Tuesday, 19 March 2013
Local Authorities should be free to set licensing fee's.
Yesterday in Communities and Local Government questions I raised the issue of local authority licensing fees for certain categories of businesses in town
Where Is Cyprus?
To most of us, we do not even know the locations of Cyprus, maybe even the fact that it was admitted into the European Union as well. How can something so small be so significant? How can it drag markets down so much? In hindsight, the weaker markets gave the lawmakers a big signal. Its not so much that they can whack the depositors in Cypriot banks, they are scared that such tough and unreasonable measures may be employed at other difficult countries such as Spain or Italy.
What is likely to happen: the Cypriot lawmakers will vote down the rule. This will anger the ECB and may pave the way for Cyprus exit. I mean, seriously, in the whole scheme of things, its only $7bn. You may actually see a minor bank run at places such as Italy and Spain as well, which may bring back the ECB, IMF and EU finance ministers to the discussion room. Likelihood, the tax will only apply to deposits above 100,000 euros ... paving the way to tax the rich but not the poorer citizens - that may be acceptable, the shortfall can easily be made up by the trioka.
(excerpts from Bloomberg & NYT)
A plan to rescue the tiny European country of Cyprus, assembled overnight in Brussels, has left financial regulators, German politicians, panicked Cypriot leaders and a disgruntled Kremlin with a bailout package that has outraged virtually all the parties. Russia was angry it was left out of talks to aid Cyprus, where it has billions in banks. Aha, you see, Cypriot banks was seen as a haven for a lot of riche Russians to stash their millions and billions.
As markets tumbled and the Cypriot Parliament fell into turmoil. It now looks likely that the Cypriot lawmakers will vote down the measures.
Officials scrambled to explain what went wrong and how best to control the damage of completely irrational decision to make bank depositors liable for part of the bailout. The deal flopped so badly that finance ministers who came up with it shortly before dawn on Saturday were on the phone to each other Monday night talking about ways to revise it. Whatever the outcome, the dispute is a vivid demonstration of why Europe, which until recently was congratulating itself on having weathered the worst of the financial storm, has trouble making decisions with so many different interests represented at the table.
Politics, both domestic and international, get in the way of economics and make it difficult for wealthy countries to line up behind a plan to help the smallest ones. The northern European nations have grown so weary of bailouts for their southern neighbors that they were intent on exacting a hefty contribution from their latest supplicant. Germany in particular, with parliamentary elections looming in September, was set on driving a hard bargain.
A wild card in this instance were the Russians, who have deposited billions in Cypriot banks, extended a $3.25 billion line of credit to Nicosia in 2011 and were in negotiations to help out Cyprus once again. Cypriot leaders apparently were so concerned with keeping their wealthy offshore Russian customers happy that they pushed their own citizens to pay even more than some of the lenders were demanding.
The Russians reacted angrily to a so-called stability tax on deposits in Cyprus, and at being left out of the negotiations. On Monday, Russia’s minister of finance, Anton Siluanov, warned that Russia might not extend the existing credit line because the Europeans had not consulted authorities in Moscow about the deposit levy plan. On Sunday, one Russian official was reported by the Interfax news agency as advising Russians to withdraw funds from Cyprus, saying the banking system was untrustworthy.
The all-night discussions began Friday and ran for 10 hours, ending shortly before dawn on Saturday. Cyprus needed to come up with billions of dollars to help cover the costs of the bailout of the country’s financial sector, or its European allies said they would leave it to face the prospect of collapse alone.
Each of the major stakeholders, which included the International Monetary Fund, the European Central Bank and euro zone finance ministers, entered the room with a conflicting goal. Protecting the small-time saver was at the top of no one’s list. The result was a compromise solution everyone is now unhappy with, officials say, one that stands to cost ordinary Cypriot depositors 6.75 percent of their savings.
