Cameron Tells Us to Get On Our Bikes, The World Doesn’t Owe Us a Living

Actually he didn’t, any more than Norman Tebbit did all those years ago, but I couldn’t let the truth stand in the way of a good title. It’s pretty much what he meant, anyway. And I like it. He’s put his finger on it

“I think too many people in this country are living under the delusion that a prosperous past guarantees a prosperous future. But it isn’t written anywhere that this country deserves a place at the top table.

It was once said that freedom once won is not won for ever; it’s like an insurance premium – each generation must renew it. Economic prosperity is the same. Just because we’ve had it before doesn’t mean we’ll automatically get it again.”

He’s nailed it. In Britain at the moment too many of us have the viewpoint that somebody else needs to come along and sort out our problems. All of ‘em.

And therein lies the rub. There are some pieces of misfortune that afflict people that we should collectively help out with – illness, accident, specific misfortunes. But if we just can’t be bothered to shift ourselves, well sod it. Why should other people help out with our lifestyle choices?

I want to retire 8 years early. I am not asking anybody else to pay for me to do that – essentially I have to both reduce costs and save up to be able to bridge the 8 year gap until my main retirement savings come on stream. Or make money some other way by selling skills. Nobody else is asked to pay for my lifestyle, and nor should they. If I’m so damn precious that I want to stop working then it is up to me to sort myself out so I can do that.

So this article in the Grauniad from a guy earning 43k whingeing about the budget “Am I really a Fat Cat” really hacked me off. The short answer is “yes you bloody well are, mate”

Said individual earns £42k, has two kids 8 and 10, his wife hardly works, receives £1000 in State child benefits,  and he’s struggling if he  loses £545 of child tax credits and pays more in VAT. Struggling, that is, to have TWO holidays a year. I haven’t had one holiday last year. Not because I can’t afford it, but because I want to do something else with the money! Holidays are a luxury, not a right, FFS.

The last priceless whinge was

“Has the government committed an own goal to match Gordon Brown’s 10p tax rate blunder? Only time will tell. The budget was certainly tough, but was it fair? Not from where I’m standing.

One thing I do know, though, is that there will be a lot of very unhappy parents, many of who have already seen their pay frozen, when they realise that they are ones that have suffered by far the most in this budget. Thanks, George.”

Suck it up mate. As pasty-faced Dave said, the world doesn’t owe you a living. The child-free have taken a soaking during Labour’s tenure, and it’s payback time. Twice in my life I have asked myself the child question, and both times I came to the conclusion that I didn’t earn enough to be able to support any putative progeny and maintain a lifestyle that met my needs and wants at the time. So guess what? I didn’t have them! I never factored in child tax credit this or whatever, it was could we manage to raise a child on one salary? If the answer was no, the course of action was obvious.

There are many people that raise two kids on less than £42000. They just have a lower material quality of life. The fact that people keep doing this presumably means that weighed in the round, the joy of having your own kids outweighs the hit it takes on your material wealth. Which is great. As a child-free individual, I don’t even mind subbing schools and all that – in the end this is all to the good and makes our society better. I’d like to see a sponsorship process paid from taxation, for poor bright kids to be able to go to uni without being crippled by debt, to invest in future Britain.

But what I do mind is subbing the individual lifestyle choices of people like Miles Brignall, who has to “ask if a family income of £42,000 really puts you in the ranks of the well-off”

The answer’s yes, mate. It does. If you want to lower costs, get a better quality of life and see your kids more, take a 25k job nearer to home to cut commuting costs and get your wife to work, since the kids are school age. Bingo, no Higher Rate Tax or £3k season tickets to King’s Cross.

The reason London prices are inflated is that there are a lot of rich people there. If you want to swim in the same pool as them and have your salary in the upper 10%, then you have to take the decor too, and some of that is higher-rate tax and expensive commuting.

Pasty-faced Dave hit the nail on the head. It’s time more of us in the UK took responsibility for our lifestyle choices, because the world doesn’t owe us a living.

The Career Arc – Progressing Through A Middle Class Career

In the movie Grease, there is one of those High School graduations that the Americans do so well, when on the last day of school there’s one big party, the sun is blazing down and everybody thinks the world is their oyster.

