Category: Finance

Bank of England Chief – “Sod you lot, I’m alright, Jack”

Bank of England Chief – “Sod you lot, I’m alright, Jack”

Okay, Andrew Bailey didn’t quite say that, but I think that is the essence of what he said.

In a nutshell, he’s gone on record warning about inflation; energy prices, food prices etc. And he’s also said again that workers shouldn’t request pay increases to help dampen the inflation increases. By this, he means you need to suck it up and suffer in silence.

I guess this is another one of those “We’re all in it together” moments. Except we’re not. We’ve already seen that.

MP’s received a 2.7% pay increase last month, this is approximately £2,200 per year and was done after the first time that the Bank of England asked workers to not request sizeable pay increases.

2.7% of the average wage as at February 2022 is £780. Quite a difference. So, Joe Average would get £1,420 less than an MP with the same percentage increase.

Oh, and Mr Bailey earns £570,000.

The Word On Everyone’s Lips; Inflation

The Word On Everyone’s Lips; Inflation

I’ve been meaning to put my two penneth in for a few months now, but events keep happening, things keep changing, I’ve been busy. It’s pretty dynamic out there, but the one thing that is certain, the price of everything is on the up, it’s just a matter of how much. Different things are increasing by different rates for different reasons; there’s the direct costs or input costs for the physical product, there’s distribution costs, there’s scarcity which pushes the cost up, and in the worst cases, a combination of all of the factors.

At work last week I tried to order a couple of boxes of plain copier paper, each box comprises of 5 reams, and a ream is 500 sheets. I’ve been buying these for the last decade for somewhere in the region of £10 plus VAT per box and the last time I purchased was December 2021. This time the cheapest I could get was £21.50 plus VAT, a jump of over 100% in five months. The supplier has largely attributed that increase to scarcity and a quick check with other suppliers revealed the same.

We’ve all seen the jump in the fuel prices in the UK with diesel in the £1.70-1.85 range on average, this is despite the government cutting fuel duty and the barrel price of crude dipping.

We’re being warned that domestic energy prices are likely to jump again by another 40% in October 2022 just in time for the cold weather and dark evenings. I’ve noticed that the wholesale gas price has decreased, so I cannot work that one out – further investigation required.

For those of you with mortgages and other debts, interest rates are on the up and show no sign of stopping; the rate of increase is currently around 0.25% per month and members of the Bank of England Monetary Policy Committee (MPC) that set the rates are starting to lean towards higher monthly increases. Only this month three of the nine members wanted to increase rates by 0.5%. To put this into perspective, if you had a £250,000 standard variable mortgage and the interest rate is currently 2%, your monthly interest payment for that debt is £417. Now, if that interest rate increases by 0.5%, the monthly interest is now £520 a month, an increase of over £100 per month, or £1200 per year. And that increase could take place in a month. And on several months in a row.

Regarding rented accommodation, I’m starting to hear a lot of anecdotal accounts of landlords increasing rents as their tenancy agreements allow. One local case that I’d heard of recently was of a mother with three children in a three bed house renting for £950 per month being told by the landlord that the market rate for the property was £1450 and that this would be the new rate of rent. That’s an increase of over 50%.

Food pricing is concerning too. Around 80% of the UK’s food is imported which makes us particularly susceptible to global price changes, supply chain disruption and scarcity. Farming UK is a consortium that represents many of the UK’s farmers. Its inflation index showed a 22% increase in input costs to September 2021, and 23% to March 2022. These increases have not yet fed through to the consumer, so that is yet to come.

I’ve been concerned for a while that we’re heading into a perfect storm, things are already horrible for so many currently and it looks like things are going to get far, far worse.

When peoples disposable income reduces or disappears completely because they cannot afford to meet the cost of living, whole industries will start to collapse – hospitality, entertainment. With this, unemployment will spike, there’s increased automation of jobs, it’s looking awful and I cannot comprehend that magnitude of what’s about to happen. There are too many variables and I just cannot process it.

And all the time that this has been unfolding (and if it’s been abundantly obvious to me and many others), our government has either been sleep walking into the situation, or wilfully ignorant of it. Or should that be criminally negligent? I don’t suppose it matters too much, whatever they do, whatever label we apply, they are wholly unaccountable and appear to more non-stick than Teflon Tony himself.

Be safe, be kind and look after one another. The government certainly won’t look after you and it’s going to be awful out there.

