Friday, 23 June 2017

Nobody move or the German car makers get it!

Via MBK, from The Times, still working on Project Fear. (Didn't they get the memo? The Referendum was held a year ago and they lost):

A hard Brexit will put up to 18,000 jobs in the German car industry in danger because vehicles will become “significantly more expensive” for British consumers, analysts said yesterday.

The knock-on effects of border duties imposed between Britain and the EU at basic World Trade Organisation levels could mean sales of European-made cars will plummet by one fifth in the UK, Deloitte forecast.

A hard Brexit — defined by the report as leaving the EU single market and falling back on WTO trading rules — would mean a 21 per cent price increase for British consumers, Deloitte said, with the cumulative impact of the drop in the pound and extra trade costs.

The car industry would be one of the sectors that suffers the most because tariffs of 10 per cent for finished vehicles are higher than the WTO average for all goods. It has also come to rely on “just-in-time” supply chains which are highly responsive to demand and would be badly interrupted by the need for customs verification checks at either UK or EU border control posts.

1. WTO rules do not say anywhere that you have to impose a 10% tariff on cars.

2. Where did they get that "10% duty on imported cars" figure from? Funny you should ask, that happens to be the common tariff which EU Member States have to apply to cars imported from e.g. Japan.

3. If the EU want to play silly buggers and apply this 10% tariff to cars made in the UK, there's not much we can do to stop them. It is entirely up to the UK what sort of tariff we impose on imported cars, whereby the ideal tariff is of course precisely zero. On everything. That's good for UK consumers, good for UK producers in the medium and long term and will play well on the world stage.

4. Even if the UK were stupid enough to maintain the standard 10% tariff on cars and 3% - 4% on car parts, it would make naff all difference to most buyers. It would make no difference to people who buy cars made in Japan. Expensive German cars would get a bit more expensive in relative terms, but as we know, showroom prices in £££ are surprisingly stable and largely unaffected by exchange rates or tariffs. And hence the number of cars imported from Germany would fall be nowhere near one-fifth as stated in the article.

5. As per usual, the article fails to distinguish between the impact of tariffs imposed by the UK and those imposed by other countries, both are bad, but to some extent the damage cancels itself out, the effect is not cumulative. (In the same way that taxes and subsidies cancel each other out to some extent).

6. Even if the article is correct and we end up with fewer Audi and BMW drivers behaving like arseholes in the fast lanes of our wonderful motorways, is that really A Bad Thing?

Stupid Criminal Of The Week

Headline from The Daily Mail:

Nanny caught stealing 68 PUNNETS of 'expensive' cherry tomatoes from Coles after her doctor told her to eat more vegetables for health reasons

Tomatoes are of course fruit, not vegetables. Duh.

Sadly, the article does not say how much the house where she works as a nanny is worth, which would have helped to put it all in perspective.

Thursday, 22 June 2017

Let's all weep.

The Torygraph has yet another bit of wailing about landlords being unfairly hit by tax changes.

Of course, being the Torygraph, they couldn't resist quoting a few myths:

"This could mean landlords opting to come out of the private rented sector, creating reduced supply or increased costs which could again mean an increase in rents." and

"The more average rents rise, the more ownership figures fall. This is a bad decision which will affect not only landlords but renters, first time buyers and second steppers.”

How does he work that out? Answers on a postcard, please.

YPP (London) brief meet-up tomorrow Friday 23 June

We'll be at The Brewmaster nr Leicester Square from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

I have to leave 7-ish to cook dinner.

Wednesday, 21 June 2017

"Psst, we're having trouble shifting these pricey new flats..."

"Not to worry, we can sort you out with taxpayers' money while appearing to help out the little guys..."

Tuesday, 20 June 2017

Mark Carney says time will never be right for interest rate rise.

From The BBC:

The time will never be right for an interest rate rise, Bank of England governor Mark Carney has confirmed in his Mansion House speech for the fourth year running...

Mr Carney said: "From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment [rate rises].

"You see, there's good inflation - house prices, and bad inflation - wage growth. We'd do what we can to stifle the latter, in the unlikely event it ever happens, but we are relaxed about good inflation.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.

