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23 december 2010, collaborative consumerism

I'm very happy to admit that sometimes I'm a magpie, in that I swoop down and pick up other people's ideas; but knowledge is something that can be infinitely shared without losing value. Indeed sharing often develops and strengthens. So it may be with collaborative consumption. Rachel botsman, seen here on the excellent ted site, may have cornered the 2010 market, but swapping, trading and barter are as old as the hills. The internet of course means that your reach is no longer just the village, or even the national tv audience swap shop (an old uk tv programme) had, but the world. You can even swap money: a loan matching a borrower. "Social lending" websites like zopa have been around for years now, but haven't taken a significant cut of the action. Internet shopping though is certainly beginning to bite into western high streets, and this season's snow-in will nudge those figures north. Rachel's point though is that swapping is not consumerism, but the recycling of goods and the renewal of trust within social networks where people do not know each other, the "big shift" that makes the market for swapping big enough to be viable. Need that drill you have in the garage ? Actually you need the hole it makes, and could very easily rent the drill for the ten minutes a year you need it if the transaction costs were sufficiently low. She also highlights the growth of co-working, people - potentially on the other side of the world - sharing a job. I'd certainly add car sharing - if only I could easily connect to the 5, 000 people that drive past my front door into manchester every morning. I don't really want the car. Access is better than ownership. We're waking up, says Rachel, from a humungous hangover of emptiness and waste.

19 december 2010, first in, first out

Few worlds are worse than british health for throwing up their own impenetrable lexicons and structures, but two years after being appointed (bottom of page) to the board of a hospital, I have just about learnt the difference between a pct, sha, pbc and pbr. Just as a new government has decided to scrap them all. Hospital of course is a simplification - I'm actually on the board of a healthcare trust, or acute provider, which manages 3 hospitals (one is altrincham, in a terrible state, which we've spend huge efforts to convince our funders to let us rebuild), the main one of which, trafford general, is whose doors the first patient of the much-fabled national health service walked through. It's also the centre of a great deal of planning that made it cutting edge today in the uk for providing "integrated care" essentially between general practitioners (the local gatekeepers), the pct (who commission) and our trust. Now however, such trusts need to move rapidly towards becoming semi-independent, or "foundation" trusts, supposedly more communal "patient-led" organisations, freer from central control. A smallish trust like ours, it seems, can't possibly make the grade, despite an absolutely excellent recent safety record, having a very good senior management team in place and being named medium-sized trust of the year for the whole of england. So we were one of the first to signal it is looking for a partner to merge with or acquire it, although there are actually many models this headline description could follow. Whilst everyone wants an administrative structure that provides the best outcome for our community - quite possibly no local structure at all - divining what that is will be the stuff of many debates over the coming, interesting, months.

Attached File: integrated care.pdf

11 december 2010, the fall and rise of the euro

The basic rule of the markets is buy low, sell high, or "when others are fearful, be greedy" as warren buffet put it. On that basis, time surely to invest in the euro, both financially and politically. Despite its difficulties, much derided in the uk in particular, countries are still queuing up to join: estonia will do so in a few weeks, and iceland is putting itself through the deeply traumatic and unpopular step of joining the eu, just for the currency (ditching the krona). Don't forget that despite its recent downward blip, the euro is up around 20% against sterling over the last 3 years; some 33% over the last 10 against the dollar - and everything points to continued and sustained dollar depreciation, which means a rising euro, especially as euro rates will go up quicker than others in 2011. For the uk, the long-term political-economic case remains as strong as ever: yes, one size will never fit all (as greece and ireland have discovered; but so for long have engineering firms in scotland), but the world's largest and most successful economy, the us, with no less variance than the eu, has made it work, and so can we. Juncker's latest contribution is a very good one whose time will come. For all the downsides, they are outweighed by the sum of the ups of not being a small dingy in choppy seas, but being part of a global cruiser. If the current turmoil shows anything it's that a currency crisis in the euro area is hugely unlikely; not so the poor pound (even if policy has skilfully avoided it for now). The world is still wandering evermore towards economic control by strong currency blocs, of which the euro is one, with sterling doomed to being buffeted by manoeuvring between giants. An independent currency is 19th century policy in a 21st century world. We will one day join the euro: so why not restart the debate now when the terms of trade for uk entry are all in our favour. That won't be the case when the uk needs it. Now's the time to buy.

