Interesting Times

 I’m waiting for news…not good news. My husband has been told that 10% of people in his organisation will be made redundant. He has a meeting at 10am which will clarify things. He suspects that he will be going.

 He’s worried and stressed and also a bit annoyed that it seems to be a fairly short term decision.

 I’m not quite sure what the news will mean. He won’t get much redundancy; few people do these days.. There aren’t many other jobs about although there are some. He is skilled and qualified and has experience. It could easily take 6 months to find another job. Although its not as bad as Primark in Bristol which had 14,000 applicants for 400 jobs. There are other things he can do to make money (sell his body??) mainly contracting type work which means nights and weekends providing the work actually turns up.

 In some ways I quite like the thought of him not working –I’ll get relieved of the school run, he can look after the house and make dahl. Life could be simplier.

 I like to think he might try a different occupation; maybe he could knit yoghurt or something. Although with the school run and the chronic lack of money I’m not sure he’ll be able to come up with something more fulfilling as an occupation.

 Money wise I’m not sure how we’ll cope. Assuming he doesn’t make any money at all post redundancy we should be able to manage on a day-to-day basis as long as we are less profligate but its going to be a huge change. We won’t loose the house or have to take my son out of school but I think everything else will be up for grabs. Also managing on paper is one thing- actually having to do it might be another matter.

 My husband works in the railway industry which is heavily reliant on government funding. The government have given all the money to the banks. Australia however has a long term plan to expand its rail network and a shortage of skilled designers. We might just be leaving the country. Exciting times.

Education in the 1980s

I took my GCSEs in 1990. I got an A for English and yet my grammar is terrible. It was the year of ‘anything goes’. My English teacher had been instructed that you could not mark students down for poor grammar (or spelling or punctuation) if it did not impede the comprehension of the piece in question. Unfortunately as a professional the world is not quite so forgiving. Children were sent out into the world of work without the skills that they needed to write without embaressment. Luckily I read a lot and mainly manage to write in a way that is comprehensable even if I don’t know why…

Affect and Effect

I’ve just found out that these words actually mean different things. I’m very excited as it will prevent lots of professional embarrassment. I had had it explained to me that they were verbs or past participles or something but as I had no idea what these mean it didn’t really help. Feeling rather desolate about a writing project that will engulf much of my summer and would require both words to me used often I looked them up in the dictionary and discovered that they are not different forms of the same word but different words. As they have different meanings its fairly obvious were you would use one or the other.

Affect: make a difference to

Effect: a result or bring about a result

 

Obviously I’ve used the dreaded colon in the above and I’m still not sure about these. I did once buy a book on grammar but I think it may have been the wrong one as I didn’t understand a word of it.

In defense of the chancellor

MPs expenses are producing much excitement at the moment; and many people didn’t vote in the European elections because they were so disgusted by the whole thing. But what is it that we really object to?

There seem to be a number of issues that should be addressed and these are becoming confused.

1 Extravagance; duck houses,  farrow and ball paint, expensive bed linen,mock tudor beams.

 MPs earn around £60k. Only 10% of the population earn over £40k. In a single income household earning £60k puts you in the top 5% of the population. People who earn more tend to spend more- not just by buying more stuff but by paying more for the stuff they buy. Its how Waitose stay in business. MPs propably buy expensive things with their own money too. They think its normal.

I wouldn’t want somebody to go through what I spend my money on. I recently spent £20 on lemons so as not to lose face at the school fair. And I have considered a volcanic limestone bath…MPs are spending money that is not theirs as if it were. This is what the rules tell them they can do.

MPs are not being corrupt here. However it demonstrates our MPs are not in touch with the population, that they don’t live as most people do.

If we want politicans who are aware of the problems faced by most people we should have asked some more searching questions at election time. 

 

2 fraudulent expenditure

MPs have defended themselves by talking about the rules and how these need to be changed. However some expenditure has clearly been outside of these rules or so clearly wrong that MPs should have known not to do it. I refer to married MPs both claiming 2 home allowances and claiming mortgage interest for non-existent mortgages. Press reports suggest that the former has upset people more. But this is where out indignation should be focused. Its not as entertaining as mock tudor beams or 2 toilet seats but much more important.

