Now where was it that I lived?
Aug. 21st, 2010 02:03 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksMy employer, as you may or may not be aware, redomiciled a couple of years ago to that well-known financial capital of Zug, Switzerland. It wasn't alone. Brit Insurance is now domiciled in the Netherlands (observant readers who pass its nameplate on Bishopsgate, opposite Chez Gerard, will see that the "PLC" has disappeared from the name, but has not been replaced by an "NV"), Catlin is domiciled in Bermuda, and the holding company of Resolution is domiciled in Guernsey. Chief financial officers have spent a lot of time over the past few years deciding (or not), to move to domiciles that are less tax-shitty. There are plusses and minuses on both sides.
Interesting, therefore, that a number of companies are redomiciling to the UK. Why on earth should they do this? Well, as Anousha Sakoui observes in the FT this morning, England is a good country in which to restructure your debt. In this sense, should you happen to hold corporate bonds in any company, any indication that the company is moving its "centre of interest" to the City of London should be viewed with serious alarm. There would be, sadly, a strong likelihood that the company would be looking for a pre-pack administration -- one of our more concerning legal manoeuvres -- whereby the people running the company would effectively keep their jobs and wages, while owners of the old company's debt would be fucked. Moral hazard in extremis, as they say.
I blame football -- prepacks were kind of necessary in football if you were going to maintain the fixture list, and thus we had Wolves, Charlton, and doubtless others I can't recall reappearing as new legal entities without missing a game. If you didn't own debt in the company, you might not even have noticed.
++++++++++++++++
When one reads opinion pieces in the financial press these days it's a bit like a broken record. First of all the columnist points out what has happened: then he says what needs to be done; and then he points out the "challenges" or "obstacles" which show, quite clearly, that the first two-thirds of the opinion piece wasn't much use, because what needs to be done isn't going to be done in a million years.
John Plender in the FT this morning observes that
and that
but just before you can say "well, no shit, Sherlock" he points out that, particularly with reference to China
Plender's assumption this is all about a dastardly Chinese government is not quite accurate. Indeed it is true that the more sensible forces in control in China are petrified of a rapidly increased standard of living, not least because this is a sure-fire recipe for social instability. It is these conservative forces that are backing the purchase of US Treasuries even though they (like the Americans) know that such a system cannot be sustained forever.
But it goes beyond this, as a recent Economist Intelligence Unit survey found. Chinese consumers themselves have a savings mentality that comes from their parents and grandparents. While today's young generation in the West (particularly the UK and US) are influenced by parents who had their debts and mortgages wiped out by the inflation of 1973 to 1990 (and the existence of a government "safety net"), in China people are influenced by parents and grandparents who knew that saving for retirement was a necessity, because, if you didn't, you would starve.
The rural Chinese, it turns out, not only save about 40% of their income (even in Shanghai more than two-thirds save more than a quarter of their income, compared with just 15% of the Swiss) but many have no intention of buying things which we now see as necessities rather than luxuries. Not only do half of rural Chinese not have a refrigerator, but 40% of that half have no intention of buying one.
On the one hand this is desperately bad news for countries planning to export their way out of recession (paradoxically it isn't so bad for the UK, because we aren't leaders in the white goods export market) while on the other it offers a ray of light. It would appear that the Chinese government has no objective to rural Chinese having fridges, or mopeds, so if the marketers can get to them and use the tricks used in the 1960s (see "Mad Men") that says "you are shit if you don't own this" then the whole economic plan being put together in the West might just work. Of course, morally it sucks. But, well, just give up your annual holiday, your car, and move back in with your kids/parents if you want to be so morally high-horse about it.
On a slightly related note (in that, if plan A above fails, we can always resort to the massive inflation solution that worked so wonderfully in the 1970s, (or not)) Adam Fergusson is interviewed in Life & Arts in the FT today, and interviewer Jonathan Ford falls into that classic Protestant-ethic mistake of confusing values with efficiency.
Fergusson wrote that cult-book-turned-besteller "When Money Fails", a timely reminder of Weimar and German hyperinflation.
Fergusson does make one strong observation of the perils of inflation in that it had the impact in Germany of concentrating wealth among "coagulated blobs among the new plutocracy". And when one looks at Russia in the 1990s one sees historical echoes. But he doesn't back this up with any evidence that this is a given with massive inflation -- one would think that, the more evenly distributed the debts, the more redistributive would be the impact of high inflation.
But, back to Mr Ford, who writes that "High inflation wiped out debts, atomising the savings of the prudent and redistributing wealth to the fortunate or simply unscrupulous".
