kids to private school the whole way through and publicly not give a fuck.

12. ‘I’ll tell you who we represent.’ No, I will. The ignorant, the angry, the greedy, and people who are having a nice time and don’t notice the world around them.

13. ‘From the country that unravelled DNA…’ DNA was unravelled in Cambridge, not Oxford, Dave, and nobody here votes Tory.

14. ‘It’s about getting people fit to work.’ Exercise for poor, fat cleaners, Dave. Exercise for poor, fat cleaners.

15. ‘Our crime-busting Home Secretary, Theresa May.’ Imagine any Tory Home Secretary as your next-door neighbour. I fucking dare you.

16. ‘I know you want this sorted out so I will go to Brussels.’ Why not just say it: ‘I can’t speak a foreign language — bit like Farage — and I don’t understand history. Even if I like holidays in Italy, they are still wogs.’

17. ‘Our parliament… the British parliament.’ It was created to curtail the antics of inbreds like you. Best not mentioned.

18. ‘If you want those things, vote for me.’ You are going to lose, Dave. You will then spend the next 10 years wishing you had had bigger balls, and ideally a bigger brain too. George will visit you.

19. ‘Our exports to China are doubling.’ Dave, I am losing the will to live. Look at the baseline.

20. ‘I don’t claim to be a perfect leader.’ Ok, all is forgiven. Emigrate.

 

Amazing that it should be 20 things.

I am going to bed and not reading this through, so apologies for typos.

 

Later:

A pretty funny video of Brave Dave following his speech has been posted to Youtube. Here it is. 1.2 million hits already. It contains profanity.

Brave Dave gets his mojo back

October 1, 2014

Cameron 1014

 

Dave Cameroon just gave his Tory party speech. After his imperial weights moment, he is back on form. Cometh the hour, cometh the Etonian.

* £12,500 zero income tax threshold (up from £10,000 in fiscal year 2014-15).

* £50,000 40% income tax threshold (up from £31,866 plus £10,000 tax-free in fiscal year 2014-15). [See update on this.]

Both ‘in the next parliament’.

Just one problem.

It is totally and utterly unaffordable by any rational analysis of the numbers. If you are vaguely economically literate, work your way through these slides from the Office of Budgetary Responsibility. Note that this was a personal presentation by Chairman Chote, and does not reflect any OBR ‘line’. But the numbers and the trend lines are the hardest ones we have. I guess that Brave Dave hasn’t seen them.

Off the top of my head, Brave Dave’s election-pitch cocktail would require GDP growth over 4%, no increase in the cost of borrowing, and further massive cuts to welfare in order to meet the Fat Controller’s debt load targets.

Now breathe in and savour the moment.

Pure Tory Bullshit.

You have got to love it.

But will you vote for it?

 

CHOTE SLIDES1  (pdf. Should open up)

CHOTE SLIDES2  (powerpoint. Should come to you as a download)

 

Update:

I hadn’t read Cameron’s speech directly, relying on Guardian coverage. After a couple of emails I now realise that part of Cameron’s putative higher rate threshold increase is spin. Unlike HMRC, which states tax bands separately (for good reason because there is no single tax-free band at the bottom, it varies slightly for different groups) Cameron’s promise of a £50,000 threshold for the 40% rate is actually a two-band sandwich — the main tax-free band, plus the up-to-40% band. So it has to be compared with fiscal 2014-15’s £10,000 tax free (the standard exemption) plus the current £31,866 40% threshold.

Still, I am not changing the text above. The cuts are undeliverable without completely fanciful assumptions about growth, interest rates and how much more welfare can be cut without widespread civil unrest. And, yes, that is even if Cameron were to wait until the final year of the next parliament, 2020, to deliver the cuts.

