The Elephant in the Room

It's been a while since I've blogged anything and I suppose the truth is, there's not been anything going on in the world that has annoyed (or interested) me enough to want to take time out from planning my next book (Imperium: Finale, if you are at all interested). As you get older, for me at least, I think one develops a somewhat "live and let live" approach to things and I try not to let much bother me.
Well, let's qualify that last statement a bit; people that stand still when they get to the top or bottom of an escalator, drivers that don't say thank you when you have stopped to let them through, little children that rudely answer their parents back in public, these things still piss me off.
Anyway, back to the Blog.
My old school friend Brian and I (hard to believe I've known Brian for half a century. WTF!) were having one of our semi-regular meals in Boisdales, Bishopsgate, during which he enquired when I would write another Blog. It got me a-thinking, and this is the result. It is a subject which has bothered me recently, ever since I figured out what the UK's next big existential crisis will be. I raised this with Brian, and also to my other regular drinking buddy, Richard.

Simply put, the UK is sleep-walking into a crisis that will cost trillions to put right and it will happen in our lifetimes, although, fortunately, probably right at the end of mine. What is it? Be patient, continue reading and I will tell you.

For many years now, it has become painfully obvious for those leaving school/university and starting work (and for many already doing so) that they have three big choices; namely, 1) you can pay enough into a private pension, or 2) afford to pay the rent, or 3) pay off a mortgage. People simply don't earn enough, in these days of high house prices and rent (the two are obviously connected), to be in a position to do more than one. It comes down to a binary choice for most people...put something away for your old age or have a roof over your head.

Still with me, and not bored yet? Good. Now, if we go back thirty or so years, the UK had a large and thriving stock of social housing eg Council Houses. These were great for those on a limited income or who could not afford to save for a deposit. It acted as a backstop for those who, for whatever reason, preferred to rent in the private sector, when they retired and could no longer afford the rent. The State would step in and find them a Council house at a below "market" rate. The majority of pensions were also final salary types, unlike now.

Fast forward to the present day. House prices and rents are at an all-time high. Social housing stocks at an all-time low. No more final salary schemes, virtually all replaced by money-purchase schemes dependent on what you pay in and the stock markets performance.

Now think forward twenty years or so from now, when the first generation of non-pension, non house owning, private renters start to retire. The State pension won't cover their  current, commercial rent. Will the State chip in and cover the shortfall? Don't hold your breath. "You should have paid into a pension", will come the cry.  "but we didn't earn enough to both keep a roof over our head and pay into one," will be the anguished response. So, these poor souls may well find themselves on the streets, with no stock of social housing for them to move into, since very few are being built and, thanks to the Right to Buy, stocks will continue to dwindle into the future.
Unless something is done now, in a relatively short time we will have a real housing crisis...one of affordability, not actual places to live in. Can the State afford to pay for the private rents of literally millions of pensioners? Somehow I doubt it.

Now, I'll be the first to admit that I'm not always right, but the more I think about this problem, the more worried I become for millions of young, and not so young, people, the vast majority of whom will have spent their lives working and contributing to the State. Surely, someone in power has identified this looming issue? If not, why not? Why isn't this top of every politician's list of things to do? Instead of poncing around debating a third runway at Heathrow or HS2, why aren't they addressing this ticking demographic time-bomb?
The mind literally boggles, especially when the answer (work it out yourselves) would also sort out numerous other problems.

Tick, tock, tick tock...

Thoughts on the referendum #1

Please note, this was written on the morning after the result.

Well, well, well, who would’ve thought it. Just goes to show, nothing is sure in this life except death and taxes. For me, the debate was never about immigration, economics, benefits or such like, simply the sovereignty of this great country. The EU was moving inexorably towards becoming a Federal state, something we hopefully will have stopped and given hope to our like-minded European Cousins.
So what happens next? Here're a few thoughts:

