We told you so

As I’ve mentioned in the past the Tories are ideologically committed to privatising the NHS, after all persist the thought of the plebs getting decent health care! Of course outright privatisation is likely to be opposed. The lib dems certainly won’t support it and I suspect focus groups where they’ve floated the idea likely resulted in the Troy drone who asked the public would have had need for NHS services afterwards (to remove clipboard and pen from certain orifices :)) ).

So the Tory plan has been to act more subtlety. Firstly they have cut the NHS budget in real terms (while on paper its up, when you factor in inflation, an ageing and growing population, etc. effectively its being cut). Secondly they have sought to carve away chucks of the NHS services and privatise them.

One of those services was the NHS 111 non-emergency help number. Their plan was to have private companies bid for these contracts and run these services locally on a for profit basis. However, this has largely been thwarted by the fact that the bulk of services are being run by local ambulance trusts. Furthermore the largest provider, NHS Direct, is now looking to pull out of running contracts across a third of the country.

A large chuck of the problem for NHS Direct has been that more calls are coming in to their centre’s than they’ve been expecting and its taking longer to process them. Projections from NHS direct’s own accounts suggest they are loosing money on every single call they receive and are looking at a deficit of £26 million over this financial year.

And if anything we can credit NHS direct for at least putting their hand up and saying that they cannot cope. For as many reports indicate the 111 service is beset with flaws and problems. Channel 4 just broadcast a Dispatches programme that used undercover reporters and showed how many of these 111 service providers are struggling to cope, in particular those covered by the private sector. Indeed it is not an exaggeration to say that lives are being put in danger.

Inevitably, the problems highlighted here mirror exactly what has happened any time the government has privatised a public service. Chaos has reigned, service quality has nosedived and costs have soared. If this is what a privatised NHS looks like, you can count me out. And anyone even thinking of voting Tory next election, all I can say is don’t plan on getting sick…ever!

What planet are these people from?

In the US the Republicans/Tea Party are trying to slash the US budget in a manner that would make Osborne look like Peewee Herman v’s leatherface from the Texas chainsaw massacre.

For example, they are attempting to cut a host of welfare programs just as deprived areas of America (such as Detroit) are going bankrupt, with many Amercians still living in tent cities. They want to slash subsidies to public transport (to an extend that it may bring down Amtrak, ending US rail passenger travel across most of the country), cut a third off the EPA’s budget and end subsides to renewables (just what’s needed with another oil rig exploding in the gulf of Mexico) and slash spending on US army veterans (how patriotic, I wonder how many will be stupid enough to sign up next time the GOP starts a war for oil?).

I could go on, but perhaps what’s more relevant is what they aren’t prepared to cut. Naturally the defacto subsidies to fossil fuels, which as I described in a prior post vastly exceed those to renewables, of course remain. The US military budget remains intact and they are not only still committed to a Moon base but also want one on Mars too! 88|

One has to legitimately ask which planet are these guys living on? :crazy:

I mean I’m actually pro-space exploration (watched too much Star Trek as a kid). But even so, life is about priorities. If the US deficit crisis is so damn serious as they claim, I’d rather spend that money doing something important, like taking care of those Detroit pensioners or looking after US army veterans or protecting the environment or stopping Florida or New Orleans being swept into the sea next time a big hurricane comes to shore.

Furthermore, as I touched on before (with regard to Newt Gingrich’s support of a Moonbase) one has to consider whether such proposals are actually achievable or just pure fantasy.

The Republican party are in short, so far removed from the reality of day to day life in America it is difficult to comprehend.

Wonga whacking

The predatory loanshark outfit Wonga.con….sorry .com ;D come under attack last week from two directions, although unfortunately both misfired somewhat.

Firstly a Geordie’s Untied footballer refused to wear his club strip with Wonga as a sponsor, as he said that Wonga’s practices (charging of an eye gouging 5,853% APR) conflicting with his Muslim believes and the Islamic ban on Usury. Unfortunately, him being caught in a casino (Islam also looks down on gambling also) didn’t exactly help him to hold the moral high ground :-/.

Then the Archbishop of Canterbury waded in claiming that he hoped to destroy Wonga. Now while I had visions of him leading an angry mob by torch light to Wonga’s corporate headquarters (difficult given that its likely some web address in the Cayman Islands or something) and burn the heretics at the stake while holding hands and reciting Psalm 23…instead his plan was to promote and encourage people to use credit unions… :no:

Of course a financial link being then established between Wonga and the Church of England hardly helped him hold the moral high ground either. Wonga have of course been fairly quiet about all of this, but then again if you’re critics decide to shoot themselves in the foot and undermine themselves why say anything?

