Now that the jet stream has moved to its customary position

Isn’t in nice to have some sunshine back in Blighty 🙂 Seems like the jet stream has been AWOL from its usual position, bringing us loads of rain and the US a drought in some parts. It seems to have returned to its usual position for the moment. No doubt we’ll be grizzling about having to irrigate before long, but it was time to seize the moment

Orford castle

The main car park near Orford quay gets well crowded but the castle grounds further back into the village are big enough to avoid getting overrun. English Heritage charge for entrance to the castle but not the grounds. The grounds are a pretty good place to laze and have a picnic, and close enough to Richardson’s smokehouse and Pinney’s shop on the quay. Pinney’s apparently have their own oysterbeds and DW tells me oysters are apparently really good value, though I can’t abide them myself 😉

Pinney’s shop on Orford Quay

It sounded like there were a fair few Londoners escaping the Smoke and the Olympics prep this weekend. Orford’s well set up for weekend visitors – I was tickled by the incitement to bend the parking regulations at the Crown and Castle

Invitation to tweak the tail of the nonexistent traffic wardens here at the Crown and Castle pub

I haven’t seen any traffic wardens either, but I’d be hesitant to generalise that there aren’t any at all. Maybe the landlord knows mroe baout the council spending cuts than I’m aware of. Either way, I admire his chutzpah in getting a sign all painted up professionally, it’s a state of affairs he anticipates staying for a long time.

Orford castle from the seawall



Ladbrokes Double Vision – more betting capacity needed for the recession!

So there I was, cycling down a familiar street, unencumbered by the tribulations of work and in search of the local junk shop. A disturbing feeling came over me, as I came across this scene

double vision in daytime – whoa there

Thinks to myself, okay, perhaps the last few days have been heavy on the sauce, but it’s daytime, I don’t think I am drunk in charge of a bicycle, but is that really two Ladbrokes betting shops, one on either side of the road? I have to admit that this picture is a composite of two taken from the same place, but that’s because my digicam hasn’t got a fisheye lens on it.  This really is what it looks like.

So what’s up with that then? Are the residents of this road so bone idle that they can’t be bothered to cross the road to get their punt in on the 4:1 horse at the 8:15 races? We’re not talking the M4 standing between one set of potential betters, just one modest suburban road.

Last time I came this way the Ladbrokes on the left looked like this

Easton’s junk shop

Now it was the devil’s own job to find this junk shop open, and it really was a junk shop of the old school. They had the child’s mannequin in the window for the last few years. However, since I am in the market for a 200w mains motor which could come with some random peice of household junk attached it was worth a go. Instead, I find the opportunity to indulge in a spot of ‘turf accounting‘ at this shiny new Ladbrokes.

Psst, wanna place a bet?

Spin through 180 degrees and I get another bite at the cherry at the old place

more turf accounting for Sir?

It all begs the obvious question. The economy is on its knees, about to enter another tailspin. The trigger finger is over the ‘Now Panic and Freak Out’ QE button at the Bank of England. Loads of people are unemployed and don’t have enough money for the essentials of life like rent and Sky TV.

Where does the money that goes into Ladbroke’s come from? Why can’t the punters understand the irony of a betting shop being called Ladbrokes? Exactly what is it that people don’t understand about this being a monumentally stupid thing to do if you are short of money?

WTF is going on here and why isn’t there a law against parting the slow-witted from their money? Should you not at least be obliged to be just a little bit more devious than ‘here, give us your money, and we’ll give you about 70% of it back, in the round? Why are people still doing this in shops?

A google search for Ladbrokes online showed me that the Ladbrokes corporation has an extensive online presence. You can be fleeced at for  the sort of thing you can do here. You can take the shaft for casino and poker on another one of their sites. Heck, you can even play bingo with them – all from the comfort of your own home. And yet there’s still money in setting up bricks and mortar shops. Dammit, there’s even money is upgrading and enlarging physical betting shops!

