Ill fares the land

Ill fares the land to hastening ills a prey
When wealth accumulates and men decay.

The Tory party conference is in full swing and celebratory high-fives, with Lord Frost chuntering that the long bad dream of EU membership is over. Now unlike some of you whippersnappers, I recall what the sick man of Europe looked like in 1973, though as an ankle-biter I wasn’t that economically aware. Ermine Command sent an expeditionary force to the fair city of Oxford. Through the crackling wisps of t’internet came this signal

Tesco

Our nonplussed forward team commander wondered if they’d picked up the time machine by mistake “I’m in a time slip and it’s Thatcher’s Britain all over again” – at least they’re all set for CDs if they can find a way to put them in their phones.

Continue reading “Ill fares the land”

Fintech Fantasyland – Raisin and Coinbase

In more innocent times once upon a time, I walked into a branch of Barclays opposite where I worked, showed them my staff pass card and 20 pounds to get the ball rolling, and walked out with a shiny new Barclays bank account. No passports, name rank and serial number proof, no pack drill, just me and them. They knew The Firm, they knew what a staff card looked like, and that was good enough. They knew their customer, in an analogue way.

Nowadays the process is grief-stricken and involves webcams picturing your driver’s license(sic) and all sorts of aggravation. I figured I should start to get a teeny bit better return on my cash than 0% as the amount started to creep up to Harry Browne regions, so I was tempted by Hargreaves Lansdown’s Active Savings, on the principle that I already had an account with them, so I wouldn’t have to go through all that customer ID crap. I stopped as soon as I read signing up for active savings means they will always send an SMS to log in, even for my SIPP. I am sick of this stupidity. It’s the easiest job in the world to slam your phone number to some ne’erdowell, particularly if you live in rented accommodation with a shared mail access. But it’s not that hard to do for everyone else.

We had/have a perfectly serviceable alternative – your bank card and one of those reader things to generate a one-time password. But no, it the general fetish to have everything on your damn smartphone, SMS messaging is a less secure alternative they are pushing. Because every bugger has a smartphone surgically implanted, FFS.

The advantage of Active Savings is that you have a single interface to the account, and they then let you save with a number of other organisations without signing up with those separately. Which is good, because the process of signing up for a bank account in the UK is absolutely horrible now with all the ID checks, I’m sick of it.

So I looked for an alternative, and Raisin seems to do the same thing. Given that I have a SIPP with HL, running with a separate FSCS institution seems a good idea anyway, and though I have to suck up the SMS bullshit at least I only have one sign up process to do.

The time to worry about bail-ins is before they happen

If you look at Raisin’s FSCS protection page, once you have signed up for savings account through Raisin, you get the FSCS (or Euro equivalent) protection of the destination institution. One of the biggest drags about savings is having to sign up with many institutions, the implication here is that you could break up your holdings below the 85k FSCS amount all through Raisin, provided you were careful where the destinations were.

There is some argument that holding more than the FSCS limit in cash is mad, unless you are really, really old. However, at current valuations I can see myself doing that for some time. Inflation is not the only hazard I see, and looking at what happened in Cyprus the FSCS limit is roughly where you become a tall poppy and a source of emergency bank funding of last resort.

So far so good, but though Raisin is associated with Starling Bank and I used Starling as a feeder account, it seems to be taking its time to happen – transferred about 10am and only got there 11pm. In general I expect better from Starling, my experience to date has been of quiet, understated competence, and blistering speed at posting details of transactions. Pay for something using the card, and by the time you have picked up the phone and opened the app that transaction is there to be seen in your account right away.  I don’t bother to ask for paper tickets for those card transactions because there’s no point.

For other Starling customers wondering what the hell their sort code is, Starling tell you there is only one: 60-83-71 at the time of writing.

I found Raisin confusing in operation. Some of this of course is that the nominee method of banking is new to me. For example I applied for a 32 days Investec notice account, paying 0.8% APR. Time to order some tiny fireworks, eh? So I get an email saying the Ts and Cs for the Investec savings account you viewed, and I think fine and dandy, to be treated to a pdf with 16 pages of solid cruft about Meteor Asset Management, with nary a peep about Investec. If you look at How Raisin Works you will see that Meteor Asset Management is the pool account front running Raisin’s customers, sort of analogous to a nominee account1, which is how you don’t get to streetfight the onerous Know Your customer crap for each and every share line in your ISA.

I happen to have read the how it works page before getting this 16 page Investec Ts and Cs not mentioning a word about…Investec. I was more tolerant of this rum carry-on because I had already qualified Starling as a competent operation, but that sort of inconsistency is going to scare the horses in customers of a more nervous disposition. Continue reading “Fintech Fantasyland – Raisin and Coinbase”

The Coming Gilded Age and Vanguard’s mustelid indigestion

Diversification is  a decent principle with bank accounts and the like, particularly given the tendency of financial organisations to freeze people’s accounts without due process due to the money laundering regulations. Then there’s the Madoff risk of the unknown unknowns cratering a business. So much to worry about.

1+1 redundancy is a good principle in many things-when I did a parachute jump there was a main and standby. Whether I’d have had the presence of mind to pull the standby1 before becoming a grease spot is another thing, but main and standby is A Good Thing.

To that end I have a second ISA with Charles Stanley as well as the main one with iWeb. The aim here is damage limitation, and you get most of the win with the first standby system you introduce. In theory I could get better security against providers going titsup by balkanising my ISA to try and stay under the FSCS compensation limit. Life is too short for that. Main and standby – and stop there.

My main ISA with iWeb is pretty spit-and-sawdust. Their win is not charging me annual fees, provided I hold no funds (shares and ETFs are fine) and don’t trade. I am OK to pay them transaction fees, the aim here is not to churn. They have no monthly investing facility, and you can’t borrow from the ISA – it isn’t a Flexible ISA.

Flexibility is valuable to people with no income

The financially independent are despised by the banking system, who won’t lend them money because without a salary income they can’t qualify the risk. So it’s handy to be able to borrow from your ISA, though you should never aim to use it. I hung onto my Charles Stanley account for its flexibility, but what with one thing and another it tended to grow, and CS jacked up their fees a while back. This begins to irk me. According to the Great God Monevator, CS rocks in at 0.35% where Vanguard are 0.15%. The difference in that makes it slightly worth while to shift as the account gets larger. As an old git I don’t need to flay costs as if they were the tattooed agents of darkness is the same way as TA, because I am a decumulator, and there aren’t as many decades to accumulate as for a 20-something. On the other hand I carry a lot of gold in the iWeb ISA and have shifted my risk balance lower, so maybe I do need to up the ante on the equity part. I was pointed toward the behemoth Vanguard as a lower-cost supplier with a flexible facility via a comment on Monevator. Although flexible access tends not to be a bargain basement offering, Vanguard do indeed offer it. To wit

The Vanguard ISA is a “flexible” ISA, meaning that money you withdraw may generally be paid back in during the same tax year without counting towards your annual allowance

Don’t transfer your old ISA as your first act. Because: AML theatre/freezes

Continue reading “The Coming Gilded Age and Vanguard’s mustelid indigestion”

This won’t be over by Christmas in Brexitland

Ah, bless. Remember July, when we were all camping and heating up the barbie and it was all going to be over by Christmas?

Hostage to fortune, mate, and you lot can’t plan your way out of a paper bag, it’s been firefighting all the way. Do or do not, do not try.The usual wingnuts from the torygraph and unHerd are fulminating, they may as well hold their breath.

We have long argued that the country needs to live with this virus. […]

The alternative is to protect the vulnerable while letting normal life continue for most people. Older people who do not wish to be locked away can make their own choices knowing the risks.

Don’t sweat it, guys, it’s what’s going to happen anyway. After Cominic Dummings’ little escapade because he is such a sociopathic Billy No Mates he couldn’t find anyone to do his childcare in London, you can’t tell any bugger what to do.  We’ll be battle testing herd immunity by default. We got there in the end, 40 years after I played this track at university.

Weed out the weaklings…

And WTF is it with all the over-acting emphasis Bozza? Don’t they have decent drama school and elocution in Eton? Less of the lunging into the damn camera, and perhaps engage brain before opening trap? Nah, it’ll never catch on, and anyway, we’ve had enough of experts. Funny how Boz is so uniquely unsuited to wrangling something with the potential to kill people. I’m not convinced that it’s the end of the beginning yet. Boz really did need to pay attention at drama school. This, dear boy, is how you deliver that sort of news:

BoJo’s emphasis is all wrong and his cadence sucks, he’s trying too hard. If you want to know who to take people with you, listen to Donald Trump – he gets that right. He can talk absolute bullshit but make it sound right.

Socrates called out the problem of the unwilling leader being better qualified than those who really, really want the job, though he didn’t crack the implementation problem. Bozza is proof positive, he’s a good-time guy who wanted to get Brexit done, not fight bugs. Be careful what you wish for…

Capitalism gears up to ream the poor at Christmas

Anyway, it was clearly bollocks that it’ll be over by Christmas. What’s more, capitalism red in tooth and claw is tooling up to ream the poor, and the recently unemployed anyone else.