Don’t get me wrong I’m not a fan of Wonga. While I’m somewhat sceptical of many religions, I certainly understand why, whoever wrote the Koran, Bible or Torah (I’m still waiting for them to find the missing first page), chose to include this ban on usury. For usury is not only morally dangerous (companies like Wonga rely on the fact that some debtors will default to function) but it allows one to make money off the labour of others while doing very little. Inevitably if everyone tried to make money the easy way nobody would be out there making stuff or growing crops or doing the hard jobs and society would fall apart.

Of course there is usury (a bank or credit union giving a mortgage to someone or extending a line of credit to a small business) and then there’s usury (sub-prime mortgages, market speculation, short selling, loan sharking). But part of the problem here is that at various times all three religions have found loop holes that allowed usury to occur, by following the letter of the Bible/Koran/Torah while perverting the original meaning of it (ya, I’m sure god won’t mind that one little bit! After all he only flooded the world once and threw Adam & Eve out of the Garden of Eden over one tiny apple, ya that sounds like the sort of guy who forgives and forgets!). This apathy from religions created a massive moral vacuum and the inevitable results have been for some very greedy people, such as those behind Wonga or the ponzi scheme we otherwise call “the markets”, taking things to an extreme.

And I often find it odd how religions can be so apathetic to the goings on in Wall Street (thou shalt not covet thy neighbours goods?) or President’s starting wars (thou shalt not kill), but some woman who was raped wants an abortion or a gay couple want to marry or some doctor wants to cure cancer with stem cells, oh, somehow that’s going too far…or is it that religions picked on easy targets rather than going after the real hard core sinners?

In short what the Archbishop is doing is trying to slap a plaster on a dam that burst sometime ago. If the church wants to suddenly take a stand on usury it needs to be clear what that is, what it considers acceptable and what is not, possibly forming an alliance with other churches (Pope Francis is hardly a fan of neo-liberal economics either) to oppose it. Then maybe we can take him seriously….or just bring back the Spanish Inquisition!

Not lost in Translation

The Tories, rather naively asked many countries for their opinion regarding the UK pulling out of the EU. Inevitably many countries declined to comment or issued polite non-committal press releases. This is hardly surprising, its generally against diplomatic protocol for countries to interfere in the internal works of other nations. It’s sort of like someone handing you his baby and asking you if you think he looks ugly. Are you going to tell him to his face what you really think?

However, the two countries who did decide to offer an opinion were pretty clear that they thought it sounded like a crazy idea. America has seldom been quiet in making clear its worries of the geopolitical and economic implications of the UK leaving the EU. However over the weekend, Japan gave us their two cents and they expressed deep concern, warning of the potential for tens of thousands of job losses.

Japan’s response is something of a break with diplomatic protocol, however the Japanese PM Shinzo Abe was in the middle of an election and he is known for his slightly unorthodoxy style. Indeed if anything I would argue that the Japanese vastly over simplified the problem and were very much sugar coating things…then again they knew that they were essentially addressing the Daily Mail brigade (many of whom still probably think we’re still at war with Japan ;D )

Part of what worries Japan is how the UK leaving the EU will interfere with the supply chains of its companies operating within the UK. Naturally throwing up a couple of extra trade barriers is hardly going to help things in this present economic climate, particularly if they have to start paying tariffs. And it’s worth remembering that it’s not just the final product were talking about. The supply chain for any industrial product these days, be it mobile phones, those Japanese label “Super Dry” clothes or Japanese branded cars, is fairly long and convoluted. As I mentioned in a prior post, many of the cars rolling off UK production lines for example will be built in LHD mode, as the bulk of them will ultimately be destined for export to Europe or beyond. Many of the parts will come in from Europe, America, Asia, etc. The last think Nissan wants is to face having to pay import/export duty on the parts and then pay it again when the export the finished car.

Now the UKIP types will claim, oh we’ll just negotiate a free trade deal with the EU. Again, as I’ve highlighted before, and the BBC has previously pointed out there is no guarantee the rest of the EU will go along with that. And even if they did they would as a minimum require the UK to take on board all of the various EU laws regarding trade, environment, H&S, etc, as well as all changes and laws passed in the future. The UK might even still have to continue to pay some of the EU budget (someone has to administer all those laws, those eurocrats in Brussels need to be paid by someone to do it). So in short the only difference between the current status quo and what UKIP proposes is that the UK looses its veto and right to vote on such laws. In short second class status for the UK!