"The Brexit negotiations will drag on for a few years, so that gives me a breathing space for the remaining four years of my tenure at The Bank of England. Waiting to see what the long term impacts of Brexit are should tide over my successor for the next few years after that.

"If the worst comes to the worst, we'll admit that inflation is through the roof and savers are losing money, but at that stage our main concern will be young families who might be pushed into negative equity.

"Come on guys, you know how it works."

Following Mr Carney's comments, the pound fell about 0.4% against the dollar to trade at $0.6682.

Monday, 19 June 2017

Fun Online Polls: Brexit delaying tactics; The attack near Finsbury mosque

The results to last week's Fun Online Poll were as follows:

The major political parties deliberately messed up the election so that they can sideline or delay Brexit.

Probably true - 51%
Probably not true - 49%

So pretty evenly split. I voted 'probably true', although I must caveat that, I'm not sure it was deliberately deliberateor whether there was just a blatant disregard bordering on negligence or even recklessnes; certainly on the part of Mrs T May who basically threw it away. I'm no fan of the Tories in any way shape or form, but this is one thing which they appeared better equipped to sort out.
This week's hot topic appears to be the attack near Finsbury Mosque.

If you ask me, this sort of thing was going to happen sooner or later, to paraphrase apologist Sadiq Khan circa 2016, this is just part and parcel of attending what is or was believed to be a radicalising mosque.

So that's this week's Fun Online Poll.

"Are you surprised that somebody finally snapped and attacked a group of Muslims near a mosque?"

Vote here or use the widget in the sidebar.

If the usual suspects want to pile in and call me a racist for my casual disregard of the issues, feel free, but please note you are missing the point.

I am a modern, west European liberal who believes in equality between people of whatever colour skin and wherever they are from (provided they are here legally); equality between men and women; equality between straight and gay/lesbian; freedom of religion and more importantly freedom to be atheist; respects democracy; likes a booze-up; and who opposes violence and corporal/capital punishment. I've a downer on any movement which takes the opposite view on such matters.

Saturday, 17 June 2017

Roaming charge fun.

From the BBC:

A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today [15 June 2017]. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home.

I'm always wary about govt intervention in such matters, but in this instance, fair play to the EU, I can't see a downside.

We know that the price which people are willing to pay exceeds the actual cost of the satellites, or else mobile companies would not be prepared to pay such huge amounts of money for the radio spectrum. The surplus is 'unearned' income or rent. The question is, who gets the surplus - best is the government (as licence fees, quasi LVT); next best is the consumer (via capped prices) and worst is letting private companies collect it.

This has been a long time coming, from The Guardian, three years ago:

Roaming charges for using a mobile phone abroad will be abolished from December 2015 in proposals expected to be voted through the European parliament on Tuesday, but operators have warned that bills could rise domestically to pay for the change...

... a coalition of networks representing 45m consumers has warned that the legislation is so badly designed that the cost of domestic calls could rise to pay for it.

"There is a risk that domestic tariffs for European consumers will increase," according to the roaming coalition. "Roaming might not be subject to surcharges anymore, but the overall level of tariffs would increase, and non-roaming customers might effectively foot the bill for roaming customers."

Yeah right. We've covered that - prices are set by what consumer is willing to pay, not by costs. Domestic users are prepared to pay £x and not a penny more. They don't care what other people pay and for what.

The mobile companies have had years advance warning that this would happen, so if they are right, they would have been nudging up prices in anticipation. Have they?

Nope. Prices have been drifting downwards for years, see recent Ofcom report.

Disclaimer - I've no downer on mobile phones and mobile phone companies, they are brilliant. While they share a monopoly, between themselves they appear to be highly competitive. It's the landline people who take the piss.

Friday, 16 June 2017

Another of those "have I gone mad or have they" moments...

From the BBC:

UK to agree Brexit divorce bill before trade talks - EU sources

The UK has agreed to sort out its EU "divorce bill" and citizens' residence rights before starting Brexit trade talks, EU sources have told the BBC.

But the UK's Brexit department has insisted a trade deal must be agreed at the same time.

Killer Arguments Against LVT, Not (416)

I haven't done a KLN for a while and a couple of LVT supporters have said to me recently that we really have to address the 'negative equity' issue and have our answers ready.