Beware the plastic

The Bank of England fondly believed that shitting on savers would give borrowers a break.While they did shit on savers they gifted ‘investors1‘ a doozy, which is how after a near death experience in Spring your equity portfolio is worth more, though about 10% of the UK economy has been burned.

Dunno what the heck they are smoking in Threadneedle Street, but it is strong. For starters lending money to people who have just lost their jobs is a risky biz in the first place, it’s about return of capital as well as the return on capital. Personally I’d also charge people more around Christmas anyway, because parents who are unable to tell their kids that Christmas is cancelled this year are unlikely to have the fortitude to do what it takes to pay this borrowing back under adverse conditions. Ten years ago in the midst of the GFC I suggested Charlotte tell her precious ankle-biter that Christmas is off, and the problem remains the same. Different perps, different kids, but Christmas is an elective spend, and it’s likely to be a tough time this year. Elect not to spend, rent and power before pressies. Tragically, there will be many who won’t have the option of either. If you have no assets, there is an argument to hit the old CC hard and fast, knowing you will never pay it off, but the IVA/bankruptcy option does rob you of some options in future. Given this hit is hopefully a one-off, then it’s a hard call. Going IVA/bankrupt may make it harder to rent a place or get some jobs…

Same old shit, different decade

Maybe we should have a guest appearance from Shona Sibary, she of the too many kids and the unawareness2 that you’re actually supposed to pay off a mortgage, plus if you use a string of fixes to borrow more than you can afford you make yourself a hostage to fortune in market crashes.

Lenders gonna lend, and you have to make money. They’re more Chuck Colson than FDR on this,

“If you’ve got them by the balls, their hearts and minds will follow”.

If the Bank of England was really that troubled about hard-working families getting a dreary Christmas then they could always lob money out of helicopters themselves, rather than getting credit card companies to do the dirty work for them. I guess Rishi might disapprove, but hey, whatever works, my friend.

As living proof of this incipient reaming of the newly unemployed, I received the following mealy-mouthed missive from a bank:

We want to help you manage your borrowing and ensure your overdraft limit is right for you. As you haven’t used your overdraft for a while, we’re planning to reduce this from £3,150 to £1,300 on 27 November 2020. Your new overdraft limit is still above the most you have used on your account in the last six months.

Well, thanks a bunch. I’ll have you know that I haven’t used my overdraft for the last fricking ten years, I can’t remember ever using it and it will have been cock-up anyway. However, you cynical punks are clearly expecting me to lose my job by Christmas and don’t want to be left holding the baby, eh? Well, you can f*ck right off and stick your overdraft where the sun don’t shine, busters.

Help me manage my borrowing? WTAF?

We’re in the chest-beating and mutual hollering abuse stage on Brexit

It was always going to get to this. Personally I’m of the view that too many Tories want a no-deal Brexit and there’s another four years to spin it as all t’other side’s fault. But perhaps all the chest-beating is just a phase we are going to have to go through.

In this crossfire, the Ermine needs to work out to preserve capital across the Brexit interregnum. I grouped together the bits from shorting earlier this year, reserves and I have enough for next year’s ISA before becoming a net decumulator.

I have ‘invested3‘ in SGLP, I will tolerate some cash in NS&I ILSCs, and some more in premium bonds. Now that does expose me a bit to Government cash grabs in the troubled fiscal future, as well as the lessening of the greatness of British Pounds to buy stuff, but the combined amount is less than the FSCS limit. Not that that pertains to NS&I anyway. I need to work out what I am going to hold the value of next year’s ISA contribution in. Gold via SGLP is one option, but I start getting seriously exposed to the gold price.

There’s still time before Brexit once October is gone, with it’s nasty tendency to downside violence in the markets, and perhaps if we know whether Trump will finish the job of Making America Great Again. Although my shares ISA is rammed, I could start to deploy the next year’s allowance into a trading account, and then bed and ISA the shares into the ISA after March. I am unlikely to be hammered for capital gains on £20k worth of say VWRL, although I suppose it depends on how well Bojo and his mates respond to the FXmarket singing ‘how low can you go’ about the GBP in the background.

There aren’t any good options here. Just less bad ones…

 


  1. That’s you and me trying to make sense of what will hold value into the storm. assuming you have capital. God knows, but I suspect valuations are not representative of value. This too will pass. That’s better for you if you have 30 years of investment horizon rather than two, but hey ho, I have had a good run since the GFC. If I buy VWRL, I am not under the impression I an ‘investing’ in productive assets at good value these days. More I am disinvesting in great British pounds. It’s a race to the bottom. 
  2. Some of it is she’s having a larf and needs column-inches, her story about running away from Devon and how to fix the First World problem of puppies turning into dogs were designed to get a rise, along with the power of phenergan elixir to quieten your rugrats on flights ;) 
  3. Ah, the i-word again. Nobody invests in gold – it’s noted for not adding value, unlike farms and companies. It’s a pure fear play, trying to hold value against a storm. 

Strong in these padawan, recency bias is

Thus quoth ZXSpectrum48k, over on Monevator. From a fellow who does this as a day job, looking at the legions of wannabe escapees from the office

Dunning-Kruger…

Socrates was the counterfactual, though he defined the Dunning-Kruger problem in his first sentence.

for he knows nothing, and thinks that he knows. I neither know nor think that I know

Socrates.
Or Plato talking about Socrates.
whatever, there still be truth in it

It is part of the way of the world – the young fellow must be ignorant to his faults to make his way in the world and try and put his ding in the universe. ZX was also talking of the younger ermine, and probably even of me now, after all, how would I know 😉

You don’t often get away with thinking that you know, when you don’t. Particularly in the markets. Somehow TA’s article showed that in a harsh light. Let us look at the thrust of his article Should you use cash to bridge the gap between your ISAs and your pension?

In it, TA postulates saving ten years worth of cash, to bridge your spending over 10 years between retiring early (the RE part of FIRE), and reaching 57, the earliest point the Agglomerator, hero of his journey, gets to access their tax-privileged pension savings (SIPP). I confess I haven’t studied his derivation of that requirement, but I was only a little bit older than his putative future Millennial when I packed in work, I was very early fifties whereas Agglomerator wants to clear the workforce at 46.

Let’s just zoom out a little and put that into perspective, the Agglomerator enters the workforce at 21 on leaving university, and clears it at 46, so he works for 25 years. In that 25 years, somehow he saves 10 years of spending as cash and about twice that much in tax-privileged accounts to see him out. That looks like a massive ask to me, saving effectively 30 years of essential spend1 along with buying a house outright and establishing himself.

Today’s FIRE community is very different from that 10 years ago

For a start, fat FIRE is a much bigger thing than it was in the past. When I started it was about frugality first

UK Personal Finance Blogosphere, Source: http://www.moneysavingchallenge.com

there are only 5/13 left standing (I haven’t counted those that haven’t been updated for over a year). It shows how different the world is now that it was just over ten years ago when I started down the FI/RE track. It was about saving and frugality.

Why was this – it was just after the GFC, people didn’t really believe the stock market would come good. Apart from Monevator, who sounded the clarion call into the low-water mark – git your ass into this market- NOW. However, valuations were such that you could get a decent return on shovelling money into that market. Although you were never going to retire early making minimum wage, you didn’t need the fancy City finance pay packet.

Today’s FIRE community is much, much richer than that of ten years ago. Some of that reflects these high valuations – if you want to accumulate enough to retire early now it’s a much tougher job. A safe withdrawal rate of 5% was conceivable in 2009, it’s much lower now, simply because valuations are higher. You need to be working in finance to get enough. There’s much more emphasis on fat FIRE now – starting off with a lot more, and spending at much higher levels. The frugalistas have been run out of town.

If you’re starting out, that’s not so bad, I have the suspicion that valuations will become more reasonable2 in the not too distant future, you need to keep buying into it. You have three decades.

But if you need to make it all happen in five years starting yesterday, then it’s going to be tough sledding. And I would imagine that a lot of getting-on-for-fifty-somethings are going to find themselves heading towards early retirement this year and next.

Talking of padawan, bless my younger self’s cotton socks, I thought I would have edge in sectors. Then I chased the HYP, is some ways because after a GFC yield was easy to find. Dunning and Kruger would be proud of me. I did do well. But not for the reasons I believed. I have no particular edge is stockpicking. But I was next to an open goal. Truth be told it didn’t really matter what you bought at that time. Valuations were in the dumps. My big win was to buy anything. I would probably have done better buying VWRL, except it didn’t exist in 2009 and before the RDR there were all sorts of dodgy practices to do with funds and backhanders. I was weak on the US market, which has been on a tear for most of that time. But I bought in at a low, and while I would have been better off buying a broad index, getting the timing right trumped sector allocation.

It’s not what I bought, it was when I bought – at low valuations. The rest of the journey was slowly coming to the conclusion that I am still a padawan, though not hopelessly so. I did OK, such that now, marked to market at high valuations (now) I have more capital than market to market at low valuations (the GFC) despite living off investment return over the last 8 years.

