Inflation High: Interest rates Low

Today we got the monthly inflation figures. As I expected - but, apparently, "many economists" did not - the inflation rate has risen again. The CPI - which is the figure preferred by governments because it is the lowest number - has risen to an annual 3.7%. The index that more nearly reflects the reality, the RPI, is back up at 4.8%. Sooner or later, they warn us, interest rates will have to increase. Interest rates should increase now. The base rate has stood at 0.5% - effectively zero - for 13 months now and has contributed greatly to devaluing the currency. Further the Bank of England has poured £200,000,000,000 of newly printed money into the economy - mainly to help out with bank bonuses and the like - and this also has devalued the currency. The 25% drop in the value of sterling has shoved up the cost of imports and more and more we import food and manufactured goods. A low value currency is supposed to help exports and exports of manufactured goods have risen - but not that much. Last month we managed a record deficit on the balance of trade of nearly £9,000,000,000 - in one month! It's a staggering figure and just a small [small?] indicator of the economic mess that this country is in. When the much derided John Major left office in 1997, the balance of payments deficit was running at about £12 billion per year - not per month. That was bad enough and had been negative from soon after Margaret Thatcher became PM and basically kicked manufacturing into the long grass as nothing more than old fashioned tin bashing and the like. The trade deficit growing and growing is a national scandal ignored by government, who [which] for the most part understands sod all about science, engineering, technology and manufacturing - and nobody understands finance and economics. The low currency does not boost our exports because we have got nothing to sell. I know this is an exaggeration but it is not far off true. All our heavy engineering has gone, abandoned to countries in the far east. But not entirely. How come that a tiny country like Finland carries on building mobile phones and big ships, when, apparently, we can't make a light bulb or build a rowing boat. Does no one in government every get concerned about the mess created by themselves and their predecessors - of whatever party?

Next month the inflation figures will probably be even worse, boosted by the rise in VAT and by still rising commodity prices. Oil is now trading at $100 per barrel and that is not into the figures yet. The government and the Bank of England feel, clearly, that they can do what governments always do, inflate us out of debt. The trouble is they never do it completely and the residual debt has built up and up. The last government indulged in profligacy on a scale un-paralleled in our history - except in times of major wars - and via their spending through PFI and all kinds of madcap initiatives - massive increases in spending on the NHS and schools - they have built a government debt of almost unimaginable magnitude.

But while inflation goes up and stays up, savers like me, get interest on our savings of next to nothing. Some saving accounts are now so generous that a capital of £1,000 will produce interest of just 50p in a year. Based on the RPI, that same £1,000 will have devalued by £4.80 in the same period. It helps people with mortgages buying over-priced houses but savers out-number borrowers by 7:1 - although not in money value terms.

What should government do? Face reality. Put interest rates up, build more houses, direct investment towards manufacturing, scrap Trident, buy British wherever possible and cut spending on paper shifting and politically correct bureaucracy - we have suffered an orgy of that over the last 10 or 15 years.

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Death of Nat Lofthouse

It's a dull, somewhat windy, grey day and with a hanging threat of some rain. It's not a good day in other ways either. I picked up the news from the BBC web page that Bolton Wanderers stalwart Nat Lofthouse had died at the age of 85. I had not heard much about him recently but I thought that he was still in good health. He died in a nursing home. He appeared occasionally on football programmes and sometimes he was seen in the crowd at a Bolton Wanderers match. He was the hero of the Bolton team in the years when i went to watch them in the 50s. He joined Bolton from school and the coal mines in 1946 and played until the early 60s. He scored 234 goals for Bolton and another 30 or so for England. Many tributes have rolled in already for a great player and a lovely man. He never played for any team other than Bolton Wanderers and he served them after his playing days as a manager, scout, director and solid supporter through thick and thin.
Lofthouse played in the Bolton vs Blackpool FA Cup Final of 1953 when Blackpool won 4 -3 after extra time, Stan Mortensen scored a hat-trick and Stanley Matthews got his one and only cup winner's medal. Lofthouse won his cup winner's medal in 1958 when Bolton defeated Manchester United by 2 - 0. This was a win - Bolton's only FA Cup win since WWII - overshadowed by the Munich plane crash 3 months earlier when Manchester United had lost so many of their best players. Neither team could be blamed for that but it was a dark shadow nevertheless.