3 MPs claiming for low value items

You can’t have it both ways- (see 1) MPs should not be extravagant but shouldn’t claim for low value item?

Be reasonable. This is actually OK.

Also they can add up- I travel for business frequently and find that the amount I spend on water alone is considerable.

4 Mistakes

One MP was being lampooned in the press for claiming his council tax twice in 6 months. This is clearly wrong BUT the full story emerged and showed that he had claimed his council tax twice in 6 months- but had then realised and repaid it. He repaid it before it was discovered by the press and I think therefore suggests genuine error.

The Chancellors £700 service charge may fall into this category. H claimed for his service charges as he paid them (6 monthly in advance). 2 months into the period he moved and didn’t repay the remaining 4 months. clearly he should have but I’m not sure that this wouldn’t have slipped through my otherwise excellent administrative procedures in the same situation.

A major area of difference exists at the moment between the 2 political parties regarding the use of fiscal policy. This is the biggest division in British politics since the 1982 election. Labour is pro-fiscal stimulus, the conservatives against. This is a huge ideological difference that could impact on the lives of ordinary people in way that MPs expenses never would. WE SHOULD TALK ABOUT THAT

Loss of Soveriegnty and the Euro

In the current economic crises ‘radical’ considerations are being proposed to stimulate the economy. One of these is the joining of the Euro. In the past two days a couple of people have asked me if there is any reason why we shouldn’t join the Euro…i.e. do the Euro sceptics have a point?

 

The arguments are rather complicated however in one respect they are right (right piled upon right). We would give up some sovereignty- this would occur in two major ways.

 

1)     Loss of control over monetary policy.

Monetary policy is policy that attempts to control the economy by controlling the money supply. Controlling the money supply can be done in a number of ways; by printing more money, by putting credit controls in place (i.e. limiting the ability of banks to lend money) and by setting interest rates.

In the UK interest rates are the primary tool that is used. Interest rates are effectively the price of money- if interest rates are high demand for lending will be low (so we lower the amount of money in circulation), if interest rates are low then people will want to borrow more money and therefore we will see more money in circulation. Providing the banks are prepared to lend it….

 

At present the bank of England has control of interest rates. If we joined the Euro the European Central bank (ECB) would have control of interest rates. Advantages of this are that we further divorce interest rates from the political cycle and therefore don’t get politicians interfering. The down side is that the ECB don’t publish the minutes of their meetings in the way that Bank of England do so we lose some accountability.

 

In addition interest rates set for Europe may not be the most appropriate for the UK. The UK had higher rates of home ownership (more specifically mortgage financed home ownership) than elsewhere in Europe and therefore we are harder hit by changes in interest rates.

 

2)     Loss of control over fiscal policy

The convergence criteria for Euro membership include rules about the amount of debt a country has; it should be limited to 60% of GDP overall and the annual deficit should be limited to 3%. This limits the governments ability to stimulate the economy by spending money financed by borrowing. The idea is that this would encourage countries to bring about innovative supply side policies. It hasn’t. Neither have the countries stuck to the rules….First the smaller, less stable countries succumbed then the larger countries, France, Germany..

The meaning of Christmas…for atheists

The joy of Christmas has hit hard this year. My son is 6 and its the first time he’s really been aware of the big C. We’ve gone through the whole ‘does Santa exist’ thing and were heading towards a big car crash of a family christmas. Its was a proper Eastenders style over excited children; messily separated families; and drunken fights and rows*.

Amongst all this my son was receiving lots and lots of presents….everything his little heart desired. I wanted to tell my son that Christmas isn’t just about presents… However as we don’t believe in God- it isn’t really. Its just a food, presents, lights and trees. 

 

 

* Lets just say I spent it with my mum, dad, step dad, dads new girlfriend…

VAT and the circular flow of income

Recently the government reduced VAT from 17.5% to 15%. This has been done to try and stimulate the economy- to make it grow. However people KEEP saying to me…but they might not pass it on to us…What they fail to realise is that the theory works anyway.