The Markets.
Traders are doing what traders have always done, prey on the fears of the less well informed, gamble and try to make this quarter's bonus target. The markets will go up and down for a time, before stabilising once everyone remembers a few things and starts to reflect. We remain the fifth largest economy in the world. If we were so unimportant and insignificant that we desperately had to hang onto the coat-tails of Europe, why have the world’s markets taken Brexit so badly? It's because we are a global trader and Britain matters. The fundamentals are all still in place, just as they were yesterday, nothing's changed. It will be two years and three months before we actually exit and a lot can happen in that time. The markets, as I wrote above, are simply doing what they do best, and that is speculate. I see that Travis Perkins, a very successful builder’s merchants that sell in the UK has seen its shares fall 40%. Why, when it isn’t affected by what happens in Europe and sells to the builders in the UK? You can’t go down a street without seeing loft extensions going up, yet canny traders are making a killing on the stock market shorting the firms shares. But, the company is still there, still making the same profits it did before the referendum and is therefore exactly the same as it was. All that’s changed is the share price, not the business.

Immigration.
So much rubbish was written and spoken on this subject during the debate that it was shameful to witness. No, immigration won't change and “foreigners” won't be shown the door, any more than Brits living in Spain etc will all be chucked out. It’s in no-one's interest to do so. What will happen is that once we leave in two and a bit years’ time, and not before then, anyone from the EU will not be able to claim any benefits while living or working here…and here’s the difference…unless WE want them to. The professional beggars blighting areas of London can all be deported and not allowed back in…should WE not want to let them back in. The foreign professionals working in our cities and health service, paying their taxes and obeying our laws, contributing greatly to the prosperity of this nation, will always be welcomed here, just as ours will be in the EU as it’s in everyone’s best interests for it to remain so. The working class Britons being undercut by cheap labour from the many underperforming parts of the EU will find their artificially depressed wages start to rise as fewer unskilled economic migrants are allowed to work. Frau Merkel made a huge mistake in unilaterally throwing open Europe’s borders to economic migrants from around the world and is still desperately looking for other nations to take the strain. What Germany wants in Europe, it normally gets, so we could have expected huge pressure on Cameron to take them here too.

Travel in the EU.
I’m old enough to remember what happened before we joined the EU. We had free movement and didn’t need visas. We simply turned up, presented at Customs our old, black, over-sized British passport and went through. Exactly the same happens now, except it’s smaller and reddish in colour. Nothing will change once we leave. EU nations still will want our tourists, just as we will still want theirs. Why? Because it generates money and is in everyone’s interest for it to continue.

They say, the defence of the realm is threatened and infer terrorism will rise
Despite shameful defence cut’s we remain the fifth most powerful military in the world and one of only three global “blue-water” navies, a nuclear power and a founder member of both the “Five-Eyes” network (with US, Canada, New Zealand and Australia) and NATO. None of these is predicated on staying in the EU, in fact, I would argue that the other EU nations have been neglecting their NATO commitments on defence spending even more than we have and were relying on us and the US far too much. We don’t need the EU to keep us safe, but they desperately need us and our peerless intelligence network. It’s no coincidence that the Five Eyes refuse to allow any EU nation to join. Why? Because they can’t be trusted not to disclose the intelligence that is gathered by the five nations to hostile powers. That we are somehow going to be less safe is a nonsense.

Refugee camps moving from Calais to Kent.
Really? The agreement with France allowing us to have passport controls on the French side is independent of the EU. Should France decide to rescind it and allows people to get onto the ferries or Eurostar without checking them, we simply fine the companies transporting the people very large sums per person (as is the case now) and put them on the next train/ferry back. Another option is to close the Tunnel. Given it is mainly owned by the French they would hate that to happen or pay the fines. Scaremongering at its worst. In addition, such a move would increase the number of migrants heading for Calais, which is the very reason France agreed to the border controls in the first place. Why aren’t the doom-mongerers mentioning that, I wonder?

Our standing in the world would be lessened.
Again, fifth largest economy and armed forces, a legal system which oils much of the world’s trade, our standing in the Commonwealth, our soft power which is as good, if not better than the Americans, a permanent seat of the UN along with France, China, Russian Federation and the US,etc etc. The list does go on a lot. Lessened, really? The nation that gave the world such things as Parliamentary Democracy, Shakespeare, English Language, second highest number of Nobel Prize winners etc is suddenly going to become unimportant if it left the EU?