I expect that Nat Lofthouse will get something akin to a state funeral in Bolton and, for a player who did not earn the buckets of cash available to today's footballers, who can deny him that.

Today was not such a good day either for the England Cricket team. They lost a 50 over match in Melbourne by six wickets. In fact Australia scored the 295 runs needed to win with five balls to spare, thanks mainly to a stupendous 161 from Shane Watson. "One of the all-time great one day innings," according to Andrew Strauss. England gave away a few soft wickets and their bowling was not what it should have been. Bowling full tosses to Watson in the final over was an easy way of letting him finish it with a six. Well done the Aussies.
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Cops On The Job

Every day that goes by brings more evidence that the world is going mad and spending by public bodies is out of control. This latest story - please, someone tell me that it is nor true and that it is an April Fool story made up early by some loony in a local newspaper office! - concerns one of those blocks that makes up the foundation of modern day policing. I mean, of course.the police helicopters. This particular whirlybird was buzzing around over Yorkshire, thermal imaging camera at the ready, eager to discover crimes as they were taking place. Flying over a council estate, the sensitive instrumentation picked up heat rising from a detached garage in an area known to be occasionally populated by criminals. The message was give that they had discovered a possible cannabis factory. The logic that lead them to this conclusion is about equal to that of any householder who hears a bang out in the street and immediately assumes that a nuclear reactor has exploded. The cops turned out in force with cars, vans and trucks to make an immediate raid on the said garage. The local residents were much amazed to see the cops smashing to bits a small garage in which lived two guinea pigs. The small harmless animals were the pets of a twelve year old boy who had, thoughtfully, provided them with a small electric heater to keep them warm in the cold weather. Of cannabis there was not the least sign. How much this massive police exercise cost is anybody's guess but flying helicopters about is not cheap and the costs rise alarmingly whenever they embark on this kind of crime detection.

Mind how you go as Richard Littlejohn advises us in The Daily Mail.

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The Last Pre-Fab

I read today that Lewisham Council in London is about to demolish what are thought to be the last pre-fabs in England. These little prefabricated homes were erected, mainly around London, after World War II to provide some quick housing to replace all those houses bombed and destroyed in the blitz. They were quite small and, as I recollect, they were made mainly of asbestos and wood. It is remarkable that they have lasted so long and even more surprising that so many people seem to have liked living in them. Although I say that most were around London, they did go up in the North as well. there were a few in the town where I grew up - Atherton - but I only remember a dozen or so on one estate. The ones there disappeared years ago.

I suppose some can look back on them with nostalgia and they did serve a purpose but they were at bottom, rather grotty.

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Labour Win In Oldham?

As we all expected, Labour won the Oldham East & Saddleworth by-election with a majority of 3,500 over the Lib-Dem. The turn-out was 48%, which is not bad for a by-election on a very cold and wet day in January. With the reduced poll, the Lib-Dem share actually increased slightly. It was the Tories who were the big losers. So, what can we conclude from all of this. The logical thing to conclude is, don't draw any conclusions at all. By-elections are opportunities for the disgruntled to express their dissatisfaction about something or other - and that was surely true here. There were the normal dissatisfactions with government policies on this, that or the other; primarily, at this moment, the row over university tuition fees. Then, it was important to the Lib-Dem leader that his party was not seen to be humiliated. For the health of the coalition government, that was important also for PM, David Cameron. Therefore, it was logical for the Tories to soft pedal in their campaigning. But Cameron could not say this and so became the first PM for many a year to go out campaigning in a by-election and knocking on doors. So the right wing of the Tory Party couldn't say that he hadn't tried. Anyway, most local Tories got the message and tactically voted for the Lib-Dems to try to keep out Labour. Are you still following? On top of all this was the reason why we were having a by-election in the first place. Phil Woolas, [picture above] a popular local MP, was barred from office by an election court after the Lib-Dems had protested about things he had said in his election literature about their General Election candidate - stuff, which they claimed was untrue. It seemed pretty mild stuff to me and if every politician that said something untrue during an election campaign was to be brought before an electoral court, we would be very short of MPs. So the electorate in Oldham East & Saddleworth would have been much peeved about being forced to turn out again on a wet January night in order to vote again to elect an MP to replace the one they were perfectly happy with in the first place. For those with good memories and/or a knowledge of history, there are many records of the electorate taking a rich vengenace on those who try to manipulate them. Politician's beware.

