This week saw a sudden change in attitude to UK and US indebtedness.

Midweek, UK investors were happy to lend to the UK government, bidding healthily for an early tranche of the massive 220 Billion pounds it needs to raise this financial year alone.

Then came Standard & Poors which said it had the UK on creditwatch, and was minded to cut the UK's credit rating (it merely lowered its outlook, no the actual rating).

UK and US markets sold of sharply. Why the sudden loss of confidence?


The FT quotes a Deutsche Bank analyst note, saying there's a risk that people who buy debt will find their asset falls in value when the UK finds it cannot actually raise/sell the full 220 Billion.

If the UK cannot refinance its borrowings, then what?

"The best possible (actually least bad) solution for the economy is for inflation to come back quickly enough for the huge Western World debt burdens to be eroded. However for this to succeed the bond market perhaps needs to be totally fooled. If it gets wind of higher inflation then we may be back to square one as funding problems arise or panic ensues."


"We think that it is inevitable that inflation eventually comes back in a fiat currency world but that it is going to be much harder to create than the market thinks. But perception is often more important than reality so we need to be aware of that."

I've consistently argued inflation is the threat and deflation is a smokescreen. Liam Halligan is one of the few others who state this explicitly.

This week, the markets twitched in their sleep. They didn't wake up. For now the markets are firmly asleep.



There’s a lot riding on the domestic consumer. Recent analysis suggests it wasn’t exports that helped the Asian countries recover from the 1998 crisis but their own consumers. In mid 2009, we’re looking at a near global crisis. It’s even less likely that countries can sit back and wait for exports to pick up.

But domestic consumers are already carrying the banks. The trillion-dollar-plus bailouts (acknowledged or not) in the US, UK and the Euro zone will result in higher taxes. Bailouts in countries like Japan, China and Russia are being financed from government reserves.

Western consumers facing higher tax bills while falling asset prices, mainly houses, have hit their wealth. They’ll be hoping for pay rises so what’s happening in the UK, for example?

Newspapers don’t write about wages. They write about pay rises. It’s easier. And it's less of a taboo than researching reality.


Moreover, when I’ve seen salary surveys, I’ve been disappointed. Maybe I'm a loser. Maybe it’s because surveys and newspapers use the mean, not the median salary.

The mean, the middle number, is easier to calculate. The median is the point at which half the salaries will be above and half below. It’s more honest. You know that half the population are below the average figure.

From National Statistics and the blog Economics Help, you’ll find the median gross weekly earnings in the UK are £479 per week, ( £24,908 per year) before tax.
So who earns less than the median salary? The median for Office Administrators is £15,210, Personal Administrators, £22,069 and Retail Store Managers, £21,106, according to PayScale.


Sometimes we have to use the mean as average, because there’s no other way to find the information.

Average BBC wages, dividing the £969m wage bill by 23,000 are £42,130. According to BBC watchers, add pension contributions and that rises to £52,000.

But a middle-ranking BBC presenter recently blurted in an argument with a UK parliamentarian that she’s paid £92,000 a year. The MP, incidentally, earns £64,766 plus expenses but that’s another story.

The most recent salary figures were fixed in 2007, 2008 before the crisis took hold. So what is happening now?

1/3 of employers surveyed are freezing wages, including Jaguar Land Rover, JCB, BT.
Wage freezes and cuts will intensify social stratification and therefore impact markets like property or, at least, who gets to buy in the property market.
First you have the public sector pushing ahead with pay rises: NHS workers, 2.4%, MPs, 2.3%


Then you have a split within the public sector as the chiefs boost their salaries by up to 4 times the increase they pay to the peons:

Then you have sectoral splits within industry: freezes in engineering and industrial raw materials and inputs producers, increases for food manufacturing, retail and drugs. Toyota will actually cut pay in the UK by 10%.

As for the jobs market, keep your job if you can.

UK unemployment benefit is well below international levels. The Guardian quotes the example of a £30,000 a year marketing man whose spouse works. If he were French, Finish, German or Dutch, he would get about 50% of his pay until he finds a new job. In Britain, he’ll get £64.30 and that stops after six months. And it’s not as if the UK is a low-tax country !

New jobs will be harder to find. Law firms, accountants and manufacturers are not expecting any increase in graduate recruitment this year.