What is truly revolting about the Tories is that you could, just about, begin to get towards reasonable assumptions for these cuts — which millions of people would welcome and benefit from — if you increased the two rates of capital gains tax (currently 18% and 28%), and introduced some level of capital gains tax on sales of first homes. But this government, just like the Blair one, is committed to taxing capital less heavily than work. What kind of message does that send to society?

More:

Well I wrote this on 1 October and on 9 October the FT runs a column saying exactly the same thing, also citing OBR numbers. Here it is, but you will need a sub. Of course, the FT is more polite than me, merely accusing Cameron of ‘arrogance’, ‘deceit’, and ‘cooking the books’.

More on 10 November 2014:

The FT has now run a deeper analysis of the OBR numbers, plus latest Treasury receipts, and concludes that to meet Osborne’s austerity targets welfare cuts will have to be massively increased from 2015. This contrasts with recent comments by Brave Dave Cameron — who is either very stupid or a brazen liar — that the worst of austerity is over. In reality, only half of the cuts promised by Osborne have been made. It is all here in the FT, but you will need a subscription. Cameron and the Fat Controller were also told in July by the International Monetary Fund that the UK has no apparent choice but to raise taxes from 2015. And Cameron and the Fat Controller have more recently been severely criticised by the Institute for Fiscal Studies (FT sub needed) over their constant efforts to diddle the numbers.

Hong Kong and the Emperor… and Tohti

September 25, 2014

A pleasant, somewhat lazy, couple of weeks <working> in Hong Kong and Shenzhen. Sitting on a surprisingly pleasant Shenzhen beach this week I watched the Hong Kong tycoon fraternity make its school trip to Beijing. Led by Head Boy Li Ka-shing, it was a full court press. Senior prefects Lee Shau-kee and Robert Kuok kept good order, while the dim but dependable Tung Chee-hwa explained his love of games and recited a short Ode to the Celestial Throne before the assembled Chinese leadership. A tremendous time was had by all, with the boys remarking that carpet and decor quality in the Great Hall is now almost as good as at home.

On the street of course, things are not quite so happy.

While the sixth form of St. Swag’s was up in Beijing learning how all is well in Hong Kong as is, school kids in the Special Administrative Region are boycotting classes this week to protest China’s gerrymandering of the 2017 election arrangements. If you haven’t followed it, the game is that everyone in Hong Kong will get a vote (as promised in the Basic Law), but Beijing will choose the candidates (<two or three>). It is actually a step back from the current arrangements which at least allowed the election of Henry Tang to Chief Executive to be blocked, replaced instead by the ineffectual but more brain-functional CY Leung.

Hong Kong, though it is rarely stated, is now just like Taiwan. The Taiwanese call it <Three Thirds>. In Taiwan, one third is Deep Blue (older, KMT, pro mainland integration). One third is Deep Green (younger, Democratic Progressive Party, pro independence). One third is in the middle.

So too, with only modest variation, in Hong Kong. There is no explicit pro independence camp but the generational gap is just the same. Hong Kong, like Taiwan, has entered its 1960s. And in the 1960s students on campus get beaten, and even shot if you remember, in their fight for what is right.

If you care at all, it is time to do whatever you can to prevent violence from arriving. You might write to the Chinese. But if you are a gweilo, that is likely counter-productive. Better to write to the American and British consuls in Hong Kong (emails below), and to the British and American governments, urging them to stand up for the spirit as well as the letter of the Basic Law, and to be ready to grant visas to Hong Kong students who will get arrest records, even criminal convictions, for peacefully protesting Beijing’s behaviour. It does make a difference if you have a moment.

Meanwhile, the Emperor. At the same time it is gently screwing Hong Kong, the Xi Jinping government’s decision to give a life sentence to, and seize all the assets of, the leading, non-separatist voice of Uighur nationalism, Ilham Tohti, is surely the most horrible, colonial, racist act we have seen from China for a very long time. Obama may have a lot on the Middle East, but he needs to draw some lines in the sand in East Asia. There are still plenty of rational voices in China, like there were in 1920s Japan. But the longer this stuff goes on, the harder, I think, the negotiating process becomes. I do not want to read this blog entry in 10 years time and find that some very unpleasant historical analogies going through my head were justified.

