Something wrong here?

Are we expected to applaud because the Chief Exec is doing the right thing?  The Guardian reports:

Morrisons chief executive, Dalton Philips, has waived his annual bonus after overseeing a collapse in sales and two massive profits warnings in the space of three months.

Despite the retailer's dismal financial performance, Philips was due to collect a £374,000 bonus for meeting strategic targets including the launch of online shopping, 22% of his potential short-term bonus for the year. Half of that would have been in cash and the other half in share awards deferred for three years. But Philips, who is paid £850,000 in basic salary, has chosen not to collect either payout after profits slumped 13% in the year to February and sales dipped 2%.

The company has had a disastrous year; yet Mr Phillips is still entitled to a bonus?  He may be doing the right thing, but the structure of his incentives is surely inappropriate.  As appears to be the case with far too many senior company officials, and not just in Morrisons.

What to do about Ukraine

Is this pragmaticism?  Or wishful thinking?

The West has, of course, imposed a raft of diplomatic and economic penalties, notably by suspending Russia from the G8. But the telltale sign is that the biggest sticks have been kept in the locker. So far, no sanctions have been imposed on the key sectors of the Russian economy; America and its allies have instead confined their countermeasures to enforcing travel bans and asset freezes on selected individuals. On Monday, they explicitly threatened to target the Russian economy if the Kremlin “continues to escalate this situation”. That phrase is highly significant. It means that if Putin takes the next step and invades eastern Ukraine, then the pressure will escalate. But if he sits tight and keeps Crimea, there might be no further punishment.

So we have reached an equilibrium of sorts. If – and it is a big if – nothing happens to upset the status quo, this crisis could subside. The great risk is that Putin will now decide that his project to challenge the post Cold War order demands the invasion of eastern Ukraine. If that happens, all bets are off. But if he contents himself with keeping Crimea, the steam might go out of this crisis.

Makes some sort of sense to me.  But what about the question of moral hazard: should Putin be allowed to get away with the annexation of Crimea?  And what happens the next time he tries it on?

No easy answers.

Getting desperate?

Our esteemed Prime Minister (here):

TAX EXPERTS yesterday welcomed David Cameron’s ambition to lift more people out of inheritance tax if he wins the next election.

The Prime Minister said he intended to “go further” with the inheritance tax threshold, set at £325,000 since 2009, to make sure most homeowners escape the levy.

“Inheritance tax should only really be paid by the rich. It should not be paid by people who have worked hard and saved and who have bought a family house,” he told a Saga event in Peacehaven yesterday.

If people with an estate of up to £325K and more are not rich, how does the PM define poor?  And it is not the people "who have worked hard and saved and bought a family house" who pay the tax; rather it is their heirs.

Besides, he made a similar promise before the last general election but abandoned it when it came to the crunch.

Geography

Does this guy know his geography?  The Guardian reports:

Nato's most senior military commander said on Sunday that Russia had amassed a large military force on Ukraine's eastern border, and warned thatMoldova's separatist Trans-Dniester region could be the Kremlin's next target.

General Philip Breedlove, Nato's supreme allied commander, described the Russian force that began exercises 10 days ago as very, very sizeable and very, very ready.

"There is absolutely sufficient force postured on the eastern border of Ukraine to run to Trans-Dniester if the decision was made to do that. That is very worrisome," Breedlove said.

As Trans-Dniester is located to the south-west of Ukraine, I am at something of a loss how the Russian forces on the eastern border of Ukraine could readily access Trans-Dniester.  Nor would they need to, as there are already 1200 Russian troops located in Trans'Dniester.

And the band played believe it if you like

The Guardian reports:

Conservative party chairman Grant Shapps says he loves bingo and beer like other "hardworking people" after he was widely criticised over a Tory poster suggesting these were the kind of pursuits that "they" enjoy.

Yeah, sure ...

Rugby

I have just watched (on telly) the best rugby match of the season,  Not surprising when the teams featured such illustrious names as Julien Bonnaire, Sivivatu, Ali Williams, Carl Hayman, Morgan Parra and Matt Giteau. To them can be added Lee Byrne, Michalak, Jamie Cudmore, the Armitage brothers, Rougerie, Nathan Hines, Djugashvili, Tomas Domingo, as well as a 15 minute cameo from Jonny Wilkinson.  Clermont Auvergne beat Toulon by 22 to 16.  Either team could have given any of the Six Nations teams a run for their money.

Vern Cottar, the Clermont coach, takes over the Scotland role this summer.  It is perhaps too much to hope that he might persuade Hines (who had a superb match) to return to the Scottish fold.  But if he can imbue the Scottish XV with half the fortitude and spirit displayed by the Auvergnois, we may look forward to happier times for Scottish rugby.