So, that's why, I don't think you should draw any conclusions at all from this by-election. At least that's the conclusion that I have reached. And I hope you feel suitably informed.

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King Coal

I was immensely critical of the government of Margaret Thatcher in the 1980s when she set out to screw the mineworkers and, in particular, the leader of the Mineworkers Union, Arthur Scargill. She wasn't going to be dictated to by the miners as her predecessor, Ted Heath had been. She was determined to shut the mines and let more and more electricity be generated using the all singing, dancing, modern natural gas. She was completely wrong about that just as she was completely wrong about so many other things. This country had - probably, still has - about 400 years supply of coal buried beneath the ground all over the UK. Now we have wasted all our North Sea gas on easy power generation, we have to import from Norway, Russia and so on. That is bad for security and bad for our balance of payments. Current thinking is that we should put much effort into green energy. Trouble is that it does not work all that well. We have found during the recent cold spell our wind farm generators produced almost no electricity because as is often the case in periods of very cold weather, there is no wind. The other daft idea is solar energy. Works fine in Florida and California but not in cloud covered, rainy England. I said 25 years ago that we would have to re-open the coal mines eventually. Now others are saying the same thing.

Money Week tell us that coal is the fuel of the future. Coal is responsible for generating most of the electricity in the world and the proportion is likely to increase. At present we generate about 40% of our electricity using coal - which we now import from Poland, the USA and, apparently, Australia - it is, of course, utter madness. How good for the environment is it to transport dirty, old coal from Australia in order to burn it to generate electricity in England, a country with lots of coal buried under the ground next door to the power stations? But sooner or later, someone will face up to telling us that Thatcher was wrong and that the coal mines must be re-opened. How much will that cost? Unsurprisingly, many pragmatists have come to the conclusion that high energy coal, available in all kinds of stable countries like Australia and the USA is a better bet than oil from the bottom of the sea or from one of the basket case countries of the Middle East or Asia.

You know it makes sense.

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All Is Well At Bloomfield Road

Yesterday, I attempted to complain to my MP, Henry Smith, about bank remuneration packages and bonuses and asked that he bring all pressure to bear on the coalition government to stand by the statements they made in opposition. He replied quite quickly but did no more than send me a bit of spin from Tory Central Office. So I complained again. I await his reply. All the senior members of this coalition government, from the PM down, have made statements about the unacceptable bonuses and pay of bankers. But in office, they have backed away, further and further from doing anything about it. So the conditions for another bank collapse remain and these arrogant, thick-skinned, over-paid robber barons carry on as before paying themselves ten time as much as the rest of the country - indeed, ten times as much as the rest of the world. I expect that Mr Smith will again give me a standard reply and that is what really upsets me. Everyone in the country is furious about the banks and, in particular, the pay of investment bankers. Yet, not only is the government doing nothing about pay and regulation, they have become apologists for the banks. One problem that niggles at the back of my mind is that yet again the rich who always run the country - including Cameron, Osborne, Clegg, et al - are protecting their own. Each of those leaders is worth a few million and they are not suffering too much as the rest of us pay to bail out the banks.

