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Weekend reading: Quid game

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What caught my eye this week.

Sooner or later in any survival drama, half the survivors walk out on the other half in search of a better future.

Sure, they’re all safer together in the camp.

But that also sucks – what with the dull food and the claustrophobia and the love triangles and the sudden deadly nocturnal bloodbaths.

Let’s take a chance, urge the ringleaders. No more meekly accepting fate. It’s time to take back control!

Viewers wince and shout “don’t do it!”

But it’s to no avail.

Stuck in the mid-series doldrums, the screenwriters need these renegades to be chowed down by zombies or vapourised by aliens or to turn on each other, starving and half-mad.

An antihero gets his comeuppance. A fan favourite cops it, too.

Whoever is left limps home, desperate to perpetuate their lucrative Netflix gig for six more seasons – unlike their unfortunate eviscerated comrades who can now only dream of 20 years signing T-shirts at Comic Con.

Lost in the supermarket

Back in the real world and in a Britain today that definitely shares nothing in common with the above scenario, things seem to be mildly unraveling:

  • One in six adults reports being unable to buy essential items because they were not available, according to the ONS.
  • 76% of British businesses believe staffing is a threat to UK competitiveness, says the CBI.
  • There’s not enough people around willing to slaughter the pigs.
  • British fisherman now need 38 pieces of paper to export fish into the EU, versus four before we left the EU – just one example of the vast frictions introduced at our borders.
  • Covid still stalks the land even as it recedes in places as disparate as the US and Italy. This despite 138,000 deaths, multi-month lockdowns, and an early lead in vaccinations.

The list goes monotonously on.

I’ll say it again – this is definitely not all happening because of Brexit.

From book shortages in the US to soaring gas prices in Europe, the Containergeddon that’s broken supply chains, and a global shortfall in everything from semiconductors to paint, Humanity PLC is struggling to reboot.

However Britain is especially vulnerable to this disruption – even absent a Brexit – because we’re very exposed to trade.

And what was heroically spun by some as a reason to make such activity difficult with our by-far largest trading partner has now come back to bite us.

As a result our economy – ‘running on fumes’ says Bloomberg – has been slow to bounce back:

Complete control

In response, the charismatic blonde survivor who headed our breakaway group has continued his finger-pointing.

Despite nearly every economist in the world warning we’d face consequences from staff shortages if we turned off free movement with Brexit, PM Boris Johnson blames business, this time for perpetuating a low-wage culture.

As the Brexit-tracking professor Chris Grey notes on this shift:

Johnson, inevitably, is the master of this illogic, managing to suggest within the course of one interview that the crisis doesn’t exist, and that it exists but is nothing to do with Brexit, and that it exists but is part of what delivering Brexit means.

It’s like the three-card Monte scam in reverse: rather than the gullible punter never turning up the winning card, Johnson’s trick is to present whatever card he picks as being the winner.

There was of course no evidence that immigration made more than a tiny difference to the employment prospects of Britons. That was a fiction, like so much other campaign nonsense:

What free movement did do was keep the lorries rolling, the elderly cared for, the Starbucks coffees coming, and the home renovations happening.

What we’re seeing on the High Streets is just the tip of the iceberg:

Even if you believe anything that Brexit will lead to upskilling and a pay boost for Brits, it’s clearly going to take decades.

So you might think the government should come clean and start taking appropriately massive action to redress this problem, given we have now got (slightly) more freedom to act and it can still borrow cheaply.

However besides the blame game and the cheering of fuel shortages, the main talk at this week’s Tory party conference was of tax rises and cutting spending.

It sounded ominously like Austerity 2.0.


Chancellor Rishi Sunak is no idiot, so you might wonder – beyond idealogy – why he’d go down this path at a time of record low borrowing costs.

Why not build new towns to solve Britain’s housing crisis? Why not plant 100,000 hectares of new forests instead of 30,000, to make a dent in our climate pledges?

If this isn’t the time for borrowing to boost the economy then when?

I suspect there are couple of big impediments.

Firstly, as former Bank of England governor Mark Carney warned Britain is reliant on the “kindess of strangers” – the capital inflows that finance our current account deficit.

On top of that Britain’s finances are uniquely emeshed with the world:

Source: Bank of England

For example, a third of UK corporate borrowing is financed from overseas lenders.

The international perception of the UK’s finances is therefore a priority for any competent UK chanceller. As bad headlines multiply, Sunak can’t risk a credibility gap, a run on the pound, and/or rising borrowing costs.

As Merryn Somerset-Webb puts it in the FT [search result]:

A 2013 study from the World Bank suggests that once government debt goes over 77 per cent of GDP every additional percentage point reduces real annual GDP growth by 0.017 percentage points.

