Why not find out then?

The blunt fact is that the US market has run out of overnight security available within what is called the repo markets (see those explainers for details).

The official line is that US corporations owed tax this week, and $78bn of cash for a bond sale had to be settled at the same time.

Let me be clear, I have no better clue on this issue than anyone else: no one seems sure whether these excuses are good or not. But I am goi9ng to take a punt and say I suspect not: this has not happened in the last decade and tax settlement and bond sales have happened before, and I can be fairly sure coincidentally.

Perhaps the duty of an academic is to try and find out?

The WSJ article also contains other sobering information. Specifically, post-crisis regulatory “reforms” have made the funding markets more rigid/less-flexible and supple. This would tend to exacerbate non-linearities in the market.

We’re from the government and we’re here to help you! The law of unintended (but predictable) consequences strikes again.

Hopefully things will normalize quickly. But the events of the last two days should be a serious wake-up call. The funding markets going non-linear is the biggest systemic risk. By far. And to the extent that regulatory changes–such as mandated clearing–have increased the potential for demand surges in those markets, and have reduced the ability of those markets to respond to those surges, in their attempt to reduce systemic risks, they have increased them.

The cause being the fuck ups by the know nothings attempting to regulate markets last time around.

Projection

Dealing with perpetual incompetence is very hard, in itself. Dealing with bombast, hubris and even straightforward lying from the incompetent party is harder still.

That’s why Snippa is no longer a member even or organisations he started.

Snippa and twat share a common descriptive power

As Larry Elliott has noted in the Guardian, Labour appears to be committing itself to a financial transaction tax for use on the financial services sector, if it is elected.

I unreservedly welcome this. Such a tax has long been the goal of tax justice campaigners. It helps address the issue, long noted on all objective sides, that the financial services sector as a whole is undertaxed,

That’s a very cool piece of rhetoric there. If you don’t agree that finance is undertaxed you are, therefore, by definition, not objective.

not least because it enjoys VAT exemption.

Which means that it cannot reclaim input VAT. The actual impact of exemption being one of those things which – objective – observers argue about therefore but at least some of them claim that finance pays more, not less, tax because of the exemption.

True, consumers of finance probably pay less tax but that’s rather different, isn’t it?

The tax is small. The impact cannot be known as the behavioural response will be hard to assess, and attempts to avoid it cannot be entirely predicted.

Bu everyone who has tried to predict it – the EU for example – says that it will be a net revenue loser. Which is why here’s the claim that whocouldanowd is being advanced ahead of time.

It’s also true that it’s not people trying to avoid it that worries. It’s the behaviour change of the tax itself which is. There will be less trading, lower liquidity, dealing spreads will rise.

He still doesn’t grasp money, does he?

Funding the UK Green New Deal

OK, super.

The Green New Deal will:

Transform the UK’s 30 million buildings so that they’re all energy efficient by 2030 – creating hundreds of thousands of jobs on the way right across the UK, as well as the training and support services they’ll need;
Turn as many of those buildings as possible into power stations by fitting solar panels and other generating alternatives;
Build new social housing to end our housing crisis;
Investing in renewable energy of all sorts on and offshore;
Build a non-carbon based transport infrastructure;
Invest in agriculture that protects biodiversity;
Require that business transform itself to become zero net carbon and provide the funding to help them to do that if they cannot find it themselves;
Provide security for people’s savings, which will be used to fund this innovation at better rates of return than most savers enjoy now;
Deliver pensions that will work.

We’re in Underpants Gnomes territory here. Green investment…….. profit!

It’s the middle step that’s missing. How does investing in new social housing bring a profit to the investor? A no-carbon based transport infrastructure? Biodiversity is rather a public good isn’t it? With all of the problems of being able to appropriate the benefits of investment in a public good?

That being the problem here. Let’s just assume that everything else is correct – it ain’t of course, climate change isn’t going to drive us extinct, nor does all of this have to be done in 10 years – and that we need the green investments and all.

OK, what’s the problem with normal market forces just providing the investments? That they don’t turn a profit. Not in the normal financial sense they don’t, even if they are desirable in the larger context. Where we can say there’s a “profit for the planet” or whatever but we don’t in fact have that “profit to the investor directly in the here and now”.

