Showing posts from April, 2016

Horror story

In response to my post about the lessons of history , Claudia Dias sent me this clip from The Times, March 31st, 1939: Four months after Kristallnacht , and two weeks after Hitler's annexation of Czechoslovakia, the British government was still repatriating Jewish refugees. This group knew they were being sent back to almost certain death. No wonder they were hysterical. Today, refugees in Greece face deportation to Turkey, and from there probable repatriation to their own countries. If they are denied the opportunity to claim asylum, as appears to be the case for some, this would contravene the Geneva convention on refugees. UNHCR representatives and aid agencies are being refused access to refugees sent back to Turkey. There are reports that refugees threaten to commit suicide rather than be sent back. Desperate people, desperate times. We have learned nothing. Related reading: When the world turns dark

What have we learned from history?

Yesterday, at the final of the Kent Schools Public Speaking Competition, a young boy stepped up to the podium. "What have we learned from history?" he asked. "We have learned that no good comes from killing people". And he went on to speak eloquently, first of World War II: "There has never been another major war," he said. True, there has not. The uneasy peace of the Cold War did not descend into outright conflict, though it was a near thing: the world very nearly went up in nuclear flames in the Cuban Missile Crisis of 1963. But have we really learned, or did we just find other weapons? War can be fought in many ways.  Then he went on to describe, in poignant terms, the Rwandan massacres of 1994. He explained the unhealed tribal rifts that underpinned Rwandan society at that time. He commented that people who had lived together for years in apparent harmony suddenly turned on each other. In the course of three months, hundreds of thous

Kafka at the DWP

I've written before about the arbitrary and cruel judgments made by DWP frontline staff in relation to ESA claimants, particularly the mentally ill. And Guy Standing, in his excellent books about the precarious lives of the "new underclass", describes how the process of claiming benefits creates huge amounts of unproductive "work". Benefit claimants have to "earn" their benefits by what amounts to jumping through hoops. But I confess that - not being a claimant myself - I lacked real understanding of just how insane and tortuous the JSA & ESA system is. Today, I read a powerful blogpost by Lizzie Cornish, a 61-year old woman who has found herself without a job and - because of women's rising state pension age - also without a pension. She describes her personal experience of claiming JSA and ESA. The story she tells is worthy of Kafka. Lizzie (who is involved with the WASPI campaign) blocked me on Twitter long ago, so I have not been

The Fund that isn't a fund

There is a great deal of confusion over National Insurance - what it is, how it works and what it funds. I have attempted to clear up some of the muddle elsewhere . But partly, it stems from the existence of something called the NI Fund. If there is a Fund, surely this implies that National Insurance contributions are invested? If so, those (like me) who insist that state pensions are unfunded are talking gibberish. There is indeed a NI Fund. But it is badly named. It would be more accurate to call it the NI Clearing House. It receives NI contributions from workers and employers, and it disburses payments to pensioners and benefit recipients. As long as NI receipts exceed pension & benefit payments, the Fund runs a surplus. But when pension & benefit payments exceed receipts, the Fund runs a deficit. When a clearing house like the NI Fund runs a surplus over a number of years, it builds up reserves. The NI Fund has significant reserves, mostly built up since the start of th

The building society broken by its own accountants

The Manchester Building Society is sinking. It has reported a post-tax loss of £4.9m and a fall in reserves of £5.4m. This is not a one-off disaster due to an external shock. No, these results are symptomatic of a deep underlying malaise. The Manchester is in terminal decline, broken not by the financial crisis, nor by regulators, but by its own accountants. The Manchester's problems started in 2012, when it discovered that its accounting violated IAS 39 (IFRS 9) hedge accounting rules. For some years, it had been hedging its interest rate risk on fixed-rate mortgages with simple interest rate swaps. To ensure that the portfolio was fully hedged, it accounted for both the swaps and the mortgages at fair value. This explanation is from a Note to the 2012 accounts: The total value of mortgages at 31 December 2012 that had been subject to interest rate swaps was £167.7m. The swap and the designated mortgages were accounted for using the hedge accounting principles of IAS 39.

Germany's negative-rates trap

Germany's Finance Minister Wolfgang Schaueble has long been critical of ECB monetary policy,. But now, as Reuters says,  the gloves are off . In a speech at a prizegiving for an ordoliberal economics foundation last Friday, Dr. Schaeuble effectively demanded that the ECB raise interest rates. The justification? Very low interest rates hurt Germany's savers, which are the bedrock of its economy. There is a political dimension to this. Dr. Schaueble's party, the CDU, is losing popularity and desperate for pensioner votes. Dr. Schauble even went so far as to blame ECB monetary policy for the rise of the right-wing eurosceptic AfD: "I said to Mario very proud: you can attribute 50% of the results of a party that seems to be new and successful in Germany to the design of this [monetary] policy," Mr. Schäuble said. This is outrageous. Dr. Schaueble is a politician, not a central banker. His attempt to influence the conduct of ECB monetary policy to ga

The illusion of value

I have been looking through my diary for the next couple of months. It is pretty crowded. Meetings, lectures, conferences, TV and radio is almost 7 days a week. It's nice to be busy, isn't it? But as I look at this ridiculous schedule, I wonder why, if I am so busy, I am so broke. When I say "broke", I mean that I do not currently have enough money to pay my mortgage this month. I am hoping that those who owe me money for work I have already done (some of it dating back to January) will pay me in time. If they do not, I will once again be scrabbling around trying to borrow the money to pay my bills. I'm so tired of having to chase people to pay the money they owe me.... Looking further ahead, I only have enough paid work to cover my obligations for the next month or two. The summer is coming, and everyone goes on holiday then. Freelance writing - and teaching - dry up. So it looks very much as if I will once again be staring bankruptcy in th

Bond yields and helicopters

The ever-optimistic OBR has some encouraging forecasts for interest rates and global government bond yields: Well, ok, they were rather more encouraging in November than they are now. The uplift was supposed to start ANY DAY NOW, but there has been an interruption to normal service. Leaves on the line, perhaps. Or the wrong sort of snow. The trouble is, the OBR has a long record of hockey-stick forecasting. Not that it is unique in having a noticeable bias to the upside: If ever there were evidence that economic forecasting owes more to magic than science, it is this pair of charts. Markets expected that interest rates would start rising in 2010, 2011, 2012, 2013, is now 2016 and markets are beginning to wonder if they will ever rise. There is a feeble uplift pencilled in for 2018, and the ghost of a suggestion that there could even be a rate cut this year. The runes have failed, not once but repeatedly. Sack the shamans. Why the runes have failed is not at all