At [the UK’s] 106 per cent that adds up — its effect on living standards might be why Sunak said at his party’s conference this week that he considers the ongoing piling up of debt to be “immoral”. All this suggests more taxation.

Whatever the Brexit rhetoric, we’re not totally in control here. Sunak has to at least talk tough – and arguably act tough – to keep foreign capital on-side.

That’s surely one reason why the government is mooting tax hikes, even with GDP in the hole and the cost of borrowing for investment neglible.

Train in vain

The second reasonable reason the government may be reluctant to embark on the kind of massive infrastructure spending spree I’d like to see at a time of record affordability is that it simply can’t be done.

It’s hardly treasonous to say we had a problem building more homes (a massive shortfall for decades) or infrastructure (Crossrail is years late) even before the pandemic and Brexit.

Now we’re short of workers, who exactly will build the new towns? The new infrastructure?

I still believe my ginormous tree-planting idea has legs. If anything requires low skills it’s digging a hole, it’d boost the economy, and it needs to be done.

But this sort of thing won’t level-up the workforce long-term.

Perhaps Sunak’s wonks have run the numbers and told him that without workers he can’t productively spend the money, even if he wants to?

London calling

I’m often reminded by critics that Monevator is an investing site – as if the nation’s economy was as inconsequential for us as the football results.

But fair enough, what could this mean for our finances and portfolios?

Firstly, Britain is not finished. Those who were opposed to our leaving the EU are foolish in predicting a collapse.

As I’ve said since day one, Brexit is more like a leaky tyre from a puncture than a headlong crash into the barriers. The pandemic added bumps in the road, but we’re still a strong, well-educated economy.

The UK will do worse economically indefinitely because we left the EU – something you might legitimately feel that was worth it for other reasons. But we won’t become an economic basket case.

Rather, I believe we face mild stagflationary forces – although not enduring stagflation, and I’m not (yet) predicting a recession.

Inflation will rise for a time, because it is rising everywhere. It may then persist for years here because of the higher cost of workers. The Bank of England’s new chief economist recently said as much. His underlings predict CPI inflation will hit 4% later this year.

But faced with low economic growth, the Bank will surely be reluctant to raise borrowing costs too fast.

This may be where Sunak’s steathy tax rises will instead step-in to remove some money from the economy to curb inflation – hopefully in a vaguely progressive fashion.

Tax rises can be expected to hurt economic growth at the margin, but may be judged better than the alternative (an international confidence scare).

The takeaways are probably something like:

  • A stronger pound than you might have expected.
  • Similarly stronger (low-yielding) UK government bonds.
  • Cash in savings accounts continuing to deliver negative real returns.
  • Mortgage rates stay low and house prices don’t crash.
  • Self-constrained against outright tax rises, we can probably expect a capital gains tax hike and lower reliefs from pension contributions.
  • I expect (and welcome) a minimum wage hike, given the rhetoric. (Of course previous governments did this without needing Brexit to do it.)
  • UK markets may be largely held back by weaker growth at home and a strong currency making our exports less attractive or profitable abroad.

The usual caveats apply. This is just my best guess, for what it’s worth. It’s definitely subject to revision with new data.

Things may go better than expected. For example, the removal of furlough hasn’t yet done the damage some predicted.

I do hope we get a few more breaks. We’re overdue them.

Have a great weekend!

From Monevator

The Slow & Steady Passive Portfolio Q3: 2021 – Monevator

From the archive-ator: How it feels to be mortgage-free – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

OECD agrees minimum 15% corporation tax rate – BBC

‘Race for space’ fuels fastest house price rises since 2007: Halifax – ES

Gove looks at cutting insurance costs to tackle cladding crisis – Guardian

What we might see in the Autumn Budget later this month – Which

Yachts to yogurt: the government’s VC portfolio [Search result]FT

In need of modernisation? The UK’s housing crisis close-up – BBC

Anyone seen cryptocurrency Tether’s missing billions? [Podcast]Bloomberg [Tether’s response]

…Matt Levine’s follow-on includes a great banking explainer – Bloomberg

Declining US birth rates in the US are due to more than the 07/08 crisis – AEI

Products and services

Which travel insurer offers the best Covid cover? – Which

Yorkshire BS launches super-cheap 0.78% tracker mortgage – ThisIsMoney

Open a SIPP with II and pay no SIPP admin fee for six months [Offer]Interactive Investor

The economics of a DIY heat pump installation – Mr Money Mustache

Housebuilders’ ‘Deposit Unlock’ scheme aims to step-in when Help To Buy ends – ThisIsMoney

