I can see clearly now

It struck me today that the latest Budget is tangible evidence of the path down which the Coalition Government wants to take the country, and the radical nature of this path.  I think Cameron is portrayed as a smoother but more limited version of Thatcher, but the policies are possibly more radical, albeit in a different direction.

20% Corporation Tax was never even remotely achieved in the 1980s.  The reform of the benefit system creates a much greater incentive for people to move to work than anything attempted under Thatcher.  But most significantly, inflation, the totemic enemy (along with the Soviet Union and the left in general) of the 1980's now appears to be the unspoken ally instead.  Inflation will erode the horrific debt levels (both in the state and private sectors) and the accompanying depreciation of the Pound will increase the competitiveness of exports (at least in the short term), but it will result in a continuing erosion of living standards.  The big gamble is will this lowering of real living standards, reduced corporate taxes and tougher benefit rules turn Britain into a lean, cost competitive but also high value added economy, or will it just lead to constant decline?  It is one hell of a bet.

Nick

Credibility in the Vatican

I can't say I know that much about the new Pope, but the election of a non-European Pope appeared to indicate a modest move in terms of realising the world in which the Catholic Church now exists.  However the sight of a despot like Robert Mugabe being treated with such reverence at the inauguration suggests that they have learned little, and that the Catholic Church remains one of the more reactionary institutions on this earth.  To denounce contraception, abortion and homosexuality while laying out the red carpet to a murdering thug who has destroyed the second strongest economy in Africa seems perverse in the extreme.  I can't somehow see Jesus giving the thumbs up to that one.

Nick

It's the end of the tie as we know it

I work in the financial sector and have done for over 25 years, so I am no stranger to suits and ties, but I think it is time to commit them to history as work attire.  The world is moving in a different direction and the formal business suit and tie will soon be gone the same way as the telex machine and the typing pool; a relic of 20th century business culture that has outlived its usefulness.  They are uncomfortable and impractical, so why do we persist with something that adds no value?

I work advising entrepreneurs, in particular in the technology and natural resources sectors; they want advisers that they can empathise with and trust to be a key part of their business, not someone who seems distant and condescending.  How many clients (not other advisers like lawyers and accountants) actually wear suits and ties?  Certainly a minority of the ones I come across, and the number shrinks every year.

The last decade has seen has two of the greatest seismic shifts in the business world of modern times: the rise of the internet from the play thing of geeks and pornographers to become a dominant and still growing part of modern business life and the financial crash of 2008.  One of these was led by guys wearing hoodies and chinos and the other wearing Saville Row suits; who have been the successes and who the failures?  Bankers, politicians and estate agents are all reviled by the public and all well known for their suit and tie wearing; where does the trust lie?

I am someone who reads widely on business, economics and society, and the key to the future is not to be left behind.  The business world of the next decade will be about being smarter in the non-sartorial sense.  We should be worrying less about whether we wear ties and more about how much we know; that is what our clients and prospective clients are worrying about.  

Instead of worrying about whether we look like a GQ model, we need to seriously increase the level of learning and development we undertake, and by that I do not mean the box ticking of "continuing professional development"; we need to be smart in the networked, global, 21st century sense of the word.  The world is moving so fast that to rely on knowledge acquired 20 years ago and just keeping up to date through experience will just mean that you fall behind.  Unless you have the knowledge you cannot know whether you can deliver what is needed or not.  

I work at a small firm that cannot rely on a big balance sheet or captive customers; we need to be both the smartest guys in the room and the one that the client feels in their bones to be the closest aligned to their interests; we need to be more Steve Jobs and less Bob Diamond.

Nick

Idle British Youth? What is the truth?

