Friday, December 30, 2022

The inflationary elephant in the room

House prices are supposedly due to fall by as much as 12 per cent in 2023. There is a cost-of-living crisis. Taxes are at record highs. Inflation at around 10 per cent is bringing Britain to a standstill thanks to a series of strikes over pay by everyone from nurses to border guards.

Much of this has been caused by the war in Ukraine and the resulting rise in energy prices.

But it is also due to the Government and the Bank of England’s reckless money-printing programme which dates back to 2008 when the capitalist system almost imploded.

Finally, in December 2021, the Bank of England woke up to the idea its 21-month-long 0.1 per cent base rate was childish and nonsensical and started, slowly and cautiously, raising interest rates to the present, still historically-low, 3.5 per cent.

Given the Bank’s one and only Government-imposed task, when it comes to interest rates, is to keep inflation at two per cent, it has failed abysmally and must share much of the blame for the economic crisis and our winter of discontent.

The question is why did the Bank get it so wrong? If we discount the war and the pandemic and even the credit crunch of 2008, when there is some justification for lowering interest rates to keep the economy alive, the Bank still failed to react fast enough to the threat of inflation.

And we have to recognise that inflation – for a time presumed to be dead but, in reality, merely waiting to pounce – is still and always the economy’s greatest enemy.

The answer is in the way inflation is calculated – the statisticians fail to take into account the single most obvious and pernicious inflationary stimulus of them all: house prices.

There are technical arguments about why house prices are excluded from the calculation, largely to do with the fact that a house is a capital good, not a direct influence on the day-to-day cost of living.

However, neglect of house price inflation is one of the prime causes of this bout of inflation. And analysis of previous economic cycles shows this neglect his stimulated inflation in the past and forced the Bank (and before that, politicians) into belated attempts to retrieve the situation.

The rate of house price inflation is a clear and obvious indicator that the official inflation rate is set to rise sharply and that the Bank base rate must be increased. Failure to take account of house prices in the official calculation of inflation means the Bank is condemned to reacting too late. By the time it puts up the cost of borrowing, the inflationary damage has already been done.

If we look at previous inflationary spikes, this becomes clear.

In 1972, house prices rose 26.7 per cent and another 39.8 per cent the following year. Official inflation was at 7.1 and 9.2 per cent; base rates at five per cent rising to 8.2 per cent. In 1974, they had to rise to 12.75 per cent as the Barber boom turned to bust.

The 1988 Lawson boom and bust had inflation at just 4.9 per cent, base rates at 8.3 and house prices running away at 10.3 rising to 32 the following year. Too late – again – interest rates rose to peak at 14.79 in 1990. High interest rates persisted through the 1990s – partly because of the Government’s ridiculous European exchange rate disaster – and house prices actually fell while inflation was tamed for the time being.

In the early 2000s, the official inflation rate was down around two per cent but house prices were once again soaring ahead – 25.8 per cent in 2003, 16.9 per cent the following year. Interest rates were around four per cent. But the failure to consider the housing market boom was the cause not of inflation, this time, but of something even worse – the financial crisis when it looked, for a moment, as if the entire capitalist system might come crumbling down.

If the Bank recognised the early warning presented by rising house prices, and if it had put up interest rates in response, would it have averted this disaster? Possibly, though of course we will never know.

The rock bottom interest rates we had for more than a decade after the 2008 crash have inevitably stimulated greater borrowing and soar-away house prices (exacerbated by the quantitative easing money-printing indulged in by the Government and the Bank to the tune of an incomprehensible £875 billion.

Between January 2009 and July 2022, the average house price rose 73 per cent, from £157,234 to £272,111. Had house prices risen with the official inflation rate, the average home would have cost £222,240 last July, a rise of 41 per cent.

Prices really took off after the pandemic but the Bank, slow to react, as usual, was still fiddling about with piffling rates of interest. It only started to take action when the official inflation rate began to rise, ignoring the early indicator of yet another over-heating housing market.

The failure to account for house price increases may be justified by economic purists but the evidence strongly suggests they feed into the economy as a whole and lead inexorably to rising prices.

This is inevitable, if only because home-owners see the value of their biggest asset rising and, as a result, their mortgage debt is, in effect, shrinking. They are encouraged to spend the extra wealth they do not actually possess, or they can cash in by increasing the amount of money they are borrowing. Either way, it leads to delusions of prosperity and results in too much money chasing too few goods.

By the time the Bank notices, in the official inflation figures, it is too late. The time has come to insert this massively significant aspect of the economy into the way inflation is calculated.

In the USA, house prices were included in the calculation of inflation from 1953 to 1983 despite the economists’ specious arguments. House prices were removed from America’s inflation calculations because their presence was increasing the rate of inflation and, therefore, increasing the cost of index-linked benefits and pensions.