One bright spot yesterday was that Blackpool FC defeated Liverpool for the second time this season - something that they have not done since 1946. Liverpool are now operating under the management of Kenny Dalglish - he has been in charge for 5 days - and he has lost his first two games. Kenny thinks that they lack self-belief. Perhaps they are not paid enough? An extra £50,000 each week for every player could give their self-belief a real boost. After all, if there is anyone daft enough to pay them a lot of extra money they must be much better than they seem to be. Rather like the American critic who suggested, mysteriously, that Richard Wagner's music was much better than it sounded. Blackpool are now 9th in the table with a game in hand. Did anyone - was there ever anyone so optimistic - who would have suggested at the start of the season that such a thing could happen? Good luck to Ian Holloway and the lads at Bloomfield Road. As a manager he has been so successful that he has a good chance of keeping his job, at least until the end of the season - and there are not many Premier League managers who can say that!!!!

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Fireworks at Broadfield Stadium

I don't go to football matches anymore. In fact, I haven't been on a football ground for nearly 50 years. The last time I went it was to watch Leeds United at Elland Road. But I still watch football on TV - at least some of the time. I always watch the FA Cup highlights and, like everyone, I like most to watch the giant killer draws. Lowly clubs that go up against the big guns of the Premier League and the Championship - and win. Last Saturday we saw Division 2 Stevenage defeat Newcastle United by 3 - 1. This looks impressive and it was. Stevenage trounced Newcastle and fully deserved their win. Now they go on to play Reading in the next round and must fancy their chances.

Closer to home, last night Crawley Town played Derby County at Broadfield Stadium in the FA Cup 3rd Round and won 2 - 1. Crawley are 2nd in the Blue square Premier League and are looking for promotion this year. Derby are sitting comfortably in the middle of the N Power Championship and should have beaten Crawley fairly easily. But, like so often in these type matches, it is easy to slip up. The lower ranked club has nothing to lose and a successful cup run can help the finances of the club no end. The reports and statistics suggest that Crawley were the better team and did deserve to win - especially when Derby failed to score from a penalty, given by referee Hayward for a fairly innocuous challenge by Crawley's Dutch goalkeeper Kuipers on Derby striker Chris Porter. With only 4,500 in the crowd - near to the stadium's maximum - it does not seem that many Derby supporters bothered to make the journey to Sussex. Perhaps they took the win for granted. Would more support have helped? Well, it couldn't have made things worse. There will be much celebration in Crawley after this result and the passive supporters may start to show more interest in the club. Crawley Town must be favourites to beat Torquay in the next round.

Crawley Town is run very prudently these days after twice going bust with previous owners and the day-to-day prudence and tight control of the money supply seems to be bringing them success. But we know that even at Premiership level, buckets on money does not always spell success. However, the management at Crawley Town have told us that the FA Cup run has, so far, netted Crawley an extra £500,000, which at their level, is a considerable fortune. The players will be wanting ten grand a week wages next. Anyway, good luck to the team in their FA Cup endeavours.

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Politics In The Pennine Foothills

Next Thursday, our wonderful coalition government will experience its first electoral test at the Oldham and Saddleworth by-election. This election has been precipitated, you may recall, by the sacking of the previous MP Phil Woolas, who, allegedly, made untrue statements in his General Election leaflets about his Lib Dem opponent. It all seemed pretty mild stuff to me and hardly damning. At the General Election Woolas won by 135 votes over the Lib Dem candidate. The Lib Dems then objected and an electoral court found against the MP, banning him from parliament for 3 years. Thus, a bye-election was precipitated. Why did the Lib Dems take this course? Phil Woolas was a popular local MP and any attempt to replace him via an action of the London based political establishment was bound to be a hazardous endeavour. Polls in Oldham indicate that any candidate wearing a Labour rosette will romp home on Thursday with more votes than the Lib Dems and Tories combined. The only slight fly in the ointment is the presence of the Labour leader in the constituency. Ed Miliband has the charisma of a shopping trolley combined with a London-centric outlook and a lack of any radical policies to distance him and his party from the chaos, profligacy and incompetence of the Blair/Brown years. He will do best for Labour if he disappears and allows Lib Dems and Tories to lose by themselves.

