EU collapse fantasies

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Press brexiters on the fact that they’ll get a worse deal outside the EU than inside it, they’ll go into denial, why would the EU cut itself off from its main trading partners…..well largely because you dickheads voted for brexit! Case in point, UK airlines have now been warned they’ll need to move their base and refinance such that they are majority EU owned and based, if they want access to EU airspace. David Davis himself more or less conceded this week, that yes, the UK will be worse off. At this point, forced to accept that yes, it is all but inevitable that the UK is going to get a pretty raw deal, they’ll mumble something about how the EU will probably collapse anyway. This fantasy of the EU crumbling, just because the UK leaves, tells us a lot about brexiters.

Firstly I would have to agree that the EU as an institution has never been more vulnerable. I’d rate the chances of it falling apart at about 25%. Now if you’re a eurocrat, that’s a pretty scary thought, a 1 in 4 chance of the EU breaking up. That’s a big red warning light that should be going off in Brussels. Certainly the need for reform of the EU post-brexit is urgent. Unfortunately for the brexiters, this reform will likely involve making it more democratically accountable (e.g. an elected EU president), more centralisation of certain powers (including possibly NATO) and to balance that all out, more regional autonomy with perhaps a multi-speed Europe. In short, everything brexiters don’t want to happen.

But that still leaves a 75% chance that the EU will survive this crisis. Part of the problem the brexiters don’t understand is that getting another country to leave the EU, aside from Greece and Italy (who many in the EU want to leave!), isn’t going to be easy. Much was made by the Daily Mail of the “success” of the Dutch and French fascist parties recently, with them leading opinion polls. Unfortunately, leading an opinion poll in most cases means getting just 25-30% of the vote.

While in Britain the Tories won a majority with the support of only 37% of the vote, things are a little fairer in Holland and most EU states with proportional representation. You want a majority, then you need 50% of the votes (which the Tories haven’t gotten in decades), about half of what the Dutch fascists are currently getting. The chances of Le Pen winning a run off, even if the other candidate was a potted plant, is somewhere between slim and zero.

And even if they could win an election and put an exit from the EU on the ballot, its not quite as straight forward as it was in the UK. The UK is also leaving the EU on the basis of support from only 37% of the electorate (the 70% turn out times the 52% support in the referendum), closer to 27% if we factor in the many millions of EU citizens and UK citizens living abroad who were denied the right to vote in the referendum. In most of the rest of the EU, the idea that 37-27% of the electorate (most of them old geriatrics who’ll be dead before brexit goes through) is not democracy, its perversion of democracy. Generally election rules in these countries would require something as radical as leaving the EU to gain +50% support (i.e. a majority of the electorate, not a plurality of those who showed up on the day). Its doubtful you could get that in the UK, so even less so in the rest of the EU.

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Hence the brexiters are likely to be disappointed to learn that the EU will likely survive. And in fact, that’s just as well because its better for the UK that there is an EU. If there’s a worse case scenario than a hard brexit from the EU, its a hard brexit and then the EU breaking up shortly thereafter. That means the UK has to go and negotiate deals with each of the 27 member countries, and they’ll all have a host of competing agendas. We might get a trade deal with Germany for auto parts, by conceding on allowing free movement of German citizens into the UK, only for the French to slap a 25% tariff on all car parts travelling through their ports unless we rebrand Cheddar Cheese la merde anglais.

Indeed, this is precisely the problem with brexit, it involves the UK delegating important decisions to Brussels (or Washington and Bejing), fooling itself that its taking control, but leaving it up to the EU to be the responsible grown up and pass all the regulations and laws that will ultimately govern UK trade. So by conjuring up such EU breakup fantasies, what the brexiters betray is that they have no plan, no big idea.

And also by pandering to such EU breakup fantasies they show that they simply do not care. They don’t care that people are losing their jobs (e.g. Heriot Watt just announced 100 jobs to go and put the blame squarely on brexit), they don’t care that young people are now migrating in droves (the talk among my students seems to be where to immigrate to after graduation, given the lack of graduate places), or British citizens with an EU spouse are being forced to leave the country. They don’t care that people have lost money due to the collapse in the pound, with prices now gradually creeping up with inflation rates going up.

Granted they probably will start to care when they realise they can’t afford retirement anymore and that many of the retirement perks the government showers on the grey vote are starting to be withdrawn. Case in point, many councils can no no longer afford to pay for elderly care homes anymore and there are chronic staffing shortages, so services are starting to be withdrawn. And with the son or grandson the old brexiters were relying on to look after them in old age having now immigrated, they’ll find there’s nobody left in the country to look after them. And I can’t say I’ll have much sympathy.

And given that polls do show that people will not accept a hard brexit or any deal that leaves the country worse off, its very likely that either parliament might come under pressure to reject the deal Theresa May gets (and remain in the EU). Or in a decade or two (once all the old racists have died off), its possible that another referendum will be held and the UK will rejoin the EU.

