News Review: MP Wife Swaps

MP Wife Swaps
Some 200 MP’s affected by the ban on employing their wives are considering defying the ruling by employing each others’ wives.  Eve Burt said “We have had the conversation about swapping jobs endlessly, they are water-cooler conversations.  It would be an option.  We did work out a very complicated ‘giant wife swap’ where you all move one husband along.  It would be an option.“  What a fantastically bonkers idea; who said politics was boring !

The unexpected, dare I say shock, -0.4% GDP growth figures for Q3 2009 showing the UK is still in recession against average expectations of +0.2% has led to an interesting mix of disbelief from some quarters, calls for desperate measures from others and in some areas (including here at Inspired) comfort that this is likely to lead to a stronger and more sustainable recovery in time.  It should in fact increase the chances of a V-shaped recovery.

The Monetary Policy Committee (MPC) is unlikely to be able to argue against increasing the quantitative easing program now and the Pound is likely to continue to plumb the currency exchange depths needed to boost exports, economic activity and eventually some inflation.

It is also likely that the figures will be revised up as more detailed and accurate data arrives at the Office for National Statistics (ONS) – by then the average Joe in the street is unlikely to notice.

City Strength
According to headhunters ‘every bank is hiring’ again.  Where bonuses are under scrutiny salaries have been increased.  Morgan Stanley has raised basic pay by 50% for its middle managers and similar moves have been seen by Bank of America Merrill Lynch, UBS and Citigroup.  Bankers are demanding much higher salaries in compensation for the reduced bonuses on offer.  And estate agents are finding city buyers are back in the market with a vengeance.  Knight Frank have seen the number of City buyers as a proportion of applicants has risen to 38%.

Observers may see this as unfair considering the harm caused to the economy by the banking collapse.  Rightly or wrongly however our economy is highly dependent on the financial sector and to see it expanding again can only be a good thing in the long term.

Public Finances
Karen Ward, UK economist at HSBC, has reviewed the assumptions made by the treasury in their last forecast (in March) and has concluded that cumulative borrowing from 09/10 through to 13/14 will be £131 billion less than expected.  This is because unemployment has not been as bad as expected and share & oil prices have recovered.  Her forecast is still for £153bn borrowing this year though so it’s still pretty grim – nowhere near as grim as another great depression however so we should be counting our lucky stars.

On the subject of real cuts in spending everyone and their dog seems to have a list of ways of bringing costs down.  In my view activity should be focused on:

  • of assets (privatizations) where monopolies & inefficiencies exist, particularly in healthcare – with a view to correcting the faults
  • tearing up dubious regulations and quango’s – HMO licensing and HIPS for example
  • cutting back guaranteed benefits for public sector staff – where the equivalent to guaranteed bonuses in the banking sector are much broader based
  • simplifying benefits & tax credits – to make it easier for people to see & benefit from a link between productive activity and income
  • reforming employment legislation – the nanny state’s gone way too far and it makes employing staff too risky & expensive

The Dollar
Currency commentators and US economists are still vigorously considering the threat of a declining Dollar to its position as the worlds reserve currency.  With vast deficits forecast to continue for another 10 years under Obama’s guidance and expensive new healthcare reforms and green energy bills the currency is likely to continue to weaken considerably in the next few years.  A resumption of strong growth (annualized 3% recently reported for Q3 2009) seems to be the only hope for stability here.  A burst of inflation to erode government borrowing would probably be quietly welcomed.  Steps do need to be made in the US to reduce spending however and until that happens the Dollar is likely to fall further.

Industrial Disputes
The three day Royal Mail postal workers strike led by the TUC union is due to go ahead next week if last ditch talks fail tomorrow.  It’s just one of a number of impending strikes.  Thousands of drivers with FirstGroup (bus & rail) go on strike tomorrow.   Swissport staff (Stansted) and British Airways staff are both represented by the GMB union and are balloting members next week about strike action.  Bin men in Leeds also represented by the same GMB union are now eight weeks into their strike.  The RMT union is balloting 10,000 workers over Christmas strike action on the London Underground and may take similar steps at Network Rail.

At a time of recession these unions can only damage the businesses that pay their members incomes.  ‘Job for life’ doesn’t exist any longer and particularly in cases like such as the Royal Mail customers will switch to alternative technologies and competitors – and quickly.  At the same time a number of union leaders have been receiving discounted loans to buy houses.

In Other News
Weird but wonderful, The Sunday Times:

  • Mohammad Al Fayed has declared his ambition to become the first president of an independent Scottish nation.  He’s urging his “fellow Scots” to detach themselves from “the English and their terrible politicians”.  He recovery, city strength, every bank is hiring, public finances, the dollar, industrial claims to share his ancestry with the Scots based upon a medieval legend that suggests Scotland’s founders journeyed from Egypt and hopes to be offered citizenship if a planned independence referendum next year leads to the breakup of the United Kingdom (Mark Horne, The Sunday Times).
  • Dimwit of the week.  A suspected shoplifter called in for questioning by police stopped off on his way to the station to commit a robbery with an associate.  Police, who had detailed descriptions of two men who held up a supermarket in Blomberg, Germany, were surprised to find one of them in their waiting room.
  • Hopping mad.  A town has been forced to cancel its annual rabbit-throwing contest after a campaign by animal lovers.  The contest normally takes place in Waiau, New Zealand, to mark the town’s annual pig hunt.  Children see how far they can throw a dead rabbit.  The RNZSPCA, the animal welfare group, said the event sent the wrong message: “Do you throw your dead grandmother around for a joke at her funeral?”.  Jo Moriarty, the organiser of the pig hunt, said the decision was political correctness gone mad.
  • Foiled fraud attempt.  Two conmen got away with A$160,000 (£90,000) after convincing businessmen they could double the value of money by soaking it in special chemicals – a mixture that later proved to be nothing more than bleach, baby powder and hairspray.  The business men, from Melbourne, Australia, handed over cash and later received pieces of paper wrapped in aluminium foil.  They were told to leave their “money” wrapped for 24 hours while the chemicals worked.  Two men were arrested when one victim became suspicious and opened the packet.
  • Parking ticket?  Oh XXXXXXX!  A driver with the registration number XXXXXXX has run up $19,000 (£11,000) in parking fines in Birmingham, Alabama – even though he has been there only once and left without a ticket.  Traffic wardens in the city enter seven XXXXXXXs on their forms when they issue tickets to cars without numberplates.  Scottie Robertson, 38, of nearby Huntsville, chose the vanity plate to mark his days building custom cars, when his nickname was Racer X.

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