9 december 2010, trapped inside the treasury

Minor riots in london today as parliament voted on increasing student's tuition fees from some £3k to some £9k. Epicentre was the treasury, with me sat inside talking about tax incremental financing and social impact bonds as the chants grew louder and the nice russian security lady came around to ask us to close the blinds. The country's bankrupt and all that, but it's a difficult one to call this for those of us that got our degrees free and indeed were given a pretty decent grant to go on holiday, sorry to university, for 3 years. Actually I learnt tons and have pretty much traded on it the rest of my life, so I definitely see it as a public good we should all be paying for. I see too though that its particularly hard on the working majority that didn't go, and so whose taxes in effect subsidise those that did. Universities certainly need and deserve the funding, but every corner of the uk government is girding itself to stop making and funding central plans and to make people and institutions call their own shots, and pay for them too - so why should the higher education sector be any different ? Everybody wins really when the student pays - except the student. It's too obvious to say many can't afford it, as it's actually free to go, you just have to repay the loan over your working life. Far, far too many in society though, and surely a massively disproportionate number of the disadvantaged, will simply not have the family or environmental history, support or culture to give them the confidence to do this, making them naturally risk-averse to take on a sizeable debt. So too many of the talented don't and won't go to university. Didn't stop many brilliant entrepreneurs though, although I have to say, it might have stopped me.

8 december 2010, it was 30 years ago today

All we are saying - keep talking- is give peace a chance. Everybody's talking about revolution, evolution, masturbation, flagellation, regulation, integrations, meditations, united nations, congratulations... As soon as your born they make you feel small, by giving you no time instead of it all, till the pain is so big you feel nothing at all. A working class hero is something to be. Keep you doped with religion, sex and tv, and you think you're so clever and classless and free... Nobody told me there'd be days like these, strange days indeed... you may say I'm a dreamer, but I'm not the only one, I hope some day you'll join us, and the world will be as one... power to the people.

28 november 2010, the day of the new world order

Driving home from my sister's 40th birthday party in london, we caught one of those excellent but rare documentaries that light up a subject and cram a lifetime's understanding into 30 minutes. I'd recommend listening to what really happened in copenhagen in full, but the story is most startling for its geopolitical climax. It shows that my call then (20 dec) was on the money. Denmark dismally failed in the usual host's duty of bringing forward a compromise at the right time to get momentum and seal an agreement, and at the end of 2 weeks, and indeed of 2 years negotiations beforehand, as the world's leaders flew in, there was nothing for them to sign. The programme gets insiders to paint the remarkable picture of obama actually negotiating a text himself in a sweaty room, with merkel, sarkozy, brown and 35 or so other nations' premiers. But several were missing. Upstairs, china, south africa, brazil and india were negotiating their own text, and blocking anything else. Eventually obama excused himself from the world as we know it meeting and gate-crashed the (now-christened) BASIC nations, where he quickly agreed to drop what had been the central tenet of the 2 year negotiation, the aspiration for a legally-binding agreement, in return for a clause on monitoring. To the astonishment of the rest of the world, and not a little fury, he then went to the press with the deal that had been done - and copenhagen was duly wrapped up. One would expect that experience to weigh very heavily on obama in his understanding of who is on the real top table if america is seeking to keep its place as the world's leader.

20 november 2010, bad policy and catastrophic politics

The financial times has surely called it right that the eu using the irish crisis as an opportunity to rid themselves of the running sore of ireland's 12.5% corporate tax rate would "politically, be the most monumental own goal europe could score. The irish were converted to the lisbon treaty by guarantees on tax sovereignty. Reneging on them would cause cracks in europe's political edifice that no words could paper over." Much as many do not agree with this rock of irish fiscals, and much as the quid pro quo for a community bail out must be rigour and reality in national affairs, that policy has proved as successful as any, and is their democratic right to pursue. This is not greece, where root & branch reform of the fiscal administration is necessary; the irish have been bold and competent in this department. The tragically lax and wayward was bank lending, which surely means a focus on regulation and balance sheets, the ultimate journey being wind down and removal of irish lending capacity, which should not be irreplaceable given open access to other euro lending. Isn't that part of what a sustainable single currency needs to be ? The press in the uk meanwhile is full of tosh about how it's all ireland's fault for joining the euro in the first place, though of course having their own currency would not have stopped irish banks irresponsibly lending the ludicrous amounts of money that are the source of the problem. It would though have robbed them of 15 years of roaring tiger growth that economically transformed this once-obscure part of europe, and nor would there be weeks of negotiation with a friendly eu white knight, but rather it would be the immovable imf against an ireland with its hand undermined by a currency crash.

