Saturday PS: A question of solvency

On September 2 1992, I arrived for work at The Guardian City office and was promptly turned round without so much as a coffee and a fag and redirected to a press conference held by the Institute of Insurance Brokers.

Said organisation unveiled some pretty scary research suggesting four of our biggest general insurance providers were insolvent. Fellow hacks scrambled for telephones (this was still largely a pre-mobile era) but something persuaded me to talk a little further to the Institute's top expert.

Why, I asked, did the Department of Trade and Industry (then the insurance regulator) allow these companies to carry on writing policies despite being insolvent? He replied that he had not said they were insolvent, merely that they fell below the DTI's solvency margin.

A distinction without a difference, surely? Not at all. The margin calculated the amount of money insurers needed in the till to pay out likely claims, but it was hopelessly out of date.

As I recalled recently on the Lion & Unicorn website here, the time was when insurers charged much the same for each different type of insurance. Of course, a four-bedroomed house in a well-policed suburb would attract lower premiums than the same sized property in an inner-city crime hotspot, and the same would be true for a district nurse driving a Morris Minor as opposed to a 17-year-old youth with a high performance motor-cycle.

The point was that there would be little difference in the premiums charged in each case from one insurer to the other. This was known as "the tariff".

Now, the solvency margin was calculated on the basis of the tariff, thus assumed that, were a company to see an increase in premium income, this would reflect the fact that it had taken on more risk - insuring more hot-shot teenagers on two wheels, as opposed to mumsy characters piloting 800cc museum pieces. Thus it would need to put aside more money for future claims.

But with the passing of the tariff and the gales of price competition blowing, it was just as likely that higher premiums simply reflected a commercially successful attempt to persuade policyholders to pay more for their cover. In any other business, charging more for the same thing would be a cause for congratulation.

In general insurance in 1992, it was, however, a cause for alarm. Anyway, I got back to the office and explained that I certainly had a story - just not the one they had expected.

What is it about the "R" ratio - the Government's supposedly infallible measure of coronavirus infection - that brought the worthless solvency margin to mind? I really couldn't say.

1) Bits and pieces on Saturday

ON the subject of the Lion & Unicorn site, it recently published an hilarious piece on the subject of how "things will never be the same again", the proximate cause of which is, of course, the suggestion that, post-epidemic, everything is changed, changed utterly. An example of similar predictions is found for each of the last 30 years. My memory is that perhaps the closest never-again thinking to that of the present came in the wake of the 1973 energy crisis, when confident predictions were made as to the decline of the motor car, the renewed popularity of candles and lanterns and the pursuit of a simpler, more self-sufficient life. That worked out really well, didn't it?

WRITING here on April 4, I predicted that, despite the wettest spring in living memory, our greedy, useless water companies would manage to run out of H2O and start imposing their beloved "hosepipe bans". Guess what?

ON the same day, I said that all newspapers appear to have only five coronavirus-related news topics: NHS staff are heroes; let's redicover the spirit of the Blitz; why are some people so selfish?; c'mon Boris, get your act together; NHS staff are heroes (again). Now they seem to have whittled the list down to just three: all front-line workers are heroes; can we ever trust China again?; why the lock-down is all about me (copyright every airhead columnist).

TO end where we began, the disclosure of the farcical nature of the solvency margin came just days before September 16 1992 and sterling's ejection from the European Exchange-rate Mechanism. Joining the ERM two years earlier came to be seen as a policy error of colossal folly that destroyed jobs and livelihoods and plunged the economy into a deep recession. Again, I wonder why this is coming to mind now?

Thanks for reading and enjoy the weekend. Pentecost tomorrow will find me reading one of my favourite poems, the one that starts: "That Whitsun, I was late getting away..."

dan.atkinson@live.co.uk

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press

 

 

Saturday PS: What a criminal world

MANY years ago, when economics editor of The Mail on Sunday, I used my weekly column to suggest HM Treasury hire me as a permanent consultant to vet all its various wheezes to see how they could be abused.

The point was that I had a criminal mind and HMT clearly didn't, judging by all those "initiatives" that ended up being treated as open invitations to help oneself to taxpayers' money - the Individual Learning Accounts were one egregious example, as was the super-low rate of Corporation Tax that prompted driving instructors, violin teachers and others to turn themselves into limited companies and pay themselves dividends.

Having heard nothing from the mandarins re. my kind offer, I returned to the topic the following week. Presumably, I wrote, they were worried that I expected some sort of department complete with staff, computers, canteen, "diversity policy" and pension schemes.

Fear not, I assured them. All I needed was a small office with a desk, a kettle and an old dear in a cardigan to do the typing. Still no go, alas.

Despite this cruel snub, I continue to believe the lack of what may be called criminal awareness in the corridors of power is a serious weakness in our system of administration. Here are two examples, again from my years as a Sunday hack.

In terms of tuition fees, it would clearly be an offence for a foreign student to pretend to be British in order to take advantage of the lower fees available for domestic undergraduates, universities being able to charge foreigners pretty much what they like. But would the reverse also be an offence, i.e. wealthy parents of a none-too-bright child pretending to be non-British to tempt an institution to offer said child a place in return for cash?

I put this idea to a very grand figure in the world of university policy. He was polite, but nonplussed. Eventually, he simply reiterated that it would be an offence for a foreign student to pretend to be British, which was where I had started from.

Worse still is the question of the 20 per cent single-person discount for Council Tax. Here, the incentives are all in the wrong places.

Let's say Fred lives alone, thus qualifies for the discount. His old pal John needs somewhere to live for a few months so Fred lets him use the spare room. Should the town hall want to know where John is living, two other friends, Tom and Jane, are happy for John to give their address because they don't qualify for the discount anyway, thus have nothing to lose.

Was it coincidence, I thought, that the figures for the number of people supposedly living solo had taken off from the early Nineties, when Council Tax was introduced? In search of the facts I spoke to someone from an association representing municipal treasurers.  

He told me two things. One is that local authorities simply indent the Treasury for the money they lose through the discount, so it costs town halls nothing. The second is that he had never heard of local authorities investigating people claiming the discount to verify their single status because they had never had a problem with the discount.

Well no, they wouldn't have a problem because someone else is picking up the tab. Again, my interlocutor seemed baffled by the notion that people may abuse the system.

