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Merry Christmas & Y2023 Happy New Year
籍此佳節 衷心感謝 您的支持....
祝 願 您 和 家 人
聖 誕 快 樂 ！
新年 平安 、健康、喜樂、 進步 !
優之語言 / 羅先生
The Guardian 22/12/2022
More than three-quarters of firms say the government’s post-Brexit trade deal has not helped them to grow their business in the past two years despite promises it was an “ovenready” deal.
The survey by the British Chambers of Commerce has prompted the business lobby group to present the government with five urgent recommendations for enhancing the agreement, which has left many exporters struggling to sell into the EU under the current terms.
More than half (56%) of the BCC members surveyed who trade with the EU said they had experienced problems complying with new rules for exporting goods, while 45% reported issues trading in services. Overall, as many as 77% of firms trading under the deal said it had not helped them to increase sales or expand.
The BCC’s director
general, Shevaun Haviland, said: “Businesses feel they are banging their heads against a brick wall as nothing has been done to help them, almost two years after the TCA was first agreed. The longer the current problems go unchecked, the more EU traders go elsewhere.”
The group’s members highlighted difficulties administering EU rules on VAT; inconsistent application of customs rules; and new limits on business travel. On regulation, two-thirds of members said they would prefer to keep using the EU’s CE mark of product quality, instead of switching to the UK equivalent, the UKCA.
The shadow international trade secretary, Nick Thomas-Symonds, said: “This is a damning report and shows the mess the Conservative government have made over trade policy. For over three-quarters of businesses to say that agreements struck by the government are not helping them to grow or increase their sales is unacceptable.”
The trade and cooperation agreement (TCA) was the core of Boris Johnson’s “oven ready” Brexit deal. The then prime minister announced that it had been struck on Christmas Eve two years ago.
It allows UK goods to avoid EU tariffs; but imposes additional customs and regulatory checks and other “non-tariff barriers”, as the UK opted to be outside the EU’s customs union and single market.
The TCA is due to be reviewed in 2026, when it will have been in operation for five years; but the BCC is calling on the government to negotiate some changes immediately. “There are clearly some structural problems built into the TCA which cannot be addressed until it is reviewed in 2026.
“But as we set out in our report to government there are some issues that do not need to wait on months of negotiations or major reviews to be fixed,” said Haviland.
The BCC’s call for action from the government came as research from the Centre for European Reform
(CER) claimed Brexit has shaved 5.5% off GDP, and cost £40bn in tax revenues. In a new report, the CER’s John Springford compares the UK’s performance since Brexit with a basket of similar economies.
Using this approach, known as the doppelgänger method, he finds that the economy is likely to have been £30bn, or 5.5% smaller in the second quarter of 2022, than it might have been had Brexit not happened. This is at the high end of recent estimates.
Springford argues the weaker economy has had a knock-on effect on the public finances, contributing to Sunak’s decision to increase taxes.
“If the UK economy had grown in line with the doppelgänger, tax revenues would have been around £40bn higher on an annual basis,” he claims.
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Admin December 20, 2022 science
Because our universe is so huge, it appears that nothing else could exist. Experts believe we may be in a 4-dimensional black hole.
Our universe began at the singularity, an infinitely hot and dense point in space. According to CERN experts like James Beecham, black holes in our universe may be characterized in the same way as they are in science.
What Causes A Black Hole To Form?
When massive stars die and collapse into an unimaginably dense mass, they generate black holes from which no light can escape. The event horizon, according to NASA, is the boundary in space beyond which no light can leave or any object can return.
The event horizon is not a new concept; it occurs in every visible universe. In the first trillionth of a second after the Big Bang, the universe began expanding at a rate faster than the speed of light. There was no such thing as an absolute speed restriction before this time because there was no such thing as outer space. The expansion of the cosmos slows with time.
There is a curvature in the space-time surrounding a black hole in accordance with Einstein's theory of relativity. If it weren't for the light and heat pulled into black holes, it would be almost impossible to see them. The event horizon expands in tandem with the black hole as more stuff is drawn into it.
The rate of material fall slows as the black hole expands. Things seem to be moving at a standstill to an observer due to the immensity of gravity. The theory of relativity says that time seems to be normal from the viewpoint of anything being drawn into a black hole.
Are We Inside A Black Hole?
In our reality, the event horizons of three-dimensional black holes are two-dimensional. According to this logic, our universe would need to be a fourth-dimensional black hole in order to be an event horizon. The singularity of a black hole is a mathematical impossibility, which is why calculating the event horizon yields infinity. The event horizon records the information that is sucked into the black hole by falling matter.
As the event horizon expands, the surface area of a black hole is just the proper size to hold all of the information that has fallen into it since the Big Bang. This type of data constitutes the entirety of our universe. It turns out that the arithmetic works and answers some of the most important questions concerning the universe and black holes. In 2014, the Perimeter Institute and the University of Waterloo published research that suggested.
It's tough to imagine our globe residing within another black hole. According to the black hole theory, our cosmos may be considerably larger and more chaotic than we previously imagined. It connects all of the loose ends that scientists and professionals have been attempting to figure out for decades.
21/12/2022
Some sellers are happier to negotiate if you’re flexible about your move-in dates, says property consultant Alex Goldstein.
Consider why you’re buying the property when negotiating, says Alex Mosley of broker Perrygate: ‘If it’s a dream home, don’t risk negotiating the price down.’
Check websites such as Rightmove to get an understanding of what is for sale, says buying agent Emma Fildes: ‘You really need to know what you’re doing before you pitch your offer.’
‘That is vital,’ says Alex Goldstein. ‘This is a people business — so if you’re responsive, they will portray that to their client.’
Don’t get carried away when negotiating, says Joel Edgerton, an estate agent based in Wigan: ‘You have to think about what you believe a property is worth and be realistic.’
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Helena Kelly and Adele Cooke moneymail@dailymail.co.uk
Daily Mail 21/12/2022
ACALM is descending on Britain’s property market. After two and half years of soaring prices and frantic bidding wars, for sale signs are staying up longer and estate agents’ phones are quieter.
In 2020 and 2021, there wasn’t the usual pre-Christmas slump. Buyers were keen to take advantage of the stamp duty holiday and rock-bottom home loan rates, even during the December festivities.
But this year is different. Money Mail has spoken to estate agents across the country and many of them say the housing bubble has burst, with soaring mortgage costs putting buyers off moving.
‘I have never seen the market go from so warm to so cold in such a short space of time,’ says North Wales estate agent Ian Wyn- Jones.
‘Properties are being put on the market for £250,000 and selling for £180,000.’
Lesley Prescott, a surveyor at Londonbased Reliable Property Group, agrees.
‘It is the fastest hot-to- cold market I have ever seen,’ she says.
‘The current trend is a downward spiral as vendors struggle to sell their homes, due to the process taking longer than 15 weeks and mortgage offers being withdrawn from buyers. There are roughly 50 pc fewer properties being processed.’
Suddenly, the power is back in the hands of house-hunters. It means there is a chance to haggle on prices again.
Last month, seven in ten estate agents saw most sales agreed at below asking price, according to industry body Propertymark. In March this figure was just 15 pc. And data from estate agency Hamptons shows the fewest homes in England and Wales achieved their asking price in November since January 2021.
BuYERShave been made nervous by headlines suggesting a housing crash is imminent. Earlier this month, one of Britain’s largest lenders, Halifax, forecast that property prices would fall by 8 pc.
This means about £23,000 will be shaved off the value of an average home. Yesterday, Nationwide predicted a similar fall, but remarked that any crash would have a ‘soft landing’. However, agents are not so sure.
Joel Edgerton, of Wigan estate agency Regan and Hallworth, says: ‘We’re definitely in a buyer’s market now. We’re seeing houses being sold for less than they would have fetched earlier in the year.’
But buying agent Emma Fildes, who runs Brick Weaver in London, spies an opportunity. She says: ‘In the past two years it has been bidding war after bidding war.
‘Now you can more aggressively turn around and negotiate a better price. Everyone is doing it. No one wants to feel they are overspending right now.’
First-time buyer Robert Bolohan plans to buy a property with his wife Mariona in the new year — and intends to haggle.
The couple had all but given up on their home ownership dream after prices soared in recent years, thanks in part to pent-up demand from the pandemic and stamp duty cuts.
They have been living at home with his parents in West Drayton, London, while they save money.
Robert, 28, who runs his own translation business called Lotuly, says: ‘Just a few weeks ago we went to see a couple of houses in the Reading area. It was really nice because these areas were so expensive last year, but now they feel so much more affordable.’ He adds: ‘I am a business owner; I negotiate in almost everything I do. So, of course, when it comes to finding a home, I am fully expecting to haggle politely.’