The Germans and their northern European allies wanted to exact a maximum contribution from Cyprus to ensure the deal could pass their recalcitrant, bailout-weary parliaments at home. A confidential report by the German foreign intelligence agency, known by its German initials as the B.N.D., was making the rounds, one that painted the island as a haven for money-laundering. The stigma attached to helping the Cypriots — and the political cost in an election year — was rising rapidly.
The I.M.F. was dead set on keeping the debt at what its number-crunchers considered a sustainable level. The Cypriots, meanwhile, wanted to spread the pain around.
The European Central Bank also had reservations about levying higher taxes, but the Germans wanted $9.2 billion from depositors, officials said. That was an enormous contribution for a country the size of Cyprus.
Cypriot lawmakers is likely now to shoot down an unprecedented levy on bank deposits, risking the island’s membership in the euro. Cypriot President Nicos Anastasiades warned German Chancellor Angela Merkel in a call yesterday that he may not be able to win passage, said a Cypriot government official.
Finance chiefs from the 17-member euro area late yesterday urged Cyprus to spare small-scale savers, while keeping unchanged the size of their demand on account holders. While Cyprus accounts for less than half a percent of the euro economy, the fight over the bank tax risks triggering new turmoil in the financial crisis that began in 2009 in Greece.
A complete rejection of the measure would forego European assistance and could lead to a sovereign default, or even an exit from the currency union. What we have seen in the last few days is a very serious blunder by European governments that essentially are blackmailing the government of Cyprus to confiscate the money that belongs rightfully to depositors.
Once banks on the island reopen, the country could see more than 7 billion euros in outflows, or about 10 percent of the total, Central Bank Governor Panicos Demetriades told a parliamentary committee.
Anastasiades was rebuffed in a call to German Chancellor Angela Merkel yesterday. Merkel told him that he can only negotiate a rescue with the so-called troika, which comprises the European Commission, the ECB and the International Monetary Fund, according to a German government official.
The bank levy and additional tax measures reduced the overall rescue package to 10 billion euros from about 17 billion euros to meet the IMF’s demand for debt sustainability and German politicians’ skepticism over financial transfers.
German Finance Minister Wolfgang Schaeuble said there was no other option if the troika wanted to keep the price tag for the bailout at 10 billion euros. Naturally, the Cypriot president tried to find a way around it, but there was none, and that the levy doesn’t violate deposit guarantees, because such protections are “only as good as a state’s solvency.
Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s.
What is likely to happen: the Cypriot lawmakers will vote down the rule. This will anger the ECB and may pave the way for Cyprus exit. I mean, seriously, in the whole scheme of things, its only $7bn. You may actually see a minor bank run at places such as Italy and Spain as well, which may bring back the ECB, IMF and EU finance ministers to the discussion room. Likelihood, the tax will only apply to deposits above 100,000 euros ... paving the way to tax the rich but not the poorer citizens - that may be acceptable, the shortfall can easily be made up by the trioka.
Global markets were rattled slightly. However as more news on the backlash by so many parties, it is likely that the rule has to be changed significantly to gain acceptance, and more importantly restore confidence in the ECB's recovery and restoration plan. Cyprus ia small issue, no one will risk pushing the silly rule through at the risk of major fallouts in bigger EU nations. Last thing they need in Italy and Spain is a bank run.
(excerpts from Bloomberg & NYT)
A plan to rescue the tiny European country of Cyprus, assembled overnight in Brussels, has left financial regulators, German politicians, panicked Cypriot leaders and a disgruntled Kremlin with a bailout package that has outraged virtually all the parties. Russia was angry it was left out of talks to aid Cyprus, where it has billions in banks. Aha, you see, Cypriot banks was seen as a haven for a lot of riche Russians to stash their millions and billions.
As markets tumbled and the Cypriot Parliament fell into turmoil. It now looks likely that the Cypriot lawmakers will vote down the measures.