Now we have the furlough scheme and assorted programmes to support businesses. Already, there is talk of abuse, of the sort that the Treasury clearly failed to anticipate. Astonishing, Holmes!

My offer still stands.

1) Bits and pieces on Saturday

IT has long been a rule of journalism that weak newspapers default to two types of (non) stories, those about the weather ("Storm Tarquin threatens chaos") and health scares ("One glass of wine can kill you"). Most, although not all, newspapers are weak these days, which may explain why they seem to believe their readers demand page after page of coronavirus-related guff, day in day out. The funny thing is that, just as the Government has an each-way "out" once all this is over (a low death toll will "prove" that the lock-down was successful, a high death toll will show that it was necessary), so the press can take the credit if circulations rise and blame the lock-down if they fall.

SINCE at least the mid-Seventies, there has been a steady stream of books about the resurgence of the far right, all with titles such as The Return of the Wolf, full of oo-er prophecies. On May 17, The Economist was at it, telling us: "The extreme right is making good use of the pandemic...Some have even come perilously close to committing deadly acts of terrorism." That's the far right, though, isn't it? Close, but no goldfish. Someday, someone is going to write a book explaining why our latter-day brown-shirts are so hopeless, having failed in the last 50 years to make any real progress despite four recessions, multiple military conflicts and stagnant real wages.

BY the way, can we stop talking about a "pandemic", a notion with no objective reality? While we're at it, perhaps we can also retire the expression "ramping up".

FOR the first time in months, I rooted through my briefcase the other day and came across a rail discount card, a spare set of cufflinks and a Northcliffe House security pass. Relics from another world.

IN the longueurs in between work assignments, I have been watching some old television shows, including, the other day, The Persuaders! (ITV; 1971-1972) Danny (Tony Curtis) drops in on a stately home owned by Brett (Roger Moore), explaining he wanted to visit "your incestral home". Moore responds; "I think you mean ancestral, Danny." I don't think he did, you know.

Thanks again for reading and enjoy the Spring Bank weekend.

dan.atkinson@live.co.uk

Europe Didn't Work,  by Larry Elliott and Dan Atkinson is published by Yale University Press

 

Saturday PS: Come on, you clerks

IN 1970, Robert Townsend, former head of Avis Rent-a-Car, wrote a best-selling A to Z business guide called Up the Organisation. My British edition is published by Coronet.

One entry under P reads: "Fire the whole personnel department." Further on under P, we have: "PR Department, abolition of. Yes, fire this whole department too." 

I trust Boris Johnson will take this second piece of advice. The woeful recent performance of his PR people suggests they would be at full stretch representing the doings of Lower Sodding Parish Council to the outside world. 

Let's just recap. Boris is due out of hospital and "reliable sources" told us he would start to ease the lock-down. He didn't.

Then, ahead of his address to the nation on Sunday, these same great communicators let it be known that Monday would be freedom day and that life would start getting back to normal. The Prime Minister then said it wouldn't.

All this without the endless confusion about what we are and are not allowed to do and when we can and cannot see family members.

Perhaps I am being a little unfair. Even the most skilled spin doctor cannot make a silk purse out of a sow's ear, or a pig's ear, in the case of our coronavirus "strategy". Or should that be "strategies"?

They say Whitehall is divided between "knights" and "clerks"; until recent days, the knights have had the upper hand, cheerfully destroying the economy and telling the peasantry to stay at home. But as the catastrophic cost of the lock-down becomes clear, the clerks - led by the Treasury - seem to be grappling for control. 

Good. Let the boys and girls of Horse Guards Road implement what I guess is their preferred strategy and get us all back to work. But it may already be too late to stave off an economic crisis to dwarf that of 2008. 

A Treasury report published earlier this week warned that the absence of moves to pay off the colossal debts incurred during the epidemic: "In a worst-case scenario, this could lead to a liquidity crisis and ultimately a sovereign debt crisis. A comparable UK scenario would be market conditions in 1976 ahead of the IMF loan, when high and volatile inflation led to a loss of macro strategy credibility and a reluctance to hold UK debt.”

Well, quite. There was pretty much a "gilts strike" two years earlier, in 1974, when the City demanded sky-high yields in return for holding British Government paper. Yes, it's that year again, but don't blame me for the parallels - they'd be there anyway, even if I'd never been born. Maybe it's the space-time vortex, or whatever was that thing Doctor Who was always banging on about.

Let's leave to one side the likely economic outcome of our present discontents as against those of 46 years ago, and instead look at some intriguing, albeit highly speculative, possibilities, drawing on the history of then to try to illuminate developments now.

You will be aware that (a) many believe the current crisis will lead to a resurgence of social democracy as practised in Britain from the mid-Forties to the mid-Seventies and that (b) I am very doubtful, as I wrote recently here. Equally likely, in my view, is that a sterling and bond-market crisis would provoke an enormous intellectual backlash against not only the measures introduced during the epidemic but all the (as it will be characterised) voodoo economics - quantitative easing, bank bailouts, huge government deficits - brought into play since the 2008 financial crisis.

Just as happened in the Conservative Party (and to a lesser extent the Labour Party) during the mid-Seventies, we will be told: "Britain has lived for too long on borrowed time, borrowed money, borrowed ideas." (For you young-uns, that was a Labour Prime Minister, by the way). But who, among the current crop of senior Tories, will lead the reaction?

A fascinating suggestion from a friend the other day suggested none other than the Chancellor, Rishi Sunak. That sounds bonkers on first hearing, but he drew a parallel with Keith Joseph, who provided the intellectual ballast for the rejection of the Kenyesian policies of Edward Heath. As Heath's Social Services Secretary, he masterminded a colossal, bureaucratic "reform" of the NHS into huge "strategic" units, but, after the Government fell in 1974, he repented of this, disowned his legacy and became a committed free-marketeer.

Should there be an unimaginable economic collapse, could the Chancellor turn against the massive spending policies that he implemented, a la Keith Joseph? Possibly, but you need to remember that Joseph, while expected to stand for the leadership post-Heath, never reached the top, and the prize went to a female politician who'd already had a brush with controversy, in her case the "school milk" affair. 

Who could be her equivalent today? I don't know, but maybe Priti Patel is keeping her diary clear two years from now.