The key word here is "prudent", to which one would answer: "Well, they weren't that prudent, were they, if they lost all their wealth? Why didn't they spend it while they had it? That would have been the prudent thing to do."
But "prudence" gives of two meanings in this sense and, like many a lobbyist, Ford confuses the two. By "prudent" he really means "righteous according to my ethics", but he can't write that. Similarly, the antonym is "imprudent", but he avoids using that in the second half of the sentence (interposing instead the word "unscrupulous") because clearly if you got a right result, you couldn't have been that imprudent.
The use of value-loaded and "hooray" words in lobbying, journalism and politics is a curse with which we have to live. The sad thing is that it is the users of these words who are more fooled by them than the readers/viewers.
Here was an interesting picture posted by a Facebook friend
Look at the "aims". "End the waste". "Pay back the debt" and "Help Families" (not to mention the lead slogan "support real action"). Well, all very admirable. I look forward to seeing the campaign saying that families suck and all breeders should be taxed to shit, that waste is excellent because our modern society actively depends on waste in order for the economy to survive, and that the last thing Australia should be doing is paying back debt because that will help send the world into global depression.
As I've said before; if no-one in their right mind would say the opposite of what you are saying "should be done", then what you are saying is (in the Wittgenstinian sense) meaningless and (in the Birks sense) worthless. Words such as "fair", "just" and "equitable" in the general mode of use just contribute to carbon emissions because of the excess of hot air produced.
I suspect that this is where I part company with most anti-capitalists. Whereas most people on the left think of the characters involved as baddies, I tend to see them as generally incompetent, operating in a system that is (a) inefficient and (b) unsustainable. So side (A - the left) will be arguing on one thing, while side (B - the capitalists) will simply say "you are building up straw men to knock down". Unless both sides can actually address issues from the other side's point of view then no resolution can be reached.
But, I guess, that's partly the point, because if these issues were resolved, both sides wouldn't really have anything to do. And for many of them, I think that the game is the thing, and the aim is subsidiary.
______________________
Interesting, therefore, that a number of companies are redomiciling to the UK. Why on earth should they do this? Well, as Anousha Sakoui observes in the FT this morning, England is a good country in which to restructure your debt. In this sense, should you happen to hold corporate bonds in any company, any indication that the company is moving its "centre of interest" to the City of London should be viewed with serious alarm. There would be, sadly, a strong likelihood that the company would be looking for a pre-pack administration -- one of our more concerning legal manoeuvres -- whereby the people running the company would effectively keep their jobs and wages, while owners of the old company's debt would be fucked. Moral hazard in extremis, as they say.
I blame football -- prepacks were kind of necessary in football if you were going to maintain the fixture list, and thus we had Wolves, Charlton, and doubtless others I can't recall reappearing as new legal entities without missing a game. If you didn't own debt in the company, you might not even have noticed.
++++++++++++++++
When one reads opinion pieces in the financial press these days it's a bit like a broken record. First of all the columnist points out what has happened: then he says what needs to be done; and then he points out the "challenges" or "obstacles" which show, quite clearly, that the first two-thirds of the opinion piece wasn't much use, because what needs to be done isn't going to be done in a million years.
John Plender in the FT this morning observes that
China's export-led growth ... has been possible only because the US and other deficit countries have been willing to run up large debts to finance household consumption
and that
What is needed globally is for both debtor and creditor countries to rebalance their economies
but just before you can say "well, no shit, Sherlock" he points out that, particularly with reference to China
the key to rebalancing towards consumption (relaxation of government controls) is unlikely to happen.
Plender's assumption this is all about a dastardly Chinese government is not quite accurate. Indeed it is true that the more sensible forces in control in China are petrified of a rapidly increased standard of living, not least because this is a sure-fire recipe for social instability. It is these conservative forces that are backing the purchase of US Treasuries even though they (like the Americans) know that such a system cannot be sustained forever.
But it goes beyond this, as a recent Economist Intelligence Unit survey found. Chinese consumers themselves have a savings mentality that comes from their parents and grandparents. While today's young generation in the West (particularly the UK and US) are influenced by parents who had their debts and mortgages wiped out by the inflation of 1973 to 1990 (and the existence of a government "safety net"), in China people are influenced by parents and grandparents who knew that saving for retirement was a necessity, because, if you didn't, you would starve.
The rural Chinese, it turns out, not only save about 40% of their income (even in Shanghai more than two-thirds save more than a quarter of their income, compared with just 15% of the Swiss) but many have no intention of buying things which we now see as necessities rather than luxuries. Not only do half of rural Chinese not have a refrigerator, but 40% of that half have no intention of buying one.
