The End of Free Banking (Again)?

The vague and lengthy declaration that retail and investment banks need to be split at some point in the distant future is going to be announced tomorrow. Desperate cries of horror from the banking lobby will follow as they always do. The most usual horror story designed to bring fear to the masses is the idea that free banking would become a thing of the past.

It's a good threat but one that will only be pulled out as a very last resort. Oddly enough, its coming about would be a sign of victory for the public. Banking most profitable asset is their customer's inertia; The infinite number of "you're more likely to change ... than your bank." There's a reason for that and that's not seeing the bank suck money out of your account. Should they start making it visible, customers will notice and all the efforts banks have been forced to make to smooth the process of transferring current account supplier will begin to haunt them.

The Electoral Smell of 2007

There's something about the Conservatives recent showing in the polls which makes me think back to 2007 and wonder whether they are thinking whether it's the best time they are going to get to call an election considering the ever diminishing forecasts for the economy.

David Cameron's use of the veto seems to have persuaded the voters that he will stand up for our interests in Europe. They aren't used to that and have been calling for it for a long time. It's never been the most important issue so it's questionable how long this bounce for the Tories will last. In their favour it may bring back the UKIP supporters into the fold.

The Liberal Democrats look to be a shell of a party with their integrity shattered due to not voting against student fees rises. The taint still shows, over a year after the issue passed, indicating it won't go away this parliament and will weigh heavily on them in the next election.

Labour are suffering a real crisis of leadership. Ed Milliband was always a risky prospect. He has 3 factors affecting how he is perceived that he will not ever shift:

• The support of the unions secured his victory
• As a key member of Gordon Brown's team he is implicated with the creation of the economic mess
• The "betrayal" of his brother David

Top that all off with having Ed Balls as his No.2 then you have an unelectable party whose leadership had far too much dealings with the problems in the economy. Now that the most prime ministerial candidate as next leader is invalidated, David Milliband being second best the first time around leaves too many open goals, there is a struggle to find a credible replacement.
If the best they can come up with is Yvette Cooper, her 18 months as Chief Secretary to the Treasury and simply referring to her as Mrs Balls introduces the same problem.

Still, it won't happen yet I feel. The all important constituency boundary changes is the vital advantage that the Conservatives need to remove doubt from the result. If the Labour leadership remains unchanged then October 2013 is the time to look for.

The Distractions of Europe

There are some big moving pieces shaping life and thought in Britain today. Prime Minister David Cameron taking the nuclear option to the EU. The governments junior coalition partners poor reaction to it. Though no-one is surprised the Conservatives and Liberal Democrats disagree on Europe. The question is, as the gravitational mass of the Euro crisis increases, can the coalition sideline the issue and still work together?

Some are amazed that Cameron used the veto. It's a threat, you're not really supposed to use it. He couldn't sign a new treaty without an uncomfortable referendum and leaving a large chunk of his backbenchers furious. The public is mostly favourable that, finally, a British leader is willing to stand up to Europe. The protection of the City of London didn't seem the issue to me and if it was I am shocked that we'd otherwise so easily had over sovereignty regarding the national budget.

The EU summit, where the weapon was wielded, went on to produce another plan to fix the eurozone crisis. Sadly, it is there to fix the next crisis and does little if nothing to address the current problems. The politicians have been shielded by the central bankers move on November 30th to bring extra US dollar liquidity into the transatlantic financial system. It's only today that the effect has worn off and the markets have taken a big tumble again.

And as much fun as the geopolitics are, there is outright refusal to address the real problem. The financial system. Richard Koo rightly points out the absurdity of having near zero interest rates and instead of borrowing cheaply, paying down debt is the order of the day. We work to a fractional reserve banking system. That means money paid back is money destroyed. It has to be replaced with fresh borrowing to keep us treading water. And in order to grow it has to be replaced with greater borrowing than what is repaid.

We can't pay down debt and have growth unless existing wealth is put to work. If we're not going to fix this unoptimised system and won't accept a write down on debt then I only see one path to generating the growth that'll turn the economy around. The existing wealth of the elite and cash rich corporations needs to be put to use on new/small enterprise, where innovation will be most significant and the next major companies will be born from.

Teach our kids to code | John Graham-Cumming

Teach our kids to code | John Graham-Cumming

Agree with John's sentiment entirely.

Program or be Programmed

So goes the title of Douglas Rushkoff's book. Unless I missed a turn somewhere, the direction our world is going suggests programming will be a bigger part of our children's lives than it is our own. Jim Anning in his post Kids and Programming argues that we need change.

I left state schooling at the end last century but very little strikes me that things there have progressed as much as they should have. ICT wasn't a real subject them. Yes, the token room and single teacher but there was little more in it than creating basic files and organising folders. In fact the most advanced stuff was the 4 PCs in the graphics room which had Macromedia Fireworks on it.

In the same way that the British struggle with foreign languages it's all too easy to see programming languages following that path.

If we have to start somewhere then if Microsoft Office holds the programs of choice then at least the kids should be taught VBA which enhances it.

Biggest Strikes Since 1926 - Why?