TA’s article says I was nuts. I agree, if I were starting now being balls-deep in equities other than three years’ essential spend would be crazy. It was less nuts starting from low valuations, because it is the truth that passivistas never allow to be heard – valuation matters, and the other name for that is market timing  😉 . But Dunning-Kruger probably would have the last laugh, because if TA went back in time to the younger Ermine and said ‘my crystal ball tells me you have to have enough cash to carry you for the next 8 years, what do you know that I don’t?‘ I am not sure that the younger ermine would have puffed up his furry chest and say ‘traveller from the future, valuations are historically low now, so the risk is much lower than it will be in your time.‘ TA wasn’t there, though Monevator said pretty much that at the time in his if not now, when?

A tale of desperation against logic

We are all, of course, the hero of our own narrative. Using the flight  analogy from a few weeks ago, I ready myself for the eight lean years in a flimsy craft, refuelling and seeing fire streaking across the runway behind. I am faced with the choice of wealth or health, and choose health. TA would not have cleared me for take-off, I did not have eight years cash saved, I did not have enough to bridge the gap. But enough to be prepared to take the chance. Against the backdrop of the GFC, the increasing value of the shareholdings stiffened the spine enough that I felt I could make it, though I did have to experience the lean years, particularly at the beginning. But in the years after the GFC, many people were skint. The ask is much, much higher now.

The Ermine cast a cynical eye at the Bank of England’s UK’s implied inflation forward curve (H/T Monevator’s should you use cash to bridge gap between your ISA and pension) and thought to myself flipping ‘eck, you lot must think we are born yesterday.

Look at the sedate trajectory On the one hand they’re expecting to write lots of letters to the Chancellor on how they cocked up bringing inflation down to 2%, indeed this will be a regular event for the rest of my lifetime. The Bank of England has a lot of finance bods much smarter than me, and I am sure that they will say well, hey, this is what is implied by the yield curves, it’s not our opinion. Sort of like a variant on guns don’t kill people, people do. Nothing to do with us, guv, it’s wot the market numbers say.

All over the decadent demise of the Western world there is this refusal to take responsibility for the consequences of our actions in favour of magical thinking. I’m all for magical thinking, but in that case let’s have some magic back, eh, rather than pretending we’re all materialist rationalists. Smells and bells, please. At least some of the ride will be more fun. Meanwhile

You’re having a larf, guys

In an exceptionally paranoid moment the ermine looked at what I expect coronavirus to do to the economy, followed by a quick one-two of Brexit, and figured that I see inflation in my future. In the BofE’s favour, if we take a look at the UK inflation rate history

UK historical inflation (CPI) Macrotrends

it looks not so different from the B of E’s prognostications, if we stick to the last 40 years. We have to go back nearly 30 years to the last time it was over 5%. Case proven, m’lud. Along with history, inflation has ended. Obviously you need some inflation, else capital will sit back on its lardy butt rather than get out into the world making good stuff happen in theory, but we’re sorted as far as inflation taking off. Hmm. In other news

We seem to be suffering a general competence deficit

We seem to be suffering a major competence deficit these days. In the battle between ability and craftiness, everyone seems to be losing their grip. The malefic Dominic Cummings seems to losing his mojo – starry-eyed for Big Data, his feet of clay show when it comes to hiring people to do anything with it. Obviously you ask your mates first, because, well, corrupt bastards are like that. He’s of the view that leadership in politics requires a science degree, but his own ancient and modern history degree from Oxford clearly failed him in his/our hour of need. He’s unable to find competence in handling data.

If the answer to your data processing job is Excel, the question is wrong

Back in the day, the Ermine was chatting to the guy at the next desk, who was tasked with keeping records of set-top boxes. Now I had an electronics, not software background, but he was planning on keeping this in Microsoft Excel. “Your problem there,” opined the Ermine, “is that you can’t do ‘owt with the data. What you need is a database”. This guy was going to try and search for repeating faults and that sort of jazz. Now you can do that is Excel, but it’s a bit like Samuel Johnson’s quip about a dog waking on its hind legs, it’s not so much that it’s done well, it is that it’s possible at all. It grinds to ever slower after about a thousand records – I discovered this the hard way when running the records of a club that had about 1500 members at its high water point. I switched to Access3 after about 500 members.

The trouble is everybody can understand Excel, whereas getting your data into a database is a different level of abstraction. Even in DOS days, dBaseIV had the edge on Lotus 123, though wrangling the forms to make it work was a nightmare.

Excel just isn’t designed to handle huge amounts of data – wrong tool, wrong job. This fellow might have had a hundred thousand set-top box ids, and Excel was only good for 65535 rows back then. You don’t use Excel for massive lots of data. I’d get off that wagon at more than 5000 data points, so you don’t use Excel for tracking your set-top boxes. Or your coronavirus victims

Now in fairness to our Dom, he’s busy getting his mates to do his data munging, falling for the old saw of anonymised data. The trouble with AI and Big Data in particular is that the aim is to de-anonymise everything.  AI looks intelligent because it cross-correlates everything, at scale. The public data Dom’s giving his buddies may well be anonymised on its own, but when combined with other data the keys to the kingdom often show up.

Now is the winter of our discontent[…]
I am determined to prove a villain
And hate the idle pleasures of these days.
Plots have I laid, inductions dangerous,
By drunken prophecies, libels and dreams,

This lot seem to have skipped a few lines of Richard III, and gone straight on to the doing evil. The thing that’s saving the rest of us is the competence deficit – in driving out Brexit non-believers, they seem to also have driven out anybody who can spot a bad idea miles away. Or indeed anybody who’s got a clue. Funny old thing, that… Correlation is not causation, eh, Dom?

Brexit zealotry doesn’t seem to correlate with competence

Perhaps driving out those who had a clue was the point – disaster capitalism unfolding before our eyes. Never let a good crisis go to waste and all that. Perhaps it has to be the way- you need moronic slavishness to the Brexit Ideal to Get Brexit Done, and perhaps afterwards we can engage people who understand the art of compromise. A little bit of that on t’other side wouldn’t go amiss, either, but we have to stick with what we can change…

I’m sure we will trade with other people after Brexit. But let’s get some people who can talk in a civilised manner to others, eh, rather than yelling we have the sovereign right to do exactly as we damn well please, and thanks for all the fish. That’s an awful long way towards the Juche doctrine of North Korea, and I suggest Brits are a little bit too soft and used to their creature comforts to want to pay that sort of price for absolute sovereignty, regardless of what Jacob Rees-Mogg and his disaster capitalism compadres in the European Research Group have to say about vassal states.

I am old enough to just remember 1973. Britain was a lot more self-sufficient in many things then, like food and cars for instance, than it is now. We weren’t that good at a lot of this, which was roughly why we signed up to the Common Market as it was then  – we were the sick man of Europe, economically speaking. However, the issues raised by James Goldsmith of the Referendum Party weren’t ever addressed with Maastricht. Brexit will definitely fix those. A little bit like burning the house down fixes bad wallpaper, but some non-ERG eyes can probably make Brexit work right after a few years. Britain’s economy did sort of work before 1973, and hopefully we have all learned something in the intervening 47 years. Just for God’s sake keep the British Eton-educated whazzocks away from leadership of our companies, particularly any that make cars, it took foreign management to make Britain’s car factories make cars that were worth buying…

work is not the route out of poverty for the ability-challenged or those with more children than skill

I confess I will struggle to drum up sympathy for the Red Wall if they find they are vassals to British plutocrats rather than EU technocrats. True, they weren’t to know of the coronavirus pandemic, but the deep compassion for those who fall on hard times of the crew that they voted in to Get Brexit Done has been hidden in plain sight for a very long time.

I still remember the relatively benign version of that looking for my first job nearly 40 years ago, it scared the hell enough out of me to never take any time between jobs until I packed work in for the last time. The experience of being unemployed in Britain doesn’t seem to have improved between Margaret Thatcher and the punitive and nasty Universal Credit.

Let’s take a look at the latest tweets by the bell-ends at the DWP about Job Entry Targeted Support.

Translated: People on the scheme which get a personal DWP goon on minimum wage who is incentivised to make your life a misery and get you to apply for endless jobs for which your skills and personal circumstances don’t fit you

Personalised, like the red dot from a rifle. The personal adviser will be targeted to make your life miserable. If you want to cop a feel of the quality of the personalised advice, knock yourself out on the gov.uk careers advice beta to gauge the accuracy.In the case of the Ermine, that’ll be

ORLY? The last time I had anything to do with sports was the very last time i packed my PE kit away at school, in the late 1970s…

Because there is a fundamental truth here. Britain is a rich, First World country. That means the cost of living is higher here than in many other places.

Sadly, Brits are not, on average, cleverer than other people. We’re average. Quelle surprise, eh? As a result, the sort of jobs available in the UK that pay enough to live on need to demand a higher level of skill than the global average, and the bar is increasing all the time4. Because: globalisation. If you thought Brexit is going to fix globalisation, then you should have been more careful about the people you gave the keys to.

Elementary logic shows that the result of increasing skill requirements is that fewer and fewer people will be able to earn enough for the average cost of living. Some of them won’t be bright enough. Some of them will have had children too early in life, or split up with the other party involved. That means you won’t have enough time to get a full-time job. As a society while we mouth platitudes about wanting to make up the difference, by our actions we clearly don’t care that much to be prepared to carry your choices for years and years.