That leaves the public sector to take up the slack. Are banks part of the public sector now, by the way?

National Statistics is the UK data gathering agency which was rebranded from the Office for National Statistics a couple of years ago in a row over, well, statistics.

Here’s its latest report: Average earnings including bonuses fell by 0.4 per cent in the year to March 2009, down from the February rate of 0.2. Average earnings excluding bonuses, or regular pay, rose by 3.0 per cent in the year to March 2009, down from the February rate of 3.2.

In the year to March pay growth (including bonuses) in the private sector stood at -1.2 per cent compared with 3.6 per cent for the public sector. Excluding bonus payments, growth in the private sector stood at 2.9 per cent compared with 3.6 per cent for the public sector.

Consultants PriceWaterhouseCoopers are not constrained by the need to please their political masters. They’ve reported that the jump in corporate profits since the 1990s was not matched, in the UK, by rising wages.

“Pressures on real wages have also remained remarkably muted…Annual real earnings growth has averaged just 1.5% since 1995. This is considerably lower than the 4.5% annual rate during the first half of the 1970s, when unemployment was at similarly low levels to today, and just over half the 2.9% average annual rate during 1984-1989, when the UK last experienced a period of rapid and sustained growth in employment."

That's PWC's UK economic outlook from 2005. Interestingly, the 2009 outlook contains no such analysis of wages.



US banks say they want to repay tens of billions of dollars this year, returning funds to the government that bailed them out.

Stock markets were rising until the latest reality check in the form of rising US jobless claims and a statement of the obvious from former Federal Reserve chief Alan Greenspan that the financial crisis isn’t over.

Ignoring the real world, the banks plough on in their eagerness to free themselves of government controls on salaries.


However, the banks will never repay the UK government for the support they've received, just as the US banks are conducting a PR stunt in their supposed eagerness to repay the US Treasury.

The sums they propose to repay barely register in terms of the total bailout fraud.

The banks do not propose to repay the billions they received through the rescue of their counterparties (much of the three successive bailouts of AIG went directly to the banks, in the case of Goldman Sucks, to the tune of $30 Billion in one wadge).

The UK banks cannot put a value on the government loan guarantees that halted the run on the banks except that it saved their a*ses.

So don't tell me HMG will get the money back with profit!

Looking at the economy, after all the bailout money, using taxpayers’ money as a war chest, the banks propose to go on an acquisition spree.


The banks, not the hedge funds, were the biggest shorters of banking stock, as the Wall Street Journal discovered when it looked into the trades.

And the banks are about to go on a carcass feast, buying up their corpsed rivals.

But the reality is that bank lending to companies and consumers is still weak. In the UK, figures show it fell from March to April.

Companies have been paying down debt. Households have barely begun.

The trade routes remain frozen. Ships lie like logs around the Greek isles. Exporters like Germany and Japan are seeing double-digit falls in sales, year on year.

Producers, from car and plane makers to consumer goods, are mothballing factories.

So only a stock picker, counting his pennies, could see something positive in all this. He should look up from his ledger, adjust the glasses on the end of his nose, open the window and sniff the air.


The UK’s massively indebted government took a body blow from the financiers, one influential ratings agency signaling its fear that the UK is borrowing more than it can afford.

"Sell Sloanes," cried the FT, referring to the well-heeled residents of London's poshest borough. Kensington and Chelsea risks losing its top-rated borrower status, along with the UK.

The ratings agency Standard and Poors lowered its outlook on the UK from stable to negative.

Specifically, S&P has concerns about how quickly the UK can repair its balance sheet - given the loss of tax revenues and the failure to cut spending.


The UK Treasury says it's already thought of that.

"The Budget set out a clear plan to halve the deficit in five years. That judgement was based on a deliberately cautious view of the public finances," the Treasury told Reuters.

But just a day ago UK finance minister Darling Alistair was saying the recession would be over by the year's end. In place of bowler-hatted caution, the minister is getting high on hogmanay.


Darling is one half of the Scottish double act in 10 and 11 Downing Street. Together they are steering the UK towards the rocks. Economist George Magnus of UBS in the FT says they're not alone. The world's bankers and politicians are trying to accelerate their economies in a sea afloat with icebergs:

* The structural credit system dysfunction in advanced economies hasn’t been fixed yet.
* The great debt restructuring, especially of mortgages, has barely begun.
* Optimism about emerging markets has to be tempered to the extent that they rely on exports to western consumers, whose spending and borrowing will remain subdued.