Mortgage price war reaches buy-to-let landlords [Search result]FT

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade

Energy firm Bulb under fire for up to 80% monthly bill hikes – Guardian

Reviewing contact-less card options ahead of limit lift to £100 – ThisIsMoney

Homes for watching wildlife, in pictures – Guardian

Fractionalizaton mini-special

The fractionalization of everything – Vox

Art investing platform Masterworks becomes a unicorn – Yahoo Finance

“I collect cashflows”Josh Brown

Comment and opinion

Returns, values, and outcomes [PDF; Research, but very readable]S&P

Pluto is a planet – The Belle Curve

Are we craving risk or losing reward? – Of Dollars and Data

Four ways to keep more of your funds’ returns – Morningstar

Cash will stay trash – Investing Caffeine

Cullen Roche: myths that never die – Pragmatic Capitalism

Larry Swedroe: hedging against inflation – The Evidence-based Investor

Celebrity crypto shilling is a moral disaster – Slate

Momentous – Indeedably

Pensions versus ISAs for limited company directors – Foxy Monkey

Chat with Abnormal Returns’ Tadas Viskanta [Podcast]Abnormal Returns

Naughty corner: Active antics

China is cheap, for good reason – CNBC

What is your investing edge? – Behavioural Investment

Valuation, not stories, determines investment returns [Search result]FT

How does the quality factor work? [Nerdy]Verdad

Base rate are a challenge when forecasting growth – Intrinsic Investing

Fund manager David Einhorn on ‘nihilistic’ crypto traders – Business Insider

A rare interview with UK investor Christopher Mills [Video]YouTube

Burnout mini-special

Be challenged, not overwhelmed – More To That

Give yourself permission to dial back – Harvard Business Review

Covid corner

Under pressure from Delta, New Zealand drops zero-case strategy – Reuters

What drove the US media’s extra-negative Covid coverage? – Freakonomics

Kindle book bargains

Quit like a Millionaire by Kirsty Shen and Bryce Leung – £0.99 on Kindle

The Snowball: Warren Buffett and the Business of Life by Alice Schroeder – £3.89 on Kindle

Creativity Inc. by Ed Catmull – £1.99 on Kindle

My Garden World by Monty Don – £0.99 on Kindle

Environmental factors

Can nuclear fusion put the brakes on climate change? – The New Yorker

Four steps to add sustainable investing to your portfolio – Morningstar

Hedge funds cash-in as green-minded dump energy firms [Search result]FT

We throw out too many clothes. Poor countries are left with the waste – Vox

Can we move forests in time to save them? – Mother Jones

Off our beat

How to not become an old bore in retirement [Search result]FT

Dangerous feelings – Morgan Housel

“Put on the diamonds”Harpers

Why science can’t settle political disputes – MIT Press

And finally…

“The fact that a thesis is flawed does not mean that we should not invest in it as long as other people believe in it and there is a large group of people left to be convinced. .”
– George Soros, The Alchemy of Finance

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{ 39 comments… add one }
  • 1 NewInvestor October 9, 2021, 12:58 pm

    Right, so it’s the Clash this week. Death or Glory.

  • 2 The Investor October 9, 2021, 1:09 pm

    @all — Afternoon! 🙂 Just a note to say if you’d like to make counterfactual points based on evidence and ideally with links, then please do add to the discussion as there’s always another side.

    However if you want to be abusive or tell me I can’t write what is on my mind on my own blog, be aware I’m really not in the mood. I’ve not slept much this week due to That Cold and by my standards I’m tired and emotional, so I’m liable just to delete what I unilaterally deem to be not constructive comments. Save your fingers. Thanks!

    (p.s. If you’d like to abuse me AND make useful counter comments, I’d suggest you put them in separate posts as the latter won’t save you from the former. Really, there’s plenty of other blogs out there. You don’t have to change this one to suit you 🙂 )

    (p.p.s. Update, a bit later… I don’t mean I’ve got Covid! I mean this ‘super cold’ that’s everywhere: https://www.bbc.co.uk/news/newsbeat-58624295)

    @NewInvestor — Quick off the mark this week! 😉

  • 3 xxd09 October 9, 2021, 1:09 pm

    The great reset is getting under way-Covid,Brexit,vast amounts of debt etc etc
    Might not be very nice!
    Tin hats!
    Investors must hold their nerve-be globally diversified in equities and bonds -have enough bonds so as not to panic when things get rough
    Good luck everybody!

