Leadership? Pull the Other One

Today’s U Turn, agree to let the Gurkhas come and stay in a country that they risked their lives for. Amazingly it was originally refused on the grounds of COST to the economy. No thought of these people having risked and sometimes laid down their lives to keep us safe. Ignore any that say they are mercenaries, they have shown a devotion to this country that should shame many of the people that call themselves British.

Yesterday’s verbal U Turn. One comment saying that Hazel Blears had accepted that what she did was wrong. Another comment later in the day saying that the PM had “Full Confidence” in Hazel Blears. What passes for full confidence from “Our Illustrious Leader” must seem like a death sentence.

Which really brings me to the point of this post.

Where is the leadership within the country today? As I see it Cameron has played it reasonably well, with various MP’s being told “Go or face de-selection”. Where is the Executives response? Who has resigned from Labour? Who has resigned from the Government? And WHY would an election cause chaos?

The Departing Speaker

So he’s going.  The man who, having held the job for over eight years, didn’t know what MP’s were telling him yesterday.

I have seen blogs saying that he was pressured due to class warfare, that he was looked down on because he was a sheet metal worker from Glasgow.  What a load of bollocks

Betty Boothroyd was, at one time, a dancer in a revue.  What did people think of her?  A very, very good speaker

George Thomas was the first Speaker to be heard via any media, when the Commons was broadcast, during his tenure between 1976 and 1983. He was also a very good speaker, because he, his successor Bernard Weatherill and Betty Boothroyd all understood that the Speaker has to be impartial.  Indeed George Thomas’ impartiality made him enemies from his old (Labour) Party who accused him of favouring the Conservatives and Maggi Thatcher

I don’t believe that Michal Martin ever was impartial.

With the expenses row still in full swing, we need a clear out of MP’s who are there as if it’s a career.  Anyone who’s been in Politics without tasting the wider world and getting experience should be banned from being an MP.  Too many people nowadays work as a Researcher for an MP or a Party as soon as they leave University, they are then Selected to stand for a seat, sometimes they get lucky and get a safe seat, where is their experience of anything outside Politics??

Deflation?? Where??

Out Today, Proof that Inflation is what we should really be worrying about, not deflation as the government and the so called experts are saying.
Information on CPI says this on the National Statistics web site

“A large upward pressure affecting the change in the CPI annual rate contribution came from transport costs due to purchase of vehicles, fuels and lubricants, and air transport. Car prices rose this year but were little changed a year ago, principally due to the price of second-hand cars. The price of fuels and lubricants rose by more than a year ago. The average price of petrol rose by 4.0 pence per litre between March and April this year, to stand at 94.4 pence, compared with a rise of 1.9 pence last year. This year’s price rise incorporates an increase in excise duty which took effect from 1 April.”

There was a further large upward pressure from communication, principally telephone equipment and services. Landline telephone charges rose by more than a year ago and the price of mobile phone handsets rose this year but fell a year ago.

Food Price inflation over the 12 months was 8.5%, and petrol has again increased since the figures were collected. In the figures the average Perol price is 94.4p/l I have not seen anything less than 97p/l in the last 2-3 weeks, with diesel now back over a pound a litre.

Remember, if inflation takes off, interest rates will have to rise, if rates rise there will be more defaults on mortages

Tracker Mortgages in the UK. Problems ahead??

Now, although I don’t like being a harbinger of doom, I currently do not see an easy way out of the situation I am about to describe below.

Business Cycles turn, at the moment we are at the bottom for interest rates as demand for goods in the “Real Economy” is so low, as the cycle turns, interest rates will have to rise, for savers, that will be welcome news, but for borrowers? Think this through, in the last 10 years in the UK, “Tracker Mortgages” have become the norm.  Currently, most people on Trackers are in a position where the repayment interest rate has dropped to between 1.0% and 1.5%, meaning that even if finances are stretched unless both partners lose their jobs then the repayments should be OK.

But, when the cycle turns, the Trackers will do just that, follow the interest rate up, meaning swinging increases in repayments, possibly in a short period.  Unless people are still paying their mortgage at their original rate and driving down the amount of capital owed, rather than reducing the payment to survive, the forthcoming interest rate rises will result in incresaed mortgage payments that that will match the previous decrease.  If people are finding it hard to repay now, how will they cope with the increases?  Any rate rise may not happen for up to three years, but when it does, if you are on a tracker, you are in trouble unless you can extend your mortgage or match the new payments.

We have one other thing that we need to consider in all of this, the Pound Sterling.  If it can maintain, or rise against, it’s current position against the other world currencies, then this change in the business cycle may be able to be postponed for a a few months, maybe a couple of years, but if the Pound slips again, look out for inflation rising, and as soon as inflation starts rising, the currency falls unless interest rates go up.  As it stands, it seems unlikely that Deflation, at least in the CPI, will take hold, especially with food inflation more like 5-7%

So what is the point of this post?

If you time it right, take all the advantage you can from the low rates that exist at the moment.

If you are unsure of your timing, I would get out of a Tracker within the next 12 months and move to a rate that’s fixed for 5 years if you can

whatever happens, it’s your decision, but as sure as eggs are eggs, interest rates will rise, avoid being hit by them as much as you can

UK Met Office vs others

Yesterday the UK Met office put out their long range waether forecast for the summer.  Overall prognosis Warm, Dry and Sunny.

I have a couple of problems with that, first, I think the UK Met Office is heavily biased towards the south of the country, specifically southern England.  Secondly it seems to be somewhat different to other forecasts I’ve seen.

The various forecasting groups, UK Met Office, European and US all use models that try to match previous weather with trends to predict what will happen months down the line. The variations that happen in a chaotic system, which is what the atmosphere is, mean that very small changes that happen today may have a huge effect further on in time, or conversly a competing change may cancel it totally.  This means that, past a time limit of just 3 days, variations mean that a standard weather forecast is, unless there are very strong trends, just a guess.  So here we are looking at 3 months!!

So let’s rewind a little and assume that the forecast models can manage to predict what will happen, it becomes obvious that there are significant differences because below is a graphic from the excellent Netweather web site

Now admitted, the temperature difference for Aug are small, but the graphic says that the average temperature for the whole country will be below average, whereas rain for august, from the same site is forecast to vary between a low of 80% for Northern Scotland to a high of in excess of 120% for Southern England.  Doesn’t look like too many BBQ’s for me

August Rain