For example, investing in solar panels doesn’t make a profit. That’s why we set up feed in tariffs and all that so that, with the subsidy, private sector investment in solar panels did make a profit. We deliberately twisted things so that the investor could appropriate some of the public benefit of that investment.

What’s the bit that Snippa has forgotten here? The Underpants Gnome bit. Where is the system whereby investors in things Green can appropriate some of that public benefit so as to provide a private return? Without that of course everything else is nonsense.

And the real joy is that with such a system then all the rest of the cobblers is unnecessary. Because in being able to make a private return on greenery we’ll get the greenery, won’t we?

That is, not for the first time, Snippa’s entirely missed the vital part to make the scheme work.

We’ve got to make it profitable to:

Turn as many of those buildings as possible into power stations by fitting solar panels and other generating alternatives;
Build new social housing to end our housing crisis;
Investing in renewable energy of all sorts on and offshore;
Build a non-carbon based transport infrastructure;
Invest in agriculture that protects biodiversity;

And once we’ve made it profitable to do so then what else do we need? And what’s Snippa forgotten? How to make it profitable.

Excellent

I loved this, said by Alexei Sayle on Radio 4 last week:

Austerity is the idea that the global financial crash of 2008 was caused by there being too many libraries in Wolverhampton.

Sometimes one line says it all.

Accountant can’t count. That’s two lines. One sentence, sure, but two lines.

Umm, Rilly?

I do not trust many polls, and Opinium seems to produce much stronger Tory results than most right now.

There is one thing to note though: look at Scotland. Not a single Tory or Labour seat.

I stress, I am not convinced, but that is still a pretty staggering forecast.

Why staggering? It’s only a mild change – 1 seat each? – from the 2015 election result.

It would appear Snippa has been making deep and detailed studies of he subject he desires to comment upon, Scottish politics.

From a random PR email

I hope you are well this afternoon?

I wanted to get in touch with recent findings from CABA, the charity supporting the wellbeing of chartered accountants and their families who found have that more than half (53%) of accountants agreed that ‘accountancy will always be considered an elite profession’.

Can’t Ritchie just apply for a hardship grant from these people rather than attempting to build Musso’s dream in our green and pleasant land?

And who thought there would be a charity to support hard pressed accountants – and limited to chartered ones at that?

Err, Snippa?

The so-called Yellowhammer report is wrong. I can say that with absolute confidence. Every forecast is, and I’ve delivered a lot in my time, always with that caveat attached to them. But in my opinion that does not mean it is not important. That’s precisely its significance.

All it really says with certainty is four things. The first is that we do not know what will happen if we hard-Brexit.

Err, that’s what the report is telling us. What will happen.

He doesn’t even understand what he himself is saying

Jeebus:

I am writing this sitting in a hotel breakfast room. Simple observation shows that obvious that the assumption that we are indifferent to others is false. People are cooperating over the breakfast buffet. That buffet shows that someone cares – and profit alone cannot explain that. The staff are attentive, and very clearly being respected. The interaction of those within the room is interesting to observe – most especially at the tables where colleagues are meeting before a working day: the interactions are clearly about more than personal gain. There are enquiries made as to well-being that are obviously sincere: the ‘other’ matters at a level far beyond their utility.

And we all know this is true. And yet we organise our economy as if it is not. And that is the paradox that is laying our society, our well-being and our lives low in the twenty first century.

That hotel breakfast room is indeed the economy. And look at it, people are cooperating and it all works.

Which is what we do in that economy. You know, interact and cooperate.

Or as we might put it, try not to use the example of a market economy working to rail against a market economy. The logic doesn’t really work if you do…..

You know what’s so lovely about Sustainable Cost Accounting?

It makes no damn difference:

I was asked by a person with a political persuasion to prepare some slides for them so that they might present my ideas on what I call Sustainable Cost Accounting.

The argument is on the production methods of the company. OK. So, apply to an oil company. Their production methods might be mildly emittive. But that’s not the point, is it? The people who buy the products are going to be doing an awful lot of emitting.

That is, this new accounting method doesn’t actually solve any known problem.

