Stuck

So...as I predicted here...I was right. We are well and truly stuck on the 45% top rate of tax from today's news. Well anyway until after a possible Tory win in 2015. And where does that place us in the international league table then?

Sweden - 56.6%
Belgium - 53.7%
Denmark - 52.2%
Netherlands - 52.0%
Japan - 50.0%
United Kingdom - 50.0% (old rate)
Austria - 50.0%
Finland - 49.0%
Germany - 47.5%
Ireland - 47.0%
Australia - 46.5%
Canada - 46.4%
Iceland - 46.1%
Portugal - 45.9%
France - 45.8%
Israel - 45.0%
Greece - 45.0%
United Kingdom - 45.0% (new rate)
Italy - 44.9%
Spain - 43.0%
United States - 41.9%
Switzerland - 41.7%
Slovenia - 41.0%
Chile - 40.0%
Norway - 40.0%
Luxembourg - 38.9%
Korea - 38.5%
Turkey - 35.7%
New Zealand - 35.5%
Poland - 32.0%
Hungary - 32.0%
Mexico - 30.0%
Estonia - 21.0%
Slovak Republic - 19.0%
Czech Republic - 15.0%

Whoopy fucking do. All that media savaging for that? Not good.

Interestingly, if you can be assed to delve into the Red Book and see what the Treasury's own analysis is on this issue, it turns out that 37% is the optimum rate for raising the most money. But then logic always gets trumped by politicking.

(PS The table highlights just how stupid the loony Lefty French Presidential candidate Francois Hollande's 75% policy looks. Coupled with their Financial Transaction Tax policy, this should utterly screw the French economy for some time. I suppose there is a silver lining to every cloud after all).

The Growth Map

I’m at an industry conference this week. Dull. But I was invited along to a fascinating event where Jim O’Neill, the Chairman of Goldman Sachs Asset Management, made a presentation. O’Neill is in the words of Business Week “Goldman Sachs’ rock star”. It was he who first predicted the slide of the developed world and the rise of emerging markets. He was the clever fellow who first coined the term ‘BRICS’ – Brazil, Russia, India, China. Here are some amazing snippets from his presentation:

Greece – Why is everyone so concerned about Greece. In GDP terms, China creates a new Greece every 11 weeks.

Italy – Why worry about Italy either. In GDP terms, the BRICs create a new Italy every 12 months.

Eurozone – The only Eurozone countries which fulfil the original EMU criteria are Finland and Slovakia. Outside the Eurozone, the only other countries which also fulfil the original EMU criteria are Sweden and Australia.

China – It is very rapidly moving from the cheap producer of Western goods to the consumer of all these goods too.

Germany – Exports more to the BRICs than to France. In the next year, China will become its number 1 export market.

You can no doubt read more of his brilliance in his new book, The Growth Map, of which he kindly gave me a signed copy.

Workfare Update

Chris Grayling has written to Tory colleagues updating them on 'Workfare':

"Dear colleague

"I am writing firstly to thank those colleagues who have been so vociferous and helpful in the debate we have had over the past few days over the work experience scheme. I also wanted to give you a bit more information about where we have got to with the scheme.

"One of the great ironies of the campaign against the scheme was that, whilst we are undoubtedly doing some difficult and controversial things in welfare reform, the work experience scheme is not one of them. It is a voluntary scheme that is extremely popular with those who take part, around half of whom come off benefits afterwards. We know that a substantial proportion are staying with the employers with whom they do the placement.

"Over the last week we have worked hard to demonstrate that the campaign against the scheme is being orchestrated by anti-capitalist demonstrators, with not a little help from some trades unions. We have also won the overwhelming support of commentators in the media.

"When I met employers yesterday, they were very clear that thy will absolutely refute any suggestion that unpaid work experience is a bad thing, and that they believe strongly in what we are doing. They did, though, want us to ease the conditionality regime for the scheme if they were to continue to take part.