Furthermore, its not just the EU the UK will need to negotiate a free trade deal with. The EU has spend the best part of several decades hammering out trade deals with other countries, notably its biggest trading partners, China, the US and of course Japan. The fear for the Japanese is that a UK EU exit would put the UK straight back to a blank sheet, particularly if such an exit occurs according to the ridiculously short timetable that UKIP or Tory Euro sceptics propose. This would have a devastating impact on the trade of any company, which would almost certainly result in job losses as inevitably companies seek to resolve these issues by moving factories overseas. And of course if the SNP have their way “overseas” could be as easy to achieve as simply relocating a couple of km’s up the M6.

The smut king

Indeed I thought it was curious that within hours of this announcement, David Cameron began going on and on about internet porn. Obviously this was his spin team leaping into action, well aware that it’s the sort of story the tabloids would latch onto like a dog onto a bone and push Japan’s statement off the front pages. Of course Katey going into labour probably helped too, I won’t be surprised if Osborne was sent around to her house to read to her some dry economic theories in the hope of inducing labour!

But jokes aside, what the Tories have succeeded in doing, yet again, is demonstrating a level of naivety that you will struggle to find outside of porno films! If there’s any porn we should be blocking its the hard core right-wing porn coming out of Downing Street these days.

Motown Blues

Many of may have heard about the filing for bankruptcy of the city of Detroit over the week. It is the largest public sector bankruptcy in history….to date! I say that because there are many other bits and pieces of the United States, counties, cities (Harrisburg being a good example) and even several US states, most notably California, which are living hand to mouth and may well follow Detroit down to the bankruptcy court. And of course certain parts of the Eurozone are far from healthy either. Consequently how the bankruptcy of Detroit plays out will be keenly watched by many.

I happened to wander over to Michael Moore’s website curious what he had to say about it all. He didn’t have much too say, Michigan born I suppose he’s always known Detroit was living on borrowed time…and borrowed money by the sounds of it! I mean how would any city cope if it lost 1 million citizens and most of its industry…likely in the UK we’d call it “Glasgow” or “Birmingham” and replace the population with Chav’s ;D

But he does have an interesting wee article on his site by Dean Baker of the Centre for Economic and Policy Research regarding the fate of Detroit’s pensioners. One of the key “creditors” in Detroit’s bankruptcy is it pensioners (i.e. former state employee’s such as firemen, policemen, librarians, etc.). Funding their pensions represents about half of Detroit’s massive $18 billion in debt.

Normally when a company goes bankrupt pensioners are some of the first in the queue for a pay out, with venture capital investors (who hold the rest of Detroit’s debts) towards the back of the queue and may well get very little back. But the city authorities, or more to the point the liquidator, is arguing that the pensioners get the same pay out as everyone else, which means some Detroit pensioners could be looking at their life savings being pretty much wiped out and be facing virtual destitution. The US media seem to be jumping on the bandwagon and assuming this as a given, just cos the nice man in a suit from the liquidators says so.

However, as Dean Baker points out, this not only violates the basic principles of bankruptcy but its actually illegal under a 1960’s era Michigan state law. This law clearly states that in the event of liquidation pensioners will get paid first, in full and if there’s any dimes left at the end, they will go to the banks and private lenders. After all, this law has been on the books since the 60’s. Any fool silly enough to lend money to Detroit must surely have known what he was getting himself in for. But then again, as I’ve discussed before, many of the MotU don’t seem to understand that they can lose money on a deal.

The courts seem to agree with the pensioners and have issued a ruling ordering the city to withdraw its bankruptcy filing (as reported in the BBC). However, the city seems to be hinting that they plan to just carry on regardless and ignore what the law says. After all perish the thought of investors having to lose money because they made stupid investment decisions!

Damned if they do or damned if they don’t

The situation in Motown creates a bit of a daunting dilemma, in part because many will interpret the outcome as a precedence for how other US public bankruptcies pan out.

If the authorities in Detroit for example comply with the law, then this will have serious knock on implications across the US and Western world. Many other US public authorities, notably many states and the federal government have huge pension liabilities on their books. If the markets take Detroit as a signal that, say in the event of California going bankrupt, that the pensioners will get bailed out come what may, then a few back of an envelope sums will tell you that private investors will be lucky to get back a few nickels on the dollar. In short those US Treasury bonds they hold with an AA+ rating ain’t worth the paper they are printed on.

Consequently only a complete fool would lend money to any public authority in the US. The US would thus find it increasingly difficult to raise capital, an effect that will spread to private investors too (if the state goes down, that makes private investment risky also, just look at Greece). Given how dependent the US government at all levels is on cheap credit (county, city, state and federal), such a market panic could easily bring down the entire US economy, although a more likely scenario is just a cut in credit ratings and a hike in interest rates, which will at the very least kill of America’s present recovery.

