Steve Smith Live

Wednesday, 4 October 2023

The Month That Was……September 2023

Whether you realise it or not, the political shuffling for the General Election has started……especially if you are an older voter.

There is key context to Rishi’s recent behaviour……in 2019 the Conservatives vote share among the over-65s was more than 60%. Such is the extent of the divide between how the old and the young vote, age has become more important than class. There are over 11 million people over the age of 65 for Rishi to now flirt with……and he’s had his best lippie on this month.

It started with the ‘triple lock’ this month, which pins the annual increase in the State Pension to whichever is the greatest of average earnings growth, inflation, or 2.5 per cent. The ‘whichever the greater figure’ in September each year wins the race and is applied the following April. September’s figure last year saw a 10% increase and it will now rise by a further 7.8% in April given this month’s figure (earnings growth won this year).

This is obviously good news for those retired, but difficult to justify politically in the wider economic context given the Government’s reluctance to raise civil servant pay and trying to tackle inflation / cost of living. So what does Rishi do……contest the 8% to a lower figure……or honour the triple lock?

Easy……look after the 60% and nurture the voters for next year.

When considering the 60% context, it will come as no surprise that there is strong consideration at No 10 among senior figures about abolishing inheritance tax as the headline tax giveaway next year as a pre-election sweetener.

50% of the population thinks that it is an unfair tax and 31% think that they have sufficient assets to have to pay inheritance tax (source: Institute for Fiscal Studies). Yet the reality is that only 4% of UK deaths a year result in an inheritance tax charge.

Given that Inheritance Tax brings in only £7 billion a year to the Government, it is a pretty cheap way to appeal to the 60%.

There is absolutely no doubt that Rishi is governing the country to appeal to voters rather than what is right and proper. Make no mistake……the General Election has definitely started.

The Numbers

Andrew Bailey, the Governor of the Bank of England, cast significant doubt this month on the need for further interest rate rises as “peak interest rates have been reached”. He also added that the Bank of England is “through with lifting interest rates” and stressed inflation was on course for a “marked” decline.

So there. It’s official. Apparently.

It won’t surprise you that there is some suspicion out there on such bold statements given the recent history of his lack of foresight on inflation, interest rate rises and the length of the pain caused by both.

Bailey at least got one month correct as interest rates were held at 5.25% as the Bank of England voted 5-4 to keep borrowing costs unchanged. It was the first time interest rates remained the same since November 2021 after 14 straight increases.

All eyes will be on 18^th October for the next instalment of the inflation game. The latest inflation figure of 6.7% suggests the direction of travel is down……just not a quick enough journey though!

The key statistic of the month showed that average earnings across the economy rose by 7.8%, the highest pace of wage growth recorded in 22 years. It is very difficult to see how inflation can be brought down to 2% when wages are growing by nearly four times this. It makes the prediction of interest rates peaking seem premature.

And that 7.8% will be painful for the Government as September’s measure of the ‘triple lock’ is what the State Pension will now rise by in April……an increase in cost of £11 billion.

The impact of higher interest rates is being felt by UK private sector businesses as the composite Purchasing Managers’ Index (my clear favourite of all of the indices……it’s a cracker) fell from 50.8 to 47.9. This was the worst performance since January 2021 and a below 50 score separates growth from contraction. The downturn hit the services industry hardest and raised the risk of a recession.

Given the level of interest rates, it is perhaps no surprise this month that house prices saw the biggest yearly decline since 2009 at 5.3% lower compared to last year.

And the month also saw the little lady return to school and a new adventure in Year 5.

Trump of the Month

For the second month in a row, nothing has come close to the absolute absurdity and sheer lunacy of this man’s body of work. September 2023’s Trump of The Month could only be……The Trump

In addition to facing 91 criminal charges for basically acting like a ‘wrong un’ over recent times (see August’s blog), he is also facing civil legal action on the grounds of committing fraud over many years. He essentially inflated the value of his real estate empire to gain preferential terms on insurance and loans.