The UK government plans to borrow 220 Billion pounds this financial year. And the need to hold a general election next year has clearly influenced the Treasury not to cut public spending or boost taxes by enough to plug the deficit.


The ratings warning spooked the markets. Yields on the 10-year gilt rose as UK bonds sold off, touching 4.5% before falling back to 3.6%.

The spread over German bunds widened to more than 20 basis points. Until last month, bunds yielded more than gilts. You can see the potential for a nasty rise in interest rates, even without higher inflation.


Like fund managers, the UK treasury will be hoping to do as badly as everybody else.

If the UK sticks out like a sore thumb, the markets will twist that thumb with a vengeance.

Speaking to Bloomberg, Gary Jenkins, head of credit research at Evolution Securities, in London, said: “The key from a market perspective is whether this is a stand-alone U.K. problem or whether it is the start of a trend where the agencies start to review the ratings of various sovereigns across the developed world. If this is really just a case of the U.K. deteriorating as a credit then it could have a significant impact.”

Bloomberg sums up Britain's position, using IMF data:

The U.K.’s debt load next year will be 66.9 percent of GDP, exceeding Canada’s 29.1 percent and Germany’s 58.1 percent. The U.S. will be at 70.4 percent, and the 16-nation euro area at 69 percent.


It is almost too soon to give an unemotional response to the revelations of routine sex abuse by appointees, officers, members and employees of the Catholic church in Ireland.

The Irish Times covers the story honourably, while the Independent seems to minimise the story.

Let's remember that the problem is not Ireland's. It is the church and many institutions besides.


Paedophilia runs to the highest levels of society. Five hundred years after the Spanish occupation of the Netherlands, it was the descendent of the Spanish governor, the Duke of Alba, who was fiddling with children in what his family must have considered their hunting grounds.

In Britain, the Chairman of the Board of Deputies of British Jews, an MP now Lord Greville Janner, was named by a boy at a children's home in Leicestershire as a frequent, abusing visitor. The press reported Janner's name, accidentally.

I remembered his name because one of my schoolboy contemporaries, on a trip to the House of Commons in 1977, disappeared for five hours in the company of Mr Janner, who entertained the child in the Commons' tea room. I thought at the time this to be a strange, homosexual oddity. The brief naming of Janner, later expunged from the press, confirmed my suspicions.

Read more here:

The Irish investigation into nationwide, endemic, high-level, child abuse took 10 years to result in a published report. The cost, 70 Million euro. The establishment, having refused to investigate the case for so long, decided to profit from it. Corruption piled upon abuse.

As one comment to the London Times put it, "Sex Abuse in the catholic church is a misnomer. What is and has been for centuries is "Systemic Homosexual Grooming" shades of the roots of Catholic theology via Plato, Aristotle, Greek mainly {Spartan} philosophy. The church is rotting from the inside out. That is why the coverup term pedophilia, when in fact it is pederasty and ephobilia."


Other commenters point out that Malta is another outpost of Catholic sex abuse. I know the Christian Brothers were violent and active in the United States.

That country has other scandals. 31 unmarked graves at a reform school and no prosecutions?

Child abuse is a merely a decadent pleasure that runs to the top of our societies. It is time for discussion, which is why I devote a small corner of my insignificant site to the topic.

God bless the victims.


Stress Test Humbles Leading Nations

After the US stress test of its banking sector, academics have done a stress test of countries, to see who is best placed to rebound from the global economic crisis.

Researchers at IMD business school in Lausanne, Switzerland, warn that they collected much of the data in 2008, before the downturn kicked in - so the outlook for some countries may be even worse.


The full impact of the global crisis will only be apparent at the end of 2009 or early 2010, the researchers say.

The IMD stress test survey is linked to a regular competitiveness survey - but this time the Lausanne business school wanted to look at ability to recover from the crisis.

The survey favours smaller countries as they tend to rebound first from global crises. That's why Denmark finds itself in first place.

What's interesting is the tensions between the two tests - competitiveness and stress test. The USA comes first in competitiveness but only 28th in the stress test.