On the other hand if they authorities burns the pensioners that will send out an equally dangerous signal. To be blunt, if I was a public sector worker in California or Pennsylvania I would be looking to immediately stop paying into my pension plan, cash out, even if I had to shoulder some losses, and stash that cash somewhere safe (property, an offshore account, anywhere but where “the fed’s” can get their paw’s on it). Obviously if only a small fraction of America’s many millions of state employees took this views it would create a virtual “bank run” on US pension funds. These funds are, as noted, heavily in debt and rely on money coming in the door from people still working, to pay those who’ve already retired.

So like I said, there’s more at stake here than Detroit and its pensioners.

Reality bites

Indeed in some respects the mere idea that any part of the US, even Detroit, nevermind places like California (one of the wealthiest places on planet earth) could even consider going bankrupt is ludicrous in the extreme. There is more than enough money tied up in the US, both in public and private hands to bail cities like Detroit out many times over. But like the Eurozone crisis it is very much a consequence of an unwillingness of politicians to make important, but unpopular decision with electorates, even when those politicians are actually protecting those citizens life savings and jobs.

Ultimately the source of America’s problems financial problems can be traced down to the fact that America is every bit as much a “big government” state as countries like France, but that US taxpayers are reluctant to pay the sort of high taxes we do in Europe for such services. Instead they prefer to maintain the illusion of being a low tax economy, as I highlighted before with regard to issues such as the differences in tipping culture across the pond. And as Andrew Sullivan & Fareed Zakaria point out, poll after poll regardless of what any US tax payers say about the benefits of small government, voters will punish any politician who either puts up taxes or cuts back on core public services.

Inevitably this has left US politicians (be they Republican or Democrat) with only two options, hack away and make short term savings that will cost them heavily in the long term, which is why much of America’s public infrastructure is crumbling (I recall seeing these huge rust patches on the Brooklyn bridge and massive potholes in the middle of freeways in the mid-west). Or politicians simply borrow money on credit from the Chinese or Middle East oil sheik’s.

Sooner or later US politicians are going to have to just bite the bullet and either cut the bits of the US budget that will actually make a difference, which as I’ve pointed out before means ending “corporate welfare” and serious cuts to the military budget, and raising taxes up to the point where the US can balance its books. But like the Eurozone, the longer the US ignores this reality, the worse things will get.

And of course there are some in the Tea party who would have been doing cart wheels over Detriot’s bankruptcy. They have long fantasized aboutshrinking government down and drowning it in the bath tub“. However, as I’ve pointed out before you’d be drowning you’re biggest collective customer (are any of those pauperized Detroit pensioners going to be spending much money any time soon?), send private investors fleeing across 6 continents away from the country and see the infrastructure many Americans rely on to run their businesses (such as those freeways that Americans love to drive on while paying a fraction of what we Europeans pay for the privilege) crumble. In short, the state goes down, you’re business, whether you’re Joe the Plumber or Warren Buffett is toast. Hopefully if there’s one positive that comes out of events in Motown it will be to lay bare the fallacy of this fantasy.

Founding Fallacies of Privatisation, take II

Anyway one wee story I saw over the week was this BBC article regarding nationalisation of the UK Railways. They asked a member of a lefty think tank and another from the Adam Smith institute to give the for and against arguments regarding nationalisation of the UK railways.

The for nationalisation argument endorsed the main points I’ve long made about the UK’s railways, that privatisation has clearly failed and the decades since have seen a massive rise in train fares well above inflation, indeed even the public subsidy to the railways is now 5 times higher than it was under a nationalised system. Yet service has scarcely improved, indeed you’ll find plenty of regular commuters who’ll tell you its gotten worse.

Inevitably the response from the ASI was to make a load of feeble excuses and cherry pick some historical statistics which he then took completely out of context. Indeed the crux of his argument seemed to be that the railways were struggling because too many people were using them (obviously he’s unaware how people travelled around the country before the Beechings axe fell). And ya, Apple and Ryanair are always complaining how hard it makes it for them to run a business when too many customers show up :no:. I mean does this guy know the first thing about how capitalism works? :crazy:

Indeed I would argue that the whole reason why privatisation has failed, both for railways as well as buses, water, power distribution and universities, is precisely because such processes involve ignoring the very basic rules of capitalism – that you have to have competition between firms in order for it to work.

But, all of the rail (or water) companies have a defacto monopoly in their given area. Inevitably this simply means they run a service that’s barely adequate, as cheaply as they can, charge the customers as much as they can fleece them for and cream off as much as they can in “profit“, all the while building up a mountain of debt and poorly maintained infrastructure for the government to deal with when inevitably its forced to step in.