Cannot influence the EU anymore
We couldn’t before. We had 73 seats in the 751 strong EU Parliament and thanks to a previous Government agreeing to qualified majority voting, found ourselves unable to veto an awful lot of things. Look how Cameron went to Brussels with reasonable demands and came back with…what exactly? Does anyone understand what he supposedly won still had to be voted on and could have been overturned by the European Court of Justice, or that his trumpeted deal on paying benefits could only be invoked after an EU vote (remember 71 v 753!). Asking the poor, Eastern Bloc nations to vote for that whose people were the beneficiaries, would have been the same as asking Turkeys to vote for Christmas!

Trade with EU and rest of the world
Most of the EU is up the Swanee economically. Look across to France, Spain, Portugal, Greece, Italy etc and they are all in a mess. Germany is doing fine, thank you very much, because the Eurozone favours it at the expense of all the rest, especially Southern Europe. We are a huge market for their exports, especially Germany, just look where all the cars and white goods go, you see them everywhere here. Does anyone really think they are going to put tariffs on British goods and risk us doing the same to theirs? Beggar my neighbour is for children. No, they will huff, and puff, and make all sorts of noises in the weeks and months from now, mainly to try and stop their own voters from demanding a referendum too, but behind the scenes, the negotiations will all be going on to facilitate free trade. There will be a few headline tariffs so both sides can save face and the politicians make noises to their voters back home, but the bulk will continue as before. Our trade with the rest of the world will continue too. Are we so rubbish and have sunk so low that we can no longer negotiate trade deals for ourselves? We get back our seat on the WTO that we had to give to the EU. I know Obama said we would go to the back of the queue in trading with them. Yeah, right. Watch this space. American businesses will be clamouring to do deals with us. Money talks in the US like nothing else.

Scotland leaving/another referendum
Might happen, but as I’ve written elsewhere, the Scots are known to be canny, not stupid. When oil was over $100 a barrel there might have been a case for financial autonomy, but now? Spain has issues with its own independence movement, as does France so they are unlikely to welcome Scotland in without their having to accept the Euro and go in as a new member. I know the SNP say differently, but will the EU, bereft of the UK’s £8 or £10 billion net payment want to take on a country that needs financial help from day one without insisting it takes on the Euro as part of the deal? As I wrote. Scots aren’t stupid. If they did go, then one good thing to come out of it would be the Socialists never ever getting back into Government. It’s an ill wind. But, I would respect their right to leave and wouldn’t make a song and dance about it.

Anyhow, I’ve had my say. What’s interesting now is to watch and read people’s reaction to the result. I can honestly say that if we had voted to remain, I would have shrugged my shoulders and got on with it, respecting the will of the people, so it’s fascinating to see how others react.
Now is not a time for triumphalism, recriminations or name–calling. We need to accept the democratic will of the people and move forward as one nation, putting our personal views aside and work together to show the rest of the EU and the wider world, that the blood that flows through our veins is the same as that which flowed through our ancestors in Agincourt, Cressy, Waterloo, Trafalgar, WW1 and WW2. A Britain that looks outwards and embraces the wider world, instead of looking inwards to an increasingly irrelevant and economically shrinking EU, is something I am proud of and wholeheartedly believe in.

Thoughts on the referendum #2

Firstly, a big thank you to those who commented, emailed or messaged me about my previous Brexit post, where I tried to explain my views on some of the scare stories being promoted by the media and the sillier claims being made. Following this, I find myself almost forced to having to add another one, due to the continuing half-truths coming out of the mouths of many so-called expert commentators in the media. People need to start questioning all the doom and gloom that is being promulgated out there by those with vested interests, who are damaging any chance we have of bringing the country together and moving forward. Why are they doing this?

• The reported Stock Market crash

The facts are, it didn’t happen, at least, not in the UK. Our Stock Market actually ended up where it had started at the beginning of the week, just down a few points on the day before the referendum. In market terms, that’s not even a rounding error and well within daily or weekly fluctuations.