In one example, The Trump claimed his apartment in Trump Tower was 30,000 square feet. In fact, it is 11,000 square feet. “A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud,” the judge wrote.

The judge ruled this month that the case of defrauding banks and insurers is likely to see The Trump lose the $250 million lawsuit and his licences to trade in New York.

Did The Trump try to argue his case tactfully? Perhaps meet the accusers half way? Come clean and admit to fraud? Not a chance……he took to social media to exclaim:

“It is a POLITICALLY MOTIVATED WITCH HUNT by a Racist Attorney General, and a Deranged, Trump Hating Judge. It is ELECTION INTERFERENCE at a level never seen before.”

Even by The Trumps standards, that’s quite a response. But here’s the thing……The Trump is still red hot favourite to win the Presidential Election next year. The latest poll puts The Trump ahead of Joe B among registered voters by 52% to 42%. A ten point lead!

I scratch my head at The Trump being considered the best candidate amongst a population of 330 million to lead the most powerful country in the world.

We are walking eyes wide open into another four years of this. All of this would be fascinating and funny if it wasn’t true.

Good luck everyone.

Trump Lunacy Rating: 10 / 10

And Finally……

“It is better to offer no excuse than a bad one.”

George Washington

Wednesday, 30 August 2023

The Month That Was……August 2023

I took a few days off this month and decided to keep things very traditional……a break in the Yorkshire Dales being, well, bloody British. This obviously meant spending too much time inside chuntering about the weather and waiting for a 5 minute break in the rain to smell the (damp) fresh air.

But my time waiting for that 5 minutes wasn’t wasted and some positive life conclusions were found:

- There is nothing in life as soothing as an animal yawning.

Getting a fly to leave your house is the most complex operation known to man. It's completely baffling how flies can accidentally end up coming into your house when you consider just how big outside is.

- The saying “better than a kick in the teeth” sums up British levels of optimism, expectation and acceptance perfectly.

- I would love to know the stats on how many divorces were caused because of arguments over dishwasher stacking. I’d say if everyone was honest it’s a strong 90%. A lightweight tupperware lunch box incorrectly put on the top shelf that ‘flips’ and fills nicely to the brim with the dirty water and then soaks the clean dishes at the bottom is a clear reason for divorce. Definitely 90%.

- It’s now impossible to ‘pick up a few bits” from the supermarket without it costing £54.

- As retailer Wilko collapses, WH Smith somehow manages to cling on. We live in a sick world. It’s got to be their iron grip on airports that’s keeping them going. Wilko, like Woolworths, did pic n mix……whereas WH Smith always stayed away. There’s a lesson for all retailers right there.

- There is no greater stress than ‘those’ people who decide to queue to the side of someone rather than directly and obviously behind them. What on earth do you think you’re doing? Your behaviour is odd, distressing and is causing mental chaos for many. Stop it.

- Only a Brit would look at a portion of rice and think “I know what would go well with that… a portion of chips”.

- Starting a sentence by quietly saying “look” is a clear warning that you're completely consumed with rage.

- I can still remember my best friend’s landline number from when I was 7……but recounting my wife’s mobile number is beyond me (it’s been the same number for over 20 years).

- I stare angrily at the ‘Quiet Coach’ sign in the hope it will cause the loud person to be ejected through the roof of the train. It never does though.

- There is never a more satisfying feeling than when you’ve given your desk a damn good tidy.

- Never has the month of August been so good for the garden.

- Accidentally inching forward a bit at the traffic lights is a guaranteed way to tell the car to your side that you've challenged them to a race.

- There’s nothing a cup of tea can’t cure. Apparently.

- You’re not truly having guests around unless you’ve decanted some posh crisps into a bowl. Indeed, nothing says domestic sophistication in Britain more than the decanting of crisps.

- I learnt that Nigel Farage is 3 years younger than Gary Lineker and I’m not sure what to do with that information other than maybe eat more crisps. I had a similar reaction to the realisation that Jay Z and Jacob Rees-Mogg are the same age.

I am sure you would agree……the rain induced downtime has been well used.