However, experts warn that buyers are out of practice when it comes to negotiating and need to bear some simple tips in mind.
First, it is important to gauge the appetite of the seller, says Ms Fildes. ‘Are they getting divorced or are they having marriage problems — therefore, do they need to sell quickly? You need to know what you’re doing before you pitch your offer.’
Secondly, she says, negotiations must be initiated early in the process, otherwise things can get ‘ messy’. Experts recommend focusing on making yourself an appealing seller.
Property consultant Alex Goldstein, based in London, says: ‘If you’re trying to negotiate from a position of strength, you need to have everything ready, including your ID, mortgage agreement in principle and having a solicitor lined up.’
Ms Fildes says buyers in the current market should only expect to cut down the price by no more than 10 pc.
Mr Goldstein adds: ‘You can overstep the mark.
‘It’s a people business and, if you come in with a lowball offer, then you’re going to anger the seller. If you get off on the wrong footing, then it breaks trust.’
Above all else, buyers must be realistic, as not all homes will be up for negotiation.
Aneisha Beveridge, head of research at Hamptons, says in the current market you are more likely to be able to haggle down the price of a larger home than a onebedroom flat.
It signals a reversal of the pandemic-induced ‘race for space’, when buyers were demanding bigger properties with more spacious gardens.
She says: ‘As mortgage rates have risen, higher repayments are causing buyers to forfeit space in order to climb onto the housing ladder, boosting demand for smaller homes.’
And at the top end of the market, house prices are expected to remain buoyant.
In holiday hotspots, for example, estate agents seem unfazed by news of a property market crash.
Shireen Cunliffe, who works for John Bray estate agents in North Cornwall, says: ‘We are in a prime location where sellers will always hold out for the best offers they can get.
‘There are no signs showing that this will ever be a buyers’ market.’
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By Sam Partington moneymail@dailymail.co.uk
Daily Mail 21/12/2022 After we revealed 250,000 homes are at risk, all the answers to your burning questions...
ANXIOUS homeowners who have paid thousands of pounds for spray foam insulation have been left wondering if their efforts to keep out the cold have landed them in hot water.
Last month, Money Mail reported on homeowners with spray foam who were denied equity release or struggled to sell their property. Since then, we’ve received dozens of questions, including: How can I tell if I have the wrong type of foam, or the paperwork is incomplete — and is my home really unsellable?
We asked three experts from Nationwide Building Society, the Royal Institution of Chartered Surveyors (Rics) and the Property Care Association (PCA) for the answers.
WHAT IS IT?
SPRAY polyurethane foam is a type of loft insulation that 250,000 households have used in recent years in a bid to make their home more energy efficient.
It is a liquid foam sprayed into gaps in the roof which expands and sets into an
insulating layer.
WHY IS IT A PROBLEM?
WHILE properly installed spray foam can help slash energy bills, it is believed a number of cowboy firms have been installing it.
the industry is unregulated and if it is not installed correctly or sprayed in an unsuitable roof space — one with leaks or defects, or one with a condensation issue — it can lead to rot.
A surveyor should have inspected your home first and undertaken a condensation risk assessment (known in the industry as a hygrothermal evaluation) before any work is done. But often cowboy firms have cut corners and not done this.
Spray foam should also not be sprayed over cables, which could lead to overheating.
Rob Stevens, head of property risk at Nationwide, says that if it’s not sprayed correctly, you will also not benefit from a boost in your home’s energy efficiency, despite paying out thousands.
AM I AT RISK?
Not necessarily. If your foam has been satisfactorily installed by a professional you will have a pack of paperwork to prove it and this will mean a risk assessment has been passed, meaning your home was suitable for the work. Here’s what you need: l Full pre- survey suitability report which tells what condition your roof and timbers were in before the foam was sprayed. l Condensation risk assessment also known as a hygrothermal evaluation. l An independent test certificate such as British Board of Agrément or Kiwa certification explaining the type of foam and how it should be sprayed. l Details of the installation company and its credentials.
l Installation guarantee.
WHAT IF MY FOAM IS WRONG?
ON THE whole, soft open-cell foam is used as spray insulation. It is unlikely you have the wrong type of the foam, only more likely that it may have been installed incorrectly or you do not have the correct paperwork to prove it.
experts say that having a condensation assessment that highlighted no risk is far more crucial than which brand of foam you have.
Steve Hodgson, chief executive of the PCA, says: ‘the issues arise from poor preparation and evaluation, inappropriate use and workmanship.’
WHERE SHOULD IT NOT BE USED?
EACH spray foam product has its own set of rules from the manufacturer about where it should not be sprayed.
You’ll find these rules on the approval certificate issued by either the British Board of Agrément or Kiwa, which must be provided by your installer. If you already have standard loft insulation, you should not install spray foam as well. It leads to condensation, says Rics. Be wary of a spray foam firm advising you to rip out your existing loft insulation. Seek advice first. Spray foam should also not fill any existing ventilation points in the roof.
WILL LENDERS OFFER LOANS?
tHoSe with spray foam may face difficulties selling, obtaining equity release or even remortgaging. Nationwide says it will lend to you if you have all the correct paperwork, your foam has been sprayed correctly and your roof was in good condition. Santander may also ask for a structural engineer’s report to be carried out that can cost up to £2,000. Halifax and Barclays say they are guided by the valuer’s decision on individual cases. HSBC will not lend on properties with any type of spray foam. No equity release lender will lend to you if you had foam installed after your home was built.
one lender, only More2life, will issue equity release on homes that had foam installed at construction.
SHOULD FOAM BE REMOVED?
IF You have the right paperwork, with the risk assessment, your spray foam is unlikely to need removing.
A mortgage lender or Rics surveyor can also check your paperwork or inspect your home to make sure the foam was suitable for your property and it was installed to the manufacturer’s requirements.
You can find a Rics surveyor on Ricsfirms.com. the rough cost is £700.
Homeowners without paperwork can instruct a surveyor to do an ‘invasive inspection’ where a section of the foam is removed and examined. Costs vary.
experts say they have heard of cold callers scaring vulnerable people into having it needlessly removed.
Steve Hodgson of the PCA says: ‘Don’t feel pressured into paying for the removal of foam without concrete evidence it is likely to do harm.’
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Who nobbled Britain?The Economist (UK) 2022/12/17
britain’s growth crisis
THE DRIVEWAY dips as you approach Belton House, the gold-hued façade rising before you as the road tilts up again. Passing through a marble-floored hall to the ornate saloon, early visitors would have admired a portrait of the original master’s daughter with a black attendant. For a while, says Fiona Hall of the National Trust, a heritage charity that these days owns the property, servants came and went from the kitchen wing through a discreet tunnel. A magnificent staircase led finally to a rooftop cupola, and views of an estate that stretched beyond the horizon.
Built in the 1680s, the idyllic mansion embodies a costume-drama view of Britain’s past that is widely cherished at home and abroad. Its location in Lincolnshire makes it emblematic in another way: in the heart of England, in a region that in 2016 voted decisively for Brexit, and on the outskirts of Grantham, a typical market town that was the birthplace of Margaret Thatcher, the country’s most important post-war prime minister. Previously the venue for a murder-mystery evening featuring suspects in period dress, this history-laden spot is an apt place to ponder a different sort of mystery. Who nobbled Britain?
Alas, the victim is in a parlous state. A country that likes to think of itself as a model of phlegmatic common sense and good-humoured stability has become an international laughing stock: three prime ministers in as many months, four chancellors of the exchequer and a carousel of resigning ministers, some of them repeat offenders. “The programme of the Conservative Party,” declared Benjamin Disraeli in 1872, “is to maintain the constitution of the country.” The latest bunch of party leaders have broken their own laws, sidelined official watchdogs, disrespected Parliament and dishonoured treaties.
Not just a party, or a government, but Britain itself can seem to be kaput. England’s union with Scotland, cemented not long after Belton House was built, is fraying. Real incomes have disappointed since the crash of 2008, with more years of stagnation to come as the economy limps behind those of most other rich countries. The reckless tax-slashing mini-budget in September threatened to deliver the coup de grâce. The pound tanked, markets applied a “moron premium” to British sovereign debt and the Bank of England stepped in to save the government from itself.
Today the economy is entering recession, inflation is high and pay strikes are disrupting railways, schools and even hospitals. The National Health Service (nhs), the country’s most cherished institution, is buckling. Millions of people are waiting for treatment in hospitals. Ambulances are perilously scarce.