The article below was posted by an acquaintance of mine, Tom Winnifrith (http://tomwinnifrith.com/) who writes on financial and political matters as well as owning a pizzeria Clerkenwell, London.  The simple question I pose is why he has received no applications from young British people to work at his restaurant?  It is in a location that is well connected by public transport and is not a location that is nasty to work in.  Working in a pizzeria may not be everybody’s dream job, but it is certainly not a horrible one either.  So why the lack of British applicants when so many young people in London are without a job? "When I discuss unemployment and welfare abuse with my father, step mother or any other deluded middle class lefties, it is their insistence that those claiming benefits would rather work, feel shame in claiming benefits and that they maintain only a marginal economic existence on welfare. The evidence, of course, shows that they are wrong. But if you watch the BBC, read only its sister publication (The Guardian) and have no contact with either the working classes or the private sector you can be forgiven for having such a world view. But it is profoundly wrong.  The case arose about ten days ago of a couple who picked up total benefits of £18,000 a year and flatly refused to work. Having stated this publicly it seems odd to me that they can still be allowed to claim the "Job Seeker's allowance" since they are patently not seeking any job but I guess that the chances of them losing that (let alone having past payments taken back since they were by their own admission made fraudulently) are nil. I do not actually blame this couple. They are playing the system. And it is the system that needs fixing. The reality is that if this couple both opted to work they would need to generate well over £20,000 of taxed income in order to be as well off as they are on welfare. The two reforms needed are a dramatic increase in the thresh-hold at which anyone pays tax and a dramatic cut in welfare benefits. Surely if the average wage in the UK is £25,000 on which tax and NI is payable, the amount that those who are NOT working should be getting should be far, far lower than that.  Somehow, I suspect that the benefits culture is now so ingrained in some quarters that even the seismic shifts I propose would take a while to change the attitudes of some folks. I noted before that when we advertised for a waitress position at The Real man Pizza Company we received ZERO British applicants who could be bothered to make it in for an interview. A good waitress with tips could be making £20,000 per annum. You do not need a degree just a willingness to do a bit of hard work and put in a 35 hour working week. But not one Brit could be arsed. Hence, we have a Polish waitress.  And now I am hiring a cook. Guess which language he or she will speak? English as a mother tongue? Forget it. I think I have hired someone who as it happens has experience in the kitchen but wants to improve her skills. Her English is rotten but since most other folks speak perfect Italian at Real Man that is not an issue. She wants to improve her English. If she improves her English and culinary skills we will increase her pay but pro tem (and I almost feel guilty about this) I am paying her 1p an hour above the minimum wage for 32 hours a week. Not only will she take the job but at zero notice she trekked across London on Friday night just for the chance of that job. Her take home will at the start be less than half of the amount paid out in benefits to that couple who elect NOT to work. And you know what? I could hire another dozen or so waiters or cooks on the same rate tomorrow and ALL would be non English as a first language speakers. I do not stand a snowball's chance in hell of getting a native Brit to take on such a job, even if it offers a stepping stone to improving their hourly rate, number of hours, skill set and thus offering a real wage and a career.  Our welfare and tax system has become so lopsided that there is now not only an economic but a cultural battle that must be waged. If Britain is to avoid bankruptcy welfare spending must be slashed. And if the UK's private sector is to regain competitiveness wages must be cut. That could actually lead to an increase in disposable income if tax thresholds were increased dramatically.  I might sound like a capitalist ogre but what I propose would see reduced Government spending and increased disposable income for those in work. And welfare transformed from a lifestyle choice to a safety net. That some families on benefits "earn" a sum equivalent to the average (pre-tax) national wage is a disgrace and an unaffordable one at that. Benefits should be strictly capped at half the post tax national average wage. Having raised a generation of idlers it is time for some tough love." Nick

Pakistan - Just stop acting like total idiots (Pt.2) and Principled Statements

I thought I would repost by earlier article (http://chairmannick.posterous.com/pakistan-just-stop-acting-likely-total-idiots) partly because I screwed up the title (obvious considering I used the word “idiot” in the title) and also because someone commented it was “controversial”.  It struck me that this is a problem that effects our social and political system – it is increasingly controversial to make principled statements.  We seem to either pussy-foot around a subject for fear of offending cultural sensitivities or have a mass outcry when something tips over an ill-defined precipice.  To carry on my Pakistan theme, there was a perfectly reasonable outcry about the young girl who was shot for standing up to the Taleban view that girls should not be educated, but why did it take that?  Why did it take this?  Why was the pressure not being put on the Pakistani government about the treatment of girls in general?  It seems like “principals” have become increasingly identified with a lack of tolerance, and that should not be the case.  Saying that women in Pakistan should have equality with men and that their society and economy will suffer until they do is not being imperialistic, it is not being racist, it is not showing a lack of cultural sensitivity, it is just the right thing to do.

 

Nick

Pakistan - Just stop acting like total idiots.

