Monday, 17 November 2014

Reflections on Rochester and Strood

In the post this morning: three communications from UKIP, two from the Conservatives, one from Labour. This is a pretty typical day. Every day brings more confetti through the letterbox, most of it from UKIP and the Conservatives. All of it goes straight in the bin.

I also get emails from the Conservatives, phone calls from the Conservatives, visits from the Conservatives.....I told an opinion pollster who rang recently (yes, I get lots of those too) that the Conservatives look desperate to me. I'm utterly sick of their flood tactics.  But now UKIP have adopted the same tactics. Spam, spam, spam. They are nearly as bad as the PPI leeches.

Spamming my letterbox, mailbox and voicemail merely annoys me. I don't need more information. I know what all of the main candidates are offering. Heaven knows, they've told me enough times.

I've read Kelly Tolhurst's six-point plan, headed up by the biggest non-issue of this by-election - immigration. I've read Mark Reckless's insane claim that a party that has no plan for reducing the deficit is somehow more likely to achieve it than one that has spelled it out in gory detail. I've also read Naushabah Khan's sensible local plans which have been unfortunately hijacked by her party's insistence that she must fight the other parties on their own ground.

I'm much less clear about what the other parties are offering. I think during this campaign I have had one leaflet from the Lib Dems, occasional leaflets from independent candidates and none at all from the Greens. Maybe it's because of where I live - the outskirts of Strood are not where the main battle lies. Or maybe it is just that the other parties have all given up prematurely. Whatever. I'm bored with it all anyway. Roll on Thursday.

Oddly enough, given it is only three days until the vote, the media have gone a bit quiet this week. Maybe they are bored with it too. A week ago, the BBC was busy promoting the idea that this by-election was all about immigration. Here is Louise Stewart, in an article promisingly named "Issues Beyond Immigration":
Perhaps the Rochester and Strood by-election campaign could also be summed up in three words - Immigration, Immigration, Immigration.
It was always going to be a big issue, given this vote was triggered by the local MP's defection from the Conservatives to UKIP.
And the headline for BBC South East's televised "Rochester and Strood Debate" announced that although local issues did feature, the debate "really heated up" when immigration was discussed. Apparently this "proved" that this by-election is about immigration, really.

I was in the audience for that debate (if you want to watch it, the iPlayer link is here). Immigration was indeed discussed, and there was a heated debate between Kelly Tolhurst and Naushabah Khan about the Coalition's record on controlling immigration. But as they were arguing, the audience went quiet. I looked around. They were mostly disengaged. The energy from the audience had dissipated. Suddenly what had been a lively discussion of local issues had become a national media circus.

I thought maybe it was just the impression I gained at the time, so I watched the broadcast as well. The same impression remained. Politicians were arguing about the issues their head offices had told them to discuss (and the media liked) while local voters looked on, disengaged and unimpressed.

A few days later I discussed the programme with one of my students who had been in the row behind me in the debate. 

"Was it just me, or was the audience really bored during the discussion of immigration?" I asked.

"Not bored, exactly," said my student. "It just seemed pointless. It's not what we are interested in".

Other people I spoke to echoed this. And the lady who asked the question in the broadcast itself summed it up:

"I don't think immigration is the big issue it is being made out to be", she said. "And I think the real concerns of local people are not being heard".

Indeed they are not. Recent reports on the by-election have focused entirely on how awful it will be for David Cameron if UKIP wins. The Telegraph wrote a piece called "Rochester and Strood by-election explained" which completely omitted any mention of local concerns in Rochester and Strood. And a nice piece in the Guardian about a local shop's straw (or rather sweet) poll degenerated into party politics. No wonder people in Rochester and Strood are cross.

To her credit, Louise Stewart did say that her own impression was that immigration wasn't the main issue:
And it's not a scientific poll, but when I've spoken to voters on the streets of Rochester and Strood the crisis which has engulfed the Medway Maritime Hospital (which was taken into special measures over a year ago) seems to be the area of most concern for residents.