"In reality we make very little use of sanctions on the scheme – fewer than 1% of participants have faced penalties, normally for serious offences such as theft, racist language in the workplace and abusive behaviour. Since the scheme is oversubscribed, getting people to take part has not been a problem.

"However we have agreed to allow people who sit down with their employer at any stage of the placement and say that they want to leave to do so without penalty. A JobCentre Plus adviser will then clearly sit down with that person and see if they require any additional intervention to help them with their job search. I should stress that the sanctions regime remains in place and those who commit serious breaches in their workplace will face penalties.

"We are now working to build up the scheme. We have already added three major new firms to the scheme this week – Airbus, Hewlett Packard and Center Parcs. Around 200 smaller firms have also come forward to express interest in supporting the scheme in the past two weeks.

"This is something that all colleagues can help with. JobCentre Plus staff are working around the country trying to find employers who will offer placements. They would welcome your help in encouraging local firms to participate. So if you have ideas, or contacts who are willing to take part, please do get in touch with your local JobCentre Plus manager, or email me so that I can put you in touch directly.

"We know that this approach makes a real difference to unemployed young people, and every extra opportunity can help – particularly for those from the most deprived backgrounds who don’t have the necessary contacts to find their first piece of experience in the job market.

"Thank you again for your support. With best wishes, Chris"

How anyone can actually oppose this initiative bewilders me.

If Britain Were Greece

Each Sunday, I open my Sunday papers and rush straight to page 4 of The Sunday Times Business section. David Smith never fails to provide a clear, factual analysis of the most pressing economic issue of the moment. He has a great blog too.

He was asked by Broadcasting House on BBC Radio 4 to compare the UK and Greece and explain what the difference is right now in economic terms. A piece of fascinating brilliance from my favourite economic journalist:

http://www.bbc.co.uk/news/magazine-17202274

Growth Taxes

March’s budget is important. All budgets are important but this one is more important than usual. Why so?

Well in truth, this is the last budget that will deliver any tangible and demonstrable change during the lifetime of this Coalition with a General Election now fixed for May 2015. And, moreover, with UK plc stuck in economic neutral, this next budget desperately needs to stimulate some growth.

Question - So what can a Government do to stimulate growth?

Answer - Tax cuts.

Thus the debate around tax cuts is going to get louder and louder week by week. But within the Coalition’s economic plan to pay down our huge national deficit ASAP, is there any room for tax cuts? My guess is that there is. What Chancellor does not plan to leave himself room for some popular tax cuts in the run up to a General Election? So with no growth, maybe Boy George will have to deploy that little bit of slack he has up his sleeve earlier than he had planned. But, which taxes create growth?

The Lib Dems have nailed their colours to the mast: reduced personal tax allowances. They want to take anyone earning less than £10k out of the tax system funded by…you guessed it…taxing the rich more, mainly via their loony mansion tax. In the long term, this is a laudable aim - I suggested something similar way before the 2010 General Election - and of course in the short term, very populist. And it seems ‘fair’, which is the new lexicon. But, and here’s the problem, it will not stimulate growth. Because those for whom this makes the most difference - those on fixed low incomes, typically the economically challenged and the old - haven’t got much to spend.

Mr Yvette Cooper, desperate to suggest something populist to raise their sinking ship, has Labour calling for several possible different cuts: VAT down to 15%, or income tax down by 3%, all on a temporary basis, or the Lib Dem personal allowance option again. All unfunded. Just borrow more. To hell with it. Fuck the consequences. Think we’ve all experienced Mr Balls’ economic prowess before haven’t we? But, again, there’s a teency weency problem. None of them deliver growth, because the cautious just save more and the incautious just splurge their extra cash on ‘stuff’, and almost all ‘stuff’ is made abroad and imported. So we would mostly be stimulating China’s economy, not ours to any great extent.

So again, what tax cuts promote growth?

Well, there’s the problem. History has shown us again and again that it’s the tax cuts unpopular with the Left and painted by them as tax cuts for the rich that actually stimulate growth: corporation tax, CGT, and top rate income taxes. (Afternote - And the OECD agrees with me!)