A gratuitous Money Shop pic. Perhaps they can turn the old Ladbrokes joint into one of these

Maybe this is the future of bricks and mortar retailing – a Blade-Runner type of world where the evil underbelly of capitalism rips people off and feeds them junk food and dodgy mobiles, with Money Shops standing at the ready to gut and fillet them, replenishing their wallets at exorbitant interest rates when the last grubby fiver falls into the rapacious maw of the Ladbrokes company. It’s a match made it heaven –

At the Money Shop we believe that you should get your hands on cash when you need it. So why wait?

And so the wheel turns, and the dirty need to make money turns into the Orwellian boot, stamping on a human face forever.

Sharesave and Employee Share Incentive Plan – becoming an ex-employee

I’ve gone on about Sharesave before, and I was also an avid customer of the Employee Share Incentive plan, particularly as I was on my way to becoming an ex-employee 🙂 Both of these schemes are designed to foster share ownership among the proletariat. Being a lumpenprole, of course, I don’t get to establish the sort of holdings that can depose the CEO, but nevertheless, sharesave was a way to take a one-way bet on the shareprice from post-tax pay for up to £250 a month, and ESIP let me buy shares in The Firm from pre-tax income, and formed part of my plans to reduce my taxable income to below the tax threshold this year. It’s also surprising how much of a holding builds up over time, even in ESIP with it’s low permitted savings limit of £125 pcm as the rapacious hands of the taxman get held at bay. When I started saving in ESIP in the early 2000s that £125 allowance was worth a bit more than it is now. The £250 limitation on Sharesave is also ridiculous – my first Sharesave was in the 1990s, when that was more of a challenge, the real value of that savings allowance has halved since then.

Up till now I’ve had a policy of outing ESIP shares as soon as practicable after the five-year embargo, on the grounds of minimising my exposure to The Firm – you don’t want to take a pasting on your shares at the same time as your employer makes you redundant, as former employees of Railtrack, Northern Rock and Enron can testify. I’ve also studiously avoided The Firm and its sector in my ISA, on the grounds that I have enough exposure through employment,  Sharesave and ESIP. However, The Firm fits into a HYP, and if it’s good enough for Neil Woodford’s top ten then it’s good enough for me once these special circumstances fall away.

On becoming an ex-employee all these shares become unembargoed, and all of a sudden a great lump of these ESIP shares come lumbering out, tax-free. At the same time, one of the Sharesaves is due to mature. Ordinarily I’d have given the instruction to take the option and sell immediately, to minimise my exposure to my employer while taking the three times uplift in price on the option price. However, this time, I will take the shares as a share certificate, and try and shift this into my ISA. Sharesave shares are one of the few exceptions to the general principle that you can’t transfer shares into an ISA unless they come from another ISA. However, they do take up part of the yearly ISA allowance, unfortunately valued at the time of transfer rather than the original option price 😉 That helps with capital gains tax. Although I don’t want to liquidate all these shares or even most of them, I probably have to do something to avoid a serious hit on portfolio diversification.

ESIP shares have to come out of the ESIP account but can only be transferred to a normal dealing account. All in all I will end up with nearly half of my total shareholdings in The Firm’s shares. The good news is that The Firm is a decent dividend payer, and indeed I get to more than double my stock market capital base, so I now have an annual income that roughly matches the dole. The bad news is that more than half of my shareholdings by value are The Firm’s shares. The firm is riding high at the moment for some reason, and I am losing hand over fist on my shorts, which is fine by me. I’ve acted much more like the fictitious Ermevator in that story in that I doubled up on the amount of ESIP shares I bought and slammed the brakes on selling ESIP shares as soon as it looked likely that I would no longer be an employee of The Firm.There seems to be something about leaving The Firm’s employment that makes me a lot less equity risk-averse, which is kind of irrational. I’m not yet ready to sign up to Ernst and Young’s Indian Summer and indeed have more feeling for Dr Doom’s viewpoint in that there’s a lot of incoming for the next year. Some things have got to get worse before they get better, and if Dr Doom gets his request of policymakers letting the bust work its way through the system like a dose of salts then perhaps there is hope for capitulation and then some resolution.

