US Government Q3 GDP Lies

It seems we have let our governments run amok. They beat their people in the streets (see Occupy Wall Street), threaten to disband peaceful demonstrations (see Occupy London Stock Exchange) and now just blatantly lie with new statistics.

Let's look at this graph for a joke[Straight from ZeroHedge:]

How can this be? How can GDP in Q3 in the USA incerase by 2.5%? Most people are struggling and cutting back expenses. Jobs are unavailable and we are heading for a depression. Except the US government will have us believe that we have had the largest spike in personal consumption in history! So, either everyone is suddenly going to get very jolly in the next 12 months? Or someone is lying about the consumption statistics...heaven forbid we have any investigative journalism here folks. Wouldn't want the 99% to know that they pay for departments to make up statistics..teehee.

Why the baby boomers have a lot to answer for - why are you poor?

Let's compare a few facts about our lives to those of the people over 45. The legacy they left us vs that left for the baby boomers by the generation above who fought for our freedoms. As the boomers get older and blighted by disease and old age do you think the under 35s are going to look favorably at their legacy?

They are the privileged many! How about a tax on second and third homes of 20% and 60%. Add to that a tax on non productive land owners of 50%. That would bring down living costs!

Baby Boomers (what the older generation left them)	Under 35s (what the baby boomers left us)
One income family allowed mothers to spend more time with their children	Two income families the norm because the cost of living has gone up and capital owners have lowered salaries as women came into the workforce
Free university education	Forcing people to pay first £3000 per year and now £45000 for 4 years education – about the same as the mortgages the baby boomers used to get when they left university in the 70s
Allowed on the property ladder	Majority unable to leave home and achieve independent property purchases with the median wage
Built enough family homes for all of their children	Stopped building family homes and built smaller and smaller inner city flats to make a profit
Built a decent amount of equity in their homes	Unlikely to have any equity to use to trade up the housing ladder
Provided jobs which were filled from the workforce	Outsourced as much manufacturing to the Far East as possible
Grammar school education and apprentorships for anyone who could prove their ability	Dumbing down of GCSE and A-Level exams to hit “targets” rather than caring about the future of a skilled labour force.
Enabled a care system to look after their elders (a combination of decent work hours and extra bedrooms in their homes)	Forcing society to put their elderly in care homes with little family time for bonding due to excessive work hours
1933 Glass-Stegal act banned the integration of investment banking and retail banking to prevent another Great Depression	Repealed the Glass Stegal act in 2000 to enable a repeat of the Great Depression – for greed not sustainability
Opportunity to fulfil the American dream of homeownership and hard work to achieve a decent living standard for the average citizen	Largest income inequality since records began
Working hours much lower in professional jobs	Banking, legal, doctors, all made to work hard to feed ever  increasing salaries at the top
NHS full of local town natives who cared about their local community and had a rapport with patients	NHS full of management and temp agency workers from abroad. No caring, simply process orientated jobs

Here's another great post from Zero Hedge showing the zero return we have had from our baby boomers since they turned 30 they simply comsumed on debt which they have now asked us to pay for. They complain that "kids today" are unruly and undisiplined when they themselves have provided very little future legacy for their children.

Heed the advice - stop buying pointless plastic crap, start educating your kids in useful activities and generate revenue for the future!

Why banks will fail in 2011... nationalization beckons!

Apparently its too difficult to predict a banking crisis so let's see if anyone takes notice of this blog in a few years.

Key facts:

• USA banks wrote most of the CDS against European credit risk - i.e they pay when Europe defaults

• BoA transferred $50 trillion(!) notional derivatives into their holding company this month essentially now backing dertivatives by the US tax payer protected retail accounts via the FDIC. Clever move -wonder how much the tax payer is receiving for this guarantee? Zero! Bet the BoA execs will earn more than the median US wage though...a lot more!

• French/German/Austrian banks have become technically insolvent if they counted the true value of their Greek debt on their books instead of accounting gimmicks endorsed by politicians who lie to the public

• Runs on French banks have already started with large corporate customers moving their cash away and highlighting that they can get better USD financing with their credit rating than they can from their own banks!

Not that it would be worth reporting in the main stream media but 80(!) smaller banks have already failed in the USA in 2011 with a slightly smaller number failing in 2010 as well. Do you hear about this on Fox News/Sky/ABC/BBC? I wonder why?

Which ones are going to fail? Well here's my punt at the first few...

