Right now, the EuroSceptics across Europe are enjoying a moral ascendancy. Peter Oborne was able to openly ridicule a Eurocrat on Newsnight to the extent that Amadeu Altafaj-Tardio stormed off, with Oborne receiving barely a ticking off from Paxman. The Germans are close to refusing to pay the bills, the Italians are reliant on the ECB for solvency and Ireland, Portugal and especially Greece have seen their economies destroyed by an inappropriate currency union. From his Spectator essay last week

Very rarely in political history has any faction or movement enjoyed such a complete and crushing victory as the Conservative Eurosceptics. The field is theirs. They were not merely right about the single currency, the greatest economic issue of our age — they were right for the right reasons. They foresaw with lucid, prophetic accuracy exactly how and why the euro would bring with it financial devastation and social collapse

This credibility was hard-won. The BBC, The FT, the CBI and even the Tory party were all infiltrated by extreme Euro-fanatics who painted those sceptical of the project as a Lunatic fringe. Fortunately, the Fleet-street Newspapers knew which way the British public felt. By the skin of our teeth, the UK was kept out of the Euro. For the UK the price was the credibility of the Tory party and 13 years of Labour idiocy. All reasonable people, even the Leader of the Liberal Democrats and at least one of their former leaders who argued strenuously for Britain to ditch the pound, are now on record as saying the Euro will not be suitable "for the foreseeable future". The sceptics have been utterly vindicated.

It would be unwise to dent this credibility by suggesting things as "inevitable" such as Greek withdrawal or a currency collapse, which aren't. The ECB, in common with other money-issuing central banks, can in final analysis, print enough money to meet any and all liabilities. The Eurozone as a whole is in considerably better fiscal shape than the USA or Japan. The UK despite the advantages of a long maturity debt profile is STILL running a 10% deficit, and is catching up fast with Germany & France's debt as a percentage of GDP. The question of whether the Eurozone stays together is ultimately one of political will. And there seems no chink in the Armour of the European political class's will to defy their people, people whom it should be remembered are not yet voting en mass for deeply Euro sceptic parties. Euro sceptics must remember that most people really don't think "Europe" a big issue. Not big enough to change their vote. Until they think it is, they will tend to vote for the Status Quo, or allow themselves to be led by the political class on an esoteric issue of which they have little understanding.

This is why I believe the Euro will survive this crisis, intact. Enough money will be printed to keep all the nations together, only Greece and then possibly Portugal & Ireland will default. Financial crises come around once every 10 years or so. The next one will probably not affect the EU, so at a guess, the Eurozone will not face another significant challenge for a couple of decades. In the mean-time, the growth-denying aspects of the way the Eurozone is structured will fuel Euro sceptic parties across the EU, who will have received a boost from this crisis. The next crisis may find traction in a more skeptical political class. Or it may not.

Rather than indulging in wishful thinking, by saying "the end of the EU is nigh", we have to CONTINUE to make the arguments. Events are not yet going to do it for us. The end of the disaster for economic growth and democracy that is the European Union is unfortunately some way off. We cannot pat ourselves on the back just yet.

Despite almost universally glum economic projections, infinitesimal economic growth, inflation, unemployment, falling wages and terrible outlook, only You Gov, who weight Mirror/Daily Record readers double their responses in their online panel, now have Labour showing a significant lead. The rest show Labour at best neck and neck with the Conservatives. Labour have lost their Scottish Fastnesses to the Scottish Nationalists. The Tories are making headway in Wales, and Labour no-longer exists at all south of the Severn/Wash line save for a couple of pockets in London.

Labour represents almost no-one in this country who pay the taxes that keep the country afloat. They're mistrusted by the elctorate on the economy and are seen as the party of benefit recipients, immigrants and the Public sector unions. Labour's leader, Ed Miliband is risible, even less popular than Gordon Brown at the height of his unpopularity. Only the Shadow Chancellor, Ed Balls is more universally disliked.

At the conference, Miliband said "I am not Tony Blair" He paused, waiting for the cheers. What happened was that the assorted brothers in the hall hissed and booed at the name of Labour's most successful ever leader. This is not a party which wants power. They want to enjoy the economic equivalent of smearing themselves in faeces, in opposition by opposing economic sanity at each turn.