On the one hand this is desperately bad news for countries planning to export their way out of recession (paradoxically it isn't so bad for the UK, because we aren't leaders in the white goods export market) while on the other it offers a ray of light. It would appear that the Chinese government has no objective to rural Chinese having fridges, or mopeds, so if the marketers can get to them and use the tricks used in the 1960s (see "Mad Men") that says "you are shit if you don't own this" then the whole economic plan being put together in the West might just work. Of course, morally it sucks. But, well, just give up your annual holiday, your car, and move back in with your kids/parents if you want to be so morally high-horse about it.
On a slightly related note (in that, if plan A above fails, we can always resort to the massive inflation solution that worked so wonderfully in the 1970s, (or not)) Adam Fergusson is interviewed in Life & Arts in the FT today, and interviewer Jonathan Ford falls into that classic Protestant-ethic mistake of confusing values with efficiency.
Fergusson wrote that cult-book-turned-besteller "When Money Fails", a timely reminder of Weimar and German hyperinflation.
Fergusson does make one strong observation of the perils of inflation in that it had the impact in Germany of concentrating wealth among "coagulated blobs among the new plutocracy". And when one looks at Russia in the 1990s one sees historical echoes. But he doesn't back this up with any evidence that this is a given with massive inflation -- one would think that, the more evenly distributed the debts, the more redistributive would be the impact of high inflation.
But, back to Mr Ford, who writes that "High inflation wiped out debts, atomising the savings of the prudent and redistributing wealth to the fortunate or simply unscrupulous".
The key word here is "prudent", to which one would answer: "Well, they weren't that prudent, were they, if they lost all their wealth? Why didn't they spend it while they had it? That would have been the prudent thing to do."
But "prudence" gives of two meanings in this sense and, like many a lobbyist, Ford confuses the two. By "prudent" he really means "righteous according to my ethics", but he can't write that. Similarly, the antonym is "imprudent", but he avoids using that in the second half of the sentence (interposing instead the word "unscrupulous") because clearly if you got a right result, you couldn't have been that imprudent.
The use of value-loaded and "hooray" words in lobbying, journalism and politics is a curse with which we have to live. The sad thing is that it is the users of these words who are more fooled by them than the readers/viewers.
Here was an interesting picture posted by a Facebook friend
Look at the "aims". "End the waste". "Pay back the debt" and "Help Families" (not to mention the lead slogan "support real action"). Well, all very admirable. I look forward to seeing the campaign saying that families suck and all breeders should be taxed to shit, that waste is excellent because our modern society actively depends on waste in order for the economy to survive, and that the last thing Australia should be doing is paying back debt because that will help send the world into global depression.
As I've said before; if no-one in their right mind would say the opposite of what you are saying "should be done", then what you are saying is (in the Wittgenstinian sense) meaningless and (in the Birks sense) worthless. Words such as "fair", "just" and "equitable" in the general mode of use just contribute to carbon emissions because of the excess of hot air produced.
I suspect that this is where I part company with most anti-capitalists. Whereas most people on the left think of the characters involved as baddies, I tend to see them as generally incompetent, operating in a system that is (a) inefficient and (b) unsustainable. So side (A - the left) will be arguing on one thing, while side (B - the capitalists) will simply say "you are building up straw men to knock down". Unless both sides can actually address issues from the other side's point of view then no resolution can be reached.
But, I guess, that's partly the point, because if these issues were resolved, both sides wouldn't really have anything to do. And for many of them, I think that the game is the thing, and the aim is subsidiary.
______________________
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no subject
Date: 2010-08-21 02:48 pm (UTC)DY
no subject
Date: 2010-08-21 02:53 pm (UTC)Speaking of which, what about the French and Italian use of the Roma as convenient scapegoats for their own countries' lacklustre economic performance?
PJ
no subject
Date: 2010-08-22 01:02 am (UTC)Titmus
no subject
Date: 2010-08-22 07:26 pm (UTC)no subject
Date: 2010-08-22 08:31 pm (UTC)It might not be that orthogonal at all, in a way. I'll get to that.
I was a little perplexed by the news that Brit Insurance re-domiciled to the Netherlands (hardly a tax-beneficial move that my own accountant would recommend, if indeed I have one). Then I realised that this is either an immediate move to the Netherlands Antilles, or else a short step towards that. One of the big, unanswered, questions about G7..20 "solutions" to avoid a repeat of the recent Great Financial Depression is why there is no steam in the international engine behind the idea of getting rid of offshore tax havens once and for all.