In Grantham, a town of neat red-brick terraced houses, half-timbered pubs and 45,000 residents, the malaise shows up in
a penumbra of hardship. Amid staff shortages in the NHS—and an uproar—the local emergency-care service has been cut back. Immured in stacks of nappies and cornflakes at the food bank he runs, Brian Hanbury says demand is up by 50% on last year, and is set to rocket as heating bills bite. Rachel Duffey of PayPlan, a debt-solutions firm that is one of the biggest local employers, predicts that need for help with debts is “about to explode” nationwide, as people already feeling the pinch come to the end of fixed-rate mortgage deals. As for the mini-budget: “It was a shambles,” laments Jonathan Cammack, steward of Grantham Conservative Club.
Natural causes
Whodunnit? A rich cast of suspects is implicated in the debacle. Some are obvious, others lurk in the shadows of history, seeping poison rather than dealing sudden blows. A few are outsiders, but as in many of the spookiest mysteries, most come from inside the house.
To begin with, Britons with long memories may detect a familiar condition: a government that has reached decrepit old age. A parliamentary remark in October about soon-to-quit Liz Truss—“the prime minister is not under a desk”—brought to mind immortal lines from the death-spiral of the Labour administration that lasted from 1997 to 2010. Then the chancellor referred to the prime minister’s henchmen as “the forces of hell”; “Home secretary’s husband put porn on expenses”, newspapers reported. In the mid-1990s, at the fag-end of Tory rule that began in 1979, a run of MPs were caught with their pants down or their fingers in the till in another relay of shame.
Britain seems trapped in a doom loop of superannuated governments which, after a term or two of charismatic leadership and reformist vim, wind up bereft of talent, sinking in their own mistakes and wracked by backbench rebellions; in office but barely in power. Eventually routed at the polls, it then takes the guilty parties several parliamentary terms to recover. In opposition, both Labour and the Tories have determinedly learned the wrong lessons from defeat before alighting on the right ones. In a system with two big parties, for either to lose its mind is dangerous. For both to do so at once—as happened when, amid recent Tory convulsions, Labour was led by Jeremy Corbyn, a hard-left throwback—is a calamity.
“A family with the wrong members in control,” George Orwell wrote of the English. Yet a repeating cycle of senile governments does not, by itself, explain the national plight. Those previous administrations never plumbed the depth of disarray the current lot has reached. Something else has struck a country that has spewed out ruinous policies and a sequence of leaders resembling a reverse ascent of man: from plausible but glib David Cameron, to out-of-her-depths Theresa May, disgraceful Boris Johnson and then Ms Truss, probably the worst premier in modern history. Philip Cowley of Queen Mary University of London says that, in bygone days, Rishi Sunak would at this stage of his career have been a junior Treasury minister, rather than the latest prime minister.
Violence has been inflicted on the body politic—most brazenly, by Brexit, in the referendum, with 52%. Parties in power for over a decade are bound to scrape the bottom of the talent barrel. In this case, much of the Tory barrel was poured down the drain when support for Brexit became a prerequisite for office. The outcome has been rule by chancers and cranks. Mr Johnson’s Brexit machinations put him in Downing Street; the tribalism that the campaign fostered kept him there for much longer than he deserved. Brexit has wrecked the Tory party—and yet it is, broadly speaking, the side that won.
Brexit has also institutionalised lying in British politics, as the dishonesty of Brexiteer promises segued into the pretence that they are being fulfilled. They are not. “Nothing much has changed,” Mr Cammack in Grantham says glumly. “Life just keeps going on.” But some things have changed for the worse. Investment is down and inflation higher than it would have been inside the European Union. Labour, skilled and otherwise, is scarce. Farmers are losing crops for want of workers. In Lincolnshire, says Johanna Musson of the National Farmers Union, tulip-growers are especially fretful. The county’s exports have fallen as, across Britain, Brexit-induced red tape leads some businesses to give up on European markets.
In 1975, during an earlier strike-hit era, Britain held another referendum on its relationship with Europe. Roy Jenkins, a proEurope statesman, predicted that, if it left, it would wind up in “an old people’s home for faded nations”. Give or take a detour to the lunatic asylum, that judgment looks prescient. The economy is floundering and the country’s international prestige is plummeting: precisely the future Brexit was meant to avoid.
Still, as any murder-mystery aficionado knows, the obvious suspect is rarely the right one. In the curious case of Britain’s decline, Brexit is as much a weapon as the ultimate culprit.
The hand of history
Many of the factors behind the decision to leave have roughed up other countries, too. Lots of people on both sides of the Atlantic crave simple answers to complex questions, and populists have provided them. Faith in mainstream parties has waned, even as expectations of government have risen. The line between politics and entertainment has blurred, aggravating, in Britain, an old reluctance to take things too seriously, and a weakness for wits and eccentrics who cock a snook at convention. That is less damaging when there is substance behind their insouciance and discipline beneath the panache.
Ben Page, the boss of Ipsos, a global research firm, points to what he terms the “loss of the future”, common across the West but acute in Britain. In 2008, as the financial crisis struck, only 12% of Britons thought youngsters would have a worse quality of life than their parents, Mr Page notes. Now that figure is 41%. As elsewhere, people worry about immigration and feel threatened by globalisation. All
this makes Britain’s predicament seem less an inside job than part of a wider takedown of democracy.
But other likely suspects lurk in the attic of British history. One grew up down the road from Belton House. The grocer’s shop in Grantham above which Margaret Roberts, later Thatcher, was born is now a chiropractor and beautician. A statue of her put up earlier this year was quickly egged and defaced (she endured worse in real life). Her legend still looms over the country—particularly her Conservative Party.
Thatcher’s 11-year rule was an amalgam of caution, patience, luck and boldness. But among some Tories it is often misremembered as a prolonged ecstasy of taxcutting, fight-picking, union-bashing and shouting “No, no, no” at Brussels. The rows over Europe that erupted on her watch rumbled on till the referendum of 2016. For some, she bequeathed a hunch that if economic policy doesn’t hurt, it isn’t working. Her ousting nurtured a lasting taste for party bloodletting. To court Tory members, Ms Truss even seemed to mimic Thatcher’s wardrobe. (It took just 81,326 of them to put her in Downing Street.)
Peer deeper into the past and more evidence comes to light. Recall, for instance, that painting in the saloon at Belton House, of the girl and her black attendant, possibly a slave. Her family, the Brownlows, had links to both Caribbean plantations and the East India Company, which helps explain the house’s splendid collection of Asian porcelain. The wider legacy of Britain’s former empire, runs a plausible theory, is a gnawing sense of unmet expectations and a fatal delusion of grandeur over the country’s place in the world.
For Sathnam Sanghera, author of “Empireland”, a powerful book about the largely unspoken effects of imperialism, “the original sin behind Brexit is empire.” The circumstances in which that empire was lost may have redoubled the psychic blow: in the wake of the second world war, during which, at least in the popular memory, Britain stood nobly alone against the Nazi onslaught. Afterwards it found itself diminished, broke and outdone by erstwhile foes, nurturing entwined feelings of greatness and grievance and haunted by phantom invasions. As the Irish author Fintan O’Toole has quipped, “England never got over winning the war.” In his view, Brexit was “imperial England’s last last stand”.
Perhaps not quite the last. Even now you can hear an echo of imperial hubris in the tendency of some British politicians to talk to EU negotiators, or the international bond markets, as if they were waiters in a Mediterranean bistro, liable to comply if only you repeat yourself loudly enough. It resounds in hollow boasts about having the best health care or army (or football team) in the world, in the yen to “punch above our weight”, and in the pursuit of a pure sort of sovereignty which, in an age of climate change, pandemics and imported gas, no longer exists.
“Until we face up to our history,” thinks Mr Sanghera, “we’re just going to carry on being dysfunctional.” On this analysis, the unravelling of Britain is a kind of karma.
In the 18th century, with a shrug
Maybe. Yet imperialism, greatness and all that have always been more an elite preoccupation than a popular one. In his enlightening new book, “The Strange Survival of Liberal Britain”, Vernon Bogdanor of King’s College London cites a survey of Britons conducted in 1951, when the loss of empire ought to have been most raw. Half of respondents couldn’t name a single colony (one suggested Lincolnshire). Odd as it is to say of a country that for centuries ruled swathes of the world, it may not be ruptures like the end of empire or Brexit that have done in modern Britain, but, less dramatically, a kind of long-term drift; not violence, in other words, but neglect.
Think back to the era in which Belton House was built. After the execution of Charles I in 1649 and the short-lived English Commonwealth, the monarchy had been restored. Compared with other European nations, the English got their big revolution done early—but then thought better of it, afterwards nudging forwards to constitutional monarchy and democracy. This piecemeal approach has characterised the country’s political evolution ever since. Walter Bagehot, a great Victorian editor of The Economist, noted the habit of compromising on thorny constitutional issues—or ducking them. “The hesitating line of a half-drawn battle was left to stand for a perpetual limit,” he wrote of such botches, and “succeeding generations fought elsewhere.”
