The Tories in Crisis: They made it. We Suffer.

December 4th, 2022

The scale of the mess we are in is way beyond just figures and forecasts. In fact it is hard to recall a forecast which turned out to be right. But our biggest problem is about the ability of government to function independently when crafting the economic management of its country. We saw under the ill fated Truss regime what happens when you ignore the markets. Now we can see what happens when you satisfy the markets.  Just about the biggest drop in living standards on record.

Why? Because for far too long there has been this lunatic ideology that you can have a prosperous economy based on consumption, when it makes next to nothing it consumes. It then  builds an illusion of wealth founded on inflating house prices, against which ever larger sums are borrowed and ever smaller sums are saved. Soon no new wealth is being created but when the money runs out you just print more. Moreover you tax low to enjoy ‘a small state’  while maintaining public services at advanced economy levels. Because the government cannot raise enough revenue to pay for them, it borrows, day by day, month by month and year by year. Who from? The markets. Where do the markets get their money from? The government prints it for them, to keep them from crashing, then borrows it back at a hefty rate of interest. Barmy? Yes but sadly true.

The years since the Tories first came to power in the post Blair era when in 2010 they formed a coalition with the Lib Dems, are now widely seen as years of stagnation and decline. They blame Putin, the pandemic and the world rise in energy costs, but in truth these negative forces just made a bad situation worse. At the heart of our economic crisis lie two completely rotten planks of modern Tory ideology. One is that all saving and wealth creation should be driven into fixed assets. This has led to absurd house price inflation which has sucked the life blood  out of the real economy tasked to create new, not recycled or inflated, wealth. The second is the blinkered doctrine that you can have low taxes and effective, efficient and timely public services which can expand on demand.

The outcome is that public services are now in a general state of collapse, so that third world levels of inefficiency are now the norm. But it has also, through a decade long programme of keeping taxes and interest rates low, led to the highest taxation levels for seventy years and  interest rates at their highest in a generation, with more rises in the pipeline because inflation is out of control. The buzz phrase is cost of living crisis and the national experience is of fear, worry and suffering.

Time is very up for this Tory party and its befuddled ideology which fosters greed, selfishness and darkness. The government’s authority has sunk to zero as angry trades unions call for strikes all across the public and transport sectors. Sadly the maths make the coming mega crisis certain. There will be a recovery, though when, at what price and and how long, are as yet all unknowns.

In the end through the toil and effort of a resilient people, the sunny uplands will be reached for sure. The best of which will be that the Tories are nowhere to be seen.

A Hindsight Read: 2010 A Blueprint For Change

November 15th, 2022

In 2008 at the height of the financial crisis I wrote this book, setting out new ideas for the future governance of our country. Some of these have not stood the test of time but some have, including many key ideas covering the economy, education, the NHS and foreign affairs. And, especially now when governance is becoming dysfunctional, constitutional reform. When it was published in 2009 my agent sent a copy to every member of the then Tory shadow cabinet, in preparation for their taking power, which they did in 2010 in coalition with the Lib Dems. Sadly I don’t think any of them read it. Had they done so our country would be in a better place today. You might have  fun with it now. Unfortunately it was never put on Kindle, so only paperback.

  Amazon UK

Nazi Era Drama: Download or Paperback from £2.99

November 13th, 2022

The UK Economic Crisis : Rules of Economic Management

November 13th, 2022

Until we see what the Chancellor Jeremy Hunt has to say in his Autumn Statement next Thursday, there is little point in pontificating about the mess we are in, save to say it is of our own making, not Putin’s or the Chinese or whatever.

But what I would like to do now is to set out the way our financial structure should be organised in ten simple rules. Informed readers will spot a number of significant variations to the current dysfunctional chaos. Those for whom these things are really confusing might, I hope, find a simple foundation upon which to build future understanding. Professional economists will find their eyes popping.

1  Central Banks are banks, not Treasuries, and should never in future set interest rates or print money. Their stewardship of these responsibilities has been a disaster leading to gross fixed asset inflation, excessive borrowing, floods of money so cheap as to be almost free and nil return on savings. The combination has led to general inflation out of control and terror in the Bank of England, charged with keeping inflation low, that to do so will bust the economy. So it has done too little to late.