Just about the only thing which could possibly save Labour now is a complete collapse of the Coalition's economic policy. That is possible, but unlikely. (If you vote Labour, and want to take issue with this assessment, please, bugger off. I'm not interested in your economic brain-fart, any more than I would be interested in Halle Berry's views on the importance of a decent forward defensive stroke). Even if we get a double dip recession, the economy will in all likelihood be recovering nicely by the time the next election hoves into view. In any case, global financial events are behind the slow-down. Just as Gordon Brown was not blamed (rightly) for the recession which Brown is judged to have handled deftly, the electorate do blame Labour for the cuts. The charge that Labour spent too much in the good times, leaving us vulnerable when the crunch came, has stuck. The electorate have surprisingly long memories.

Coming out of the Labour conference was no real, honest admission that they overspent and left the country unprepared for the recession when it came. Indeed whilst Shadow Cabinet members mouthed the need for deficit reduction, no-one really did so with the enthusiasm necessary to achieve so hard a political end, and the talk from the stage was all about the "savagery" or the "callousness" of the coalition's economic plans. With this attitude, Labour are just not, and will not be trusted on the economy before the election.

Then there is the Boundary review, which I reckon will go through, which removes much of Labour's inbuilt (unfair) advantage, as will individual voter registration which removes the opportunity for Labour to farm votes in ethnic minority communities. Finally the incumbency advantage will be behind the Tories.


The fact is Labour's polling is boosted by the fact that saying something to a pollster when times are tough, as now, is a cheap way of telling the Government "I'm unhappy". Mike Smithson of Political Betting.com believes that Leader approval ratings are a better guide to the future electoral success of parties than the standard "if there was an election tomorrow..." question, as voters in an election are looking for Prime-Ministers. If he's right, Labour's toast.

On the Today program, Jim Naughtie asked Ed Miliband "Why do people find you weird?" There is just no way Labour can win an election with such an implausible twat at the helm. Ed Miliband: My favourite Labour leader since Gordon Brown.

Independent trader, Alesio Ratsani caused quite a stir last night with this interview. In his view, there's going to be a crash, and everyone should get prepared. Well, I hope he was short when he said it, because the market's up 2% off the open the day after this interview.

His rather juvenile "Goldman Sachs rule the world" comment is typical of traders who are in awe of that company. Goldmans doesn't even rule the markets, they've just made a couple of decent calls recently (and more than a few bad ones). In saying this, and the deliberately provocative "I dream of a recession", Mr Ratsani has pandered to the fear of every lefty on the planet. I am sure he had fun. I certainly enjoyed the look of disgusted incredulity on the BBC Bird's face.

So disturbing did Prodicus find this, he e-mailed me. My good friend, NorthBriton45 also fell into the trap, concluding.

"...it confirmed like nothing else why the notion of a free market is in reality anything but and would strip power away from so many completely innocent people."

The depths of confusion that comment reveals! Mr Ratsani and people like him don't control the markets. Nor do they strip power away from innocent people. Quite the opposite, in fact. There's no moral component to the market going up, or the market going down, and everyone has the opportunity to profit both ways

If you're convinced mr Ratsani is right, ring me and ask to buy the Deutshe bank Short FTSE100 ETF or 'XUKS' for short. I can have you short the market in 5 minutes. If you're extra sure mr. Ratsani is right, try a geared short ETF*. That's before you start writing options, spread-betting, or trading CFDs all of which you can do just by picking up the phone. Condemning the trader for making money on the short side, is like blaming the surfer for the wave. Markets don't cause recessions, whatever traders dream of at night. They respond to the likelihood of one.

I used to work on a trading desk. I've seen people like Mr Ratsani, extremely pleased with themselves as they ride the trend. As their overconfidence in their own genius becomes pathological as their winning streak lengthens, they take bigger positions. I once saw an independent trader lose a years' income in 20 minutes. He then went on to lose his trading capital. And his house. It took an hour, before he started destroying things around him and was escorted off the floor. We never saw him again.

The markets have been stuck in a bear market since the peak in 2000 at which time the share-price divided by the earnings per share (the PE ratio, a key measure of whether the market is cheap or expensive) was 42. That is each share was worth 42 times the profit to which it was entitled. That figure is now 9 times. The last time the market was that cheap was in 1979/80, at the foot of a 20-year bull market. In the short-term, I don't know what is going to happen. But if your view is years, the market is cheap, and paying a decent yield NOW. When the bond bubble and gold bubbles burst (they will, some time) there will be a wall of money flooding into shares.