But if appropriate and timely action were taken by the Bank of England, that should not become a danger. Indeed, it would save the State\ money by ensuring policies like the pension triple-lock do not become as expensive as an average terraced house in London.

In short, our cost-of-living crisis has been caused in great part by the refusal of economists to recognise the inflationary elephant in the room. As a result, house prices have once again trampled all over the economy and we are all now paying a heavy price.



Friday, September 02, 2022

A Shakespearian tragi-comedy


Shall I compare Liz to a summer’s day?
She ain’t as lovely nor as temperate.
Rough winds did shake the darling Theresa May
And Bozza’s lease hath all too short a date.
Sometime too hot the eye of heaven shines
And often is our gold collected in
And every month our pay perforce declines
Through energy costs, tax and inflation.
But this infernal summer gives no shade,
As we work out how much we owest.
Nor shall Kier brag that he hath made the grade,
When all the time interest rates growest.
So long as there's no election to see,
So long lives Liz and exit poor Rishi.

Sunday, August 07, 2022

The Boris, Piers and Jeremy of the 17th century

 Just 380 years after the outbreak of the English Civil War on August 22, 1642, the memoirs of the era’s most notorious, controversial and successful journalist are finally published. 

Marchamont Nedham, who was just 22 at the outbreak of war, became a newspaper pioneer, the most successful publisher of the era. 

In an era when “freedom of speech” did not exist, he was jailed three times, threatened twice with execution and once fled the country fearing he would be hung, drawn and quartered. 

He was as notorious in his day as journalists like Boris Johnson, Piers Morgan or Jeremy Clarkson are today. His “crimes” included attacking King Charles I, attacking Oliver Cromwell, attacking King Charles II. His other offences included: 

·        Revealing leaked Government documents;

·        Publishing illegal reports of Parliamentary debates;

·        Exposing greed and hypocrisy among Puritan MPs;

·        Condemning the politicians who executed the King;

·        Attacking the Scottish, the French and the Dutch.

Nedham’s memoirs are closely based on the 17th century newspaperman’s career. 

In an unrestrained age, when invective was as rife in print as it is on Twitter today, Nedham was a master of the well-aimed insult. 

He first wrote a newspaper in support of Parliament against the King; then a second backing the King against Parliament; his third was the official newspaper of the Cromwell dictatorship. Finally, he was employed writing for Charles II against the King’s political enemies. 

In the 17th century, newspapers were in their infancy. Nedham was a pioneer – the most successful journalist and editor of the era – yet he is relatively unknown today.

Historians accuse Nedham of inconsistency but they disregard his greater achievement – to write, print and distribute three successive weekly news-sheets over a turbulent period of 18 years from the outbreak of the civil war in 1642 to the restoration in 1660. 

The desire for news was insatiable and literacy was surprisingly widespread with about half the population of London able to read. 

News-books were not sold in vast numbers (1,000 copies a week costing one penny each was about average) but they were widely shared and read aloud in many places, especially among the armies involved in the war. Politicians tried many times to rein in the press. They wanted to control what was being reported and, at the same time, they wanted to use the press for their own ends. 

Marchamont Nedham’s writings on constitutional and political issues helped inspire the American revolution. Yet because his allegiances and his opinions shifted according to who he was working for, he has been dismissed by historians as a contemptible “triple-turncoat” of no great significance.

I would contend that there is nothing wrong with being a pen for hire and, in navigating his way through the deep, dark currents of the English Civil War, he not only kept his head above water but laid many of the foundations of journalism that we take for granted today. A martyr in the cause of free speech – jailed three times and fleeing for his life once – he was a pioneer whose importance to journalism should not remain as obscure as it has done for centuries.

Marchamont Nedham, who died of a heart attack in a London coffee house in 1678 aged 58, was belligerent to the end. His last publication was a robust attack on the French who, he said, were “those monkeys of mankind”. 

I have written his autobiography for him, taking the known facts about Nedham’s career and trying to stitch them together by filling in the gaps.

Tuesday, July 26, 2022

Just shut up about freedom of speech

Having just written a book (“The Man Who Invented The News”) about a journalist who was jailed three times and fled the country in fear of his life, I find I must support the campaign to free Julian Assange.

He would appear to be an unattractive man with a distinctly dodgy history but that is not a good enough reason to want to see him deported to America and incarcerated there for, quite probably, the rest of his life.

He published secret information which, according to the Americans, put people’s lives at risk. There’s not much to be said in favour of that – except that it’s a journalist’s job to reveal inconvenient truths. The alternative is an even more secret society than the one we live in most of the time.