  • 4 Atlantic Span October 9, 2021, 2:19 pm

    Hi Investor,
    I hope your ‘Cold’ gets better soon. Even to produce an article under the influence of your ‘Cold’ is heroic.
    Take it easy.
    Atlantic Span

  • 5 Pinkney October 9, 2021, 2:40 pm

    Excellent article which aligns with my thoughts. Things could get very bumpy over the next year or so its a case of keeping cool and not selling. The key to me is interest rates there is no way with this pile of debt (gov,corp,personal) the gov would choose to increase rates . So it looks like we will have higher than recent inflation along with the gov choosing who can be squeezed next. The choice of who to tax is getting more difficult and if rates go up it will be very very interesting. Lots of strikes and unrest could tip things.

  • 6 BeardyBillionaireBloke October 9, 2021, 2:41 pm
  • 7 The Investor October 9, 2021, 2:42 pm

    @AS — Yikes, I didn’t mean to imply it wasn’t a cold. 🙂 Just meant the one everyone has been getting recently:


  • 8 ermine October 9, 2021, 2:47 pm


    > If anything requires low skills it’s digging a hole,

    You’d be surprised! I’ve dug holes for gateposts and for fencing, and tree planting. There’s a lot more in it that you think, although I will give you that holes for tree planting are the easiest of the lot. On one farm workparty we had a young fellow who looked fit enough but perhaps of the more cerebral persuasion. It was positively painful to watch him wielding a post hammer like a timid pussycat. I had thirty years on him and soft hands from sitting behind a desk for most of those thirty years. But I had the edge because I put my weight into it. And digging a deep enough gatepost hole without it collapsing in on itself or needing far too much backfilling is really hard.

  • 9 The Investor October 9, 2021, 2:54 pm

    @ermine – A little known fact about me is I’ve planted a fair few trees. I’ll grant it’s not easy if they’re big (they wouldn’t be here, they’d be the little ones in tubes) but I stand by low skilled. At most one technique to master. Name something lower skilled. I’ll wait! 😉

    I like your lump hammer technique. The most painful thing with hammers and picks is when you see people laboriously raising them to their chests then forcing them down with a puff.

    Swing and drop people, swing and drop!

    Beyond that I’ll bow to hole experts… 😉

  • 10 JimJim October 9, 2021, 3:37 pm

    @TI + Ermine
    For a painful viewing experience of sledge hammer work, I can recommend the opening scene in “Oh brother whereart thou”.
    If Hollywood can afford voice coaches, please let them employ skills coaches when it comes to tool use.

  • 11 ZXSpectrum48k October 9, 2021, 4:01 pm

    @TI. MSW’s commentary about govt debt is moronic most of the time. The World Bank and IMF have seriously rowed back from their initial ideas that large government debt caused a GDP drag in the last few years. More recent papers by both entities have demonstrated the issue is far more complex. For example: their early approaches totally ignored the duration of the debt profile! Once the debt profile is included, the numbers change drastically.

    A good reference is the more recent IMF paper by Barrett (https://www.imf.org/en/Publications/WP/Issues/2018/04/11/Interest-Growth-Differentials-and-Debt-Limits-in-Advanced-Economies-45794). Once the UK’s long-duration debt profile is incorporated, the effective ceiling for the debt/growth tradeoff rises to a debt/GDP ratio of above 140%.

    Also can we stop with the pretense that UK debt/GDP is 107%. About £875bn of UK debt is held by the BoE. One you deduct that, govt debt/GDP is more like 70%. It’s not a problem. It’s private sector debt, foreign currency govt debt, and most of all, rolling over short dated debt that causes crises.

    Having 30-year Gilts at 1.50% with inflation running at twice that is not on the UK’s top ten list of problems. Sunak only cares because the Tories grassroots supporters are economically illiterate idiots. But he knows if he panders to them he gets his shot at leader when BoJo gets stabbed in the back.

  • 12 Ben October 9, 2021, 4:13 pm

    Hey @TI, could you leave some abuse in? Just for the lols.

    Also MSW says we should be buying value cause inflation but swedrow says profitability underperformed in inflationary periods. You really won me over with your do-nothing argument btw.

  • 13 The Investor October 9, 2021, 4:14 pm

    @ZXSpectrum48K — Yes, while I’m not qualified or sure what to make of the World Bank/IMF’s back and forth (and from memory, the academic who first did the work, forget his name, where there was an error in the spreadsheet IIRC) as I say I believe we probably can and should borrow to invest in infrastructure right now, and ideally on a massive scale.

    But I do try to bring a few voices in from other angles, both as good practice and to try to see the other side of the argument. Initially I labelled MSW a ‘Brexiteer’ to surface this but it seemed petty so I deleted it.

    Given much the grassroots of the Labour party is undoubtedly economically illiterate too, we could do with a bit more deference to experts on this subject, as with much else. But that horse has long ago bolted, as has much else I’d want to undo in this country over the past five years. :-\

  • 14 Mr Optimistic October 9, 2021, 5:10 pm

    I have been waiting for inflation and a bond market crash since about 2013. When it happens I’ll aim to be the first here to say I told you so. Thinking about things that I know I know nothing about has caused its fair share of problems.
    What if the BoE just opens the spreadsheet and zeros the government debt it holds ?