Mr Ratsani may well be right. There may well be one final capitulatory crash but each and every time austerity has been attempted as a response to recession, it's worked. To my mind the Plan to allow a 50% haircut on Greek bonds while gearing up the stability fund and buying Italian and Spanish debt with it, looks credible. And in any case; bankrupt governments? Meh. They're not necessarily bad for business, indeed their retreat from activity will encourage growth.

I have not seen everyone so universally bearish, which means we're near the point of maximum fear. Which means we're near the bottom. Like mr. Ratsani, I'm prepared for the crash: I'm waiting to buy.

*N.B. Do your own research, this does not constitute investment advice, yada yada...

Here's the Daily Mash on the subject.
Update 1: It appears mr Ratsani may indeed be a spoof: is he one of the Yes men?
Update 2: It appears Mr Ratsani is NOT one of the Yes Men. Forbes have spoken to him.

I don't have a problem with the state helping out the less fortunate members of society. I also don't have much of a problem with some measure of redistribution, given that so much of one's success or otherwise in life is determined by where you're born. Society, in one form or another does have an obligation to those who for whatever reason aren't successful. A certain measure of redistribution is the price the rich pay to avoid ending up on a Gibbet. But the welfare state in the UK is not structured as a safety net for those who suffer misfortune. Nor is it structured as a ladder to success. Instead, the welfare state seems structured to keep its' beneficiaries and their offspring down in the gutter in perpetuity.

There are two facets to this cruelty.

First there massive disincentive to work, save, form stable families or otherwise behave in a manner likely to lead to gainful membership of society. Claiming any of the (I think) 72 different handouts to which a household might be entitled is complicated and bureaucratic. Accepting the kind of low-paid, insecure work which can act as a stepping stone to something better, will result in lost benefits and the risk of real hardship. It's much easier to stay on the dole than risk the change.

Should they ever get work, many of the poor face up to 95.5% marginal tax rates, when you take into account benefit withdrawal. The assessment of people as "households" rather than individuals has the perverse effect of driving people apart. A household of two gets fewer benefits than a pair of households with one. Thus there is a financial incentive to form separate households. Finally the assessment of access to social housing on need, although seems fair, in fact creates an incentive to catastrophically screw your life up, thereby bumping yourself up the queue. The incentive for young women to have children in order to get a flat, though claimed to be apocryphal, isn't.

Secondly, by removing the habit of work, and herding the long-term benefits claimants into welfare ghettos of social housing much of which is of spectacular ghastliness, removes any psychological wherewith all to do or even seek a better life. This narrow, depressed world-view is passed onto children. Even if we could change the incentives, for many people it may be too late.

Thanks to the welfare ghettos, a large slice of the population - perhaps around 15-20% is perpetually and parasitically condemned to the fringes of society. Despite its large size, these people are hidden from view, "society's" moral obligation to them met thanks to the enormous tax-bill needed to pay it and the rest of us go about our lives in ignorance of the estates and what goes on in them.

The issue is not money. These people are not "poor" because of their income. I know plenty of people with incomes from work lower than that of some people on benefits. It is possible to obtain quite a respectable income benefit-farming. The poverty is instead moral. As Theodore Darymple argues in "life at the bottom", with all needs met, no fear of starvation or homelessness but no hope of anything to make life meaningful, life is lived in a perpetual present.

The enormous & wasteful industry helping those who can't cope is larger than that necessary to help those who genuinely can't due to genetic happenstance or misfortune and injury. Instead, large numbers of people are infantilised by a system which for example pays housing benefit direct to the Landlord, but where help will be abruptly removed six-months after starting work means the habits and skills needed to survive off the state's teat atrophy. If Winston Smith is to be believed, the children who are brought up in this system are taught that no consequences of their actions are ever forthcoming. Changes to the welfare state aren't a magic bullet - but they might start to change the culture.

With a simpler benefits system, fewer civil servants and local Government bureaucrats will be needed to administer it. This resource could be freed up for the tax-paying private sector. In work benefits could then become more generous, increasing the incentive to find and keep employment. Eventually the system could evolve into something nearer to a negative income tax. Meeting the financial obligations to society's more unfortunate members, without depriving them of the means and skills of independent living.