1) Saturday bits and pieces

CAST your mind back to the 1988 presidential election, pitting Vice President George Bush against Massachusetts Governor Michael Dukakis. Bush's almost every single mention of the Democratic Party candidate referred to "the liberal Governor of Massachusetts". Some claimed to be appalled, but it worked. I am not the first to suggest this, but come the next election, the Tories could do worse in their new northern power-base than talk constantly about "human rights lawyer Keir Starmer".

SAD to say, I long ago lost track of all these supposed "scandals" concerning lack of preparedness for the epidemic on the part of the Government and the NHS. Lack of protective equipment...no proper method for contact tracing...failure to protect care homes...All rather reminiscent of those alleged furores in the Seventies that I could never quite be bothered to check out, like the Bert Lance affair in Wasington or Muldergate in South Africa. It just seemed a lot less bother to turn the record over and have another cigarette.

A friend suggests that, after the lock-down, there may be theological debates as to the authenticity of the "virtual Masses" being said on-line from (otherwise empty) Catholic churches. I tell him that Graham Greene was there first. In Monsignor Quixote (The Bodley Head; 1982), the eponymous priest is staying at a monastery. Delirious and close to death, he hallucinates the bread and wine and administers “Communion” to one of those present, dying shortly afterwards. The senior monks then earnestly discuss whether, given that an ordained priest conjured up this vision of the gifts, did they actually exist?

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press

 

Saturday PS: The Season of the Witch

IN conversation with an old friend the other day, we agreed that 2020 is shaping up to be the strangest year since that witchiest of times, 1974. Back then, we had power blackouts; a three-day week; a state of emergency (the last such in Great Britain, in fact); assorted horrors in Northern Ireland, such as the Ulster Workers' Strike; the culmination of Watergate; the spy scandal that forced Germany's Willy Brandt from office; Lord Lucan; two British elections in one year; roaring inflation; the slow-motion collapse of American power in south-east Asia.

It was also the first year since the birth of the post-war consumer society in which UK living standards fell.

It's still only May, but how is 2020 shaping up? Pretty well, I'd say. The Government has crashed the economy on "scientific advice" and the worst recession in several centuries is now in prospect. Back then, the streets were dark and deserted at night. Now, they are deserted - or close to it - all the time.We don't yet know what scandals are lurking in the undergrowth (other than the utterly joyful exposure of the contraband rumpy-pumpy activities of the now-ex scientific adviser Professor Neil Ferguson) but we can be reasonably sure that, as with 1974, 2020 will mark some sort of bend in the river, although where future navigation takes us is far from clear.

More broadly, the coronavirus crisis can be seen as the dropping of the second shoe, the first being the financial meltdown of 2008 onwards. In a similar way, the energy and other crises of the mid-Seventies followed the financial turbulence of the late Sixties and early Seventies, with the devaluation of sterling, the temporary closure of the London gold market, the devaluation of the dollar and the break-up of the post-war Bretton Woods system.

One more narrow-gauge, specifically British, echo arises from the public reaction to the disruption of work. In the Seventies, British employees belied their reputation for strike-prone idleness by producing as much during a three-day week as they had when working five days. Now, British employees are belying their reputation as hard-grafting strivers by clearly enjoying the "furlough" era and telling opinion pollsters they don't want it to end.

1) ...and we're going to tell the king

MANY years ago, a colleague dreamed up a new City livery guild, the Worshipful Company of Panicmongers. Its coat of arms would feature a millennium bug rampant and its motto would be taken from Chicken Licken, who responds to a dropped acorn by declaring:  "The sky is falling on our heads and we're going to tell the king." (It isn't and they aren't, being eaten by a fox instead). Panicmonger-in-chief Professor Ferguson may have departed, but the influence of the worshipful company remains strong. I had been going to warn you not to expect much from the Prime Minister tomorrow when he was due to announce easements of the lock-down, but I don't need to, as Downing Street has already done so. Apparently, that great liberal Boris Johnson will instead produce a "roadmap". Does that mean we're allowed to drive again? Let's celebrate with a Founders' Dinner at Panicmongers' Hall.

2) Saturday bits and pieces

SELF-SERVICE tills, introduced in the name of efficiency, are, in fact, woefully inefficient. This fact struck me the other day in a queue at the Post Office to use just such a device. I have no complaints about the helpful young man who tried to guide us all through the mysteries of do-it-yourself shopping, but I did wonder why retailers persist with these machines given they take up more time than would interaction with a human till operator. Came the answer - because it doesn't affect the retailer. Only the customer bears the burden of wasted time. In economist-speak, the inefficiencies have been externalised. Less politely, the retailers don't give a monkey's.

DOES anyone else have trouble distinguishing the current we-love-the-NHS rainbow flag from (a) the Gay Pride flag and (b) the Rastafarian colours? While I'm sending out a general appeal, does anyone else become enraged at being told, on every separate visit to a website, that "we use cookies". I have no idea what they are, beyond being what the Americans call biscuits, and couldn't care less whether you use them or not.

ONCE again, that invertebrate institution, Germany's "all powerful" constitutional court, has proved to be all mouth and no lederhosen. This week, it demanded the European Central Bank (ECB) justify its purchase of bonds to ensure it was "proportionate". ECB president Christine Lagarde told the court to get stuffed and the bank will provide no such justification. Apparently, the court may retaliate by ordering Germany's Bundesbank not to participate in future bond buying. Don't hold your breath; this one is up there with Boris Johnson "lifting the lock-down" in terms of unlikelihood.

LAST week, I quoted from Michael Booth's 2014 book The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia (Jonathan Cape). Here's another gem from the same work: "A Danish friend told me this anecdote just the other day: 'A group of Swedish colleagues met every Friday afternoon to share a bottle of wine as an end-of-the-week treat. After several weeks, one of the party suddenly stood up and said: "I really think we should declare this bottle of wine as a tax perk." There was some discussion among the rest of the group and it was agreed, they must declare the five-krona tax to the appropriate authorities.'" My favourite bit of that hilarious story is "there was some discussion". Oh ja, sounds like a wild night out, fellas.

I have written a piece for the Lion & Unicorn website, asking if competition policy will be the latest Eighties casualty of the current crisis. You can read it here.