 

The circular flow of income suggests that a simple economy is made up of 2 key actors- firms (or producers) and households (or consumers). Consumers spend their money buying things from firms. Firms spend their money buying things from consumers (labour, land, raw materials- the factors of production).  There are withdrawals from this simple system (savings, money spent on exports and taxes) and injections to the system (government spending, investment, money received from imports). If withdrawals are reduced (i.e. the tax rate is reduced) then there is more money in the system. If firms have this money they will spend it (on wages, dividends etc) and if consumers have it then they will also spend it. Either way the money remains in the system and creates growth. The problem isn’t with WHO has the VAT bonus but what they do with it- we don’t want it in the bank and we don’t want it spent on exports to grow other economies.

 

So what can we do to keep it in the system? Low interest rates will discourage saving and a weak pound will make imports seem expensive. So according to this economic theory…the government is getting it right.

 

There is also the multiplier effect which amplifies the effect described above but I’ll save that for another day!

Price Earnings Ratio and Monkeys

Price earnings Ratio is a major investor ratio- that is one that is considered material to people when making investment decisions. 

So what is PER? (don’t worry I get to the monkeys in a minute)  Well it can be calculated as the market value of the share (i.e. its price on the stock market- usually found in the FT) divided by the earnings per share. EPS(*) is the amount of profit attributable to each individual shareholder (so if a company gave all the profit made in a year to the shareholders this is how much each share holder would get). This ratio shows the number of years it would take to earn back the market value of the share. Its felt that the higher is better as this shows the confidence the market has in the share i.e. how much its valued over what it will earn.

This brings me to the monkeys.

 
Once upon a time in a village, a  man appeared and announced to the 
villagers that he would buy monkeys for  $10 each. 

The villagers seeing that there were many monkeys around, went  out to 
the forest, and started catching them. 

The man bought  thousands at $10 and as supply started to diminish, 
the villagers slowed  their effort. He then announced that he would 
now buy at $20. This renewed  the efforts of the villagers and they 
started catching monkeys again.   

Soon the supply diminished even further and people started going back   
to their farms. The offer increased to $25 each and the supply of   
monkeys became so few that it was an effort to even see a monkey, let   
alone catch one! 

The man now announced that he would buy monkeys at  $50! However, 
since he had to go to the city on some business, his assistant  would 
now buy on behalf of him. 

In the absence of the man, the  assistant told the villagers. ‘Look at 
all these monkeys that the man has  collected in this big cage! I will 
sell them to you at $35 and when the man  returns from the city, you 
can sell them to him for $50 each.’ 

The  villagers rounded up all their savings and bought all the monkeys. 
Then they  never saw the man nor his assistant again, only monkeys 
everywhere!   

Now you have a better understanding of how the stock market works.

(8) There are lots of rules about how EPS is calculated- its mentioned in UK accounting standards and international accounting standards. Companies are expected to comply with these standards in order that their accounts are considered to present a ‘true and fair’ view of the companies activities. This in turn is necessary to get a ‘clean’ audit report and comply with the companies act.

Sustainable

I’ve just started studying for a masters level course in sustainability. I have attended my first ever online lecture (rather scarily in the Department of Mechanical engineering). Its brilliant- its given by Karl Henrik Robert who was originally a cancer specialist dealing with bone marrow transplants. He became concerned about sustainability and the issues arising (global warming, death of wildlife etc). He was concerned that there was no common framework to understand the science produced and set out to produce one. He’s working to establish a set of concepts we can use to analyse all the separate bits of science. 

One of the interesting things he talked about is the lack of trust between people and there leaders- the idea that we don’t have a shared mental picture with our leaders; we tend to feel they are just interested in power. And the idea that taking care of each other doesn’t seem to be institutionalised; we feel we have to rely on ourselves and our families. It seemed quite pertinent in the current climate- I’ve not spoken to anyone who feels Brown has a vision- let alone one they share. We see the increase of apathy, people feeling disconected from politics…

Obviously we get to the science soon which will be scary. The book has differential equations…hmm I might need to call the chicken into help.

Intellectual moi?

Please excuse the randomness of these musings…I’m trying to think this through..