2 The democratically elected government must be responsible for the money supply, credit rules and interest rates, because these are political decisions, which must be taken in the interests of the wider economy and the social priorities of the majority as represented in parliament.

3 Markets must serve the people rather than the people be subservient to markets.

4 Governments must never, ever, borrow to meet day to day expenditure. They can either cut spending or increase taxes. They can also either increase the money supply to boost economic activity, or, if the economy is overheating, reduce the money supply and raise  interest rates.

5 Interest rates must always, this is a golden rule, provide a meaningful return to savers. The  average must not be lower than 5%

6 Money is a measure, not a thing and it must measure economic activity, not itself. It is the property of the State (hence the King’s head) and only the state’s treasury can print it. When it does it enters the economy as new money. No loans or gilts are involved.

7 Gilt Edged securities are not a credit card to be used by governments to live beyond their means, conning voters that prosperity is their offer. Neither should they be used as an aspiration to invest in this and that project, many of which never  actually come to fruition. Cancelling things to save money already borrowed, without giving it back,  is a modern political option, which in civil life would be classed as fraud.

8 Gilt Edged securities are a necessary instrument for investors, both domestic and foreign, who  seek absolute bedrock security without risk. Depending on their coupon (interest rate) their trading value fluctuates between issue and redemption, but if held for the term, are absolutely guaranteed. Pension funds are obvious customers. The more the economic activity the greater the demand, including  from overseas investors. The government can issue gilts on a continuous basis, not to spend, but to invest in its own reserves of either gold or foreign exchange. Thus the more the economy grows the more the State’s reserves expand.

9 Infrastructure investment can  be funded with borrowed money but it must be with annotated bonds, which redeem not more than five years after the completion of the project. The coupon should, as with all gilts, be fixed not variable.

10 Index linked gilts are fine until the index takes off, as it has now. They can then become a real problem for the government. It is for investors to organise portfolios hedged against inflation. The government’s job is to prevent inflation getting out of hand.


Funding The NHS

November 6th, 2022

The NHS is probably the most comprehensive health service in the world. But it is now in crisis at every level and in every sphere. From time to time I plan expose what I believe are fatal flaws, which hobble its outcomes and frustrate both its selfless, overworked and dedicated staff as well as its suffering patients. Today I want to talk about money.

From the moment it was founded the NHS was launched on a mathematical impossibility. You cannot provide an infinite service on a finite budget. Yet it has always been the case that the NHS has had to work within the financial constraints or generosity (the latter not very often) of the government of the day. But the NHS, while planning large numbers of pre-booked procedures, investigations and treatments,  does not know for certain what any day will bring. Because its budget is fixed for the year and because it is paid out of general taxation, the more patients it has to deal with, the less it has to spend on each of them. That is plainly ridiculous.

The more customers who enter a supermarket the more they spend and the more the company stocks up to supply them. Imagine the fiasco if the owners were paid by the government a fixed sum to feed an unknown number of people in the district. Soon there would be hunger, shortages and queues.

The first thing we have to get straight is that the NHS is not free. We all pay for it. The problem is we are throwing money at the wrong business model. What is required is a funding system that expands with demand, so the more patients and procedures, the more the money. Not because the government allocates more, but because it is done automatically.

This is not a proposal to privatise the NHS. Nor does it, nor should it, involve the private sector for organisational reasons which I will lay out in a later blog.  The Government, or rather the State, should be the sole employer and provider, but instead of a fixed budget met from general taxation, it would be on the actual cost  paid by a universal insurance premium surcharged to income tax. Re-set annually, it would be calculated according to the current cost of the service and the  ability to pay, so the higher earners would pay more than the lowest. The State would be the sole insurer and there would be no exclusions from cover, as in private insurance schemes, which exclude existing health conditions or add surcharges to cover them.

The principle of the greater the demand, the greater the money, would be established and there would be democratic control of what was or was not free at the point of delivery. To make it work huge reform and de-structuring would be required to the byzantine structures and hierarchies which proliferate at the moment. These will be discussed in a future post.

The object is a health service without waiting lists, queues and cancellations, or such abuses as moonlighting doctors earning big money in private practice while others work themselves into the ground filling the gaps. What we need is an NHS, operating 24/7, giving  joined up care to those in need, which is all of us at some point in our lives and with the money, staff and equipment to do the job properly.

