Britannia Unchained – Welcome to your Future

Reader, I sucked it up so you don’t have to. After diligently searching the library for a copy of Britannia Unchained, the 2012 tract authored by Kwasi, our Dear Leader, Chris Skidmore and a couple of also-rans, I failed to find it. So I sucked up the Amazon price of £16. I don’t suggest you do the same 😉 I am tempted to list it as an investment expense. After all, you need to know what Liz Truss is thinking, and since she didn’t have to put any of it in a manifesto, this is as good as it gets.

I expected to hate it, but though I found it somewhat studenty and one-dimensional in places, I found much to agree with. My main philosophical charge against the tract was the strong tendency to infer the general from the particular, heavy on anecdote and light on tested principle. You could, however, level that charge against most of the dismal science of economics. What theoretical principles I have seen in economics often doesn’t come out well in the testing, or there is a replication issue where it works in some circumstances but not others. This is not terribly surprising for something attempting to make sense of a multivariate system rammed full of independent and resourceful actors with varying degrees of knowledge and emotion.

But I’ll run with it, because for better or worse, this philosophy is guiding the country for the next up to two years. So far, what’s appeared has been consistent with the book, but I can promise you, dear readers, you ain’t seen nuffink yet. About 90% of the idea hasn’t been voiced yet. So let’s set the scene from Britannia Unchained itself, in the intro.

All five authors grew up in a period where Britain was improving its performance relative to the rest of the world. The 1980s, contrary to the beliefs of many on the left, were a successful decade for Britain. They were a time when, after the industrial chaos of the 1970s, business and enterprise began to flourish once more.

I’m not really going to dispute that. I saw the 1970s and started work in the 1980s. I saw a gradually improving economy, such that it blinded me to the single worst financial mistake of my entire life to date, buying a house in 1988. Because I inferred the general from the particular. The only defence was I was in my twenties and a greenhorn, but it’s not like wiser heads, both my parents and colleagues in the office, hadn’t suggested prices were high and there might be value in not acting right now. It is the nature of the world that young folk and believe themselves all-wise and invincible. It is the job of the world to disabuse them of that belief.

These authors ascribe this successful decade to Margaret Thatcher. She had something to do with it, for sure, but I would say that North Sea oil might also have had something to do with it. Outcomes are not always due to a single cause. But Thatcher did seize the opportunity, and did fix some deep problems that did need fixing. Seeing Arthur Scargill, or any union baron in general, still makes me want to throw things at the telly, because Art and his flying pickets and secondary action was running the country in the 1970s. Where Thatcher failed was not in taking the miners down IMO, but in leaving the twisted wreckage of those communities to rot – you can still feel it passing through some of the Welsh valleys. However, in the round, I’ll give the point.

They observe that in 1950 the UK was still richer than France of Germany, but lost its mojo and did not benefit from les trente gloriouses in the same way. We know the litany of 1970s decline. The surprising difference in belief comes with

a comparison of social mobility puts Britain near the bottom in the Western world. Yet the suggested cures to this disease — abolishing grammar schools or redistributing wealth — have been, if anything, counterproductive. This is not just a problem of the left, however. Right-wing commentators are apt to argue about natural ability and talent, as if success is solely a result of destiny rather than persistence.

Much of the following discussion is about the decline in educational attainment of Brits relative to our developed world peers according to the OECD PISA scores. And I’m surprised by Kwasi, Liz et al.

All the experience I have had in my decades on Earth is that intellect is innate, slightly inherited, and broadly immutable. Some people are brighter than others. Intelligence isn’t necessarily an indicator of success, particularly in the past, because there are many other skills – intelligence is broadly reflected in academic prowess, but doesn’t make you a better human being. It wasn’t even particularly advantageous in times past.

I formed this viewpoint in primary school, . In 1960s London, they were short of teachers, and some of the kids who had mastered spelling and some aspects of arithmetic were set to try and teach the slower ones. I was one of the child tutors, not electively, and found the experience frustrating, because I could not see why others could not see what I had learned/derived. Although I am probably to the right of the bell curve I am not MENSA bright, but the range of pupils at this school was wide. In a later repeat performance I saw a quarter of the class lose the plot when they introduced fractions in arithmetic.  Many never really mastered spelling. I was not the brightest in the school, however, and even at that age could see that, though I was in the upper reaches. At secondary school O level maths, calculus1 in the form of differentiation did the same again.

But I could see that some people were slower, and no effort seemed to redeem the problem. My valedictory primary school report had the phrase doesn’t tolerate fools gladly, and the succeeding decades has still not shown me why this was such a bad thing, fools should be kept well away from things they are foolish in 😉 I am foolish at all sorts of things, that house purchase was something I should have been kept away from! I have never, ever, considered teaching as a profession – not as a child, not as a young adult and I wouldn’t entertain the idea now.

In my grammar school, about half the class cleared off at 16, to go to work. These were the less academic, but the employment world of the 1970s was not the same as the employment world today. They could start earning – some of them worked in garages fixing cars or apprenticed to trades. The world of work presented opportunities for a much wider range of aptitudes than it does now, where analytic skills are much more to the fore, particularly if you want to earn well, and that roughly correlates to academic ability, and often to STEM areas, due to some of the analysis being mathematical, or at least arithmetical. Th 1960s and 70s had good earning positions for people without academic qualifications who could learn a skilled trade.

A lot of Britannia Unchained laments the poor academic and specifically STEM aptitudes of the output of Britain’s schools, and the tendency to favour arts and humanities because it is easier to get decent grades in these.

Instead of hard choices, students apply for a degree in media or business, which will often allow for the study of easier A Levels. As with US college courses, science A Levels are more harshly marked than those in media and sociology, the difference being up to a grade. In a culture of equivalence, where all subjects are deemed equal, students make the seemingly rational choice of going for the easier option.

Kwasi and Liz are of the belief that perseverance, hard work and application can compensation of a lack of innate ability. That may be true in many areas, but academic ability I am not so sure, although I have not darkened the threshold of a school for 40 years. Perhaps it’s all different now. This matters, because if an increasing number of jobs require academic ability, then the flipside of that is that the proportion of the workforce who are employable for anything other than national minimum wage will fall – the polarisation into some lovely jobs and lots of lousy jobs2, which seems to be what we are seeing. I am one of those commentators that are apt to argue about natural ability and talent, as if success is solely a result of destiny rather than persistence.

Success in some areas of life may well involve persistence, but academic ability is more innate IMO than persistence. Sure, it needs teaching to focus it, I am not saying teaching is irrelevant, but it won’t improve the material. It’s the same as indeedably’s tale of the second-rate athlete.

For whatever reason, often through no fault of their own, they just don’t have what it takes

The difference is important, because of the implication that the academically challenged can raise their game by putting in a lot of hard work. In which case, Kwasi and Liz are of the view that the problem is a lack of grit and determination of Britons to raise their game.

In Britain, there has been a massive rise in welfare dependency. The generosity of income support has risen sharply since the war. In today’s money, the taxpayer now spends ten times more on social security than in 1950 — with a fivefold rise in the number of people claiming unemployment benefits. The number of people claiming sickness and disability benefits has increased thirteenfold.
[…] The British state has made it too easy for too many people to take the easy option.

We know what’s coming. Massive cuts in benefits. So far very little has been said about this, but the authors of Britannia Unchained do not stint in their admiration for the American model of unemployment benefits, which have a time limit of about half a year. I believe that there is also a 99 week lifetime restriction. We will see Hoovervilles in the UK 3 in the coming recession and destitution if Lasi Trussteng have their way, because trailer parks and people sleeping in cars is how the US solves this conundrum, although to be fair that US is large enough that is some areas the climate makes this more possible, and it has a much lower population density, so the strife with the settled population is probably lower.