The Numbers

A puzzle, disguised as a problem, wrapped up in a conundrum, creating a dilemma. Welcome to the world of UK inflation 2023.

August started with the Bank of England’s announcement on interest rates……a further rise of 0.25% to 5.25%. This is the 14^th consecutive interest rate rise and a 15-year high.

All eyes were then on August’s pay and price (AKA inflation) figures.

First came the announcement that wages grew at a record annual pace of 7.8%, the highest since comparable records began in 2001. Then came the news of inflation reducing from 7.9% to 6.8%. ‘Stable’ is not a word that comes to mind.

The Bank of England Governor, Andrew Bailey, said “once both prices and pay are stable, then rates would drop”. This month’s figures were far from ‘stable’.

To put this another way, inflation can’t hit the target of 2% if we are earning more than that.

Not welcome figures and it points to more interest rate rises from September. We are certainly not at the interest rate peak.

Perhaps the biggest challenge for the Bank of England is to explain why interest rate rises have had so little impact, despite causing huge pain to hundreds of thousands of mortgage holders and other borrowers. This is the biggest credibility test it has faced.

The key indicator of when the interest rate pain is working is when unemployment increases sufficiently. When businesses start to fail or reduce employment numbers, unemployment will go up. And when unemployment goes up, there will be a greater pool of people to fill less vacancies. The greater the pool, the cheaper the wages that need to be paid……bringing inflation down as a consequence.

This month’s announcement from the ONS's employment data suggested that the UK jobs market is weakening, with the unemployment rate rising from 4% to 4.2% and the number of people in jobs ticked lower. This will be welcomed by the Bank of England as a sign labour market conditions are cooling……but not cold enough though. Clearly, interest rates need to be more painful and more pain is in the post.

My own favourite number this month……250……the number of years Honister Slate Mine has been in operation……which obviously meant that a certain Daddy and Daughter felt obliged to climb!

Trump of the Month

There has been quite an abundance of entries for the monthly award for lunacy and all are very worthy candidates.

Huw Pill (Bank of England Chief Economist) informed all in a recent speech that “there's an equal risk that inflation could fall too far below the Bank’s 2% target in the next 2 years or it could prove stubbornly high, leading to more monetary tightening”. A perfect forecast……it might be too high or too low. This is the UK’s top economist and we pay him £197,217 a year. Mental.

Liz Truss……remember her? She could have demurred when it came to the announcement of her resignation honours list and won back some respect……but she persisted. Her nomination list included people who, during her five minutes as Prime Minister, stayed steadfastly at her side while she crashed the economy and presumably didn’t once say: “You are stupid and this is mad.”

Whilst BoJo’s resignation honours list was simply ghastly, Lizzie trashed the values of excellence, achievement and integrity that should underpin such awards. Crazy.

Interestingly, the list didn’t include the financial master Kwasi Kwarteng. Presumably even she thought he was too insane for an honour given his interview this month where he admitted that the mini-budget turmoil they created affected his mortgage. To put that another way, he's having to pay the 'moron premium' for screwing up our economy too.

Personally, I don't think you should be allowed to be the Chancellor of the Exchequer if you are stupid enough to have a tracker mortgage since 2021 when Bank of England interest rates were near to 0%. What was he thinking?

Oliver Dowden (Deputy Prime Minister) showed equally idiotic economic skills when wheeled out to do media duties in Rishi’s absence (as a Disney world tourist).

“Raising interest rates will grow the economy” he proclaimed proudly.

Now hang on a minute Oli……let me explain this. There may be good reasons to raise interest rates, but growing the economy definitely isn’t one of them. Ever. You see, raising interest rates is to create depressed spending and this reduces the size of the economy……which is the complete opposite of what you believe. It’s basic economics Oli. Fool.

However, there could only ever be one winner for August’s Trump of The Month……The Trump!