"The UK (34th) is in a disquieting position; just as is France (44th), Italy (47th) and Spain (50th), stressing how much the recovery in these countries may be hampered by structural rigidities. Finally, Russia in 51st position may not have had enough years of economic growth to consolidate the structure of its economy and to create the necessary buffer to cope with a crisis of this magnitude.

“In short, the Stress Test shows that smaller nations, which are export-oriented, resilient and with stable socio-political environments are better equipped to benefit immediately from the recovery,” concluded Professor Garelli. “However, only the good performance of the very large exporters such as the US, Germany, China or Japan will send a credible message to the world that the worst is over – a change that everybody will be able to believe in.”


The stress test uses 20 criteria, based on forecasts. The World Competitiveness ranking is a deeper, long running survey, based on 329 criteria, two-thirds of them data, while the rest is based on surveys of almost 4,000 managers worldwide.

The results are sifted four ways: economic forecasts; attitudes to government and business; business conditions; social conditions.

This is my extraction from the two surveys

Competitiveness Test, Stress Test
USA 1 28
Germany 13 24
Ireland 19 25
Britain 21 34
France 28 44
Russia 49 51

The survey is worthy because it focuses on the views of business, while much of what passes for common knowledge is distorted by the views of bankers, through the influence they wield on politicians and the press.

BBC and "Freedom Fighters"

Gullible journalists, including the BBC's, have for years swallowed the "liberation tigers of Tamil eelam" story. Can you imagine the IRA, even if it changed its name to the ineluctebal rebel angels, being quoted as such?

The mere use of the "tigers" name indicated a moronic misguided love of freedom fighters.

Sri Lanka doesn't get much coverage on the Beeb. It's easier to point to Palestine and what the BBC called "the journalism of attachment" - the idea that journalists didn't have to be objective, they just had to be appalled.

This spawned the fawning, biased reports of the Sacred Bleeding Heart of Saint Orla Guerin.

But back to Sri Lanka. Does the BBC care to report that there is a big place in India called Tamil Nadu where people speak Tamil? It's a homeland. They don't actually need a chunk of Sri Lanka which happens to be someone else's country where Tamils have historically sought work.

Any BBC journalists, anonymous or not, wish to debate why a group as intrusive as the Albanians moving into Kosovo should be treated differently from Turks moving into Cyprus?

It's not just about standards. It's about the quality of intellect of the people the BBC hires as journalists.



The US political radio host Michael (Weiner) Savage is banned by the accident-prone UK Interior Minister Jacqui Smith.

Listen to what Michael Wiener-Savage says before you accept her dictat.

Savage is controversial but not unique. Venezuela's Hugo Chavez having a bit of an issue with Jews - just Google it.

President Barak Obama calling for a civilian national security force, a group of brown shirts, with equal powers to the military.

Clearly, there is a New World Order in which someone who says what governments in the UK and the US don't want to hear, is placed on a watch list.

Listen to Michael Savage and make up your own mind.
I am not prepared to go away, and simply say that Jacqui Smith is a bit silly. She is supposed to be the Interior Minister of a country which has a seat on the UN Security Council, Nato, the European Commission etc, etc.

Jacqui Smith may be a poodle but the British security aparatus knows what is it trying to achieve. The British civil service has instigated 60 measures, made law through 27 Acts of Parliament, in just 10 years, each of which repeals or limits a fundamental English freedom.

We are told this doesn't matter because out leaders are careful, intelligent, would never misuse these powers.

And then Jacqui Smith, orders the arrest of a British Member of Parliament, a Deputy, for challenging her lies, when it turns out that the UK government has no idea how many illegal immigrants are working in the country...

... and lumps a straight-talking radio journalist alongside mass murderers.. yet leaves the leader of North Korea or Venezuela free to come and go as they please.

I put my hand up and doubt the sanity and/or intelligence of a key member of the British government. Do I get arrested for that?

I don't want an ignorant mediocrity representing my country or running a bank.. though I know I won't win this one.

So just listen to the voice that the UK government wants to ban, and remember that they also wanted to ban George Orwell for speaking truth unto nations.. something the BBC does not.



The UK government's minister for children, Edward Balls, announces a £58 Million plan to reform social services.