Before you FI/RE sorts get all complacent here, Lasi Trussteng would like a word about all that early retirement, you lazy bastards.

Our baby boomer can look forward to a long retirement, based on estimates of life expectancy nearly a century out of date. Most of his universal benefits remain ringfenced by the government, while his defined benefit pension is unlikely to ever be experienced by his children.

One has the feeling that your State Pension is going to be means tested at some stage 😉 The clue is in universal benefits, although it is possible that their position has changed on this – the recent rolling back of the child benefit withdrawal for higher-rate taxpayers goes against the grain.
The move towards an insurance based NHS is also lauded, thankfully more admiration for the European (French and German) way of doing that than the obnoxious US model. Supporting evidence is the pulling of the health inequality white paper by Therese Coffey. Although once you’ve done the work I’d be in favour of publishing it, it is going to be a statement of the bleedin’ obvious.

The rich are bound to live longer in general because they have more control of their lives. As a child I used to get bronchitis, because it was cold and damp in 1960s London before central heating. I never had it after my mid 20s – because I didn’t live in exceptionally damp and cold houses.
If you are poor you will fill yourself and your kids up with cheap carbs. That won’t be that varied, it will be ultra processed foods with all the problems that go with that, and that will not do you any good in the long run. There are whole supermarket aisles that I don’t recognize as food – nobody needs family packs of crisps or tins of noodles in alphabet shapes. Michael Pollan was right – eat foods your grandmother would recognize. But it’s all more time and aggravation. There is very little that can be done about this unless we decide that poverty is not allowed to happen.

Redistribution is very much a no-no in the Truss-Kwasi-verse. It is at the root of what has gone wrong with Britain, arguably redistribution and the everyone’s a winner approach are the Chains that bind Britannia, and This. Will. Not. Do. Any. More.

You know what to do to get out of the firing line.
  • Be rich
  • don’t be disabled
  • don’t be stupid.
  • If you are young enough to have the option, study maths and science at school.
  • If you are shit for brains then simply Work Harder, you’ll get there in the end.
  • Best not have bought a house in the last couple of years, if you have a mortgage, that is. You may be in for some interesting times

Although it’s easy to satirise because of its simplistic approach, there is a lot of truth in Britannia Unchained. Some of their examples haven’t aged well – the admiration for Brazil would hopefully be muted, because while Jair Bolsonaro may well appeal as a strong leader, but de Gaulle’s epithet that Brazil is the country of the future and always will be is ringing more true in the second clause than the first.

I agree with Lasi Trussteng that thirty or forty years the work ethic was stronger in Britain – working class people disliked going on the dole, and there was some sense of pride in not doing so. But there were more jobs right across the ability range 30 or 40 years ago, and the culture was more homogeneous, there was more commonality of media consumption (no talking heads TV and social media thriving on fomenting outrage, for example). People’s expectations were much lower, and they tended to raise their children themselves, rather than going to work and paying others for large amounts of childcare. Everyone was poorer, and there was less wealth disparity. Britannia Unchained will struggle to recreate those times nowadays.

You could make a much better case in the past that work was the path out of poverty. I just don’t think that’s true any more, because a larger and larger proportion of the working-age workforce can’t really add enough value to raise themselves out of poverty.

There is some argument that if people didn’t have children they couldn’t feed 4 they might be better off, and it staggers me that so many people bring up children in poverty, but every technocratic solution to that vector of poverty has ended up creating serious evil if it is coercive, so either everyone else gets bailed in to pay for the fecundity or the progeny have to suffer as a lesser evil.

Even without the problem of children they can’t afford, a life on the minimum wage is probably not going to rich in experiences. The privately educated journalist Polly Toynbee wrote a book about that called Hard Work, and it really doesn’t sound like the greatest amount of fun you can have, and ISTR she got to take some time off, possibly weekends, in her leafy middle-class home.

Liz and Kwasi haven’t gotten off to a good start with their attempt to implement the principles of Britannia Unchained, largely because the markets asked to fund the interim shortfall have taken one look at the project and thought to themselves ‘Nah, not gonna work, not a prayer, guys’ and raised the premium they want to lend against the collateral. The markets would have been a lot more convinced if Lasi Trussteng had first outlined the cost-cutting part of their project:

  • Massive cuts to benefits >10%
  • immiserate the poor in Hoovervilles. Much admiration for US tough love.
  • Public spending cuts – Think 10%. There is admiration for the Canadian cuts a few years before the 2012 publication of Britannia Unchained
  • Privatise the NHS (along the European model, in fairness to them)
  • Raise interest rates closer to the 5-7% long run average for the UK, crushing house prices, which would genuinely improve affordability for the young and transfer capital from the economically inactive oldies. How that will go down with the core Tory constituency remains to be seen
  • Make planning and zoning more like the US, pretty much build anything anywhere
  • Do something about the State Pension to reduce its cost – reduce eligibility, make it payable later, whatever.
  • A smaller State in general, as a matter of principle

Unfortunately they chose to major on the expensive revenue-losing aims first. It’s like going to the bank and talking all about the des res you want to buy on their dime or the flash car, without telling them about the promotion you are going for to be able to afford it. I’m not necessarily of the view that tax cuts are bad in and of themselves, but it would have been a lot better for the market’s ability to digest the great scheme if Lasi Trussteng had got off on the front foot with their savings first.

The problem is that the solutions outlined in Britannia Unchained are going to be unpopular with the voters or the funders. The unique talents of the Liz and Kwasi double act is that they’ve managed to make them unpopular with both. Well done them. Not only that, but they look decidedly shifty in telling the Office of Budget Responsibility to deliver their report six weeks after the October budget. That just looks shifty.

It is theoretically possible to improve the balance of payments by increasing growth, and undoubtedly some of the proposals in Britannia Unchained might increase growth. The trouble with increasing growth in developed economies is twofold. One is that economic growth means working harder, which is a decline in lifestyle for those of us who want to do something other than working with our allotted three-score years and ten. That includes you lot, dear readers, with your reckless FIRE fantasies, just as much as potential candidates for Benefits Street. Britannia Unchained shows a secular decline in working hours in nearly all economies, good luck with turning that round.

The second is represented by all those keen emerging economies and hard-working Asian students that are lauded in the book. There’s a hell of a lot more competition these days. It will be harder to shift the needle on the dial.
As the Torygraph fulminated, most of the self-inflicted wound Liz Truss and her sidekick made was because they didn’t have confidence in their working. There’s something studenty about the whole project, and particularly ill-suited to a crew who spend a fair part of their book spitting bricks about the lack of analytical skills and STEM smarts in the feckless British workers, students and school-leavers.

To get ahead in the new type of jobs you need to be able to reason and think logically.

[…]

While improving these skills helps growth, they can’t be restricted to the few. The biggest effect happens when on top of a large number of people with high-level skills almost everyone has the basic and mid-level skills. On the latter measure Britain needs radical measures.

Yup. I would say start with Dear Leader and Crazy Kwasi. Sticking “and then a miracle occurs” in the middle of your working has been disapproved of in the sciences for a very long time.

I saw a copy of this Sidney Harris cartoon, in Felix, the Imperial College student newspaper in the 1980s, and it’s still true forty years later

Show your working Kwasi, and having independent workers replicating it and getting roughly the same answer is even better. Independent workers like the OBR.

There’s a price to pay for unchaining Britain, which is deconstructing many of the things voters have been used to having. The NHS, benefits and pensions cost a hell of a lot of money, and that offer plenty of savings enough to make it all work. It’ll be a tough sell at election time, but if you have to borrow the money to make all the tax cuts eye candy work, you’re going to have to show your working to the bank manager, and show your plan to the voters.