China (and how I enjoy discussions about the Chinese economy, because they almost invariably play into my field, History, and not into the advertised field, Economics), has, I think, fallen into an unanticipated trap here. It's not so much the rural poor. It's not so much wage inflation. It's not even property bubbles -- and the Doubleday Rule of Thumb is that if everybody involved in the process of selling a particular market's real estate says "rumours of its imminent decline are exaggerated," then that's a good time to get out.
Nah. The present and looming problem with China is massive industrial overcapacity, which was in fact encouraged by the PRC between 2008-2010 in the fond hope that the rest of the world would start buying again. Well, that's not going to happen, and the "overcapacity" isn't some stupid Western thing involving service companies: it's factories and production lines and massive stockpiles of raw materials. This is not going to be an easy one for the Communist Party to deal with.
Oh yeah, the boat-stopping thing. Passing by the vague present swingometer (72 Lab 73 Lib/Nat 1 Green Loon 4 Loonier Ind 76 Needed for majority), and concentrating on the ridiculously small number of swing constituencies, and still ignoring the fact that the Aus Labour party failed to put the traditional money in the traditional brown paper bags, the problem is simple:
There are only about ten constituencies that currently make any difference at all to the result. These constituencies tend to be either in the Western Suburbs of Sydney (v blue collar, old South European immigrants from the 70s) or in the more booming bits of Queensland.
Sadly, the bog-standard political discourse in Australia is therefore to bleat on about the ozone layer and Mom and Apple Pie and ... whoops, that would be pay back the debt and stop the waste ... in order to lock down the sheep, and then fight over the one issue that actually matters to the 20,000 "swingers."
It's getting much better these days. These days, it's only "Stop the Boats." Thirty years ago, it was "Bring back free-range shooting of Abos."
The other Power-point issues are merely a clearing of the throat. The only important point is buried in a nice safe place that will be noticed by the intended audience but which won't cause palpitations amongst the activists.
Such is liberal democracy these days.
Fuck the Fascists
Date: 2010-08-22 08:32 pm (UTC)no subject
Date: 2010-08-22 08:44 pm (UTC)PJ
Yer Friendly Uncle Grammar Nazi
Date: 2010-08-22 09:10 pm (UTC)Argument from lack of authority
Date: 2010-08-22 09:39 pm (UTC)Emotional detachment is always a fine thing. Except when it gets people killed. You may want to go back to 1939 and 1982 and reconsider your position, O Grumpy God.
And in fact it's irrelevant to my concise argument about the Aussie election. I'd trust Bowen to collate the numbers better, but I lived there for a year, and I know what the bloody place is like, come election time. It's a horrible cross between Tammany Hall and the Oxford Union.
Correct me if I'm wrong, but most of the heroes of modern democracy, as epitomised by a varied selection from Edmund Burke and Thomas Paine through the Chartists and Lloyd George (1911, if not after) and the Bevan/Bevin twins, and the little man down the village Post Office that closed who still sits on the parish council ...
... None of those people give a shit about your "emotional detachment."
The very fact that any political party is able to put up a "Stop the boats" argument anywhere on their silly, balloon throwing, hey-there's a barbie-next, comfortable little middle-class rally dooms these Ocker fuckers to purgatory, as far as I'm concerned.
I'm not remotely in favour of uncontrolled immigration (although I should be, because I'd be back in California right now, and fuck the lot of you). However, I object to political irrationalism (Australia really doesn't have a current immigration problem/issue) combined with a sordid appeal to the past (they're not talking about "immigration," they're talking about "boat people.")
"Boat-People" is a nasty little trigger issue in Australia that started off from Vietnam (with that country's wonderfully stupid decision to throw out 10% of the population just because they were Chinese) and had knock-on effects in the new host countries (mostly Australia in the '80s and '90s). But it's no longer relevant.
This isn't political discourse on a Power-Point presentation. It's basically a combination of ignorance, terror, and fascism.
I'd go with your mates from 1939 and 1982, if I were you. Fuck emotional detachment. Get real.
Re: Argument from lack of authority
Date: 2010-08-22 09:51 pm (UTC)Re: Argument from lack of authority
Date: 2010-08-22 10:12 pm (UTC)You can probaly look up on Google the guy from 1939 by the way. His name was Heinrich Fraenkel.
The only other area where I feel similarly is capital punishment (my opposition to it thereof). I try to avoid getting into discussions about that as well. My atheism I don't even bother about. I'm happy to let people carry on believing in a greater being if it makes them feel comfortable. Unlike Dawkins, I don't think it's religion that causes bad things to be done by human beings. I just think that it's because human beings, generally speaking, suck. If we were all atheists, we'd find some other reason to kill each other.