  • 15 Conor October 9, 2021, 5:16 pm

    “There was of course no evidence that immigration made more than a tiny difference to the employment prospects of Britons. That was a fiction, ”

    Might have been to you given where you lived and the field you worked in but for the hundreds of thousands of lorry drivers like myself who were experiencing it first hand it sure as hell wasn’t fiction for us. EU migration affected us so badly with wage compression and worsening employment terms like the death of overtime after 8hrs a day/40hrs a week, the death of time anf a half on a Saturday, double time on Sunday, double or triple time on bank holidays that the highest hourly rate I’ve ever been paid driving a lorry was August bank holiday in 2003 where I got £21/hr. This is despite the fact that in 2020-21 working at a FTSE250 company with a basic hourly rate more than twice that in 2003 of £16.17 which is quite high for the job, 15 years of erosion of employment terms means that overtime for Saturday, Sunday and Bank Holidays is only paid at time and a fifth. They’re able to do that thanks to the hundreds of thousands of Eastern Europeans who came here who didn’t give a shit about getting paid an overtime rate because the basic rate was several times what they’d been earning back home.

    Boris Johnson is absolutely right to point the finger at businesses for the low wages. It’s amazing how they’ve all of a sudden miraculously found the ability to pull 20,30,40% wage rises out of their arse after spending the last decade advertising roles at NMW or barely above.

    And don’t forget those low wages they were paying affect you directly because as a tax payer you’re funding tax credits and universal credit the low paid workers get, effectively paying through your taxation for subsidising these businesses wage bill.

  • 16 Tyro October 9, 2021, 5:21 pm

    TI, I just want to say thanks for not allowing the abusive and aggressively stupid posts to get through. It must be very wearing for you to have to read them, but I really appreciate not having to wade through endless micro-frictions to find the interesting and useful comments.

  • 17 The Investor October 9, 2021, 5:33 pm

    @Conor — Of course there could and probably were individual sectors — and even more individual people — impacted by immigration. But study after study showed either no or (in a handful of cases) only a very small impact at the bottom decile alone, for reasons well-rehearsed on this blog and elsewhere.

    Let’s say immigration did restrict the salaries of lorry drivers by 30-40% because it was one of the sectors impacted? If studies show no widespread impact on wages, and we get lots of other economic benefits from immigration — let alone from being in the EU — then should we have stayed in the EU for the benefit of lorry drivers and any other small groups impacted? Or should we have a sensible system of retraining et cetera and accept that some people are prepared to drive lorries more cheaply, and benefit from that *and* EU membership.

    I don’t expect you to agree but that’s the counter argument. I’ve changed careers/sectors twice, and I don’t say it’s easy. It’s doubtless much harder if you’re skilled rather than a general knowledge worker, at least at the lower levels of knowledge worker which you can pretty much plug-in anywhere.

    With that said, when I started doing freelance in my 20s the mid-1990s I’d get about £100 for a morning’s work. The going rate by the mid-2000s was about £50 for the same work (so I upskilled/moved on). It’s probably lower still now. What caused this was globalization and the Internet, basically. Brexit won’t turn that off.

    I do agree with you there are issues with tax credits and supporting a low wage culture that way, though I’m not sure where the balance lies. And as I’ve said many times I’d support (and voted for) higher minimum wages and general redistribution, for what it’s worth.

    Anyone voting for a right-wing Tory project expecting that sort of thing is pretty hopeful IMHO. The best we’re going to get (economically) from Brexit is the Singapore-lite model, and I doubt the current crop (BJ, Gove) could ever usher that through. (Maybe Sunak in 5-10 years.)

  • 18 Lee Briggs October 9, 2021, 5:48 pm

    Agree with your comments TI.

    Connor- Yes, you make a strong argument from the lorry driving perspective and and certain other industries who have had negative experiences of EU migration.

    However, the UK is an ageing society with many jobs completed by migrants i.e. care work, hospitality, farm and food industries etc. The reduction in the workforce will have a
    greater ramification for both society and the economy then we all realise.

    Not enough staff to care for the old and vulnerable. Food unpicked and meat imported instead of being exported or made available for the UK public. The tax take is also reduced as the workforce is reduced.

    We have to be mature when we have the ‘Brexit’ discussion and look
    at the whole picture. The negatives of Brexit (as above) need to be addressed without the usual finger pointing. Politicians always use the ‘blame the Foreigner card’ when times get tough- strangely they employ them as cleaners, gardeners, au pairs etc without thought of what they say in public.