We have hidden this in the past by increasing the number of shit jobs in the economy, things that should have been done by machine or not done at all, and priced these at minimum wage. It is one of the reasons why productivity has gone down the toilet in the UK since the credit crunch. For contrast, I started work when this was about 55 on that scale, and left when it was about 95. Britain got better off while I was at work – not due to me I hasten to add. You need an increase in productivity to address poverty. There has to be more shit to go around per head for the country as a whole to get better off – it is a necessary but not sufficient condition.

UK per capita productivity, it’s less than it was in 2016, and pretty flat since the GFC. Source: ONS

There’s only so far this can go. Another way we are hiding this is to create a punitive DWP system for the un(der)employed called Universal Credit, employ young graduates who can read and write to be mean to people who perhaps have literacy issues or generally can’t stand filling in forms. We incentivise the graduates to disenfrachise as many of their ‘clients’ as possible so that they keep their sort-of middle-class jobs, while making it all look like the clients’ fault that they don’t have the natural ability to get/hold a job that pays enough to live on.

Let’s not even start on what we do to the physically and mentally ill, eh? We just don’t care. Oh and then we wring our hands about the amount of homelessness.

Now I’m not saying I am clever enough to know the solution to this problem, but I have learned over several decades is that whistling a tune and repeating inappropriate platitudes like ‘work is the route out of poverty’ isn’t the way to fix the problem. It would be more honest simply to tell some of the people with insufficient skills or chaotic lifestyle choices that there is nothing we are prepared to do for you. Work is not the route out of poverty, for the simple reason that the cost of living is too high in Britain to keep a roof over your head on anything less than the full-time minimum wage, and there are too many people in the UK who don’t have enough aptitude to add enough value to something to even justify the minimum wage.

Some people are seriously short of basic life skills, like recognising food 😉

Ceci n’est pas food

Microsoft offered me this picture of a field of Halloween pumpkins in some American field. It’s a little bit weird, a tad Magritte, IMO. How do I know it’s American – there are no trees, hedgerows, we don’t have one-armed pylons unless there’s a really good reason and we don’t run our railway tracks with no guarding, and I don’t think I’ve seen boxcars like that.

However, it’s in keeping – Halloween never used to be a retail-fest or even A Big Thing until about 30 years ago, and it’s been pushed like hell, imported from Over There. It’s still rather disturbing that a significant proportion of British parents were presumably raised by wolves themselves in being unaware that you can eat what’s inside pumpkins5. Although I had no idea how they grew, I was aware of this by the time I left home, though it wasn’t particularly useful information as Halloween wasn’t a big thing, and I am child-free anyway 😉

However, I am with hubbub – eat your damn pumpkins FFS 😉 Tossing 90% of the pumpkins we grow is just plain rude. Mrs Ermine grows these smaller ones which look the part but taste better. We don’t need to carve them, but with cucurbits size does not correlate with flavour IMO.

It’s not so much that the big supermarket ones will taste horrible, the main failure mode is to taste of nothing much at all. Think marrows as opposed to courgettes. Having said that, if it tastes bitter, then toss it out. Pretty much a rule of everything to do with eating really, but according the the RHS bitter squash can give you bellyache if it doesn’t breed true. So don’t seed save curcubits unless you know what you are doing.

Last year I was in Morrissons and they actually labelled their Halloween pumpkins as ‘not for human consumption’, which makes me wonder what the hell they spray the buggers with. And quite frankly, parents, maybe you want to ask yourselves, if you buy this sort of contaminated shit for your kids, then what sort of world you are encouraging capitalism to build for them?


  1. I know, he doesn’t keep it all in cash and gets some return on his money. But the maths works out at enough for 30 years essential spend, even if it isn’t deployed in that way. 
  2. Valuations becoming more reasonable is otherwise known as a bear market 
  3. Before all the DBAs take the piss, Microsoft Access was the right solution for a club database, easy enough to a tyro to make it work. If it didn’t, the result was going to be embarrassment rather than death. I’m not saying PHE should have used Access ;) 
  4. I took my O levels in the mid 1970s. The typical class sizes of my grammar school was 31, but after the O levels class sizes were about half, because half the kids had gone into the world of work. They were fixing cars, helping in businesses, all without A levels or a degree. I saw far more people as a child building the Goldsmith’s College halls of residence than I saw on the entire Olympic Athlete’s Village building site in 2012. You wouldn’t need to be able to read and write as a hod carrier in the 1970s, I saw nobody carrying bricks onto the scaffolding up a ladder in 2012, there were mechanacal aids t do that. 
  5. While I despise Halloween for being a jumped up capitalist consumerism-fest, rather than an honourable celebration of the turning of the seasons/harvest festival/thinning of the veil, the truth is that parents who eat their pumpkins with their kids and then carve jack o’lanterns out of them use more of the fruit than I do. Upcycling writ large and they should be applauded! 

ermine egging on the economy

Monday 15th June was allocated to opening non-essential shopping in England, and it seems to have gone down a storm. Boris would like a word with y’all

Boris, me old buddy, the prospect of 10% unemployment1 is heading towards these punters you’re exhorting to shop with confidence. Isn’t it better to shop with confidence you will have a job to pay for your consumerism first? Not sure I’d start with Westfield either, I don’t have fond memories of my last visit to Westfield – a food desert of overpriced junk.

Nevertheless, we decided to go egg on the economy the Ermine way, so we headed off to the South Coast. Mrs Ermine wanted to swim in the sea. She was much taken with it – on the south coast you can see some depth into the water, which is a step up from doing that in the North Sea, which is pretty murky.

Personally I can’t understand the attraction – you get salt in your hair and sand everywhere. I am a weak swimmer, however, and when I hear this sort of thing then I just don’t fancy my chances at all.

Indeed Mrs Ermine started talking of rampant consumerism – she is thinking of getting a snorkel and fins. I was picturing this sort of thing and wondered if that’s really a kindness on a public beach. Suppose it’s one way of encouraging social distancing

Fin

Apparently she means flippers. That’s future consumerism. We had more immediate requirements for consumerism, and dropped £60 on this,

a whole lobster in halves

and mighty fine it was too. We got to eat it on a table, but we had to provide that and the eating irons ourselves – we had it in our camper van in the National Trust car park. Call me timid, but I think trying to wrangle half a lobster on one’s knees using a blunt wooden fork could easily end up a tragic waste of fine seafood.

Although we were doing our bit for Britain, personally I think that hospitality is toast. This sort of thing is all very well in midsummer, but it’s going to suck bricks in winter

physically distanced queue to get chow is OK in summer…

plus there’s still rent and maintenance on the buildings that you can’t turn a profit on. Sure, you need the kitchens, but there’s a lot of wasted space on the eatery. Perhaps they will have got that sorted by Autumn, because al fresco dining in the rain isn’t the cheeriest prospect in the world. Margins seem razor-thin in the restaurant trade. Second-hand catering equipment and premises will probably be very cheap next year, perhaps it is down to a new generation of restaurateurs to build the new world out of the ashes of the old. Continue reading “ermine egging on the economy”

What will we do with our world when this is over?

As my ageing mother said a couple of weeks ago, up until this you have not lived through any crisis. This is a woman who was not yet into double digits before the second world war ended.

You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.

Rahm Emanuel

Having switched off a fair part of the economy, it’s a fair chance to ask the question “If we started with a blank sheet of paper, I don’t know, say about May 1979, would we design to get to where we are now?”

if it was meself that was going to Letterfrack, faith, I wouldn’t start from here

apocryphal Irish joke

Let’s take a look at what we have got in the UK compared to what we had. Way back when a young Ermine entered university around that time, inflation was way up in the sky. By the time I graduated,  the economy went titsup in a big way, and it took six months to find a job. I plied my trade in a small company making electronic gizmos. Britain was a different place then.

When we wanted castings for a piece of equipment, we were able to go a couple of miles down the road to meet up with the suppliers, they could point to the part of the design that would reduce the yield, tell us why and we got to change that. The people who wound the transformers for us were in walking distance.

In my next job, I travelled by train from SE London to Cannon Street Station. No city, other than perhaps Edinburgh presents a pretty face to the railway line, but I saw light engineering firms here and there from the railway line, amongst the council estates and blocks of flats. As the decades passed, billboards went up ‘you could be home by now’ as the factories were cleared to make way for estates of ‘executive’ homes. Funny how every bugger buying a new house wants to feel they are an executive, I’d imagine a real FTSE100 CEO wouldn’t be seen dead in one of those rabbit hutches.

I inherited this pump made in east London from my Dad, we still use it when making compost to get enough pressure from our water butts to run a sprayer.

They used to make pumps in London – yes, Romford is in London, not Essex

As the entertaining wingnut David Starkey related, today’s Britain is buggered if it can make shaped bits of plastic in any quantity, for that is largely what PPE is. Sic transit gloria for the erstwhile workshop of the world. I’m sure Mr Carter would have something to say about that, once he’s stopped spinning in his grave on his sintered bearings, still serviceable after six decades or more.

Starkey is surprisingly dirigiste for a wingnut. Perhaps he hates globalisation and its inhabitants of nowhere even more than furriners. Maybe here is a way to make a success of Brexit, with hyper-localisation, though I thought we had given industrial policy up with Thatcher in favour of Ricardian advantage and the invisible hand of market forces. Too much of a good thing can be wonderful and all that.