Slightly further out residents in Hoo are worried about plans to build 5,000 homes at Lodge Hill - on a Site of Special Scientific Interest - and the Green Party and Liberal Democrats have made fighting it one of their key policies.
The other big bugbear seems to be traffic management - businesses say they're suffering due to the long-standing traffic hold-ups on Medway's biggest trading estate, worsened by what they describe as "incompetent" highways management of roadworks nearby.
Yup, that's more like it. Medway Hospital, the Lodge Hill development and traffic jams. Had this by-election been six months earlier, the list would have included the Estuary Airport proposal, which was - and remains - unbelievably unpopular with local people. It's not about immigration. Really, it isn't. It's about this area being a dumping ground for all sorts of political pet projects that can't go anywhere else because of the insane London greenbelt. It's about stupid political ideology that deprives schools and hospitals of resources, squeezes people's incomes and hurts the poor. It's about failure to reform the banks, failure to mend the roads, failure to fix the health service. It is, in short, about the everyday things that affect the lives of ordinary people.

Although I'm not going to vote for him, I have to say that Mark Reckless actually addresses these local concerns well. And if he wins it will be more because of this than the ridiculous UKIP policies. As a Westminster politician he has been something of a joke, but he has been a good constituency MP. He has more personal support than perhaps the media appreciate.

But one thing that came across clearly in the BBC debate was how close Tolhurst and Reckless are. As far as policies are concerned, they are almost indistinguishable. And the Labour candidate wants to play them at their own game. Three parties, all offering pretty much the same menu. Do we vote for posh Mark, chavvy Kelly or clever Naushabah, or waste our votes on a fringe party?

In the end it all comes down to this.We, the voters of Rochester and Strood, are being drowned out by the noise from the media circus and the political Punch and Judy show. If we kick the main parties by re-electing Mark Reckless, it will not be because we are a bunch of racist, sexist xenophobes. It will be because we are angry that what really concerns us is apparently of so little importance to the Westminster elite. They should take note.

 Related reading:

Rochester and Strood: it's not about UKIP

The land of the setting sun

"So tief im Abendrot, wie sind wir wandermü das etwa der Tod?"
- R. Strauss, Four Last Songs, no. 4 "Im Abendrot"

Japan  is in recession. Will it ever escape from its deflationary trap? Indeed, should it even try to? Or would it be better for it simply to accept that its future is gentle decline into a comfortable (and highly automated) old age? Is it becoming the land of the setting sun?

My thoughts on this are at Pieria.

Tuesday, 11 November 2014

The central bank of Russia is regaining control - but for how long?

At Forbes, more on Russia's currency problems:
After the Central Bank of Russia (CBR) established free float with the condition that it would intervene to protect domestic financial stability, the ruble immediately rallied, but then fell again. Many people forecast dire consequences. I admit I was a little worried, but I thought the ruble would stabilize once markets became used to the lack of routine intervention from the CBR. After all, the whole point of allowing a free float is to enable the currency to find its own level – and more importantly, restore control of monetary policy to the central bank.
When a country operates a fixed exchange rate system, it de facto adopts the monetary policy of whichever country issues the currency to which it pegs its own currency. In the case of the ruble, that is the United States. And as I have noted before, because China has large US$ reserves and a currency peg to the US$, the Fed’s policy is to a degree determined by the People’s Bank of China (PBOC). After all, a currency peg has two sides. It is unusual for the pegging country to influence the monetary policy of the country to which it pegs: usually a smaller, weaker country pegs its currency to a the currency of a larger, stronger country, and the larger country simply ignores the smaller one. But the US and China are now sufficiently close in size and strength to influence each other. Both also influence the oil price, and as Russia is an oil exporter, that has significant effects on the Russian economy. In effect, Russia’s monetary policy has until now been jointly determined by the Fed and the PBOC.