 

Always look on the bright side?

Not all of us elderly citizens will be entirely content with yesterday’s budget announcements.

If I were one of those pensioners owning shares in Partnership Assurance, Legal & General, Aviva or Standard Life (which thank the Lord I’m not), each of which has suffered sudden and substantial falls in their values on the stock exchange as a result of the Chancellor’s attack on annuities in yesterday’s budget,  I might be feeling a little hostile towards Mr Osborne this morning.  Indeed, I might wonder if it was legitimate for the Chancellor to make such sweeping changes without any prior consultation.

Nor would I be feeling particularly chuffed if in recent months I had retired and been obliged to take out an annuity, leaving me in a much poorer position than imminent pensioners now not required to do so.

I might also be irritated at the vagueness as to when all the proposed changes will actually be implemented.

I appreciate that into each life a little rain must fall but where are the umbrellas when you need them?  And budgets greeted with initial approval usually end up causing greater angst as their details are revealed.

Game for you

More hours of wasted office time:

http://gabrielecirulli.github.io/2048/

We've been here before

Taken at face value, this might kill off the remaining hopes of the Yes campaign:

In a move to help build a united platform in favour of greater devolution from all three UK parties, Cameron told the Scottish Tories it was a "blatant" nationalist myth that a no vote would mean the end of the road for further powers.

"Let me be absolutely clear: a vote for no is not a vote for no change.

"We are committed to making devolution work better still, giving the Scottish parliament greater responsibility for raising more of the money it spends," Cameron told the party's spring conference, which has attracted a record number of 1,100 delegates.

"So here's the recap: vote yes – that is total separation. Vote no – that can mean further devolution; more power to the Scottish people and their parliament, but with the crucial insurance policy that comes with being part of our UK."

Could we trust the Tories?  They have previous form.  In 1970, they promised devolution but failed to deliver.  In 1979, they promised devolution but failed to deliver.  Since then, they have opposed devolution at every step.  I rather think that we will need more detailed evidence of commitment before we can take the Tories at face value.

 

Black day for the Co-op

Who would have thought that the dear old Co-op would have got itself into such a mess?  The Guardian reports:

The shambolic state of the Co-operative Group was laid bare in a scathing verdict warning that the survival of Britain's biggest mutual organisation was at stake

The Co-op has been undermined by "reckless" dealmaking, "shocking" levels of debt and governance standards far worse than even the banks before the credit crunch, according to Lord Myners, the group's senior independent director who was charged with overhauling the boardroom.

...

Myners said the Co-op had lost almost all the customers it picked up when it bought Somerfield in 2008 for £1.6bn. He said taking over the Britannia had almost bankrupted the Co-op bank and the attempted Lloyds deal, codenamed Project Verde, was misconceived: "Somerfield was reckless. Britannia was reckless. Verde was reckless."

The Co-op bosses may not be the only guilty parties,  With regard to the Co-op bank, what were the regulators doing, when the Britannia takeover was going through?  And why was the Verde deal allowed to get as far as it did?  And what action did the company's auditors take?


 

A minister for the high jump at the next re-shuffle

The Independent reports:

Downing Street has been forced to check how a foreign-born nanny employed by David and Samantha Cameron came to be a British citizen, after a back-firing speech by a Conservative MP.

James Brokenshire, the newly appointed immigration minister, gave a speech this week which appeared to blame the “wealthy metropolitan elite” for jeopardising the employment prospects of working-class Britons by employing foreign staff.

The Camerons have never made a secret of the fact that they employed a Nepalese-born nanny, Gita Lima, who has worked with them for years and moved with them into Downing Street.

There's no accounting for stupidity ...


 

Ne'er cast a clout 'til February is out

Look, it's no big deal.  Yeah, I wore my shorts for the first time this year.  But I'm far from a George Clooney lookalike,  So don't get excited.

The legs were not too peely-wally, given that they have not seen the sun since last November.  Amd maybe the trendy lilac semmit did not quite match the green shorts - but it's too hot to care.


 

Not all bonuses are bad

So John Lewis is to pay its staff - all of its staff from Chairman to shelf stackers - a 15% bonus this year, reflecting improvements in its performance.  Good for them.

But, if a successful company like John Lewis can get by with bonuses of 15%, why do high heidyin bankers need more than 200%?