I’ve just been listening to ‘Whose Side is Bart Simpson on?’. The writer has been on talking about the programme and particularly the description of the French as cheese eating surrender monkeys in the run up to the Iraq war. The phrase apparently was used by Willie the caretaker when taking over the French class and represented the idea that ‘there are a group of people over there; who are very intellectual and the anti-thesis of everything we’re not’ . Intellectual is seen as something other.

 

I found this interesting as I was recently called ‘intellectual’ by an American and am not entirely sure how to take it! I think my intellectuality was proved in the following conversation…

Mum 1: I’m from Iceland

American; everything I know about Iceland comes from Smilla’s Sense of Snow

Me: Wasn’t that in Denmark? Everything I know about Iceland relates to Cod fishing have you read Cod? It’s a fantastic book about the history of cod fishing…

American: err no-!

 

I also read an article about the decline of the intellectual as a political force in Russia. Historically the Russian intellectual has produced a rich source of ideas that undermine and critique the social order. This it seems is declining as the present social order privileges intellectuals and is (to a certain extent) supported by them.

 

This presents 2 very different views of what an intellectual is- the first suggests that its somebody who reads, the second that its somebody who thinks, writes, maybe even publishes…but essentially people who devout there life to the pursuit of knowledge.

 

The redefinition of an intellectual to somebody who reads books not sold in supermarkets, and the anti-intellectual culture displayed in the Simpson quote can hide the importance to society of the second definition. Society needs scientists who aren’t linked to product research, political thinkers who aren’t linked to parties…..And we need people who can link ideas together.

 

This brings me onto the current state of British Universities. We need these independent intellectuals but not too many of them. Intellectual shouldn’t be confused with academic and the privileges that we might want to extend to intellectuals don’t need to be extended to academics. Although of course free speech is needed for all…

 

Dictionary Definitions:

Intellectual: a person with a highly developed intellect

Intellectualism: the exercise of the intellect at the expense of the emotions

Academic: relating to education and scholarship

 

Another related point in the article was that we shouldn’t follow intellectual whatever- that we do need emotion when selecting the ideas to follow. The example they gave was Marx and the misery inflicted on the Russian people in trying to follow these ideas. Whilst I agree with this I’d argue that the politicians didn’t follow Marx to the letter and a lot of the misery came from the random exercise of power rather than actually Marxism. In addition to which Marx saw the socialist revolution occurring after capitalism was fully developed- he believed the natural contradictions in capitalism would lead to its eventual collapse. In Russia they attempted to impose capitalism on a semi-rural economy. This is, I admit the line taken by the Socialist Worker Party to explain the downfall of capitalism however it is consistent with my reading of Marx.

Politics is Boring

Politics is boring

 

My brother is very apathetic about politics- he’s says its boring and makes no difference to his life; that it makes no difference to him going to work, having a few quid in his pocket, owning a home, and being with his family. That the only type of politics he’s interested in is giving money to starving children in Africa.

 

I just feel the need to explain a few things he won’t let me say.

Politics does make a difference to the amount of money he has in his pocket. He ‘owns’ a house on which he has a large mortgage that he struggles to pay. At present he pays around 6% interest- this is around £9,000 a year (or £750 a month); his current mortgage repayments. If interest rates rose to 15% he would be paying £22,500 a year (£1,875 a month). He currently earns around £27k and brings home around £1,500 (after tax, pension, student loans). He would lose his house. The government did this on ‘Black Wednesday’ when John Major raised interest rates in an attempt to prop up the pound.

 

If the government decides we need to fully enter the nuclear age we need to replace US bases with British bases- this would cost a fortune. Tax would increase- he would bring home less money and therefore have less to spend.

 

If we really want to give money to starving children in Africa we need to monitor the government to see how they do this. Should they send food or should they invest in capital projects?

If we send food- children stop starving (if we send enough and distribute it etc)

If we invest in capital projects then we may create employment and reduce the need for future aid…Or we may just f**k up their environment.

Do we get to decide? Should Africa be developed like the west or should we allow Africans to determine their own future?

 

Should we give more aid (like many Scandinavian countries) or should we use the money to allow and support asylum seekers (unlike many Scandinavian countries)?

 

Who should make these decisions? We should be watching.