In short, this brexiters EU collapse fantasy is essentially an admission that they know they’ve screwed themselves and the country over for ideological reasons, just so they message their fragile egos. Is the equivalent of some fool who burnt his house down for the insurance money, but the company refused to pay, so now they want everyone else to burn their houses down too just so they can feel a little less foolish.

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The flawed logic of preppers

daryanenergyblog

apocalypse-8.jpg When we said brexit could end badly……

I started writing this one a few month ago (prior to travelling long distance) and then forgot about it, but thought maybe I should finish it.

For quite some time in American there has been a survivalist movement, which grew out of fears of the aftermath of a nuclear attack during the cold war. “Preppers” believe than in the event of some major calamity of some kind they must be ready to “bug out” if things go south. Preppers come from a wide variety of different political backgrounds. Certainly thought some of the more oddball right wing elements tend to be the most vocal. Oddly enough many of these are keen Trump supporters (so there’s a certain element of a self fulfilling prophecy as a result!).However there are some fundamental flaws in many preppers (particularly the right wing…

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The Trouble with AirBnB

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There’s been a massive increase in the number of spare rooms,or even entire flats, offered for rent on AirBnB, across the UK and worldwide. We’ve recently identified several within the building where I live. However this is cause for concern, because there are quite a number of issues with AirBnB. Put rather bluntly, if you are offering rooms on AirBnB you might be breaking the law and you are also possibly jeopardising your neighbours financial well being.

So what’s the problem? This clip from Adams ruins everything sums up the main arguments against AirBnB. Cracked also reviews the major arguments against it.

But for starters, if you are offering rooms on AirBnB what kind of mortgage do you have? Because if you’ve got a owner occupier mortgage that only allows you, your family and non paying guests to stay in the property. Even with a buy to let mortgage only registered tenants on a long term least (generally more than 90 days) are allowed to stay. If you are renting rooms, or worse the entire flat on AirBnB, then you are almost certainly breaking the terms of your mortgage. In theory if the bank finds out, they could tear up your contract and demand immediate repayment (i.e. you get 30 days to come up with say £100,000 or lose the house!).

And this issue of who is allowed to stay in the property is not some minor bureaucratic point. People tend to prioritise mortgage or rent payments above all else, as they don’t want to end up homeless. So the risk to the bank of you defaulting on a mortgage loan is relatively low, hence why they can get away with offering such a low rate of interest on such a large loan. By contrast hotels and B&B’s are a much more risky business (recall Trump’s four bankruptcies involved exactly these sort of properties). They are much more likely to go bankrupt, hence why they have to put up a higher proportion of starting capital and get charged a higher interest rate. While some banks are starting to offer AirBnB compatible mortgages, they generally involve a higher rate of interest and a larger deposit. So unless you are on one of these mortgages, you are likely to be committing mortgage fraud.

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Then there’s the issue of home insurance. Again, home insurance assumes you are either renting (long term) or living in a house you own. AirBnB type arrangements aren’t covered. Some insurers are starting to offer AirBnB compatible policies, but as with the mortgages these cost more than a conventional insurance policy. If you are renting out rooms under AirBnB and you lack an appropriate policy, then you (and any of your guests) are likely to be uninsured and there is very little chance of your insurer paying out in the event of a claim.

Also the above only applies to home insurance. There’s also the issue of getting liability insurance (in case you being sued by a guest if he falls in the bath tub or tumbles down the stairs). Then there’s your block insurance if you are in a larger apartment complex. Hotels and B&B’s have to comply with a long list of safety requirements to be given permission by the local council to operate and too convince any insurer to provide them with cover. e.g. does your building have a sprinkler system? I know mine doesn’t, but I know that in some countries hotels (above a certain floor height) are legally required to have one (and this applies even if the building is a mixed development). Hotels tend to have better security arrangements, CCTV, key cards and codes that expire every 24hrs, security guards, etc.

Hotels aren’t doing all this for fun, they are doing it generally because their insurance policy will be voided if they don’t. e.g. in the UK there are no sprinkler requirements, but your insurer (or fire officer) may insist on expensive modifications (e.g. putting in fire walls and new fire escapes) if you don’t have a sprinkler system.

Now I’m not usually the sort of person to get worked up about health and safety, but this is one situation where the H&S killjoys experts have a point – hotels, B&B and hostels do catch fire, there have been several large and often fatal incidents over the years (e.g. the MGM Grand fire or the Downunder Hostel fire in Australia, hence why the regulations are so strict. And no, small B&B’s aren’t exempt, you still have to comply with at least some minimum level of safety.