Booby traps were often left behind. One lies in the fuzzy and weak restraints on the British executive. As Lord Hailsham, a Tory grandee, warned in 1976, a government with a secure majority in the House of Commons has an inbuilt tendency towards “elective dictatorship”. The House of Lords, which is meant to scrutinise legislation, is the fudge par excellence. In an absurd backroom deal of 1999, the hereditary peers who once dominated it were ejected—except for 92 of them. They are still there; when one dies, another is elected to replace him. Those are the only elections to Parliament’s upper chamber.
It is hard to see many other countries tolerating such a farrago. Meanwhile, a gentlemanly understanding that leaders would regulate their personal behaviour, once known as the “good chaps” theory of government, did not survive contact with Mr Johnson. As when a mob realises the rule of law is a confidence trick, it turned out that a few good shoves could dispense with much of the flimflam of oversight.
Or consider the myopic attitudes of successive governments to devolution. When it created the Scottish Parliament, Sir Tony Blair’s Labour administration did not fully anticipate the subsequent surge in English nationalism. Nor did it foresee how, after taking office in Edinburgh, the canny, proindependence Scottish National Party (SNP) would enjoy both the dignity of power and the sheen of opposition to Westminster. Now Brexit is inflicting more casual vandalism on the union, undermining support for it in Scotland and Northern Ireland, which both voted to remain in the EU.
Whereas once Scottish independence was an in-or-out proposition, says Sir John Curtice of the University of Strathclyde, it has become a choice between competing unions, British and European. As the SNP vows to rejoin the EU, some Scottish Remainers who had rejected independence are embracing the idea. For some in Northern Ireland, explains Katy Hayward of Queen’s University Belfast, the mere fact of Brexit made a united Ireland more desirable; the region’s awkward post-Brexit position has led still more to think unification is likelier than it was before. Across Britain, a majority thinks the union will fall apart. It is not on the cards yet, but one day Britain may dissolve itself by accident.
Drift and neglect have undermined more than the constitution and the union. David Kynaston, the pre-eminent historian of 20th-century England, invokes Sir Siegmund Warburg, a German-born banker who helped shake up the City (on the slide as an equity market in the aftermath of Brexit). Warburg detested the British fondness for the phrase, “We’ll cross that bridge when we come to it.” As Mr Kynaston ob
serves, Britain is not a place that is “good at grasping the nettle”.
With some glaring, uncharacteristic exceptions—Thatcher’s battle with the coal miners, the bust-up over Brexit—Britain tends to dislike confrontation, especially the ideological kind, perhaps a legacy of the civil war. It prefers irony to ideas and douses plain-speaking in good manners; its people have a quaint instinct to apologise when a stranger steps on their foot. Alongside this squeamishness, says Mr Kynaston, runs a “deep-dyed anti-intellectual empiricism”, and an inclination to tackle problems “pragmatically, as and when they arise, not looking for trouble in advance”.
This reticence has costs, not least through its complicity in the underpowered economy. Consider the glacial planning regime, or—an even more venerable problem—the skewed education system. It produces a narrow elite, dominated for too long by the alumni of a few private schools: Brexit and the mini-budget can both be traced to the playing fields of Eton, attended by Mr Johnson, Mr Cameron, who botched the referendum, and Kwasi Kwarteng, very briefly the chancellor. Less conspicuous, but at least as damaging, is the country’s long educational tail.
It has recently made some progress in international education rankings, but a stubborn quarter or so of 11-year-olds in England are unable to read at the expected level. A higher share of teenage boys are not in work, education or training than in most other rich countries. As for those who stay in the classroom: the “greater part of what is taught in schools and universities …does not seem to be the most proper preparation” for “the business which is to employ [students] during the remainder of their days.” That was Adam Smith in “The Wealth of Nations”, published in 1776. Employers make similar complaints in 2022.
In a post-imperial, post-industrial, ever-more competitive world, all that contributes to a skills shortage and a longterm productivity gap with other advanced economies. The fat years under Sir Tony and Gordon Brown disguised these shortcomings—until the crash, when it became clear that the boom they oversaw was overreliant on financial services and debt. Using the fruits of Thatcherite economics to fund a more generous state had seemed a political elixir; it turned out to be a fairweather formula. In the kindest of circumstances, New Labour left some of the hardest problems unsolved. Most new jobs went to foreign-born workers. The number of working-age adults receiving welfare benefits barely shifted.
The cradle of the Industrial Revolution has not yet found a secure niche in the 21stcentury economy. Nor has it figured out how to pay sustainably for the sort of public services that Britons expect. If, in the matter of Britain’s meltdown, Thatcher is an accessory before the fact, so is Sir Tony.
The country-house red herring
In the upstairs-downstairs, country-house vision of Britain, the country is a museum of class, with overlords surveying their lands and minions scurrying below stairs as they once did at Belton House. Famously, Disraeli wrote of “two nations”, the rich and the poor, as distinct as “inhabitants of different planets”. England, especially, is indeed a class-ridden place, whose denizens still make snap judgments about each other’s backgrounds based on accents, shoes and haircuts. Too many at the bottom of the ladder cannot see a way up it. Some at the top still benefit from unearned deference. Politicians often share this binary outlook, thinking the business of government is to squeeze the rich and comfort the poor, or vice versa.
But Disraeli’s formulation is too crude for 21st-century Britain. After generations of muddling through, it is in large part a country of people who are not exactly poor but are by no means rich. Instead they are “just about managing”, as Mrs May, the last prime minister but two, described them.
Take Grantham, a constituency in which the average income in 2020 was £25,600 ($32,900), just below the national median. (This year, Britain’s GDP per person will be more than 25% lower than America’s, measured at purchasing-power parity.) Amid the cost-of-living squeeze, says Mr Hanbury at the food bank, not only households that rely on welfare benefits but nurses and teachers are coming unstuck: “People live so close to the edge.”
It is only a 70-minute train ride to London, but power in Westminster seems remote, reflects Father Stuart Cradduck of St Wulfram’s, a lovely medieval church behind Grantham’s low-slung high street. Lincolnshire, he says, feels like a “forgotten county”. Kelham Cooke, the leader of the local council, says young people who leave for university often don’t come back. Regional inequality is another old, hard problem that successive British governments have only desultorily tackled, watching on as London sucked in talent and capital and other places fell behind.
There is something to be said for drift; or, to put it another way, gradualism. A “highly original quality of the English”, Orwell wrote in 1947, “is their habit of not killing one another.” By slowly expanding the franchise and incorporating the labour movement into democratic politics, Britain avoided continental-style extremism in the 19th and 20th centuries. When liberalism perished elsewhere in Europe in the 1930s, observes Mr Bogdanor, it survived in Britain. Compared with places such as France or Italy, where the far right is resurgent—or with ultrapolarised America—it is healthy in Britain still. Ms Truss’s stint in Downing Street was inglorious, but, Mr Bogdanor notes, she was removed quietly and efficiently, without riots or fuss. The flawed parliamentary system worked.
So drift can be benign. But it can also take you into a cul-de-sac—or off a cliff. In Britain it has led to economic mediocrity and disgruntlement, which in turn contributed to the yelp of Brexit and the desperate magical thinking of the minibudget. Senile governments, self-inflicted wounds, the blowback of empire, corrosive global trends, the spectres of bygone leaders: they are all accomplices. But the main cause of Britain’s woe belongs less at a crime scene than in a school report. In the end, it didn’t try hard enough.
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10/12/2022
WELCOME to THE end of cheap money. Share prices have been through worse, but only rarely have things been as bloody in so many asset markets at once. Investors find themselves in a new world and they need a new set of rules.
The pain has been intense. The s&p 500 index of leading American shares was down by almost a quarter at its lowest point this year, erasing more than $10trn in market value. Government bonds, usually a shelter from stocks, have been blasted: Treasuries are heading for their worst year since 1949. As of mid-October, a portfolio split 60/40 between American equities and Treasuries had fallen more than in any year since 1937. Meanwhile house prices are falling everywhere from Vancouver to Sydney. Bitcoin has crashed. Gold did not glitter. Commodities alone had a good year—and that was in part because of war.
The shock was all the worse because investors had become used to low inflation (see Briefing). After the global financial crisis of 2007-09, central banks cut interest rates in an attempt to revive the economy. As rates fell and stayed down, asset prices surged and a “bull market in everything” took hold. From its low in 2009 to its peak in 2021, the s&p 500 rose seven-fold. Venture capitalists wrote ever bigger cheques for all manner of startups. Private markets around the world—private equity, as well as property, infrastructure and private lending—quadrupled in size, to more than $10trn.