Tricky one for the Boy George.

Tax Facts for Lefties

I am so bored of the Left’s endless rhetoric on taxing the rich. The latest incarnation of what used to be called ‘class war’ has now morphed into a ‘war on bankers’. It’s always the same thing: they want the rich to pay more, pay for all their well-intentioned but distorting social engineering, pay more for ‘their’ voters. And all this is often dressed up as ‘the rich need to pay their fair share’. So, my Lefty friends, a few inconvenient facts:

First, let’s define rich.

Remember the Millipede’s rambling statements about the ‘squeezed middle’ some time ago on Radio 4’s Today programme which, when challenged, he couldn’t actually define. Well, it’s actually pretty simple. According to HMRC, the median income in the UK right now is £26k. Thus the ‘squeezed middle’ must be either side of that line, no? Let’s say, for sake of argument, £5k either side of that line ie £21-31k. Seems reasonable, no?

Well ‘rich’ in relation to our now newly defined ‘squeezed middle’ is probably a little less rich than many of you were thinking. So let’s subdivide all those earning more than £31k into three groups: the ‘affluent’, the ‘very rich’ and the intergalatically, global ‘super rich’. Turns out, the bean counters at HMRC have already sort of done this for us through the income tax personal allowance system. The ‘affluent’ pay Higher Rate above £35k and the ‘very rich’ pay Additional Rate above £150k. Let’s not really worry about the ‘super rich’ who buy houses for tens of millions, all have yachts and float from tax regime to tax regime. In the big picture, there’s
an absolutely insignificant number of these guys, they are highly mobile and stay well ahead of any tax system in any case and so are simply uncatchable. Waste of time trying really.

Why did the Millipede have such a problem then? Ah, well, it’s because all the NuLab Islington set straddle that ‘very rich’ line. It’s a bit embarrassing for them. (The High Priestess of this set, Polly Tithead, is of course off the fucking ‘very rich’ scale!)

Second, how many ‘affluent’ and ‘very rich’ are there?

Very easy this one, because the Government tells us every year. The latest stats are here. In summary:

Total population - 62.3 million
All income taxpayers - 29.9 million - 47.9%
Basic Rate taxpayers (ie average) - 24.9 million - 39.9%
Higher Rate taxpayers (ie ‘affluent’) - 3.7 million - 5.9%
Additional Rate taxpayers (ie ‘very rich’) - 0.3 million - 0.5%

Hmmm. Awkward facts for you Lefties there, no? The reality is that the ‘affluent’ earn as little as £35k (ie they are teachers and policemen, not oligarchs) and that we in fact have a really teeny tiny number of ‘very rich’ whom, even if you taxed at 99%, would generate nothing more than a small rounding error in HMRC’s annual tax collection numbers because the tax pyramid has this large base of Basic Rate taxpayers and a tiny pinnacle of Higher and Additional Rate taxpayers.

Third, so how much do the ‘affluent’ and ‘very rich’ currently pay for?

Fact - The top 25% of earners pay almost 75% of all income tax.
Fact - The top 1% of earners pay over 25% of all income tax.

HMRC’s 2011 numbers are here.

Ooops. More awkward facts for you, Lefties. Seems the ‘affluent’ and the ‘very rich’ are actually paying way more than their fair share already. So, the facts rather get in the way of that ‘tax the rich more’ rhetoric.

And this is the problem I have with so many of the Left's arguments: much of its rhetoric is anchored in populist, mythical ideology rather than cold, hard fact.

More Balls From Balls

Rather than listen to the spin, why not read Moody’s statement in full here.

