Tuesday, December 15, 2009

Gold Related Silliness

Guido reckons we should all start buying gold in order to hedge against the coming inflationary apocalypse, the whole idea seems a bit silly to me.

An above expected rise in inflation (from 1.5% to 1.9%) is not exactly grounds to start panicking. Japan despite employing quantitative easing for a very long period of time never experienced inflation, it's still struggling with deflation.

Even if we were to see inflation, how much would we see and is it really wise to hedge with gold? An unlikely nightmare scenario of two years at 20% inflation would give us around a 30% drop in the real value of the pound, is it really wise to hedge against a 30% loss in an asset with whose price has nearly tripled since 2005.

As far as I can see there's been a rush to gold going on for some time now, much of it brought on by fears of inflation. Just how long can this gold bubble be sustained? And what if the predicted inflation doesn't come? Personally, I really don't trust in the price of gold remaining as I has it is forever.

I wouldn't be surprised if we see a little more inflation in the next few years, I think you'd be mad to want to guard against it by buying gold though.

Should Labour facilitate a progressive reengagement by implementing a philosophy of pragmatic rediscovery?

The title of this post, in case you're wondering is based on my idea for a Fabian essay title generator. I've chosen it in celebration of this Guardian piece by Tessa Jowell on adapting the mutual model for public services. I'm not necessarily against it, it's just that the whole idea seems to have been taken from some kind of politician's guide to gimmicky policy announcements.

It's a simple enough process..

Stage 1 is to take an idea that is universally acceptable to everyone (like co-ops, mutuals, the voluntary sector,local democracy or Google for example).

Stage 2 involves the publishing of an article about said idea filled with management speak by a major government figure in a major newspaper. This article will explain how this new idea can be used to form a model that will transform public services.
Indeed, can we really expect citizens to take on greater responsibility for their own health, learning, and environmental impact, if public services fail to give them the right to shape the ways in which they deliver them? We can. By bringing users, employees, and others together as mutual members of the provider organisation we can successfully get to grips with the supply side of public service.
..let us give brief thanks that the article did not contain the word "stakeholders"..

The Final Stage is for the same politician to deliver a lecture. This lecure must have a title in the form of a question and ideally contain words such as: agenda, reform, progressive, pragmatic and so on.
Rt Hon Tessa Jowell MP is delivering the Progress lecture, The Mutual Moment: How Progressives Can Capture the Ownership Agenda
And so it is complete..

Monday, December 14, 2009

I'm not Sure I Buy This

Now it's no secret that I don't like the finance industry. I happen to think that bankers are overpaid for what they do. I also don't appreciate their actions in bringing about the financial crisis and their action in pumping the housing market up to ridiculous proportions.

That said, I really can't endorse the figures that have come this latest report from the New Economics Foundation. Apparently:
The report said tax accountants were the most destructive, laying waste to £47 of value for every £1 they created. Elite City bankers (earning £1m plus bonuses) destroy £7 of value for every £1 they create and advertising executives wreck £11 of value for every £1 they are paid.

On the other hand, the report judged that waste-recycling workers generated £12 for every £1 spent on their wages. Childcare workers create between £7 and £9.50 of value for every £1 of pay and hospital cleaners create more than £10 in value for every £1 they receive in pay.
As I said, I think bankers are overpaid, but the numbers in this report are just absurd. I find it hard to believe the conclusion that bankers make no contribution towards the economy.

A more detailed look at the methodology they used doesn't help. For bankers the calculation largely seems to be based around the cost of the financial crisis over the next 10 years, which doesn't strike me as a particularly good method (why not consider year's prior to the crisis for example).

The report basically amounts to doing a little bit of maths in a very selective fashion and using it to justify a set of political conclusions. I don't approve of that kind of behaviour when it's used by the Taxpayers Alliance so I feel it would be wrong of me not to criticise a left wing think tank for taking the same attitude to their research.

Tuesday, December 08, 2009

Government IT Spending

I'm really not sure about this whole annoncement on scaling back the NHS IT programme. The standard of reporting It's been my experience that in order to express a meaningful opinion on the usefulness of an IT project you need a) some understanding of the business processes that the IT system is supposed to facilitate and b) some kind of basic technical knowledge.

A large number of the politicians don't seem to have educated themselves appropriately. Whit is generally referred to as the NHS IT system is a whole bundle of different IT projects designed to achieve a different ends, so when Andrew Lansley says that the Tories will ditch the "enormous centralised IT system" and instead give hospitals "the opportunity to buy IT systems" he is issuing nothing more than a worthless soundbite.

It's also interesting to see that the Tories grasp of figures is equally poor:
The Tories said the government had spent £100bn on IT since 1997 and contracts
worth another £70bn were due to be renewed or commissioned over the next two
years. They said a Conservative government would put those projects on hold

If you add up the total government spending between now and 1997 you end up at £5.66 trillion, spending on IT works out at about 1.7% of that, not exactly excessive.