Officials scrambled to explain what went wrong and how best to control the damage of completely irrational decision to make bank depositors liable for part of the bailout. The deal flopped so badly that finance ministers who came up with it shortly before dawn on Saturday were on the phone to each other Monday night talking about ways to revise it. Whatever the outcome, the dispute is a vivid demonstration of why Europe, which until recently was congratulating itself on having weathered the worst of the financial storm, has trouble making decisions with so many different interests represented at the table.
Politics, both domestic and international, get in the way of economics and make it difficult for wealthy countries to line up behind a plan to help the smallest ones. The northern European nations have grown so weary of bailouts for their southern neighbors that they were intent on exacting a hefty contribution from their latest supplicant. Germany in particular, with parliamentary elections looming in September, was set on driving a hard bargain.
A wild card in this instance were the Russians, who have deposited billions in Cypriot banks, extended a $3.25 billion line of credit to Nicosia in 2011 and were in negotiations to help out Cyprus once again. Cypriot leaders apparently were so concerned with keeping their wealthy offshore Russian customers happy that they pushed their own citizens to pay even more than some of the lenders were demanding.
The Russians reacted angrily to a so-called stability tax on deposits in Cyprus, and at being left out of the negotiations. On Monday, Russia’s minister of finance, Anton Siluanov, warned that Russia might not extend the existing credit line because the Europeans had not consulted authorities in Moscow about the deposit levy plan. On Sunday, one Russian official was reported by the Interfax news agency as advising Russians to withdraw funds from Cyprus, saying the banking system was untrustworthy.
The all-night discussions began Friday and ran for 10 hours, ending shortly before dawn on Saturday. Cyprus needed to come up with billions of dollars to help cover the costs of the bailout of the country’s financial sector, or its European allies said they would leave it to face the prospect of collapse alone.
Each of the major stakeholders, which included the International Monetary Fund, the European Central Bank and euro zone finance ministers, entered the room with a conflicting goal. Protecting the small-time saver was at the top of no one’s list. The result was a compromise solution everyone is now unhappy with, officials say, one that stands to cost ordinary Cypriot depositors 6.75 percent of their savings.
The Germans and their northern European allies wanted to exact a maximum contribution from Cyprus to ensure the deal could pass their recalcitrant, bailout-weary parliaments at home. A confidential report by the German foreign intelligence agency, known by its German initials as the B.N.D., was making the rounds, one that painted the island as a haven for money-laundering. The stigma attached to helping the Cypriots — and the political cost in an election year — was rising rapidly.
The I.M.F. was dead set on keeping the debt at what its number-crunchers considered a sustainable level. The Cypriots, meanwhile, wanted to spread the pain around.
The European Central Bank also had reservations about levying higher taxes, but the Germans wanted $9.2 billion from depositors, officials said. That was an enormous contribution for a country the size of Cyprus.
Cypriot lawmakers is likely now to shoot down an unprecedented levy on bank deposits, risking the island’s membership in the euro. Cypriot President Nicos Anastasiades warned German Chancellor Angela Merkel in a call yesterday that he may not be able to win passage, said a Cypriot government official.
Finance chiefs from the 17-member euro area late yesterday urged Cyprus to spare small-scale savers, while keeping unchanged the size of their demand on account holders. While Cyprus accounts for less than half a percent of the euro economy, the fight over the bank tax risks triggering new turmoil in the financial crisis that began in 2009 in Greece.
A complete rejection of the measure would forego European assistance and could lead to a sovereign default, or even an exit from the currency union. What we have seen in the last few days is a very serious blunder by European governments that essentially are blackmailing the government of Cyprus to confiscate the money that belongs rightfully to depositors.
Once banks on the island reopen, the country could see more than 7 billion euros in outflows, or about 10 percent of the total, Central Bank Governor Panicos Demetriades told a parliamentary committee.
Anastasiades was rebuffed in a call to German Chancellor Angela Merkel yesterday. Merkel told him that he can only negotiate a rescue with the so-called troika, which comprises the European Commission, the ECB and the International Monetary Fund, according to a German government official.