I have to discharge those shorts or roll them over in September, however, I will hang on to them until The Firm’s shares go XD and the Sharesave scheme matures. The maturity notice did warn that so many of The Firm’s employees will be selling shares at the maturity and that it may take several days to sell all the options, so now is probably not the time to close the short 😉

Thank you DVLA – sometimes an Ermine needs a kick to live intentionally

Ever since I left London and moved up here, so getting on for nearly a quarter century, I have owned a car for getting to work. I’ve owned four over those years, Now if there is ever a product that comes with great overtones of emotional baggage, ’tis the automobile. It represents freedom, it represents coming of age, in some cases it performs the same function as the tail feathers of a peacock, and of course it enables a young cub to whisk his lady love off to new exciting places.

And it lets you get to work every day, in order to earn the money to pay for it. I lived about 7 miles from work, there’s an acceptable bus service from town to The Firm, but in the end I have to admit that I was with Thatcher about buses and getting to work.

A man who, beyond the age of 26, finds himself on a bus can count himself as a failure

attributed, probably apocryphally, to Thatcher

The £2.50 each way bus doesn’t cost in on fuel prices either, and in the end the work journey only added about 3000 miles on the clock every year. I’ve tried ride-sharing, but basically the cost benefits on a 14-mile round trip aren’t worth the hassle of hooking up with a colleague and starting and finishing when they do. It’s all very worthy and all far too much like hard work IMO. I was open to cycling and was a sometime fairweather cyclist, but in the end I didn’t want to depend on anyone else for the journey to work.

However, once I’d left work it was brought home to me that my car didn’t get much use when the battery ran down earlier this week to move it in order to get the bins out. Then I got the renewal for road tax for the end of this month, and thought to myself I don’t want the aggravation of being a vehicle owner any more. The Ermine household has another vehicle, we don’t need two, particularly if the battery is going to run flat, and generally, whay am I putting up with stroppy notices from the DOT telling me what to do. Stuff the buggers, they can stick their road tax demand where the sun don’t shine.

Now I’ve never bought a new car- I buy secondhand from a dealer at about £5k and run the damn things into the ground over a period of five to ten years, I’ve taken two of the four cars I’ve had to the scrapyard. However, cars have become more reliable over the years, this one was still serviceable. So I called up Quicken to see how much I had spent on it over the last year

Car costs

Interestingly, fuel is only a third of the running costs. Even less, indeed, if I amortise the £5k purchase price of the 10 years, running a car cost me about £1600 p.a. though the purchase price is a sunk cost from long ago.

Now I happen to live in easy walking distance of a Europcar hire location, so I thought I’d find out how much it would be to hire the same model of car as mine over a weekend, though obviously nearly new as opposed to 14 years old 😉 It’s about £70 with a £900 CDW excess, or about £100 to eliminate CDW.

I’m spending about £750 on parasitic non-fuel costs of running a car, or £1250 if I take into account the amortised capital costs. I start to ask why am I doing this to myself? I could rent a nearly brand-new car one weekend a month, and avoid getting dunning notices from DVLA and generally feeding The Beast, all for the same price as I’m paying to run a 14 year old motor. Since the Ermine household already has a vehicle that isn’t the obvious way to go, but should there be a conflict in our requirements one day then talking nicely to Mr Europcar is the right way to do this job rather than keeping my old car on the driveway and charging the battery every week 😉

Since my requirements have changed, reduced and become a lot more flexible, it was hello the rapacious Ebay corporation in the form of Gumtree, and I outed my car to a young lad, all in the course of about three days. Despite their best efforts to upsell me the ad didn’t cost me anything to post. A young lad from Felixstowe got a reasonable deal, I got to dodge a road tax bill and the end of this month and a bunch less hassle in my life, what’s not to like. The young cub gets to show his lady love some new places, and I get to eliminate some of the tentacles of feeding the Government more money. As an extra boost I get to claim some motor insurance back to the tune of about £150, so all in all doing this makes me about £1000 better off in cash in hand and avoided expenditure.