I’ll leave you with what Liz and Kwasi of you, the voting public, as they open Chapter 4, Work Ethic

Once they enter the workplace, the British are among the worst idlers in the world. We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.

Just as well they didn’t have to sell this project at an election 😉


  1. I was shocked to learn that these days  calculus is deferred to A level maths these days, so perhaps this is a wider problem and Kwasi et all are right. 
  2. Lousy and Lovely Jobs: The Rising Polarization of Work in Britain, Goos and Manning, 2007. 
  3. For you metropolitan city mice that say you haven’t seen anything like that, I have seen unauthorised camping by the poor in some parts of Somerset. This isn’t wild camping or elective #vanlife 
  4. I’m perfectly aware of the social justice warrior argument that having a child is a 16-20 year project and a lot of ruin and misadventure can happen over two decades in a life, particularly with the increasing precarity of work. I have some sympathy for these unfortunates, but they aren’t the majority IMO. Contraception is free on the NHS. This one grates because I recall paying an awful lot of tax and NI towards New Labour’s largesse snowing parents with public money, to such an extent that there’s a hypothesis that Tony Blair was the daddy of the baby boom. At least Truss and Kwarteng approve of this baby boom for giving the bulge of young people now. They don’t give the daddy due credit for his redistributing ways, but they lambast New Labour for driving up public spending in the last couple of years of their tenure. You can’t have it both ways, guys 

Right you lazy FIRE 50-something layabouts – Britain needs YOU

Listen up, y’all Feckless FIRE Folk. Kwasi here, and the problem Britain is having is that you bunch of layabouts CBA to show up for work. This Will Not Do.

While unemployment is at is at its lowest rate for nearly 50 years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth

So wotcha gonna do about it, Kwa? Well, apparently

Anyone who works fewer than 15 hours per week on the National Living Wage will have to attend coaching sessions at job centres and prove they are trying to increase their earnings.

That’s highly interesting, Kwa. I am one of these feckless gits, so exactly whaddya gonna do about it if a mustelid remains sleeping in a curl and decides to pass on your coaching sessions?

A sleeping stoat
A sleeping mustelid, with the tail curled back to the tip of the snout. Do Not Disturb…

“will require benefit claimants working up to 15 hours a week to take new steps to increase their earnings or face having their benefits reduced. “

What benefits, Kwa? When I left work I didn’t take up the 6 months Jobseeker’s Allowance I would in theory have been entitled to, because I did not want to subject myself to your despicable goons at the Jobcentre mouthing off that finding a job is a job and all sorts of mealy-mouthed metrics making a misery of life. So I walked away from £72*26= £1872, basically for the sake of retaining my mental health. I’ve still always held that against the System, particularly when I had a check of my NI record to establish how many years I needed for a State Pension. At least I saved a lot of money on NI by picking about seven years up at the absolute steal of £150-ish a year of Class II. So excuse me, Kwasi, me old mucker, if I twitch my mustelid snout, exhale a weary “whatevs, Kwa” and keep the muzzle in contact with the black tip of my tail and return to sleep. Continue reading “Right you lazy FIRE 50-something layabouts – Britain needs YOU”

Truss mines magic money tree, mithering multitudes marvel at the munificence

Blighty has a new Dear Leader, under what has been an excessive interregnum to feed the ego of a small part of the Tory party. A four-month delay to collect their prognostications is fair enough for a party in opposition, but is far too long to replace an incumbent PM. Would we have had to wait four months in the depths of the pandemic if Bozza had been pasted by Covid? Or if Putin novichoked him or nukes London?

New! Dear Leader says shes is going to fix energy bills, after people have been working themselves up trying to find a way to pay a doubling of rates up to 51p a unit from October, while working minimum wage. After spending four months hollering from the rooftops that she is not in favour of handouts the likely solution looks very like handouts to me 😉 Indeed it looks tremendously Third World to me, subsidising the price of something. La Truss delivered herself of some pithy statements in her former life as a candidate:

On the eve of the price cap announcement, Ms Truss acknowledged that soaring energy bills were a “massive issue”.

But she said the government couldn’t “just bung more money into the system”.

Ms Truss told the hustings in Norwich: “What we need is to fix the supply of energy.

“If people think this problem is going to be over in six months they’re not right.”

I happen to agree with the sentiments, although not for the same reasons. Arguably fixing the supply of energy is a great idea. But to get there you wouldn’t start from here, but perhaps many years ago, although a hat tip should be given to the significant progress that has been made, particularly with offshore wind which is a resource Britain has a lot of, comparatively.

I also agree with Dear Leader that this won’t be over in six months. The well-repeated narrative is that it’s Putin wot done it by turning off the gas pipeline, indeed what surprises me is he didn’t do that earlier, General Winter is an old friend Russia knows well. See Napoleon, Hitler and Monty’s rule one on page one of the book of war. I don’t believe the narrative. Putin supplied the shock, but the response of the market prices shows there is very little spare capacity. I am of the view that this is what the foothills of peak oil looks like. It’s not a sudden bang and turn off all the things. It is increasing scarcity, and scarcity=high prices at first, and then shortages if the prices don’t depress demand enough.

That’s not going to be over in six months, and it may not be over, ever. This doesn’t mean we will be living in caves in five years’ time, but I agree with the former La Truss that the government can’t fix this by just bunging more money into the system. That’s because this money is for rising operating expenses, and while it’s sometimes reasonable to borrow money for capex, it is never a good idea to borrow money for opex.

Net zero is not about saving the planet

It may be politic to give the handout to bills to soften the transition, but it’s an ongoing drain if energy prices are going up because supply is running out of spare capacity. If you think the need for a bung is just as long as it take for Putin to prevail in Ukraine enough to get something he can walk away with, then yes, perhaps it’s a price impulse. The trouble is that the world consumption of fossil fuels shows a steady increase, because population is still increasing, and everyone would like to have an American lifestyle in terms of energy use.

can you see the falling fossil fuel consumption? Me neither

So even if Putin changes his mind, soon rising demand will consume the amount we have lost, and spare capacity is in short supply. For all the hullabaloo about CO2 emissions, humanity ain’t giving up using fossil fuels any time soon. Just look at that chart. There was a Covid retrenchment, but it’s roared back on track.

If you want to reduce CO2 emissions, then carbon capture and storage, which has never been demonstrated at scale, and tends to use a lot of energy itself, is the only way that’s going to happen. The good things about having loads of energy at hand are just so good than nobody is going to think of the  grandchildren. Sure, the West might get to net zero in penance for having been the first out of the block, and that penance will be making the fossil-fuelled air conditioning of a burgeoning Asia and Africa that little bit less expensive by taking some demand off the table.

For a declining part of the world less able to fight its way to the top in 50 years time increasing renewables is arguably not a bad allocation of capital, because electricity is not very storable and not very transmissible at transcontinental scale, so while it can displace some fossil fuel demand it can’t easily be sold to richer bidders. As a way of reducing global CO2 output? Fuhgeddaboutit, that consumption chart will be limited by supply, not going green IMO. You can feel good about the UK dropping its per capita fossil fuel usage from 46MWh per year in 1973 to about 22 in 2021.

You have Thatcher to thank there for destroying heavy industry, and the Arab-Israeli war in 1973 to thank for improving efficiency. There are echoes of 1973 now as well – in general if you do things that piss off your energy suppliers like yelling in their lugholes they are scumbags or supporting their enemies, the price goes up. Our product, our rules was the word in ‘73 too. Sometimes you have to put up with that privation, but pretending it isn’t going to happen won’t take you anywhere good.