   

Looking after the pennies

It's all your fault, y'know.  You're not saving enough.  CityAM reports:

BRITAIN remains in a savings crisis. A shocking 19 per cent of the public have no savings at all, up from 17 per cent last year, and the average stash put away for a rainy day is a miserable £10,208. The total number of people who felt able to add to their savings actually dropped last year to 14.4m (just 30 per cent of the adult population) from 14.8m the previous year, and 54 per cent of people surveyed by Scottish Widows said they were saving less than they did two years ago. Just 12 per cent of people have more than £50,000 in savings.

It is clear that individuals, when at all possible, need to accumulate more financial assets. As incomes start to grow again, as much of the increase as possible ought to be put aside, rather than be spent on consumer goods; this process would depress domestic demand for years to come but is the only way the economy will ever be rebalanced. Tragically, it won’t happen.

A lack of trust in the system is one important explanation. People simply don’t believe the government – and politicians of all parties – when it comes to long-terms savings and pensions. They worry, with good reason, that the rules will keep changing; they are afraid that savers are an easy target and that they will eventually be hit by a wealth tax if the national debt continues to grow; and many therefore say that they prefer to invest in property instead. Many also distrust the financial services industry.

As a simple soul, my view is more pragmatic.  Why put your money in a savings account paying peanuts in interest and watch its value frittered away by inflation?  If you have any spare cash (which is a big if), better to buy shares in National Grid which will deliver an annual dividend payment of over 6%, more or less guaranteed - it's as least as safe as houses ...

Scroungers

Do the banks care what people think of them?  Obviously not.  In fact they couldn't give a toss.

Look at Barclays:

This is what "pay for performance," as practised by Barclays, looks like: in a year in which profits fell by a third, shareholders' dividends were flat and the share price went sideways, 481 employees collected £1m or more. That was 53 more than in 2012.

At the top of the tree, eight individuals got more than £5m, and another 54 earned between £2.5m and £5m. Again, those tallies were higher than in 2012. Overall, the bonus pool was increased from £2.2bn to £2.4bn.

If this division of spoils – bumper hand-outs for senior staff while shareholders get scraps – strikes you as a distortion of capitalism, you are not alone. Even the Institute of Directors, the bosses' club, is flabbergasted that Barclays has the nerve to hand out bonuses worth three times the dividend pay-out to shareholders. "For whom is this institution being run?" it wonders. Quite.

Then there are Lloyds and HSBC:

Bailed-out Lloyds Banking Group and Barclays have handed their bosses almost £1m in shares to sidestep the new rules from Brussels which are intended to clampdown on bankers' pay.

Similar handouts, which have become known in the City as "allowances", will be given to about 1,000 staff at Barclays and some 75 bankers at Lloyds. Barclays is facing outcry about its increased bonus payouts, which are being awarded despite a sharp fall in profits in 2013.

Barclays has agreed a £18,000-a-week shares payout for its chief executive Antony Jenkins, who earns a salary of £1.1m a year. Lloyds' boss António Horta-Osório is getting almost the same size allowance, after receiving a total pay package of £7.5m last year.

The new allowances at Barclays and Lloyds follow a move by HSBC last month to hand its boss, Stuart Gulliver, £1.7m in shares a year to get around the bonus cap, which the EU introduced on 1 January and the chancellor George Osborne is fighting in the courts.

Amazing to think that the bankers keep on getting away with it.  At least the EU is trying to bring them to heel.  And from our own dear government: not a cheep ...

A faraway country

Do politicians have to sound so pompous?  The Guardian reports:

Hague sounded stern and determined as he deplored Russia's actions. As Douglas Alexander, his opposite number, would have been saying precisely the same thing had their positions been reversed, his contribution was limited to trying to embarrass Hague that the Tories' inaction plan had accidentally been leaked in a photograph the day before.

Hague batted this one away. "I want to make it absolutely clear that anything that is written in one document that is being carried by one official is not necessarily any guide to the decisions that will be made by Her Majesty's government. Our options remain very much open on this subject."

Except the only options the government was presently considering were the same ones as before: not sending government representatives to the Paralympics and slowing down visa applications for Russians. Hague did add there could be some more options on Thursday after the EU summit. He might even cancel his trip to see the Bolshoi Ballet. Or something. Putin must be terrified.

Easy to mock, but nobody else seems to have much of a clue about what to do.

And your point is?

I grow ever more weary of nutritional advice.  Here is the latest:

A diet rich in meat, eggs, milk and cheese could be as harmful to health as smoking, according to a controversial study into the impact of protein consumption on longevity.

High levels of dietary animal protein in people under 65 years of age was linked to a fourfold increase in their risk of death from cancer or diabetes, and almost double the risk of dying from any cause over an 18-year period, researchers found. However, nutrition experts have cautioned that it's too early to draw firm conclusions from the research.