The bank levy and additional tax measures reduced the overall rescue package to 10 billion euros from about 17 billion euros to meet the IMF’s demand for debt sustainability and German politicians’ skepticism over financial transfers.
German Finance Minister Wolfgang Schaeuble said there was no other option if the troika wanted to keep the price tag for the bailout at 10 billion euros. Naturally, the Cypriot president tried to find a way around it, but there was none, and that the levy doesn’t violate deposit guarantees, because such protections are “only as good as a state’s solvency.
Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s.
Monday, 18 March 2013
Joe Irvin Chief Executive NAVCA speaks at UNISON Community Conference 2013
Joe is the Chief Executive of NAVCA (National Association for Voluntary and Community Action)
"The current climate in the voluntary sector is affecting the sector by public sector cuts and resulting poverty.
Contracts and grants from local authorities are decreasing by 20% in 2011-2012.
Working together with UNISON is beneficial in order to use public law to challenge cuts; to exchange information and campaign for voluntary community services.
Working together we can join forces to address the Social Value Act and be a strong voice for children living in poverty, shelter for the homeless and practical help with pension regulation and accrediting to the Living Wage.
More joint work can be done by campaigning for the independence of the community sector and be able to advocate and be the voice of people living in the community, building the partnerships necessary to change society.
The services that protect children, environment and social care are the statutory duties of local government . Research by the NAVCA shows that the money available to other service are decreasing and will have a dramatic downward trend in the future. Now is the time to campaign together with UNISON and the voluntary sector to achieve positive social change.
We must learn to avoid constraints in the workplace, learn to exchange information and support both sectors in legal challenges and campaigning that can be used effectively and get the results we both want".
From top bankers, to millionaires, the Tories stand up for the wrong people
Ed Miliband has today laid the battlelines for a “living standards general election”.
With the Tories: more of the same - trickle-down from the top, squeezing the middle and a race to the bottom.
With One Nation Labour: a recovery made by the many, not just a few at the top.
A fair tax system is a central part of building a successful, One Nation, economy. That is why we want to introduce
Sunday, 17 March 2013
Self-Censorship & The Brilliant Independence of Brokers' Research
I have yet to come across a top tier broker research that truly examines ALL the potential outcomes of the upcoming election and the implications. Yes, we had the research from Bank Islam and see what happened. Nomura Research only presented 3 possible scenarios. THREE, nothing more.
Even the dumbest person in the room would know that that is not the entire scenarios available or the available outcomes. Even in my "biased piece below", at least I have the decency to look at all the possibilities.
Nomura has painted three potential election scenarios and their impacts on the economy.
Three fucking scenarios ONLY??? Its a fucking coin toss, the last elections popular vote is like 49-51, and you fucking give only 3 scenarios??? Why don't you just say it out loud ... that you cannot make any comment on the other 2 possibilities, no matter HOW REMOTE they may be, only then can you say it is from a fucking research house!!! (the other two possibilities: PR wins by small majority, and PR wins by more than 10 seats majority). Why the self censorship, is there something you cannot say, ... its like predicting the recent US elections and you only give Obama winning by less than 2%, 5% or 10% ... asif the Republicans never existed. I know your hands are tied and you depend on the flows of IB deals but seriously, if you cannot comment or choose not to comment on the other side of the coin .... then don't fucking print the research idiots. It makes a mockery of the so call research piece.
Another one, just received from Morgan Stanley, the big US house, from the land of the purveyor and global sheriff of the maintenance and prevalence of democracy ... they also gave 3 fucking scenarios ONLY ... sigh, long live the USA ... OR come out with a note that says that you think there is a ZERO chance of Pakatan winning the elections and see how many legs you have to stand on.
I am sure we all understand the self censorship part, I would understand but not condone it, if it came from a local house ... but from a foreign house it smacks of something smelly.