Let’s ask ourselves why stock markets fell all around the world? Well, very few traders thought Brexit was going to happen and had made trades expecting the market to go up once the results came through. When it didn’t, they had to “close out” their positions, leading to volatility. Don’t forget that shares are simply tiny bits of ownership in a company. If that company was making profits at the start of the week and was making them the day after the referendum, as the fundamentals didn’t change, why should their share price?

What’s interesting, however, is what happened to the European stock markets. Go have a look. They all dropped further than the UK’s and haven’t recovered as much. Why? Because our business is so important to the EU that in a shin kicking competition over tariffs and trade, we have hob-nail boots. Look how the EU commissars are insisting we invoke Article 50 now, rather than wait, as is our right and enshrined in Article 50. The uncertainty is hurting them more than us. The longer they have to wait, the better the deals we can strike, however, as our politicians are mostly fools I shan’t hold my breath on them doing the right thing for Britain.

• They say, foreign car firms will now leave the UK as they can’t trade with EU anymore.

A quick Google will show that the UK, in total, exported c905,000 vehicles to the EU last year. In return, Germany alone exported over 800,000 to the UK. Add in all those from Seat (Spain), Volvo (Sweden), Fiat (Italy), Peugeot and Citroën (France) and it wouldn’t surprise me if car exports from the EU to the UK added up to over 1 million (I couldn’t be bothered to add them all up myself, but feel free), leaving us with a net balance of vehicle import/exports in the EU’s favour, eg they sell more to us than we do to them. But let’s be generous and say the two equal each other out. Will Germany, by far the largest exporter to the UK, put all those exports at risk? How many German automotive jobs would be lost in a trade or tariff war, let alone Spain where unemployment runs at 21%? Doesn’t it make sense that the EU would want a level playing field? Granted, they might want to “make an example” of us, but on Saturday, Merkel was saying the UK shouldn’t be punished, for she knows better than anyone just how important the UK market is to Germany. As I wrote before, what Germany wants, Germany tends to get in the EU.

• They say, there’s a lack of UK negotiators available to renegotiate our trade deals.

Firstly, what does that say about how emasculated we had become as a trading nation, when everything had to be done by Brussels? No wonder trade deals took so long!

From my perspective, I know plenty of shrewd, talented, hard-nosed negotiators. Go to Romford market and you will see dozens, manning their stalls and making money. I don’t know where all the Jewish clothing merchants went when their East End factories relocated, but those guys could negotiate with the best. I have two friends (Martyn and Julian) who could go into any negotiation and come away with a good deal. Hell, most Bank managers had training on negotiation and could make a good fist of it. Are we really that bereft of talent in the UK?

• They say, Scotland will leave and the UK will break up

I mentioned this in my previous post, so bear with me as some will be repeated again here. Sturgeon is kicking up a fuss but it’s all bluff and bluster for her domestic audience. She can’t call a referendum on independence without the agreement of the Westminster parliament. No ifs or buts, it’s not within her remit or power, yet few commentators say this. Why? Because it doesn’t make for good press or soundbites. When oil was over $100 a barrel, the economic numbers for Scotland to be financially solvent almost added up. With a few tax hikes and spending cuts they could have managed. Scots are smart and canny, even if a few have a tendency to blame the English for everything, but they can’t blame the fall in oil prices on perfidious Albion this time. Oil is now around $50 a barrel and with massive over-capacity in US shale oil, plus Iran now able to sell its oil on the world markets, the price is likely to remain low for some time and will certainly be a volatile source of income for a nation to rely on. At these levels, Scotland would have a very large deficit, plus would have to find cash to cover its share of the UK’s national debt that would be transferred to the newly “free” Scotland and its contribution to the EU coffers. No-one seems to mention it would have to pay in to the EU, just as we do now. How does Scotland find the money and cover its financial black hole? The only way is to raise taxes and make cuts in spending, for example, perhaps the end of free University education and free prescriptions in Scotland? Tax rises would immediately make Scotland a less attractive place to do businesses. If that wasn’t enough to make even an SNP voter think twice, the EU aren’t going to let them in on the terms they enjoy by being part of the UK, for, under EU rules, you have to be an independent nation before you can join. All new members have to accept Schengen and the Euro, so no pound Sterling for them.