  • 19 Zero Gravitas October 9, 2021, 6:49 pm

    Re EU migration and wages the link that @TI provided is instructive if you dig a bit deeper:

    “The MAC (2018) estimated that an increase in the number of EU migrants corresponding to 1% of the UK-born working-age population resulted in a 0.8% decrease in UK-born wages at the 5th and 10th percentiles (i.e. people in the bottom 5-10% of earners), and a 0.6% increase at the 90th percentile (i.e. high earners). In practice, this means that between 1993 and 2017, the total effect of EU migration on the wages of UK-born workers was estimated to be a 4.9% reduction in wages for those at the 10th earnings percentile, a 1.6% reduction at the 25th percentile, a 1.6% increase at the 50th percentile, and a 4.4% increase at the 90th percentile. ”

    So, I think it is fair to say that the way that many people voted in the Brexit referendum was probably in line with their class interests as they had experienced them for some years (clearly there were economic impacts due to membership beyond migration too).

    As it happens I was (alone amongst humanity it sometimes felt) a bit agnostic about Brexit, either way. In the end I was a pretty soft remainer come referendum day – and interestingly I was probably at the ~60th of 70th percentile in 2016.

  • 20 Neverland October 9, 2021, 9:18 pm

    “Democracy is the theory that the common people know what they want and deserve to get it good and hard.” H.L. Mencken, 1949

  • 21 LadsDad October 9, 2021, 9:21 pm

    A brilliant book to add to the Kindle bargains:

    The Almanack of Naval Ravikant: A Guide to Wealth and Happiness – is just £1.49 on Kindle right now

    For those that don’t know, Naval has “walked the talk” in business talks at length around business, wealth and philosophy.

    Get well soon TI

  • 22 Rui Ventura October 10, 2021, 12:52 pm

    Interesting article but before anyone gets too carried away about the U.K. problems being confined to just one country, they should try living and working in Spain and Portugal as I do, work in one, live in the other.
    Inflation is rampant and rising across the board in both countries, possibly oil price related, plus, both countries have supply chain problems with many items, presumably related but I’m only guessing, to the worldwide chip shortage.
    I ordered a refrigerator and clothes dryer from one of the large chains only to be told both items were on back order with a possibility of delivery in one month, a story that was repeated at other outlets I tried on both sides of the border.

  • 23 MattofCov October 10, 2021, 5:37 pm

    @The Investor – I feel your pain. I’ve had this cold (not Covid – I got tested) for over a week and it shows no sign of shifting. The only time I was more ill was when I had norovirus about 10 or 11 years ago and that went away quicker than this.
    Whether you blame Brexit or domestic industry leaders for the shortages of lorry drivers, farm workers etc. I seems to me that what was lacking was any sort of foresight or advanced planning before we pulled up the drawbridge. Of course, given who our PM is that is perhaps not a big surprise.

  • 24 Jim McG October 10, 2021, 7:29 pm

    Check your sense of smell after you recover from your cold! Seriously, my wife and I both came down with “a cold” in late summer which, after we recovered, left us both with no sense of smell. Of course, everyone says “You had Covid then”, but we’ve had several PCR and lateral flow tests (my wife has also had the antibody blood test twice) and we’ve been negative. Spookily, we both came down with the cold not long after our second injections, not that I want to fuel any anti-vax controversy….

  • 25 Fatbritabroad October 10, 2021, 7:35 pm

    @mattofcov not to be too negative but it’s taken me 4 weeks and 2 courses of antibiotics (mine turned into an ear and chest infection) to get rid of said lurgy

  • 26 Seeking Fire October 10, 2021, 7:55 pm

    At least we aren’t in Lebanon………feel very sorry for those people at the moment.

    Think these articles are pretty relevant actually. Not necessarily to your overall investing strategy, which should largely be a mixture of equities and bonds but to make you think around what might or might not happen going forward.

    Not that much of this is predictable e.g. I don’t recall many people forecasting energy shortages six months ago. So plan on the basis you cannot predict the future. Not sure at the moment things are particularly tricky in the UK but the general population doesn’t seem very resilient.

    What to do

    – very comfortable holding a decent portion of physical gold and $TIPS given the low equities correlation and imperfect hedge against tail risks
    – global equities to hedge out country specific risk acknowledging in a crisis everything tends to go to one.
    – financial leverage is a useful hedge against financial repression and money printing, which seems very likely to continue given an absence of any other serious ideas
    – Long property given that’s the main economic policy ad-infinitum of this country
    – recognition tax is going to go up and look to do everything to mitigate that further

    I wonder who the UK GBP will look to blame g/f when they continue to fall behind other countries relatively speaking. Probably the big faceless corporations or rich bankers….again, stoked by entities with their own agenda to avoid facing up to reality.