Maybe there is a turning point here. We could draw in our horns and make more stuff, indeed balance the economy, though I don’t think that we will have employment enough for the horny-handed New Tories of the North. But hopefully we could make shaped plastic quicker… We used to have big companies that made the raw materials, with grand sounding names like Imperial Chemical Industries.

Britain decided to maximize the amount of money we could make, by specialising in finance, and tossed an awful lot of the population’s dreams and expectations1 by the wayside. Now although I blame the borked state of the housing market squarely on Mrs T and her cursed Right to Buy sale of votes, clearly the world didn’t stay static over the intervening 40 years, so you can’t blame other pathologies of modern Britain on her. But it did set the direction of travel, a focus on the numbers and Ricardian advantage. Despite the bad rap she has for manufacturing, causal inspection of the share of GDP as manufacturing chart lower down shows that it was the Rt Hon Tony Blair who was in the wheelhouse when manufacturing got run out of town.

Our finest minds went into finance, and there’s some pretty damning critiques of the desperate lack of balance in the British economy from some of these. There’s the short form from ZXSpectrum on Monevator

The UK made a sort of Faustian bargain: low unemployment for high underemployment and low skill base. Taxpayers subsidize many corporates and SMEs, through low taxation and incentives, to provide rubbish jobs on low pay. These jobs should have been offshored to EM markets years ago. It’s unsustainable for UK workers to be paid 3-5x an EM worker for something where they offer no advantage. It’s also results in terrible productivity and low capex.

I’m clearly going to have to pay more tax after this crisis. I’d much prefer to pay people UBI so that they could stare at the ceiling, than see my tax used to subsidize Richard Branson, Mike Ashley or Phillip Green. Machine learning and AI is going to make many middle class people unemployed.

and the long form with knobs on from Tullet Prebon’s Tim Morgan

In the West, a small minority prospers, principally the CEOs of companies whose profits have surged, and bankers who gain from the expansion of the lending sector. On the other hand, the majority suffers, both because of declining wages and because of rising indebtedness.[…]

Our Tim ain’t feeling any more chipper about things now, here’s what he has to say about the much-vaunted V-shaped coronavirus recession that the markets are telling you do go buy into RIGHT NOW ‘cuz everything is up in the sky and going up. There’s an updated version of Tim’s growl H/T FI Warrior which makes the same sort of Limits To Growth angle. For the moment let’s set the LtG angle aside2. After all, I was still in short trousers when the Club of Rome said we were doomed in thirty years, and I am now within spitting distance of The Firm’s normal retirement age, after two decades of extra play.

However, it is clear that since 1980 we in Britain have designed a world of work that is a seriously shit experience for a lot of people after 40 years of TINA. In particular we shifted the UK economy to services, and created an awful lot of crap low-paid bottom end jobs, and a lot of middle-class bullshit jobs. The poor on zero-hours contracts can point to what the problem is with their service jobs. They aren’t reliable, and they aren’t enough to pay the rent, never mind a good life.

Many in the middle-class find their bullshit jobs eat their souls, though they pay OK. One of the problems of bullshit jobs is that they are like Universal Credit for the middle class without the DWP torture, they still lower productivity. Bullshit jobs produce services/goods that nobody wants or needs.

We have maximised money, but not meaning, and muddle along with misery for the many

It’s all very well to clap for our carers, but we will learn what our values are if we collectively stick our hands in our pockets and pay the poor bastards a living wage, and perhaps bring back bursaries so they don’t carry student debt. In general this crisis is highlighting that an awful lot of people who keep the wheels running for us are paid the minimum wage if they are lucky, and don’t have a minimum guaranteed hours if they are unlucky.

And, when we get to stand back a little bit from it all, we discover that an awful lot of better paid middle-class jobs are a bizarre combination of make-work and perverse incentives. F’rinstance, several years ago, we took a look at how some funding organisation was setting up a community project. The first rule of funding is that you have to fund the consultants who happen to be funded by the funders somehow, that advise you on how to use the funding, then how to get next year’s funding, how to fill in the innumerable forms to get the right ticks in the boxes so the funders feel good about the funding.

Personally, I’d pull the plug on the lot, including the National Lottery and all its good causes. There’s a lot to be said for the Hippocratic oath when it comes to fiddling with the lives of the poor. First do no harm. Betting on the horses or greyhounds in the 1960s was more honest than ‘it could be you’ but pretty definitely won’t be. I have some recollection that there was regulation of that but it appeared that the Tote established by Churchill was sold off3 to Betfred in 2008. Ain’t privatisation such a great thing, eh? I’m sure Betfred maximises the amount of money not ripped off from the punters and feeds it back to the sports. Not.

On a more collective level we end up with the deeply borked twisted mess that the DWP has become. They start with a buggered up premise from the get go, which is that work is the way out of poverty. No. It used to be, when the economy had a wide range of jobs for a wide range of talents, and we needed hod-carriers as well doctors. That was forty years ago, guys.

That’s just not true any more, because: globalisation. There are many people in the UK whose skills aren’t up to adding enough value, because it is cheaper to go to somewhere where the cost of living is cheaper and hire that function there – or build a factory to make it there and import the product.

Now there are lovely jobs and lousy jobs, and whaddya know, there are a lot more lousy jobs than lovely jobs. This was spotted 17 years ago, it’s not new. You can’t make a lovely life out of lousy jobs.

That is why they don’t make pumps in London any more – they make money in London, and making pumps is just too low value-add compared with making money.

That isn’t to say we make nothing in Britain any more – the added value of manufacturing has been sort of retained, even as the share of GDP has dropped like a stone

Share of GDP added by the manufacturing sector as percent of GDP
Added value of manufacturing, bn USD, probably slightly declining over time given 30 years of inflation probably make 500bn 2020’s US$ worth less than 300bn US$ in 1990

So what, many might say. After all, my Dad was notably hard of hearing by my age due to working in a glass bottling plant, and he was stone deaf by the time he cashed in his chips.

People may wax lyrical about the mining community spirits but it was still a pretty ghastly tough job. There’s not that much great about a lot of manufacturing jobs, because wrangling Stuff tends to be physical, noisy and hard work. The younger ermine thought I would have to leave the electronics industry due to getting asthma. That first company was probably not COSHH-compliant. The problem turned out to be that we would wash circuit boards in boiling Arklone with the instruction never fall to the floor in that room, because the vapour is heavier than air. I never had trouble with asthma4 since leaving that first job after a year, though soldering was still part of the electronics industry, and fume extraction was not a thing until a few more years. As a design engineer and then research engineer I didn’t do enough soldering for that to be an issue.

Many manufacturing jobs were bad for you, but an awful lot of modern service jobs are shit in a different way. At least many of the problems in manufacturing were soluble with PPE and automation, whereas many service jobs seem to gravitate towards low-end minimum wage zero hour contracts that you can’t live or die on. The micromanagement and metrics of some middle-class jobs lead to chronic stress and the associated strokes/heart attacks.

In Britain Thatcher inaugurated the practice of buying votes by raising house prices. This was achieved by destroying social housing, giving bungs to people who were too poor to buy a house. Credit was expanded massively with banks going into the home lending market. In 1989 a young Ermine as a single man stupidly bought a house on 3.5 times earnings. Apparently you can still do that oop North, but according to the ONS your average English first time buyer earns5 52k, saves one year’s earnings and spunks 237k on the house.

Over a couple of generations, that means a higher level of housing precarity, though house owners feel good about higher nominal values, and they increase inequality by favouring their own children with the loot when they die. Those not so blessed with ancestral wealth also take a hit from BTL landlords hoovering up starter homes, because homeowners are of the view that bricks and mortar = money tree. Present company excepted, that is…

One thing I have always thought would be a good way to eliminate a lot of what’s gone wrong with employment practices is to terminate all agencies and middlemen. If somebody pays you to pay someone else to do something then you are skimming, and should be run out of town. We did it to wholesalers of Stuff, let’s repeat the exercise to wholesalers of people. The Firm used to employ its cleaners directly. They saved money by outsourcing that, goodbye paid holiday and sick pay. Agency is a fancy name for gangmaster. Oddly enough digitalisation has greatly disintermediated buying and selling stuff, but has greatly intermediated employment with agencies and job-search platforms.

What could we do better?

We will have less Stuff. Probably fewer Services. It’s not all bad – you might get to see your kids more. Here are some things I would like to happen. I’m sticking with the UK here, we seem to want the world to get a larger place what with Brexit etc and I am nowhere near clever enough to fix anything wider, but I could probably match the current shower in charge of the UK in basic competence. Ain’tcha glad I’m not in charge. huh?

1) Destroy the low-cost leisure airline industry. Burn it, and encase the memory that it ever happened in glass and concrete, and bury it so deep nobody will ever find it for five thousand years.

Easyjet will resume domestic flights in mid June. There is absolutely no need for domestic flights in the UK ever. Britain is not that big – we aren’t Australia or the United States. I want to see EasyJet, Ryanair, the lot of them destroyed and the ground that low-cost airlines grew in salted and burned. If you have grandchildren, you don’t need low-cost airlines. Because: their world when they are your age.  Let’s quietly ignore the possibility that air travel got Europe into serious shit in March according to the ECDC. The original mistake wasn’t malicious – people weren’t to know then. However, after what happened, if you postulate air bridges – well, it pretty much sums up air travel all round. No externality is important enough to constrain the God Given right to cheap air travel. This is not about people starving like the Berlin Airlift, it’s about the right to fight for towels on a packed beach.