This year’s dramatic reversal was triggered by rising interest rates. The Federal Reserve has tightened more quickly than at any time since the 1980s, and other central banks have been dragged along behind. Look deeper, though, and the underlying cause is resurgent inflation. Across the rich world, consumer prices are rising at their fastest annual pace in four decades.
This era of dearer money demands a shift in how investors approach the markets. As reality sinks in, they are scrambling to adjust to the new rules. They should focus on three.
One is that expected returns will be higher. As interest rates fell in the bull years of the 2010s, future income was transformed into capital gains. The downside of higher prices was lower expected returns. By symmetry, this year’s capital losses have a silver lining: future real returns have gone up. This is easiest to grasp by considering Treasury Inflation-Protected Securities (tips), which have yields that are a proxy for real risk-free returns. Last year the yield on a ten-year tips was minus 1% or lower. Now it is around 1.2%. Investors who held those bonds over that period have suffered a hefty capital loss. But higher tips yields mean higher real returns in future.
Obviously, no law dictates that asset prices which have fallen a lot cannot fall further. Markets are jumpy as they await signals from the Fed about the pace of interest-rate rises. A recession in America would crush profits and spur a flight from risk, driving down share prices.
However, as Warren Buffett once argued, prospective investors should rejoice when stock prices fall; only those who plan to sell soon should be happy with high prices. Nervous or illiquid investors will sell at the bottom, but they will regret it. Those with the skill, nerve and capital will take advantage of the higher expected returns and thrive.
The second rule is that investors’ horizons have shortened. Higher interest rates are making them impatient, as the present value of future income streams falls. This has dealt a blow to the share prices of technology companies, which promise bountiful profits in the distant future, even as their business models are starting to show their age. The share prices of the five biggest tech firms included in the s&p 500, which make up a fifth of its market capitalisation, have fallen by 40% this year.
As the scales tilt from newish firms and towards old ones, seemingly burnt-out business models, such as European banking, will find a new lease of life. Not every fledgling firm will be starved of funding, but the cheques will be smaller and the cheque-books brandished less often. Investors will have less patience for firms with heavy upfront costs and distant profits. Tesla has been a big success, but legacy carmakers suddenly have an edge. They can draw on cashflows from past investments, whereas even deserving would-be disrupters will find it harder to raise money.
The third rule is that investment strategies will change. One popular approach since the 2010s has blended passive index investing in public markets with active investing in private ones. This saw vast amounts of money flow into private credit, which was worth over $1trn at its peak. Roughly a fifth of the portfolios of American public pension funds were in private equity and property (see Finance & economics section). Private-equity deals made up about 20% of all mergers and acquisitions by value.
One side of the strategy looks vulnerable— but not the part that many industry insiders are now inclined to reject. To its critics, index investing is a bust since tech companies loom large in indices, which are weighted by market value. In fact, index investing will not disappear. It is a cheap way for large numbers of investors to achieve the average market return.
Where to worry
It is those high-fee private investments that deserve scrutiny. The performance of private assets has been much vaunted. By one estimate private-equity funds globally marked up the value of the firms they own by 3.2%, even as the s&p 500 shed 22.3%.
This is largely a mirage. Because the assets of private funds are not traded, managers have wide discretion over the value they place on them. They are notoriously slow in marking these down, perhaps because their fees are based on the value of the portfolio. However, the falling value of listed firms will eventually be felt even in privately owned businesses. In time, investors in private assets who thought they had avoided the crash in public markets will face losses, too.
A cohort of investors must get to grips with the new regime of higher interest rates and scarcer capital. That will not be easy, but they should take the long view. The new normal has history on its side. It was the era of cheap money that was weird.
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10/12/2022 When the tide turns
For almost a year, ever since America’s stockmarket peaked on January 3rd, investors have been craning their necks, looking for the bottom. Will the most recent trough, halfway through October, turn out to have been it? More importantly, bottom or not, what trends will shape returns going forward?
Even at present levels, the slump in markets around the world this year has been painful. MSCI’s broadest index of global equities is down by 18%, as is the S&P 500 index of big American firms. It is not just shares that have suffered. More speculative assets, naturally, have been bludgeoned far harder: the market value of all cryptocurrencies, which surged to nearly $3trn in 2021, has fallen to $840bn. Supposedly safer assets have not escaped the rout, either. The indices compiled by Bloomberg, a data provider, of global, European and emerging-market bonds have all dropped by 15%; the American equivalent by 11%.
The breadth of losses is even more striking than the depth. In particular, the “60/40 portfolio”, comprising 60% stocks and 40% bonds, a popular choice for investors seeking a good return without running big risks, has performed appallingly. Evan Brown and Louis Finney of the assetmanagement arm of ubs, a Swiss bank, calculate that, as of mid-October, a 60/40 portfolio of American equities and Treasuries had had its worst year since 1937.
Typically, portfolios allocating more to bonds and less to equities are considered less risky. But losses on bonds have been so steep this year, says Alex Funk of Schroders, another asset manager, that this rule of thumb has not always held. Other presumed safe havens have also offered little shelter. Gold, seen by some as a hedge not just against the vagaries of financial markets, but also inflation, has fallen by 3%. The Japanese yen started the year at 115 to the dollar and is now 136. Well-timed bets on commodities, many of whose prices were supercharged by Russia’s invasion of Ukraine in February, would have paid off handsomely. Otherwise, investors have had startlingly few places to hide (see chart 1 on next page).
The plunging markets are the result of a decades-old macroeconomic regime falling apart. High inflation, not seen in the rich world since the 1980s, is back, which in turn has brought to an end ten years of near-zero interest rates. As a result, the rule book of investing is being rewritten. Protecting portfolios from inflation, once a peripheral concern, is now a prime consideration. Rising government-bond yields, meanwhile, make riskier assets less desirable. In particular, private markets (as opposed to standardised investments traded on exchanges), which expanded massively during the years when decent returns were hard to find, face an uncertain future now that they are not.
Before this year, as bond yields grew ever more anaemic, the desperation of yield-hungry investors was encapsulated by the acronym tina: there is no alternative (to riskier assets such as equities). This approach helped to propel the world’s stockmarkets on a rampaging run. From its low point in 2009 to its peak at the end of 2021, the S&P 500 rose by 600%.
In addition, the TINA mentality drove many investors to buy more obscure or illiquid assets in the hope of earning halfway decent returns. Private-equity funds have been prolific investors in unlisted companies ever since the buy-out boom of the 1980s. The typical “leveraged buy-out” involved buying a company mainly with borrowed money, parking the debt on its balance-sheet and selling it on. The dirtcheap loans available after the financial crisis lit a rocket under the industry. Private markets around the world—the lion’s share being private equity, but also including property, infrastructure and private lending—quadrupled in size, to more than
$10trn. Big private-equity firms created listed funds of unlisted firms, to lure in retail investors. But it was institutional investors that were especially enthusiastic: private equity and property came to comprise almost a fifth of American public pension funds’ portfolios.
The monetary backdrop that drove those trends has now changed dramatically. Though inflation in America peaked in June, it still stands at 7.7%. Elsewhere things are worse: in Britain prices are 11.1% higher than they were a year ago, and in the euro area the rise is 10%. The IMF forecasts a global inflation rate of 9.1% over the course of 2022.
As a result, markets expect the Federal Reserve to raise interest rates to 5% in 2023, and the Bank of England to lift them to more than 4.5%. What is more, both central banks have started to unwind the huge holdings of government bonds they built up in the wake of the financial crisis (quantitative tightening, in the jargon). The intention of the purchases was to hold down long-term interest rates; the sales should have the opposite effect.
This year’s carnage in the markets is the natural outcome of these changes. Inflation erodes the value both of the interest payments on bonds and of the principal. At the same time, rising interest rates drive bond prices down, to align their yields with prevailing rates.
If inflation and interest rates were increasing because of runaway economic growth, shares might also have risen in expectation of higher earnings. But instead prices and rates are rising because of a commodities shock, supply-chain snarls and labour shortages that threaten corporate profits, too. That is why the hedging relationship that underpins the 60/40 portfolio has fallen apart. Rising yields on bonds simply make more volatile equities less attractive by comparison, so the prices of both assets have fallen at the same time.
When the dust finally settles, it will reveal a landscape that is likely to have changed for good. Though markets expect interest rates to fall after a peak next year, the odds that they will collapse back to next-to-nothing seem slim (see chart 2). That is because inflation is likely to be hard to tame. Nearly two years of it have raised expectations of price rises, which can be self-fulfilling. Tight labour markets in many countries will drive wages up, providing a further push. Unrelenting demands on government spending—from ageing populations to an ever-growing expectation that states will shield people and companies from economic storms—may also help elevate interest rates and propel inflation. Taken together, these forces will reshape investors’ portfolios and alter the returns they can expect.