The overall harmful effects seen in the study were almost completely wiped out when the protein came from plant sources, such as beans and legumes, though cancer risk was still three times as high in middle-aged people who ate a protein-rich diet, compared with those on a low-protein diet.

But whereas middle-aged people who consumed a lot of animal protein tended to die younger from cancer, diabetes and other diseases, the same diet seemed to protect people's health in old age.

You've got to die of something, right?  And, as we are no longer being cut down by bubonic plague or consumption, it has to be something else.  So I will carry on with the bacon and eggs.

Odd socks

I'm watching the Southampton-Liverpool match.  I am intrigued to notice that the Liverpool team are wearing odd socks, in that the top of the left sock is of a much deeper blue than the top of the right sock.  The entire team is outfitted in this way.  If you don't believe me, check it out on Match of the Day later tonight.

How did the team authorities ensure that the socks were worn the right way around?  I find it difficult to imagine the manager stressing to the team before the match to remember that the lighter blue sock goes on the right foot.  That pre-supposes that footballers know their right foot from their left.  And, anyway, are there no rebellious spirits in the Liverpool team prepared to defy conventional thinking?

I guess that it will remain one of life's minor mysteries ...

   

A man with a memory

CityAM reports:

INVESTMENT guru Warren Buffett has offered up his latest advice to would-be investors by comparing the stock market to sex. Buffett, who delivers his closely watched letter to shareholders every year, said investors should be wary of the current market rally. “A bull market is like sex. It feels best just before it ends,” he said, quoting legendary investor Barton Briggs. Buffett, who has been married twice, said it was dangerous for timid investors to enter the market in a bull run because it would put them off when markets inevitably fell.

Mr Buffett is 83.

Divorce: who gets the CD collection?

The Guardian reports:

The culture secretary has told Scots that they will lose the BBC if they vote for independence in September. Maria Miller said a vote for Scottish independence would be a vote to leave the institutions of the UK, and that included the BBC.

The culture secretary said in a Q&A session after her speech at the Oxford Media Convention on Wednesday that the BBC was "part of our crown jewels", and was too important for the debate about its charter renewal to become embroiled in party politics.

"We have to think what the [independence] vote is about. It's about whether or not Scotland wants to remain as part of the UK," said Miller.

"If the vote is no, they don't want to do that, then it's a vote to leave the institutions of the UK and the BBC is one of those institutions."

SamCam and the Scottish Experience

Mrs Cameron tries valiantly to get into the spirit of Dave's Scottish adventure:

I said to Dave, babes it is easy for you channelling Robert the Bruce & Emeli the Sande but that is your actual heritage, we cannot all be descended from Macbeth, he's like Hamlet actually, I'm like, whatevs, NO dressing up :( He's like please babes, imagine some "bonny" jeggings in Clan Tilda Swinton, even Theresa wears that tartan suit, I'm like, my POINT? So he's like fine, your call, but Shapps changed his name to Grant Shortbread without even being asked & honest Phil has got everyone in Dhaka working 24/7 on a bespoke kilt for Picklesy, McGovey is putting Lulu at the heart of the music curriculum, plus even Kate Moss said Scotland stay with us the other night which is basically 25% of everything she has ever said, I got Danny to work it out?

I'm like seriously, you are saying a no vote is like, super on trend, God who knew, he's like aye didnae you hear me screaming in ecstasy, I'm like, oh please, you do that all the time on Candy Crush, wait, let me check with Alexa, Dave's like, we already did, hen, 'twas yon wee lassie's idea tae hold a cabinet in, I think, Cawdor, unless it was Motherwell, och whatevs, there was this like majorly braw oil rig, ye ken, all the Scotch types LOVED? I'm like God, I totally ken, haud on there babes while I gang order some breeks on net-a-porter :)

   

A rose by any other name ...

CityAM reports:

THE CONSERVATIVE MP calling for an end to National Insurance payments has won the backing of business leaders at the Institute of Directors.

Backbench MP Ben Gummer will set out his argument to rename National Insurance the “Earnings Tax” in parliament today, and has admitted that this is the first step in a plan to remove NI altogether.

“If it’s a tax we should call it a tax,” Gummer said. “I want to see National Insurance and Income Tax merged, as they are essentially the same thing.”

They are not the same thing if you are a retired pensioner.  Pension payments attract income tax, but are exempt from NI contributions.


 

Desperate Dan wears a tie and collar

 

The Workers' Party?

Memo from David Cameron to Lynton Crosby

I say, Lynton old boy, jolly good wheeze, what?  I mean describing us as the workers’ party takes the veritable biscuit (although it may not go down terribly well with the backwoodsmen - workers are the oiks they call upon when the moat needs cleaning).  Nevertheless, if it convinces the plebs that we have their interests at heart, all well and good.