It's chickenfeed in terms of the cash this government throws around (it spent similar sums renewing the disabled parking badge). It's also throwing yet more money at a social work department that failed.

Failed because it's 20 years since social services moved away from the old model of hiring experienced middle-agers, and replaced them with socio-students, cutting salaries in the process.

Probation officers and social workers used to comprise men and women who'd had their own kids, ex services types, those looking for a second career in which to use their people skill.

But such people were a threat to the aparatchiks, who hounded them out of the system. My own close relatives have experience of this, and it happens much more in the public sector than the more supposedly free-wheeling private sector.

Now Balls' £58 million will not go on social workers - beyond 200 sponsored university places - but it will be a plaything for the aparatchiks who will be reinventing their taskforces and their electronic case management systems.

At least they recognised the system needs to be "less prescriptive and offer more scope for professional social workers to use their judgement".

In other words a box-ticking process cannot replace men and women with life experience.

But the robot managers aren't about to give up! Even though they admit it has failed, I am sure they will spend a good chunk of the £58 million "improving" their multiple choice system. I can't see the modern manager giving up on box-ticking systems, can you?

This is a clear example of what's gone on throughout the public sector and why it should be cut.

This is what he had the balls to say: "Our ambition is for social work to be a high-quality profession, with the confidence and support of the public, but to do this we must give social workers the training and support they need to develop."

The commission under Lord Laming that reviewed the failures of social workers who overlooked the terminal threat to Baby Peter, tortured to death in north London in 2007, suggested a new postgraduate qualification in child protection.

Those skills are out there in experienced middle-aged, career-changers. Another qualification in Britain's devalued educational system will change nothing.

And the throw-money-at-it approach to government just goest to show that we are fools to expect cuts in public sector spending.



Prosecutors in the UK's tax ministry are getting bonuses for seizing the assets of defendants - even before they're found guilty.

Criminal Law Week suggests the behaviour of UK Revenue & Customs borders on corruption, as officials profit from "a revenue-raising racket".

More after my article which dates from May 2009.


In Spanish, poca means a little. In Britain, it can mean the lot, because it stands for the Proceeds of Crimes Act.

Under this act, police do not have to prove that you committed a crime.

They simply ask you to prove that you earned the money legitimately. If you can't prove it, they can take it.

In the following case, the man may or may not be a crook. The fact is, they didn't have to prove it either way.

As Maurice Saatchi, Margaret Thatcher's ad man, wrote on Monday, Britons stand by idly as their rights are whittled away, content with the phrase, "if you're not guilty, you've got nothing to hide".

A man has been ordered to forfeit more than £67,000 because he could not prove where the money came from....

Adept con Phil Davies of something the BBC identifies merely as "the division" said:

"Specific criminal conduct need not be proved.

"It is enough to show that the cash is probably related to one of a number of kinds of activity, any one of which would have been unlawful, for example, cheating the revenue, trading in counterfeit goods, drug supply or falsely claiming state benefits."

"The public can really help us by passing on any information about people who may be making a living off ill-gotten gains.

"Generally, these people are clearly seen to spend more than their apparent disposable income. This can include owning properties, expensive cars or having a social lifestyle beyond their means."

Update: October 2009.
From The Times:

Police forces, other law enforcement agencies, prosecutors, the courts and the Home Office itself all stand to benefit financially from convictions which lead to confiscation orders.

In one recent case, 16 people convicted in a £3.2 million VAT fraud conspiracy were each ordered to pay back £3.2 million — a total of £51 million.

In another case a pharmacist who had overclaimed £464 in VAT was subjected to a confiscation order of more than £212,000.

Criminal Law Week, the respected legal journal, has commented on “extravagant claims” for confiscation which “leave the impression that some prosecuting authorities have abandoned any pretence to fulfil a ‘minister of justice’ role in favour of taking advantage of what they appear to see as a revenue-raising racket”.

The journal has described as “a scandal” the link between the funding of law enforcement agencies and the amounts of money they can confiscate. It added: “Targets ... far from improving the quality of criminal justice, merely serve to corrupt the system.”

The RCPO disclosed to The Times under freedom of information legislation that in 2008-09 it paid almost £44,000 in bonuses to its senior staff who met “agreed, written objectives”. It added: “In one instance these objectives relate to confiscation of criminal assets.”