• BNP Paribas
• SocGen
• UniCredit
• Bank of America (incl. Merril Lynch and Countrywide)
• Spanish CaJa's
• Morgan Stanley

Who knows who is next...but one by one they will crumble due to their inter-connected derivatives, leverage ratios and debt burdens. Once the Greek debt write downs begin all bets are off. If even one bank calls additional collateral due to higher credit risk then its all over. Thanks to the greed of politicians, we're all a bit screwed in the West. What ever happened to civil leaders who had civic duty. Money wasn't  important - the success of their society was the driver. Its all just words now.

Welcome to the complete collapse of banking. I'm sure the bonuses were worth it! Its going to be pandemonium. The Euro is likely to collapse in all but name without issuance of Eurobonds at each country's relative exchange rate (pre Euro).

When will more people learn that the banking system is an outrageous lie allowing a few to gain wealth over the many. It shouldn't be that way but that's what its turned into. Complex mumbo jumbo which has kicked "risk" down the road and made tax payers pay upfront fees that guarantee wealth to a minority! What a clever system if you're a sociopath. Look up kleptocracy, it has taken over democracy.

The only question is when this is going to happen. Timing is tricky but if I were to guess-itmate I'd say we will have smaller failures in 2012 with epic failures in 2014 and complete crisis in 2016.

Update 2013: The ECB and FED have instituted massive swap lines with each other in order to keep banks alive. They have allowed banks to pass worthless collateral to the taxpayer for 100 cents on the dollar and they have pushed money to banks by buying most bonds issued by western governments. Banks are simply trading with this money instead of lending it for real economic growth. IMO, They are only delaying the inevitable

Removing black mould from bathroom / shower corners and silicone

Its the scourge of existence. The black mould that generally occurs in damp parts of houses in the UK. It not only looks bad but it smells nasty and the spores you inhale aren't good for you. There are plenty of online guides which recommend the following:

1. Don't dry your clothes inside

2. Install a humidity controlled extractor fan

3. Open the window a tiny crack before and after you've had a shower

4. Use a fungicide or other brand name mildew remover

Well, a lot of people can't do these things. For instance, the weather is always a bit crap in the UK so no working person can ever dry their clothes outside!

There are a few easy ways to remove this black mould.

1. To prevent mould taking hold: Take one of your empty old spray bottles of Flash/CIF or other spray cleaners and fill it with one part bleach and 4 parts water (try Domestos but any will do generally it has to say the words "bleach" to contain Sodium Hypoclorite - the magic ingredient). Spray this on the mixture in the damp parts of your shower and leave for 10 mins then rinse off. Basically, spray it on when you finish showering and then rinse off after you towel dry your hair etc.

2. If you've already got mould what can you do? Well, put some gloves on, take some bleach in a little tray/takeaway carton and an old toothbrush. Apply the bleach liberally where ever you have mould growth. Then go and make a cup of tea. Come back in 20 mins. Take the tooth brush and scrub along the mould infested areas. You'll find it just comes away easily. Do this a few times for heavy mould areas.

3. If the mould is really bad (i.e you haven't managed to clean it away for a while!) then it may have made its way behind the silicone in the corners of the shower/bathtub. In this case you have have to apply the bleach method above then, if it has gone through into the silicone you'll have to remove and re-lay the silicone. Its not too hard. Remember to get silicone that is fungal resistant.

4. If the black mould has appeared on walls and windows it means you need to spray the bleach mixture (1 part bleach 4 parts water) on the wall. leave for 20 mins then scrub away. Once removed you will probably need to re-paint the affected areas with mould resistant paint. Or buy some mould resistant additive to add to normal bathroom paint (you can find good American ones on Ebay).

All these sprays sold by most retailers are just selling the same ingredients in different forms. The advertising is the only difference - that - and the higher price! Normal bleach just costs too little to make a large profit any more. As far as I'm concerned, good bleach and a chemical to remove limescale (Viakal normally works but there are a few others) is all you need. The rest of the market just enhance the "Citrus" or "lavender" smells but don't make a better cleaning product - which after all, is the main reason you need it!

Retail bloodbath at Christmas 2012

Its safe to assume that all the major department stores and large scale retailers did their planning for Christmas 2011 in July possibly August. This was just before the world fell of a cliff due to the "sudden" realization of the excess debt plaguing western economies. Unless they can reduce their contracted stock they are going to massively discount to get us to buy their oversupply (just like 2008). Don't fall for it Britain. You don't need several new pairs of boots or hundreds of jumpers. Think before you spend - every £1 you spend is effectively borrowed money. The UK government borrows 42p for every pound in your pocket. The deficit spending is over - reign in your desires just for a couple of months over Christmas. If you are unhappy with our economic system this will begin the re-balancing that we so desperately need in the world!