Well, enough of the misery. Tomorrow I return to Hong Kong for dinner with dear Hemlock. Back when CY Leung was elected, Hemlock had a hard-on for him, said he was going to change stuff. Not so much on the democratisation front, which would have to occur through a degree of managed confrontation, but in terms of the godfather economy and all those stitch-up oligopolies in real estate and retail and the securities markets. You gotta love Hemlock, even if he’s not as funny as he used to be. It is so heartening that after all these decades, the old boy could still be an ingenue (accent missing). It is so strange that it should turn out that I am the cynical one.

tycoons in beijing 0914

Above: Can’t get a bigger photo. Running anti-clockwise from Xi Jin-ping on the right, looks to me like Tung, K.S., Lee Shau-kee, Robert Kuok, Henry Cheng (son of Cheng Yu-tung, now decrepit), Lui, possibly Michael Kadoorie, and finally David Li of Bank of East Asia.

Saint Swag’s. September 2014 School trip to Beijing. 6th Form boys attending.

(Parents please note: the wearing of non-school uniform items such flat caps is strictly against school policy, including on school trips. Lui Senior (Cuthberts), who has already been in trouble this term for playing cards in dorm, has been fined a week’s tuck and given leaf sweeping for his transgression. This sort of thing will not be tolerated at St. Swag’s.)

Cheung Kong (Holdings) chairman Li Ka-shing

Chairman of Kerry Group, Robert Kuok

Chief executive officer of Shangri-La Asia, Kuok Khoon Chen

PCCW chairman and younger son of Li Ka-shing, Richard Li Tzar-kai

K Wah Group chairman and Galaxy Entertainment Group founder Lui Che-woo

Henderson Land Development chairman Lee Shau-kee and his elder son Peter Lee Ka-kit

Sun Hung Kai Properties Alternate Director Adam Kwok Kai-fai

Bank of East Asia chairman David Li Kwok-po

New World Development chairman Henry Cheng Kar-shun

CLP Holdings chairman Michael Kadoorie

Sino Land chairman Robert Ng Chee Siong

Harilela Group vice-chairman Gary Harilela

Hang Lung Properties chairman Ronnie Chan Chichung

Shui On Land chairman Vincent Lo Hong-sui

MGM China’s co-chairman and daughter of casino mogul Stanley Ho Hung-sun, Pansy Ho Chiu-king

Ian Fok Chun-wan, son of the late Henry Fok Ying-tung

Wharf (Holdings) chairman Peter Woo Kwong-ching

Asia Financial Holdings chairman Robin Chan Yau-hing

Li & Fung honorary chairman Victor Fung Kwok-king

Lai Sun Development chairman Peter Lam Kin-ngok,

Oriental Press Group former chairman Ma Ching-kwan

Glorious Sun Enterprises chairman Yeung Chun-kam

Phoenix Satellite Television chairman Liu Changle

Swire Pacific director Ian Shiu Sai-cheung

Shimao Property Holdings founder and chairman Hui Wing-mau

China Grand Forestry Resources Group founder Ng Leung-ho

Goldlion Holdings deputy chairman Ricky Tsang Chi-ming

Novel Enterprises vice-chairman Ronald Chao Kee-young

HKR International managing director Victor Cha Mou-zing

Hongkong and Shanghai Banking Corporation chief executive officer Peter Wong Tung-shun

Prof Anna Pao Sohmen, daughter of late tycoon Pao Yue-kong

Far East Consortium International chairman David Chiu Tat-cheong

Shun Hing Group vice-chairman David Mong Tak-yeung

Galaxy Entertainment Group deputy chairman Francis Lui Yiu-tung

Dah Sing Life Assurance Company chairman David Wong Shou-yeh

Far East Holdings International chairman Deacon Chiu’s son, Duncan Chiu

Bank of China International Holdings deputy chief executive officer Tse Yung-hoi

Sing Tao News Corporation chairman Charles Ho Tsu-kwok

More:

UK Consul General to write to about standing up for the Basic Law, granting visas, etc is Caroline Wilson. hongkong.consular@fco.gov.uk

US Consul General to write to about standing up for the Basic Law (an agreement lodged with the United Nations), granting visas, etc is Clifford Hart. hartca@state.gov

Why foreigners do have a dog in any Hong Kong fight. Re-posted NYT oped.

Op-ed about the Hong Kong situation by former Chinese political prisoners in the Wall Street Journal.

Video stream of Hong Kong student protests this week.

On why allowing everyone to vote but restricting the candidates isn’t democracy, Georgetown professor Don Clarke offers this nicely phrased US 3rd Circuit decision in a corporate voting case from 1985. Here’s the actual law library link (Durkin v National Bank of Olyphant). Of course what the Chinese are doing is just what British colonial governments did, but let’s not go there.

<We rest our holding as well on the common sense notion that the unadorned right to cast a ballot in a contest for office, a vehicle for participatory decisionmaking and the exercise of choice, is meaningless without the right to participate in selecting the contestants. As the nominating process circumscribes the range of the choice to be made, it is a fundamental and outcome-determinative step in the election of officeholders. To allow for voting while maintaining a closed candidate selection process thus renders the former an empty exercise. This is as true in the corporate suffrage contest as it is in civic elections, where federal law recognizes that access to the candidate selection process is a component of constitutionally-mandated voting rights.>

On Tohti:

Teng Biao writes in The Guardian that the guy sent down for life actually deserves the Nobel. Here is the background.

Nicholas Bequelin writes in the NYT that the treatment of Tohti will radicalise more Uighurs. This is your key piece of analysis.

English translation of Chang Ping article trying to find logic in the treatment of Ilham Tohti. See also the translated extracts from Tohti’s statement after sentencing, below.

Ilham Tohti’s statement after sentencing in Chinese. Here are some heart-rending extracts in English:

<My outcries are for our people and, even more, for the future of China.

Before entering prison, I kept worrying I wouldn’t be able to deal with the harshness inside. I worried I would betray my conscience, career, friends and family. I made it!

The upcoming life in prison is not something I’ve experienced, but it will nonetheless become our life and my experience. I don’t know how long my life can go on. I have courage; I will not be as fragile as that. If you hear news that I mutilated or killed myself, you can be certain it is made-up.

After seeing the judgment against me, contrary to what people may think, I now think I have a more important duty to bear.

Even though I have departed, I still live in anticipation of the sun and the future. I am convinced that China will become better, and that the constitutional rights of the Uighur people will, one day, be honored.

Peace is a heavenly gift to the Uighur and Han people. Only peace and good will can create a common interest.

I wear my shackles twenty-four hours a day, and was only allowed physical exercise for three hours out of eight months. My cell mates are eight sentenced Han prisoners. These are fairly harsh conditions. However, I count myself fortunate when I look at what has happened to my students and other Uighurs accused of separatist crimes. I had my own Han lawyer whom I appointed to defend me, and my family was allowed to attend my trial. I was able to say what I wanted to say. I hope that, through my case, rule of law in Xinjiang can improve, even if it is only a baby step.

After yesterday’s sentencing, I slept better than I ever did in the eight months (of my detention.) I never realized I had this in me. The only thing is don’t tell my old mother what happened. Tell my family to tell her that it’s only a five-year sentence. Last night, in the cell next door Parhat [student of Tohti’s] slammed himself against the door and cried out loud. I heard the sound of shackles, nonstop, as they were taken to interrogations. Maybe my students have been sentenced too.