Bank of England Base Rate Increase?

Bank of England Base Rate Increase?

Wow, here I am in the first week of May 2022 and Boris Johnson is still our Prime Minister, just. I cannot believe that he’s still hanging on in there, he obviously doesn’t get embarrassed. I guess few of his ilk do and it reminds me of Shiv Roy and her unforgettable line “We don’t get embarrassed”. If you know, you know.

Anyway, moving onto business.

The Bank of England (BofE) Monetary Policy Committee (MPC) meet tomorrow, I think everyone is expecting there to be a change, and realistically, it’s only going one way, and that is up. I’d expect 0.25%, but we could see more, who knows.

One lender got a little over-excited and announced a “change” a day early. Yup, you, Halifax.

They then realised their mistake after a fair few hours;

However it goes, I hope that whatever the changes and how they affect you, that you you keep safe and solvent. The next year or two has the potential to be very ugly….. sending you my very best.

Vodafone, HMRC, Harnett and the Whiff of Impropriety

Vodafone, HMRC, Harnett and the Whiff of Impropriety

Over the last couple of years we’ve become increasingly used to people in positions of power in the UK government doing naughty things and not being held to account. There’s one incident that goes back over a decade that really gets me upset and if you are a UK taxpayer, then it should do the same to you. There’s a lot more detail than I am going into here, but this should give a fair idea of what has gone on;

Vodafone is one of the darlings of the FTSE and has often been in the news for its tax dealings. It is a client of an accountancy firm called Deloitte. There is one incident that I’m going to focus on and this happened in 2010 when a man called Dave Harnett was the Permanent Secretary for Tax at HM Revenue and Customs.

Vodafone owed over £7bn in tax at this point, which is of course a considerable amount of money. To put that into perspective, according to the ONS, the mean gross annual salary for full time employees in the UK for 2010 was £25,879. From that figure £6,097 tax and national insurance would due (this is deducted at source, the worker has no choice in the matter), and the employer has to pay £2,580 on top of this; a tax for employing the worker. So, for each person earning this wage, theirs, and their employers contribution totals £8,677. Vodafone’s tax bill is due on profits earned, and is equivalent to the contribution of 806,730 average UK wage earners tax contribution based upon my quick calculation. That is a considerable amount of people.

Now this is where things take a turn for the worse if you are one of those people that lose approximately 20% of their earnings to tax and national insurance at source without having any say in the matter. Vodafone play by a completely different set of rules, and it appears that they are assisted by the very people paid to stop them avoiding their tax bill.

During the 2000’s Vodafone was locked in a long running dispute with HMRC regarding the amount of tax that it owed, in April of 2007, the Director of HMRC’s Large Business and Customer unit was a man called John Connors, he defected to Vodafone in a move that stunned his colleagues leaving many feeling betrayed.

Dave Harnett and John Connors used to work closely together at HMRC, and as the dispute evolved, Harnett changed the HMRC team working on the Vodafone case, instead installing a team that he deemed to be more flexible. This team negotiated a settlement with Connors in 2010 whereby Vodafone would only pay £1.25bn instead of the £7bn.

In July 2012 Harnett retired from HMRC, and less than a year later started working for Deloitte (Vodafone accountants, see second paragraph above) in a very lucrative deal. At the time, the Prime Minister, David Cameron approved his appointment subject to six caveats, one of which was that Harnett did not draw on privileged information from his time at HMRC. I don’t really think that this is the problem, the damage had already been done.

Deloitte commented at the time that Harnett will work as a consultant to them advising foreign governments and tax administrations, primarily in the developing world as he has significant experience in advising such countries on the development of effective tax regimes.

That’s a bit of a giggle, really, isn’t it?

Why I Think Tesla Is Over-Valued.

Why I Think Tesla Is Over-Valued.

In the last week or so, Tesla hit a market cap of $1 Trillion USD which is a staggering figure.

This means that it is worth more than the combined market cap of the nine largest car manufacturers globally, in the month of October, it added the equivalent of another four Ford Motor Co’s which is incredible, and a testament to Elon Musk. But is it really worth it?

I don’t think so, for a number of reasons. I’ve felt this way for the last year or so, I think the tech is flawed. I’m not going to dwell on the financial side of things here, everyone is doing it. The valuation simply doesn’t stack up when you look at things like production capacity, number of cars sold etc.