28 January 2013 Last updated at 21:17 ET

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Viewpoint: Pakistan's economic woes are being overlooked

By Bruce Stokes Pew Research Center

Investor confidence is waning as Pakistan's economy continues its downward trend

Continue reading the main story

Related Stories

• Pakistan: sink or swim?
• Is Pakistan's economy facing potential collapse?
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Pakistan is a country beset with political difficulties, but they could be of secondary importance to its economic woes.
While much attention has been devoted to the dramatic Supreme Court move to order the arrest of Prime Minister Raja Pervez Ashraf on charges of corruption and recent large-scale protests led by populist cleric Tahirul Qadri to demand the resignation of the government ahead of elections due in May, the country's financial difficulties have been overlooked.
Likewise recent deadly militant bombings have also distracted attention, as have skirmishes with India on the Line of Control (LoC) that divides the disputed Kashmir region.
These headline-grabbing events have not only served to obscure the profound economic challenges facing Pakistani society but in many cases have also nurtured and aggravated them.
'Deteriorating economy'
The truth is that the Pakistani people are deeply troubled by the plight of their economy and their own economic prospects.

Optimism about the state of the economy is not high

With the government likely to ask the International Monetary Fund this year for a new aid package, the nation's economic plight may soon become topic number one in the global discussion about Pakistan's future.
"Deep seated structural problems and weak macroeconomic policies have continued to sap the [Pakistani] economy's vigour," the IMF's executive board concluded in late November.
Economic growth over the past four years, after adjustment for inflation, averaged 2.9% annually, and is projected to be only 3.2% in 2012-13.
That, says the IMF, is not sufficient to achieve significant improvement in living standards and to absorb the rising labour force.
All this at a time when prices are rising about 11% per year.
Moreover, the government deficit was 8.5% in the last fiscal year and press reports suggest it may miss its budget deficit target this year by a significant amount.
The IMF expects foreign reserves this fiscal year to be half what they were just two years ago, a sign of waning investor confidence and a deteriorating international economic situation.
Hardly surprising then that the Pakistani people are extremely downbeat.
'Personal pain'
Roughly nine out of 10 say the economy is bad, including a majority (64%) who think that it is very bad, according to the 2012 Pew Global Attitudes survey.

Many Pakistanis will see little discernible improvements in their living standards

Just 9% rate the economy positively.
There has in fact been a sharp decline in economic ratings in Pakistan since the beginning of the global economic recession.
In 2007, 59% said the economy was doing well; by 2008, this percentage had dropped to 41% and has continued to fall since then.
A plurality (43%) believes the economy will only worsen. For many of them, this pain will be felt personally.
Their assessment of their own personal economic situation is down 19 percentage points since 2008, one of the largest fall-offs among the 15 countries for which the Pew Research Centre has comparable data.
Only 38% say they are better off than their parents.
More than half (57%) say they are worse off than five years ago. And 65% say it will be very difficult for their children to advance economically.
Unemployment is one of the public's major concerns.
Nine out of 10 people say that the lack of jobs is a very big problem, a more important issue to them than concern about corrupt political leaders or unrest in Kashmir.
However because the survey was conducted in the spring of 2012, it could be that concern about Kashmir has risen more recently because of flare-ups in January along the LoC.
While it is true that issues of life and death and war and peace will always trump economic news, the dire nature of Pakistan's economic problems could ultimately feed political and social unrest as the regional and global discussion about Pakistan's future moves to centre stage.
Polling suggests that the people of Pakistan may say this refocusing is long overdue.
Bruce Stokes is the director of global economic attitudes at the Pew Research Centre.

via bbc.co.uk

I read this article on the BBC today, shortly after reading about the possible collapse of Egypt into chaos and the wanton destruction of Timbuktu’s ancient treasures, and the question that came to me was , “why are these people acting like total idiots?” It appears like a broad swathe of Pakistani society just seems intent on creating chaos without any regard to the Pakistani people. From corrupt politicians, through religious extremists to double-dealing intelligence officers, a general state of anarchy appears to be rising inexorably, while external powers, whether it be in the form of US drone strikes, Saudi covert financing, Chinese arms sales or Indian sabre rattling merely adds petrol to the flames. This is not something that is inherent in being an Islamic society – both Turkey and Malaysia have proved that – so what is it? Whatever it is, it cannot be good in a country with nuclear weapons, massive population growth and many serious environmental issues. It appears that there is always a desire to blame others (America, India, Britain, whoever) and little willingness to look in the mirror.
Nick.

Shopping - the future is almost upon us.

