In the words of one of my former school masters, we are past the worst. We can look forward to longer days and shorter nights now as star gazers and people who read their daily horoscopes will know that at 12.04 GMT on Sunday 21st December 2008, the Sun reached its southernmost point in the sky or winter solstice (in the northern hemisphere) and is now on its slow journey back north. Days will be more or less equal at the Vernal equinox 11.43 GMT on 20th March 2009 when the Sun passes through the plane of the ecliptic and we are then on the run into Summer. More of this stuff here at the National Maritime Museum website http://www.nmm.ac.uk/explore/astronomy-and-time/time-facts/equinoxes-and-solstices#solstice Just the sort of stuff for a pub quiz and a very interesting place to visit in the Christmas break.

Earlier winters with no central heating, street lighting, cars or supermarkets hardly bear thinking about as if you had not stored enough food for the winter, some of your family would not survive. Not much excuse would have been needed for a celebration and some of our Christmas festivals e.g. Yule date from a pre-Christian era.

Back in the present time and season of office parties, imagination has never been in short supply and the Christmas bash at in2 Consulting Christmas took us on the water in the form of a DUKW tour rather than under it when we went to Brussels via Eurostar last year http://www.georgeemsden.co.uk/2007/12/mannekens-woodpeckers/

11. 00 prompt and the 66 year old DUKW turns up at our offices in Shoreditch. London DUKW tours have a fleet of 6 http://www.londonducktours.co.uk/ dating from WW2 and are considering getting another one. Our journey through the City and West End is enlivened by a few jokes and stuff we did not know like Green Park in the West End is so called because it has no flowers (only trees) and was once a mass burial ground for victims of the plague. The entrance ramp into the water itself is next to our SIS (MI6) service HQ from which we can see their “5″ cousins on the other side of the river at Thames House. The HQ of the latter used to be above Euston Square tube station and as my guide at the time told me, one of the worst kept secrets in London. The Thames House in the BBC series Spooks (available on BBC iPlayer) is actually the Freemasons’ Hall in Great Queen Street round the corner from Covent Garden. My April blog http://www.georgeemsden.co.uk/2008/04/itchy-wings-sticky-susan/ mentioned that the feature film Green Zone set in Iraq was being filmed there, and more of it was being filmed three weeks ago when I went to a lodge meeting.

For borrowers there is some good news as rates ease slowly with fixed rates appearing at 3.89% and 3.69% for example. Nationwide has reintroduced a 95% mortgage but the rate is high. Lending criteria do not seem to get any easier with Abbey tightening their Affordability calculator parameters and withdrawing their Fast Track facility where no proof of income was needed below a certain LTV level. Doing mortgages at present is rather reminiscent of “work to rule” we used to hear about in the days before New Labour. All this will continue to depress house prices as most people pay for most of their property cost with borrowed money. The long term values can be guessed quite easily – multiply your earnings by say, 3 and that will give you a pretty good idea of how much you will be able to borrow and of course what price property you can afford. Even worse, a retired building society manager I met at the Bank of England last month informed me that the multiple with some lenders used to be 2 and half times earnings!

The higher Stamp Duty rates introduced by the Government still affect most property owners and of course, Home Informations Packs are basically a tax on property buyers. The effect is rather like pre-Keynesian economics where the perceived economic wisdom of the time was for Governments to increase taxes in a depression which made the 1930s one much worse. This was in the days of the Gold Standard and the UK was one of the first countries to leave saving itself a lot of economic pain as a result. The UK Chancellor of the Exchequer who increased taxes then was Winston Churchill who as my economics lecturer was fond of saying, was The Worst Chancellor we ever had!

History will judge if he continues to deserve this mantle as British forces in Afghanistan suffer 4 times the rate of casualties as American troops there, as our troops are not given enough resources to do the job  http://www.telegraph.co.uk/news/newstopics/politics/defence/3884829/Afghanistan-British-suffer-four-times-as-many-casualties-as-Americans.html something the head of the SAS resigned over recently.

One money raising idea the Government has not tried might be to allow drivers to BUY off their penalty points on their licence say, for minor offences – such as a being few miles over the limit at 1-o-clock in the morning when no one was around and no one was in any danger?? This could be very popular and might allow some people who need their licences for their jobs to keep them?

Thanks to a Daily Telegraph reader for doing an Emperor’s Clothes job and pointing out the obvious regarding state pensions. The Bernard Madoff hedge fund scandal has been likened to a gigantic Ponzi scheme where today’s money going in pays for the return of the people in already. This is exactly the way public sector and the State Pensions are funded (sometimes called the Pay As You Go system) prompting the question, is the Government is running the biggest Ponzi scheme of all time?

Merry Christmas!

Five months and four consultants later have my blog back again. My last post seems so long ago that the feeling that I have been away on another planet is inescapable. There were plenty of mutterings about recession before but now it has finally sunk in and the November report on inflation from the Bank of England  http://www.bankofengland.co.uk/publications/inflationreport/2008.htm said that the current economic crisis was the worst since 1914 and before. Next report due in February.

With the telephone numbers of cash being printed and thrown at banks & sundry, the Government is at least consistent in ignoring the cheapest and simplest alternatives. Banks now have plenty of capital but are too ignorant or timid to lend especially in simple cases it seems. A recent case involving a trust illustrates this. Trusts date back to the Crusades and are basically very simple. When you sell your property for example, there will be a clause in the contract saying that you sell as beneficial owner meaning that that you own it for your own benefit or in your own right. With a trust you are the registered legal owner but you own it for someone else’s benefit. Pension funds are owned in this way and pension law is actually based on trust law. They are often used by families where they wish to keep their wealth safe for future generations. While the basic concept is very simple, the tax side for example, can be a nightmare.

In this case a client set up a family trust for future generations using a long established City firm. The trust deed naturally allowed the trust to borrow. Weeks of dithering by the lenders who said they would offer the cheapest terms, turn out to be the most expensive and want an independent opinion that the trust deed is OK – rather like buying a new Audi and being asked to take it to a Mercedes garage for an MOT. The lender (or rather the Credit Committee) do not understand the concept at all and as they have not kept their word on rates and fees, will probably lose the business to a competitor serving them right for the waste of time. Amazing to think that a few years ago there was a bank that had the rather catchy slogan “The bank that likes to say, Yes!” For the sake of clarity if you can remember who this bank was, they are not the villains here.

Simple solutions for kick starting the economy have been around for ages. President Ronald Reagan gave us supply side economics and Free Trade Zones do just that for example. Docklands was a wasteland for years while the local councils bickered and did little. The Docklands Development Corporation with exemption from many controls plus Government help, turned the the City of London effectively in to a twin city that could almost be called New York on Thames generating lots of jobs, profits and of course taxes.

Small businesses are exempt from some regulation where they have less than 5 employees but this limit used to be 20. Smaller companies are capable of much quicker growth than larger ones and the above measure has not helped growth at all. Government borrowing will be paid for by printing more money (inflation – the pound in your pocket is worth less) or by making our grandchildren pay for it. The latter will have an ever harder job paying this off as the lower birthrate combined with a longer living generation of baby boomers, means that a proportionately smaller working population has to support an ever increasing elderly one.

What hardly makes the news is people succeeding, following the old dictum that Good news is No news. While some clients prefer to wait, others need money for investment as their businesses are expanding. Even with the thousands of job losses in the City and elsewhere, most people are still in work and as any manager or business owner will tell you, finding good people can be the most difficult part of running a business. Capital is always needed for investing in new plant and technology but amazingly, there are Government funds around which have invested only half their money. Unsurprisingly, this is an increasing part of my work.