The Wikileaks founder did reveal that thousands of civilians were killed during the wars in Afghanistan and Iraq – the sort of slaughter we rightly condemn Russia for today.

Did we have a right to know the information Wikileaks revealed? I would say we did. It is a journalist’s job to expose inconvenient, embarrassing or incriminating evidence if and when it becomes available. It does not seem reasonable to allow Assange’s extradition just so the Americans can get their revenge.

Hillary Clinton once asked of Assange: “Can’t we just take the guy out with a drone?’

In 1640s, Marchamont Nedham, the most notorious journalist of the English Civil War, leaked the contents of King Charles I’s private papers.

These revealed he had written to the King of France complaining about the behaviour of his sister, Henrietta Maria, Charles’s wife. They revealed the King’s determination not to negotiate with his Parliamentary enemies as well as his scathing private opinions of some of his closest aides.

Marchamont Nedham was jailed when he called the King a tyrant and mentioned that Charles spoke with a stammer. In those days, there was no such thing as ‘freedom of speech’ and journalists ran the risk of imprisonment with every newspaper they published. Later, Nedham was jailed again and eventually fled the country in 1660 in fear of being hanged, drawn and quartered.

Have we really made so little progress in almost 400 years?

Monday, June 06, 2022

The birthday-cake coup

 In January I sent this email to my MP Nigel Huddleston:

Dear Mr Huddleston

Please do not fall for the propaganda and take part in the defenestration of Boris Johnson.

He has made some mistakes and the Conservative Party is betraying many of its grass roots supporters by its woke policies, tax rises, unquestioning support for the abominable NHS etc.

But - and it is a big but - he has done a good job over the vaccine rollout and, more to the point, getting rid of him is only worthwhile if the party has a better leader to take his place.

It emphatically does not.

Despite his shortcomings, those red wall MPs and others who are fearful of losing their seats unless they get rid of Mr Johnson should realise they will definitely lose their seats if they do get rid of him.

It is alleged MPs are overwhelmed with emails calling for him to be removed. Who from? His long-term opponents. Please stick with him. How can we endure this birthday-cake farce when the world is on the brink of another war?

Today I followed it up by saying:

Dear Mr Huddleston 

I sent you the email below in January. Nothing has changed except the war is now being fought and is liable to get worse. 

Please do not vote to oust the Prime Minister.



Tuesday, May 24, 2022

An open e-mail to Talk-Talk

 I have tried a dozen different ways to communicate with you and failed to get the message through that you have stopped giving me access to my accounts, you continued to send threatening emails demanding money I have been paying.

I informed you some time ago I no longer wanted to receive any 'service' from you and proposed to cancel my ransom payments of £5 a month. Today you send me a demand for £25. You cannot be serious.

Tuesday, April 12, 2022

Sod the Children

Save the Children turned down a donation of £750,000 to help Ukranian refugees because it came from a North Sea gas producer. As a result I have cancelled my monthly standing order and sent the following email: 

I wanted you to know that I have today cancelled my monthly standing order to Save the Children in protest at your rejection of a £750,000 donation because it is linked to fossil fuels. 

If you can afford to refuse so much money, and deprive potential beneficiaries of that amount, you certainly don’t need my chicken-feed contribution. 

I have for many years believed your highly-politicised organisation, with its excessively over-paid executives, was squandering the money it received from poor idiots like me but I am now quite convinced you are more interested in feathering your own nest, virtue-signalling and playing to the Guardian-reading gallery than you are to saving children.

I do hope you will forward this email to some of those exalted powers-that-be, not that it will make any difference but it would at least alert them to how contemptible they have become in the eyes of at least one long-term supporter.

Mili Sargeant from the alleged charity replied:

Thank you for getting in touch and sharing your thoughts on this matter. 


Save the Children is committed to making decisions that are in the best interest of the charity but ultimately in the best interests of children. Our Donation Acceptance and Refusal Policy ensures we do not compromise on our mission and values when it comes to raising income. This policy governs the acceptance and refusal of donations by Save the Children UK where there is perceived risk to our programming, staff, reputation, financial position or brand in accepting the donation and is reviewed regularly by our Board of Trustees and Executive Directors.


Our work is focused on meeting the immediate needs of children in crises around the world, as well as protecting their futures. We will take tough but calculated decisions where needed to achieve this. This means raising and spending funds responsibly, but also turning down funding where we believe doing so could have a greater long-term impact for children. Climate change is one of the biggest threats to children’s future and now is the time to do everything we can to minimise the impact of this.


We are in the process of reviewing our global policy on accepting donations from fossil fuel companies to ensure it reflects our position on the threat the climate crisis poses to children.


We understand that not everyone will agree with this decision, though I hope this goes some way to explaining why we have chosen not to accept funding from Neptune Energy.