The bullet points for my thinking are;

  • The battery materials are finite, there is simply not enough lithium in the world to replace all of the internal combustion engines with battery. And the way that the lithium is obtained is a huge environmental concern.
  • Not only are battery materials finite, they are nearly damned impossible to recycle currently. There are huge environmental concerns.
  • Competition from China is hotting up, they are catching up fast, their tech is good, their quality is better, and their price point will be lower. Tesla are renowned as being expensive (the margins are huge), and their build quality is renowned for being sub par.
  • And finally, and this is the final nail in the coffin for that gravity defying valuation, internal combustion hydrogen is the way forward, not battery. The energy for hydrogen can be generated using renewables and the only thing that comes out of the exhaust pipe is steam…. no getting kids to mine lithium, no piles of unrecyclable batteries, no brainer.

I’ve long discussed with friends (Steve C, Russ, I’m talking about you) about the benefits of hydrogen as a replacement for fossil fuels. I think maybe even as far back as 2008. Back then, even we identified that it would make sense for renewables to be used for creating hydrogen. All that is required is electricity and water. Imagine for example the areas of the Middle East and Australia that receive enormous amounts of sun every day, they could be hydrogen producing powerhouses. This could be done with PV arrays (solar panels), and the hydrogen generated stored and shipped. Heck, for the Middle East, this could easily replace oil, the infrastructure is there. And under these PV’s, crops could be grown as these areas are currently inhospitable and dead areas, barely anything grows or lives, but an environment that could sustain agriculture could be created. A double benefit.

With renewables such as solar and wind, one of the biggest issues is the storage of energy generated. With hydrogen, no longer would you require batteries or other cumbersome solutions, you could simply create hydrogen and ship it in a similar way to gas or oil.

Toyota in Japan has just signalled that it is starting to work on hydrogen combustion engines. Currently they are big into hydrogen fuel cell cars; these are cars that use hydrogen to generate electricity to power the motors. The problem with these is that they are extremely expensive. Their move is an interesting and significant one and I think it signals the start of a change away from fuel cell and battery driven vehicles. At this point Tesla should sit up and take note, very quickly, as should their investors.

Corporate Property Ownership in the UK.

Corporate Property Ownership in the UK.

I’ve been wanting to write this for a few months now but have been hampered by a few things. Particularly, what I wanted to write would descend into a frenzied rant lacking focus and smacking of conspiracy theory. Hell, it may still happen, but here it goes…..

My first dilemma was whether to write an expansive, comprehensive account of how I view things with multiple references, or as a shorter summary, a condensed, readable account. I’ve opted for the latter. Nowadays, we all seem to have the attention span of a gnat, and the likelihood is that nobody will read this, and if they do, I need to make it shorter and to the point to accommodate this. If it piques the readers interest, they can go Googling and educate themselves further. The information is out there – it’s readily available. Maybe then, the reader can make a more informed opinion. Any feedback on findings would be gratefully received.

I’ve been keeping an eye on economic indicators for most of my adult life, for some sad reason it interests me – and I’m starting to see some worrying trends that I wanted to share.

We’ve all seen the “Great Reset” stuff all over the media, and heard multiple Western leaders screaming “Build back better!” in the wake of the COVID issue. Boris Johnson even managed to deliver it at the G7, albeit a mashed-up, bumbling version with his counterparts barely able to stifle their sniggers.

This, in the light of what I am about to expand upon, makes me extremely worried for the future, not so much for my generation, but for the younger generations. I think Britain, and the West is about to take a particularly unpleasant turn for its citizens.

The Great Reset apparently is, according to the World Economic Forum (WEF) an opportunity for rebuilding society and the economy in a sustainable way post COVID. There’s an awful lot of people (namely the Plebs – you and I) that aren’t entirely happy with this. They (the Plebs) are viewing this as a way of the “Elites” i.e. people with an awful lot of money, power and influence such as the likes that attend Elite only clubs such as Bilderberg and The Trilateral Commission to continue with World Management avoiding democratic process. Interestingly, Kier Starmer, sorry, Sir Kier Starmer, the leader of the opposition to the UK Government is a member of the Trilateral Commssion. He’s the only MP in that particular club, and the club itself? Well, worth some reading up on, it can be quite concerning, as can Bilderberg.