The problem with energy is that all the alternative options suck. For an economy in secular decline, they suck bigly. You are likely to have less energy available in future, because it’s dearer, and that’s not something the government can fight. They could try and increase renewables, and they could do something about not tying the price of renewables to the price of gas – perhaps some industrial customers could live with the intermittency of renewables for a cheaper rate. There has been a historic correlation of energy-hungry industries colocating with sources of energy, from the cotton mills oop north with the abundant water power, to aluminium refining occurring near hydropower.

But for y’all at home, it’s gonna get dearer. There’s only so much money Dear Leader can magick up from taxation and borrowing because that’s the trouble with depending on the kindness of strangers It should be noted that some at the Bank of England dispute the former guv’nor’s pithy warning. Apparently Britain has foreign assets worth 4xGDP and is flogging these off at 6% of GDP to fund living above its means. So that’s all tickety-boo then, 66 years until the high-water mark reaches the low-water mark. Should see me out, that’s a SWR of 1.5% so it might even be sustainable, ceteris paribus… The trouble with life is that all things stay equal only in the grave.

We have lived with less energy before, we can do so again. We have some advantages – efficiency is better and control systems are smarter. Against that, energy is used in a lot more places quite diffusely than before the digital revolution of say the 1990s onwards. I started chasing power in the face of future energy rates of £1 for 2kWh. Saving energy at home showed that most commenters had the edge on me in the art of saving energy 😉 Despite that I hit two power hogs and continued chasing, as well as investing in renewables. And oil…

Now that La Truss has declared that the Ofgem increase isn’t going to happen for two years until the next election some of that is perhaps a misallocation of capital, and I am not going to increase my investment in renewables over and above what I have already. I am cheered not to be paying for other people’s heat pumps, solar panels and insulation, though 😉 I know it’s petty, but I don’t want to pay for your green crap through my power bill. I don’t mind too much paying for some green crap, even if it’s the same amount, through taxation1, because CEOs will hopefully get to pay more. There’s a hint of the poll tax in the everyone pays the same amount for the green crap so we don’t have to call it taxation.

Now the magic money tree has been located, well, that’s all fine then. Inquiring mustelid minds are intrigued as to how tens of billions of pounds are going to be magicked up ongoing, the obvious solution is to make those pounds worth a bit less so the job is easier to do. Still, it will reduce near term inflation, which gives me a little bit more time to think. On the other hand, if you look at a chart of the Great British Pound against a basket of other currencies, IMF special drawing rights, I’d say

How many IMF SDRs can 1 GBP buy

going down the toilet is perhaps being charitable. Not as bad as Covid, pretty much the same level as after Brexit. Looks like night has fallen on them sunny uplands, and Putin has knocked about 15% off the value.


  1. FWIW the Ermine is and probably always will be an income tax payer, despite the non particularly economically active status 

Saving energy at home

There is much chatter about the increasing costs of energy, apparently Ofgem will announce a new price cap on Friday. The situation is epitomised by Martin Lewis’s video spitting bricks about the issue.

It’s clearly going to be a big issue for a lot of people. Something that puzzles me about this is that I recall power prices being pretty damn high in the past, and my recollection of current (post April, pre-end of this month) power prices is that I have seen this movie before. I remember power costs being high in the early to mid-2010s in real terms, it felt like they were higher. Some of this is because that was a period when I was trying to save money, firstly to load enough into the stock market to retire early, and secondly once I had retired to eke out the period before getting hold of my SIPP savings for as long as possible. However, I wasn’t shocked by the March changes, because I remember real prices being higher.

Undoubtedly projected costs are going to be higher in real terms than they were before, after all going to war generally damages the economy, plus there is the cleverness of Brexit, which seems to be dragging its feet on delivering the promise of making us all so much better off. In an attempt to substantiate this recollection, I inquired of the ONS, which sadly only goes back to 2015, with something called the energy price index.

Energy Price index, from those nice fellows at the ONS

Turns out gas is currently (up to the end of this month) still cheaper per unit than it was in 2015, in real terms. The dotted line is when the price cap mechanism was instigated. It is electricity that is much dearer than it used to be per unit.

This is deliberate – most of the green crap has been loaded on the cost of electricity. You are paying for other people’s solar panels (thankfully the subsidy on that has been dramatically reduced – if you think solar panels on a domestic basis is such a terrific idea then pay for this frippery yourself). I hate green crap subsidies with a rabid vengeance, because I don’t want to pay for middle-class homeowners’ virtue signalling. I have nothing against renewables – I invest in wind, solar and power storage, as well as oil, because I am shameless, but I think poncing about on a domestic level is bonkers. As David Kay says, every big helps.

Making the poor pay more for their power just so you can tell your middle-class rugrats that you are doing your bit is really rather ethically dubious. That is because ever since Thatcher raising income tax has become anathema, so these subsidies come from indirect taxation, raising other people’s electricity bills by 25%. Britain generates much of its electricity using gas, so there’s no good reason for the divergence between electricity and gas unit prices, this is the extra loading on electricity because it’s harder to live without electricity than gas, plus many households don’t have mains gas.

There’s an argument than I can afford to subsidise your green tossery, but I don’t want to. However, I can’t fight Government policy. I collect my share of my and other people’s bills via the renewables inducements to UKW and its ilk rather than on an itty-bitty scale, repossessing the subsidy loading on my power bills through the stock market, but it’s still a rum way to do policy. Resistance is futile, you have to join in. Unlike middle class eco-warriors limited by their south-facing roof area and domestic consumption, I can collect far more subsidy that I could on my own consumption. Your average solar installation costs £5-7k, you can invest a lot more than that if you are minded to.

IMO the reason there is more hullabaloo about heating costs now than seven years ago is because government policy has been immiserating the poor through a punitive approach to benefits on the bottom end. Higher power costs makes more difference now, because it’s a larger part of a smaller available income pie at the low end. And, quite frankly, it seems that the current wannabees don’t giveashit, and in 2019 it was clearly more important to more people to have some grandstanding and Get Brexit Done by an established liar than give a shit too. We are where we are because we wanted to believe in magic. Were you asked by the grandstander in chief whether power bills of £6000 p.a. were a price worth paying to stop Putin’s tanks? Me neither.

Under Johnson, the UK also appears to have taken a gamble on an almost complete break with Russia, at least so long as Vladimir Putin remains in power. There is nothing from London, as there is from Berlin and Paris, about keeping channels open to Russia, because Russia will still be there when the war is over.

At least BoJo acknowledged the issue in his valedictory grandstanding photo-op

Comparing the costs of Russia’s war, he said: “If we’re paying in our energy bills for the evils of Vladimir Putin, the people of Ukraine are paying in their blood.”

Neatly making this issue the next PMs problem. Never one to stick around and pick up the pieces, our Bozza, or to answer awkward questions. Contrast BoJo’s apparent inspiration, who had the cojones to front up the cost of war in his first address to Parliament

I have nothing to offer but blood, toil, tears and sweat.

while observing sotto voce to his generals

Poor people, poor people. They trust me, and I can give them nothing but disaster for quite a long time.

Not quite the same as have your cake and eat it, eh? Sometimes you do have to experience privation to defend something more important, but Putin isn’t shit for brains, and he is no doubt counting on resolve withering somewhat. General Winter has fought on the Russian side before, against Napoleon and Hitler, and now Putin is hoping he will fight against the decadent and softness of the West, even if they aren’t physically marching on Moscow. I don’t really know where I’d place my bets.

Given the level of inflation I am happy to take my chances in the stock markets on energy to defray the extra costs, though I am glad I made most of my push before July, I’m not able to work out if the bonkers mini-rally is in fact the £ falling down the toilet or the return of irrational exuberance. Perhaps it is the froth blowing off the top before the monster that has been rising from the deep finally breaks the surface.

You can do something about this

You could join the Don’t Pay campaign.