    The key issue being other people in other countries (predominately Asia) will work far harder than us for less reward.

    Going to be tougher for the next generation than the last relatively speaking not withstanding absolute standards of living should hopefully continue to rise through technology progress. I imagine the students of today will be pretty upset paying >50% tax (>£30k) when factoring in student loans with no hope in affording a property in the UK, many having been sold a useless degree, their global competition happy to work all day and night and granny looking down saying you don’t know lucky you are, in my generation……..

  • 27 Bb October 10, 2021, 9:09 pm

    @seeking fire
    Interesting post… have come to some similar conclusions… have been thinking about remortgaging and getting a BTL because of two of the points you make:

    – financial leverage is a useful hedge against financial repression and money printing, which seems very likely to continue given an absence of any other serious ideas
    – Long property given that’s the main economic policy ad-infinitum of this country

  • 28 The Investor October 10, 2021, 9:40 pm

    Thanks for the thoughts on the cold all.

    My debrief: I’m blessed with a pretty strong immune system, and I rarely get colds or have them stick around for long. Sure enough after two days of my nose running *continuously* (I mean carry a box of tissues or a loo roll around the flat with me continuously…) it abruptly stopped and I was left with a very manageable cough on Thursday morning. Job done I thought.

    However this innocuous cough was bizarrely persistently ‘gloopy’ at night; I couldn’t sleep 15 minutes without waking feeling my lungs were filling. Last night was the first night I got more than two hours unbroken sleep since Tuesday. I do feel I’m probably past the worst now though. Touch wood!

    As for Covid, my mum’s getting her third shot tomorrow. It’s all go, eh?

    Hope those suffering get well soon!

  • 29 The Investor October 10, 2021, 9:53 pm

    @Seeking Fire: — Good list. Don’t forget to add a “bug out” plan if things really go off the rails. (I’d still say only a small single digit % chance of that over the next 5-20 years, of course.)

    As I wrote in December 2019 (excuse the long self-quote!):

    A tinfoil hat bit to conclude: Have a ‘bug out’ plan

    The point for me is that you need a Plan B. I believe there’s a non-trivial chance you may want to get out of the UK in the next five to 20 years.

    Before I get screamed at – or this post referenced in ten years as ludicrous – I’m only talking perhaps a 5-10% chance as things stand. So it’s a small chance, but it might happen. That’s the way probability works.

    Probably we won’t spiral down into some hard-right / hard-left Dystopian nightmare. Perhaps having these modest populist convulsions today will see off deeper problems that other countries will need to face in the years to come? That was one argument made by some Leave voters, who felt we’d be more flexible outside of the EU.

    The point is this prospect of national calamity was effectively non-existent 20 years ago. The UK was one of the most politically stable countries on the planet.

    This is no longer the case.

    So get your F-off fund. In a worse-case scenario you may need to deploy it against more than just an unpleasant boss. Consider using some of that fund to explore and if needed secure the potential for a life in an alternative jurisdiction.

    I made sure my Plan B was solid in the weeks after the Referendum. I suggest you do, too.

    Think I’m being hysterical? As I said, I’d guess it’s only a 5-10% chance I’ll need it, gut feel.

    But it’s the sort of thing that if you need it, you really need it.

    While I don’t claim to be a fortune teller, I’ve long warned there’d be societal consequences from the financial crisis, such as in this post back in 2012.

    We are certainly not yet off that train. I’m not even sure we’ve left the station.

  • 30 cat793 October 11, 2021, 7:35 am

    The problem with bug out plans is that the country you bug out to is likely to have serious challenges of its own that you might not fully appreciate being too focused on the problems at home. It will be out of the frying pan into the fire if you are not careful. I have noticed that people tend to view foreign countries through rose tinted spectacles when concerned about their own country.
    I don’t think workers in developing countries are happy to work twice as hard for half as much as the British or other developed world workers. Most workers in Asia for example are much less productive than those in a country like the UK which explains their lower incomes. They are no happier to work excessive hours than anyone else either. If they do so it is driven by a lack of better options or levels of coercion by management that are no longer acceptable in the UK or the rest of the developed world.

  • 31 The Investor October 11, 2021, 10:27 am

    @cat793 — Absolutely good points, it’s certainly true the whole world is undergoing all kinds of upheavals. Yet another reason why Brexit was a futile self-harming act; it’s no solution to the real issues facing developed economies, in fact it’s quite the opposite.

    What’s more, the new-fangled brand of cognitive dissonance (/lying) that drove the Brexit vote and is still motivating the current party in power is a feature of many other countries, too, most recently Trump in the US.