Problem is, dear chap, that the UK is not like the land of Oz.  To suggest that it doesn’t matter who your parents are and that you can go as far as your talents and hard work will take you is patently not true.  And nobody, neither peer of the realm nor peasant in a benighted housing scheme, will believe it is.

Nor should we be suggesting that they do believe it.  There are already far too many working class toerags who have found a place in decent society.  Our actual policy - though we need not state it openly - is to pull up the drawbridge:  those of us patricians from proper breeding stock must continue to dominate, while the little people content themselves with the panem et circenses provided by the authorities.

But don’t worry about it.  This latest hoo-ha will be over soon and then you can get back to smearing the Labour Party.  So be a good fellow and stick to the plot, eh?

That explains it

Look, the Scottish rugby team does win many matches, least of all away matches.  So Saturday's glorious victory was something of a surprise, albeit an entirely welcome surprise.  But now we know that they had some help:

Scotland may have received help from an unexpected corner in its dramatic win against Italy in the Six Nations on Saturday: JK Rowling has revealed in a new story why "it is considered infra dig for wizards to support any rugby team other than Scotland".

Ever since the 19th century, writes Rowling on her website Pottermore, the worldwide wizarding community has thrown its support behind the Scottish rugby team, even though they are forbidden to take part in "Muggle" sports themselves. In a rare appearance on Twitter, Rowling also urged her nearly three million followers to "help keep this noble tradition alive by tweeting #wizards4scotlandrugbyteam before #6nations Scotland v Italy", adding: "Wizards worldwide support the Scottish rugby team. It's an old magical tradition."

So, Gerry Guscott, Andrew Cottar, and co, stick that in your pipe and smoke it!


 

Surprise, surprise

I think that we are supposed to feel sympathy with rich Londoners.  CityAM reports:

LONDON and the south east of England are forking out 50 per cent of Britain’s inheritance tax bills, fuelling fears that the levy has turned into yet another tax on the capital.

Londoners alone shell out as much inheritance tax as the north east, north west, east midlands and west midlands, Scotland, Wales and Northern Ireland put together.

London and the south east contributed half of the country’s £2.6bn in the 2010-2011 financial year, paying £1.3bn to the Treasury, according to figures revealed this morning by analysis of official tax data by Prudential.

Well, who would have thunk it?  A wealth tax hits hardest on the wealthy ...

Quote of the day

So Facebook spends $19 billion on WhatsApp.  It won't make a lot of difference to me but I liked this description of the deal:

Peter Garnry, head of equity strategy at Saxo Bank, said: “Facebook’s technology deals are often not hinged on cash flows but more on controlling a competitor that could ultimately pose a great threat to Facebook’s dominance and market value.

“In essence, it’s a paranoid defence play in the spirit of Intel that pursued the same strategy back in the old days to fend off new competitors. But only the paranoid survive right? Investors are not entirely impressed by the acquisition.”

A paranoid defence play?  Let's run that one up the flagpole and see if anyone salutes it ...


   

Just a thought

Should our future king be so pally with the Saudis? And is waving a sword around an appropriate activity?

 

Surprising facts

It is little more than a passing reference in a Guardian article about Marks & Spencer's website:

Items ordered online for collection in store, meanwhile, will be delivered from the warehouse, even if that item is already on the shop floor. Although it is more costly for M&S, the retailer's outdated IT systems do not have an accurate enough picture of stock levels in stores to cope with the demands of online shoppers. The system is due to be updated later this year.

To say the least, I find it surprising that the company is unable to keep close tabs on the levels of stock in its stores.  I would have thought that this was a fairly basic requirement of a retail operation.  Little wonder that the stores are filled with unwanted items, while best-sellers are prominent by their absence.  Lord Sieff must be birling about in his grave.

 

Sauce for the goose ...

From the BBC (here):

European Commission President Jose Manuel Barroso has said it would be "extremely difficult, if not impossible" for an independent Scotland to join the European Union.

…

In his interview with Andrew Marr, Mr Barroso said: "In [the] case [that] there is a new country, a new state, coming out of a current member state it will have to apply."

He said it was important that "accession to the European Union will have to be approved by all other member states of the European Union."

He went on: "Of course it will be extremely difficult to get the approval of all the other member states to have a new member coming from one member state."

If Scotland were to become a new state, why would not also the rest of the UK?  Splitting legal hairs, I know, but that’s what the arguments come down to.  After Scottish independence, the rest of the UK would manifestly not be the same state it was before independence.  If the Barroso doctrine is correct for Scotland, why would it not also be correct for the rest of the UK?   Thus leading to the intriguing prospect of both the former parts of the UK having to apply …

It is not of course for Barroso to decide these matters.  Nor indeed the ECJ, as nothing in the Treaties sets out what should happen in the event of the disintegration of an existing Member State.  The one aspect where Barroso is correct is that it will require to be sorted out - politically - in the Council of Member States.