Spain is unlikely to want to do Scotland any favours in their entry negotiations due to their own separatist issues they have in Catalonia; the North of Italy wants to cede from the South and I read recently that Venice wants independence too! Given this, I would say Scotland's negotiation position is very poor and being forced to take the Euro and being in Schengen are a certainty. Schengen in all likelihood means a border between England and Scotland, to stop free movement and immigration problems. Having just voted to leave the EU, with immigration a real issue, why wouldn’t we insist on a border going up?

Scotland has the same sized population as Finland and Slovakia (c5.3 million) so can expect to be allocated the same number of seats in the European Parliament. Thirteen. That’s just 13 out of a total of 751 (750 +1 for the President)) yet in the UK they have 59 out of 650 in Parliament. Effectively, they would have even less say in the EU than they enjoy by being British. Does this make sense to you?

In light of all this, is it reasonable Scots would vote to give up the pound, have higher taxes and harsh cuts in services, become a small fish in a huge pool and have a border between England and Scotland? Really?

• They say, the city of London will decline in influence.

There certainly is a chance, but if it does, it will happen slowly and remember, the same people who are saying it will happen are the same experts who said the same if we didn’t join the Euro. Make your own mind up on this one. However, it’s no secret that the EU’s goal was to become a giant Federal super-state, with one set of laws, one governing body, one armed forces, one foreign policy etc.  At that point, what would have been London’s chances to remain the financial centre when already, the Germans have bought the London Stock Exchange? Frankfurt, anyone? Thankfully, now we will never know.

Another thought on this is to consider whether a decline is such a bad thing. The financial crises in 2007/8 almost broke our nation. Is a smaller financial sector therefore such a bad thing? I seem to recall strident voices from many that the City was too powerful and had to be made smaller for the good of the wider economy and manufacturing, so what’s changed now? How ironic that the same people who vilified the bankers now want them to stay!

Finally, London has advantages nothing to do with being in the EU, namely it’s time-zone between the US and Asia, our legal system, stability and the attractions of London living itself.

• They say Northern Ireland will join Ireland or a border will go up between the two.

There isn’t a border now between us and it works just fine. Like the UK, Ireland isn’t in the Schengen area of passport-free travel, so providing they don’t join it there is no reason why a border needs to be imposed. This is another example of scaremongering and mischief making. I read today that Ireland has announced it isn’t interested in a referendum on unification. Why? Because the Irish economy couldn’t stand the financial burden of taking on Northern Ireland, so if they don’t want it to happen, it won’t. How can Ireland be forced to accept the North against it’s will? I imagine they also don’t want to have their own version of the Troubles start up as Loyalists mirror in Ireland what the IRA did in Britain.

• There will be damaging Tariffs on trade between the UK and the EU and look how much Sterling has “plummeted.”.

Yes, these tariffs can happen but only in accordance with WTO (World Trade Organisation) rules, which average out at around 10%, meaning that if we can’t agree on amicable terms with the EU, this is how much extra our goods will cost in the EU and theirs here.

Let’s look at a simple scenario:

Sterling drops 10% in value against the Euro, staying at this level forever and no agreements can be reached on tariffs, resulting in the 10% being applied on our exports to the EU.

The Nissans made in the UK and sold in the EU are 10% cheaper over there due to the fall in Sterling, but also rise 10% due to the tariff. Net impact on the price in Europe? Zero.

On the other hand, the shiny new BMW’s or SMEG freezers sold here now cost 10% more due to Sterlings fall, plus another 10% as we impose our own tariff. Net result? German goods are 20% more expensive, and cost 20% more in the UK (10% from the fall in Sterling and the 10% tariff)

What’s the net result here? German goods cost 20% more and become very uncompetitive, the British built car costs exactly the same as it did before Brexit. Now you can understand why the Germans are worried and a tariff and trade war unlikely.

Of course, politicians need to save face, so there will be huffing and puffing on both sides, but as ever, money talks.

• They say it will take years to disentangle ourselves from EU laws

Not unless we want them to. The simple thing is to write all the existing EU legislation we currently follow into UK law, then we can get rid of the bits we don’t like in our own good time or as case law supersedes it. No need to rush or panic. Simple answer really. Makes you wonder why it isn’t being mentioned.