And the whole reason why there is no direct competition is because it would be largely impractical to do this (there’s only so many trains you can operate on the same track, you’d need separate ticketing facilities and possibly stations, issues with companies not honouring one or other’s tickets, etc.) as well as potential unsave, as some companies seek to cut corners to survive. It was corner cutting and unsafe practices that led to a number of the large rail disasters of the Victorian era (the Salisbury rail crash being a good example) and corner cutting by Railtrack played a role in a number of rail accidents immediately after privatisation, eventually leading to Railtrack’s effective renationalisation.

Indeed I would argue that the ultimate proof of the failure of railway privatisation is how the government is now being forced to stump up the cash for HS2, much as they did for the Eurostar link to London. The original Tory plan was that the magic of the market would provide high speed rail links. However there has been scant if any privately built railway building since privatisation. Which is hardly surprising as such an endeavour represents a long term financial risk, which the train companies have no financial incentive to undertake and which no bank would ever be willing to lend money too.

If we the tax payer are going to be forced to finance a project, it stands to reason we should own the end result. This is my main argument against the proposed new nuclear plant in Hinckley Point C. It looks to me like the UK government is going to underwrite and pay all the upfront costs for the project, but EDF energy….owned by the french government, are going to own and run the plant and set electricity rates! In essence we’re going to be paying the French government to do the dreaded “nationalisation” stuff for us because its against the Tories free market religion to do so.

Hence, I am very sceptical that the government’s plans for further privatisation of Royal Mail, policing & prisons (G4S are already in trouble over tagging, is anyone seriously suggesting we give them run of an entire prison or police station?) or NHS services. Indeed the Beeb have another debate here about NHS privatisation. While the pro-privatisation type speaks alot about choice, he ignores the fact that the “choice” most of us want to make when it comes to health care is the best we can get! What he is proposing kind of reminds me of that Dickensian family heart centre piece in the 80’s movie Robocop.

Indeed experience from other parts of Europe or the US is that wherever you do open up health services to private competition, while services do tend to improve for those who can afford it (of course in the UK they can opt for private insurance anyway, so its not as if they’re being denied this right), but in poorer areas the number of clincs and the quality of them tends to decline.

Furthermore, there tends to be little if any correlation between a privatised “public” service costs (such as healthcare) and quality of service. Inevitably they will provide a service as cheaply as it can and charge as much as they can from the customer.

University fees in the UK are another good example. The OECD recently warned that the UK HEI sector is facing a similar issue where the costs of going to university have risen dramatically since the last election, but the quality of those degrees has only moderately increased (if any!). This is somewhat embarrassing for the government as they had previously claimed that the OECD supported this increase in fees, when in fact the OECD has since pointed out they were commenting on statistics relating to the pre-2010 fees structure.

In short privatisation does not offer any of the benefits it free market supporters claim, largely because the very act of privatisation often involves ignoring those very free market rules. It is merely a tool to drive through further inequality in society.

That’s not the way to do it

Not been blogging for awhile, too busy and too hot! :p: The operating manual for Irish people clearly states that one should not heat above 30’C or else you’re Irishman will become irritably and slow down. Its consumption of fluids (notably alcohol) shall also increase substantially :)).

The other week the UK ran into “issues” with the European Court of Human rights in Strasbourg (again!), this time over whole life tariff’s for multiple murderers, prompting yet another tabloid feeding frenzy.

However, as I’ve pointed out before this is as more a failing of UK law than anything to do with Brussels. You would think if you read the tabloids that the rest of Europe do not have dangerous Islamic preachers they want to deport, violent criminals they want to extradite and for that matter lock up and throw away the key after the trial. And indeed the other European countries are able to do this, as I highlighted with regard to the deportation of numerous rogue Islamists by France a few weeks ago. If these countries can do it why can’t the UK? A bad tradesman blames his tools and a bad government blames foreigners for all its problems.

Again if you read the tabloids you’d swear Europe was run by a bunch of fluffy tree hugging liberals. Alot of brits don’t seem to realise that many Europeans are actually fairly conservative. There are as many EU states with right wing governments as left wing ones. Angela Merkel for example is head of the Christian Democrats, a fairly pro-business and generally conservative party (the sort of people who don’t find Fawlty Towers “the Germans” episode the least bit funny). Switzerland only made divorce legal in the early 80’s while it was the mid 90’s before divorce was legal in Ireland. Indeed it was also the 90’s before homosexuality became legal in Ireland (that’s not gay marriage, I mean it was technically illegal to be gay!). Abortion was only allowed in Ireland as of last week and a number of other Catholic countries within the EU (notably Poland) have similar restrictions. I would note that I’m not advocating these policies, merely pointing out that Europe is a fairly conservative place, one where the Tories, if they took the correct attitude (as opposed to going all Daily Mail on things), could easily find allies.