The killer central argument is this:

“The primary driver underlying Moody's decision to change the outlook on the UK's Aaa rating to negative is the weaker macroeconomic environment, which will challenge the government's efforts to place its debt burden on a downward trajectory over the coming years. These challenges, reflecting the combined effect of a commodity price driven hit to real incomes, the confidence shock from the euro area and a reassessment of the lasting effects of the financial crisis on potential output, were already evident in the government's Autumn Statement…. The second and interrelated driver of Moody's decision to change the UK's rating outlook to negative is the fact that the weaker environment is also, in part, a by-product of the ongoing crisis in the euro area. Although the UK is outside the euro area, the crisis is affecting the UK through three channels: trade, the financial sector and consumer and investor confidence.”

So, how’s that economic policy working out for you, Mr Balls?

The Golf Club Analogy

Mrs Cragsbury has a tendency to be a bit grumpy. And she has regularly given me a bit of grief over my ‘blame shift’ argument, whereby I believe that politicians should be blamed for the financial crater that is our economy rather than those lovely, cuddly, innocent bankers we all like. Thus, I need to explain my theory to her in detail. I shall do this via – The Golf Club Analogy.

La Famille Cragsbury live in a nice rural Sussex village. The village has a golf club. Obviously. The Cragsbury's are not members. I can think of no better way to spoil a pleasant afternoon than by chasing small white balls around the countryside. But imagine that the golf club’s management committee passed a new bylaw this afternoon:

“Byelaw No 296 - After any round, all members will be positively encouraged to drink as much as they can in the bar – as this is good for the golf club’s profits – and never minding how drunk members are when they leave the building, all members will be issued with blindfolds for them to wear whilst they drive out of the car park.”

There might be a few days when nothing untoward occurs in the car park. My guess is that over the next couple of weeks, a few minor prangs might happen. But I’m sure we’ll all agree that at some point during the month of February there would be a bloody great pile up at the car park exit, probably on a Saturday evening.

Now. Who is at most fault?

• Is it all the dumb assed members who followed Byelaw 296 to the nth degree? For sure they share some of the blame.
• Is it Sir Gred Foodwin the driver of the biggest and flashiest car that accelerated into the rear of the pile up? He gets quite a bit of blame for sure.
• Or is it the golf club’s management committee, who incidentally were all in cars in the pile up too?

And, after the events of this week, who should be banned from the golf club and have their ‘golden putter’ award taken away from them: all the drivers, Sir Gred Foodwin or the chairman and members of the management committee?

Mr Cragsbury rests his case.

Lynch Mob Politics

I have written before of the incredible blame shift operation politicians have carried out vilifying bankers when in fact it was the banking regulation system that failed, run by...oh yes...those same politicians.

The madness continues, with the loss of Fred's bauble. Putting aside the rank hypocracy of MPs and Peers who have openly committed fraud wandering around Parliament as if they have done no wrong, as Nick Boles MP said in his Macmillan Lecture to the Tory Reform Group:

“…making a few bankers and company bosses a bit less rich is not going to make most people in Britain any better off.”

Lynch mob politics is always wrong. And as Bagehot so eloquently demonstrates, when La Toynbee and The Dark Lord Dacre unite on any issue it must be wrong...and very scarily so.

After the last few days, we have now set in train a terribly dangerous anti-business agenda, which The Millipede and Mr Yvette Cooper will latch onto like an underweight baby desperate for its mother's teat.

Dave needs to wrest us out of this suicidal nose dive urgently.

Hester-gate - The Impact

Labour forcing a vote on Hester’s bonus in the next Opposition debate. Pathetic populist bullshit or what? But, with this announcement, it became inevitable that Hester could not therefore take his bonus.

The impacts:

1. Hester is now the worst paid bank CEO in Europe and will be poached within weeks/months for a job paying him 4 times as much.

2. This will now become an annual blood sport for RBS CEOs.

3. We will struggle to find a good enough candidate to fill his shoes.

4. This silliness will have zero impact on other banks.

5. As ever, the 'politics of jealousy' caravan will rumble on.

Economics for Dummies - Lesson 2

And so to Hester-gate, aka ‘21st century class war’ or ‘the next ride on the blame shift merry-go-round demonising bankers so that politicians can get away scot free’.