Looking back the ramping up of these parasitic costs is quite noticeable – road tax was increasing at over 5%  a year since 2008. Which is a damn sight more than the official rate of inflation. My car was a 1600 petrol hatchback, not a 4×4 Chelsea tractor, but it seemed that I was still taking the shaft. Insurance, comparatively, was coming down with judicious use of price comparison websites although it was starting to edge up again. However, I needed the kick up the backside of the road tax bill to actually get round to shifting this, so thank you, DVLA, for your extortionate demand. Now stick it, and thanks for the kick up the butt.

The Guardian is telling me I’m living in poverty. Oh and a family needs £36k to get by these days

Cripes. According to the Grauniad’s new campaign on Breadline Britain, the Ermine is living in abject poverty. Not only that, they appear to be in some confusion between the notions of income and wealth –

Using key data from the Institute of Fiscal Studies […] you can see exactly how wealthy you really are.

Really? The reason, dear Guardianistas, that you will never get rich is because you are stuck in a poor person’s mindset. You think only of selling your time for money, and therefore you assess how wealthy readers are by exclusively focusing on their incomes. So just to set you guys right, wealth is accumulated income that hasn’t been spent. Geddit? Although no doubt the Ermine is lacking many of the baubles and gewgaws that the IFS consider to be essential to a life well lived these days, like Sky TV and a smartphone, the reason the Grauniad decides I am subsisting below the poverty line is because my income is low. I am in the lowest 5% by taxable income, though in the upper 5% by net worth. That doesn’t quite set me into Monevator’s millionaire bracket ambitions, it simply shows how little accumulated wealth most Britons have. Presumably because they’re spending it on cars and childcare…

In another article, the Graun shares with us the fact that a family of four need a combined income of £36k for a decent standard of living – a third more than before the recession.

A large part of this seems to be due to rising expectations – said family needs to run a car and have broadband which it didn’t in 2008. I’m not sure if those nice chaps at the Joseph Rowntree Foundation are au fait with what the word recession means. It means living standards taking a hit. So those rising expectations had better be packed away in a dark place until the recession ends, if and when that happens. Old Mervyn King, while he’s not occupied giving brash American banksters the order of the boot, isn’t chipper about that happening any time real soon now. So, JRF, just put away those rising expectations for the moment, OK? Then we had this corker

With the cost of bus travel doubling compared with the cost of owning and running a car, families said that having a car was now essential in urban areas outside London.These rising costs come as government cuts deeply into the subsidies paid to modern middle-class Britain.

Well, colour me a cynical old so and so, but exactly why was the government subsidising the middle class in Britain? Did somebody discover the money tree in the last decade? Surely it is the very definition of middle class that you can basically pay your own way in the world…

Now I’m probably going to get some hate for this, but apparently childcare is now these two child families’ biggest weekly outgoing. Which sort of begs the question of why the parents are spending time they’s probably like to spend with their kids in earning money so that … they can pay other people to spend the time with their kids rather than doing the job themselves. Seems a rum old situation, that.

Government Guarantee against Stock Market falls – Mis-Selling Scandal ahoy

Don’tcha just love something for nothing? Here’s a doozy – invest in the stock market, take the gains and insure against the potential losses? What on earth could go wrong.

It’s like the philosopher’s stone, or the elixir of everlasting life, an idea that is almost numinous because it’s something we all want.

Guaranteeing against stock market falls did for Lehman Brothers, so why did our very own Steven Webb, Pensions Minister not remember this recent history when he spake thusly

Steve Webb, the pensions minister, said he wanted to give people “certainty” that they would get a guaranteed income when they retired.

Steve, me old mucker, it ain’t gonna work. You did PPE at Oxford, so you were a damn sight cleverer that I was, but it obviously didn’t stick. Let’s take a butcher’s hook at the old plan, eh.

Ministers fear that unless they can guarantee that pensioners’ money is safe, they will be deterred from saving.

Now this raises a whole bunch of philosophical debates, of the sort that probably occupied fine minds in Oxford. What exactly does safe mean, f’rinstance? Most of your pensioners probably think put in £100 and get at least £100 back, that’s safe. It isn’t. £100 will buy you a colour telly now, it may not buy you a loaf of bread in thirty years, if the economy fails, if energy gets a lot more expensive, if climate change means you can’t grow wheat. It’s called inflation, and it’s how governments lose excess debt. You should know that, Steve, because the Government you are part of has been doing just that. You’ve destroyed 25% of my lifetime net worth over the last five years, by printing money and making it less valuable. However, perhaps the proles aren’t up to spotting such legerdemain, so we’ll conveniently look the other way.