If you want to send a message to governments to fix this mess, its time to stop buying anything this Christmas that isn't made in the UK, Europe or the USA. I know it'll be expensive and right now I couldn't tell you what you could actually since everything we purchase each year for our loved ones seems to originate from the Far East! Maybe by buying raw ingredients and making your family dinner. Look at sustainable ingredients from the UK and Europe. This is the year where we give people our time rather than a crappy Christmas cracker!

Reduced demand for Chinese products will force the communist state to improve its internal demand - we need to rebalance - it is the key to a sustainable economy. Each country in the world must sell useful services and goods to each other. 


Stop the debt - its not too late! The red line has to be below the blue line!

Iphone iOS 5 will remove all SMS revenue for mobile phone providers

Not sure if any telecom analysts read this but:

IoS 5 will enable iMessage in all iphones. This, together with 3G data tariffs and ICloud subscriptions will mean that all the major UK telecoms will lose revenue from SMS. Remember that SMS revenue was far higher than data revenue - its a service that gains a ludicrous margin in %'000s. It cannot be replaced by margin from data services easily. As Iphones become cheaper and cheaper and eventually hit the PAYG market the telecom companies will really miss this revenue. No more excessive charges for SMS text messages whilst abroad. If you're on wi-fi it'll be free through iCloud.

On the other side of coin. Apple will now have access to information from all the texts sent around the world and be able to build a network to determine the people who are most interconnected and targeted for advertising. A real world facebook - no need to register, you just have to use a mobile phone and send texts on a regular basis. That's pretty much 60-70% of the UK earning population - if not more. They'll use this technology eventually to target adverts for adMob and beat google and Facebook in the mobile space.

Let's see if I'm right...

Our politicians can't speak their minds!

Imagine if we had a day where we could allow our politicians to speak their mind. To really tell us what's hindering them or what's wrong with Britain. They could do this without affecting their chances of re-election or pissing off their rich donors, business and vested interests? What would they really say? That's probably what the Bilderberg group is for. You see, it's only wealthy people that can be trusted with this information because they have as much to lose as the politicians when the Ponzi scheme that is Capitalism is discovered by the people.

Now, I don't choose either politician party. Each have merits and disadvantages, and most choices in life do. It's not quite black and white. The problem is telling the truth is now impossible if it upsets any powerful vested interest who can prevent that message being delivered to the population. Take the hacking affair - it took two years for the Guardian to plug away until that made any impact. The damage it did to Rupert Murdoch was obvious and no one was powerful enough to take on the media Barron.

Today many secrets exist in plain sight, talked about by masses of journalists but unavailable to print because of super injunctions. If our public service bodies aren't there to serve our public interest then what are they there for? If people are manipulative liars shouldn't the public know? Even if it's deemed tittle tattle or gossip its misrepresentation if you choose to let celebrity in your life. There are plenty of people who live in the public eye and don't appear in tabloids - that's how we know it's achievable!

Officials once had a duty to serve the population but that sense of government has long since disappeared. In fact in all walks of life professionalism has been replaced with clock watching or box ticking. You can't measure passion and pride that easily at work. It's one of the reasons the NHS has begun to be a heartless organisation - process is king and money is the measurement. Is that what the public want? No.

The trouble is politicians have to ask the public to reign in their spending and manage expectations. That is difficult to do when the last 25 years have only re-enforced the idea that greed, consumerism and individuality is good. In fact, its actually not terrible but like anything its about moderation. Politicians just didn't want to tell people about moderation.  Our elders in society are meant to use their experience to prevent previous issues affecting our future society. They have the benefit of hindsight. Unfortunately, when you give humans this power they tend to use it to enrich themselves rather than save the masses.

Take a simple example like house prices. If they rose at 10% a year (as they were in 2003-2006) for even one average life time say 75 years. The average house would be worth £165m. Obviously not sustainable. Why did they not tell us or implement rules to stop this? It's because they got greedy. The vested interests, banks and developers realised they could enrich themselves so they paid off the politicians to do their bidding. Newspapers still seem to think that this "hand in the cookie jar" is of some great surprise to the public. Sure, it sells papers, but everyone knows it happens and that no one will stop it. Its not even "news" anymore.

So how do we create a politician system free from this moral hazard, where the richest get to control feckless politicians for their own nefarious purposes? Well, its time to use technology. We need a crowd sourced government with multiple voting opportunities. We need summarised information for each part of society and equal ability to vote in this new world. The answer seems to be the mobile phone software. Use it vote, capture your thoughts to elected representatives and publish results borough by borough. Basically we need direct democracy - by the people for the people. Mistakes will be made and i'm sure people will attempt to subvert the system but the wisdom of crowds suggest that it would be very difficult to do this on a country wide scale. Now I'm not suggesting I write down a full manifesto here but here are some key suggestions:

1. Enable a simple text/web/phone based voting mechanism that sets deadlines and broadcasts votes and deadlines on all communication mediums next to the programmes with the largest captive audience (make this a broadcaster condition of licence)

2. Enable parliamentary debates to begin with 100,000 signatures on a web portal. The debate should simply present all the material and allow a mass vote.