This raises the question as to whether, in the event of a claim, would the insurance company pay out. My guess is they’ll probably take it on a case by case basis. If a fire started say in an AirBnB rented property, they’d likely pay out to any of the neighbours effected, but refuse to pay out to the AirBnB owner (so he gets saddled with maybe £50,000 of fire damage and he’s still in debt to mortgage company). If it was an issue nothing to do with any AirBnB property (e.g. the roof caves in), they’d likely just pay out and not ask any questions. However in a scenario where say a large number of flats in a block are AirBnB and say the building burns down, the insurer might well argue that the block was essentially functioning as an illegal hotel, thus invaliding the policy and they are within their rights to refuse to pay out to anyone.

Suffice to say, its hard to say which way things could go, it will likely take a few test cases to sort out. However the implication is that if you’ve got AirBnB owners in your building, there is a risk that you might not be fully insured anymore. So anyone renting rooms via AirBnB is having a potentially detrimental effect on their neighbours. Quite apart from all the other issues with large numbers of people coming and going at odd hours.

And as I mentioned earlier, you generally have to apply for planning permission if you are planning to set up a hotel or B&B. And yes, this applies even if you don’t plan to make any alterations to your building (as you are changing the use of your property). In some parts of the world you will also need to apply for a license of some sort in order to operate a hotel or B&B. And this is not some bureaucratic rubber stamp process. Any application from an AirBnB owner for permission to operate has a very strong probability of being rejected. Why?

Well because, as noted, homes and apartment blocks often don’t comply with the same building codes imposed on hotels. There’s also issues like disabled access, which hotellers have to cater for (newly built apartments also have to have disabled access, but older residential blocks don’t) and possibly parking issues. Then there’s the provision of water, electricity, broadband and public services (e.g. bin collections, access for fire engines and emergency vehicles), which will be based on the assumption that all the apartments in a certain area are domestic properties, not defacto hotel rooms. This is why hotels pay business rates to cover these costs. An Airbnb might also need a different form of TV license to those used by a domestic property.

And speaking of which, you are paying tax on any earnings you make from AirBnB, aren’t you? You’d need to declare this as income on your self assessment tax form (as well as paying those business rates, water charges, TV license, etc.). So its very likely than anyone offering rooms on AirBnB is not paying their taxes in full….like David Cameron’s dad, or Jimmy Carr.

Also the freehold (or leasehold) on many buildings may well prohibit any form of AirBnB like activity (mine forbids the operation of any form of business within the block for example). Getting around this is going to be harder than dealing with the council, as you’d need to get your neighbours or the leaseholder to agree (and they’d either say no or insist on a cut of any of your profits).

Another issue for councils is the fundamental matter that they don’t want all the apartments in a city turned into hotels. This makes it harder for people to buy or rent. If its possible for a landlord to kick out his tenants paying £1,000 a month on a 3 bedroom apartment and then move in AirBnB guests paying £50 a night each (i.e. up to £4,500 per month!) everyone would do it and city centres would be full of AirBnB‘s with nowhere for the people who live there to rent. So AirBnB is contributing to the housing crisis in the UK. Hence it is not unreasonable for the authorities to be resistant. And while some aren’t doing much about it at the moment, a crack down is going to come at some point. Already some cities are starting to take action and my guess is that this is only the start.

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Protests against AirBnB by renters facing eviction is a growing problem

Then there are other issues, e.g. lets suppose you are an AirBnB owner and one of your guests refuses to leave at the end of his stay (as has happened on a few occasions already), nor will he pay you anymore. What are you going to do? Drag him out by the scruff of the neck? Okay and then when the cops show up they’ll be putting the cuffs on you (for assault) and letting him back in. In the UK a landlord has no legal right to undertake an eviction. Only the courts can sanction an eviction and it can only be carried out by an agent of the court (e.g. a bailiff). Until your tenant has had his day in court, he remains your tenant, you can’t throw him out or harass him in an effort to try and make him leave, indeed doing so would likely make it harder to secure an eviction.

While yes it is true that certain providers of shorter term accommodation can get around the need for a court order, but they still can’t drag someone out of the building (there is a due process they have to go through as well). And they are operating within a tightly defined legal frame work. As I think we’ve established, any AirBnB owners is likely to be operating in legal limbo and is almost certainly in breach of the law. So it would be up to the courts to decide. While they would almost certainly authorise an eviction, that could take weeks. And one wonders what the court will make of someone admitting under oath to operating an illegal hotel, in violation of planning laws, building codes, while simultaneously committing tax fraud, insurance fraud and mortgage fraud.

And note that we are talking about the UK here. UK law blatantly favours the landlord, unsurprising in a country where the landlords and the landed gentry have been making the laws for several centuries. In certain US states or in Europe the legal situation is very different. It can take months, sometimes years to evict someone.