We are a movement against the rise in energy bills

Yeah, I take a principled position against poverty, war, dogshit in cities, and all sorts of things I don’t like. Doesn’t mean to say they don’t happen. You may as well be against the sun rising. Magical thinking at it’s best. Martin Lewis doesn’t officially approve.

Readers of this probably have too much to lose with don’t pay. It is surprising to me that suppliers are obligated not to pull the plug on non-payers, previous generations didn’t have such scruples 😉 However, they can send the heavies round.

More practically, you can try and use less. This is another example of the Sam Vimes Boots theory of socieoconomics, because the options open to homeowners, including those who don’t actually own their house but have a mortgage, are far wider than those who rent.

I managed to reduce my electricity consumption by 20%, and given the loading on electricity that punches well above its weight. It’s the financial equivalent of reducing gas consumption by ~40%, which would be a very noticeable detriment to lifestyle in winter and much harder to do.

The big picture

Most of the wins in domestic settings are to do with anything that is designed to change temperature. If you run an industrial process involving big changes in temperature, like a bakery or a cement works, then you are out of luck, because your product is about to get a lot dearer into a market that has less disposable income and you aren’t protected by the energy cap. I have no idea what to do about that, but at home you have options.

In general drive down waste before making any capex. In the UK that means loft insulation and draughtproofing. The good news is that the materials are relatively cheap and this is an entirely unskilled DIY job that any reasonably able person can do. It’s an unpleasant job – fibreglass insulation is irritating to handle and work with, though it has the advantage of not catching fire and apparently not being particularly attractive as rat nesting material. You can use other materials, mainly made out of plastic, but remember a lot of wiring is up there and plastic fumes are nasty 😉 This used to be subsidised, I recall paying less than £2 a 5m roll when I last did that job in the old house, but these days it looks like B&Q will hit you up for £25 a roll, which bites. It’s not the greatest fun you will have of a weekend, but apart from a large crawlboard and a big pair of scissors there’s no specialised equipment or hard to learn skills. JFDI

If you have cavity walls and for some bizarre reason there is no insulation in the cavity then that’s the next step, though it is a professional job it will pay a return in a reasonable time. Double glazing which also addresses most draughtproofing is another professional install that has a reasonable payback, after that you are in the wilderness, because insulation gets difficult for solid walls, it’s probably easier to move 😉

The next thing to understand is that the unit price on electricity is much higher than that of gas. So focus on anything that reduces electricity consumption, and favour heating with gas. If you heat with gas, you will use more energy in kWh, because heating is the biggest annualised load, but you may pay more for electricity. As an example, over the last year I used half the energy kWh in electricity as I did in the kWh form of gas, but paid twice as much for that electricity, near enough. Before Putin’s antics I investigated the feasibility of generating electrical power with gas as well as considering changing over to cooking with gas, basically to cut off the government-attached hangers-on. I concluded the risk wasn’t worth the reward, but it would have paid back in the medium term, given the boundary conditions at the time 😉 The antithesis of that is, of course, the heat pump, which does a heating job using electricity that can perfectly well be done with gas.

Heat pumps? Eh?

In order to save 75% of electricity energy that costs three times as much you get to make a big capital expenditure and change your radiators. On the upside, in some rare cases1 you may get air conditioning, and of course the warm fuzzy feeling of being a greenie doing your bit. On the downside, that 75% efficiency doesn’t hold at the coldest time, you’re paying three times as much for the energy and you are potentially carrying a lot of poor people’s bills on your back. I could see the sense if you used bottle gas or oil for heating, but against mains gas this sucks. Electricity is a highly concentrated form of energy and is best used for what it does well.

I struggle to see heating as falling into that category, in a country that generates a third of its electricity using gas, losing 50% (roughly estimated from the heat -> mechanical power of the steam turbine and distribution losses) of the calorific value in the process it seems a little bit mad, though I can see that some things may make sense in where we want to be in future. But don’t be an early adopter unless you have a specific reason to carry the baggage. Not all countries have this disparate taxation in electricity and gas costs, a heat pump may be a perfectly reasonable proposition under a different cost regime or generation mix. If you don’t believe me, take a look at what Her Majesty’s Government have to say under five reasons to get a heat pump

Moving to a heat pump means you can avoid the volatile prices associated with gas and oil. If you are using oil, Liquefied Petroleum Gas (LPG) or electric heating, you could see a reduction to your energy bill if you move to a heat pump.

They are very careful to avoid saying you can save running costs compared to mains gas, because it’s not true in the UK 😉

There is one specific exception to heat with gas. Even if you have a gas cooker, use an electric kettle for your tea, because the close coupling of the heating element with the water, and, with a glass or plastic electric kettle, the better insulation, all tend to beat out the losses to the air, heating up the metal gas kettle notwithstanding the gas energy cost advantage of a third of electricity.

An Ermine’s journey to reducing electricity consumption

It’s a little bit embarrassing2 that the inspiration for this, other than high electricity prices, is an American. OVO energy have a listing of average household usage across selected countries3.

Not everybody in the US is that profligate. Mr Money Mustache has got his power drain down to 300kWh a month, which is about the same as mine, though I note he doesn’t mention cooking, and the furnace blower (as opposed to the furnace4 itself) as an itemised load implies to me that he heats with something other than electricity; if it’s gas I presume he cooks with that rather than electricity. In a followup in 2015, MMM says he used 2MWh over 15 months, coming out at 133 kWh pcm. That is less than half my power drain, and a serious source of embarrassment to the Ermine fur. It should be noted that I cook with electricity, so some of the difference is due to that.

MMM’s followup is more succinct than this ramble. This is more a walk-through of my journey, which may help walk some folk through what you need to do. Go to MMM for the short-form version 😉 I worked as an electronics engineer for a couple of decades before moving to IT. Although electrical engineering is a different discipline, the electronics background has many of the concepts in common. Everybody’s energy usage is different, but so far I managed to reduce my electricity usage by 20%, and I haven’t finished the job yet.

You have to be able to see what you are doing – knowledge is power

I commissioned an efergy engage whole house system, reusing some components from my old Efergy elite monitor5, that died of causes unknown but wasn’t obviously fixable when I took it apart.

I loathe software as a service and subscriptions with a vengeance, but sucked it up in this case because the price of entry is the hardware rather than a subscription, and in the end this is a service I can live without OK if efergy does bust or decide to do a hive. Some folk will say why not just take a smart meter, but with my old-skool rotating disc meter they will have to bash on the door and look me in the eye to cut me off, rather than some oik in a call centre going clickety-clack. That’s worth paying £70 to do the smart monitoring job myself. If they teach me how to save £70 worth of power by the time Efergy goes titsup then I am in the black, power saving is a gift that keeps on giving. If you do have a smart meter, knock yourself out and save £70 if it offers you the charting thing with a resolution down to 1 minute.

Go for the big wins first – anything that heats

I installed Efergy early in March. And got to see this

The second ratty lump at 6pm around 2.5kW is roasting a chicken in the old electric cooker. But look at the shower hit in the morning, oy vey. Now this sort of monitor needs to have a decent time resolution, arguably that was something the old Efergy Elite Adobe Air software didn’t offer. A stupendous load of 10kW needs a finer time resolution than the oven at 2.5kW, because it matters four times as much. In many ways the summarised kWh split by hour display is more useful to me.

Same thing, aggregated into hourly boxcars by kWh

Which shows the shower takes about 2.1kWh, whereas the roast chicken takes 4.78kWh. The difference is, however, that we roast a chicken once a week, not every day. Having the oven on at 200 for an hour and a half is a shade over twice as much energy consumption6 as the shower. And it’s pretty obvious that roasting a chicken is going to take a shedload of power, because the kitchen gets warmer. In March that’s not such a terrible thing, though in a July heatwave not so much. So guess what, we didn’t use the oven in the heatwave. Simples.