I tend to feel pro the coalition government and David Cameron is doing better than I expected - of a rich Old Etonian. But there are a lot of things not right - and I am not just thinking of student tuition fees - a fall-out from Labour incompetence which brings millionaire students in £2,500 suits out rioting on the streets complaining about their inability to pay the fees. I am concerned that the government is not getting to grips with the debts. Local government - as well as government service providers - are telling us all the things that they cannot afford now while keeping armies of bureaucrats shifting paper about and indulging in orgies of political correctness. This is well illustrated by recent nonsense about the non-emptying of dustbins - or more correctly in these days, of emptying wheelie bins and collecting black domestic rubbish bags. This is a priority service and must be maintained come ice, snow, hell or high water - it was alwys possible in the olden days! Some towns have not had the bins emptied for 4 weeks. In Birmingham they had the nonsense of bins on one side of a road [in Solihull] emptied every week and bins on the other side [in Birmingham] untouched for a month. The roads are not mended; education is a mess; pensions have to be sorted; above all the government has not even begun to tackle the obscene pay of the bankers. The NHS wastes buckets of money - again, it's the bureaucracy. I will ignore other nonsense for the time being - like the housing minister's suggestion that he is going to stabilise house prices. How? He has got a good sound bite but nothing will happen because any action will be resisted by the bankers and the Tory faithful. They shot down Vince Cable's mansion tax fast enough and they will do the same to any process that could eliminate house price escalations.

Back in Oldham the Lib Dems and the Tories have a struggle and I think that not even Ed Miliband will be enough to lose it for Labour's Debbie Abrahams. Nick Clegg's path in government is going to get a whole lot harder.

Peter McHugh, reporting for Channel 4 News reminded us that all by-election results are protest votes. The first problem in Oldham & Saddleworth is that you have to work out what is the protest, who are the protesters and what are they protesting about? The next problem is that there is no one answer to any of these questions.

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It's Bonus Time Again

It's that time of the year again. I mean the time when banks and other financial institutions pay out their staff bonuses. On TV at lunch time today, Prime Minister, David Cameron said that banks should "exercise restraint" and show social responsibility in the handing out of bonuses. Fat chance there is of that happening. We know already that they will pay out buckets of money as usual. Figures were announced today by Goldman Sachs - an organisation as likely to exercise restraint as I am likely to land on the planet Jupiter. The miserly sum of $13,000,000,000 has been allocated to fund the total remuneration packages this year for their staff [world-wide] of 35,400. This gives us the princely sum of $367,000 each - on average. Obviously the Masters of the Universe will get much above the average and the tea lady may have to get by on $50,000 but overall they will be paid, on average, ten times as much as the average wage earner in the USA or Britain. I am sure they are worth it. At least, they are worth this much just as any other investment banker or financial whizz kid is worth this much. Governments will issue forth exhortations, but when will they do something. It has to be a co-ordinated attack throughout the world to stop them paying themselves these obscene sums. One thing which is absolutely essential is - as the governor of the Bank of England has said - to separate investment banking and allied jiggery-pockery from normal clearing banks. Then if the investment banks go bust, we can let them. One problem is that bankers have glorious lobbying organisation and always stop governments interfering with their freedom to do as they dam well please.

Soon other banks will tell us how much is being spent on bonuses. But will they please stop talking about bonuses as if they were rewards for spectacular performances. Bonuses are part of the wage structures and get paid to everyone who bothers to turn up in the mornings. Because so many outsiders have been moaning about bonuses some institutions have acknowledged the truth and have deliberately doubled salaries and abolished the word "bonus".

During the next few weeks we can expect many politicians complaining about the bonuses, as they will next year and the year after if nothing gets done.

Don't hold your breath!
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