Irresponsible mortgages (3 of 3): Reckless lending is a boon for buy-to-let

Reckless lending got us all into this mess, and can get some of us out of it

Read More

Fairtrade - the good reason, and the real reason

“A man always has two reasons for doing anything: a good reason and the real reason.” 

J. P. Morgan (1837-1913), banker

Fairtrade products cost more. But what happens to that extra you pay to be Fair? The supermarkets want you to think it goes like this:

You don’t have to be a bleeding heart to believe in fair trade. Fair trade isn’t in itself just about charitable giving. Of course, charity can be an element in any decision. An OFGEM survey on why people swapped energy supplier showed 9% of switchers over 65 years old did so in part because they wanted to do the salesman a favour. Even the Fairtrade Foundation states that its mission is not just about charity – it is about being Fair. But what does “Fair” mean? Does it mean it pays enough for a farmer to bring up and educate his family in good health regardless of the value the market puts on his produce? Or does it mean ensuring the farmer doesn’t get ripped-off by local agents, wholesalers and supermarkets? All that debate is important and is complicated, but not central to the subject of getting more cash to the farmers. For ordinary Fairtrade buying Britons, it is principally about getting more money to the farmers for whatever reason, just as Free-Range is about getting better conditions for chickens. If that motivates you, then you should be pretty grumpy about what is actually going on. Even if you don’t care much about our rural brethren, be they animal or vegetable, conscience driven products are easing food prices up in the UK marketplace. With about half of all eggs sold being free-range, barn or organically raised, and a fifth of all coffee and bananas being Fairtrade certified you are paying extra whatever the state of your conscience. When you know where all the extra pennies and pounds you are paying go to, regardless of your “Fair” sympathies, then you may sit less easily of a morning in your cotton pyjamas, downing your scrambled eggs and coffee whatever their origin.

Take the coffee industry as an example. Fairtrade promises farmers a minimum price for their coffee. When the price falls beneath this level, farmers on the Fairtrade scheme get paid the ‘Fairtrade Minimum Price’. When the market price is higher, they get paid that higher price. The pact with the consumer is that you pay more not for the flavour, the quantity, the quality, nor the environment, but you pay more for the farmer. And many consumers are willing to sign up to this pact, as can be seen from the supermarket shelf space allocated to Fairtrade Coffee. Going from a few token bottles just a few years ago, Fairtrade now fills up to half the instant coffee shelf space in some supermarkets. In February 2011, the price of Tesco’s own brand 100g bottles of instant coffee were £1.69 for “Gold” and £2.73 for “Fair Trade”. A difference of £1.04.

So if that extra pound is going to the farmer, then it’s money well spent. Isn’t it?

Read More

Irresponsible mortgages (2 of 3): buy-to-let is the nation's great hope

KJ discovers that responsible lending is dependent on who your tenants are

Read More

Irresponsible mortgages (1 of 3): No let up on buy-to-let

KJ sees a mortgage adviser about his new career

Read More

Larry the cat isn't pussyfooting around

Will Downing Street's new appointment subvert the Tories from the inside?

Read More

“A fat policeman chasing a speeding Ferrari” – Her Majesty’s Taxmen versus corporate tax departments

As it gets towards 4pm, when there is nothing but crumbs left on the biscuit plate, a civil servant’s thoughts turn lightly to the commute home. This is the moment the highly compensated teams of private sector lawyers, accountants and bankers focus laser-like on their incentives and try on their wheeze of the day. Hopeful that Her Majesty's tax officials have no desire to enter into another detailed debate, potentially threatening their chances of getting to the 17.25 train out of Victoria Station early enough to get a seat. Hopeful that in their haste to finish the day's session without appearing to be slackers, the taxmen will pretend to understand things they don't entirely.

Lord Oakeshott, who in February 2011 resigned as the Liberal Democrat Treasury Spokesman, has the insight on this. An insight that cost him his job.  The Coalition Government said that Oakeshott’s departure had been a mutual decision.  Perhaps something along the lines of:

Oakeshott: “This makes me sick to the stomach. I resign!”

Treasury Munchkin: “Good riddance!”

While that exchange is just a guess, the following quotes from Oakeshott are minuted and publicly available. Made in an interview with the BBC’s File on Four, Oakeshott commented:

“HMRC are miles behind the curve on this. It’s like a fat policeman chasing a speeding Ferrari..”

In reference to documents leaked from Barclays Bank, detailing some of the bank’s tax avoidance schemes, Oakeshott commented during a session of the House of Lords:

“These, my Lords, are documents which describe deals worth billions of pounds set up by the bank in order to make money out of depriving the UK and foreign exchequers of revenue. Barclays would not last for one minute without the British taxpayer standing behind them.  Yet they’re holding out one hand for taxpayers’ money while they picking taxpayers’ pockets with tax avoidance activities on the other.”