This means that the CBR has never really been in control of either the ruble or monetary policy.....
So how is it regaining control - and what might make it lose it again? Read on here.

The foolishness of the old

Older people tend to want their pensions and benefits protected and the burden of cuts to be borne by the young. Of course, this is only natural:
Most people want government to spend more money on them than on anyone else. This applies regardless of their tax contributions (those who don’t pay tax often demand more than those who do). And it is completely understandable. After all, charity begins (and when times are hard, ends) at home.
But it is also foolish. In my latest post at Pieria, I explain why older people should be demanding that governments invest in the young. 

Sunday, 9 November 2014

A Strange Memorial

Poppies, at the Tower of London, turning the moat blood-red. A wonderful memorial to the British and Commonwealth servicemen who died in the First World War. 

One of them was my great-uncle, Henry Dodson Noon. We've always referred to him as "Uncle Dodson", so Dodson is the name I shall use in this post.

Dodson was born in 1894 in Eastwood, Nottinghamshire, the son of George Henry Noon and his wife Mary Catherine Noon, my great-grandparents, who were farmers. In 1911, at the age of 17, he emigrated to Australia. My mother always said it was "because there was no money in farming in Britain". Indeed, farming was at that time in long-term decline: Dodson was not the only farmer's son to emigrate. Nonetheless, he doesn't seem to have become a farmer in Australia either. His Australian Army papers show his occupation as "butcher".

In 1914 he joined the 16th Battalion AIF. After training near Perth and Melbourne, he embarked with the rest of the 4th Australian Infantry Brigade to join the Anzac force in Egypt. He fought and was wounded at the battle of Gallipoli in 1915, receiving a bullet through the nose. The wound became infected and he was invalided home to England.
He later returned to his battalion. At some point he was promoted, since his embarkation papers for Egypt show his rank as "Private", but his war grave records show his rank as "Sergeant". He fought at Mouquet Farm on the Somme, where he disappeared and was listed as "missing" on August 31st 1916. After extensive enquiries on behalf of his mother and the Rector of Eastwood, his death was finally confirmed six months later. The exact circumstances were not established until May 1917, when Sergeant-Major Blimman in the 16th Battalion wrote this:
Sgt. Noon was killed on the night of 29th-30th August 1916. He was not buried in a soldier's cemetery. His body could not be found, but it was buried by shell fire in a German trench. I knew Sgt. Noon well and I think I was the last person to speak to him before his death. Dodson's body was never found, he is remembered both on the Australian war memorial at Villiers-Bretonneux in France, and on the Northumberland Road war memorial in his home village of Eastwood, where he is listed as "H. Dodson Noon" (third from the bottom).

Dodson was George & Mary Catherine Noon's only son, and with his death the name Noon died out in Eastwood. But in a strange way, it lives on - and not just on war memorials or in the memories of his family. For this, we have to thank Eastwood's most famous son - the writer D.H. Lawrence.

D.H. Lawrence knew the Noons. Indeed there seems to have been some animosity between them. Family legend has it that when they were children, my great-aunt Maggie (Dodson's older sister) was not allowed to play with Lawrence because her mother thought he was a "nasty little boy".

In 1920-1, D.H. Lawrence wrote a short story called "Mr. Noon", which was published posthumously in 1934. But his work on "Mr. Noon" didn't end there: he gradually developed the story into a novel, though he never completed it. The unfinished novel was eventually published in 1984 in a critical edition compiled by Lindeth Vasay. The chief protagonist of Lawrence's story is Gilbert Noon, a twenty-six year old mathematics teacher with musical talent. On the basis of the initials G.N. and the character's behaviour, Vasay concluded that Gilbert Noon was modelled on Lawrence's friend George Neville. And indeed there are obvious similarities, although in many ways Gilbert Noon is also Lawrence's own alter ego. "Mr. Noon" is widely recognised as Lawrence's most autobiographical work.