Would it not be better, as the Coalition is attempting in the teeth of opposition, incompetence and obstruction in Whitehall, to pay all benefits direct to individuals and leave them to sort out rent? the standard leftist retort is telling: that people paid their benefits won't sort out rent and food, unless so guided by an employee of the state. Instead they will drink or inject it, or otherwise squander the money before it reaches the landlord. The extent to which that reveals complete contempt for their clients is lost on the left. Of course some will do this at first. The difference under a universal credit or negative income tax system is that the individual will face consequences of his irresponsibility - eviction, which they do not face now. The idea that this will not improve behaviour over time, is absurd.

Instead of a population of infantilised automata, subject to the (left-wing, labour voting, hugely populous) bureaucracy, independent people could be being helped through hopefully temporary set-backs in their lives. Neither hope nor consequences would be denied to the people at the whim of the welfare state. Instead of the bureaucracy, people would be in control of their lives. As a result, the bill, both psychological for those at the bottom, and financial for those of us paying for it, which currently amounts to a quarter of Government managed expenditure, might even get smaller.

Unfortunately, the people who stand to lose out from this policy are not the poor, most of whom desire a life off benefits, but the bureaucrats, social workers and do-gooders who gain employment by controlling, monitoring, assessing and providing the "care and support". These people will fifth tooth and nail to keep their jobs, and they will use their unfortunate clients as rhetorical ammunition to ensure the vast machine which eats the poor and keeps them that way, never shrinks. The only thing a bureaucracy servers, is itself.

The Bank of England has indicated that it is considering another bout of Quantitative easing. This presupposes that the problem in the world economy is insufficient demand, to which a solution is printing more money. If insufficient demand WAS the problem, the incredibly low interest rates would have encouraged investment and spending. The first two bouts of quantitative easing would have seen demand pick up.

They didn't. We barely scraped out of recession.

What quantitative easing did do was push up the prices of Gold - a hedge against inflation. Up too went the price of Oil, of Commodities such as copper, and therefore share-prices. Much of the money went into banks, so their balance sheets were artificially boosted. The FTSE100, being mostly miners and banks did very well, for a time. Other commodities, such as food also rose as more money chased a short-term fixed supply. House prices in the UK have been artificially maintained at their inflated level. Most of all, Quantitative easing, a policy of buying bonds has contributed to a bond bubble, where the sovereign debt of the USA, UK, Germany, Switzerland and (for a long, long time now) Japan are paying nothing in real terms.

The cost of this policy is borne mainly by the poor. Inflation has been explicitly blamed on Oil price rises and rises in the cost of , especially in food hurts the poor. While the main beneficiaries are people with assets - the rich. Labour's left however is clamouring for MORE intervention in the economy, but this isn't a Keynesian recession caused by aggregate demand. Therefore Keynesian solutions such as fiscal stimulus (spending money, or cutting tax) won't work any more than monetary ones, at least until the Government books are nearly balanced. So Labour's solution - to keep spending until we're Greece won't work.

So if it isn't demand, what is causing the problem? First there is a lack of investment opportunities. Whether this is a cause of or caused by the excess bond issuance crowding out other investments is moot. What's certain is the low interest rates and negative real yields are shielding governments from the effects of their two decades of profligacy. Germany, the USA, Italy and Japan all have enormous stocks of debt. Thanks to Labour's 10% deficit, the UK is still catching up fast. Most of the debt is internal, to pension funds and citizens of the states involved. The External debt, especially the USAs is mainly bought by China.

This has the effect of keeping the Chinese currency down and the Dollar artificially strong. What this does is boost exports from China at the expense of domestic demand. This is, in effect keeping Chinese poor to allow the Chinese Government to sit on an enormous pile of Dollars. At some point, this has to end. The Chinese will have to allow their people to buy French handbags & Wine, Italian Clothes, German Cars and English Shoes at the cost of devaluing their Dollar reserves. A fall off in demand for Western government securities will force (or allow) Governments to cut spending even as real interest rates rise. As bond prices fall, and the bubble bursts, money will flood out of treasuries and look for more productive investments.