Zooming out, you will never electrify air travel. Sure, you might be able to do it technically in a couple of decades, but you have to plug the entire output of Sizewell B power station into a future electric 747 for an hour to achieve one long-haul flight. Even if you don’t give a shit about climate change or know for a fact it’s all a Deep State cabal, just how much nuclear waste to you want those grandchildren to have to deal with to keep up your flying habit? People used to have one annual family holiday to foreign parts. If we could make work less hateful, perhaps we might not need to run away from it so often. As for commuting by air…

Right, capt'n, where do I plug this sucker in? Photo Dave Croker, Geograph
Right, capt’n, where do I plug this sucker in? Photo Dave Croker, Geograph

I really hate the low cost airline industry. It fucks up our skies which is patently obvious now, it generates needless unholy rumble through most of the day and encroaching onto the nights, it ruins your kids’ future worlds,  it facilitates stag party twattishness, it makes places like Barcelona nd Amsterdam crap. It’s just gone too far. If coronavirus can kill it that is all to the good IMO. Less is more. It’s a proxy for the pathologies inherent in late stage capitalism. It just doesn’t know when to bloody well stop. More is not always better.

2) A four day week isn’t a bad idea, along the lines of making work less hateful

3) Do something about crap jobs. Automate the ones that aren’t worth doing, pay the ones that are worth doing a living wage.

4) String up anybody who even thinks “work is the way out of poverty”  – it hasn’t been for 40 years and it never will be. Talent that matches well paid work opportunities and luck are the route out of poverty, and neither are something you have overwhelming influence over. You can play a good hand well, but you can’t do anything with a weak hand, the opportunities just aren’t there. We have specialised too much.

5) Fix Universal Credit. Turn it into a universal basic income, or for all I care universal basic services. Or at least be honest and say we believe some people’s lives are worthless, we aren’t going to get involved, we don’t give a shit, and basically, kill ’em all. If we can pay Endemol to round up Iain Duncan Smith and have him live a month on UC that should be good for a laugh, too.

6) Destroy bullshit jobs. A Universal Income/Services would save the waste of human potential. And the trees. And reduce the pressure on the transport system.

6) Think about how we feel about poverty. If we collectively are chilled about it, there are enough dystopian way pointers on how to deal with it. If we aren’t, then finding some way of learning to live within our means will mean rationing of some things. Probably including air travel,  and probably including other popular lifestyle choices.

7) Reinstate previous generations’ controls on ownership and share of media6. There was an awful lot wrong with the media in the UK before Mrs T gave it to Murdoch, but I would suggest that while the cure eliminated the disease, the pathology metastasized into something worse. There was at least plurality in the previous disease.

Ain’tcha really glad I’m not in charge? Before I take too much heat for the air travel, note many people would have more time in an Ermine world, you can get to your Alpine skiing second, third, fourth holiday by Eurostar. I’m only coming for your second and up air travel holidays. We’ve probably got enough world for the air travel of the 1990s. But not the amount in 2020 BCV.

How about that Limits to Growth stuff?

It is possible that this second global financial crisis of the new Millennium is the result of systemic overreach as described by the Club of Rome. Let’s not beat about the bush here- the prognosis for FIRE is dire in this case. If you aren’t there you’re not getting there, and if you are there you may not stay there, and yes, that’s me too. The problem is an overhang of debt accumulated, this covered up the fact that global production hasn’t kept up with global population, and some of the limiting inputs to production are becoming exhausted. These are claims on future resources that will not be honoured because they just aren’t possible.

That narrative makes a lot of sense, but there are other stories playing out. For starters old men have been saying the world is going titsup ever since Roman times and probably before.

an alternative – Spenglerian decline

Secondly there is a power shift in play – the ascendancy of China and the East in general, which is a longer example of the cycles of the Imperial decline of the West. These were the European empires of Victorian times, of which the best know example was of course the British Empire, but I would also say that the American Empire is also into decline, the Project for a New American Century looks like a Spenglerian dream gone wrong.

Old men dreaming of past Imperial glories, back in the last century. Diddums. Now where have we heard that recently?

Trump and Brexit both express nostalgia for past exceptionalism, but this is not just a pathology of the Anglosphere, it’s writ across the Western world IMO.

Spengler’s – The Decline of the West was written a hundred years ago, and the narrative runs true to form, and it predates the Club of Rome by fifty years. Like Asimov in Foundation, Spengler did not predict a catastrophic fall, but a protracted decline. That’s pretty much what this looks like to me. Maybe the Chinese will fix air travel with small fusion nuclear reactors that won’t spew foul shit everywhere in the event of a crash. Maybe we will have five thousand years of darkness until the new Imperium rises. Hopefully humanity will have learned a thing or two across the interregnum.

We could make a better world, and for all I know this may be the impulse that makes us ask some tough questions about would we want to end up here if we started along the track that got us here. We could start with the question anybody contemplating FIRE asks themselves.

Is our current level and form of consumption the optimal way to live, or is there a better way to optimise our experience?

But I fear we will let the crisis go to waste. The desperate urge to get air travel going again is symbolic of the driving impulse for a snap back to how things were before. There’s all sorts of special interest pleading to get back to the status quo.

A lot of that is understandable – this has been a sudden stop for an awful lot of economic activity. But it isn’t unheard of for us to say ‘we want to see less of this sort of economic activity in future’, usually because it has undesirable outcomes, usually externalities, costs paid for by other people who often don’t get a say or a share of the economic advantages.

It won’t happen. The drive towards a snap back is strong, and the countervailing forces are weak and disorganised. Macchiavelli was right

“there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.”


  1. The dreams include raising children, having jobs that you could plan a life on, being able to buy a house. The reason their dreams were tossed by the wayside is because they don’t have the aptitudes for high finance. That’s the problem with doing one thing overwhelmingly well, you tend to suck at other things. Specialisation is for insects 
  2. If you want to see how Limits to Growth is going now, take a look at the thirty years on update. It ain’t looking good. 
  3. Blair’s government should be charged with the original idea and doing all the groundwork for this, even though the next government actually pulled the trigger. New Labour was no friend of the statistically illiterate working classes, since t’was they who inaugurated the National Lottery to happen. 
  4. Curiously enough the OSHA doesn’t cite getting asthma as a side effect of CFCs, they reckon it causes you heart problems. You can get away with anything in your 20’s, eh 😉 OTOH the datasheet seems to say respiratory problems were possible. 
  5. I can’t work out if earns means individually or collectively, best not have kids in that house if collectively given what young children do for the household income, eh? 
  6. Goldsmith’s College have a longer form report on UK media shares/ownership  

I’ve got a sneaking admiration for Donald Trump

Go big or go home…and The Donald’s going big in opening up America, standing down the coronavirus taskforce in the next few weeks. It’s probably fair to say there’s not an awful lot of love lost ‘twixt the Gray Lady and The Donald. New York is full of, well, t’other side, and it’s just not Donald’s tribe, though it has been his old stamping ground for ages.

Trump administration officials are telling members and staff of the coronavirus task force that the White House plans to wind down the operation in coming weeks

NYT

It’s not unknown for a POTUS to claim a premature victory. We’ve seen this movie before

How did that work out for ya, Dubya?

but there’s a big difference. I felt that Dubya was a bit out of his depth. He probably believed his own hype. It’s all that inbreeding in the presidential families of America. Trump is an outsider. Sure, his dad was steenking rich, we’re not talking the poor kid from the wrong side of the tracks making it to POTUS version of the American Dream.

I’m of the view that Trump is one of a kind – a masterful dog-whistler. Not everybody is responsive to his particular schtick, and it brings an awful lot of people out in hives. But those to whom he does speak, he speaks directly, and they feel he speaks for them. And sure as hell nobody else has been speaking for them since the American Dream started to go down the toilet pretty much since Reagan took office.

The Mule’s childhood was one of alienation and torment. This motivated him to use his powers to get revenge on the Galaxy

He reminds me of the Mule in Asimov’s Foundation Trilogy, someone who almost directly controls people’s minds by making what he says resonate with their lived experience. After years where nobody sounds like they are listening to you that is magnetic – because all humans want to belong and for their pain to be witnessed. The Ermine has recently fired up the TV and paid the goons of TV licensing. I heard Trump on the TV news, and unlike hearing it through my PC on the Web, I heard him on my hi-fi.

The Donald needs to be re-elected

And while he doesn’t speak to me and I know he’s a lying sack of shit, I could hear the magnetism in the way he used his voice and understand the appeal. But the Donald comes with problems. Presumably he had attachment issues as a child, anyway he has a deep seated need to think that he is favoured, and it is really, really important to him to win the election.

Over in London they think coronavirus probably has a low mortality rate and the economy is suffering. Citing various posts from the intellectual right-wing website Unherd, some make a cogent case that Covid-19 isn’t such a big deal for most people. To their credit, Unherd supported their assertion with interviews with experts of similar views  – Hendrik Streek, and Johan Giesecke, and these make a lot of sense. it’s only when you look at Unherd’s content more widely that the focus of their particular lens shows clearly.