During COVID, the Federal Reserve in the States and The Bank of England in the UK have hurriedly been printing and creating money like it is going out of fashion to prop up their spending. The figures are huge, and it is worth further research. The Fed’s exercise has been nothing short of mind boggling, and in the UK, the figures are crazy, okay, not up to the Fed’s levels of craziness, but still extremely concerning. As we have seen throughout history, creating money creates inflationary issues – think Germany in the 1920’s and more recently, Zimbabwe. It all gets a bit silly when a loaf of bread costs a few billion of whatever Disneyland Dollars your central bank creates.

What happens next is where it gets really sticky, and I hope that I am completely wrong, but I don’t think so.

Okay, so, the government prints a shed load of money, inflation spirals out of control, what is the government to do? They increase interest rates to ‘slow things down’.

Over the last couple of decades, us Plebs in the West have got used to low interest rates creating extremely cheap money, almost lulling us into a false sense of security (cue conspiracy theorists). In many Western economies, the domestic housing markets are going silly; there are plenty of accounts whereby demand is outstripping supply and prices are rocketing. Essentially, people are paying far more for their houses, and these were already considerably overpriced when you compare them to historical norms. Bidding wars are erupting, and there are plenty of anecdotal accounts in the UK of between ten to fifteen buyers competing for one house. All of this is being fuelled by cheap borrowing of money and it isn’t slowing down. Yet.

Those of you old enough to remember in the UK during the early nineties will recall the high levels of inflation resulting in interest rates exceeding ten percent. In some cases, the mortgage rates hit 14-15%. If you’ve got a mortgage, quickly run the amount you owe with an increased interest rate through one of the online calculators.

I worked for a retail bank at this precise time, and we were repossessing houses daily. It was hideous. Mortgage payments were spiralling, people fell into arrears and subsequently lost their family homes. What was previously affordable, became unaffordable. The carnage has left me with indelible memories and cost me a lot of money; when I mortgaged, I fixed the interest rate for the term, so I knew exactly what I was having to stump up each month. The rates dropped to bugger all and I was paying over the odds and could have saved myself thousands if I had been on a variable rate. But at least I felt secure in the knowledge that I could I afford to cover my borrowing.

Now, let’s add another layer. You will likely be aware of the onslaught of Cryptocurrencies. These clever things are exactly what the Central Banks (The Fed and Bank of England particularly) don’t like. It’s decentralised finance; something that they have absolutely no control over. In the UK, many banks are blocking people trying to buy into crypto under the guise of “there’s potential for criminal activity”. Essentially, when the money leaves them and goes into crypto, it’s very difficult to track and there’s a risk of it never coming back.

In China, they have recently signalled their distaste for Decentralised Crypto and there has been a mass exodus of people and money involved with it. Now, the Chinese government is bringing out its own crypto currency and is trialling it in a few areas. The big difference being that this is one that is centralised – ie. Completely traceable and that they maintain control of. It’s called Central Bank Digital Currency (CBDC), worth a Google. In the UK, the Bank of England has signalled its intention to bring out a similar currency dubbed Britcoin, operating on a similar basis to that of the Chinese one.

So, a centrally issued cryptocurrency. This could potentially mean that your account for your new Britcoin is now held with the central bank, in the UK’s case, the Bank of England. COVID and the chance of transmission means that cash is on its way out. That then means that they, and government are fully aware of everything that you do, and that the likes of the retail banks, such as Lloyds, HSBC et al are no longer required. Seems like a long shot? Read on.

Imagine a scenario whereby retail banks in their current guise become largely irrelevant, they’ll likely need to diversify.

In the UK earlier this year, Lloyds Bank Plc signalled its intention to become a large private landlord, despite the potential for damage to its brand – it doesn’t take much working out. Imagine upset tenants in the queue. But this shift, despite the potential for serious PR damage is a seismic one. Regardless, they’re pushing ahead. Why?

Now, mix in people being prevented from getting involved in decentralised crypto and forced into the CBDC’s detailed above. Another thing to Google for would be about the role that the CBDC is playing in China with regards Social Credit. People being prevented from buying plane tickets to fly within the country. Imagine having an account with a central bank/government and their being able to dictate where and on what you spent your money. If you aren’t pro-Government, you could find your money evaporating. You play ball with the Government, you get a favourable interest rate. It looks like it is starting to happen over there.