As for AirBnB guests they have to consider the risks they are taking. For example, what do you really know about the person you are renting off? There’s already been a number of clients who’ve been scammed by rogue landlords and con artists. You might find the room you’ve been offered is well below the standards, or even dangerous. There’s even been guests who’ve died during their stay at an airbnb (due to poor safety standards or carbon monoxide poisoning). You might find your host suddenly cancelling on you days before you travel. Note that a recent crack down by authorities in London caused many to lose their bookings. This link includes a few tales of woe from Airbnb guests and providers.

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And this brings us to the racial profiling. About the one thing you will know about your AirBnB guests or hosts is what race he is, as he will provide either a photo or a short video. Trouble is you can’t really tell a lot from that. You’re host could be fine, or he could be Begbie from Trainspotting, or an axe murderer on the run from Eastern Europe whose previous premises was the inspiration for the movie Hostel. As a result this has let to accusations of racial profiling or profiling by social class by both hosts and guests.

Certainly, the fact is that the law, factors, insurers and mortgage companies haven’t quite caught up with events. Once they do, they’ll likely re-draft laws and policies to accommodate things like AirBnB. However, this will almost certainly come at a price. AirBnB owners will suddenly find it costs a lot of money and hence there’s a reason why hotels charge £100 a night for a room (because that’s about what it costs to pay off all those bills!) and suddenly AirBnB isn’t the brilliant money making scheme they’d thought (much like Uber). Also changes to the law, while bringing AirBnB the right side of the law, they will probably allow more leeway for AirBnB operators to be blocked from operating, if for example other residences in a block object to it.

And inevitably further crack downs will come at some point, both by the authorities and perhaps private investigators operating on behalf of insurers and mortgage companies. And woe to any AirBnB owner who gets caught in this dragnet.

Taxing the Sun

daryanenergyblog

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I’ve joked before that it would be just a matter of time before the Tories started taxing solar panels rather than subsidising them. Well, now its happening. To help pay for the ever increasing cost of brexit they are putting up business rates. And within this tax hike they’ve sneaked in a clause that withdraws certain exemptions to business rates meaning they will now apply to those selling electricity to the grid via solar feed in tariffs. And we’re not talking a minor increase here, a 6 to 8 fold increase in taxation is expected for some operators, effectively making some solar installations uneconomic.

This is not the first time they’ve tried to pull this trick, they tried it before prior to the referendum, but were forced to back down, when the media caught them at it. Oddly enough they blamed the EU on that occasion for forcing them…

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The impact of brexit on Northern Ireland

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Well the results from the NI election are in and the result isn’t going to make great reading for either the Unionists nor the brexiters. The one thing that was never supposed to happen in Northern Ireland has happened – the Unionists have lost their majority.

While the DUP are still the largest party, in theory they and the UUP can now be outvoted on any issue…such as whether or not to hold a border poll. Now granted, Sinn Fein don’t hold a majority either. They’d need support from the smaller non-unionst parties. And all “non-unionst” means is that they don’t go on orange parades, nor is their pin code 1690. While they aren’t against the idea of a border poll, they aren’t in favour of one either, it doesn’t make them flag waving Irish nationalists.

However in the event of a hard brexit, one that starts impacting on the Northern Irish economy, they could be persuaded to back a border poll, to settle the issue. In short there is now a path to a border poll, that did not previously exist. And its very difficult to tell, particularly against the back drop of a hard brexit which way such a poll would go.

The unionists can block a border poll even without a majority. Rules written into the Northern Irish constitution allow a minority of delegates to veto legislation. Ironically, these rules were inserted to protect the nationalists, something the DUP originally objected too! But the DUP cannot do this alone anymore, they’d need UUP support too. Also blocking a vote and standing against the rest of the assembly raises the risk of the pro-poll parties pulling the plug again, declaring a new election and an electoral alliance in which they don’t stand in each other’s constituencies, effectively turning the election into a defacto border poll.

Now like I said, the other smaller parties aren’t automatically going to go along with Sinn Fein on this. And there’s no guarantee even if a border poll was held that it would be a Yes vote. But the point is that its now a plausible option. The unthinkable (from a unionist point of view) is actually possible now. And the unionist have to look to the moderates in the centre ground and on the left, to save them from a mess of their own creation.

While many unionists are generally euroskeptic (and often to the right of UKIP on many issues) the UUP backed Remain in the referendum, precisely because they feared what is now playing out in NI might happen in the event of a leave vote. But the DUP very stupidly backed leave. Arlene Foster may go down in history as having done more for Irish reunification (through a combination of arrogance, stupidity and incompetence) than Gerry Adams or Martin McGuiness!

But either way, the cost of brexit for unionists is not that they are going to “take control”, its that they’ve lost control and their fate is now in the hands of others….something the rest of the UK will soon discover when brexit negotiations start and they realise its the EU, US and other powers who will decide the UK’s future.