The perils of making lentil soup in a foreign language

Spain being the home of Iberian jamon, it should be far from impossible to russle up the odd hambone or two.  Alas, the task has proved beyond me; so I've settled for a couple of gammon stock cubes.  Cumin and coriander were no problem, but I'm slightly worried about having used a red onion - at least the soup will be colourful.

The main difficulty was the lentils themselves.  The little shop where I used to buy the traditional orange type has closed down.  So I have been forced to use yellow lentils.  As my old boss used to say, when in need improvise.

Don't know how it will turn out, but as always let us hope for the best.

Worth a look

http://www.theguardian.com/commentisfree/cartoon/2014/feb/14/steve-bell-scotland-keeping-pound

 

The pound or groat in your pocket

Anent yesterday's post, and strictly for those obsessed with the minutiae of currency connsiderations, here is the take of Larry Elliott of The Guardian on some of the options open to a Scottish Government on the currency question:

Option one is to do nothing. Nicola Sturgeon, Scotland's deputy first minister, says the joint pledge by Osborne, Balls and Alexander amounts to bullying on the part of a campaign panicked by the narrowing of the no camp's opinion poll lead. The SNP could assume that London is bluffing, aware that the rest of the UK would suffer significant collateral damage in the event of a messy divorce that left Scotland scrabbling around for a new currency. In the short term, that is likely to be the response.

Option number two is to assume that the three main Westminster parties mean what they say and quietly agree to accept whatever terms the Treasury and the Bank of England demand. There will be a high-stakes poker game if Scotland votes yes to independence: while London does not hold all the cards, it has most of the good ones. Put simply, an independent Scotland would need a monetary union with the rest of the UK more than the rest of the UK would need a monetary union with Scotland.

Option number three would involve Scotland continuing to use the pound even if London said it couldn't. This sounds far-fetched, but the free-market Adam Smith Institute says it is both feasible and sensible. The institute's research director Sam Bowman said Panama, Ecuador and El Salvador all used the US dollar without permission, so there was no reason Scotland could not use the pound without Westminster's permission. What it would mean is that the Bank of England would not act as the lender of last resort for Scottish banks or as a guarantor for an Edinburgh government, but according to Bowman this would be no bad thing as it would deter irresponsible lending. "An independent Scotland that used the pound as its base currency without the English government's permission, with banks continuing to issue notes privately and private citizens free to choose any currency they wanted, would probably have a more stable financial system and economy than England itself".

   

They're all agin us ...

So the major UK political parties are united in their efforts to deny an independent Scotland the use of the pound sterling.  The Guardian reports:

Britain's main political parties are drawing up plans to deliver a powerful message to the Scottish people that the remainder of the UK will refuse to form a currency union with Scotland if voters endorse independence in the referendum in September.

Amid strong polling evidence that financial matters have become the decisive factor in voters' minds, George Osborne, Danny Alexander and Ed Balls are each planning to deliver an unequivocal warning that an independent Scotland could not keep the pound.

Of course, if and when Scotland were to become independent, the UK authorities could not actually prevent the pound circulating in Scotland, much as it does at present (whether or not Scotland introduced an alternative currency).  But, in such circumstances, the new Scottish government and its monetary authorities would have no influence over matters such as the level of interest rates.  Would this matter much in the short term?  There are plenty of examples of countries using foreign currencies as their principal means of exchange - such as the use of the dollar in much of central America or the use of the euro in eastern Europe.  Even now, it is still possible to have a UK bank account in euros (I have one myself).  And the larger shops in the touristy areas of London and Edinburgh will accept euros in payment for goods.  So the existence of parallel currencies is not impossible.  Indeed, whatever happens with the introduction of a separate currency and regardless of the UK authorities’ attempts to quash a sterling currency union, it is impossible to imagine a situation where the pound would not continue to circulate freely in Scotland.

Furthermore, it is difficult to believe that - if push came to shove - London politicians would actively seek to insist that Scotland should introduce a separate currency/  In such a deeply integrated UK economy, what would be the value to any of the parties in forcing cross border companies to set up parallel currency operations and introduce exchange transaction costs?

So, yes. a currency union has its own problems.  But they are not insuperable.  And perhaps the politicians might be prepared to give a little and take a little.