Now if I was a Tory PM and the human rights act was becoming the major road block that the Tories claim, I’d be either trying to find ways to adapt the UK legal system to account for it (as other EU states do) or I’d start trying to find right wing allies within the European Parliament about getting the act amended slightly (as one assumes there’s plenty of others across Europe who’d agree), to allow a more conservative friendly interpretation of it.

Of course the fact that the Tories are doing neither, indeed they seem to be repeatedly running straight into this legislative brick wall and blaming the wall for blocking their path…sort of reminds me of the time I say a drunk having a fight with a bus shelter, he kept running into it and swearing, even though it was only 5ft wide and its obvious he can just walk around it! One has to conclude that either the Tories are either incompetent and not fit to chair a parish council meeting, or doing it on purpose in the hope of generating plenty of Tory friendly propaganda.

Inevitably, while option A is suspected, one has to conclude that they are doing it on purpose. They are fully aware that making Europe a key issue in the next election is the best way to set them apart from Labour, not to mention distract from the train wreck otherwise known as the economy post-Tory cuts. In short, its classic Machiavellian bait and switch.

If this is indeed the Tories tactic, then they are playing a dangerous game, one that could easily backfire on them, particularly if UKIP get enough seats as a result to deny the Tories a majority.

Furthermore the Tory plan seems to be to go to the EU and unilaterally demand the rest of the EU renegotiate its membership. As I’ve pointed out before, this is an absurd policy proposal that anyone with a clue as to how geopolitics works would know is doomed to failure. Inevitably when they come back from Europe with their tail between their legs the result will probably be the Tory party splitting or imploding.

Regardless of what you’re views are on whole life tariff’s or prisoners voting rights, British law and the incompetence of the Tory government for bringing in badly written laws has to take some of the blame. And the UK’s all important relationship with the EU should not be a matter for punch and Judy politics.

The Tory Squeeze on Education

One of the insidious features of the Tory spending cuts is how they try and get others to do the dirty work of cutting public services for them. I’ve previously described how cuts by the Tories are forcing councils across the country to make very tough choices, kicking pensioners out of nursing homes or shutting down museums sort of stuff.

Another tactic is to “privatise” public services. But because a private company needs to turn a profit (from providing a service that is obviously unprofitable, I mean if the state is struggling to run it at a loss how is a private company supposed to achieve that and earn an extra 20% to keep shareholders happy?), hence they immediately have to start laying off staff and cutting services, just to stay in business. The UK train and bus companies are an excellent example of this practice and its failings.

The NHS is probably next on the list for creeping privatisation and its budget is being cut in real terms (once you account for an ageing and growing population plus inflation) forcing newly independent management into the difficult position of deciding which services to cut back on.

The student loan hole
My own sector, higher education, is starting to see something similar. We’re doing rather well in my department. Our ratings are going up, we’re attracting more and more students. Indeed this year we expect not to need to take any students through clearing as our expectation is that we’ll fill 1st year just through first preferences, overseas, deferred and the rest made up of second preferences.

However, we’re still overall expecting a drop in first year student numbers, and a further drop in years to come, as are many other universities across the UK, indeed they will be down by around 30,000 students across the country.

You may inquire if we’ve got the resources to support more students, why don’t we take them? Well because the UK department for Paranoia (aka the UKBA) has scared away many of the Tier 4 overseas students with their Daily Mail antics. Normally, we’d compensate by recruiting more UK or EU students. However, in order to come to our university the students have to be able to afford the fees. Those from wealthier background can rely on the Bank of Mum & Dad, but the majority have to get finance from the Student Loan Company.

The problem is that the SLC is essentially bankrupt. Nobody knows exactly how much they are on the hook for (they’re something of a Whitehall black box, some statistics on them here if you want a thrall), but with an expectation that 85% of all students will eventually have their debts fully or partially written off, its likely they represent a significant liability. If they were a private company they would be in the category of shoot-this-guy-&-burn-his-credit-cards-if-he-asks-for-credit sort of credit ratings ;D.

Consequently, rapidly depleting whatever cash they get from the government, they’ve made it harder for students to get loans. This in turn means we’ve had to start rationing the number of SLC financed students we allow into each department’s first year. And if we recruited more we’d be over that quota and thus unless they have alternative means of funding, we can’t take them, even if they’ve got the grades and even if we’ve got room on the course.