MORGAN STANLEY
#3: Election Scenarios and macro implications
Scenario 1:
BN Parliamentary seat share > 63%
Positive surprise for investors
Scenario 2:
High 50% < BN Parliamentary seat share < 63%
Scenario 3:
BN Parliamentary seat share < mid 50%
(To be fair to Morgan Stanley, they did a decent policy comparison between the two parties without really saying too much one way or the other. The snaps attached below are from MS).
The final scenario is that the ruling coalition winning around 125 to 130 seats.
hishamh said... Dali,
I've looked at the problem myself, and for the life of me, I can't figure out how anybody can make an objective forecast of GE13, much less tease out the probability distribution of outcomes.
We are nowhere near being able to replicate basic electoral prediction methodologies, much less aggregate them as e.g. Nate Silver did recently for the US presidential election.
Problem 1: The overall Malaysian electoral sample size (across time) is too small, both for votes and seats.
Problem 2: The sample size for the predictors normally used (opinion polls, quarterly economic data) is even smaller - small enough that a regression estimate can't be generated, which is a precondition for estimating the probability distribution of outcomes.
Problem 3: GE12 may represent a structural break from the past, but that can't be determined statistically until confirmed by results of GE13.
A time series analytical approach can handle the first two statistical issues, and predicts a BN victory with well above a two thirds majority (point estimate) but with a sample error so large as to make any forecast worthless (I suspect this is due to problem 3).
I don't understand how Nomura or MS or BIMB can predict such tight probability outcomes given these constraints. There's nothing in the scenario analysis methodology that allows you to estimate the probability distribution. Scenario analysis is more of an ...if...then... decision tool, not a forecasting methodology per se.
In short, i don't think self censorship has much to do with this, rather everyone's just pissing in the dark. You're absolutely right - nobody should be publishing research on this, because its too damaging to their credibility. 11:32 AM 
Even the dumbest person in the room would know that that is not the entire scenarios available or the available outcomes. Even in my "biased piece below", at least I have the decency to look at all the possibilities.
Nomura has painted three potential election scenarios and their impacts on the economy.
The first scenario is that the ruling coalition will win a smaller majority of 120-124 seats out of 222. BN currently holds 137 seats. The second scenario is that the number of seats won by the opposition and the ruling coalition are marginally less than 120 seats, which would likely be an accelerated ousting of the prime minister. Nomura said within this 20% probability, there is a small chance of the election leading to a hung parliament. The final scenario is that the ruling coalition winning around 125 to 130 seats. But Nomura said this outcome looks unlikely unless there is an unexpected fall in support for the opposition.
Another one, just received from Morgan Stanley, the big US house, from the land of the purveyor and global sheriff of the maintenance and prevalence of democracy ... they also gave 3 fucking scenarios ONLY ... sigh, long live the USA ... OR come out with a note that says that you think there is a ZERO chance of Pakatan winning the elections and see how many legs you have to stand on.
MORGAN STANLEY
#3: Election Scenarios and macro implications
Scenario 1:
BN Parliamentary seat share > 63%
Positive surprise for investors
Scenario 2:
High 50% < BN Parliamentary seat share < 63%
Scenario 3:
BN Parliamentary seat share < mid 50%
(To be fair to Morgan Stanley, they did a decent policy comparison between the two parties without really saying too much one way or the other. The snaps attached below are from MS).
The Edge/Sun Daily: Nomura Economics Research said the upcoming general election (GE), which is likely to be held on a weekend between April 6 and 20, 2013, could make or break its relatively positive economic outlook on Malaysia.
"Our baseline scenario is for the ruling Barisan Nasional (BN) to win, but by a smaller majority of 120-124 seats, which is lower than what we had previously penciled in, partly because recent surveys show an emboldened and well-organised opposition," said Nomura in its "Asia Special Report: Southeast Asia" dated March 6, 2013.
"This raises uncertainty over whether there would be an orderly transition of power, whether Prime Minister Datuk Seri Najib Abdul Razak remains in power and whether the much-needed economic reforms can continue," it added.
Nomura has painted three potential election scenarios and their impacts on the economy.
