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Friday 18 December 2009

Meglomaniacal, Delusional and SCARY.

Apparently 20 or more people accompanied Gordon Brown on his trip to save the world from itself in Copenhagen. They were referred to very loosely as advisors or simply as his entourage.
I have my doubts.
My personal belief is that they are either:
a. Men in white coats who, for the sake of appearances, are sticking to civvies for the duration of the conference or
b. members of the Serious Fraud office waiting for an appropriate moment to feel the collars of Flash Gordon, the Millibands and Ed Balls.
They can't, seriously, be genuine advisors, can they? No serious - i.e. reasonably compos mentis - civil servant would allow Brown to run around the conference halls pledging 6 Billions of our hard-earned pounds to various Asian, African and other chancers if they only pledge to cut their C02 emissions: would they? Equally, no one capable of performing straightforward multiplication and long division would, seriously, allow him to promise to slash our own emissions by 40% in nine years. It's just not do-able.
So, either our meglomaniac Prime Minister is seriously delusional and really has convinced himself that he has been sent from the planet Krypton to save the earth. In which case, the men in white coats will move in once the Copenhagen beano has finished and measure him for a nice, new, tight-fitting jacket. Or, he has salted away large chunks of our national treasure without our knowledge; in which case it might be the Serious Fraud Office that feels his collar.
What other explanation can there be for his actions in Denmark?
Our country is, apparently, so broke that it has to choose between providing our soldiers in Afghanistan with basic equipment now, or protecting the country against sea and air strikes in the future. Our country is so broke that we are having to print money we don't have to buy back the debts that we do have because their attraction to international investors dwindles by the day.
Yet, magically, Flash Gordon can pat his pockets and come up with the odd billion here and there to hand out to the other delegates like a Billy No Mates child handing round his sweets to buy friendship in the school playground.
There was a time when Brown's self-regard was something of a joke. But now it's more serious than that. He is so utterly wedded to the idea of his own importance that he is using money we don't have to purchase himself some sort of future legacy. It's like fame on the never-never.
The last person to believe in Never-Never land was Michael Jackson. Post-Copenhagen, he will probably look distinctly grounded and well-balanced compared to Gordon Brown.

Monday 14 December 2009

Why the UK housing market is different

This downturn started around 18 months ago. As soon as it kicked in, all of the experts who had been predicting the collapse of the UK housing market popped their little heads out of the woodwork and chorused in unison, "told you so".
Unfortunately for them, but less so for us ordinary home-owners,  their  visions of  a deflating housing bubble never really materialised. In certain parts of the country, house prices are significantly lower than they were. In others, though, they have hardly moved at all. While not exactly buoyant at the moment, the UK housing market hasn't quite fallen of the expected cliff; unlike some parts of the US, for instance, where it is possible to pick up substantial properties for just cents on the original dollar asking price.  
The reason is simple. As I wrote in September 2008: "This country still needs 3 million new homes to accommodate all the extra people we have allowed to settle here in the last 10 years. So, despite the turmoil in world markets, the shortage of mortgages and the impact of the stupid and pointless HIPS on the housing market, house prices are never going to go into complete free-fall. People who, two years ago would have bought a property are now having to settle for renting. Nonetheless, whatever they rent still occupies land and that is a commodity that becomes scarcer every year. As Mark Twain said: " Buy land. They can't invent any more".
Anyone who has ever read Adam Smith would have understood the reason for this buoyancy.
Despite rising unemployement, stingy mortgage lenders and the fear of being saddled with negative equity, people still need to move house for business, work or family reasons. The number of new homes built has barely scratched the surface of the numbers actually needed - probably 200,000 compared to the 3 million the Government would like to see built - so demand continues to outstrip supply. When that happens, it becomes very difficult for prices to fall very far.  

 I was minded to revisit this topic by two recent news items. The first was a statement by the Council of Mortgage Lenders that mortgage approvals last month were the highest they had been in over a year. So, people still see value in bricks and mortar. 
The second was an extraordinary speech by Housing Minister, John Healey, to the Fabian Society, the gist of which was that people should stop aspiring to home ownership and settle for long-term renting. The argument in favour of this approach was, basically, that trying to save to acquire a deposit for a mortgage was so difficult that young people should accept it as an unattainable pipe-dream and rent their homes instead; like most of our Continental neighbours are happy to do.
It would take a book rather than a blog to examine the wrong-thinking that went into this paper. Despite membership of the EU, the UK is nothing like the rest of Europe. Europeans tend to like apartment living; we prefer our own house and garden. Long-term rental is both normal and do-able in countries like Germany. It is virtually impossible here.  Few other countries suffer our population density, so land scarcity is not a big issue. As long as land is readily available, it remains relatively cheap. In the UK - and most particulalrly in England south of the Watford Gap -  land is scarce and getting scarcer every day; hence this Government's wish to concrete over the Green Belt. ( but that is another subject).
So, for a variety of reasons, Mr Healey's dissertation was long on words but short on commonsense. Given the fact that he has made it close to the top of the current administration, that shouldn't come as too much of a surprise. Neither, unfortunately, should the sheer hypocricy of what he is advocatng, which comes straight out of the Animal Farm guidebook to equality. Because the man who wants to see a return to long-term renting for the great unwashed turns out to be a serial flipper.
According to the latest tranche of Parliamentary Expenses, Mr Healey not only hoovered up all of the  benefits going, he also flipped his second home before selling it for a profit of some £88,000 in July of this year.
What a chance he missed to set a good example. Instead of cashing in on the property's increased value, he could have found some young couple to rent it to for an economic but affordable rent.

The X'cess factor

Anyone who has ever worked for a large corporation will recognise this scene. The occasion is  a large corporate gathering such as an annual sales conference. Before dinner, one bold, brash individual shoulders his way to the bar. " I'm in the chair. What's everyone drinking?"  he says  - before putting his corporate credit card behind the bar.
The same individual, out with his mates for a Friday lunch-time drink, is adept at  merging into the background until a round has been bought.
He is much happier spending the company's money than his own.
If this sounds familiar in more ways than one, think back over the last few days.
Gordon Brown, he of the doleful face and grizzly mien, turned into Sunshine Charlie when he met up with his fellow-EU leaders to discuss climate change.
The customary glower was replaced with a benevolent cheeriness.as Gordon  once more donned the garb of Flash Gordon, super-hero and single-handed saviour of the global economy (except for that bit languishing in the doldrums that he happens to be Prime Minister of) and go large on the largesse at our expense.
When it came to contributing to a Pan-European fund to bribe 3rd World countries into lowering  their emissions, our very own Flash put his Euro rivals in the shade. Each time the diminuitive Sarkozy and mighty Merkel announced their country's contribution, Britain's answer to Cool-hand Luke out-trumped them. At the death, with the others clearly exhausted, our hero had committed this country to £1.2 billion in additional funding; the biggest single contribution to the aid pot. 
Of course,a grateful Europe clapped him on the back and praised his altruism. Then sniggered up its collective sleeve. Not only was the biggest bankrupt in the room offering to buy  drinks all round but also a slap-up dinner with all the trimmings.
The irony, obviously lost on our Gord, was that, since the aid  would be labelled "From Europe with love ", he was doing so virtually anonymously.
Not that Gordon minded. He had splashed our cash and had been rewarded with personal praise.
All he needs to do now is figure out where the extra £1.2 billion is going to come from.
Now, where does Mervyn keep the keys to those printing presses?