    Still, as my quote and my other comments stress, I don’t think there’s a high likelihood of ‘needing’ to get out of the UK. I’m still putting it at 5-10%, more as a rough quantum then anything exact.

    To be clear, bugging out wouldn’t be triggered by income tax going up by 3% or a few riots or even, say, Scotland’s rupture with the UK, ushering in permanent Tory rule for the rest of us (because I hope the remaining parties would adapt and moderate, and that rule wouldn’t prove permanent.)

    It’d probably be triggered by what I consider to be the rule of law breaking down here. “Enemies of the people” attacks against the courts being manifested in (soft) constitutional changes etc. We’ve already inched down this path thanks to Johnson et al, but so far mostly in rhetoric.

    The choice of the Bug Out destination is important. Ideally it’s somewhere that doesn’t preclude you coming back, obviously. In most cases it’d be somewhere the bugger-outer has connections to already I’d imagine.

    I definitely wouldn’t suggest just picking Belize off a map, say, then burning your blue/black-ish UK passport on the beach.

  • 32 Andrew October 11, 2021, 10:54 am

    Interesting set of articles as always. Get well soon. But mostly I wanted to comment MAXIMUM INTERNET KUDOS for the article title. Genius!

  • 33 Al Cam October 11, 2021, 10:57 am

    In his 2013 work on shallow risk vs deep risk Bill Bernstein came up with the following four types of deep risk: inflation, deflation, confiscation, and devastation. He also conceded that there is not much you can do to protect against confiscation and/or devastation risks ‘beyond [having] an interstellar spacecraft’. On a more practical level he did suggest owning a few gold coins and giving a bit more consideration to foreign property. See e.g. https://www.amazon.co.uk/Deep-Risk-History-Portfolio-Investing/dp/0988780313

  • 34 ZXSpectrum48k October 11, 2021, 11:35 am

    @SeekingFire “The key issue being other people in other countries (predominately Asia) will work far harder than us for less reward. ”

    It’s not just that they work for less. Consumption is also lower. Hence most Asian countries have significant current account surpluses.

    This is where the UK public remain utterly deluded. They think their standard of living should improve when our balance of payments is explicit: our standard of living is already too high. Until we can generate a sustained primary surplus, we are (at best) in managed decline.

  • 35 The Investor October 11, 2021, 12:21 pm

    @Andrew — Thanks, I wondered if anyone had noticed! 😉

  • 36 Dean October 11, 2021, 2:27 pm

    “The UK will do worse economically indefinitely because we left the EU – something you might legitimately feel that was worth it for other reasons.”
    Philip Hammond said something similar. This is it in a nutshell. Those other reasons depending on what beliefs motivated 2016 voters. Leaving aside immigration, some leavers believed/believe long term in an economic case for Brexit ie after global trade deals, UK prosperity will be higher. My recollection is the UK government’ own economic estimates were not even all the target trade deals combined would offset the economic harm of GB leaving the SM and CU. And the most important trade deals were with the US and China. Neither is happening any time soon.
    This is your blog and writing about Brexit is your prerogative. It’s regrettable when you get negative posts for expressing hardly controversial statements. People should be able to express themselves objectively and with respect. We all know Brexit remains a divisive topic but ignore it we cannot and it’s directly relevant to the UK’s economic prospects and therefore investing.

  • 37 Seeking Fire October 12, 2021, 11:19 am

    @30 Cat793 – Agreed with your comments, which are not really contradictory to mine or others

    The 95% probability of not pulling the ejection cord includes that in all likelihood where you are thinking about going may not be in a better position.

    I also agree and this is a sweeping generalisation of ridiculous proportions that those in shall we say ‘developing’ countries (a very western phrase of looking down on people) want to be in our position of work life balance. My contention though is western workers particularly in the UK believe their standard of living is equivalent to what they produce economically, which is quite frankly laughable given that for decades the UK continues to sell off the family silver to pay for our largess. At some point the party will end and the hangover will have to be dealt with. The US is having a bigger party but they are lucky – they actually produce the champagne in the form of having a reserve currency.

    The relevance being from an investing perspective to diversify I guess.

  • 38 The AI persona of John Keats October 13, 2021, 9:13 pm

    I just wanted to say that was one of the best weekly columns I’ve seen on the site and some great discussion in the comments. Cheers everyone.

  • 39 Boltt October 14, 2021, 10:34 am


    Thanks for the book suggestion (Almanack of Naval Ravikant) very good/easy reading especially the first half. My favourite one liner was “with equities you are buying the upside and with debt (inc pref shares) you are buying the downside”

    Obvious, but I like pithy statements.

    @A1Cam – Thanks for yours too


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