The unions have got themselves a bit carried away in their rhetoric of late. Talking up strike action to rival the General Strike of 1926 only prompts people like me to look up how successful that particular campaign was.

What was it about?
Miners workers pay and conditions.

What was the problem?
They were going to get paid less and work more.

Why?
The mining industry in this country was dying on its arse. The easy rich seams were depleted long ago. Extracting the remaining sources was getting increasingly expensive and foreign supplies were becoming ever cheaper.

Why did the strike get so big?
Largely out of sympathy strikes. Subsequently made illegal.

What was the result?
Take a look at our thriving industry now. There's no escaping the inevitable.


And moving on to the present. Lets spot the similarities:

What is it about?
Pensions, mostly.

What is the problem?
Well, they are going to get paid less (by contributing more to their pensions and getting less back than they thought) and work more (extra years per lifetime rather than hours per day).

Why?
Well, the demographics of supporting large pensions are dying on their arse. The days were there were 9 workers to support each pensioner are long gone. We're now looking at closer 3.

Why is the strike getting so big?
As our Chancellor likes to point out we're all in it together. It's a mutual cause that chimes with almost every union.

What will the result be?
Take a look at the private sector. What's unsustainable will not be sustained. Kick and scream about it by all means, but it won't change. Not without a great shift in the demographic layout of the country.

Greece - Will it Make it to the Long Grass?

The Eurozone leaders are becoming increasingly desperate to see Greece's problems dismissed to the long term. Voluntarily extending maturity on loans by 30 years can only be an option taken by someone facing obliteration if they do not.

The usual answer to being unable to pay debt is default. It's painful, it's ugly but it's necessary. Ever increasing debt gets to the point where you are paying nothing but interest on that debt and never repaying the capital. Greece isn't there yet but with it's bond yield in double digits and its economy in recession that is the trajectory.

Far better to accept the consequence now. Restructure the loans and reform the economy. Greece will learn to balance it's budget as it struggles to find foreign funding for years to come. Spurious lenders get their hands burnt and learn to invest more wisely in future. Something to be said for a balanced portfolio. But at least everyone will know where we stand.

The uncertainty is stopping us for moving on after the world financial crisis.

The AV Referendum

I just received the No Campaign Ltd mailshot. To summarise, it's position is the voting system should be simple, just like you.

"The winner should always be the one who comes first." Comparing electing a government to winning a race, match or bout is a terrible analogy.

Imagine the following election results under first-past-the-post:
BNP 18%
Conservative 17%
Greens 17%
Labour 16%
Liberal Democrats 16%
UKIP 16%

Under this system we have a BNP Member of Parliament with 18% of the vote. Congratulations.
The 82% majority that didn't vote for this candidate would mostly veto him/her if they could. But they can't, so tough. And they can't even register their opposition by putting him/her 6th or even leaving off entirely. Your preferences beyond your first choice are completely ignored.

The leaflet is quite vacuous.

The literal big picture (of Nick Clegg)
"The Lib Dems and Nick Clegg would always be part of the government." What a ridiculous statement. Clegg is going to be lucky to survive the next year in the government, let alone being an indefinite fixture.

The figures
"The alternative vote system could cost the country £250 million"

"£91 million on the referendum". Considering that money would be spent even if we stick with FPTP that's a bit of a non argument.

"£26 million explaining how people should vote under the new system". Less than £1 per voter. Money well spent. Though you would have thought that all the money we ploughed into education would have been enough. The only reason FPTP doesn't need explaining that every child is familiar with a pirate's treasure map and knows that X marks the spot.

"Up to £130 million on electronic vote counting machines". You know you're stretching the argument when you use "up to" because the item itself is discretionary.

And there's not even an "or" in the alternatives the money could provide. So the
2503 doctors,
6297 teachers,
8197 nurses,
35885 hip replacements,
69832 school places
could look very attractive to someone who must have the FPTP system because they are too ill witted to understand the alternative vote.

Lets not kid ourselves. AV is a miserably little compromise, to borrow a phrase, but that's no good reason to dismiss it because we aren't being offer proportional representation.

Getting proper political, the gap between this referendum and the last referendum in this country has a span encapsulating a 18 year Tory administration followed by a 13 year Labour one and a few years either side. If we say no to AV, how long do you think we'll get until one for PR comes along?

Youth Parliament and Tuition Fees

Just watching the Youth Parliament debating the rise in tuition fees. This was held on 29th October 2010. Normally, they are pretty good at showing up their elders. Not this time, sadly. This issue is far too close for objectivity.

The supposedly intelligent members of the more egotistical nature (the ones that talk about themselves) think they can't go because of the debt. Repayment is based on ability to pay. The bailiff doesn't show up for non payment when you're out of work...

Bless them.

Vince Cable Doesn't Help Himself

"Obviously one will have to be more guarded, but the problem is you need to give people an honest answer when they ask a question. Again it diminishes our role."

I don't understand the principle of telling a single constituent who asks the right question an honest answer but not the voting public at large. A coalition is expected to have its fractures. Putting on a brave face and brushing over them like they don't exist reeks of insincerity. We don't like it.