The Office for National Statistics (ONS) said retail sales volumes fell 0.1% between November and December, after economists predicted a return to growth of 0.2%. It will fuel fears that the economy contracted at the end of last year.

There were further signs that shoppers shunned the high street with the figures showing that non-store retailing volumes grew 1.6% month on month, and accounted for 10.6% of all retail sales in December.

Household goods, including electrical appliances, furniture, hardware and music and video recordings, showed the sharpest month-on-month drop with a decline of 3% - the biggest fall since January 2010.

But it was a better festive period for department stores, which saw volumes grow 0.4% month on month.

Clothes and shoe shops were the only other sector to fare better in December, posting a rise of 0.7%.

With inflation nearing 3% in December, retailers will have suffered as sales values also declined 0.1% month on month and by 0.3%, excluding fuel.

Today's figures come after a lacklustre performance in November, when sales were flat after a shock 0.8% drop in volumes in October.

Vicky Redwood, chief UK economist at Capital Economics, said the 0.6% overall decline in the final three months of the year was yet more evidence that the economy probably contracted at the end of last year.

Howard Archer, chief European and UK economist at IHS Global, said: "The problem that retailers - and the economy in general - face is that consumers' purchasing power has come under some renewed pressure after seeing appreciable improvement over the first three quarters of 2012.

"Inflation moved back up in late 2012 while earnings growth appeared to falter."

The Office for National Statistics said that retailers' internet sales helped to boost overall sales and provided a much greater proportion of business in December than they were expecting.

This has increased the pressure on the high street, where HMV, Jessops and Blockbuster UK have all gone into administration this month.

Peter Saville, partner at advisory and restructuring firm Zolfo Cooper, said: "Today's figures show a disappointing end to a tough year for many retailers. While 2013 appears to be heading in a similar direction, with the likes of Jessops, HMV and Blockbuster being the first to fall victim, the fact that many, including John Lewis, Dixons and Asos, are still performing well means that all is not lost."

PA

via independent.co.uk

Most of the news headlines and political soundbites will be focussed on this as an indication of continued economic difficulties. Whilst it is undoubtedly true that the economy remains troubled - and will remain troubled while the indigestion of the excesses (at a government, personal, corporate and financial sector level) from the decade to 2008 pass through the system (note to all: more borrowing will not help, it just pushes the problem to someone else down the line while easing the pain of those making decisions now) – I believe that there are a number of rapidly emerging trends that these figures are a harbinger of, and which will have great importance over the longer term. Some are already well documented but others less so:

• An increasing element of the population are no longer agreeing with the “shopping is a leisure pursuit” mantra that commenced in the 80s. They may like to buy things, but the whole process of getting in the car, driving to the town/mall, finding a parking space, paying for parking, trekking round the shops trying to find what you want, eating rubbish at the overpriced food court, paying for parking, paying for fuel for your car etc., etc. is not fun. Instead they log on to Amazon/eBay/whoever and a few days later the goods appear at their door; this trend is gaining rapid momentum.
• People are becoming increasingly less concerned about “ownership” as long as they retain the “ability to enjoy”. Retailers like HMV were all about selling a physical manifestation of something that is innately non-physical, e.g. music, films, computer games. Now that technology has reached the stage where the physical product is no longer needed in order to enjoy the material, why would you want something that takes up space, is less convenient? Much is made of people buying media on iTunes, but I would suggest that streaming services such as Spotify and Netflix are what is really changing the game.
• People are getting used to austerity, and are realising that certain aspects of their life are no worse as a result. Primark is booming because people still want clothes to go out in, but they can get what they want for half the price of M+S, who correspondingly are not booming. Going a step further however, many people are realising that the accumulation of more and more “things” does not make them happier, so they are just consuming less.
• The government debt crisis in many European countries and the austerity measures in the UK has seen many people re-evaluate their views on government provision of various services and benefits, so they are in turn making the logical decision: borrow less, spend less, save more.
• Retail expenditure will increasingly no longer provide easy pickings for landlords and governments/councils through rent, business rates (UK property tax) and parking charges. It is the retailers themselves that are currently going bankrupt, but these failures will have a knock on effect and I would anticipate big right downs by banks on loans secured against retail property and local councils making further budget cuts about a year down the line as this feeds through. This is not just cyclical, it is structural, so it will require a re-evaluation of town centres and their role in a community. I would also expect more than a few “out of town” shopping centres to become ghost towns.

Nick