Well, he would, wouldn’t he?

This is my kind of macroeconomics:

The abstract says:

The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The paper argues central bank independence is a product of neoliberal economics and aims to institutionalize neoliberal interests.

Of course Snippa won’t like it.

The actual aim of central bank independence being to stop politicians inflating the hell out of the money supply as Snippa wants to do.

Not that that’s neoliberal, it’s just a rational constraint on the excesses which public choice economics leaves us prey to.

So who hasn’t read the report then, eh?

To pontificate:

IPPR has issued a report this morning calling for the alignment of tax rates on capital gains tax with the equivalent income tax rate applicable to the taxpayer making the gain. In effect, they are arguing that gains should be taxed as income. This is a policy proposal I entirely agree with, as I noted recently. It is virtually inexplicable that when we are worried about increasing income and wealth inequality in the UK, which organisations as left-wing as the IMF argue is harmful to society, the tax system is designed to exacerbate this trend. I say virtually because for some this is entirely explicable: that increase in inequality is their aim.

The Guardian report on the IPPR proposals is supportive.

Worth actually reading the report really:

The first two are significant: it is a deeply economically orthodox view of tax to think that it is simply a tool for raising revenue that must be maximised in a microeconomic sense as if a government is the same as any other entity subject to the rules of the market, which that microeconomic approach would suggest to be the case. This view, best summarised of late in the IFS’s own Mirrlees Review, is profoundly wrong. It fails to recognise the importance of tax as an instrument of social and economic policy in its own right. I would suggest that the IFS is repeating its own error in endorsing the Mirrlees view in making these comments on the IPPR proposal.

The IPPR proposal discusses, at length, the Mirrlees view and suggests that it’s an entirely viable method of structuring matters. Someone who had read the report before pontificating would know that.

In that case the IFS objection on the grounds of whether or not this policy might raise significant revenue is irrelevant. The whole purpose of equalising tax rates would be to change behaviour. The object would be to remove the incentive to re-categorise income as gains and to as a result minimise the tax avoidance activity that takes place around this rate differential to the benefit of society at large. It really is time that the Institute for Fiscal Studies understood these most basic issues with regard to text design, which their blinkered adherence to orthodox neoclassical economics prevents them doing.

I applaud IPPR’s approach. This change needs to happen.

Well quite. The IPPR models both an inflation allowance and the Mirrlees risk free return allowance. Pointing out that one of the two is – probably – needed in order not to tax illusory capital gains.

But, you know, why bother to read before commenting, eh?

Sniff. Pshaw.

If you want a giggle this analysis of MMT from a hard Marxist perspective is amusing for the politics and economics geek. Written by Adam Booth, it could have been improved by even a little reading of what MMT is about. It makes the most basic of errors. So many in fact, I have no time to point them out.

Actually, the first half – got bored, sorry – looks pretty good.

I think what’s pissing on Spudda’s chips is that Marx was actually correct in that money arises from the desire to track debt rather than state action. That’s so not Tutto nello stato that Snippa just can’t allow it to be so.

Seventhly, it’s the narrative that matters, oh yes!

One reason I have for writing rugs blog is to work out just what the narrative of my life might be. I would suggest that all of us, in our different ways, do this all the time.

At times like the present it is harder to work out what the stories on which we build what we think we know might be.

It’s usually good to start with reality.

We know he is a pathological liar. Once it was just bent bananas.

EU law does in fact state that class 1 bananas for direct human consumption must be free of excessive curvature. And there’s a 6 month spell in pokey and or a £5,000 fine for anyone who breaches that law.

He claims we are ready for No Deal. Nothing can prepare us for a shock of that sort – even if the hit is only 5.5.% of GDP as Mark Carney now suggests.

Carney has suggested that some time down the road we might be 5.5% worse off as a result of leaving than we would be if we’d stayed. That’s not a “hit”. That’s less of a rise.

I am not presuming that those people who think ‘we must just leave’ are stupid. They’re not. But they are misinformed. They have built narratives peddled to them by thsoe with deep pockets and a willingness to lie that this is an option that is in their best interests, even though it is not.

Willingness to lie, eh?