Thank you again for all the support you have shown Save the Children. As you mentioned your regular contribution to Save the Children via standing order, you will need to cancel this at the bank. If possible, please can you kindly provide me with your address so that I can update your records with us and log your complaint. 


I look forward to hearing from you again soon.


I responded:

Thank you for your cut-and-paste reply. I can't believe anyone takes this guff seriously.

The long-term impact of climate change is all very well but the immediate and necessary needs of refugees from a war zone surely take immediate priority. Either that or Save the Children now has so much money it doesn't know what to do with it all.

It is deeply regrettable your organisation has such delicate sensibilities it cannot see the pain and suffering before its very eyes.

Monday, February 28, 2022

It's the end of the world as we know it

 If, and it’s a bigger if than we might like, but if we all survive without being vaporised in a nuclear war, then Vlad Putin has done us all a favour.

The monstrous invasion of the Ukraine is the drastic wake-up call the West has needed for some time.

We have been sleepwalking into this disaster ever since the fall of the Berlin Wall.

We have complacently assumed Russia and China would more or less accept our liberal, capitalist, freedom-loving values and we could all live peacefully side by side.

Their true, sinister, aims have always been visible but we preferred to look the other way. 

We have allowed the Chinese to devastate our manufacturing industry and steal our technology.

We have encouraged ultra-rich Russian crooks, thieves and murderers to launder their money through London.

The disgusting sight of gold- and blood-dripping oligarchs, their vile women and entitled offspring flaunting their ill-gotten gains around our country has been one of the most appalling developments of recent years.

We enrich their dictators’ regimes by lapping up cheap goods made by slave labour in mega-cities like the one responsible for unleashing coronavirus on the world.

The Chinese and Russians between them are destroying civilisation, democracy and innocent lives – genocide or invasion, murder and incarceration, it’s all the same to their barbaric leaders.

What has the West being doing instead of recognising our enemies and dealing with their many threats?

We have spent our time banning free speech in universities in case some non-woke feminist might upset a bloke who wants to pretend he’s a woman.

We have been chucking statues in the sea because someone over 200 years ago did something reprehensible.

We have abandoned any idea of fuelling our own power needs in exchange for ineffectual windmills, Russian gas and Chinese-financed, French-owned nuclear power plants that may never be built.

Oh and we have saved money by giving up on the idea we might one day need to go to war again to defend ourselves. It’s far more important our soldiers and spies recognise their white privilege.

If we see the invasion of the Ukraine as an opportunity to get a grip, recognise what’s really important and realise our way of life is under constant threat from countries which would love to destroy us, some good may yet come out of this terrible war.

Tragically, I doubt if we have the strength of will to recognise just how ridiculously complacent we have become. Meanwhile, the destruction of our freedoms will continue apace.

I hope we recognise the urgent need to change before it really is too late.

Otherwise, the era of peace, freedom and democracy may be coming to an end. Do our leaders – and the rest of us – have the guts to hold back the tide of chaos, dictatorship and destruction? I doubt it.

Thursday, February 17, 2022

Prince Andrew is the real victim

We all know Prince Andrew is an obnoxious, entitled nob who deserves zero sympathy for bringing the Royal Family into disrepute but what illegal activities did he actually engage in?
His critics bandy about words like 'rape' and 'paedophilia' but he is guilty of neither. At the absolute worst, he may - if we choose to disbelieve his denials - have had sex three times with a 17-year-old girl.
Nobody has claimed this was anything but consensual. She may, perhaps, have been 'trafficked' but she was old enough to make up her own mind whether she wanted to jet around the world with millionaires. And by all accounts she boasted of having sex with the Prince.
So if it was consensual, and she was 17, where is the crime?
The Prince and Virginia Roberts allegedly had sex in London, New York and the US Virgin Islands (oh the irony).
It is quite legal to have sex with a 17-year-old, no matter what the age of the other participant, in London and New York. In the Virgin Islands, the age of consent varies from 13 to 18 but, supposing the latter applied in this case, the Prince might be guilty of statutory rape on that occasion.
However, Ms Roberts or Giuffre as she is these days, alleges their passionate embraces took place during an orgy involving nine other girls as well. Are we supposed to take her allegation seriously in such circumstances?
The hatred directed at Prince Andrew - much of it fomented by those who loathe and detest the Monarchy - is over-done, misplaced and unfair.
Now he and his mother are £12 million the poorer, it is difficult not to conclude that Prince Andrew, not Virginia Roberts, is the real victim.

Monday, January 31, 2022

The world's worst airline

 British Airways used to claim it was the world's favourite airline. It must now be the worst.

I have never had a trouble-free flight with them and it is now impossible to talk to anyone in the entire organisation.

It doesn't deserve passengers. It is an abomination.