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Thursday, 29 March 2012

Naïve or stupid?

There must be a dividing line between naïvety and just plain, old-fashioned, stupidity.

The puppy barking at its own reflection... just the thought of it probably makes you smile. The puppy will learn pretty quickly; he's just naïve (as in untrained).

The youngster repeating something overheard between two adults... perhaps embarrassing for those concerned but, it's a lesson that gets learned. The youngster is naïve, as in inexperienced.

The politician being found with his pants down in the wrong place... not a pretty picture but, perhaps, getting caught once might be described as naïve (as in unwise), you might even take a generous view and suggest that he might have been framed; any more than that, questions could be asked about competence.

The UK government suggesting that people should take precautionary measures in case of a tanker drivers' strike... was this naïve?.

This incitement to stockpile has been interpreted, as it obviously would be, as 'keep your fuel tanks full, and have a bit extra put aside'.

The last time there was a threatened tanker drivers' strike, in 2000, petrol stations and shops rapidly ran out of jerry cans. It seems that the same thing is happening again. This begs the question of 'where are the jerries' (cans, that is). Are we sitting upon a huge stockpile of filled containers (potentially seeping into the environment), have they been put to some other use, have petrol can manufacturers got a particularly strong lobby at Westminster?

Perhaps someone would care to calculate the wasted cost (in additional fuel used, for a start) of queuing at filling stations, to only put a modest amount of fuel in a tank, the additional wear and tear on mechanical components (particularly starter motors), and the not inconsiderable additional pollution caused by this wanton exercise.

The result of the advice is self imposed rationing by some garages.

So, in your opinion, is the recommendation of the government naïve or just plain stupid?

The Prime Minister has convened 'Cobra', the emergency planning committee... lucky Benny Hill's Chinaman isn't a member!

Tuesday, 13 March 2012

Affordable property for first timers

Coincidentally, Britain and Switzerland have both announced (on Sunday 11th March) measures to make housing more affordable for first-time buyers. The routes taken to reach the decisions, and even more the measures are very different, even diametrically opposed.

The British government has announced the NewBuy Guarantee scheme (available only in England!). The political motivation behind this scheme purports to make access to the housing ladder more affordable for first-time buyers; a very noble ambition. How likely is it to succeed?

Working backwards from available information, one finds that the average initial housing purchase is funded with a deposit of £38,000. Based on a deposit of 20%, this equates to an average capital cost for a first-time property of £190,000. It also appears that the average age of a first-time buyer is, a surprisingly high, 37. So, basically it has taken about 25 years to save £38,000; not taking into account compound interest, or the vagaries of the stock market (where one could easily have lost 30% in 2008).

Firstly, the scheme is not limited to first-time buyers, so, at its most basic the scheme is already pitting existing home-owners against property owning virgins. This will prove to be the first ratchet in an upward pressure on prices.

The scheme is being funded by the government (whenever you read that, it means YOU, the taxpayer) and property developers. A fund is being set up protect lenders (the banks) against potential losses on these deals. Under the scheme, the property developer pays the lender 3.5% of the purchase price, and the government provides an additional guarantee of 5.5%. This clearly adds an additional cost to the expenses of property developers and will be the second upward pressure on prices. Put simply, if the sale price of a property is cost plus 20%, the average sale price of £190,000 has just become £198,330, as a simple fact of the additional cost to property developers.

So, taking our examples above, and assuming a 5% mortgage rate, the current first-time buyer has to find £7,600 to fund the interest element of his mortgage; under the new scheme, this will have risen to £9,420 per annum; an increase of £1,820 per year. If these newcomers to the home-owning experience had the extra £1,820, they could have saved it, been younger than 37, and buying property at a lower price.

Additionally, the NewBuy Guarantee scheme does not provide a safety net to the purchaser; if he finds himself in a negative equity situation (and has to sell), he will still be in the usual creek without a paddle (or even a canoe). This is all so similar to the starting point to the US sub-prime debacle, which was based on overly generous lending on overpriced properties; lesson not learned.