I switched back to the gravity-fed shower, heated by gas. This will mean using a little more gas, particularly as I don’t have an instant-on boiler.

energy usage in monthly boxcars

March is a little bit short (because Efergy wasn’t tracking through the whole month) but April is representative of previous months on the old Efergy system, so pulling the shower saves me 26 kWh a month. Assuming this holds across the year that is £88 (at 0.283 p/kWh), which isn’t bad for an hour’s work with a spanner and a capex of 50 sods for a new showerhead and hose. The cost recovery time will be shorter if the price cap raises electricity prices again at the end of this month, which seems to be expected. It will be offset by the gas consumption going up a little. I will look for that on a year on year basis.

The next upgrade was to get a modern cooker with an induction hob, rather than this old-skool sort of hob element.

the sort of previous hob elements

Photo copied off some auction site, it’s not my old cooker. You need to book a temperature change two minutes before wanting it, usability sucks.

Mrs Ermine uses an antediluvian piece of kit called a Moka pot that makes coffee which can do double duty as battery acid, and this involved heating up the old hob and filling the chamber with boiling water from the kettle, then waiting for it all to rise with a menacing sound. A barbarian way of making really harsh coffee IMO, but each to their own.

Mrs Ermine’s Moka pot

The classic Italian Moka pot design is an aluminium casting which isn’t going to work on an induction hob but Mrs Ermine had a purge on aluminium cooking equipment a few years ago, so her Moka pot was induction capable from the get go.

Efergy told me in early April with the old cooker doing this with kettle plus hob rocks in at about 1kWh, though I should knock off the static load which was 0.28kWh just before. That now shows at maybe 0.6, less again nearly .3 static. There’s no need to boil the kettle first, and overall the coffee happens much faster, as the induction hob heats the metal in this thing directly. The same applies with pretty much everything – the power control on an induction hob is much closer to the response time of gas. Usability is greater, and efficiency improved, because you don’t have to heat up a great big lump of steel hotplate. The induction process heats the pan, standing on a ceramic insulating surface, so the lag is the same as gas, which also heats the pan in an insulating medium (air).

How does that do with the chicken? This is an electric fan oven, but it is the same basic tech as the old cooker – resistive elements in some ceramic thing on the sides and a blower fan to circulate the air. However, in an electric oven you can gain efficiency by sealing the container better.

Comparing this against the old oven, bearing in mind it looks more dramatic because the mahoosive heave-ho of the shower is absent in the morning and the chart auto scales, there’s more wait in the heat up, wait, heat, wait, heat. The peaks after 19:00 are the dishwasher. Apart from the peak load being lower, looking at the corresponding hour block chart the total used to roast a chicken is 2.44kWh, half the previous amount and a shade over the erstwhile shower. This isn’t surprising, since the kitchen gets less warm, and indeed when you open up the oven to baste the chicken or finish up, you get a serious faceful of uncomfortably hot air that steams up your glasses, and I have become used to opening the door and leaning away to let that rise. This translates to more efficiency through not letting the heat out into the kitchen for most of the 90 minutes or so. Continue reading “Saving energy at home”

The limits to growth and declining living standards

For some light relief as to the recent theatrics, let’s take stock. There seem to be several things not going entirely as expected or planned, and they are a little bit more than down to the antics of one man. Even if his name is Vladimir Putin…

I was listening to a couple of punters bemoaning the energy crisis and saying that the Government really should do something about this, to which the obvious question is, how do they go about doing that?

Energy is pretty much about oil and gas at this stage. You may not like that very much, but let’s start with where we are. If you look at a list of oil producers in the world, the top five in 2021 are the US, Russia, Saudi Arabia, and Iraq, in that order. The first three are the big hitters, responsible for about 30 billion barrels a day, and Russia and the US are about neck and neck at ~10bbl/day. Slightly ominously, they say of the top three “since 2014 all three have been producing near their peak rates of 9 to 11 million barrels per day” and Russia and Saudi are the top exporters. We have decided to stand with Ukraine, so that’s the second largest exporter we have declared persona non grata.

What do we use for energy? Fossil fuels, bar the shouting…

the UK energy mix. Don’t be fooled – despite the whacking great three pin pug symbol, I read this as total energy usage, not that used to generate electricity, of which more later

If you look at the UK’s energy mix, it is three-quarters oil and natural gas combined, in about equal portions. So even if we did have a disciplined functioning government that hadn’t had enough of experts, there’s a serious limit to what can be done. I’m not taking an opinion here about the virtue of standing with Ukraine – history does show that it is sometimes necessary to tolerate privation in the interests of a wider goal, but if you want to know why energy costs are rising, well removing a large source of supply for what is basically an imported product will tend to push the price up.

Vlad the bad has played a good hand

I’m not a Putinversteher, IMO he’s is a psychopathic nutcase who is mad a box of frogs, just not randomly mad. He’s sitting on a massive resource that people want – gas and oil, and our Vlad has spent most of his life understanding power. If you are going to have enemies, it pays not to underestimate them. Sure, Putin and/or his military ballsed up some of the initial parts of their invasion, but they seem to be learning from their mistakes. I am not saying this is a good thing in the round, but it is good for Putin and his aims. Putin is right in one respect, in that the much vaunted Western sanctions are a weapon that fires on both ends. In raising the price of energy by restricting sources of supply, Putin doesn’t have to sell as much to raise the same revenue. Well done us. Perhaps there was no other way, but strangulating his cash base only works if the West was like it was before the Millennium, a much larger part of the world economy. The world is multipolar now. Sanctions may have other effects in the longer run, but it’s not a quick win, and energy prices will be higher for a fair while as a direct result. It is interesting that 50 years ago this was predicted. Not in the Nostradamus sense of

Two great men yet brothers not make the north united stand
Its power be seen to grow, and fear possess the eastern lands

which is just as well, because the West is  short of great men, we seem to be scraping the barrel of late. More in the sense of Asimov’s Foundation, with the role of the Second Foundation played by the 50 year old Club of Rome Limits to Growth crew. A couple of recent updates comparing the track we are on shows the future not being terribly rosy even with everybody’s high-tech dreams coming good.

LtG World3 model, with lots of technology (left) and business as usual (right). From Graham Turner on the Cusp of Global Collapse

on the left is the high-tech dreams of Wired magazine – even with that industrial output doesn’t continue rising on the trend of up to now. If we look at extracted resources specifically

LtG World3 model, comparing actual results with model results with lots of technology (CT) (top) and business as usual (bottom). There’s some support in the observed model for the comprehensive tech track relative to BAU, so that’s collapse averted, eh, but growth still ain’t going to carry on as before.

there is some evidence we are more high-tech than BAU. So that’s all right then? Well, Gaya Herrington tells us a little bit about the world your children will be growing up in

CT represents the technologist’s belief in humanity’s ability to innovate out of environmental constraints. It assumes unprecedented technological innovation in a world that otherwise does not change its priorities much. The new technologies do in fact help avoid an outright collapse. However, CT still depicts some declines (Figure 3) because the technology costs become so high that not enough resources are left for agricultural production and health and education services.

There was a nice little radio play about the preparation of the original model, still on BBC sounds

Back to our dictator, who is perhaps a symptom how the LtG model is playing out. Like Asimov’s psychohistory, they did not claim to foresee the individual track the future plays out, just the broad sweep of history rattling in the channel of the available resources. The resource curse means that petro-states tend to be unsavoury, and in the past perhaps we could afford to be precious about our values. These days there is more realism, yes Saudi Arabia did most likely top that Khashoggi bloke but we want their oil so perhaps we need to STFU about that sort of thing.