The first scenario is that the ruling coalition will win a smaller majority of 120-124 seats out of 222. BN currently holds 137 seats.
"Although there is scope for some relief on this baseline result because a small minority of the market sees the opposition actually winning the election, we believe this will be short-lived owing to the immediate implications of a small majority.
"A simple majority in parliament calling a no-confidence vote could emerge when parliament convenes for its first session 60 days after the election. This would raise political and economic uncertainty," said Nomura.
The second scenario is that the number of seats won by the opposition and the ruling coalition are marginally less than 120 seats, which would likely be an accelerated ousting of the prime minister.
Nomura said within this 20% probability, there is a small chance of the election leading to a hung parliament.
"The risk of such an outcome includes policy paralysis, potential protests, calls for a recount or even an annulment of the election results, which can be called within three weeks of the election announcement," said Nomura.
Risk of a no-confidence vote from the opposition on the prime minister will also be even greater, while internal party pressure could also lead to a change in Umno leadership.
"Currently, Deputy Prime Minister Tan Sri Muhyiddin Yassin is seen as a potential replacement for Najib and viewed by the market as somewhat hard-line. This change could emerge earlier than the planned October/November 2013 party elections.
"With the negative political backdrop and economic risks, as well as possible delays in investment projects, these could lead to a sovereign rating downgrade," the research firm said.
The final scenario is that the ruling coalition winning around 125 to 130 seats.
But Nomura said this outcome looks unlikely unless there is an unexpected fall in support for the opposition.
"(However, if it does happen,) the pressure on Najib to step down on this outcome would be significantly reduced and economic policy continuity will likely be maintained."
Nomura believes that increased political and economic concerns if the opposition gains power could be overstated as there may not actually be any major policy changes.
"The opposition has a common objective and is likely to initially focus on governance issues (which could lead to slower government investment), keeping key government staff in place such as the central bank governor and heads of key state companies, consolidate the civil service, before focusing on the direction of economic policy," it said.
I've looked at the problem myself, and for the life of me, I can't figure out how anybody can make an objective forecast of GE13, much less tease out the probability distribution of outcomes.
We are nowhere near being able to replicate basic electoral prediction methodologies, much less aggregate them as e.g. Nate Silver did recently for the US presidential election.
Problem 1: The overall Malaysian electoral sample size (across time) is too small, both for votes and seats.
Problem 2: The sample size for the predictors normally used (opinion polls, quarterly economic data) is even smaller - small enough that a regression estimate can't be generated, which is a precondition for estimating the probability distribution of outcomes.
Problem 3: GE12 may represent a structural break from the past, but that can't be determined statistically until confirmed by results of GE13.
A time series analytical approach can handle the first two statistical issues, and predicts a BN victory with well above a two thirds majority (point estimate) but with a sample error so large as to make any forecast worthless (I suspect this is due to problem 3).
I don't understand how Nomura or MS or BIMB can predict such tight probability outcomes given these constraints. There's nothing in the scenario analysis methodology that allows you to estimate the probability distribution. Scenario analysis is more of an ...if...then... decision tool, not a forecasting methodology per se.
In short, i don't think self censorship has much to do with this, rather everyone's just pissing in the dark. You're absolutely right - nobody should be publishing research on this, because its too damaging to their credibility.
Bedroom Tax Protest Rally Manchester 16 March 2013
The Bedroom Tax is a major issue to the Community members up and down the country. Not only are they going to be the workers who have to deal face to face with the resulting misery from vulnerable tenants due to the Bedroom Tax, but is is clear that many specialist Housing Association and voluntary organisations risk going under due to the whole gambit of Tory/Lib Dem welfare cuts.
Centre picture is of top UNISON and Labour movement activists Angela Rayner and Maureen Le Marinel. Angela is the branch sectary of UNISON Stockport Local Government branch and Maureen is of course one of our two UNISON National Vice Presidents.
Angela is standing for selection as the Labour Party candidate for Manchester Withington. What a superb MP she would make.
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