3. All contracts the government farm out should be presented on an open bidding forum where all limited companies have the right to participate. If they do not complete the contract correctly they receive negative feedback from the people whose service they provide (i.e allow the public to vote if a NHS records system is working correctly - that way you have limited the possibility of corrupting individuals). If we did this at a council level wouldn't it improve voter apathy?

4. Vote in politicians but rank them via a vote system on the number/quality  of solutions they have proposed to a larger is of parliamentary debate problems. They are supposed to have access to the finest minds so technically they will come up with the best solutions from which the public can choose the one they want.

5. Enable governance of employee bank accounts and relationships with civil servants. If they choose to be civil servants they have to be above reproach and more scrutiny will be applied to their private lives - they need to accept this.

6. Bankers should become civil servants to only gain bonuses when the companies they back succeed on improving society. The measures of this need to be worked out but in essence the ideas they back with money should make life interesting, exciting, better, easier or simpler. Difficult to measure but I'm sure we'll think of a way.

Pensions

What I've learned from researching pensions for my dad. [this is in no way investment advice]

So, my dad's turning 65 in April 2011 and I took a look at what his options are. Obviously, because we decided to provide jobs to many middle class workers (see previous post) we  had created hundreds of needless rules to ensure that only the rich can be tax efficient whilst the rest of us have to spend inordinate time and money for the same result.

 One thing I've found is that the insurance and investment industry create a whole new language to make themselves appear more knowledgeable than they really are! Terms like index-linked, annuity, income drawdown, ETF, fund platform ensure that you lose your hard earned money to someone who gives you all the risk and takes a big fat reward upfront. So after doing some significant research as a mere mortal there are a few things you should look out for.

1. If you have a pension, find out what its been invested in all these years, give your pension provider a call and then look up the prices over the last 2 years on Google finance and Trustnet (or similar) and see how they did. In all likelyhood you paid them over 2% of your fund every year to give you supposedly better than average returns.

2. Inflation is supposed to be the increase in the value of goods and services each year. These days its the increase in the amount of money in the country because the government keeps printing more. When the money supply goes up (i.e the goverment prints more) the value goes down. This often leads to misleading statistics about bread costing 3p when your grandfather was a youngster and 90p today etc etc.. The cost of bread hasn't increased, the value of your penny has actually decreased! Its just a "clever" way of controlling the middle and working classes to ensure the majority stay poor - after all everyone can't be rich that's not how capitalism works.

3.Thanks to the financial crisis, insurance companies have pretty much pulled back on good offers for annuities.  An annuity is simply a guaranteed income for the rest of your life. So you give a pension company your saved nest egg and in return they calculate when you will die (based on statistics) and agree to pay you a set amount for life. If the amount is linked to inflation i.e it goes up every year with the cost of living then they will start out paying you less. Remember they want to make sure they keep as much of your money as possible! That's how they make a profit.

4. Its definitely worth asking a few different insurance companies for quotes - they will 9 times out of 10 be higher than your own pension company. Additionally, this is the only time in your life where telling them all about your illnesses, previous health related issues and your chain smoking actually makes you money!


5. Income drawdown - In my opinion income drawdown (for pensions that are reasonable e.g over 100K) is now a better bet than annuity. You can take 25% of your fund as a tax free lump sum and use the rest to invest in some income funds which pay out rates more likely to be higher than inflation. If you think logically, solid companies which earn profits must be part of the inflation calculation. As their costs rise they pass them on to the consumer. If you are an owner of these companies (via a fund which owns shares in them) you become inflation protected. Obviously your capital (your cash invested) may rise and fall with the stock market but the return you make should be reflected by their continuing profits in a inflationary environment. For instance, a utility company will increase prices to maintain its profits when the price of oil and gas rise.


6. Invest yourself - why pay someone else to screw up your life?


Investment managers take up to 5% of your fund upfront simply to provide a "service" which has no guaranteed results. Its like buying an iron and after a year of not being able to iron your clothes you are told you can't return it and you've lost the money you paid for it.

In my opinion if you spent a 3 or 4 days in a year focused on your funds and move them if necessary - you would save that 5% fee and probably do as well if not better than these "advisors". Sometimes people feel they don't know enough to do this or feel that investment professionals know more about which investments are better. The reality is that most of these professionals don't really provide better returns so why pay them?