Thanks again for reading and enjoy the bank holiday weekend (yes, yes, I called it wrongly last Saturday - how was I to know that, thanks to VE Day, May Bank Monday would be on a Friday? I could always have looked at a calendar, I suppose).

dan.atkinson@live.co.uk

Europe Didn't Work,  by Larry Elliott and Dan Atkinson is published by Yale University Press

 

Saturday PS: A libertine, not a liberal

GREAT was the disappointment among many earlier this week when Boris Johnson, newly released from hospital and widely expected (and reported, courtesy of Downing Street spin doctors) to start lifting the house arrest imposed on the nation, instead did precisely stone blind nothing. The restrictions, said the great champion of freedom, would remain in place.

What else did anyone expect? The notion of Mr Johnson as some sort of deep-dyed libertarian has been almost as ludicrous as the identical view of Margaret Thatcher that you still hear in some quarters of what I think of as the hippy Right.

This is a man whose very first act on becoming Mayor of London was to ban drinking on the Tube. At that point, 2008, I'd been riding on the Underground man and teenager for some 30 years, day and night, round the system, and had never once seen any incident related to someone drinking in a Tube car. But then, it was never about public safety but about social control. 

Not that I imagine Mr Johnson personally gets off on pushing the rest of us about. Merely that he defers to those who do, i.e. officials and senior coppers. In his own mind, this shows he is "responsible".

Since returning to work, he seems to be falling into the same rabbit hole that swallowed the likes of Edward Heath and Theresa May, that of trying to win the approval of institutions that will always hate you, in his case the public health blob, the BBC and those at the top of the NHS unions.

In pursuit of this, Boris and colleagues keep changing their story on the lock-down. Originally, it was to "protect the NHS" (shouldn't it be protecting us?), then it was to get us through the peak of infection, then this week we learned we were indeed through the peak (hurray!) but the PM added that this made it the period of maximum danger. Sorry?

A true freedom lover would, daily, demand justification from the Whitehall bureaucrats as to the repressive measures being imposed on the rest of us, instead of which Boris Johnson appears to be demanding justification for any easing of them.

Many seem to have confused someone being a libertine with being a libertarian, or even a liberal. They are now learning the error of their ways.

1) Saturday bits and pieces

AS always, the Institute of Economic Affairs is at its finest when defending the liberty of the person, rather than trying to convince the rest of us that big business and the wealthy are persecuted minorities. This is what it had to say yesterday about the pernicious Coronavirus Act, rushed into law by cowardly MPs: "Laws passed in late March 2020 to deal with the Covid-19 pandemic are the greatest restrictions on liberty in modern British history. They were introduced to prevent overwhelming the NHS after the initial outbreak, but there is a danger the goalposts are being moved. The Coronavirus Act contains a sunset clause that will make the measures expire after two years – which seems an excessively long period of time. Any benefits that have emerged as a side effect of the restrictions have been far exceeded by the costs to the economy and civil liberties. A concern is that prolonged exposure to draconian regulations will normalise illiberalism and that isolated benefits from the current restrictions will be used to promote illiberal policies in the future." How true.

FREDERICK "The Day of the Jackal" Forsyth was on the money in the Daily Express yesterday: "When this is all over, it has to be recorded that our national bureaucracy and its partner-in-incompetence the quangos have let us down badly in our hour of need. A root-and-branch clear-out here is vital before the next national emergency, which will surely come one day."

CHEERING myself up, I re-read bits of Michael Booth's 2014 book The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia (Jonathan Cape; 2014). Heretically, he asks whether Nordic-style equal societies don't tend to be "a bit samey, a little boring?" Booth adds: "All those lists of the best cities to live in are always made up of places with clean streets, cycle paths and touring productions of The Phantom of the Opera, like  Berne or Toronto; it is never the really scintillating, stimulating places like New York or Barcelona." No, quite.

FINALLY, in case you thought normal tabloid service had been suspended for the duration of the "emergency", on Wednesday the Daily Star's front page headline read: "Proof that UFOs exist". On the same day, page 14 of The Sun lead off on: "Is this Nessie?", explaining: "A 30ft shape spotted in Loch Ness is believed to be the biggest sighting ever recorded of the 'monster'." In troubled times, it is good to know that some things never change.

Thanks again for reading and enjoy the bank holiday weekend, although whether you notice the day off may be up for debate.

dan.atkinson@live.co.uk

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press 

 

 

Saturday PS: Goodnight from...whom?

AN age ago, every episode of The Two Ronnies (BBC;1971-1987) would conclude with an item concerning "next week's news". 

In the same spirit, may I suggest some headlines from the near future?

1) The crash in the oil price will bring down at least one important financial institution, probably a bank, that has lent unwisely to the energy industry, probably the US shale-oil operators who are now facing deep trouble. This is what happened last time round, when banks rode the wave of official encouragement in the Seventies for American wildcatters (just as Donald Trump has been spurring on the shale-oil companies) and then ran into an oil-price slide. Chicago bank Continental Illinois was dragged down in this debacle.

2) Fraud related to the multi-billion pound schemes to support businesses and individual workers during the epidemic will prove to be far more widespread than Ministers anticipated. Organised gangs will be uncovered, along with bogus businesses set up solely to get access to public money. Some furloughed workers will be claiming twice over, and unscrupulous bosses will invent "ghost" employees. The Government will claim to be shocked - shocked! - which is a good gauge of Ministerial naivety.

3) Britain and other western countries will be shafted if the possible increased issue by the International Monetary Fund (IMF) of "special drawing rights" (SDRs), the Fund's in-house funny money, goes ahead. These can be exchanged voluntarily by two countries, with the weaker one swapping some or all of its allocation for hard currency, such as the dollar or sterling. But the IMF has the power to instruct hard-currency countries to take SDRs in return for real money in "exceptional circumstances". What is the betting that the health emergency fits that bill and that we end up handing over a chunk of our official reserves in return for this "asset"?

4) Some of the "challenger banks" promoted by the Government in recent years to bring real competition to the banking market will turn out to be the "secondary banks" of our time. For any young people out there, the secondary banks were a phenomenon of the early Seventies, a raft of fairly small institutions that exploited relaxed credit controls to engage in breakneck lending, especially in hire purchase and property. As with the challenger banks, some were well run but a number were not. What horrors are lurking out there?

