Daily Archives: August 3, 2007


Get A Little Extra Shafted By The Halifax

My son Jamie is on his gap year and has been working as a barman for an events company at Test Matches, Olympia exhibitions, etc. This is casual employment but offering in practice quite a lot of hours per week on average, just concentrated in heavy bursts.

Jamie was planning to finish shortly and to set off on a cheap hostel holiday around Eastern Europe. Unfortunately, the wages for one of the events at which he had worked did not come through in the expected week, This resulted in him slipping over – by less than ’50 – his ‘250 overdraft limit.

That does not sound like a disaster. But he had been booking his hostels online with his debit card, putting down the tiny deposits required.

8 deposits came in total to only a bit over ’30. But the Halifax allowed each transaction on the card, and then charged him ’30 penalty per transaction. That is a fine of ‘240 on ’34 worth of payments. As a result he has to cancel his holiday, as I have no cash either.

He spoke today to the Halifax, who said this was an “Adminstration charge”. But, as the payments went through normally, where precisely is the extra administration cost? The Halifax also said that pending the resolution of the current High Court case on the legality of such charges, they are not prepared to consider the case.

This is appalling. ‘240 of charges on ’34 of expenditure is plainly disproportionate. I was walking past a bank in Shepherd’s Bush yesterday and saw that a vandal had cracked one of the windows, which was being replaced. I tut-tutted with disapproval at the stupid violence. This morning if I see the vandal who did it, I will shake his hand.

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US Economic Vulnerability

The War in Iraq has already cost the US taxpayer over $500 billion and will cost over $1 trillion – that’s $1,000,000,000,000 – according to official estimates.

http://www.boston.com/news/nation/articles/2007/08/01/analysis_says_war_could_cost_1_trillion/

The war has been almost entirely deficit financed. It has added to the US’ already massive budget and current accounts deficits. The US economy can sustain its massive deficits because the rest of the World is willing to treat the dollar as its currency of note, and accept the value of the eurodollar.

Eurodollar is a term economists coined decades ago to denote dollars held outside the US. It is no longer that apt as most of them are held in Asia now. China alone holds about a trillion dollars – indeed there is a neat argument that China’s willingness to hold vast stocks of US paper has financed the Iraq war. Japan, perhaps surprisingly, also has over $400 billion.

How much money are we talking? Let me put it this way. China could buy all the real estate in London or New York – buy every property in the whole city – and have change. China could buy a controlling interest in every single company in the Dow Jones.

That, however, is not the danger. The danger is that China, Japan and others will come in time to doubt that these huge mounds of paper (OK, virtual paper) really hold the value that they are supposed to hold. They could start to diversify their holdings. The result in the US could rapidly tip towards extreme inflation, among other symptoms. Once the process starts it snowballs – the UK went through the economic trauma of slipping from being the key currency in the last century, largely as the result of expensive wars.

Confidence is a difficult thing, and the process could certainly be sparked by moves to switch major commodity trading to euros. The US is indeed jumpy about that, though the theory that this concern triggered the Iraq war is overblown.

Much of the trillion dollars war cost is redistributive within the United States. It is important to remember that to ordinary people – and to the unfortunate US taxpayer – the War in Iraq may look like an unmitigated disaster, but to easily identifiable groups the whole thing is a great success.

Record oil prices have resulted in obscene levels of profit for the oil companies. Armaments manufacturers have bulging order books and, given urgency of demand, have like the oil companies been able to increase not just profits but profit margins. The privatisation of war has brought massive contracts for those employing the many tens of thousands of mercenaries and the logistic supply contractors.

Like any war, increased career opportunities have opened up for the senior military. This one has been unique in the massive burgeoning of budgets, jobs and promotions within the security services also.

How the system works was outlined 100 years ago by the Liberal economist J.A.Hobson in his great book Imperialism – A Study. Written at the greatest extent of the greatest formal Empire the World has yet seen, Hobson proved, counter to the prevailing wisdom of both supporters and opponents of Empire, that the Empire had cost Britain money, not been a gain at the expense of the colonies. But while the net effect had been to make Britain poorer, the redistributive effect had made the ruling class, military and arms manufacturers much richer, at the expense of everyone else.

Hobson is now almost completely forgotten. In part this is because Lenin, a much lesser thinker, ruthlessly plagiarised Hobson’s work some years later and plastered it over with Communist claptrap. But for me Hobson’s Imperialism is in the same rank as J.S. Mill’s On Liberty, Adam Smith’s The Wealth of Nations and Tom Paine’s The Rights of Man, as essential reading on the foundations of modern political thought.

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Russian Continental Shelf Claim under the Arctic

I trust it is plain from recent articles that nobody can accuse me of being an apologist for Putin.

http://www.craigmurray.co.uk/archives/2007/06/russian_journal.html

Indeed I have been accused of being in the pay of US neoconservatives to stoke up anti-russian feeling, which I found rather funny. Just now I rather wish I were in the pay of somebody.

Anyway, Russia seems to be doing nothing wrong with its maritime claims in Arctic waters, despite the huge fuss the media is making. Every country is entitled to a 200 mile Exclusive Economic Zone, subject to boundary agreement where claims meet. Beyond that, countries may claim the contiguous continental shelf up to the limit of that shelf, the deep seabed. Whether or not there is ice above the shelf is irrelevant, and unlike the Antarctic, which is of course land, normal maritime rules apply in the Arctic.

Whether an area is continental shelf or not is a geological question. Russia’s claim is not extraordinary. One of the most spectacular continental shelf claims in the World is made by the UK and Ireland, stretching far westwards into the North Atlantic. As Head of the Foreign and Commonwealth Office’s Maritime Section at the time, I was deeply involved in the succesful negotiation of the UK/Ireland boundary lines on that shelf.

There is a happy self-limiter here, because if an area contains oil and gas, it is pretty well by definition continental shelf, for obvious geological reasons. The only question is whether it is contiguous and whether it is within an agreed boundary or subject to a legitimate claim by anyone else. Without studying detailed charts, on the face of it current Russian claims look to me perfectly reasonable on both grounds.

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