Tuesday, 1 August 2023

The Month That Was......July 2023

As the joint Chief Executive Officer of a spirited nine year old, global warming and the state of the environment that is passed on to her is an ongoing concern. The recent sweltering weather in many parts of Europe breaking records daily caused me to check my environmental compass yet again. Am I doing all I can?

The Government (in their wisdom) is advising us to put less in the recycling bin because so much of it (crisp packets, juice cartons, toothpaste tubes) can’t be recycled and it is contaminating the system.

Rather than compelling manufacturers to create alternative packaging for certain products, the onus is on consumers. Manufacturers are simply off the hook. They can sleep at night. The burden, it’s on us. We are deemed the packaging and recycling experts and it’s all our fault. We are bad people.

And get this……putting the wrong item into the recycling bin can mean whole tranches are tipped in landfill.

Actually, I will revise my initial assessment……we are terrible people. The worst.

Charged with being a good CEO to that nine year old, my plan is to set an example and be a good citizen……the best. It’s all on us, remember.

Exhibit A……an empty Pringles tube. Snack size obviously……I’m not made of money. Sour cream and onion……in case you were wondering.

I set about trying to decode the baffling recycling symbols that are clearly a secret language that’s nigh on impossible to decode and far too confusing to be effective. I checked the symbol and did the honourable thing of asking Mr Google to decode the symbol. The result……“widely recycled”, which is excellent, but then adds: “as accepted by 75% of local authorities’’.

So am I one of the lucky 75%? I don’t have to phone my council, do I? I really don’t want to turn into ‘that person’. I know it’s absolutely inevitable that I will but I am doing my best to hold off for a few years before I morph.

I look on Darlington Borough Council’s website. Nothing about sour cream Pringles. But crisp packets……they’re a “no”. Then I note that under the symbol on the tube it says in tiny letters: “lid”. So only the lid is recyclable? And only by 75% of local authorities? Is my council a lid-accepter? I go back to their website. Nothing on lids.

I decide to move on to the next symbol on the Pringles. It says “tube” up top and then “recycle at recycling point”. “Do not recycle at home”. Where is this recycling point they talk of? I go to the Pringles website for guidance.

They have “Bring Banks”, apparently. I can do that. I can bring my empty tube to a Bring Bank. I scour the list of locations and my nearest is a 98 mile round trip involving paying to use the Tyne Tunnel (which will cost more than the Pringles).

Or I could go by public transport and it will take 6 hours. I appreciate it’s not most people’s idea of a day out but it’s school holidays and we have one planet (and all that).

But what’s this? They also have “drop-off points”. What are these mysterious drop-off points that pretty much everyone knows nothing of? I get redirected to a company called TerraCycle to learn that these points are run by members of the public who basically volunteer as a collector. Brilliant……my kind of people.

The volunteer is less than a mile away and I pass them on the way to the office. When I get there, it is a normal house. No recycling bin. No Pringles dayglo sign with an arrow pointing. What am I supposed to do? Knock? Post it through the letter box? Chuck the tube in the garden?

So here I am, having put in a day’s work on this……sitting here cuddling my empty tube……trying to keep it together. But it’s still all our fault. We must do better.

The Numbers

For me, too many people got waaaaaaaaay too excited over the inflation announcement this month……7.9% (down from 8.7%). Let’s be clear, this is still 4 times (give or take) the Bank of England target of 2%. Come back to me when we hit Rishi and Jezza’s magic 5% figure and I will still be utterly perplexed.

On the back of the inflation news, interest rates are predicted to rise less sharply. The Bank of England has put up rates 13 times since December 2021 to try to cool soaring price rises, driving up borrowing costs for millions. But it is now under less pressure to do so if inflation continues to fall. But will it continue?

Never have we seen such rapid interest rate rises, which makes it difficult to judge the stress points. There are going to be many losers in all this economic turmoil……it is just a case of who will be hit the hardest and some of the figures this month offer a clue.

- House prices fell at their fastest rate for 12 years, with higher mortgage costs and the cost of living squeeze putting buyers off.

- Then there is construction, with the rate of contraction in housebuilding the fastest in more than 14 years. UK brick sales last month were 27% lower than a year ago.