5) The gold price is in bubble territory. True, we don't know quite how bubblicious it will prove, because you must always adjust for US inflation, given gold is priced in dollars. Thus the 1980 peak (think invasion of Afghanistan - by the Soviets, not us, "second" Cold War and Iranian hostage crisis) of $850 an ounce would seem dwarfed by the current price of about $1,725. But the 1980 figure would be $2,574 in today's dollars. That said, I expect a downswing before too long.

1) Bits and pieces on Saturday

HEARTENING signs that the natives are becoming restless, with reports of increased travel, construction activity and shopping. There was nothing more dispiriting than endless opinion polls suggesting the public's only criticism of the lock-down was that it didn't go far enough. Similarly, those newspapers that took much the same line until very recently are now demanding some sort of a plan for ending nationwide house arrest. As Enoch Powell said in a different context, that of Whitehall's economic bungling: "These are some of the notes in which the rising anger of the nation becomes audible. It is a sound I like to hear."

ELSEWHERE, the Welsh "government" popped up yesterday to announce new restrictions on the movement of its subject people, just as Westminster was reportedly looking at easing the constraints east of Offa's Dyke. But, as I noted on March 21, "giving pseudo-national powers to glorified county councils" was always a mistake. Bossing people about is the parish pump politician's idea of a good time.

MEANWHILE, you may have forgotten but at some point the Liberal Democrats are supposed to be holding a leadership contest after the electoral demise of the appalling Jo Swinson. It's had to be postponed for now, leaving Sir Ed Davey as acting leader. How nice it would be to have a genuine liberal get the job for a change, someone passionate about personal liberty and with a clear understanding that the State, for all its virtues, is an interest group in its own right and ought never to be deferred to automatically. Never has such an understanding been more vital than it is now. It won't happen, of course.

QUITE like old times on Radio 4 the other day when we were treated to the thoughts on the crisis of The Politician Formerly Known as Kenneth, the BBC's favourite Tory. 

IT'S probably too easy to slip into binge watching, what with the pubs being closed, so I have tried to restrict myself to one Youtube obsession at a time. Currently, it's Randall and Hopkirk (Deceased), (ITV; 1969-1971). For the uninitiated, Hopkirk is a dead private eye, while Randall, his former partner, remains in this vale of tears (as does Hopkirk, in ghostly form, helping Randall with his cases). A joy of this show is spotting big names from elsewhere appearing in the cast. Frank Windsor, Sergeant Watt in Z Cars, plays the bad-guy businessman in the first episode who arranges for Hopkirk to be deceased; Philip ("Pike! Your name vill go on ze list") Madoc is suitably evil in the fourth episode, while Lois Maxwell (that's Miss Moneypenny to you) plays a scheming heiress. Garfield Morgan (Mr Haskins in The Sweeney) appears in an episode about diamond fencing. Perhaps most incongruously, Brian Blessed (another Z Cars alumnus) dons a dinner jacket to head a casino-scamming racket in the south of France.

AFTER years of resistance, I have caved in and joined the world of on-line banking. The call- centre service at HSBC was already going downhill before the virus (no fault of the staff - I retain the view that those working for Honkers and Shankers are a bit special) but their numbers were being reduced and the epidemic obviously accelerated this. It works pretty well, but, just as I was congratulating myself on my modernity, I recalled that Bank of Scotland introduced Britain's first electronic banking service in, er, 1985.

LOCAL papers are having a tougher than usual time of it, so I take care to buy the one that  serves my town. Let's call it the Very East Hampshire County Gazette. It's genuinely a fine publication, but I would caution that always leading the front page with "stories" under headlines such as "Let's hear it for our NHS heroes" contravenes a basic principle of journalism, which is that news is something that someone, somewhere does not want published.

THERE are, of course, some pluses from the current situation, and not only the reduction in air pollution and the quieter streets. The media may have gone mad over virus coverage, but at least this has meant much less space for the creepy Swedish truant and her followers, for manufactured rows about "gender pronouns" and for tedious articles on "the real significance of Fleabag in the age of MeToo". On a personal note, I feel desperately sorry for those with young children at the moment and am grateful that we started our family when the only pestilences stalking the land were the Spice Girls and people boring on about Windows 95. Finally, in my recent celebration of the fact that homeworking means my suits (unworn) don't need dry cleaning and my smart shoes (ditto) don't need mending, I forgot to mention another sartorial bonus of working from home: I don't need to wear socks, an item of clothing I've never really liked.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press

Saturday PS: Looking to the other side

THE other night, I dreamed I was on a commuter train through Clapham Junction. As an opening, it's not exactly up there with Daphne ("Rebecca") Du Maurier, but at least it actually happened.

It wasn't a very nice dream, given it was a cold, grey morning, of the type familiar to those of us who commuted over decades, and that I managed to get my arm stuck in an automatic door. What's more, it was pretty inaccurate in that this was a Thameslink service and these don't go through the Junction, having sheered off at East Croydon on to the line to London Bridge and points north.

Weirdest of all was the sense that I wasn't really sure why I was there, strange for someone who left London and started commuting in the spring of 1998 and has done so with a couple of very minor breaks ever since. But looking at my diary, it seems I last went to El Smoke on March 13.

What will I do afterwards, assuming the State power-grab known as the lock-down is ever lifted? Given that, so far, I've been able to work reasonably well from home, I suspect the days of monthly season tickets are over, and that I'll aim (as my wife advised me to do during one of the above-mentioned brief interruptions to the commuter life) to get up once a week and arrange to see as many people as possible in the interests of keeping contacts fresh.

I'll go up also whenever invited to return temporarily to the newspaper world (which happened a gratifying number of times this year, before the restrictions) and to see friends. But the days of forking over hundreds of pounds a month to the railway companies are, I hope, over.

In all the pontificating about things never being the same again and the middle classes rather liking working from home, one benefit that gets little play is that it saves you a packet. The dark suits in my wardrobe have been out of action all this time, thus the dry cleaning industry is no longer guzzling large pieces of my earnings, any more than is Southern Railway.

The cobbler community is similarly bereft of the sort of money I would routinely fork over to mend shoes worn down by tramping pavements in the City and West End. Said footwear sits in the hall cupboard, in pristine condition.