PJ
Re: Yer Friendly Uncle Grammar Nazi
Date: 2010-08-23 05:42 pm (UTC)Good god, man, it's only five sentences! Even you can manage to keep your attention span going for that long, surely!!
Re: Yer Friendly Uncle Grammar Nazi
Date: 2010-08-23 06:08 pm (UTC)To take your commendably pithy comment as an example, blog-speak generally incorporates an unusually large number of parentheses (three, in your case), plus tropes such as ALL-CAPS, ellipses, and hyphenated by-the-bys. For fairly obvious reasons, these are not seen so much in books of 200 pages or so. Without due care and attention, they have a nasty tendency to slide into verbal hiccups and distract the reader from the point at issue.
That's why paragraphs are important in blog comments.
As you know, I'm a naturally lazy person, and I make this point simply on the basis that it takes little or no effort and it therefore works for me.
There's actually nothing wrong with your monobrow paragraph, except that when I read "policy is not what is being sold any more" I had to return to the top to decipher exactly what premise was being developed to this conclusion.
Perhaps I'm wrong, but your argument would present far better if you put a para break before "I think there are," and a further para break before "Since it's impossible..." (although the second of these isn't quite as forceful).
And of course I'm not being a Grammar Nazi. I'm being a Style Nazi. This rather worries me, since I have no intention of being the Gok Wan of the Internet.
Re: Argument from lack of authority
Date: 2010-08-23 06:38 pm (UTC)On a side note, and remembering your long-standing hatred of small talk, I sometimes wonder why I go down the pub at all. (Precisely for the reasons you adumbrate.) Pub conversation in my experience breaks down into four basic categories:
(1) Things that convention suggests one should not talk about in pubs. Broadly, religion, politics, and the law. I can pretty much guarantee that I will be on the obverse side of these arguments, and the results are never pretty for anybody.*
(2) Subjects in which you are an acknowledged expert. I'm a little short on these. Being in possession of a degree in History puts me at something of a disadvantage, because somebody is always coming up with a preposterous theory about the Habsburgs or something. Since footnotes are not generally available in pubs, this case degenerates to (1).
(3) Subjects in which you have a mild interest, but by which the bloke sitting opposite is fascinated. These are wildly diverse. They may include (if you're lucky) cooking; they may involve minority sports (which always devolve to some other minority sport which is somehow more important). These conversations used to be a harmless diversion, but in the age of the internet they now lead to promises to "look it up and get back to you." Given the veracity of the average internet lookup, I think (3) is now actually worse than (2) or (1).
(4) Small talk. Never good. Particularly bad when it comes to the "water cooler" level of TV sitcoms or Eastenders In Space or Sherlock Holmes. The problem with small talk, paradoxically, is that it is precisely during "small talk" that you realise that you have nothing in common with the other person and, in fact, you secretly despise their tastes.
There's not much left but drink. You don't do that any more, and I couldn't do it today because the local pub is run by an idiot and the cellars had flooded for the third month running.
Checked out Heinrich Fraenkel, btw. Excellent man, somewhat wasted on the University of New Mexico as far as I can see. As with quite a lot of interesting people, he's not too well served by the Web.
* If you think that capital punishment is contentious, you should try my local, where nothing short of slow evisceration with red-hot pincers is deemed suitable for child molesters...
Re: Yer Friendly Uncle Grammar Nazi
Date: 2010-08-24 04:08 am (UTC)This is not a good image.
Prepacks and football
Date: 2010-08-24 02:37 pm (UTC)I've been amazed by the supine attitude of most football club debt owners over the past few years -- I still don't have a clue what Chanrai is doing at Portsmouth (other than some extremely complicated property play), and he's one of the ones who's actually getting some money back. The idea of RBS taking over Liverpool is equally bizarre in a different direction. If RBS were a private equity firm, I could see it working: book the assets at £270 million, or whatever it is; shunt cost items around via SPVs; sweat the assets; and hold out until some cash-rich foreign buyer comes along for a 50% book profit. With RBS and regulatory requirements and a complete lack of in-house knowledge on how to run/market a football club, this seems unlikely.
In general, Premier League clubs are surely a big enough financial proposition (with nice juicy debt attached) to make a vertical market possible for Premier League insurance. Is there any such thing? Is anybody trading in Premier League CDSes? Would St John's Ambulance be able to get insurance on their exposure?
It would be sort of entertaining if there was. Clearly, no sane organisation would expose themselves to Premier League debt without some sort of insurance. Presumably the consequence would be that any contract signed with a Premier League club would come with a 20% padding to cover the insurance premiums ...
Re: Yer Friendly Uncle Grammar Nazi
Date: 2010-08-24 02:40 pm (UTC)