Their lens may be more accurate in some areas. I find a lot of resonance in Unherd’s interpretation that a lot of the problems in recent decades stem from a general anomie where by measuring everything in money we may have stripped our world of meaning and knowing what we stand for. I am not clever enough, nor privy to the information that shows whether the truth about coronavirus is closer to the Johan Giesecke end of the spectrum or Neil Ferguson’s. I am less convinced by Giesecke’s, not because I have a way of evaluating it, but from the people that are pushing it, who seem driven by the economics. But the low mortality rate we are all overreacting because what does it matter if this is infectious as hell if it doesn’t kill that many people is popular in London, and it is internally consistent. These are clever people making the case. Human societies do not put life first above all else everywhere – cars, pollution and many other things are examples of drawing a balance where some deaths are part of the price of achieving a greater good.

Mandy Rice-Davies might proffer that Londoners would say that. Londoners are young so at lower risk, on average. It’s unlikely to be a lot of fun being holed up in London micro-flats in a mini-heatwave.  Some are currently not doing a job that brings in squillions. Feeling more squillions disappearing down the plughole due to the shuttered economy must be stressful.

It’s less bad for a retiree in the sticks, where in a bike ride of several miles I encountered four cars once I got out of the town. I saw this

the white handkerchief is a Little Egret

avoided a serious gang fight

Why this field hasn’t degenerated into a swan war of all against all beats me

and wondered how this knot was done

Knotted Willow

While there’s some rumbling going on among the more swivel-eyed Tory contingent about opening up the economy – step forward Iain Duncan-Smith channeling FDR in the Torygraph

After six weeks of lockdown, we mustn’t lose sight of how vital a functioning economy is to our health and wellbeing. Perhaps we should remember President Roosevelt’s wise words in a time of crisis: “The only thing we have to fear is fear itself.”

Iain “I’m all right Jack” Duncan-Smith, who is of the blessed opinion that poor people have a previous monthly salary paid in arrears that they can draw on before they get Universal Credit, writing in the Torygraph 5 May 2020

the trouble is that they are all chickenhawks. What the world needs to straighten out the difference between these courses of action is someone sure of their convictions and with balls of steel and pure conviction. Enter our man of the moment, Donald Trump.

Here’s a guy who knows what he wants, and knows how he’s going to get it. There are two competing ends of the theory spectrum about coronavirus, and sadly we have insufficient data to make a clear call which is right.

One, the London/Unherd view is that it’s not a biggie, most of us have already had it, closing the economy kills people too y’know. The other is that this is so infectious it will let rip as soon as its given a chance, mortality is not low enough that it won’t kill many. The UK already seems to have the highest European death toll, which points me in the latter direction, but whatever.

What we need is strong leadership, somebody who goes with his gut to cleave the Gordian knot in the face of uncertainty. Now strong leadership tends to have rather undesirable consequences of people marching in shiny jackboots and smashing windows in the night, so what we need is strong leadership somewhere else. And in the US of A they’ve got it. They voted for it once, and they’re gonna vote for it again.

Donald’s really keen on getting re-elected. He’s already flung so much Federal Reserve money at the stock market that it no longer reflects reality, even Warren Buffett can’t see where he’s going, the screen is covered with so much money.

But that’s not enough. Donald needs boots on the ground. He’s not going to let a little thing like a global pandemic get in his his way of being re-elected. Not only is he going to ReOpen America, he’s going to damn well Make America Great Again. And for that he needs Americans back at work. lickety-split.  No, not that interpretation of the phrase, though I guess this is Trump…

Now obviously there’s a chance that people might die if the low mortality  view is less congruent with reality than the higher mortality view. But that’s not important to Donald. Strong leaders decide, others take the consequences. Trump 2020 is what matters, so the great engine of American exceptionalism needs to get fired up. As Warren Buffett said,

never bet against America.

Warren’s ADF indicator may be titsup because of the Fed’s wall of money, but Donald Trump knows exactly where he’s going, what he wants and how he’s going to get it. And he’s going to put the pedal to the metal. Real Men accept collateral damage.

Warren scratches head. Which way is up on this damn thing? Trump leans over, smashes glass, sets the needle. That way is up, buddy.

Cheese-eating surrender monkeys and the rest of the world can stick it, lily-livered quislings that they are. But they can hitch a ride on the Trump.

VUSA is your friend. Or pretty much any S&P500 fund or ETF. Never bet against America, because Donald will MAGA. I’m tempted. I am light America. I loathe everything Trump stands for. But perhaps our Londoners are right, and coronavirus isn’t all that. A punt may at least make me feel better when Donald wins again in November. Like Asimov’s Mule, he doesn’t need to make everybody like him – all he needs to do is keep the people who do like him doing his bidding.

This is your captain Warren speaking – it’s going be a long night. Three out of four engines are on fire, the fourth is running rough

I sparked up Warren Buffett’s Berkshire Hathaway livestream, well, the recorded version anyhow. H/T Monevator. Some Ermine tips – start about an hour in, and I had to click n the unmute audio to get to hear anything. It was a funny old feeling. Warren’s sitting more or less on his tod in a massive convention hall with hardly anybody out there. It’s all very 1950’s, there’s no top end in the audio and you can hear the 60-cycle hum and noise in the amplifiers. BRK clearly doesn’t spend money on young media-savvy hipsters to tart up the presentation slides either. This is part of his homey schtick of course, but you’re sitting there watching one of the richest people in the world.

He cut a lonely figure on the podium. And while I wouldn’t go quite as far as to say he sounded scared, the headline sums up what I heard. Sure, you can count on the tailwind of American exceptionalism, but you gotta live that long to get into the upswing. And at 89, in some ways it’s in doubt that he will.

He spent a lot of time describing how if you’d been unlucky enough to buy into the DJIA before the Depression, you would have to be ready to fall back and fall back and fall back to hope that the engines of American exceptionalism would fire again into the low-water mark, and it would be 1951 before you break even. He’s not saying this will happen again, many things are genuinely different now. The intercession is likely to be much shorter, and of course he was quick to state he does not know what the markets will do tomorrow or next year.

But he didn’t give the impression he sees a V shaped recovery. He didn’t even see BRK shares as a good buy now. And he’s dumped airline stocks. I wonder what else?

In some ways I was cheered by Warren Buffett. I dumped a lot of rubbish in the first half of March. In a single hit on mainly one day. I had gotten decadent with the long bull market, and had a significant holding of the FTSE100 in VUKE. ZXSpectrum summarised it well on this Monevator thread

The high street was obsolete anyway, airlines should go bust, the petroleum industry needs massive downsizing. The FTSE is not coming back because it full of crap companies with obsolete business models. The S&P and Nasdaq are not.

I’m also more relaxed about higher unemployment. The UK made a sort of Faustian bargain: low unemployment for high underemployment and low skill base.

[…]

Machine learning and AI is going to make many middle class people unemployed. We might start getting used to it now and stop stigmatizing those who don’t have jobs. A generation or two from now being unemployed might well be the norm.

I was heavily in the FTSE100, and I was buying rubbish because the yield was decent. My main ISA1 is 13% down on what it was in January, so I showed a clean pair of heels in time. I got rid of a lot of other rubbish, because in a decadent bull run shit looks attractive and safe. It wasn’t.

And WB reminded me of that. I had lost my way, and was buying trash. Quality is worth having now. If you are going to buy, buy quality. WB doesn’t forget that, but I did.

Warren’s patriotic American exceptionalism shtick got on my tits. America is captained by a uniquely talented buffoon of the first order, who is a danger to the world and his own subjects. Trump reminds me of The Mule in Isaac Asimov’s Foundation trilogy. Just as Asimov’s psychohistorians foresaw the arc of history but failed to model a mutant intellect, the founding fathers of the United States got an awful lot right. They put checks and balances to try and control the temptations that absolute power brings. But they had no model for Trump’ particular talents resonating against a particular slice of history. There is at least cheer to be had in that like the Mule his particular combinations talents seem sui generis; we will get at least another four years of him, but the magnetic combination will probably die with him. So no, Warren, Americans do a lot right, but not so much as you’re cheering. However, in economics ZX48’s observation support WB’s thesis – compared to the US indices ours are full of crap businesses, and the US appears the only place in town for quality.

But Warren Buffett is a much better investor than me and his point is right. I need to favour quality – companies supplying what people actually want and need. I did well getting rid of the rubbish before it had fallen too far. I am intrigued the WB finds nothing at attractive valuations, because he credits the Federal Reserve with forestalling another credit crunch for companies. He thoroughly approves of the action, compared to the results of inaction, but it has corrupted the signals given by the market because of its indiscriminate behaviour. Noise floods the input, but he prefers that to the deathly silence of no noise and no signal.

And yet if Warren Buffett is saying that the compass spins and knows no North, then perhaps I have not missed the opportunity. My guess is the signals will start to return at the start of November, as we start to enter what is likely to be a long winter low in reserve capacity.