Back in 2013, when the newspaper industry dispensed with my services after 30 years man and boy (before the recent in-from-the-cold period), a dear friend from schooldays, herself just made redundant from a very different line of work, and I enjoyed a deeply boozy lunch in Kensington Court. As we said later, we went on to the dole queue in style.

At the time, swaying slightly across the table, she, having been dispensed with shortly before me, confided that the thing to remember was that "going to work costs you a fortune".

How very true. The trick is to be in work but to go to it as little as possible.

1) Saturday bits and pieces

DON'T you love the instant expertise of the journalistic community, not merely in relation to the virus of mass destruction, but all those blithe references over the years concerning topics about which their knowledge is a tad sketchy? Some examples:

- Circa 1970: Prince Sihanouk, Mekong Delta, Lon Nol, B52s bombing Hanoi, Paris talks, peace with honour...

- Circa 1979/1980: Three Mile Island, the China syndrome, nuclear meltdown, (throw in reference to the Mount St Helens eruption if you need to make up the disaster count)...

- Circa 1990: German re-unification...wounds of Cold War finally healed...Trabant cars...exchange of one east-mark to one west-mark...act of statesmanship...Brent Scowcroft...

- Circa 2000:New economy...weightless assets...brilliant young entrepreneurs...need refinancing (i.e. they've run out of money)...

- Circa 2005: Basra...Baghdad...holy city of Nablus...Republican Guard...radical cleric Muqtada al-Sadr...

- Circa 2010: Great Recession...austerity...step back from the brink...excesses of light-touch regulation...things never the same again...

And so to now:...flattening infection curves...herd immunity...vaccine imminent...vaccine not imminent...

IN terms of things "never being the same again", I have written a piece for the Lion & Unicorn website taking issue with the current notion that the official response to the coronavirus (greatly increased public spending, deep intervention in private businesses and so on) will herald a return to the sort of social democratic values largely abandoned after the Seventies. Equally likely, I suggest, is that a new breed of quasi-Thatcherite emerges offering to clear up the "monetary and fiscal anarchy" of the Johnson-Sunak years, slash public borrowing, get a grip on inflation and put a stop to all this nonsense about talking to the trade unions and guaranteeing people's wages. These are the Tories who always loathed David Cameron, saw Theresa May as Edward Heath in a skirt and tolerated Boris Johnson only as the guarantor of Brexit. Could such a counter-counter revolution happen? It did last time.

FINALLY, on the rare occasion I gave it any thought, I imagined I rather liked the woodpecker, a friendly-sounding bird after which a brand of cider was named. That was before I had one living in trees across the road, its trademark rattle constantly audible from the desk at which I am working. Now what did I do with my Webley air pistol...?

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press

 

Saturday PS: Rishi, don't lose that number

APOLOGIES if this appears on screen looking as if produced on a manual typewriter about 40 years ago - there seem to be problems with Typepad, but I can't be sure. May well be my fault.

Anyway, how's the crisis going for you? As suggested before, I suspect one's reaction to the "lock-down" (loathsome phrase) is conditioned by a couple of things. One is age: if you're of primary or early secondary school years, presumably it's all great fun, as were the winter blackouts of 1970-1971, 1971-1972 and 1973-1974 (I was nine during the first and 12 during the last).

Another is general mindset. For those whom Matthew Parris described as having a "don'tyou know there's a war on?" mentality, the lock-down is a wonderful opportunity to boss other people about, or at least to snoop, pry and perhaps shop them to one of those snitch hot-lines set up by our some of our more-than-usually pointless police forces.

In fact, Parris was on the radio a few days ago in discussion with a confused woman who suggested the real problem with irresponsible people was the Government's "two metre rule", because many assumed that, if they observed it, then all was well. What was wrong with thinking that, asked Parris.

She replied that the line had to be drawn somewhere, to which the answer is, of course, that it has been drawn - at two metres. 

Anyway, as the repressive measures enter this fourth week, it seems official opinion is divided, to say the least. Some want to relax restrictions that will prove unenforceable anyway during the warmer weather. Some don't.

In yesterday's edition of The Daily Telegraph, Fraser Nelson wrote that: "One Minister has even proposed adopting a French-style system, demanding that no-one steps outside without papers authorising them to do so." That waste of space should be fired from the Government right now, even if they are Boris (which is highly unlikely).

Ah yes, Boris. Were one of a conspiratorial frame of mind, one may hazard that the Prime Minister's being placed on the critical list (happily, now ended) came at just the right time, coinciding with the first chaffing by the public and commentators against the nationwide house arrest. Who would belly-ache about the lock-down with our esteemed leader at death's door?

Actually, I don't believe a stitch-up is likely, and I certainly don't think the Prime Minister would have consented to go along with one. But, as has been noted elsewhere, his absence has exposed how thin is the available Cabinet talent.

OK, your starter for ten, no conferring. Who is Defence Secretary? I don't know, without looking it up. Health is Matt "stone me, what a life" Hancock, but I know that only because of the virus.  I am pretty sure that the Education Secretary is Gavin Williamson, ex-Defence Secretary. Transport? Pass. Work and Pensions? Not a clue.

It is at times like this that I hope for a swift and strong recovery for Dominic Cummings, right-hand man to Boris Johnson. There are suggestions that he is not a nice person to work with, but my withers are un-wrung. Maybe it will take a non-charm school graduate to start blowing away some of these utterly useless "Ministries", along with deep-sixing quangos such as Public Health England, which has been so spectacularly hopeless in the present difficulties.

There have been suggestions that the post-coronavirus world will be warmer, fuzzier and more consensual than what went before. I'm all for better and more generous welfare and stronger workers' rights (I had to rub my eyes, in a pleasant way, when reading that Chancellor Rishi Sunak had been in, presumably, telephone discussions with the trade unions - long may they continue and don't lose their number).

But that shouldn't mean an easy ride going forward for time-serving bureaucrats. And it certainly shouldn't mean the authorities hanging on indefinitely to "emergency" powers they have recently collected, on the basis that it would be "irresponsible" to give them up. 

In fact, the process of demanding "tough new measures" has yet to run its course. There have been proposals that we should all be required to wear face masks when leaving the house.