So, can cutting Government spending faster, closing the deficit and restricting the issuance of Government debt help without the Chinese releasing their reserves? A restricted supply of Gilts would lead to the real interest rate falling, helping with deficit reduction. This doesn't really help prick the bond-bubble, but restricting the supply of Gilts will drive more money into the productive economy. Furthermore the means by which spending will be cut faster - firing and not hiring people in the public sector will re-weight the economy faster towards the private sector. In the Last Quarter, the public sector lost 111,000 jobs, but the private sector gained 41,000. Year to date, the figures are 149,000 fewer public sector workers and 159,000 more private. The cuts are beginning to do their work, and the private sector, against the stark warnings of the left, is taking on the task of picking up the slack. Since public sector employment started falling in the first quarter of 2010, the Private sector has increased employment in every quarter. That's 617,000 jobs created for 290,000 lost in the public sector. Each of those public sector jobs lost is one fewer wage bill. Each of those extra private sector jobs is one extra tax-payer. This helps reduce the deficit.

But it's more than the reduced deficit. Most public sector workers aren't the Nurses, teachers, firemen and doctors which represent the public sector in the fevered imagination of the Left. It's bureaucrats, so there's another benefit of having 290,000 fewer of them: They're not sticking their clip-boards in the way of business hiring and investing. These bureaucrats aren't unemployable either. For a decade, business has been crying out for literate, competent people who are capable of turning up to work in the morning. In many parts of the country, these people have been working for the state, which has effectively crowded out private sector employment. With that option no longer open, the Private sector is now able to find the people to provide the investment opportunities for capital which have been so lacking since 2005. The fact is this recession, like all recessions is down to malinvestment. In this one we've over invested in public sector prod-noses and under invested in the productive private sector.

This has been multiplied across the entire western world, and added to imprudently low interest rates as Governments have pumped money into the economy in a desperate and futile attempt to keep the party going. This monetary and fiscal "stimulus" has had the same effect as moving off beer and onto vodka. Quantitative easing is like offering round the cocaine in an attempt to keep inebriated guests dancing at 4am. The conversation's still nonsense, but the hangover will be much, much worse as a result.

If the Chinese government can do a bit for us and allow their domestic demand to rise with their currency too, we (and the Chinese people) will be thankful. Chris Dillow argues against the usual reason for stimulus not working (as per this paper, often cited by Tim Worstall & Others including me on discussiong about "stimulus") keeping suggesting that it raises the currency, harming exports. In this recession, that might not be the case, AUSTERITY in the west may weaken our currencies relative to China's by slowing the flow of treasuries & gilts which are being purchased by the Chinese in order to keep western currencies artificially high.

The "double-dip" is a misnomer. We're witnessing the last gasp of an asset and credit bubble which started to burst in 2000 and it ain't going to be pretty. In truth, we've barely left the recession which started in 2007. Unless we free up resources - people, capital from the public sector, we will not get growth. BRING ON THE CUTS. More & faster, please.

The US Army has finally abandoned the rather silly policy of preventing out homosexuals serving in the Armed forces. I was serving in the regular British army when the Ban on homosexuals was ended in the UK.



The platoon was formed up on the morning of the lifting of the ban, and the statement "...It is no longer acceptable to discriminate on the grounds of Race, Religion, or SEXUALITY..." was read out by the colour Serjeant. He then numbered the men off from the right in twos

One
Two
One
Two...

...And so on

"Number ones turn to your left, twos to your right... LEFT and RIGHT TURN!..."

...Pause for effect...

"...Now give the man in front of you a nice big kiss...".

Homosexuals in the British military is now a complete non-issue. As, I hope it will be for the USA.

As long-standing readers may or may not know, I don't own a car. I simply Hire one as and when I need one (roughly 2-3 times a month). This gives me a unique opportunity to test-drive a number of cars, and tell you what I think. Most of the time they're bog-standard golfs, vectras and occasionally a Mercedes A -Class, which leave me thinking that driving completely sucks arse.

However the firm I use (the very reasonable EasiDrive) occasionally run out of such mundane vehicles and I get upgraded. I learned to drive in a Porshe, and my last car was an Alfa Romeo, so I have some understanding of what a good drivers' car is & Everyone knows hire cars are the fastest things on the road. However regular readers will know that I hate driving (on the road) so who better to review cars? I am naturally sceptical.