Let’s get straight to the facts:

Arguably one of the most important jobs, if not THE most important of jobs in the UK right now, is to get our damaged and recently part-nationalised banks back on their feet so that we taxpayers can get our money back. With interest. As soon as is practicable.

The last Government brought in Stephen Hester, apparently the best man for the job. He has been endorsed as such by the new Coalition Government as well.

He is acclaimed by everyone to be doing a good job, apart from assorted meanies on the Left who want to throw stones at him because he is a banker and rich. (They’d love to be able to denigrate him as an ex-public school boy too but sadly for them he went to a comprehensive before going up to Oxford. He is also a white Anglo Saxon protestant. If he was very ethnic, the Guardianistas would be less hopping mad but the Daily Mail would be more so).

So far, so good. He’s doing a good job, earning big money but substantially less than he could earn elsewhere in the private sector, accepting this no doubt partly because his current role is one of THE jobs of the moment and thus is a challenge and will be good for his CV, maybe partly out of altruism and probably because he will likely pick up a knighthood at the end of it, assuming he is successful. And assuming he is, the non-executive director roles will come flowing in for years to come.

So, the big three questions of the day:

Q1. Should he have such large potential remuneration in the first place?

Simply, we need the best turnaround expert for this task. And that will cost. Inevitably. Supply and demand and all that - something our Lefty luvvies often try and pretend does not exist when it does not suit their ideology.

Now he wasn’t bumbling along running some dull Government department or quango, earning around £100-200k. No, he was the acclaimed CEO of British Land, one of the top 3 property companies in the UK, one that is well run, cautious and has survived numerous booms and busts very comfortably since 1856. This boy had been earning millions for years being a high flyer at Credit Suisse and Abbey National before British Land.

When you are in intensive care, you don’t say: ‘Take away this acclaimed medical expert who is doing a brilliant job and seems to be saving my life, he is paid far too much. Bring me a more sensibly remunerated doctor.’ On the contrary, you say: ‘Can I get this wizard to make me better any quicker and would it help if I motivated him more by paying him more?’

Unless you are a Lefty, when you make cheap political points about how much he earns, how much more that is than a senior civil servant – good comparison, Chuka, really? – and how much this is in relation to a corporal in the British Army in Afghanistan – and you Peter? All of which, of course, is bollocks.

Supply and demand.

Simples.

Q2. Should he get his bonus?

He should get whatever bonus the RBS’ remuneration committee feels he deserves for his last year’s performance under his contract. Populist bullshit from Lefty politicians, journalists and all the rest is just that. Bullshit.

I, as a taxpayer, want his mind 100% on the job getting my money back not on endless meetings with his chairman, UKFI, Government ministers, his comms team and others about various Lefties views on his bonus.

Q3. Should he take it?

If I was him, after all this bollocks, I’d refuse it and resign. My resignation letter would say:

‘We agreed my remuneration in my contract. Nowhere does it say the Polly Toynbee set gets a vote on what my bonus should be. I have been working night and day to turn this fucked up company around with considerable success and acclaim and all I get is bullshit from people who know nothing about what I am doing, could not understand it if I explained it to them and want to use me as a class war political football. To say I am demotivated would be a fucking understatement. I’m out.’

He would be in a higher paid job by Easter.

PS Loving the paradox of unions which endlessly use every aspect of employment law to defend their often idle and incompetent members whilst seeing no hypocrisy in demanding that a manager’s contract should be completely ignored.

Let's Have Some Common Sense

As Mr Eyebrows reminded us today in the Pre-Budget report, we are in the shit. Deep in it. Way past our armpits. There are just a few tufts of hair poking up from beneath the NuLab economic shit that has enveloped us. (And before you Lefties who always email me complain about the bias in that last sentence, remember this: we are the only G20 nation still in recession. Think about it.)

And we also know that we need to give the public sector a haircut. A massive one in fact to reign in public spending. Even NuLab and the Etonians agree on that; they are just arguing about when and how drastic the haircut should be.