14 november 2010, of benefit ?

So much news: aung san suu kyi (free at last, but so little so late), abysmal failure at the g20, whose consequences will be with us for a decade (an excellent economist piece echoes my last post), and ireland again tests the euro. I'm struck most though by another excellent piece, by andrew rawnsley, on changes to the UK benefits system. Maybe because it's a problem facing all europe, with the outlier uk dealing with it first; or maybe because my horizons are now rather narrowing to things british. I really need to know much more about this. All sensible people agree that we have ingrained welfare dependency, which is both personal tragedy and economic millstone. British benefits though are not generous: I have personal experience of this, my other half having lost a well-paid teaching job in germany, and become entitled to two-thirds of her salary. Far more people though claim in the uk: around 5m says rawnsley, a third having been receiving for nine of the last ten years. All recent governments have been complicit in this gradual but rock solid rise, and all political parties want to reverse it. The way is, to use the slogan, to make work pay. Logically, this surely means both increasing minimum wages and/or enabling people to keep some benefits whilst in work, but also decreasing benefits. What to do though when there is no work, which for some is certainly the case, although much less than most think when we consider the lowest paid jobs. Should people be forced to do something for their benefits to become or stay accustomed to working ? That's hardly training to move people into the knowledge intensive economy we need - but work surely is work, and it's not benefits. There are of course the defenceless in society that need strong support; but how to tell them apart ? These are the questions. The grand experiment of the next years will not be without casualties, but it may provide some of the answers.

10 november 2010, the need to change global reserves

It's freezing out, so my study has made its annual migration from conservatory to dining room. It's cold too for some in the sovereign debt markets, with irish troubles worsening by the day, as countries become the new banks, ready to topple over, but for an imf or ecb bail-out. Biggest debtor of all is of course america, but it has no trouble raising endless funding due to dollar dominance. This is now being challenged though as never before. Ideas about a more balanced basket for global reserves are hardly new - see eg manchester's own stiglitz - but the greenback's relentless downward spiral, and the firm policy intention to drive it down further to drive growth and avoid inflation in the us (our currency, your problem) has moved this debate from obscure imf papers on creating a new global currency (the bancor) to the front page. It is the main item of discussion at the g20. In fact, there's already a perfectly serviceable global foreign reserve currency, the imf's own sdr, although alas it has no market presence and so is not really attractive for wider use. This may change, but more likely is an ebbing into slowly building up reserves in other currencies, mostly of course the euro, although the prospect of bailouts is hardly an advert for euro stability either. The big change will come when the yuan becomes fully convertible, and china has already taken the very first crucial steps towards making that happen. With some 15% of global gdp now tied up in reserves though, starving the world of capital, something, somewhere has to give, and it won't be pretty. It also won't be that soon - so for now, buy gold.

6 november 2010, reality is almost always wrong

Not the doctor, but the place to live, of which there is a chronic shortage in the uk, as house building has declined dramatically over the last 2 years, with no signs of improvement. Apart from land that people want to build on not being made available, this is largely because the norm here is home ownership. However, as hefty deposits are now needed for first time buyers, and declining prices have hit those who already own, the market is weak and indeed getting weaker. Public interventions have kept things afloat until now, but with all spending now slashed, that is grinding to a total halt. It may be a while until it percolates through that the fundamentals have changed and that the end of the access (now gone) to cheap money (going soon, as high inflation and interest rates mean expensive money) that fuelled ever-increasing house prices means that owning your own house no longer makes such great sense. Like germany and so many other continental markets, renting is more and more likely to rise, and not just for students. This view is strengthened by the fact that even with the last years' decline, uk house prices remain vastly overpriced: they need to fall a further 25% to hit their long-term average. What is needed to unblock the system is investor confidence in a financial model that securitises long-term rental incomes, so enabling a mass of building in the first place, and enabling more to be built from revenue and profits. But this isn't going to happen before it takes hold that the change from own to rent isn't a blip but a trend.

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