This weekend, I was given a new Citroen DS3, A special edition 5-speed manual with the HDi90 engine and sports trim, with just 3,000 miles on the clock, and I have to say it is the best little car I have ever driven. Lively, responsive, stable, quick off the mark, comfortable, surprisingly spacious swallowing 2 adults, a 2-year old, luggage for same and a folding bicycle with ease. It's economical - the day's driving cost less than £10 in (yes, really) diesel and when you consider that hiring the thing cost £28, why would anyone who doesn't need a car daily, own one?

I drove the twisty A600 from Shefford to Bedford and it just loved the roundabouts. Being small, it was easy to find room to widen the corners and when Mr. The Cat decided to leap out in front of me, it stopped extremely quickly. All this potential fun, though merely reminded me why most drivers are so frustrated. The roads are not race-tracks, but this car was able to accelerate quickly enough and corner fast enough to make overtaking safe. The Mitsubishi Evo (VI, I think) with who's driver I was playing silly-buggers, had selected the wrong gear coming off the roundabout on the A428 at Warrington and I was able to overtake with a cheery wave. This was the highlight of the drive. Obviously he was able to blast past later, but I had rubbed his nose in driving incompetence. Wrong gear? - pah! The Citroen's engine had such a wide torque band, it accelerated acceptably from a standstill in third.

Channelling my inner Clarkson, if this car was a dog, it would be a well-mannered but mischievous spaniel with a wagging tail who wants to play. With my beige trousers on, it ticks all the boxes, reliable, efficient, spacious, safe etc. But when you want to put your cap on at a silly angle, it's fun when necessary and surprisingly quick. I did not perform a crash test, nor did I (honestly, officer) test the top speed, which isn't published but may or may not be 115mph.

If you absolutely must own one, you could do a lot worse than this little car.

Apparently Libertarianism is just identity politics of Selfish white men. The evidence 'Left Outside' uses for this absurd assertion is my last post, where I suggest that although I might disapprove of a T-Shirt bearing the slogan "I'm too pretty for homework so my brother has to do it for me", I would be unlikely to do anything about it, because I don't really give a shit. The hysterical reaction of the left to such things, I find faintly disturbing, and evidence of an intrusive, totalitarian mindset which seeks to impose it's values on everyone.

Of course with a name like "left outside", there is going to be economic lunacy in there too. Let's just look at some of the more absurd statements in this post.

Jackart’s argument seemed to hinge on the idea that “Lefties” who are trying to make the world a slightly better place for women (and slightly worse for selfish, privileged men)...

Political freedom is not a Zero-Sum game.

Brian Caplan is one prominent Libertarian who has written very strongly in favour of late C19th America despite all the oppression of women and blacks and poor people and trade unionists.

Of course, it is possible to praise an economic system without supporting the entire social system. Praising, for example the competitive rail-road expansion in 19th Century America does not equate to support for slavery. Praising Enoch Powell's legacy of economic thought does not imply support for "sending 'em all back" and so on. Brian Caplan isn't a supporter of "oppression". Play the ball, not the man.

Likewise a large and probably dominant strand of Libertarianism has adopted the Thatcherite slogan “Let Management Manage” which is nonsense. Getting bossed around at work feels often worse than being bossed around by the state...

...except that the state has a monopoly of legal violence and takes 50% of your earnings at gunpoint. You CAN leave a job. Of course if the lefties get their way, there won't be any other jobs to go to. Workers "rights" merely make it more risky to hire someone, so there are fewer jobs around. You really want to empower the worker? A job-creating dynamic economy is much better than job protection. Employers need to treat their workers decently or they will walk. What this has to do with a T-shirt slogan, though is beyond me.

The left-outside's post starts from the assumption that all such hysterical left-wing actions such as getting products of which some people disapprove off the market, are a good thing; making the world a "better place". Individually, the may be right. Taken together, I fear such actions create an atmosphere of mutual suspicion, excess caution as people businesses refuse to take risks or make arguments for fear of offending noisy bullies. Left-wingers, obsessed by identity politics, shout down any dissenting voices. My point is that the world would be better if everyone just ignored behaviour by others that doesn't directly affect them. Libertarianism is a mindset in which I don't seek to impose my values on others, and simply ask the same courtesy in return.

The fact Left-Outside thinks this "selfish" is telling, and explains why socialism in action usually involves enormous piles of corpses.