Read More

I'm with stupid

In a precarious world for consumers there's always a 1 in 14m chance of salvation

Read More

UK immigration for the non-EU super rich

Chris, Fee and KJ on how fast the despots fleeing their home countries in the Middle East could settle in the UK

Read More

Power to the Egyptian people

Chris, Fee and KJ salute the strength of Egypt's ordinary citizens

Read More

Graphs at a glance: MPs' salary and allowances and how they raced ahead of inflation

Regardless of their paid hobbies (i.e. all their other paid jobs), which suggest they have more free time than many of them claim, MP’s basic salaries have grown vigorously over the decades. The strategy seems to have been to take the pain, or more accurately the gain, in occasional bucketloads. For most years, salaries go up at around inflation – sometimes a little more, sometimes a little less.  But every now and then a major payrise is slipped through. And there is a certain correlation with changes of government – perhaps to cement members’ loyalty, and perhaps to give the losers’ generous final salary pensions a little filip. 

• In 1979, when the Labour government fell, MP’s salaries went up by 37% when the retail price index (RPI) measure of inflation was 13.4%.
• In 1996, the year before the fall of the Tory government, MP’s salaries went up by 29.6% when the RPI was 2.4%

Read More

Parliamentary Expenses - Westminster Gravy Train's return journey

Having been knocked back by public outrage over many of their brethren’s fraudulent expense claims over the years, Members of Parliament have just come up with a new tactic to justify cutting the strings of the public purse.  Their spokesman has stated that they should be more liberally provided for to help the poor, those who have to care for relatives, and to fight child neglect. 

"It would be a tragedy if the implementation of an expenses scheme were to have the effect of inadvertently and unnecessarily limiting access to the role of MP for those with young families, caring responsibilities or other challenging personal circumstances."

They argue that to encourage all these people in these "challenging personal circumstances" to become MPs, all MPs' expenses regardless of circumstances should be more liberally forked out.

While Britain has seen shortages in teachers, nurses, policemen, scientists and engineers, never in the recorded history of these islands has there been a shortage of politicians. However, in a profession where supply is wildly greater than demand, as can be seen by the unseemly scrabble first to get selected by a constituency party and then to get voted in by the electorate, MPs have over the last two decades persuaded us that they deserve more money. Not that they wouldn’t do what they do without it, because they do what they do because of their public spirit, but they just plainly and simply deserve the cash. And that it would be unseemly, and would be a national embarrassment on the international stage, if the rulers of the United Kingdom had to live a less than well padded lifestyle.

The objections to all this are not simply based on a certain queasiness at the MPs helping themselves more and more liberally to public funds, but on the more basic reason of what MPs are for. MPs arguing for better pay, and their sympathisers, are forgetting that MPs are not our rulers but are our representatives. 

There was a time when MPs were men of substance, who like a country squire would look down on the populace and decide what is best for them. But those were men emerging from centuries of feudal rule. Their ‘substance’ was not earned by plying their parliamentary trade in Westminster, though in many cases it would have been augmented there. Today, it is not the MPs purpose to sit at the high table as one of the masters looking down at the masses. It is his purpose to sit at the high table representing the masses. The masters and the masses treat him with respect because of what is in his vote bank, not his bank account. The MP shouldn't be there to merely sympathise with the interests of his constituents, but to have the same interests as the voters who sent him there. The impact of Parliament’s decisions should affect the MPs in the same way as it does the population.

Which, of course, means that in financial terms some MPs should live like nurses, some like GPs, and a few like CEOs. But if all MPs get a standard salary, how would this income disparity arise? Well, MPs are absolutely allowed to supplement their parliamentary incomes, and by their talents earn extra money to make that difference. The MPs register of interests shows their remunerated positions.

Read More

Eton, prison and parliament

Chris, Fee and KJ mull over the real reason why MPs have been convicted of expenses fraud

Read More

Keeping banks profitable

KJ and Fee ponder the best way for the government to recoup the money used to bail out the banks

Read More

The deficits of the coalition

The deficit reduction is not working and plan B .... what plan B?

Read More

From tobacco to banks to television - don't blame us, its all been a horrible misunderstanding.

People can fail to understand anything if they are paid enough to not understand it.

For decades the bosses of the tobacco industry denied that smoking harmed your health. They would roll up for British parliamentary and US Congressional committees, look the nation straight in the eye and claim that the link between smoking and lung cancer was unproved. The nation would pour scorn over these men for their evident stupidity. The chief tobacco pushers, careless of their fellow citizens' opinion of them, would pocket their generous pay and allowances, and smugly go shopping under cover of this smog of their apparent ignorance.

The tobacco industry managed to fail to understand a tsunami of evidence building since the 1950's. In 1956 the American Cancer Society stated

"The sum total of scientific evidence establishes beyond reasonable doubt that cigarette smoking is a causative factor in the rapidly increasing incidence of human epidermoid carcinoma of the lung and that smoking of tobacco, particularly in the form of cigarettes, is an important health hazard."

35 years later a spokeswoman for British American Tobacco showed that they had successfully managed to fail to understand this, claiming

Smoking has not been proven to be a cause of disease . . . smoking is merely a `risk marker' for diseases like lung cancer, in the same way that driving licences are `risk markers' for car accidents

Read More