The message is not hard to work out. It is that our leadership has failed us, on many sides. But that we the people do want to co-exist with our neighbours, because we do know we are better when cooperating, and we do know that we have more in common than divides us, whilst recognising that we are not all alike and do not wish to be so. We do therefore want to have a relationship with Europe based on mutual trust, the ability to trade and to move between our countries whioch does, however, respect our differences and lets all make decisions that reflect the fact that those differences are real, but must not be used as a means to oppress others.

So if we – and they – are to be allowed to make different decisions then we’ll have to not be part of the same political construct, won’t we?

The Murphmeister demand investment. The Murphmeister doesn’t understand investment

As we know, no one is to be allowed to just save. They must invest.

You know, spend now, gain later?

Ahem:

Now much less might be right. But, and I stress the bit, only if they explain why. In full. With logic as to why they continue to support loss making operations when it would seem utterly logical for them to retreat from Europe as they would make more by doing so. Shareholder capitalism would require nothing less.

??

Spud’s lovely assumption

And I will also say I do not believe Amazon any less profitable in the U.K. than the US

I know that in fact. If it was it would have pulled out long ago

This is a single global entity with a consistent core business which is mature in the UK

Ford’s been in Europe for a century now. GM had been. It’s reasonably well known that Ford Europe and GM Europe are not equally profitable to Ford US and GM US.

No, not really


So he asked me if I’d take him to the station so that he could get into college in Cambridge on time, which I admit I do not do very often. And I agreed.

My reward was a tirade about how unjust it is that he, as a 17-year-old with a lifetime of living with Brexit ahead of him, will not get the vote at a general election that will decide that issue.

And he’s right. Of course, I’m biased about him: that’s a father’s duty. But I’m not about his friends. And he, and they, are more than capable of making an informed decision on what they want from a government, and their future.

It’s a farce that they will be denied a vote on an issue so important for them.

That’s he’s currently going to college is proof perfect that he and we regard hims as currently insufficiently educated. Why in buggery should he have the vote then?

A threat!

I will have no choice but vote tactically when the chance comes: the future of parliamentary democracy demands it

Oooh!

I will be voting Lib Dem.

I am not a Lib Dem. I have major reservations about the Lib Dems, but only they can unseat the Tories in the seat I live in, which is South East Cambridgeshire.

Ahem.

In 2015 and 2017 Labour achieved the largest increase in their share of the vote, and in 2017 achieved their highest ever vote share in the seat (27.7%) and overtook the Liberal Democrats for the first time since 1997; despite this, the Conservatives achieved over 50% of the vote in the seat for the first time since 1992.

Well done to Ritchie

The alternative is to ensure savings are actually used to fund real investment, which is possible (and I do understand MMT). As I have argued, if savings were directed via pension funds and through ISA accounts into Green New Deal related investments then those funds would be available to invest in the transformation of our society needs if it is to survive. Those Green New Deal investments might include government gilts, but are more likely to be dedicated to the purpose. So, it could be green gilts. But better still they would be issued by a National Green Investment Bank to fund the Green New Deal, either directly or by making loans to those businesses that will actually supply much of this activity on the ground. In addition, I think that there could, and should, be housing bonds to fund new net-zero carbon social housing. And I see no reason why we should not have transport bonds and energy bonds as well, and I also happen to think that all of these could come in regional forms so that people could direct their funding towards the aeria where they live, if they so wished

From the discussions that I have had these ideas appear to be very popular.

Maybe that is because I add another suggestion. In my opinion the minimum funding required for the Green New Deal is £50 billion a year. I have shown that none of this need come from taxation if savings are properly reorganised using tax incentives. But in that case I think the least that we can do is pay a decent rate of interest. Right now that need be no more than 2%. If that was on offer are present the money would pour into these accounts: all the funding we need to transform society would be readily available, and at a cost of just £1 billion a year to fund £50 billion of investment.

2% eh?

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.0% in July 2019,

You’re to get a zero real return on your savings for your retirement. anyone want to work back to the savings rate required for that?

The Consumer Prices Index (CPI) for the 12-month period to March 2019 stood at 2.0% – down from 2.1% in April 2019, according figures released by the ONS.

Less than zero return?