So, let me in my sweet simpleminded way suggest some common sense to the thinking behind that public sector haircut.

The social welfare state in the form it has now grown into is ethically and financially out of control and now completely unaffordable. This is the time to be bold and re-model what type of social welfare state we want and can afford.

Four examples of how topsy turvy our social welfare state has become:

1. BOM is a wonderful blog I read daily. I do not agree with all that it says, but I respect its intellectual rigour and common sense economic logic. It had a really interesting post the other day, which in summary and in round numbers said this:

Good thing - 22 million private sector employees (aka the producers).

Bad thing - 12.5 million state pensioners, 7 million out-sourced Government employees, 6 million direct Government employees, 6 million people totally dependent on benefits (of one kind or another), 530,000 employed in further and higher education, 40,000 GPs and 33,000 working at National Rail. Thus 25.5 million public sector employees (aka those for whom the taxpayer pays.

Spot the problem? We have an imbalance. Too few in the private sector paying for too many in the public sector. We need a change.

2. Next, the NHS. Should your next door neighbour pay for you to have bigger tits just because it would make you feel a bit better about yourself? Should the people down the road pay for you to have your cock chopped off if you feel more like a woman than a man? Should the inhabitants of the next town pay for gluttons to have appetite suppressants because they are too fat? Should the taxpayer pick up the bill if you make lifestyle choices that have zero financial implications for yourself but significantly expensive financial implications for the taxpayer, like fags, booze and drugs? You get my drift.

We have an NHS where we have subverted 'no taxation without representation' into 'I do WTF I like and some other fucker should pay for my life choices'. We need a change.

3. Now, employment. Do we want a society where those that are willing to work are worse off if they do because the benefits system is too generous? Don't we want to make work a more attractive option than living on benefits? The so-called benefits trap. Crazy. We need a change.

4. Last, prisons. Under NuLab, we have locked more and more up in prison (and not built enough prisons so then let them out again, but that's another story). However, prison is so cushty that for many of those that end up there it is better than being outside. Here's David Bywater, an ex-prisoner:

"Things can get difficult if you are shoplifting or whatever you are doing. So you think, I will go to a prison for a bit of a rest period. You know you are going to get your drugs, methadone and what have you, so you are better off inside."

Or Andrew Whalley another ex-prisoner recently released after spending 10 years behind bars for a drug-related robbery with a firearm:

"I'm an addict, so if you give me free methadone, free drugs, keep me in active addiction, then release me out of prison, then surely when I come out of prison I've got to commit crime to keep me there." Was he ever offered rehab? "The last course I was offered was a safer injecting course". We need a change.

Now, of course I am being simplistic here. But my main point remains true. If we are to spend taxpayers hard earned cash that we have ripped out of their pay packets, then we should be giving them a good return on investment. Neither of these four random examples are doing that right now. And there are many other examples I could have cited. We need a much less generous social welfare state. Right now, it is too easy to beach yourself there and let the taxpayer pick up the cost. We need a strategic re-balancing.

Now, Lefties, before you cry foul and accuse me of being a self satisfied, arrogant fascist who does not care about those less fortunate than myself, consider this:

We are allowing our generous nature to (a) make the most vulnerable in society more dependent rather than less dependent, actually enslaving them to social welfare dependence and (b) bankrupting the country in the process. Is it sensible for the public sector to be larger than the private sector bearing in mind the latter pays for the former? Is it reasonable for taxpayers to pick up the bill for any damage I inflict upon society or myself; should I not have responsibility for my own actions? Should the benefit system pay me more than I can earn with my qualifications and experience? Should the prison system not be taking me off drugs and preparing me for an honest working life hopefully in the private sector?

So as the Etonians are 'blue sky thinking' about WTF they are actually going to do come 7th May 2010, they should be thinking on this: we need to use the discipline of having to downsize Government to re-fashion what Government should be doing and how it should be doing it.