Imagine in the West, spiralling inflation, interest rates, repossessions and banks amongst other corporates now becoming landlords as they snap up properties from the repossessed. Essentially a shift from private property ownership to corporate ownership and Britain being a nation of tenants.

Corporate ownership of domestic property is starting to happen now, particularly in the States and looks like it will accelerate there and in the UK. Have a Google for subscription based housing. It’s a thing.

Historically in the UK, home ownership is considered important. In recent years we’ve heard “millennials prefer renting” or that they “prefer to not own anything”.  We hear it time and time again. Why the indoctrination against owning your own home? Where is this coming from? The only thing that could halt this march and rebalance things in favour of the Plebs is government.

You think that the government has your best interests at heart? Think again. Just look at the way the UK government has been proven to act in the best interests of its own members, Matt Hancock as been found as acting unlawfully with regards awarding contracts, and yet he’s still in office, untouchable. No prosecution. Now, you, a Pleb, you try acting unlawfully and see where that gets you. And it doesn’t have to be for millions/billions. Just a couple of quid. Don’t do it, kids.

Billions of this created money has found its way into the companies of many MP’s, their friends, their families. It’s all on public record. It’s all out there to read, for how long, I don’t know. These things have a way of being erased, the joys of the digital era.

They (MP’s) are generally regarded as being a self-serving bunch on every level and have been often shown to not give a care about their electorate, the Plebs. Their loyalties often sit with big business, take a look at former PM David Cameron and the recent lobbying scandal. He stood to trouser £60m if he’d pulled it off. And that’s only one of them; many appear to be similar. If the banks and corporates decide to get involved in buying up domestic property, they’ll likely get their way, helped by their friends in Government.

This all takes me back to the “Great Reset” and “Build Back Better”. Worth a Google.

EE and Faversham in Kent

EE and Faversham in Kent

Over the last few weeks (since the 12th January 2021 to be precise), the mobile network coverage in Faversham on EE has been terrible. Dropped calls that were never received, unable to place outgoing calls at times, having to resort to Wi-Fi calling. Wi-Fi calling is really a cop out – this kicks in when the mobile network is that poor in an area that your handset locks onto a Wi-Fi network and routes the calls via a fixed line broadband connection instead. Essentially, you are paying for a mobile network that you are unable to use, you are propping it up by routing calls through your broadband which you are also paying for. Not good.

You’ve probably seen a lot about EE on TV and in the press. This is a lift directly from the ‘About’ section of their website;

“Our vision is to provide the best network and best service so our customers trust us
with their digital lives.”

Lovely. If only it were true.
Have a look at this link on their support site;

The gist of it is that EE were aware during 2020 that their existing mast site in the town would have to be closed because the landowner was developing the site. On 12/01/2021 EE were instructed to remove their kit, which they have done, resulting in the decrease in service. If you can call it service now.
At best, this will not be resolved until the end of February. I’m not holding my breath.

My post on the EE support site that I have linked above is;

I don’t feel that this is acceptable. I blogged about it at; EE and Faversham in Kent – The Slayford

Why can’t you roll a mobile base station in, such as the ones that you turn up to festivals such as Glastonbury with?

In the interim, what compensation are you offering? I have several business mobiles with EE. At times they are useless and have been since the second week of January. 

Faversham had a population of approximately 20,000 a decade ago. There are four large mobile networks, so, let’s just say that EE’s got one out of four residents as a customer, that’s 5000 people. Multiply it by a conservative £30 a month. (Each of my handsets is on approximately £50 a month, so I am being generous.) So, 5000 customers multiplied by £30 a month gives £150,000 gross revenue for EE. This ‘service’ that you provide is down for two months at best, by the look of it. So, you have charged £300,000 to your customers, and not really provided them with much of a service. I’d wager that you are actually getting more than the £300,000 in this period.

My earlier question regarding compensation was a bit of a rhetorical one – I already know the answer. Nothing. You have told people that I know have telephoned to complain this. That they will get absolutely nothing. This looks a little bit obscene considering my rough calculations in my previous paragraph……

How have you managed to arrive in this position as a company. This is either cost cutting or ineptness. Which is it?

Being a paying customer, that is not receiving the service that they are paying for, that will not receive compensation, I would be grateful if some of my money was spent on answering, in detail, the points above. Surely it is the least you could do? Right? If not just for me, maybe the other 4,999 users. How about the patient three listed below too?

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