Start with inflation. Simona Paravani of BlackRock, an asset manager, does not expect it to return to the “rock’n’roll” levels of the 1970s, when it spent two long spells in double digits. But even if it soon settles down to an average in the low single figures, it would still be more elevated than it has been since the financial crisis. That makes building inflation-resistant investment portfolios more important than it has been in decades.
Fortunately, that is easier than it used to be. Commodities, as a frequent source of inflation, also provide a good means to hedge against it. They are now substantially more “financialised” than they were in the 1970s, meaning that they have deep and liquid futures markets. That allows investors to acquire exposure to them without having to own any actual barrels of oil or bushels of wheat.
Other assets can also provide protection from rising prices. Blake Hutcheson, the chief executive of OMERS, a large Canadian pension scheme, describes how his fund spent years building up big holdings in infrastructure and property. The revenues from such investments, in the form of rents and usage fees, tend to rise with inflation. “It always felt like low inflation and low interest rates were an aberration,” says Mr. Hutcheson. “We’ve been preparing for a day that looks like today.”
The end of ultra-low interest rates has more far-reaching consequences. The increase in the “risk-free” rate “affects how you think about private assets, equities, bonds, credit, everything”, says Schroders’ Mr Funk, by raising the hurdle rate against which all other returns are measured. TINA is dead, and has been succeeded by TARA: “there are real alternatives”. Or, as Raj Mody of PwC, a consultancy, puts it, “If you can get 4% on government bonds, is 7% on private assets enough?”
A reckoning is thus due over whether the more exotic and less liquid assets snapped up during the low-yield years are still worth what investors paid for them. It will be a big one. Private-equity funds and their cousins, private-credit funds, which raise money from investors to make loans, have become driving forces in corporate dealmaking. Leveraged buy-outs amounted to $1.2trn in 2021, dwarfing the previous peak of $800bn in 2006. Private-equity deals accounted for a fifth of the value of all mergers and acquisitions. The market for private credit, often used to fund such deals, ballooned to over $1trn. That is more than twice its level in 2015 and only slightly less than the value of big loans made directly by large financial institutions. Big investors such as university endowments and sovereign-wealth funds have loaded up on private assets like never before.
A creaking lever
Can they keep their appeal now that rising government-bond yields have resurrected the alternatives? For leveraged buy-outs, which by definition are extremely sensitive to the cost of borrowing, the answer is almost certainly no. Scarcer, more expensive debt makes such deals harder to finance and less attractive to complete, as higher interest payments eat into prospective returns. Higher rates also diminish the value of the companies such funds already own, given their high levels of debt.
Elsewhere the picture is more mixed. Private loans tend to have floating interest rates. That means that, unlike bonds, on which the interest is usually fixed, their value grows as rates rise. Many funds specialise in distressed companies, of which there will be plenty as debt becomes more expensive to service. Institutional investors often feel that the stronger oversight and influence that comes with private investments, as compared to public ones, gives them an edge.
Yet the raised hurdle rate is inescapable. Private investors who buy a toll road, wind farm or office block are deliberately taking more risk than they would if they bought government bonds instead. Richworld countries are very unlikely to default on their debt, but infrastructure and property can cost more to build than expected or yield less profit than projected. This risk
is worth taking if investors are compensated by a better rate of return. The climb in risk-free rates therefore means private assets, too, need to offer higher returns if they are to stay attractive. Squeezing more revenue out of the assets will be tricky in a slowing economy. But the only alternative means to realise higher returns, selling the assets for a higher-than-expected price, is even more implausible given already dizzyingly high valuations.
In all likelihood, many private assets face sharp write-downs in value. It is often up to the fund that manages the assets to value them. Managers are naturally reluctant to mark them down. In the first three quarters of this year, for instance, Lincoln International, a bank, reckons that privateequity funds globally marked up the value of the firms they own by 3.2%, even as the s&p 500 shed 22.3%. Such foot-dragging, however, will lead to lacklustre returns in the years ahead, as assets with unrealistic valuations prove difficult or impossible to sell for a profit. Many institutional investors have invested too deeply in private markets to unwind their holdings quickly. The scope for disappointment is high.
In property, it is not just big institutional investors that are being hammered by rising interest rates. The same cheap and easy borrowing that lured them into private markets in the 2010s also pushed house prices ever higher. During the pandemic even lower rates and, for some, stimulus cheques, supercharged that trend. Now these drivers are going into reverse. More expensive mortgages limit how much buyers can borrow, causing their purchasing power to shrink. Like private-equity managers, home-owners are loth to acknowledge that their property may be worth less than they paid for it, making them unwilling to sell and causing transactions to dwindle. Yet across much of the rich world, a housing slump has already begun.
Higher risk-free rates also change the types of company prized by investors. During the TINA years “growth” stocks, whose value depends on the promise of spectacular profits in the future, stormed ahead of their “value” counterparts, which offer steady income but less scope for growth. But as interest rates rise, they erode the present-day value of future earnings, making growth stocks less appealing.
When the interest rate is just 1%, $91 deposited in the bank will be worth $100 in ten years’ time. Put another way, $100 in ten years’ time is worth $91 today. But when the interest rate is 5%, it takes only $61 to generate $100 in a decade. So $100 in ten years’ time is worth just $61 today. That makes future growth much less valuable, and immediate profits much more so. As stockmarkets have tumbled, therefore, growth stocks have performed especially poorly (see chart 3).
The same logic diminishes the investment case for startups and nascent firms, which by definition will earn the lion’s share of their profits in the future (if they prove successful at all). Higher rates diminish the value of future profits relative to current ones. For a firm whose profits are projected to remain stable indefinitely, less than a tenth of the present value of its future earnings comes from the first ten years when the interest rate is 1%. At 5%, around two-fifths does.
Sure enough, the type of startup that draws the most interest from investors has changed, says an experienced venture capitalist. Whereas those that expanded the fastest used to be the most highly prized, the balance has now shifted in favour of those that generate, rather than burn through, cash.
Ray Dalio, the founder of Bridgewater, the world’s biggest hedge fund, believes that a much bigger paradigm shift is under way than a simple rise in interest rates and inflation. He cites the risks of huge debts, populism within Western democracies and rising tensions between global powers. The first puts pressure on central banks to tolerate inflation and even monetise debt rather than raising rates. The second and the third could spur conflict both within and between states. Mr Dalio worries that the stage could be set for a period like that between 1910 and 1945, where in some regions “you have almost the complete destruction of wealth as we know it”.
Even setting aside such a dark scenario, straitened times lie ahead for many investors. Perhaps the grimmest impact is on those close to retirement. With less time to recoup recent losses, such savers are always more vulnerable to market shocks. Worse, to mitigate this, they are often advised to hold the sort of bond-heavy portfolios that have been among the hardest hit this year. Their short investment horizon means that future returns can do little to restore their fortunes.
Many 30- and 40-somethings are only slightly better off. Most had saved too little by the start of the 2010s to benefit fully from the go-go years, yet had accumulated enough by the end of the decade to have suffered heavy losses this year. Those who recently bought homes are painfully exposed to a global housing slump that is only just beginning. Many can look forward to the double whammy of owning houses that are worth less than the mortgage on them while, in places where long rate fixes are rare, also having to remortgage at higher rates. But unlike those closer to retirement, this generation at least has the time to try to repair the damage.
In that respect, the news is good: the crash has at last lifted expected returns from the rock-bottom levels of recent years. The 60/40 portfolio, say Mr Brown and Mr Finney of ubs, is back in business. Higher bond yields increase its income stream and lower equity valuations increase the likelihood of future returns. After a year in which the dollar has strengthened considerably against most currencies, reversion to the mean would raise the value of foreign assets for American investors. As a result, ubs has boosted its forecast for the portfolio’s average annual return to 7.2% over the next five years, up from 3.3% in July 2021.
The biggest beneficiaries of this are the youngest cohort of investors. They will have started saving only recently, so will not have built large enough portfolios to be much hurt by this year’s crash. In any case, the vast majority of their earnings are ahead of them. Ever giddier market valuations had fostered ever gloomier expectations of the returns their savings could deliver. So bad did their prospects seem that in April Antti Ilmanen of AQR, a hedge fund, published a book entitled “Investing Amid Low Expected Returns”. He dedicated it to “the young retirement savers across the world—who have been handed a bad draw—and to everyone working for their benefit”. That work is now much easier.
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10/12/2022
Manchester has plenty of swagger. It has the best team in club football, and is also home to Manchester United. Cranes dot the city centre. Its mayor, Andy Burnham, is the most recognised in the country, beating his counterparts in London and the West Midlands. Yet the cockiness disguises a big problem, for the city and for Britain. The Manchester urban area contains 3.4m people, making it about as populous as Amsterdam, Hamburg and San Diego. But its GDP per head at purchasing-power parity is at least a quarter lower than all three, and stuck at about 90% of the average in Britain itself.