Well, that would certainly give the police another displacement activity, along with "hate speech", another excuse not to pursue knife-wielding criminals and the like. Of course, it will be impossible for the force to charge everyone who fails to wear one of those things, but - as with the tele-screen in George Orwell's Nineteen Eighty-four - you'll never be certain that it won't be you they'll pick up on.

Meanwhile, there will be vast amounts of pay and overtime for the face-mask police. What a field day for The Heat.

By the way, this piece on Spiked! about some wibbling corona-nonsense on the BBC is brilliant:

https://www.spiked-online.com/2020/04/09/the-staggering-hypocrisy-of-the-bbc/

Thanks again for reading and a Happy Easter. I'm hoping to pick up Sunday Mass on a video link from my local Church, but with my level of technical competence...we'll see.

dan.atkinson@live.co.uk    

Europe Didn't Work, by Larry Elliot and Dan Atkinson, is published  by Yale University Press

 

Saturday PS: Up with the rations

RATIONING! There are three syllables to stir the loins of a certain sort of nostalgic, even those who have no memory of the privations of Big Two and the even more stringent consumption controls that followed the end of the war.

Fair shares...all in this together...the very opposite of selfish consumerism. That's the theory, anyway.

It is 66 years since general rationing ended and people could actually buy things without needing State-issued coupons, although there were what may be described as one and a half exceptions since then, both relating to petrol. Motor fuel was briefly rationed in 1956 and 1957 in relation to the Suez debacle, and petrol ration books were issued in 1973 during the energy crisis.

In the latter case, rationing was never activated but that was far from clear at the time. My mother cannot have been the only motorist to keep her book of coupons tucked away in a drawer for most of the Seventies.

Now there is talk of rationing again, a response to the virus of mass destruction. Let's suppose it happens. What exactly would be the economics of rationing?

First, put out of your head the notion of people queuing patiently outside Mr Jones the Butcher (or similar) and offering under-the-counter bunce for an extra bit of scrag end of lamb (or similar). Instead, let's go to the world of fiction outside Dad's Army,for a moment, and a psychological thriller from 1950 by Julian Symons, The Thirty-First of February.

It is set in an advertising agency in post-war London and throws an intriguing light on the capital at that time, incidental to the plot. There is a fair amount of casual rumpy-pumpy, but no-one seems to enjoy it very much. More to the point, those clients of the agency engaged in selling consumer goods are, we learn in a one-off aside, very worried about the prospect of an end to rationing.

Why on earth? Because, for example, sweet manufacturers were currently able to sell everything they made from "off the ration". Nothing would be wasted. They could plan ahead to produce only what could be shifted and would be sold to a market where demand had been artificially restricted. But post-rationing...?

So, lesson number one is that big business, far from comprising lions of free enterprise straining at the leash to slip the bonds of rationing, in many cases rather liked it.

But the consumer hated it, right? Mm. That depends. Provided rationing were restricted to the essentials of life, and that disposable income held up, then rationing could, paradoxically, free up cash for fripperies.

Don't take my word for it. Here is Britain's official submission for financial aid from America's Marshall Plan in September 1948:

"The difficulties of the present economic position do not present themselves in an obvious form to the British public. Unemployment is barely noticeable; jobs are apparently secure; industry is finding it easy to earn profits; wages are relatively high; the necessities of life are fairly distributed; and because they cannot buy many necessaries, many people have money which they can spend on things which they would otherwise regard almost as luxuries." (My italics)

So this rationing lark is a bit more complicated than it may appear, in one way at least. in another, it is simply a formalisation of economic life as it is lived at all times, in which the price mechanism allocates resources ("rations them") automatically. Indeed, in both 1973/1974 and the 1978/1979  winter of discontent, in a sort-of price/rationing hybrid, Ministers left it to individual petrol retailers to pick and choose among different types of paying customers - blackboards would indicate, for example, three gallons for doctors and nurses on call, two gallons for regulars and one gallon for passing trade.

I hope we can avoid rationing. If the objective is fair (or fairer) shares for all, then better cash benefits for the less well-off are the way forward, not State-mandated helpings of consumer goods, distributed via (doubtless digital) ration books with the quotas enforced by the sort of officious shop assistants who probably always wanted to join the police but were rejected.

1) Bits and pieces on Saturday

RECENTLY, I suggested here that, after the heavy rainfall at the start of the year, even our useless water companies could not run out of H2O. Oh yes? This is from The Daily Telegraph on March 25:

"Parts of southern England could run out of water within 20 years as a result of global warming, Britain's spending watchdog has warned.

"Drier weather is expected to cut supplies by up to 480 million litres per day, the National Audit Office (NAO) said, while efforts to extract less water so wildlife can flourish will cut supply.

"It said water companies must fix the roughly three billion litres of water - 20 per cent of the total supply - lost to leaks each day, while consumers and businesses needed to cut their use." (Sure you've got enough "cuts" in those two sentences, Telegraph types? Maybe a couple more to be safe?)

SAMIR Shah, ex-BBC big cheese now an independent programme maker, is on fine form in the April edition of Standpoint magazine, excoriating the hysterical media coverage of the coronavirus that seems designed to spur Jim Hacker-style Ministers into ever more extreme measures. It's a brilliant piece. but I'm not sure about this passage: "Crises sell. People buy papers, watch the news and listen avidly to radio to get the latest news on this advancing apocalypse." Do they? I'll be interested to see the figures for circulation and for broadcast audiences when the dust has settled. Why would anyone spend time consuming news when they know what it will say? Roughly: (1) NHS staff are heroes, (2) Britain has rediscovered the Blitz spirit, (3) A selfish minority is undermining the anti-virus effort, (4) c'mon Boris, get your act together, and (5) NHS staff are heroes (again). 

FINALLY, roll on the end of all this and the re-opening of two institutions that are key pillars of a civilised life. Public libraries. And public houses.

Thank again for reading and enjoy the weekend.

dan.atkinson@live.co.uk    

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press

 

 

Saturday PS: The worm turns?

DURING the "phone hacking scandal" of 2011, during which it emerged some journalists had, allegedly, been listening to the voicemails of people in whom they were interested, I worked for a newspaper group that had not been and never was implicated in any of this.

That didn't stop a number of my colleagues taking the whole thing terribly seriously and "responsibly". Hacking wasn't nice, certainly, but I didn't quite see how listening to (in the main) celebrities' answering machine messages was the crime of the century.