The Politics of Jealousy

I have always thought that jealousy is without doubt the most unattractive of all human emotions. It is totally negative. It has no redeeming features. And, ultimately, it is utterly pointless. Has jealous behaviour ever stopped a partner or friend from misbehaving? No.

But for the last few months we have been engaged nationally in a monumental act of petty, pointless, vindictive and hypocritical political jealousy on a massive, industrial scale. Politicians and the media have been queuing up to bash bankers. The international political class at various summits have been queuing up to do it too. The French, socialist to their finger tips, have been in the vanguard of pushing for EU action to punish bankers and take away their bonuses.

Tomorrow, Mr Eyebrows will publish his Pre-Budget Report and, we are led to believe by the usual heavy trailing in the media that politicians now go in for, he will enshrine this jealousy into policy and no doubt promise legislation to enshrine it into law as well.

This is all just absolutely ass numbing madness. Let me explain...

1. Political dishonesty - We are in the midst of an enormous 'blame shift' operation being carried out by the political class, led by Gordy's Government. Once again for the Lefties, the stupid and those that have forgotten, the banking crisis was caused by regulation that was too lax. Who regulates? Government. Did the banks adhere to the regulation? Yes, to the letter. Thus who is to blame? Duh!

Let me explain this another way. Suppose you belong to an organisation which has some rules. You keep to those rules to the letter. Then the organisation implodes. Is it the fault of those that ran the organisation and its rules or those that worked within it and kept to the rules?

Now do I think the banks should have spotted that regulation was too lax? Yes, of course. We all should. Some did. Not enough, sadly. But the overwhelming major culpability rests with Government. But they don't want to be blamed, so by tapping into our jealousy of those more rich and successful than us, they have shifted the blame to the banks. As ever, once the media agenda was set, the banks have just had to soak it up. (This behaviour is similar to how the police behaved after the that moronic McPherson Inquiry conclusion that the Met was institutionally racist. Once the media agenda was set, everyone queued up to self-flagellate themselves that they were institutionally racist because (a) this tapped into our first world, post colonialism guilt and (b) it was good for your career prospects because that was the prevailing orthodoxy).

2. Economics for dummies - Supply and demand, children, supply and demand - aka the market rate. If you tax entrepreneurial rich people more than they think is fair, they fuck off. They are already doing it: companies moving to other countries (viz Shire Pharmaceuticals, UBM, WPP, Yahoo), hedge funds moving to lower tax states (viz Amplitude Capital, Odey Asset Management, Guy Hands) etc.

If you tax UK bankers more than their foreign counterparts or bankers from certain selected UK banks (that happen to be part owned by the Government) more than their competitors, then they will fuck off to other banks, other financial institutions, other countries. In fact, they already are. 1000 RBS staff have already jumped ship. QED.

And the loser? The freaking taxpayer you numpties! You muppets tried this in the 1970s, remember? Didn't work then, won't work now.

3. Pissing away our unique international positioning - Banking is an absolutely critical part of the UK economy. It attracts massive inward investment. It is one of our key selling points internationally. Dick around with that at your peril.

What message are Gordy and Eyebrows giving internationally? That we are targeting bankers comparatively more aggressively. That we are going to tax the rich harder than other countries. Hmmm. Good for inward investment, d'ya think?

4. Cutting off your nose - Large salaries and bonuses are taxed, shortly at 50% (but that's another story). If you don't pay them, then the Chancellor's tax coffers further diminish just when he needs more cash. Duh! (Where's both my feet. Ready. Aim. Fire.)

All this nonsense is just the politics of jealousy. It is always popular with us Proles to tax the rich more. We're just jealous of their success and their money. It is for politicians to rise above this base stupidity, see the bigger picture, take their own fair share of the blame, and not pander to us dumb Proles.

But then again, I may as well just piss into the wind.

(And for the record, before some Lefty tosser emails me, I am not a banker).

Economics for Dummies

On the left, all those G20 countries not in recession.

On the right, all those G20 countries still in reccession.

Don't you just love Guido Fawkes' graphics?