Inevitably a cut in students will mean a cut in staff. We’re being told that in our department there are no plans for layoffs, other “avenues” for finance are being pursued. Possibly by supporting more Tier 4 students overseas remotely, or doing more private sector teaching and research. But a pay freeze and a stop to any hiring (even of staff retiring or otherwise moving on) seems likely and I’d probably get a frosty reception if I asked for a couple of grand for some new lab kit |-|.

And we’re probably one of the better placed departments (like I said, we’ve been doing pretty well the last few years). But as I’ve highlighted before some universities have vastly overstretched their finances. This artificial squeeze in student numbers the government is implementing will almost certainly lead to some departments closing. Indeed I still reckon it’s just a matter of time before an entire UK university just goes bankrupt. And that doesn’t mean just a load of academics out of work, it would have a further knock on effect across the economy, a drop in tax revenue, drop off in local trade, collapse of house prices and the rental market near to the university, etc.

UKBA tactics backfire
Oddly enough its been hinted to me by conservatives that partially what’s been driving the crack down on Tier 4 students has been because they feel uni’s are recruiting too many at the expense of UK students. Now while I would agree (up to a point), but recruiting students from around the world has always been part of the university experience (right back to the days of Erasmus). And also, if the Tory’s want us to take on more UK students, then there’s the small matter of them paying for that, which they clearly don’t want to do. Universities have been leaning ever more heavily on the Tier 4 crutch to compensate for cuts in their funding (in real terms) by successive UK governments under Major, Blair, Brown and Cameron.

And the irony is, if this is the motivation for the government’s crack down on Tier 4 students its likely to have the opposite effect, as universities simply start recruiting students overseas (quite a number of UK universities have additional campuses overseas already) or maybe even move entire courses overseas, something which will essentially have the opposite effect the government intends! Indeed I happened to glance at a universities job advert website the other day and I noted several jobs being advertised which would appear to involve hiring staff to do this very thing!

Tory Elitism
And of course perhaps more insidiously it means that university education in the UK is increasingly becoming the domain of the wealthy in the UK. They can afford to pay fees and maintenance for their siblings and I’m guessing they’ll soon be uni’s somewhere sufficiently desperate to take any fool regardless of grades who can pay those fees (indeed without naming names, there’s already a couple of them!).

This to me highlights the reality of the Tory cuts. Public services that those on middle or lower income depend on get cut. Not because of “the deficit (actually thanks to the cuts the UK government’s debt levels have actually been increasing!) but for purely ideological reasons. Meanwhile UK society becomes ever more elitist as those who can afford it will still get good health care, university education, a pension and be looked after in old age, as for the rest of us….you fill in the blanks. Is this the sort of society we’re striving for?

The truth about the financial crisis

A bit of a scandal has erupted in Ireland over tapes that have revealed what was really going on in the middle of the financial crisis over at Anglo Irish Bank…not to be confused with AIB (Allied Irish Bank, as we often joked at the time, AIB had been screwing its customers over for so long that it could take a hit of a few billion in its stride :DD). The Irish Independent article on this is available here along with a link to some of the tapes.

One could summarise Ireland’s economic problems with but one word – Anglo. In effect, Anglo were running what turned out to be a thinly disguised ponzi scheme. They were giving out ever and ever larger loans to property developers, using the collateral to borrow more money and stay in operation. Now while other Irish banks certainly weren’t angels, Anglo were by far the worst of a bad lot, if not one of the worst of all the banks behaving badly around the world.

Now when it all collapsed the Anglo Irish board invoked the aw shucks” defence, much like Fred Godwin (due to his super-injunction I don’t mention him by name in a number of other articles, prefering to use the acrynom Scottish Holder of Indebted Titles ;D) or Dick Fuld of Lehman Brother and numerous others of those behind the financial scandal. They claimed that oh, we don’t understand all these big words and numbers, why how could we be expect to know what was going on…..ah! cos you’re being paid salaries of tens of millions to be able to understand these things! Many would argue that if what they said was true then they were at the least criminally incompetent.

However the Anglo leaks hint at the truth. We hear the board members laughing and joking about it as the bank and the entire Irish economy collapsed around them. The head of capital John Bowe is heard claiming that he pulled figures “out of his ass” relating to Anglo’s losses, which were then entered into testimony to the Irish parliament. Those figures were largely the reason behind the Irish government’s foolish decision to bailout Anglo (Morgan Kelly‘s analysis of the crisis sums up the situation we then faced). If we knew now what we now know, it’s likely the Irish government would not have bailed Anglo out, but instead begun its orderly disillusion. However instead, it was the bailout of anglo that blew a +30 billion Euro hole in the Irish government budget, more or less forcing us to go looking for a bailout from the ECB (and all the problems that this has brought since then).

