First there was Climategate, then Glaciergate, then Amazongate, and now Africagate.

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It’s in the usual place. We’ll be there handing out free samples and rude remarks about the government.

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I was shocked to learn today that a rather nice little cafe in Steyning where we have been buying brew day breakfasts for the last 18 months has quietly shut it’s doors.

This is on top of today’s news that the torrent of pub closures continues, currently running at 39 a week. This is a very slight dip in the figures but the period covers the busy summer months and it’s likely to show a greater rate of decline in the period covering January. I suspect that’s what did for our own cafe.

Even worse is that it’s the free houses that are bearing the brunt of the carnage.

Each closure of this nature is a human tragedy, and it wrecks lives. Please support your local pub.

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Wikipedia tells me that Lord Stern is the nephew of the late great Swann of Flanders and Swann. Flanders and Swann were known for their comic songs in an earlier time. Their song of ‘Patriotic Prejudice’ probably violates several thought crime statutes in our more enlightened era.

Some of their comic genius must have rubbed off on Lord Stern. In 2006 he was responsible for the Stern Review which looks at the economic impact of Global Warming (it wasn’t called climate change in those days). To call it controversial is putting it mildly, and oddly enough it concluded that the government policy of the time was exactly right. His suggested solution to the climate crisis is the usual deadly combination of carbon trading and green taxes.

Yesterday, Tory High command announced that Lord Stern would be advising them on the creation of a green bank to help rebuild the economy.

About ten minutes later Lord Stern said he wouldn’t.

It’s actually hard to put your finger on what aspect of this story is more inept. The fact that the clique currently in charge of the Conservatives thought that the advice of Lord Stern would actually help the economy recover, or the misunderstanding on whether he was involved or not at all.

In the last few days I’ve developed a new theory about what’s going on. I think the Conservatives have decided that the situation is so dire that winning the election is a poisoned chalice. Whichever party gets into power next time will necessarily become so unpopular that their party will never be in power again. Perhaps they want Labour to sort out their own mess.

That must be it.

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Benedict Brogan asks – are they doing it deliberately ?

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This lovely beast is a Laffer curve, it describes how much tax revenue could be raised by taxing a certain item such as beer.

On the far left, where the tax rate is set to zero, you don’t raise any revenue because your tax rate is 0%. In other words you are not taxing a pint.

On the far right where you are taxing something at 100%, the amount of revenue raised is again zero. This is because that although you might be willing to buy a pint taxed at 100% I wouldn’t be prepared to make it – I wouldn’t get any money for the ingredients or labour. So no beer is made, none is sold, and therefore no tax revenue.

Now obviously beer is taxed and the government gets revenue from the duty and the VAT, so we know the curve goes up as you move towards the middle. It follows in a pretty straightforward way that there’s a bit somewhere in the middle that’s at the top. That’s where you get the most tax revenue.

Some chancellors decide to tax things to the left of the peak (for example at point A) because they think that all tax acts as a restraint on trade and trade builds strong happy countries. Unfortunately we haven’t had one of those since Gladstone’s era.

Most chancellors are self interested and tax items at the peak because that’s where they make the most money. Occasionally we get chancellors who are round the twist that tax items to the right of the peak (at point B for example) where they actually gather less money than they could.

Guess what kind we have at the moment ?

In the last year Alistair Darling raised the duty on beer over 20%. A few days ago the British Beer and Pub Association reported that the revenue to the government was down by an estimated £258 million.

£258 million! Enough for a nice new hospital, or some decent equipment for the army. Hell, you could resurface a moat and get a nice new duck house for that kind of money.

Rumour has it that someone once drew Alistair a Laffer Curve on the back of an envelope. He must be holding it upside down.

H/T to Pete Brown for his take on this.

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I’ve spent the last few days brewing, making sales, struggling with paperwork, and composing a letter to the council that is so vitriolic that on reflection I’ve decided not to send it. So I’d missed these three stories that taken together are deeply disturbing.

A bit of context. Public finances are in a dreadful mess, with at least two trillion pounds of debt (Feb 2009 according to the OECD) and 200 billion pounds ushered into existence by quantitative easing. The debt is bought by international financial markets who give money to the government in return for gilts. They demand a certain level of interest to do this and that interest level is reflected in the interest rate charged on mortgages and other day to day credit transactions.