It will also be interesting to find out how HM Treasury will account for their part in the guarantee scheme. Will it be a straight cost, or a contingent liability, which will only become apparent when things go belly up.

The thinking behind this scheme is, no doubt, well-intentioned but also doomed to failure.

On Sunday 11th March, the Swiss people voted in a referendum (there were four others that day, as well as state elections) to limit the number of secondary (i.e. not main) residences to a maximum of 20% in any given 'commune' (town or village). The vote was passed by a slim majority, and against the recommendations of the Federal Council (government) and parliament.

The initiative was mainly aimed at mountain villages, which are sprawling as a result of seemingly excessive development. The idea is that the countryside is for everyone, and that continued development will blight this asset. Tourism being a major industry in Switzerland, this is a powerful motivator. Part of the argument was also that wealthy Swiss, as well as foreign investors, were driving up property prices, to the detriment of the younger generation.

It is now for the law makers to make this initiative applicable; they have their work cut out. There are quite a few resort villages where considerably more than 20% of the properties are owned as second residences, and frequently a high proportion of those are foreigners. Forcing people to sell is simply not a option.

So, what are the likely outcomes of this change in attitude. Firstly, it is likely that construction permits in these areas will be much harder to obtain. This, in itself, can only result in higher prices, unless there is a sustained movement to divest oneself of these properties. But, who would want to sell a property that can only increase in value.

Secondly, it seems likely that there could be another upward pressure on prices by foreigners viewing this as a 'last chance saloon' to invest in tourist areas.

In the medium term, if planning permissions are only given for main residences, this will have the desired effect of reducing prices, provided that local authorities make available the building land necessary for such projects.

This initiative seems to have some hope of helping first-time buyers but, not in the short-term, and it is not without risks.

Thursday, 8 March 2012

How to keep your hands warm

I suffer from cold hands in the winter. There's no need to feel sorry for me, clap (like a seal), or throw peanuts; it's life and that's all there is to it. The problem manifests itself when skiing; the action of clutching one's poles means that there is no movement of the fingers, thereby worsening the situation.
I have, however, been looking for a solution for a number of years. My criterion was (and indeed still is) passing my ERC (Effective, Reliable, Comfortable) test.
There are many solutions that pass some of the individual criterion but none (until now) have fulfilled all the criteria.
There are inner gloves, which used to be in pure silk (good luck finding any nowadays), and are now in various artificial fabrics. Apart from making the glove tighter, which is very much the opposite of the desired effect, they do offer a slight improvement. What they are really doing is compensating for inadequate gloves. The obvious suggestion of purchasing larger gloves is ineffective, as you end up with longer (glove) fingers that hinder your grip on your poles.
Chemical warmers do indeed warm the hands but, they can also be far too hot, are uncontrollable and (mainly) non-renewable. They also tend to be uncomfortable as they are in the glove or, all but useless if fitted in a pouch in the top of the glove. The sensation of cold tends to start in the extremities of the fingers, not on the back of the hand.
There are also gloves containing elements that are heated by a battery that is contained in the glove. I have tried these and found them to be very unreliable and backed by customer service that is so appalling that it should be nominated for the opposite of a WOW! Award.
Things have now changed, at last. There are heated gloves that meet my ERC test!
My recommendation is to leave your gloves on a warm radiator overnight (and don't forget to take them in the morning). The reason for doing this is that if you start with cold hands (putting on boots, helping the kids, paying for your lift pass…), then you face an uphill battle. This way, when you put your gloves on, they will already be warm and your batteries still fully charged.

The gloves have three heat settings, with a light which changes colour from green, through amber, to red. Don't spare the horses, set them straight for the highest setting (red). On this setting the heat will be constant for about three hours. To compensate for the higher setting, I suggest that you buy a spare set of batteries; the extra comfort is well worth the additional cost.
If (when) you stop for lunch, turn off the battery (in order to conserve charge), and place the gloves on a radiator (to get that toasted feeling when you put them back on).
I am happy to have experienced cold conditions (-10), wet (snowing, that is), and had warm hands all day.

A big 'thank you' to Sandy, who will be happy to supply you with details of how to obtain this excellent product.