Putin has willing customers for his oil, which is more transportable than gas due to its value by volume. India seems to taking up a fair amount of Russian oil and China will take some of the gas off Putin’s hands. The leverage of gas is very high because of the same thing – it’s hard to reroute supply for producer and consumer alike. Germany has made itself exceptionally exposed to Russian supplies through Ostpolitik, combined with a historical anti-nuclear stance.

Atomkraft Nein Danke – that’ll cost ya

There’s a cost to Atomkraft, Nein Danke, and the bill has just landed on the doormat with a Cyrillic stamp that says hefty fee to pay, our product our rules. It’s understandable for the country that anticipated invasion through the Fulda Gap for years to try and play nice with the big bad bear, but there’s a cost to singing Kumbaya like that, in the end you get to rely on Russian gas. As the old saying goes “When you have them by the balls, hearts and minds will follow”. It could be a long winter, and Germany is already rationing gas.

Before we think stupid Germans, I suspect we will see energy rationing this winter. Germany has relatively deep pockets and will drive up the price of gas from other sources. You just can’t knock out a leading supplier of energy and carry on as normal. Italy seems quite exposed too, so perhaps we will see another Euro crisis. I don’t know how Greece will fare…

The Ermine as a nipper can remember Britain before central heating became widespread in the 1970s. Insulate Britain is wrong – British houses in the 1960s were far less insulated than now, they were draughty and often heated with coal fires, which needed a decent airflow from outside to get enough draw. People generally heated only one room – the one with the fire in it. If you wanted to heat another room you got to do that with open bar electric fires, or the sort you wouldn’t be allowed to even think of now. A mustelid kit learned something interesting about the power of electricity with a screwdriver and one of those.

People got cold. Ice would appear on the inside of the single glazed window panes. People survived. They used coats, jumpers, blankets, tea and hot water bottles. That is how we will deal with less energy. We aren’t going to ponce about insulating the bejesus out of homes that serviceably sheltered earlier, hardier generations and were never designed for insulation. They worked OK then. They will serve people again.

Continue reading “The limits to growth and declining living standards”

Ten years of leisure wrested from The Man

I stopped working for The Man ten years ago, at the end of June. I spent my last working day in the Athlete’s Village in the 2012 Olympics. It was a little bit odd to end my career working off-site, but I had a little bit of annual leave to use up. I did return the The Firm at lunchtime at the end of June for a valedictory round of drinks at a local pub and a send-off, and that was it, three decades of working life came to an end. It was a good way to finish off, on a high as the last manager said. I look at the pictures and they are good, though I see the signs of three years of the stress and the effects of drinking too much to dull the pain.

Not many FI/RE people are still writing after a decade, so here are a few takeaways from the ride. It has been against the background of a long bull run that is only just fading, as the firehose of central bank interventions begins to surrender to the irresistible force of the accumulated pathologies stoked with it.

I did not get bored

Honestly, I still can’t understand why bright young fellows like Monevator still link to cruft like this. Seriously, if work is the best thing you can think of to do with your limited time on Earth, then you need to get out more and get some hinterland in your life. Preferably half a lifetime ago, but now is better than never. I am sure that for 1 or 2% of people their profession is their one true passion. They tend to be outliers, often psychopaths like Elon Musk, or Mark Zuckerberg, and that passion tends to be unbalanced. That leaves over 90% of us who can probably do more congenial things with our time than working, if only we could solve the conundrum of dreadful things happening in our lives if the flow of income from our jobs were to stop. You know, like losing your home or your kids starving, that’s the sort of thing that keeps most of us working past the point that the Do What You Love, Love What You do meme has transmogrified into Suck it Up, Our Way or the Highway. Solving that is what financial independence is about, but too many people end up with Stockholm syndrome with work. The Escape Artist summed up the problem. Don’t just load the gun. Pull the trigger.

The world is plenty interesting enough to reward an inquiring mind and an inquisitive snout. Learning new stuff has never been cheaper or easier, though it pays to remain critical as there is also much more misinformation about. In many areas of factual learning, favour books over online, and I personally almost always favour the written word over video1.

I got less hard-line about working than my younger self, who was running away from a crap situation. But the key takeaway is still the same. Don’t rely on income from work after you have become FI. Save it, spend it on champagne and caviar, but never, ever, set up your life so you depend upon it again. Otherwise you are no longer financially independent. This severely limits what the financially independent can safely do with the proceeds of work.

Spending FI/RE earnings on  lobster is OK. You can live well without lobster, but perhaps better with.

Breaking that rule is fair enough if you opted for thin-FI/RE and came to the conclusion you don’t want to live that way – financial independence is not worth more than anything else, and if you want to live high on the hog, or live in London, or send your kids to private school, then you are probably not going to be financially independent as early as someone who can eschew some of that and drink prosecco rather than Dom Perignon.

Continue reading “Ten years of leisure wrested from The Man”

Fear and loathing in the markets again

The Ermine household decamped to Wales for a few days, near Saundersfoot. Over a decade ago I was halfway through my three-year plan to gain manumission from The Man. The halfway point of any drawn out goal like that is really tough – you have lost the comfort of the port of departure, and are on the stormy uncertain seas without sight of the distant friendly shores.

I was living on roughly the national minimum wage, in order to maximize the benefits of salary sacrifice. This was greatly softened by the fact we owned a house outright and several acres of farmland which Mrs Ermine grew a fair amount of our food. But it was tough, and for a holiday in that period we took two weeks out, touring south Wales in our campervan, staying on campsites. Mrs Ermine has a penchant for spas, and while we stayed at Trevayne Farm campsite one afternoon she sampled the spa, and in the evening I walked down from the campsite and we had dinner at St Brides Spa Hotel. It wasn’t cheap, but not having gone out to a restaurant for a long time the experience was great. Hedonic adaptation means eating out every week gets ho hum, but if you go big once in a while it really hits the spot.

This time we stayed in a flat in Saundersfoot itself, which is a better experience than having to walk back three-quarters of a mile uphill to the campsite, and I got to see more of the strange heritage of the place.

It used to be a coal harbour, and the train ran along the now rather pleasant promenade along to Wiseman’s Bridge going through some tunnels carved through the dark rock, some of them long enough to be a struggle to see your way in the middle.

King’s Quoit, Manorbier

The Wales coast path had some remarkable prehistoric monuments, and we encountered these bad boys with curved crimson bills. I have never seen choughs before.

Chough, Manorbier Bay, Pembrokeshire
Chough, Manorbier Bay, Pembrokeshire

One downside of Saundersfoot beach and walk is it is dog-infested. Despite the council’s fond belief that dog owners can read, my experience is they don’t give a shit about signs, and assume everybody is as delighted to come across their precious pooch as they are. “Oh he won’t bite” they exclaim lamely when two barking rows of drooling teeth jump up at you.

Dogs not allowed on that side of the beach. Except for these ones, because they are special.

The photo, taken around noon on the 11th May, shows that these dogs were special, and rules didn’t apply to them. Neither the rules saying no dogs on that side of the beach, nor the rules saying keep your mutt on a lead, because it’s so much more fun for Fido to race up and down the beach, other beachgoers be damned. That’s bad on the beach, it’s really quite unpleasant in the tunnels.

crisis, what crisis?

I come back after about a week away and Monevator’s Bonfire of the Vanities seems to indicate that it’s been a tough time in the markets of late. GBP investors’ ability to shoot straight is handicapped by the falling pound, which flatters apparent returns.

Looking at my iWeb ISA, it didn’t look so bad, though of course that’s in falling pounds. I sold out a fair amount a little before the turn of the year, because I had done reasonably well coming out of the Covid crash and unicorn shit is on the rise. There is a lot of gold in there, because I had a plan to sell out gold from my ISA and rebuy it in my GIA, and buy income in the ISA with the liberated cash. Because: income tax and inflation.