• They say the old farts have just screwed over the younger generation

It's not the old voting farts that did this, but the politicians, going back decades. The old voting farts have been paying taxes for decades longer than the young  and were the ones that fought and died to keep this country free. But let’s get serious here. So the EU is great for its youth. Really? Let’s look at some statistics:

Country                Youth unemployment %

Germany                              6.9

UK                                       13.4

Greece                                  48.9

Spain                                    45.3

Portugal                                30

Italy                                      39.1

France                                   24.6

Belgium                                25.1

Sweden                                 19.1

Netherlands                          11.3

The figures show me a few things: the EU, and especially the Eurozone, isn’t working too well for its youth. Now as we all know, our youth in Britain is actually no different to anywhere else in Europe. Just as smart, just as daft at times. Imagine you are a smart graduate in Greece, Spain, Italy, France or Belgium etc. You probably speak English as a second language. There’s little work back home but in the UK there’s lots of work so where do you head for and who are you competing with? Now, can someone explain to me how British kids having to compete against lots of desperate, smart young Europeans for a job is going to help them, especially with Uni debts in the tens of thousands of pounds to service?

The awful EU unemployment figures also show just how pants most of the EU economies are. Without fiscal transfers of wealth from the richer to the poorer nations, the Eurozone will collapse. Coming out of the EU now means we won’t have to face demands for our budget contributions to go up to pay for the nations lining up to join or to finance the collapsing Eurozone. In addition, to save the southern European economies they will either have to exit the Eurozone or be forced into a Federal union so these fiscal transfers can take place. Don’t believe me, then look at the UK. London and the big cities make more than they spend so the remainder is fiscally transferred to the poorer regions. That is what will have to happen in the Eurozone for it to work properly and save southern Europe from bankruptcy and eternal penury, but this can only come about under a Federal system.

• They say this referendum wasn’t fair. The percentages were too tight and it wasn’t representative

Really? What happened to Democracy? Let’s compare the percentage turnout and winning percentage against our general elections going back to 1987:

Year                     % Turnout          Winning parties % of the vote

2015                      66.1                       36.9 Conservative win

2010                      65.1                       36.1 Hung vote

2005                      61.4                       35.2 Labour win

2001                      59.4                       40.7 Labour win

1997                      71.4                       43.2 Labour win

1992                      77.7                       41.9 Conservative win

1987                      75.3                       42.2 Conservative win

Referendum result

2015                      72%                      51.9% Leave win

Looking at the above figures, taken from the Electoral Commission’s website, clearly demonstrates that voting percentages had been falling since 1992, with just a slight uptick in recent years, yet at the referendum, the percentage voting was at its highest in twenty-four years, a real win for Democracy, unless, of course, you were on the losing side!

Let’s now consider the winning percentages for every single Government since 1987. Not a single Government has had a higher percentage of the vote than the Leave campaign achieved at the referendum, yet no-one’s calling those Governments illegal or unrepresentative. Britain also had a vote on proportional representation recently and that was defeated too, so no-one who is unbiased can complain about the fairness or the legality of a voting system that has been used and accepted in every General Election. Is it sour grapes? Surely not!

What does all this bitterness and calls for the results to be overturned tell us about the state of Democracy in Britain today? Have we really become a nation of whiners and sore losers, virtue signaling hypocrites who bang on about democracy and people’s rights only for as long as they get their own way? Why is it that if someone goes against the establishments position or takes a differing position they are classed as bigots, small-minded, racist, out of touch, little Englanders or far worse? Remember Gordon Brown and the off the cuff comment he made about “that racist woman” who dared call him out, simply because she had a differing opinion? That’s what our chattering classes really think about us; useful idiots who are tolerated for only as long as we do as we are told. What we are witnessing today over the referendum result is no different to what happened in Ireland when the people voted no in a EU referendum, so their Government kept having them till they got the response they wanted. Shameful, and if we are not careful the same thing will happen here and our Democratic right to hold differing opinions will be lost and with it, our freedoms.