That was the big idea at the beginning in 1948. It can be delivered, but not until we put the funding on a footing that meets the ambition.

Is The Tory Party Fit To Govern?

November 1st, 2022

All my (quite long) life, I have been a keen observer and sometimes participant in the political merry-go-round which is the politics of democracy. By its nature democracy is undisciplined and unpredictable, which is exactly what it needs to be, otherwise it could not and would not be free. But it has to be grown up. And it has to have at its apex, in our case the House of Commons, people who are principled and driven by the desire to make a difference through public service, so as to improve the lot of their constituents who put them there. They also have a responsibility, when in government, to the wider mass of voters who have given their party a majority to govern. They must be compassionate and fair and very conscious of the collective needs and priorities not only of their own party and voters, but of the whole population. What they must not be is journey men and women who view parliament as a stepping stone on their career path to fame and fortune. They cannot fool about forming and trashing one administration after another, clever but stupid, introverted, deaf to reason, blind to light and strangers to truth.

I do not have to list the sad roll call of current Tory MP’s who meet this humiliating specification, reducing our country to something of an international laughing stock, bringing glee to our rivals and enemies and despair to our friends. They are on the back benches, at all levels of government and in the cabinet. Not all of course. There are some honourable souls who lie sleepless at the shocking turn of events. New words are coined. Permacrisis is a good one. Funny even, were it not true.

Time is up. This has to stop.

Boris And Putin

July 3rd, 2022

Boris sees himself as the mega hawk about Putin and his intentions. He proclaims a determination to see Putin beaten back from Ukraine and warns of going soft on Russian aggression. Without discussing  the merits of either case, it seems to me that the ordinary people of Ukraine have suffered enough and that diplomacy needs to end this war now. Boris will do his best to encourage Zelensky to fight on.

Yet the hard truth is that Putin is vital to Boris’s political survival. Without the Russian invasion of Ukraine, Boris would now  be far, far away from Downing Street. Whatever price this war is going to exact upon the British people for helping to keep it going,  Boris remaining in office, as the most disreputable prime minister in our long history, is a price not worth paying.

This man is unfit for  office. He lies and cheats, he is obsessed with his own power, he sees politics as a game show and will promote any cause that he judges good for him, without understanding its implications nor caring about its delivery. He lied over Brexit, he lied over the Red Wall, he lied over partygate. He does not understand, and has lost control of, the economy, the NHS, the energy crisis, the housing crisis, the cost of living crisis, the social care crisis, the justice system.

The list is almost endless. Most of his government is a rabble of  incompetent nobodies in politics as means to make money later, who do his bidding because they are clueless. In every sphere of public life the gap between promise and delivery is wider than ever in modern times.

But he hangs in there, knowing in his heart the game is up, but stoking the Ukraine cauldron of suffering for all he is worth, because he realises it is Putin who gives him standing in the world and that strange cloak of respectability worn by conmen down the ages since the dawn of history.

Learn About Printing Money

May 21st, 2022

Wimbledon Ranking Ban: The Right Move

May 21st, 2022

The move by the tennis authorities to cut Wimbledon from the ranking points system in retaliation for the ban on Russian players is right.

I absolutely disagree  with the current fever for banning individuals from sport, or anything else, just because they are Russian. Individuals are not their government and to ban or punish people just because of their nationality, or race, is a monstrous step back into the darkest past. We all know, and do not need to be reminded of, the genocide which has been the ultimate outcome of such a concept.

Like minded nations can take whatever action they agree upon when confronting an adversary. But it betrays the very values the West is supposed to protect, to sanction people unconnected to politics or the military, just because of the colour of their skin or the flag of their passport.

War in Europe: Time To Uncover Secrets From WW2?

May 20th, 2022

Adolf Hitler is reviled as the greatest tyrant in history. Yet behind this well-deserved image, there was a man with personal and political secrets known to very few and almost unknown to conventional historians. This remarkable novel reveals his hitherto unknown connection with England, including a secret pact with Churchill. It is based on the personal story of the author’s close family and includes a non-fiction Author’s Memoir. This gives personal biographical details and recollections, which reinforce Tor Raven’s conviction that his interpretation of real historical events is more accurate than the accepted truth. He gives you the opportunity to be the judge.