If the rate of interest goes up, the economy will tank and with a mere 0.1% growth in the last quarter (if you can believe that) it will not take much.

Why would those wicked financiers demand more interest ? They’ll do it if they think that Britain’s ability to pay back the gilts has become riskier, for example if Britain’s credit rating was downgraded. It happened to Greece late last year.

Now, as a matter of fact, despite the sheer cack handedness of the way the economy has been handled over the last few years, the ‘market event’ has not happened. Britain’s economy has run off the cliff but like Wile E. Coyote we are not falling because we haven’t noticed yet. You’ll note that I’ve described the carnage of the last few years as ‘not falling’; imagine what ‘falling’ might be like.

Opinions vary on why, but a very plausible theory is that the markets are waiting for a change in government when they believe George Osbourne will become Chancellor. The theory goes that he will immediately make drastic cuts in public spending to start setting the situation to rights. He is after all, a Tory. In other words, George is under the microscope.

On Thursday, George published this piece of nonsense full of sound and fury and the latest psycho-economic theories but studiously ignoring the elephant in the room.

At round about the same time the world’s most influential bond manager (Bill Grosse) wrote:

The UK is a must to avoid. Its Gilts are resting on a bed of nitroglycerine.

…and finally today we learned that the Standard and Poor’s, the credit rating agency had downgraded Britain’s banks. This is frequently a precursor to downgrading an entire country’s credit rating.

It’s beginning to look as if at the end of Davos, the markets have reached a judgment about George, and by extension about the likely future of the UK. Just like Wile E. Coyote, we may well be about to learn what gravity really means.

Hat tips to The Devil’s Kitchen, Burning our Money, IanPJ on Politics.

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(Hilariously, this image comes from the Envirowise government website where they ask for acknowledgment. I am of course happy to do so.)

I get most of my news from blogs these days. I read far more than are on our official blog roll. That’s mainly for beer or rather local related blogs. Much of the stuff I read is not suitable for those of a nervous disposition. Occasionally, something comes up that is so horrifying it bears repeating here.

….and today’s example is the official estimate of government waste, that is, the government’s own estimate.

It’s (wait for it)

15%

Fifteen; one five percent.

I was so shocked I had to sit down for a moment.

To put this into context, that’s what we were paying in VAT last year. It’s simply wasted.

Burning our money is all over this.

On top of this, today is the official announcement of the end of the recession. During the Christmas season the UK economy grew 0.1% although a lot of forecasters were expecting 0.4% This is very close to the margin of error and several quarters growth have been revised down after the first announcements. In all probability there was no real growth last quarter and the cold start to this quarter, combined with the fact that it’s not Christmas will probably send the numbers properly negative again.

You can see from the official graph that the drop from the 2006 peak to the present day is 9% avoiding the technical definition of a depression by a mere 1%

We could still get there if we work on it.

+++UPDATE+++

One implication is that the election could start as early as next week.

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I’m feeling somewhat put upon this morning. I’ve woken up to discover that self harmers have now taken to using alcohol! as reported by the BBC.

I believe I’m an innocent bystander in all of this, albeit a slightly blood spattered one from standing too close. As it happens I did know someone who self harmed at university, typically just before exams started. She ended up in hospital one day having rather overdone it and I’m not sure what became of her after that.

The thing is, the BBC doesn’t seem to particularly care why people self harm, or indeed why – during the reign of benevolent king Gordon of the workers paradise – that self harming seems to be on the increase.

No, what the BBC seems to think is important is that self harmers drink. The whole tone suggests that somehow the drink is causing the self harm.

Well, I don’t know about you but if I was sitting at a table preparing to carve bloody chunks out of my forearms, I’d need a stiff drink first. The surprising thing is that a mere 64% of them drink.

Its ironic that BBC is well known for its lavish hospitality and I dare say that there are one or two staff members who have been known to take the odd glass. But I don’t think I could conclude that there are a larger than average number of self harmers at the BBC.

That wouldn’t be fair, and just like the BBC I try to be fair.

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