 

Hillary and me

It's no big deal.  The Guardian reports:

"One of the regrets I have about my public life is that I can't drive any more,"Hillary Clinton told a car dealers' conference on Monday. Among her most painful memories, you suspect this doesn't rank all that high. Yet the remark is a reminder of how wealth and power tend to separate people from normal life, and how they don't always like it. Clinton has not driven a car since 1996, on the instructions of the secret service, and it is something that her husband pines for too. "Whenever I'm on the golf course I always make them let me drive the golf cart," Bill Clinton has said.

I know the feeling.  I sold my last car in 2001 when I took a job in Brussels.  Both there and subsequently back in Edinburgh, I lived close enough to my office to walk to work.  After retirement, I never felt the need for a car, particularly in view of parking restrictions.  Besides, a car seemed like a bottomless pit into which to throw money, given depreciation, insurance and petrol costs.  Accordingly, it did not seem worthwhile to renew my driving licence when it expired.

So, unlike Hillary, I have no regrets,

On yer bike!

Some of us pedestrians would argue that far too many cyclists are already using the pavement.  Not all of us are as mobile as we used to be.  But this transport minister has no obvious qualms about putting us in danger:

Cyclists should be free to go on to a pavement to avoid hazardous stretches of road, Transport Minister Robert Goodwill has told police.

Mr Goodwill said that the police should use their discretion “where a cyclist is using the pavement alongside a dangerous section of road out of fear of the traffic”, The Daily Telegraph reported.

However he also said cyclists must “be mindful to not put pedestrians at risk”.

If cyclists want to use the pavement, let them get off their bikes and wheel them along.

Does he know what he is doing?

The Guardian reports:

George Osborne will today deliver a stark warning to Britain's European partners that the UK will leave the EU unless it embarks on whole-scale economic and political reform.

The chancellor's comments come as the Tory leadership tries to regain the initiative on Europe, after 95 MPs signed a letter calling for the dismantling of the core principles of the EU.

If I were Angie Merkel, I would be sorely tempted to reply "Here's your hat, Georgie boy.  The exit door is over there."

A Parisian fairy tale

Frankie and Val have been shacked up together for three or four years.  But Frankie has been a naughty boy, sneaking off to have a thing with Jools.  Apparently, Val never noticed when, after dinner, Frankie would take his toothbrush and disappear for the night, not re-appearing until after breakfast the next day.  But Val found out last week about Frankie and Jools and went off the deep end.  She was so stressed out (or perhaps she was mentally exhausted, or maybe just a case of the blues) that she had to go into hospital where she remains to this day.

Meanwhile Frankie is saying nuffink.  He does not deny that one of his pals took him to his nights of passion on a scooter, nor that the same pal would bring the couple croissants in the morning.  

Incidentally, Frankie is in the habit of dying his hair, if rather unconvincingly.

Where will it all end?  Probably in tears on the part of both Val and Jools.  On the other hand, they will certainly be better off without serial love-rat Frankie.

Stick or twist?

There is an economic argument going on in the background.

Some pundits cannot wait to plunge us into trouble.  Like this one:

The Bank should be putting up rates now, in a gentle and gradual manner. The money supply is growing at a reasonable rate; nominal GDP is expanding  nicely; employment is soaring; wages of some professions (including brickies and architects) are shooting up; there are already some skill shortages; and the current account deficit is huge, suggesting that aggregate demand is too large compared to supply. Monetary policy should be forward-looking: decisions today have an effect with long and variable lags, so waiting until there is a problem is always too late. Sure, the UK economy remains smaller than at peak; but that will change before the year is up. It is a mistake to look merely at the macro effect of interest rates: the impact on big aggregates such as consumer prices, output or employment. The micro effect also matters hugely – the allocation of credit, capital and labour between different companies and all the myriad decisions that make up an economy are being hugely distorted by artificially low official interest rates. The economy is normalising – monetary policy must follow suit.

On the other hand, some take what appears to me to be a more sensible line:

Chris Giles at the Financial Times has argued that the Bank of England will have to raise rates soon, because recent job growth has been accompanied by low productivity -- a situation that could produce inflation unless the bank acts. The informal Shadow Monetary Policy Committee, which meets at a free-market think tank, has been calling for an interest-rate increase since February last year, when there was no recovery in sight.

What the policy hawks fail to recognize is how damaging a premature tightening could be. As Oxford Professor Simon Wren Lewis has noted, debt-service payments still occupy a large portion of households' budgets. In the absence of an adequate increase in income, even a small increase in interest rates could trigger defaults and foreclosures on a grand scale. Why would anyone intentionally precipitate such a crisis unless coerced by the prospect of rampant inflation?

Why indeed?