- There was a 27% increase in business insolvencies this month, compared to the same time last year.

- Then there is the Government, with borrowing costs rising to a 16 year high. This is expensive money for a Government whose debts are more than 100% of national income. If only we could grow GDP by 4%... increase our exports to the largest and geographically closest single market, reduce red tape and burden on small business. Oh yeah, thanks Brexit.

- The Government held emergency talks with the industry regulator in case the debt-laden Thames Water needs the option of nationalisation. Rising interest rates are piling pressure on leveraged companies across the sector, with Thames Water owing £14 billion (the highest debt ratio in the sector at more than 80%).

More optimistic news came from the US with inflation down to 3%, its lowest level for more than 2 years. That could mean US central bankers may finally pause their increases in borrowing costs over the next few months, easing fears that they would trigger a recession for the world’s largest economy.

My own favourite number this month……12C was the water temperature for the little lady’s first wild swim with me.

Trump of the Month

An interesting month of candidate considerations……especially as Parliament is closed for the next 6 weeks as (apparently) there is not much going on at the moment that needs their attention.

HMRC did their best to be considered, having made a right royal mess over recent times with the management of all things tax. Not content with such disorder, they have found a way to make things worse……by closing their self-assessment helpline until September. Offering no help on a complex process and matter is pure lunacy.

BoJo had a good crack at muscling in on the action by naming his new born son Frank Alfred Odysseus Johnson.

For those not up to date with Greek mythology, Odysseus was the king of the island of Ithaca and well known among the Greeks as a most unique speaker, womaniser and a cunning trickster. How apt.

And then there was NatWest……who kicked Nigel Farage out of their premier banking division (Coutts) as “his views do not align with our values”.

Really? And what values are they, given that NatWest had to be bailed out and are still part taxpayer owned? And what about your values when you held dictator General Pinochet (indicted for human rights violations committed in Chile) money as a client?

Do I agree with Nigel Farage’s political views? No. That’s a big NO.

Do I think banks should be able to close the accounts of people they disagree with politically? No.

Am I sick to death of hearing about Nigel Farage? YES.

When we rely on banks to set moral standards, we know we are in trouble. Sympathy is wasted on any of the participants in this story. Move on quickly.

Which leaves just one logical choice……the Trump of the Month for July is……Suella Braverman.

Suzy deserves huge credit for services to lunacy as every wheel came off her Rwanda Deportation Plan. The Government admitted the policy, which is designed to be a deterrent……won’t actually be a deterrent. It will also cost almost £170,000 per person deported.

The bill was torn to pieces by the House of Lords and then the entire policy was ruled illegal in the Royal Court of Justice. Rishi informed all that “I respect the court”. Suzy said that she “didn’t respect the court because it was rigged against the British people.

She went on to suggest courts should be abolished or ignored because “the majority of the British people demand a Rwanda policy” (really……the majority?).

And get this……she is the Home Secretary…..it is her actual job to uphold the legal system.

Absolute nutter.

Trump Lunacy Rating: 10 / 10

And Finally……

“If history teaches anything, it teaches that self-delusion in the face of unpleasant facts is folly.”

Ronald Reagan

Wednesday, 28 June 2023

The Month That Was……June 2023

If ever there was a month to sum up the fast moving pace of politics, June was it.

In one week, Trump was indicted on 37 counts of espionage (how very Trump)……Sturgeon was arrested……Berlusconi was taken by the (presumably scantily clad) angels……Nadeen Dorries went on TV to say “the last thing I would want to do would be to cause a byelection in my constituency” and yet four hours later she resigned with immediate effect, causing a byelection in her constituency……and, inevitably, there was Boris Johnson.

I don’t know about you but I have BoJo fatigue. I am just exhausted having to bear witness to yet another of his dramas playing out relating to covid parties.

The spine of the biography of BoJo has his relationship with the truth running straight down it. Sacked from The Times for making up a quote. Sacked from the Conservative front bench for lying about an affair. And now the Partygate enquiry confirmed he lied.