And while it’s all different now are the most dangerous four words in investing. I need to start to challenge some assumptions I have held from 2008. One is I have always been weak on the US – it looked overvalued and as I started to buy a lot of my holdings in the 2008-2014 period. Most of my US holdings are in the half of VWRL, and yes, I was wrong earlier. Don’t bet against America 😉 My market timing scored over sector selection.

In the early stages just after the GFC when I have bought individual shares, I thought more like WB. I still have nearly all those shares, mostly in my HYP. But as an index investor you can’t think like that, because you’re not buying individual shares. And I started chasing meta-parameters like yield, and following stories. The best story is Lars Kroijer, but sadly I picked up that signal late, it was only written in 2015. I still have all my VWRL.

I have been fortunate in being able to shoot the other index crap early enough, but I need to get back to basics. Good quality at the right price – and also perhaps take another line from WB. It is better to buy a great company at an okay price than an OK company at a great price. In index investing that means no FTSE100, not VHYL (which I have never owned) and perhaps I need to suck it up and consider the S&P500, and maybe the CNDX on the NASDAQ100, preferably after Trump has either won or lost and the new administration suckout goes on top of the pandemic recession. In the meantime I will continue to buy little bits of smallcaps which will become more and more bombed out. I am where I want to be with about 2/3 equity exposure now, because I have serious firepower. Buffett gave me the hope that I will have somewhere to aim that in the year(s) to come…

No, Buffett’s message wasn’t quite Bill Ackman’s self-serving Hell is Coming interview, I am glad I sold before he opened his bloody great big gob 😉 But it sure as hell rhymed.

Capt’n Buffett will make it across the water on the one defective engine, but it’s going to be a very long and rough ride to get from here to there. And he seems to believe that there is an outside chance that Dubya’s angle from 10 years ago is a very real possibility, leastways in the time he has left.


  1. My secondary one with Charles Stanley doesn’t revalue in Jan. It isn’t underwater on purchase, but is mainly a DevWrldExUK index fund LGITI, so similarish to VWRL and also about 13% off Jan from its chart 

Shiny shiny starts to gleam as fear rises

Fear usually means a fire sale in the markets. MedFi gives you the graphical take straight between the eyes using the gold price vs the S&P500. Market valuations have been high in recent years so I feel this one will have legs. Officially the selloff is attributed to coronavirus, so let’s start off with a bit of old Leonard, RIP.

Everybody knows the plague is coming,
everybody knows it’s moving fast

You’re going to get covid-19. So am I. Most likely in months, not years. Not sure I’m smart enough to even imagine how they’re going to isolate London, but hopefully some bright minds are on it. Let’s hope they’re not all Dominic Cummings’ weirdos and misfits with their charming views about creating a master race 😉

Our Sab, with the all-knowing clarity of youth. Bless…

Selective breeding works a treat – for us, rather than the selectively bred species. Closing that loop doesn’t seem to end well.

The odds of surviving Covid-19 seem good, so game theory shows us that in the financial aspects it’s the opportunities that are worth looking at. If you aren’t going to survive it then your investments aren’t your problem – in five years’ time you’ll know if you were hardy enough. If you aren’t then you’re not going to experience the downside of getting it wrong. You shouldn’t have money in the equity markets that you will need in the next five years.

It’s early days yet, but I wonder if the coronavirus is gaining extra traction in the markets by pushing a stale long bull run over into its natural nemesis, the bear market. We aren’t there yet, but the markets could get more interesting.

The fear/greed index has shifted into fear

If you’re under 40 this should be a cause of celebration. Firstly because you’re very low risk from covid19, and secondly because you are a net buyer for a long time. A low stock market early in your investing career is all to your benefit.

 

VWRL in early March 2020

Bear markets declines are steeper than bull market rises , presumably because fear is more contagious than optimism. The bull run has been very long, and for the last ten years stock markets have been inflated by funny money as interest rates have been depressed. The bloodletting could be stiff.

I am not under 40. I have now come to the end of my investing career, I was  unlikely to make a contribution to my ISA ever again, and I will only wash £2880 through my SIPP as cash to collect the free £180 a year from the government because it’s rude not to.

Unlike every other bugger in the FI/RE blogosphere, I am done, I have turned the engine off and pulled out the key. All around there are many FI/RE protagonists intoxicated with ten years of bull run, and the the air is heady and ripe, the smell of Autumn in the stock market all around although it is only Spring in the landscape. Winter is coming.

Over the last few months I had shifted my holdings more defensively, largely as a result of high valuations and my impending shift towards drawing an income from the ISA. Most of that income I can get from the natural yield, and I have a chunk of cash in Premium Bonds that I was going to slowly decumulate over the next few years to boost that ISA top-up to smooth my income ahead of getting the State Pension.

I am not a passive investor, that heavy cash/gold policy was set because I looked at the high valuations of the markets as I came up to drawing down and felt meh about it. I haven’t sold any of what I did have, but didn’t add much to the equity sections at these valuations.It’s fine to draw down from the natural yield of what I have bought.

The natural yield will probably be reasonably stable, as it is largely from investment trusts and the high-yield portfolio. But there’s a lot of gold in my ISA, which was there because of the high market valuations and the fact I don’t have decades of accumulation ahead of me.

no battle plan survives contact with the enemy

I am wondering if I shouldn’t sell some of that gold over the next few months and run the other way, into beaten down ITs. And/or take some of the cash and use next years ISA allowance, which would mean I would have less yearly income in running it down.

Valuations haven’t yet fallen to levels that are usefully lower than say a year ago – f’rinstance if you take a look at VWRL

VWRL in early March 2020

while there is a tip at the end where it has nutted down, but it’s not as if it is down to this time last year. For me to exchange some of the shiny shiny for VWRL I’d say I don’t want t pay more than say £52, as it was way back when in 2016.

If I am going to surrender some of my guaranteed income or my shiny tokens for income, ITs give a good income stream, particularly when bought at a discount due to bearishness. It’s been over ten years since I last saw that advocated, but I took action on that message – and these investment trusts have been paying me steadily for over ten years. I’d like some of those low prices, please.

So I need to take some time out and do some research, ask myself what sort of prices/discounts I would consider ITs better value than some of the guarantees of cash or gold, and start sticking some alerts out. The time may never come, in which case nothing to see here, move along now.

I’m using natural yield, not a SWR

I am not going to sell stocks to derive income. I want more income from the ISA but I don’t have to thrash it; I get over 3/4 of what I want already off the natural yield.

It’s all very well for people to sit in their ivory tower and say sell off units of VWRL to achieve your wanted SWR, but I am not going sell off units of anything, because I only started to get ahead in the markets when I stopped selling equities. I am a jumpy seller and that’s bad. But I do skew buying choices.

Natural yield is despised by people in the accumulation phase – see the stick Greybeard took in this article for advocating investment trusts. ITs form a large part of my high yield approach, much of mine were bought early in my investing career, because IT prices get thrashed more in times of turmoil as discounts open up due to their closed-endedness. Which is a bug when you’re selling and a feature when you’re buying in a down market

Written before the recent falls, this interesting throwaway line in Monevator’s SIPP/ISA article

For eight-year periods or less: save enough in cash to cover your spending needs plus an inflation top-up. The potential upside of equities isn’t worth the risk of grievous loss with so little time to bounce back.

made me change my mind about adding to the ISA for one last time next tax year, because my distance to the State Pension is of this order. I could add to my ISA to top up my income to the amount of the SP, trying to smooth my income, but I could also run down cash savings over a decade to make up the difference that way. At valuations a couple of weeks ago I’d need to spend about 30 times the desired uplift in annual income to get it from the stock market.

Using the rough rule of thumb that inflation halves your money over 15 years I’d need about 15 times the desired annual income to draw cash down over 10 years. The catch is, of course, that drawing down the cash means it’s all gone after 10 years. The plus is that it’s not sensitive to bear markets.

I normally used within five years as the sort of time horizon where one would steer clear of the markets and hold cash, but as I said above, valuation matters. At high valuations the cash-favouring time horizon drags out for two reasons.  You’re paying more for less expected income. Plus the risk of capital loss gets higher.

the smell of fear in the morning

The ermine snout twitches, wondering if there is the scent of one last chance to purchase income at low valuations. That time is not right now, but it may be soon. My investing career would then be bookended by bear markets, a fitting swansong. The first one served me well, more so than anything I could do with what’s developing. There’s only a couple of year’s worth of ISA allowance I could commit to this one so it would be more of a fillip to my income rather than a heavy lift, like the years starting from 2008.

There’s certainly mileage in yanking out some of the Premium Bonds and replacing the amount I borrowed from my Charles Stanley ISA earlier this year, that needs to happen this month. If I decide that I don’t want to buy into the ISA I can shove the money back into Premium Bonds next tax year.

To make this worthwhile I need a bloodbath in the markets. Perhaps there will be an opportunity to swap some income for about a decade into some income for longer. And I need a strong enough immune system to fight down covid-19 to carry off the spoils of war. If not – then it’s not my concern…

I’m going to take time and look at what happened to various ITs in the last crash including their payouts, what their prices were over the years I have been an investor, and determine a price that I would think was really good value to buy. And set these alerts for if/when the price falls below that. I will be looking for valuations closer to 2009-2012 than 2013 to now. The opportunity may never come. But if it does, then sometimes you just have to hold your nose and do it…