Although discharging capital gains is a pain, with a gold ETF I can swap some SGLP for a gold ETF run by Wisdom Tree or SPDR, which would harvest capital gains for the cost of the turn.

As it was, I started buying gold in the GIA, but then Putin switched from exercises to war, and although I had started buying income ITs by selling gold in the ISA, I didn’t sell the rest of the gold for cash, so I rather increased my total exposure to gold. I will continue to hold my capital in the ISA as gold rather than cash, selling gold only just as I am buying. For some reason you don’t seem to have to wait for settlement in an ISA, so other than the £5 transaction cost there’s no advantage to selling it for cash ahead of the purchase.

I will admit to a fair amount of schadenfreude about tech, which I viewed as vastly overvalued before, and other than my exposure as part of VWRL didn’t really have much exposure. I do take the point that this will have given up return although I wasn’t quite as heavy on dividend paying equities as GFF, VWRL is my largest equity holding and pays almost diddly squat in yield. 1.56% isn’t going to make anybody fat. One needs £600,000 to capital in VWRL to earn £10k in dividends. I am some way off that. Continue reading “Fear and loathing in the markets again”

Citywire’s miscellaneous marked up moronic musings on market movements

I use Citywire occasionally, and they spammed me with this breathless noodling. Now don’t get me wrong. I share some of their opinion that economically we are in a hole, and until the last couple of months I would say the stock market was overvalued, particularly in tech. However, this is all storytelling, and one thing I have learned across ten years is that short-term macro storytelling is hard to use. To be honest, you are better off with a Netflix subscription, not so much because the storytelling is better, but because the scenery and the protagonists are more attractive. How do you like your stories?

Netflix
Citywire Pulse

Which storytelling would you rather look at? Netflix seems to roll in cheaper at £192 p.a

SELL IN BEFORE MAY AND GO AWAY!
The market bounce has entered April. Investors should use this rally to sell
before May, as equity markets may be about to re-enter a volatile bear market
for the rest of 2022.

Hmm, what rally is this we speak of? Let me consult the Great God Vanguard and their price of VWRL

Rally? Oh Really?

Well, I suppose it’s a rally of sorts. Equity markets may always ‘enter volatility’. What I would expect to get for £280 a year is at least Equity Markets will enter a volatile bear market after May, and if they are higher in December than they were in May (benchmark SPX or QQQ or whatever) then your money back, hows about that? Or if December is too heady for you because of the Santa bounce, then guarantee it till St Leger Day at least.

Record-high inflation has left central banks cornered, unable to resist hiking
rates and taking liquidity out of the market. This makes the economic downturn
almost certain.

They’ve spent the last ten years resisting hiking rates when perhaps they should have done. Has somebody suddenly taken the old Frankenstein jump leads to Paul Volcker then? Surely the energy crisis is more of a thing than what the Fed may or may not get up to. At least it’s got form.

Yield curves are one of the leading indicators for investment strategists, along with liquidity data and monetary aggregates.

Subscribe to unlock this issue of Pulse.

Plan will auto renew for £280/ year or £28/month until cancelled

Don’t Panic, Mr Mannering[1]. And as a general rule, anything sold via a subscription should be viewed with suspicion. If it auto-renews, then they are out to get you. More widely, I am buying. Bring it on. Monevator dealt with the yield curve earlier, and you’re late to the party, which is not a good look for £280 a year.

I now expect my mum to tell me about the yield curve inverting when I call her this Sunday. In-between her spring gardening plans.

Monevator

The other problem with Citywire’s Pulse is that I expect competence in the spelling, at least. I will look the other way at the curious construct of SELL IN BEFORE MAY AND GO AWAY!, which has a sort of TEFL feel to it, but the video shows that you can’t get the staff down at t’wire

Seriously. Won’t somebody save us from the grocer’s apostrophe?
The intern trawled https://stuckinthemiddle.substack.com/ for inspiration from Twitter’s @mrblonde_macro. I’ve saved you £280 p.a. You’re welcome.

I’d normally ascribe this sort of puffery to something written by AI, but the brutalised English supports a human origin. Anyway, I intend to ignore this breathless ballyhoo and buy over time. After all, if sell in May and go away, come back on St Leger Day is true then isn’t that when you want to be a net buyer in the summer? Also if you have religion about annual timing, then wouldn’t you want to avoid holding ‘owt in October too?

Continue reading “Citywire’s miscellaneous marked up moronic musings on market movements”

Seeking a new ISA platform

Last year I had a bash at getting a second ISA platform to join iWeb. There’s nothing wrong with iWeb, indeed if I could find a broker with iWeb’s service that was unconnected with Halifax/Lloyds I would just do that.

I ended up with Vanguard, but although there’s nothing wrong with Vanguard either, I came to the conclusion that they aren’t the right fit for me. I should have spotted it really in Monevator’s broker table

Investors with larger portfolios — Look first at the flat-fee platform table if you’ve accumulated over £25,000 (ISA)

Yeah, I was already over that with Charles Stanley before I moved it, and I am now way over. This is not good because – fees.

Iweb are good enough to provide the FSCS regulatory info. I am already well over the FSCS limit, and would suffer a serious haircut if push came to shove. The aim of splitting is to get 1+1 protection, This means I have to avoid

  • Halifax Share Dealing,
  • Lloyds Bank Direct Investments,
  • Bank of Scotland Share Dealing,
  • IWeb Share Dealing, (because I already have this)

To get that protection. Taking a look at Monevator’s broker table, that’s the first three options ruled out right away.

Interactive Investor – just say no, once more, with feeling

I’m not that keen on Interactive Investor, because I have had bad experience with them not just once but twice, though I could jump over it. There’s a lot not to like about iii – the odious scumbag Tomas Carruthers who pissed me off last time is still in there having bought it out, and its owned by private equity associated with JC Flowers, according to Wikipedia. No, I’ve drunk from that well before, and private equity is never any good for anybody other than private equity, with it’s inherent lack of transparency and generally scummy behaviour. If you look at all the M&A activity they are to share brokerages what Endurance international Group are to web hosting and Interbrew are to craft beer. On a more positive note, Aberdeen Asset Management seem to be in the process of buying them out. That might remove some of the reservations.

Continue reading “Seeking a new ISA platform”

A trip to the Great Wen in the Ides of March

The Ermine made a rare visit to London recently, to see the World of Stonehenge exhibition at the British Museum. The exhibition is striking enough – not so much about the specifics of Stonehenge but about the development of the Neolithic world-view in North-western Europe, insofar as we can determine.

Part of the trouble with Stonehenge is that it is very clearly there, after forty-five centuries, but there is no story associated. That is the enigmatic appeal of prehistory. "Every age gets the Stonehenge it deserves — or desires"1 This exhibition tries to fill in some of the blanks, with analogy, with a general timeline meandering through the exhibition sequence.

The ticketing roster packs ’em in, and while it’s not explicitly prohibited to go back, it’s hard and discouraged. So if you want to admire Seahenge, the wooden circle with upturned tree trunk in the centre, do it as you pass the first time,

Seahenge exhibit, normally at Flag Fen

Because else you will be going against the tide of visitors for a long time. There’s a certain prelapsarian hint to the narrative, peaceful cooperation in the the early days, and remarkable evidence of quite long-distance communication and exchange of ideas as styles. Technology remains simple, there is a certain beauty in the collections of stone axe-heads.

Stone axes
a polissoir - how you sharpen your stone axes
a polissoir – how you sharpen your stone axes
Evidence of remarkable craft skill in gold

Until the advent of iron in metal working, and then this happens

Overall good stuff and worth the £20 a head cost of admission, if a teeny bit rushed 😉

Continue reading “A trip to the Great Wen in the Ides of March”