Coming into work one morning, I was greeted by someone who had taken  the opposing view with the information that The News of the World was closing for good as a result of the scandal. Did I, he asked, still believe it was a fuss about nothing?

He was, of course, begging the question, in the true sense of the phrase. The reaction (in this case, shutting the Screws) was, he implied, proof of the seriousness of the original actions (phone hacking). I saw it as along the lines of being told that of course we were right to send troops into Iraq because, if it weren't right, we would not have done it.

I had a letter from my local hospital this morning, telling me that a neurology outpatient appointment due in May for which I have been waiting since November will now take place over the phone. "We have not taken this decision lightly," I am told, seven words that could become the abiding motto of the official response to the coronavirus, said virus, naturally, providing the rationale for this move.

So far, "this decision" has involved crashing the economy, shutting down society and family life, and throwing huge numbers of people out of work. Not to mention piling up a vast amount of debt and giving the police (well, of course) "tough new powers" to tell people what to do.

Until this week, most of the media seemed fully signed up to the "war" on Covid-19, with one or two honourable exceptions, notably Peter Hitchens in The Mail on Sunday. But at last, the worm seems to be turning.

On Monday, Tim Stanley wrote in  The Daily Telegraph: "There might be strong arguments for bold action and we all want to help out, which is why some journalists have tempered our language. But we cannot suspend our critical thinking just because there is a crisis."

In the same paper on Wednesday, Philip Johnston wrote: "Amid a national economic shutdown and restrictions on personal liberty the likes of which we have never seen, it must be asked if we have embarked on the greatest series of policy blunders in recent history." He added that Donald Trump was right to say that we cannot let the cure be worse than the disease.

In The Times on Thursday, Gerard Baker wrote: "Economists' estimates for the annualised growth rate for the next three months envisage a contraction of as much as 40 per cent. To get a sense of the speed of the collapse, remember that last month the US recorded the lowest unemployment rate in 50 years: 3.5 per cent...One alarmed senior executive said this week: 'Millions die every year from varying causes. Are we to stop the world for everything?'"

There were other straws in the wind elsewhere. 

We are now about a third into the three-week period after which Boris Johnson said the "lockdown" (a loathsome phrase borrowed from the American prison system) would be reviewed. This timespan was wisely chosen, as I suspect 21 days is the absolute limit for tolerance of a ban on most people seeing anyone other than those they live with and the odd shop assistant, and that compliance will start to fray after that, "tough new powers" or not.

More broadly, it is always wise to study the form, and in the four major crises in my lifetime, the overall performance of the British State does not inspire confidence. I won't count Cuba, as I am too young to remember, and it was really an American affair.

Here we are:

• Northern Ireland, 1969 onwards. The stroke of non-genius here was to send in British forces to implement a security policy drawn up by the same regional politicians many considered responsible for the crisis in the first place. Only after Bloody Sunday in 1972 did Westminster take direct control, by which time 20 years of conflict stretched ahead.
• The energy crisis, 1973-1974. Probably the closest parallel in some ways to the present situation. Although the Arab oil embargo had combined with the miners' strike severely to squeeze fuel supplies, the Three Day Week may well have been un-necessary, a piece of theatre designed to bring home to everyone the seriousness of the situation. The most serious recession since the war followed shortly. Remind you of anything?
• September 11 2001. An attack on America that was always going to involve the UK, not least because a big chunk of our armed strength was at the time on manouevres in the Middle East, in (friendly) Oman. The sensible thing would have been for our US friends and ourselves to hit the Taliban hard in Afghanistan, declare victory and then vamoose. Instead, we embarked on two lengthy wars (the other in Iraq) in both of which, I am afraid, we were defeated.
• The financial crisis, 2008 onwards. I am biased here, because both Gordon Brown (when Chancellor) and his successor Alistair Darling were very decent to me during my 12 years as a full-time economics correspondent. But I think it's fair to say Britain was a policy leader in terms of rescuing the banking system, while others followed (I won't say the US Treasury, but you feel free). So there we are. Hey! One out of four ain't bad. Oh, er, hang on, yes it is.

1) GNUs and other miscellany

ONE truly terrible idea doing the rounds recently has been for a "Government of National Unity", in which all the nice sensible people will get round the table and decide what is good for the rest of us.  A great strength of Britain's parliamentary and judicial system is the recognition that there is almost always a yes and a no to each question and both sides of the argument should be tested, hence the "loyal opposition" and defence barristers. So, sorry, but GNU off.

IN the film All the President's Men (Warner; 1976), the hotshot reporters (Dustin Hoffman and Robert Redford) are upbraided by Washington Post editor Ben Bradlee (Jason Robards) over a proposed article that, in Fleet Street slang, didn't stand up. "You haven't got it," Bradlee tells his hacks. "Get some harder information next time." Last week, I wrote that "whenever I see a court defendant charged with any offence containing either the word 'attempted' or the phrase 'conspiracy to', I suspect the Crown just hasn't stood up whatever is the substantive crime in question". Come Monday, and former Scottish First Minister Alex Salmond was cleared of all 12 charges of sexual assault including, yes, attempted rape. 

JUST remind me of the official advice/guidelines/decrees on "tackling" the virus. We are to stay away from the vulnerable, especially older people, except when we are being urged to be good neighbours and help them in any way we can. We are never to hoard or panic buy, but "stocking up" for the lockdown is fine. We are to stay six feet away from each other, something impossible on the severely reduced public transport services that those who cannot work from home have no choice but to use. Well, that all makes perfect sense.

AN excellent piece by Fraser Myers on Spiked,  headed: "Why are so many journalists clamouring for a police state?" Never understimate the bully worshipping tendency of journalists, and keep a special eye/ear on the BBC News, most of whose staff are essentially civil servants with press cards. 

FINALLY, on "begging the question", possibly the most misused expression in the language. My schoolboy edition of Collins Gem Dictionary of English Usage (1971), still in front of me after all these years, defines it thus: "Strictly it means that he [the person with whom you are arguing] is arguing from an assumption that is itself open to argument, or is drawing unjustified conclusions." The example given is of someone saying that of course the Prime Minister is a good leader, otherwise he would not be in the job.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press