Naturally one is forced to wonder, given the revelations about Anglo, what was going on in Wall Street and London board rooms. Indeed Rolling Stone have an expose on the practices of the Rating Agencies in the lead up to the crisis, which alleges that they knew damn well that the sub-prime bonds they were rating AAA were nothing of the sort….and the banks knew it! This sort of suggests that this was no bolt from the blue.

Inside Job

Like ENRON the bosses at the top knew the ship was sinking, but rather than go down with the ship, they actively sought to profit from the collapse. As revealed in Chris Fergeuson’s academy award winning documentary Film “Inside Job” (review of it here) many of the major finiancial firms began betting against each others share price falling, i.e. they started to bet that their own bank would fail. This is sort of like taking out insurance on you’re house and then burning it down…which is sort of illegal for a reason!

In short it is increasingly difficult to escape the conclusion that the financial crisis was no accident. The executives in charge of these companies may play dumb (same as Murdoch did over phone hacking, but recent leaked tapes suggest otherwise) but the reality is they knew exactly what they were doing, they just didn’t care. They knew their fortunes would be safe. Casing point, the head of Anglo’s British operations for example is living the life of Reilly on a country estate. While Dick Fuld the Lehman’s boss is also leading the high life (still worth $160 million although he’s been stripped of his trading licence recently…it took them 5 years after the bankruptcy to realise it should loose it! :no:) and that “the little people” who pay taxes would dig the world out of the resulting train wreck.

And that perhaps is the real scandal. These guys, who committed some of the most grievous injuries against Western economies and democracy since Adolf Hitler, have escaped without any attempt to punish them. And as the LIBOR scandal reveals, they clearly have not learnt their lesson, and thus one is forced to concluded they’ll create another massive crisis to profit off of (as trader Alessio Rastani let slip sometime ago on BBC, they may be engineering such a crisis as we speak) but this time the governments may not be able to afford a bailout, possibly leading to the collapse and bankruptcy of many Western countries.

It is therefore imperative that there is some sort of investigation set up with the expressed purpose of putting the key culprits in the financial crisis on trial. In short, much as the allies made an example of the leading Nazi’s at Nuremberg we need to do the same to Wall Street….maybe not stringing them up, but at the very least giving them a lengthy spell in prison and make them poor…or force them to work in Poundland for one of IDS welfare chain gangs ;D. It is also essential that the sort of strict regulation with harsh penalties for violators, is now brought in to prevent another financial crisis.

Phone charge paranoia

Another front has been opened in the “debate” over Scottish independence. It sees the lib dems (aware that with Scottish independence they’ll loose alot of their MP’s) putting together a report that presents various spurious arguments for economic “chaos” if Scotland gets independence. They specifically highlight the fact that as its a different nation Scot’s phoning England (or visa versa) will suddenly be making international calls, and how expensive that will make it to do business.

My response to this is to say Bollix to that! :crazy: Certainly it is true, that in Ireland having a border up north is a complete pain in the butt sometimes. I’ve heard stories of people making calls near the border who walk a few feet, the system decides they’re now the other side of the border, and they’re suddenly making an international call. Has this stopped cross border trade? No not really, people get around it, by either buying phone cards that provide cheap calls both sides of the border or getting a 2nd mobile.

Indeed, the EU has long had a bone to pick with mobile phone providers ripping people off in this regard. Consider that most European countries share quite convoluted land borders. Consider how awkward it is for someone who lives in Germany, but works just across the border in Masstricit…then goes down to Strasbourg every couple of weeks! The EU has therefore been arm twisting the mobile companies to get them to lower cross border charges for quite some time. The EU would in fact rather just do away with such charges altogether.

But again do all these separate mobile phone charges stop EU states trading with each other? well no! It’s an inconvenience yes, but that’s it. No one (save some Braveheart’s in the SNP) is saying that independence and putting up a border won’t have some impact (both positive and negative), but the gates of Hell are unlikely to open, as the opponents of independence would have you believe. The only situation where trade might suffer is where one or other country chooses (rather foolishly) to impose such trade barriers, but that would harm both countries and be against EU, as well as EEA & WTO rules, so that’s probably unlikely.

I’m largely neutral on this issue of independence, but this sort of cheap sloganeering and tabloid friendly scaremongering is certainly something I oppose as merely demonstrates signs of desperation for the coalition government on this issue.