As with Manchester, so with Tyneside, Birmingham and other conurbations in the Midlands and north of England. Second-tier cities in most countries have productivity that matches or exceeds the national average; a pre-pandemic analysis by the OECD of 11 British second-tier cities, mostly in the north of England, found that gross value-added per worker was 86% of the British average. London is as rich as Paris, but metropolitan Birmingham or Leeds is nowhere near as rich as Lyon or Toulouse.
No one should be happy about this lopsided picture, whether proud northerner or smug southerner. The country’s long-running growth problem cannot be solved—more to the point, has not been solved—by one superstar metropolis.
These huge imbalances in Britain’s economic geography have not gone unnoticed. In the 2010s George Osborne, then chancellor of the exchequer, promoted the idea of a northern powerhouse. Boris Johnson put promises to tackle regional inequality at the heart of his 2019 election campaign. Gordon Brown, a former Labour prime minister, highlighted the problem in a set of proposals for constitutional reform this week
(even if proposals to remake Parliament hogged all the attention). But diagnosis is plainly not the same as cure.
It is true that Britain’s second-tier cities face some deep-rooted challenges. Manchester and other post-industrial spots share several ailments—poor health, labour-force scarring, too few people and jobs in their centres. But they could achieve so much more if politicians got a few relatively simple things right.
One is to focus on big conurbations, not towns. Some politicians persist in thinking that smaller places need lots of attention. Mr Johnson’s “levelling-up” agenda included a multi-billion-pound Towns Fund; Treasury workers are being moved to Darlington, a place with 108,000 people in north-eastern England that happens to be next to the constituency of Rishi Sunak, the prime minister. Invigorating metropolises has a far bigger impact; Greater Manchester is home to almost one in five people living in the north of England. And successful conurbations pull surrounding towns up. Britain needs several engines to fire, but they have to be big.
A second priority is to rebalance public investment away from London. Between 2000 and 2019, the government devoted £10,000 ($12,160) per Londoner to economic development, science and technology, and transport. The equivalent figure for residents in the north-east and north-west hovered at around £5,000. There is a rationale for this: productive places generate higher returns on investment. But it is a recipe for entrenching the skew between the capital and the rest. And the Treasury has approved southern schemes, such as upgrading London’s Thameslink railway, with low benefit-cost ratios.
The third and most important priority is to devolve fiscal control. Cities must go cap in hand to Whitehall for much of their money. Only 6% of tax revenue in Britain is collected by local government, a large chunk of it for social care. That is a tiny share in comparison with others. Combine local and regional taxes, and France is on 14%, Germany 32% and America 36%.
Worse, much of the money available to cities is in the form of pots for which they are invited to bid. These pots are numerous and often piddling. Civil servants sit in Whitehall, weighing applications for cash to run adult-numeracy programmes and to build public toilets hundreds of miles away. Officials in Greater Manchester are currently handling more than 110 grants from 15 government departments. The result is colossal inefficiency, especially when policies change—as they do, a lot. Officials wasted many hours this year preparing bids for investment zones, a wheeze of Liz Truss’s brief administration.
This system also distorts decision-making. Cities define their needs in order to fit available grants. When there is money for sprucing up high streets, cities decide they must do that; when there is money for buses, everyone develops a bus obsession. Ministers in London may be tempted to dole out largesse for political ends. A report in 2020 by the Public Accounts Committee, a parliamentary body, was suspicious of how recipients of levelling-up grants were chosen; one town that got money was 535th out of 541 in the priority list.
Mr Brown has some good ideas for tackling these problems, such as consolidating funding streams from Whitehall. But neither Labour nor the Tories have embraced the obvious prescription: give metropolises the power to raise much more money locally and spend it on what they need. Ideally this revenue would be in the form of property taxes, which are too low and are based on out-of-date valuations. Cities will develop an appetite for building if more of the proceeds come their way.
Britain’s northern lites
They need more freedom, too. Greater Manchester has been allowed to plan for housing and office development at metropolitan scale, and is making a good go of it. Other metropolises are still denied that power. Mr Burnham is also being allowed to unpick one of Margaret Thatcher’s less wise reforms, in which buses outside London were privatised and deregulated. But it was a hell of a fight, and required a court case.
Freer cities will inevitably make mistakes. More local revenue-raising risks widening the gap between the poorest and richest places; a mechanism for redistributing money that does not squelch all incentives to develop will be needed. But Britain’s economy cannot keep relying so heavily on London. And its second-tier cities cannot thrive unless they have more control of their destinies. Time to free the north.
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There are several best practices for software design and architecture that can help developers create high-quality, maintainable, and scalable software. Some of these best practices include:
Identify the requirements and constraints of the software upfront, and use these to guide the design and architecture process. This will help ensure that the software meets the needs of the users and the business, and that it is built on a solid foundation.
Use modular and reusable design patterns, such as the MVC (Model-View-Controller) pattern, to organize the code into logical components that can be easily maintained and extended. This will make the code more maintainable and flexible, and will help avoid common design pitfalls.
Use appropriate data structures and algorithms to ensure that the software is efficient and scalable. This will help ensure that the software can handle large amounts of data and user traffic without degrading performance.
Use automated testing and continuous integration to ensure that the software is correct and reliable. This will help catch bugs and other issues early in the development process, and will make it easier to deliver high-quality software to users.
Use a version control system, such as Git, to manage and track changes to the code. This will make it easier to collaborate with other developers and to roll back changes if necessary.
Use documentation and comments to explain the purpose and behavior of the code. This will make it easier for other developers to understand and maintain the code, and will help ensure that the software is well-documented and easy to use.
Overall, the best practice for software design and architecture is to approach the process in a systematic and disciplined manner, and to use proven techniques and tools to create high-quality software that meets the needs of the users and the business.
MVC (Model-View-Controller) is a software design pattern that separates an application into three main components: the model, the view, and the controller. The model represents the data and the business logic of the application, the view represents the user interface, and the controller mediates the interactions between the model and the view.
The main advantage of the MVC pattern is that it allows developers to create modular, maintainable, and extensible software. The model, view, and controller components are independent of each other, which means that they can be developed and tested separately, and can be easily replaced or extended without affecting the other components. This makes the code more flexible and easier to maintain.
The MVC pattern is commonly used in web development, where the model represents the data and the business logic of the application, the view represents the HTML pages and other user interface elements, and the controller handles the user input and the interactions between the model and the view. This allows developers to create web applications that are easy to maintain and extend, and that have a clear separation of concerns between the different components of the application.
Flask is a microframework for the Python programming language that is often used for building web applications. Flask is not a full-stack framework, which means that it does not include many of the features and tools that are commonly needed for web development, such as an ORM (Object-Relational Mapper) for working with databases and an authentication system. Instead, Flask provides a simple and flexible core that allows developers to build web applications quickly and easily, and to add the features and tools they need as needed.
Flask uses the MVC (Model-View-Controller) design pattern to structure the code for web applications. The model represents the data and the business logic of the application, the view represents the user interface, and the controller mediates the interactions between the model and the view. This allows developers to create modular, maintainable, and extensible web applications with Flask.
For example, in a Flask web application, the model might be implemented using a database and an ORM, the view might be implemented using Jinja2 templates, and the controller might be implemented using Flask routes and view functions. This separation of concerns makes it easy to develop, test, and maintain the different components of the application.
A REST API (Representational State Transfer API) is a type of web API that uses the REST architecture for building web services. The REST architecture is a set of principles and constraints for designing web services, and it is based on the idea that the web is a collection of resources that can be accessed and manipulated using a standard set of methods, such as GET, POST, PUT, and DELETE.
A REST API defines a set of URLs that represent the different resources in the web service, and a set of methods that can be used to access and manipulate those resources. For example, a REST API for a blog might have URLs that represent the different blog posts, and methods that allow users to create, read, update, and delete those posts.
REST APIs are commonly used in web and mobile applications, as they provide a simple and flexible way to access data and services over the internet. They are often based on the HTTP protocol, which makes it easy to integrate with existing web technologies, and they can be accessed using a wide range of programming languages and frameworks.
HTTP GET and POST are two commonly-used HTTP methods for requesting data from a server.
The GET method is used to retrieve data from the server, and is typically used when the client wants to read or download information from the server. The GET method sends the request parameters in the URL, and the server returns the requested data in the response body. The GET method is safe, meaning that it should not cause any changes to the server or the data on the server.
The POST method is used to send data to the server, and is typically used when the client wants to create, update, or delete information on the server. The POST method sends the request parameters in the request body, and the server processes the request and returns a response. The POST method is not safe, as it can cause changes to the server or the data on the server.