More fundamentally, however, who is doing the insurance job?

The policy, provided by private insurance companies, would guarantee savers that their pension pot on retirement is worth at least the combined value of their contributions, their employers’ contributions and the tax relief they have received over their working lives.

Right. How is that going to work then? Does it come with an implicit Government guarantee, in which case FFS lose the private sector, as all they will be doing is paying bankers bonuses in the good times and letting the taxpayer carry the can when it all goes titsup. That’s the trouble with insurance, it works most of the time, but it is like a flawed sword. It fails you in your time of greatest need, shattering into a thousand empty promises.

There are many things in life that gain their power from their inherent heart of darkness. It is the possibility of 100% losses that makes investing different from saving, it is the negative counterbalance to the possibility of investment gains. Diversification can mitigate this effectively, both temporal diversification (pound cost averaging) and stock and sector-based diversification. But the risk of investment is inherent – you are capitalizing other people to take risks on your behalf. This risk is the fire that feeds the flame. The price of eliminating the risk is about as much as the potential return. The stock market is a hellaciously noisy signal superimposed on an almost imperceptible drift upwards, though you assume some of the fundamentals of industrial civilization hold or be replaced by equivalent value if you’re going to project that drift into the future.

The real return on a diversified portfolio is low. Eating an insurance cost of 0.75% could well shave off 20% of your real investment return, year on year. That may be a fair price to pay for  peace of mind for some people, and it may even be good value in the last 25% of your retirement savings career (55-65) but it may come at a high cost in the early days of your retirement savings.

The worst thing about this is that Steve Webb plans to deliver the future pensioners of Britain into the arms of the rapacious financial services industry, rather than telling them how to achieve the same result themselves, as Monevator describes here.

There’s a mis-selling scandal brewing in this one…

We need to work less, like those feckless Germans

Germany never really struck me as a haven for the bone-idle, but if this opinion piece in today’s Grauniad is to be believed, the old Protestant work-ethic seems to burn low over there. At least compared to the poor old Americans, who may live in the richest country on Earth but seem to have ended up working the longest hours in the developed world. And ended up with sod all annual holiday (vacation) allowance to boot.

Looks like the lazy Germans work only four fifths of the amount of time the Americans put in. Nevertheless, Dean’s comment here made me take a double-take

The most important point to realize is that the problem facing wealthy countries at the moment is not that we are poor, as the stern proponents of austerity insist. The problem is that we are wealthy. We have tens of millions of people unemployed precisely because we can meet current demand without needing their labour.

I spent about five minutes going WTF, this guy is totally full of crap, before coming to the conclusion that he is probably absolutely right. Now of course there was the same old same old in the comments, indeed the first one I saw was Chris

If I do less work I get paid less money.

You’d be solving unemployment at the cost of making those who have jobs much poorer.

No thanks.

Chris’s problem is that he feels that he can’t maintain his current lifestyle on less than what he currently earns. The solution, Chris, is to live below your means. Buy less shit, do more with less Stuff, and y’know, maybe see more of your family? It’s amazing how much really interesting stuff is nearly free – as Mr Money Mustache summarised with panache in Get Rich With – Nature

And yet I have a curious fellow feeling with those Germans. I’ve chosen to take their solution in a different way. Give or take a few months, I have retired 8 years short of the normal retirement age for The Firm, and had I run to term I would have had 37 years of working under my belt (from coming of age at 18 and after knocking out three years as an’ undergraduate and one postgrad year). That’s pretty close to a German-style 20% fewer hours, it’s just that I’ve packed them all in at the end. There was, in 2008, the option of going part time which was offered by The Firm in a German-style response to the recession, but I was already in the final sprint and lowering my income would have delayed my exit date. So for different reasons to Chris, I responded in a similar manner that I couldn’t afford it.