(To his wife): My love, for the sake of our children, please be strong and don’t cry! In a future not too far away, we will be in each other’s arms once more. Take care of yourself! Love, Ilham.>

Only in Chinese on Hong Kong:

Wen Wei Po, Beijing mouthpiece in Hong Kong, says that Hong Kong student organiser Joshua Wong has received training from <black hands> in the US navy. I understand there is lots of this stuff doing the rounds in the official press.

Update, 29 September:

Well, it’s game on after a weekend of student-led confrontations with the police. Parts of HK island (Admiralty, Causeway Bay) are at a standstill, but Central still functioning. Speculation that Xi Jinping is going to can CY Leung, try to buy off the student leaders with small gestures. A talk-first strategy worked well with both Tiananmen in 1989 and more recently with the Falunggong protests in Beijing. But once you have lulled protesters into a false sense of security in HK, it is not so easy to send in secret police to round up the organisers, let alone send in troops. This is a whole new ball game for the CPC…

Here are the early instructions from the Propaganda Dept to mainland media outlets about handling information on the Hong Kong protests, courtesy of China Digital Times:

<All websites must immediately clear away information about Hong Kong students violently assaulting the government and about “Occupy Central”. Promptly report any issues. Strictly manage interactive channels, and resolutely delete harmful information. This [directive] must be followed precisely. (September 28, 2014)

各网站对香港学生暴力冲击政府和“占中”相关信息一定要立即清理,有问题及时报告。严格管好互动栏目,坚决删除有害信息。要严格执行。[Original text]>

At the end of this SCMP story on the protests is a 9-minute embedded video interview with student leader Joshua Wong (you will have to do some kind of registration to access this). It is well worth watching. Not only Beijing, but the HK tycoons, have a very serious young man on their hands.

28 September 2014

28 September 2014

HK 280914b

28 September 2014

28 September 2014

Cordon created by police around Tamar/Admiralty, keeping protests out of central for now. 28 September

Cordon created by police around Tamar/Admiralty, keeping protests out of central for now. 28 September

 

Parenting-mare

September 2, 2014

So here is the last blog post of the holiday season. Turn away now if you cannot cope with the f-word. 

What follows is a verbatim rendering of a conversation that took place last week in the car, driving down to the Isle of Wight. Me driving. Wife in the front. Three kids, 11, 9, 7, in the back.

9 year-old boy: ‘What does fuck mean?’

[pause]

Wife: ‘It’s very rude and you must never say it.’

9 year-old boy: ‘I know that. But what does it mean?’

[pause]

Me: ‘You’ll find out in Year 6 sex education.’

9 year-old boy: ‘But I don’t want to wait for Year 6. Tell me what it means now.’

Wife: ‘Look, I’ll talk to you about it later. We can’t do it now — daddy is driving and I have to do the directions.’

9 year-old boy: ‘Why can’t you just tell me what it means?’

[long pause] 

Worldly-wise 11 year-old sister, feeling very pleased with herself: ‘Look, It’s like a hug.’

[pause]

9 year-old boy, turning to 11 year-old sister: ‘Can I fuck you?’

7 year-old girl, turning to 11-year old sister: ‘I want to fuck you too.’

………………………………

More:

Here is a funny video I saw this summer, on how to assess the marriageability of women. It is funnier for me because my wife is called Tiffany. It is probably funnier for anyone when you have had a couple of drinks.

Here is a funny song about learning Chinese (in Chinese, so skip it if you don’t speak any). In case you are wondering, it was done in Taipei. Can’t imagine something like this being done on the mainland.

 

Addendum:

Just now in the car…

9 year-old boy: ‘I know what fuck means.’

Me: ‘Oh yes?’

9 year-old boy: ‘It means sex.’

Wife: ‘How do you know that?’

9 year-old boy: ‘X and Y [friends at school] told me.’

[pause]

9 year-old boy: ‘But why can’t you say: “What fuck are you?”.’

 


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