But Vasay seems to have made no attempt to identify the provenance of the name Noon. For me, this is a grave omission. G.N. are the initials not just of George Neville, but also of Dodson's father, George Noon. George Noon, as an independent farmer, was a small businessman with money - like Gilbert Noon's father. And Dodson, had he lived, would have been twenty-six in 1920, the year Lawrence started work on "Mr. Noon". The Noons were a musically talented family: we do not know if Dodson had musical talent, but his sister Maggie was a professional pianist and other girls in the family sang and played the piano to a high standard. Indeed, I owe my own musical talent to my Noon ancestry. 

So despite the untimely death of Henry Dodson Noon, the name lives on - in literature. Lawrence's unfinished autobiographical work is perhaps my great-uncle's strangest memorial.


A tangled web of fraud

Bulgaria's Corporate Commercial Bank. Again. Oh dear.

There is some good news:

The Bulgaria National Bank (BNB) has now – belatedly – revoked the banking license of the failed Corporate Commercial Bank (KTB) and commenced bankruptcy proceedings. This will come as a huge relief to insured depositors, who will get their money back in time for Christmas. It also means that the attempt by a consortium of investors to rescue the bank has failed.
But what a mess has been left behind:
The BNB’s disclosures about KTB reveal the desperate measures that were taken to preserve the illusion of solvency in the months before its failure. This statement from the BNB’s website explains how the bank self-funded its own Tier2 capital with a complex web of circular lending transactions involving an investment company called TC-IME and a host of smaller intermediary companies. The ownership of the components of this tangled web requires some explanation.
Indeed it does. Read on here.

Related reading:

Bulgarian Stalemate
The Bulgarian Banking Disaster
The Bulgarian Game of Thrones
The curious case of the Bulgarian bank runs
What on earth is going on in Bulgaria?

Russia's desperate defence of the ruble

Two pieces (so far) at Forbes on the Russian central bank's desperate defence of the ruble. Well, it appears desperate, anyway. But is it, really?

Firstly, I explain why the Russian central bank can't defend the ruble and shouldn't try to:
When a currency is rising in value due to capital inflows, the central bank can cap its rise by buying assets and foreign currency. This is what the Swiss central bank has been doing for a few years now. Its purchases of Euros amount to possibly the largest QE program in the world relative to the size of its economy. Since it can create infinite amounts of Swiss francs, it is unquestionably the most powerful player in the Swiss franc market, and no market participant will oppose it. Instead, market participants will happily co-operate with it by selling Euros at the price that it sets.
Similarly, when a currency is falling sharply in value, the central bank can support it by selling assets, including foreign currencies. But in this case it does not have infinite quantities of assets. Central banks can create their own currencies at will, but they can’t create foreign currencies or assets. So the ability of a central bank to prevent sharp devaluation of its currency is limited by its asset and foreign exchange holdings. It is not all-powerful – and markets know it.
So what should central banks do? Read the post to find out.

Shortly after I wrote that post, the Russian central bank abandoned any attempt to maintain the ruble within its trading bands:

The Central Bank of Russia (CBR) seems to have decided that it can’t beat the markets. On Wednesday November 5th, it announced an end to unlimited currency support interventions. It said it would spend a maximum $350m per day smoothing out fluctuations as the ruble approached the edge of a trading band. Once that limit was reached, the ruble would be allowed to fall out of the band. The final sentence of the CBR’s press release spells it out:
As a result of the implementation of this decision, the ruble exchange rate will be determined predominantly by the market factors.
Game, set and match to the markets, apparently.
Or is it? Perhaps not. As I explain in this post, it looks more like "game on" to me.

As this game plays out, I shall write more posts about it.

Related reading:

Russia is facing a full-blown currency crisis - Tomas Hirst, Business Insider
Plunging rouble raises spectre of fresh financial crisis for Russia - FT
Rouble rebounds as central bank says it could take action - BBC
Has the Japanese central bank started another round of central bank wargames? - Forbes