Where I differ from Chris is that I didn’t need the money to maintain my living standard. Indeed, what this story shows is one of the tragedies of our time. I saw a BBC programme a while ago called the Century of the Self with Adam Curtis, who showed some archive footage from the dawn of the 20th century. There was a real fear that the nascent industrial mass-production would be in serious trouble once people had got all the stuff that they needed.

Yeah, I know, stupid buggers, eh, how on earth could they ever have thought something so daft? But apparently it took some effort to find the path that took us to the place we are today, and the talents of a chap called Edward Bernays, who according to Curtis (quote is about 1 minute in from the start)

was the first person to take [Sigmund] Freud’s ideas about human beings and use them to manipulate the masses.

He showed American corporations for the first time how they could make people want things they didn’t need, by linking mass-produced goods to their unconscious desires

Now Adam Curtis gilds the lily somewhat, but he does have a point. Bernays was the nephew of Sigmund Freud, and I’d say that Westfield Shopping centre is the logical fruition of Bernays’ ideas – a place where it is virtually impossible to buy anything useful, a shrine to the supremacy of Wants over Needs. Is there really a need for Peppa Pig

Meet Peppa Pig, exclusive wristband only in advance extra

or pretty much any of the rest of the stuff on offer in the Westfield shopping centre? Breitling watches? McDonald’s? Massage Angels? Previous generations of Londoners managed with keeping their ostentation down to luxury departments like Harrods, we now need two Westfield shopping centres and Harrods to service London’s wants 😉

The problem may well be that we are wealthy – and we have ended up engineering society to that people like Chris feel they need to earn as much as he feels he requiress, so that he can spend that money to be able to service his job-house-home-car wants to the level that he is told he needs.

Now I’m not sure that this is really what the Guardian’s Dean Baker meant. The possibility that he doesn’t acknowledge is that perhaps German productivity is higher. However, his point is valid in isolation; you can adapt to varying load by varying hours as well as varying the number of people employed. From a human point of view it is a lot easier to cope with an expectation of up to a 20% variation in income compared to an expectation of full income with unexpected and uncontrollable outages of uncertain duration, otherwise known as periods of unemployment. You can adapt to a fall in income by cutting back on elective expenses like going on holiday. You can’t adapt to a loss of income without having savings or a passive income – I should know, after all I have electively prepared for a loss of income for up to eight years, and cutting back is not the route to success there, you have to forestall it or go under 😉

However, something that Dean Baker also doesn’t acknowledge is that there is a threshold effect. Any task needs so many man hours, but hiring 30 workers for one hour a week is nto the same as hiring one worker for thirty yours a week. The government needs to tax employment, via national insurance to provide unemployment benefits among other this. That is a hit on employment, making an incentive for employers to employ fewer people but increase the hours they work, and there are other disincentives to employing more people such as the cost of checking work permits and other social costs which are, unfairly in my view, loaded onto employers. It should be the Government that checks eligibility to work from the NI number an employer submits, not for the employer to do the grunt work ahead of time.

So I’m all for working less, like Germans. But if we are going to do that, we need to teach people not to rabidly live all the way up to their instantaneous income. Even at work, far too many people took their bonuses and because it was a unusual spike that month spent it on wants and toys.

A bonus is part of their pay, indeed shifting the balance from basic pay to bonuses is a way for the Firm to pay less (it wasn’t pensionable) and keep open an option of paying less in future (it wasn’t consolidated). I observed The Firm slowly increase the portion of pay that went to bonuses from a couple of percent in the 1990s to about 10% this year. People didn’t arbitrarily save up 10% of their income and blow it regularly on toys in the 1990s, so why they treated their later pay in such a cavalier fashion at the end beats me. But they did, and this tendency to live up to the peak of one’s instantaneous means is a large part of why unemployment is such a cause of great pain in recessions – there is no buffer to keep the wolf from the door.

In the German model the company takes over some of the responsibility of smoothing the peaks and troughs, and in general as we have seen with pensions in the UK, companies show a far greater capability to do strategic long-term planning than most individuals do. However, in the Anglo-Saxon world at least, companies are running as hard as they can away from taking any responsibility for their employees’ financial well-being, other than to provide them with a pay packet.