The report was brutal……but not shocking. The report’s breadth and depth simply demolished BoJo’s character and conduct and confirmed yet again that he is not great with the truth.

For me, the report was never about parties during Covid. It is about the fundamental pillars upon which public life and society at large is constructed. Conduct. Behaviour. Believability. Integrity. The sanctity of truth. The contempt for lies. BoJo’s behaviour and moral compass couldn’t be further from this.

The report confirmed our suspicions and suggested an unprecedented 90 day suspension from Parliament as punishment (triggering a by-election). But BoJo did what BoJo does……took no ownership, did a runner by stepping down (avoiding a further show of no confidence in a by-election) and deflected attention by accusing the committee of mounting a "witch hunt" against him that is determined to "drive me out of Parliament". He jumped before he was pushed.

What I find fascinating is the media losing their minds over a 90-day suspension yet this is the man who has literally been touring the world making £4 million doing speaking gigs whilst missing 187 Commons votes in the process. I’m embarrassed for you.

Just 40 weeks ago, BoJo was Prime Minister……the figurehead of a Government with a huge majority. But then……

41% of his MPs voted against him in a confidence vote. 72 ministers resigned to get rid of him. He was found guilty by Sue Gray, fined by Met Police and found to have lied during the cover up by an independent committee.

Catapulted first to the backbenches and now out of Parliament too. The demolition of BoJo’s career by his own peers has been brutally quick.

People who say Boris Johnson came to power, achieved nothing, partied during lockdown and then ran off in scandal are forgetting……he built 40 imaginary hospitals.

Good riddance. We deserve better.

The Numbers

The big news of the month was the announcement that annualised wage growth increased from 6.7% to 7.2%...... the fastest rate in 20 years. This has raised concerns that employers would try to pass on the extra costs through higher selling prices and fuelling inflation rather than cooling it.

Ever willing to show how little he understands inflation, Rishi boasted during PM Questions that “we are delivering the fastest wage growth in years”.

It was an extraordinary boast for a few reasons.

1) Wage growth is a big reason why interest rates are still rising and why the Bank of England will continue increasing them. Mortgage pain is in the post for many. More than 400,000 people will see their existing fixed rate deals end between July and September and the cost of remortgaging has soared by nearly 40%. It is no wonder that house prices are falling at their fastest pace in nearly 14 years……it’s not a sexy time to borrow money.

2) “Fastest wage growth” is mainly in the private sector, over which the Government has no control except in respect of setting the minimum wage.

3) Downing Street and the Treasury have been furiously trying to suppress wage increases in schools, hospitals and the rest of the public sector because they regard inflation as THE problem.

4) Even with this “fastest wage growth in years”, most people on average are poorer because inflation is even faster / higher.

5) The Government’s 2-year borrowing costs have risen above 5% for the first time in 15 years amid mounting expectations that the Bank of England will continue to lift interest rates in forthcoming months.

I’m embarrassed for you Rishi.

Given the wage growth level, there was little surprise that the inflation data for the month showed inflation remained at 8.7% despite hopes of a fall. The exceptionally grim part of our inflation outbreak is food inflation, which is still running at 18.4%.

If inflation isn’t under control soon, the Bank of England will raise rates to a level where a recession next year becomes inevitable. As a Chancellor said 34 years ago, "if it isn't hurting, it isn't working".

So, the Bank of England decided to test our pain threshold a little further by increasing the base rate by 0.5% to 5.0%. It is the 13th increase in a row and the rate now stands at its highest level for nearly 15 years.

The Government knows that it will feel the wrath of voters in next year’s General Election who are seeing their household income squeezed. Let’s see how creative they get in tackling this.

The big number for me was the little lady finisning 1st in the school sports day (hurdles). Priceless.

Trump of the Month

The Trump of the Month award for June 2023 for services to lunacy can only be……Boris Johnson.

No further questions your honour.

Trump Lunacy Rating: 10 / 10

And Finally……

“It is better to offer no excuse than a bad one.”

George Washington