In summary, the main difference between the GET and POST methods is the way they send request parameters and the potential impact they have on the server. The GET method is used for reading data from the server, while the POST method is used for sending data to the server.
One of the main differences between the HTTP GET and POST methods is the security of the requests they make. The GET method is considered to be safer than the POST method, as it does not make any changes to the server or the data on the server. The GET method sends the request parameters in the URL, which means that the parameters are visible to anyone who can see the URL. This means that the GET method is not suitable for sending sensitive information, such as passwords or financial data, as it can be intercepted and read by third parties.
On the other hand, the POST method is not safe, as it can cause changes to the server or the data on the server. The POST method sends the request parameters in the request body, which means that they are not visible in the URL. This makes the POST method more secure than the GET method, as it is not possible for third parties to see the request parameters. However, the POST method is not completely secure, as the request body can still be intercepted and read by third parties. Therefore, it is important to use encryption and other security measures when sending sensitive information using the POST method.
Flask and Django are two popular web frameworks for the Python programming language. Flask is a microframework that provides a basic set of features for building web applications, while Django is a full-stack framework that includes a wide range of tools and features for developing complex, database-driven websites.
Here are some of the pros and cons of Flask and Django:
Flask:
Pros:
Flask is lightweight and easy to learn, which makes it a good choice for developers who are new to web development or who want to build simple, single-page applications. Flask is highly customizable, which allows developers to easily add and modify the features of their application. Flask has a large and active community, which provides support and resources for developers. Cons:
Flask does not include many of the features that are commonly needed for web development, such as an ORM (Object-Relational Mapper) for working with databases, an authentication system, and support for web templates. These features must be added manually, which can be time-consuming and complex. Flask does not have a built-in admin interface, which means that developers must create their own administration tools for managing the data in their application. Django:
Pros:
Django is a full-stack framework that includes a wide range of features and tools for building complex, database-driven websites. This makes it a good choice for developers who want to build sophisticated applications quickly and easily. Django has a built-in ORM (Object-Relational Mapper) that simplifies the process of working with databases and allows developers to write Python code instead of SQL. Django has a built-in authentication system and a powerful admin interface that make it easy to manage the data in an application. Cons:
Django is a large and complex framework, which can make it difficult for developers who are new to web development or who want to build simple applications. Django has a "batteries included" approach, which means that it includes many features and tools that may not be needed for a particular project. This can make the codebase larger and more difficult to maintain. Django is not as customizable as Flask, which means that developers may have to work within the constraints of the framework in order to build their application.
Docker is a technology that allows users to package and run applications in containers. Containers are isolated environments that include all the necessary code and dependencies required to run an application, which makes them portable and easy to deploy. Docker allows developers to create and manage containers using a set of command-line tools, and to share container images with other users through a registry. This makes it possible to quickly and easily deploy applications in a consistent and reliable manner, without worrying about differences in the underlying infrastructure. Docker has become very popular in recent years, and is widely used in the development and deployment of microservices-based applications.
Git is a version control system that is used for tracking changes to files and coordinating work on those files among multiple people. It is commonly used for software development, but it can be used to track changes to any type of file. Git allows users to save versions of their files, called "commits," and to share those commits with other users. This makes it possible for multiple people to work on the same files simultaneously, without worrying about overwriting each other's changes. Git also includes powerful tools for reviewing and merging changes, and for tracking the history of a project. It is a widely-used tool in the software development industry, and is available for most operating systems.
A Python unit test is a piece of code that is written to test the functionality of another piece of code in the Python programming language. The goal of a unit test is to verify that a small, isolated component of the code is working correctly. This typically involves writing a test case, which is a piece of code that exercises a specific feature or behavior of the code being tested, and then verifying that the code behaves as expected.
Here is an example of a simple unit test for a Python function that calculates the sum of two numbers:
import unittest
def sum(a, b):
return a + b
class TestSum(unittest.TestCase):
# Define a test method that calls the sum function
# and verifies that the result is correct
def test_sum(self):
result = sum(1, 2)
self.assertEqual(result, 3)
if name == 'main':
unittest.main()
In this example, the TestSum class defines a test case for the sum function. The test_sum method calls the sum function and uses the assertEqual method from the unittest module to verify that the result is correct. If the result is not equal to the expected value, the test will fail. When the script is executed, the unittest.main() method is called, which runs all the test methods in the TestSum class and reports the results.
A Python log is a record of events that have occurred in a Python application. Logging is an important part of developing and debugging Python applications, as it allows developers to understand what is happening in their code and identify any errors or problems that may occur. The Python standard library includes a module called logging that provides a flexible and powerful way to generate logs.
Here is an example of how to use the logging module to create a log in a Python script:
import logging
logger = logging.getLogger('my_logger')
logger.setLevel(logging.DEBUG)
logger.debug('This is a debug message')
In this example, the logging.getLogger() method is used to create a logger object, which is used to generate log messages. The setLevel() method is used to specify the log level, which determines the type of messages that will be logged. In this case, the log level is set to DEBUG, which means that all log messages will be logged. Finally, the debug() method is used to create a log message with the string "This is a debug message". When the script is run, the log message will be printed to the console.
The logging module provides many other features, such as the ability to specify a log format, to write log messages to a file, and to send log messages over a network. It also supports different log levels, such as INFO, WARNING, and ERROR, which can be used to filter log messages and only display messages that are relevant to the current situation.
Python documentation is written text or comments in the Python code that describes how the code works and how to use it. Python includes a built-in documentation system called docstrings, which allows developers to include documentation directly in the code. Docstrings are string literals that appear immediately after the definition of a function, method, class, or module, and are enclosed in triple quotes """.
Here is an example of how to use docstrings to document a Python function:
def sum(a, b):
"""
Calculates the sum of two numbers.
Args:
a (int): The first number to add.
b (int): The second number to add.
Returns:
int: The sum of the two numbers.
"""
return a + b
In this example, the sum function is documented using a docstring. The docstring provides a brief description of what the function does, as well as information about the arguments and return value of the function. This information can be accessed using the built-in help() function, or by using a documentation generation tool such as Sphinx.
Docstrings are an important part of writing Python code, as they make it easier for other developers to understand and use your code. It is good practice to include docstrings for all functions, methods, classes, and modules in your code, and to keep the documentation up to date as the code evolves.
Python docstrings are written text or comments in the Python code that describe how the code works and how to use it. Docstrings are string literals that appear immediately after the definition of a function, method, class, or module, and are enclosed in triple quotes """.
The built-in help() function can be used to access the docstrings for a given Python object. For example, if you have a function named sum with a docstring, you can use the help() function to view the docstring like this:
help(sum)
Help on function sum in module main:
sum(a, b)
Calculates the sum of two numbers.
Args:
a (int): The first number to add.
b (int): The second number to add.
Returns:
int: The sum of the two numbers.
In this example, the help() function is called with the sum function as an argument, and the function's docstring is displayed on the screen.
Sphinx is a documentation generation tool that can be used to create professional-looking documentation for Python projects. Sphinx uses the docstrings in the code to generate the documentation, and provides a variety of features and options for customizing the output. For example, Sphinx can generate documentation in different formats, such as HTML, PDF, and ePub, and can include code examples, diagrams, and cross-references. To use Sphinx, you need to write the documentation for your project using docstrings, and then use the Sphinx tools to generate the documentation.
AWS (Amazon Web Services) and Azure are two popular cloud computing platforms offered by Amazon and Microsoft, respectively. While both platforms offer a wide range of services for building and deploying applications in the cloud, there are some key differences between the two.
One of the main differences between AWS and Azure is the range of services they offer. AWS offers a wider range of services, including services for computing, storage, database, analytics, machine learning, networking, mobile, developer tools, management tools, IoT, security, and enterprise applications. Azure, on the other hand, has a more limited range of services, focusing mainly on computing, storage, database, analytics, networking, and developer tools.
Another key difference between the two platforms is the pricing model. AWS uses a pay-as-you-go pricing model, where you only pay for the services you use. Azure, on the other hand, uses a combination of pay-as-you-go and pre-paid pricing models. With Azure, you can choose to pay for services on a pay-as-you-go basis, or you can purchase a pre-paid subscription for a set amount of time and get a discounted rate on the services you use.
In terms of integration with other platforms and tools, AWS offers a wider range of integration options and third-party integrations. Azure, on the other hand, has better integration with other Microsoft products and services, such as Office 365 and Visual Studio.
Overall, the choice between AWS and Azure will depend on your specific needs and requirements. Both platforms offer a range of powerful and flexible services for building and deploying applications in the cloud, but the specific services and pricing models they offer may be better suited to different types of applications and use cases.