Manufactured Political Outrage

FACT 1 - One of the duties of central banks is to prop up banks when they look like they might collapse, to forestall a run on the wider banking system.

FACT 2 - This is always done secretly and has been all over the world for centuries.

FACT 3 - The Tories and Lib Dems need to prolong the recession story right up to the General Election to help them and hinder NuLab. The fact that the Tories' and Lib Dems' mock outrage lasted just one 24 hour news cycle, tells us all we need to know about their reasons.

The only thing surprising about this week's £62 billion story is that the Governor of the Bank of England thought is wise to tell everyone what he'd done. Transparency is one thing but some things we proles don't need to know. Whatever next? MI5 and MI6 telling us all their secrets?

Update: Could this be the reason why the Governor spilled the beans?

Just Love This...

A piece of graphical brilliance from Guido Fawkes.

Where Weak Governments Seek Shelter

Three wonderful examples from today's media of desperate news management by 'right on' weak politicians:

1. Child Migrant Apology - A totally manufactured 'crisis' over apologising for sins past. Always a good one, this. The pathetic media, always desperate for a contrition story as it serves the current societal appetite for being outraged over nothing. Why apologise to all these ex-British Australians now? Why not in 1997? Or 1998? Or 1999? (I could go on). You have had a number of years to so this, Gordy. Such a desperate attempt to regain control over the news agenda and play Gordy as a brilliant compassionate leader, it's pathetically transparent. Pah!

And while we are on the subject of style over substance political apologies, where do we draw the line? Where is the apology from the Norwegians for raping and pillaging? And for that matter the French for invading Britain in 1066? And what about the Italians for letting Julius Caesar come over here and start the first road building programme? Trendy lefty governments love this sort of crap. Pointless political bullshit, which the media should ignore but suck up like lap dogs.

2. Pointless Summit - A summit that achieves nothing substantial but a photo op (funny how Obama is always there) and a 'really strongly worded communique', viz the APEC summit. I have opined about summits before (here, here and here). Can we all grow up? We Proles can see through the bullshit, you know.

3. Scapegoat-itis - Always blame someone else for your mistakes. Blameshift is a well recorded political tactic. Thus politicians, who have I recall been raping the taxpayer on pay, expenses and benefits in kind for decades, are still desperate to blame the evil bankers and their fat cat bonuses for our financial woes. Again, you fuckwits, it was a failure of Government regulation not a banking failure or greed on the part of any bankers.

I might as well piss into the wind.

Heads in the Political Sand

Don't you just love this. Tonight the Chancellor makes his Mansion House speech. Here's the BBC headline:

BANKING REGULATION NOT TO BLAME

So Captain Eyebrows will witter on about how brilliant Gordy's tripartite system is. (Pause). That would be the one that did not spot the greatest recession since the 1930s, right? And also the one that did not have the ability to deal with the recession quickly when it belatedly noticed it, right? Good work Gordy. Good work NuLab.

And the BBC headline from America today:

US PLAN FOR TIGHTER (BANKING) REGULATION

Time for the stupid little trolls in No10 and No11 to admit we have a problem of their own making methinks.

US Budget Cuts Explained

Can some clever dude work this out for the UK please...

Hat tip - Donal Blaney

NuLab Chickens Beginning to Roost

Two interesting articles in the FT today: here and here.

Point 1 - I predicted this back in February. If you shit on high earners (for example, bankers) and attack their market competitive pay, they bugger off to a company who will pay them the market rate. Think what that might mean for taxpayer owned Lloyds, HBOS, RBS, NatWest, etc…

Point 2 - The top 1% of British earners pay 23% of tax. Reduce their pay significantly and HMRC is cannibalising its own income, purely for political, gallery playing ends.

Point 3 – High earners are internationally very mobile. They move to the best tax regime; think 1970s Britain, the so-called brain drain etc...

All you NuLab luvvies and St Obama cocksuckers might want to remember these three facts the next time you mistake your ‘politics of jealously’ for a reason to attack high earners.