SNAFU

There once was a period of time, perhaps a brief period of time, but nevertheless there was indeed a time when a Minister of the Crown took responsibility for the actions of his department whether or not he was personally involved in those actions.  In the Crichel Down affair, Sir Thomas Dugdale resigned when the Ministry of Agriculture made a mess.

It is unlikely to happen nowadays, least of all as a result of the incompetence of the Department of Work and Pensions:

Thousands of people have been wrongly identified as liable for the bedroom tax, including some who now face eviction or have been forced to move to a smaller property, as a result of an error by Department of Work and Pensions.

Housing experts believe as many as 40,000 people could be affected by the mistake. The DWP says it believes only a "small number" of tenants are affected, which it estimates number 5,000.

All could be eligible for refunds worth on average at least £640 per claimant and millions in aggregate.

The error affects working age tenants in social housing who have occupied the same home continuously since 1996. An oversight by the Department for Work and Pensions (DWP) when drafting the legislation means that the housing benefit regulations dating from 1996 were not updated when the coalition legislated for the bedroom tax.

And so, another scandal sticks to the wall, with nobody accepting responsibility.

How not to do it

The Government's development of the universal credit system will become a case study to be examined in future decades as a classic example of systems development getting deeper and deeper into the mire, while its project sponsors maintain a wilful blindness to the absence of progress.  The Guardian charts the latest inanity:

Despite a scathing NAO report in September, Duncan Smith has been insistent that the project remained on time and on budget. In December he revealed a new plan for delivering the project.

Sources indicate that tensions between government departments spiked after Duncan Smith refused to restart the embattled project afresh – a move that would have incurred massive write-off costs and political embarrassment.

Duncan Smith is understood to have insisted on a "twin track" approach – keeping current universal credit development going to prove that claimants could use the service before the 2015 election – while ordering money and time to be ploughed into a web-based system that did not rely heavily on jobcentre staff to fill in claimant benefit details.

According to the newly approved plans, hundreds of thousands of benefit claimants will then be transferred from one design of universal credit programme to the other once the digital design is ready some time after the general election.

Plan A won't work, Plan B won't work, and transferring data from Plan A to Plan B will be nightmarish.  It would be laughable if it were not so serious.


 

On the one hand ...

The size of the state pension will be maintained:

The prime minister has vowed to guarantee annual increases in the state pension until 2020, and marked them out as the only welfare spending to be exempt from the forthcoming cap if the Conservatives win the next election.

On the other hand, don't expect any cheer on other old age benefits:

David Cameron's pledge aims to reassure older voters that their payouts will continue to rise in line with inflation despite a squeeze on other benefits such as winter fuel payments, TV licences, and free bus passes and prescriptions.

Somehow, I don't believe that pensioners will be terribly pleased ...

In memory of John Fortune

It's far from cheap to feed your habit

Here are the Colorado prices for the newly legalised sale of pot:

Below are some of the options provided by licensed sellers (all prices are subject to an additional 21% sales tax).

• Pre-rolled joints, $10 each. A typical joint contains less than 1 gramme of marijuana.

• 1 oz Indica or Sativa buds: “best”, $179; “better”, $169; “good”, $159.

• Glass pipes: $15-$30.

• Marijuana-infused pomegranate “elixir” drink (75mg): $14.

• Marijuana spearmint dew drops (100mg): $20.

• Marijuana truffles (50mg): $10.

• Marijuana chai mints (100mg): $11.

• Marijuana massage oil (100mg): $14

• Marijuana pain relief lotion (100mg): $18.

• Marijuana bath soak (100mg): $18.

    (And no, you cannot get them by mail order.)

 

Power corrupts

I do not know if the Labour Party is correct when it argues that the energy companies are over-charging consumers.  The miasma engendered by claim and counter-claim makes it difficult to see what is going on,  The Guardian reports:

Households may have paid £150 over the odds for their electricity over the past three years because energy companies bought their power for almost £4bn more than the average market rate, Labour has claimed.

In a new analysis of official figures, the Labour party, which has pledged to freeze prices for 20 months if it wins the general election in 2015, said the big six energy suppliers appear either to be inflating their prices to make extra profits for their own power plants, or striking very expensive deals to the detriment of consumers.

Caroline Flint, the shadow energy secretary, said she could demonstrate that the energy giants – which supply 98% of households in Britain – have been buying electricity at a far higher price than they could get on the open market. This amounts to about £50 a year per household for the last three years for which data is available, she said.

But at least the Labour Party is questioning the practice of the energy companies.  Does anyone believe that the Government would have done anything if Miliband had not raised the matter of a price freeze last autumn?  And would it be unfair to ask what Ofgem, the supposed regulator, has been doing?