If you look at safe "income" funds which provide you the money from your investments each year, you can invest these in safer funds through an income drawdown pension investor and pay a yearly fee of around £500. Services like SIPPs provided by Alliance Trust. Take a look and have a read. Save yourself £000's of pounds. Look at what the funds invest in and think logically about what people will always need and purchase e.g food, light, heat, weapons, drugs.

Comments welcome.

The future of Britain (UK) - it looks bleak

So, apparently its really difficult for politicians to tell the public the truth. We all know this but yet we continue to believe them. I just don't understand why. Is there a choice you might ask? Yes, there is! We need to occupy the streets and make change happen! Look at occupy Wall Street. The movement has been ignored by all western media - whilst they continue to show us "arab spring" scenes from Syria they refuse to show thousands of people acting against their governments in the UK or America? Could we be controlled just as easily as the human beings in the Middle East?

Lets look at two simple graphs and try and look at what is going to happen in Britain in the next 5-10 years

Graph 1: Population of the UK split by age

So, we can see the population through the eyes of those over 40 is a perfect pyramid scheme. There were always more workers to pass your work off to. You could comfortably go into management knowing that the next generation will be there in greater numbers to do your grunt work whilst you think of "strategy and direction". Do younger people not realise a pyramid scheme when they see one?

Now look at the population after the 40 year olds. There's a huge gap in the pyramid. The older generation have filled jobs with immigration and outsourcing and as a double whammy made having children and child care in general very expensive for the middle classes. We have a inverted pyramid for those who are 39 and below.

If the Conservatives do as they have promised and close down immigration from outside the EU we will see the cost of younger skilled labour rise if there are jobs available.

Remember those currently in the 15-19 age group will also hit the job market with debt of £40-60K actually equivalent to the mortgages that the 50-55 age group actually started to buy when they were starting a family. This will make kids even more unaffordable for the middle classes as they will have a huge debt on their heads before they can even begin to build equity in a property.

The politicians can obviously see all of this but won't bother showing this simple graph to the public nor will the media as its one big game to make you believe in an idea like "we're all in this together" or " the squeezed middle". The politicians always get paid and magically they are all wealthy enough to afford two houses, children and private education. So they have safeguarded their future the question is are the British people willing to fight the political classes for theirs?

It's time to get government that lives by the same rules that its population has to live by rather than simply being the overlords. Its time for no more free housing and transport for politicans - they do a job like everyone else. If they need to move down to London - buy a house and move your family. You can stay in your continuency house when you need to in a one bed room flat owned and paid for by the government or local authority each MP represents. Plenty of mums and dads have to leave their family behind in order to work why shouldn't politicians? They chose the career!

Next up: Who is going to pay for the health costs for all of that lovely pyramid of 40+ year olds?

Graph 2: Health care costs

Its unavoidable. There will definitely be more older people in our future. Look at the population graph its a mathematically certainty!

Now lets study the healthcare costs. Since Tony Blair came to power he pumped a very high real term increase in spending for the NHS (i.e above inflation). That kind of spending can't be sustained unless Britain is growing its economy at a phenomenal rate.

David Cameron will have to reduce spending but even so, we've seen from the population graph that more and more people are getting older. If he reduces spending each person will have less and less spent on them. THE NHS WILL BECOME TERRIBLE its a foregone conclusion based on the facts. Less beds, less space per person, less treatment, more self care and out patient work, and fewer operations until absolutely necessary. The list can go on and on. We just don't have the money to pay for over 40s to get sick. Now remember which age group all the capital (i.e money) and power (i,e heads of companies, senior management and cabinet ministers etc) They will look after themselves rather than the children in the UK. The wealthy ones know that their kids will be ok. They would rather enjoy their retirement than let the nation's kids have a lifestyle anywhere close to the one they enjoyed. Why do we think equality and child poverty are getting worse in the UK?

The future will therefore be one of mass emigration for the younger generation who look elsewhere for cheaper house prices and higher wages or significant wage inflation for the smaller supply of labour in the population. Robots (or other technology) may change these dynamics but that has yet to be proven. As things stand the pictures above illustrate that it was easy to see this coming but the politicians just couldn't be bothered to do anything about it. Instead they promised the world to retain power at all costs. 

Its a shame the younger generations will pay for the sins of their fathers. I hate it when people simply complain with out actually trying to think of solutions. Shadow cabinet politicians seem to think that is their role for some reason - when actually we need them to price and forecast different ideas to share with the public. So in an effort to help - here are actions we could undertake to minimise the trough in this business cycle - How to help Britain