So let's dip into a recent article in the Daily Express. The comments section is a hoot, our BenJamin' goes into bat and is roundly derided as a Marxist. Plenty of disappearing homes etc.

(It also includes the ultimate distillation of all KLNs: "I don't like LVT because I am scared of hard work". This is paraphrased by May Jam thusly: "There are two kinds of people in society. Those who want to be left alone (independence) and those who won't leave them alone (the Left). Land ownership is just one small aspect of achieving independence." What he or she means is "I don't want to have to work to earn a living, I want to buy my home, retire early and let everybody else get on with paying for public services and looking after me.")

But I digress, returning to the article...

Families face plunging home values and potential negative equity if Jeremy Corbyn slaps a Land Value Tax (LVT) on properties, as promised, according to the Labour Land Campaign (LLC).

The levy would replace council tax and business rates and will result in the "collateral benefit" of knocking house prices, the group gleefully told Labour members.

Falling values may even lead to another banking crisis, the group incredibly hinted.

I look at it this way:

A. Prices are unlikely to fall...

1. Going by what real data we have, a 1% tax on land and buildings appears to reduce selling prices by about 17%. But the UK already has taxes on housing which average out at about 1% a year (all the minor ones - council tax, SDLT, inheritance tax, CGT, ATED charge, TV licence fee, Insurance Premium Tax etc). A straight swap would have little impact. The houses most likely to fall in value are those which have risen most over the past few years, easy come, easy go. My house would have to fall 75% in value before I can really say I lost money on it (glossing over 25 years of largely living rent-free).

2. Having LVT as an additional tax on top of what we've already got is a stupid idea and nobody has recommended it, so we don't need to address that.

3. All LVTers are agreed that LVT could and should reduce/replace the BIG taxes on output, employment and earnings as well. If it's a £ for £ swap, there's no reason to assume that prices would change much. Some people (first time buyers and second-steppers) will have a lot more disposable income and will bid up prices; the semi-retired might decide to trade down, pushing down prices for larger/family homes etc but it all largely cancels out.

B Even if prices were to fall...

4. The LVT is like an interest rate hike of a percent or two, people who take out mortgages ought to reckon with the fact that interest rates might go up a percent or two. Aren't the Homeys always criticising the under-40s for being addicted to debt? Don't they always boast about having paid 15% interest on their mortgages and survived? Why do they have so much sympathy all of a sudden? Presumably because they are two-faced gits.

5. Nequity is largely a psychological problem, it's not pleasant but it only really affects people who want to move.

6. The number of people in nequity depends on how large their mortgage is. It is only people with high loan-to-value who will be affected, this is mainly recent purchasers.

Put 5 and 6 together and ask yourself: how many recent purchasers suddenly want to move? Why did they buy somewhere recently and now want to move?

7. If we do a proper tax shift and reduce VAT and NIC, then while some people with large mortgages (our recent purchasers from 6) go into nequity, they are the ones who make the biggest tax savings, call it £10,000 a year on average. Are they really worse off? They can now pay off the nequity in a few years, from there on in they are cruising.

C There are various ways of fudging this and sharing the apparent loss (it's not a real loss, the real value of the houses is unchanged)...

8. If people want to move, we can just introduce rules saying that they can transfer their existing mortgage on the same terms and conditions to the new place, and pay off the shortfall at their leisure. Those who are trading up will end up in the next house they wanted with a smaller total mortgage than otherwise.

9. We can write down mortgages to the new lower value, but keep monthly repayments the same by upping the interest rate.

10. If banks take losses, they can do debt-for-equity swaps. That looks like a "banking crisis" but it is a one-off transitional thing. If mortgages are smaller/more affordable in future, future banking crises will be very much muted (like they were during the post-war decades when Georgism Lite kept house prices down).

11. We could adjust LVT bills down for a) people who took out mortgages before LVT is introduced and/or b) give recent purchasers a credit for the SDLT they paid (borne by the vendor, of course, but not much consolation to those who sold and bought recently).

So somehow or other, the apparent loss can be shared between borrowers, banks and the taxpayer generally, it is not a huge number to start with, split it three ways and spread it over a number of years, it's chump change.

I'm sure you can think of more reasons why this is no Big Deal but I've got to get back to work :-)