As the last roll-call ever is read out on prom day, the principal posits that somewhere there is a future Eisenhower, the next JF Kennedy etc, and the camera zooms in on the kids going all starry eyed as they picture themselves as POTUS.

Well, that’s a movie, so real kids may have different dreams, but I bet few of them will have

flushing their life away in 40-hour increments in exchange for enough money to keep a roof over their head, put food on the table, and buy the occasional electronic gadget to distract them from how miserable their lives are.

as part of their dreams. Hat tip to Philip Brewer for the quote :) Inspired, in a depressing “abandon all hope, ye who enter here” way.

You also never get the view from the other end of the telescope. So I thought I’d look at how it worked out for me, now that I am on the glide path towards the end of my working life.

I was a geek at school. Science was what interested me, how stuff worked, and how it could be made better. Those were more innocent days, when we believed that science would help us to make a better world, “Limits To Growth” had not taken hold, we were scared of global cooling but not very much. Oh and we made things in Britain – the financial sector was not so huge a part of the economy as it is now.

So I did sciences at A level; in those days that was chemistry, physics and maths, not “general science”. I then did Physics at uni, and emerged, wide-eyed and innocent into the world of work in 1981. That was a world in which Margaret Thatcher was having her first recession, which destroyed jobs, particularly for young ‘uns, so I filled in the UB40 form for six months.

Ignoring that nasty little matter, what I had seen of the world so far was a reasonable expectation of getting a middle class job in a research facility in industry,  with a salary that rose quickly from the graduate scale, and then slower. When I started work people stayed much longer with a company, and there was less roiling change of areas of expertise. They tended to get into an area and then pick up experience and deepen their expertise along the way, which was associated with better pay and seniority. My expectation of a career salary was something like this

My expectations of salary over a career

This wasn’t totally arbitrary, by the way. It was observation, by looking at the starting salary offered a young pup like me, and looking at the salary of a greybeard about to retire. The ratio was around 3:1 and the graduate scale usually rose a bit faster for the first few years. In those days white collar jobs usually had a retirement age of 60.

So what happened? It was difficult to analyse because I don’t have exact figures for my salary every year, so I have interpolated some years.  The figures are rebased to 2010 pounds using inflation info from here, and the gross values corrected for 2010 tax and NI to derive the graph. The total is then normalised to my net income from my first job = 1. So there’s a fair number of fudges; I’ve ignored bonuses, I’ve ignored employer’s pension contribution, ISA income. Taxation of income has varied slightly over the 30 years too, but not hugely compared to the uncertainty of the data.

In my expectations I didn’t allow for running into the headwinds of progressive taxation, and my recollection is that fewer people paid higher rate tax 20 years ago anyway. So my actual salary is under-represented and my expectations are slightly too optimistic at the tail end of my career.

What actually happened (green), compared to expectations (red)

The complicated stuff at the end of actuals is because I intend to live on less than my pension in the 8 years leading up to drawing it, these are assets I have in ISA cash and linkers. I don’t need to work as I don’t have a religious fear that the Devil will come and get me if I don’t work.

I changed job three times in the first eight years of working and took a year out to do an MSc to fix my less-than-stellar BSc. My first job was a junior test engineer job, with what I remember as a fairly paltry salary. I was chastened to enter it into the inflation rebaser to find it was quite considerably more than the current national minimum wage in 2010 terms.

I then worked for the BBC for three years and saved enough to pay my living costs for the MSc, though hat tip to the Manpower Services Commission who gave me a grant for that. I was more savvy then and had a BBC job in London lined up after the course, and then gave this up after a year to come to work in Suffolk when I realised I would never be able to buy a house in London. And here I have been for over 20 years.

Work is an important part of life, and it’s worth putting the effort into getting it right, particularly when you are young and you need to get set on the right path. Hence all the chopping and changing early on.

In retrospect I made one crucial error when my current company asked me what I had got at the BBC. I should have said it was in the ballpark of what it was inflated 10% – enough to be credible, and it would have put me onto a higher grade.  I was naive and said what it was more or less exactly :(

Your greatest chances of salary advancement are at points of change. It’s why even if staying within a company those that want to get on have to change jobs frequently. I haven’t done this, and you see the result on my career track as a shifting of the progression towards later years. I snuck in to the progression and seniority path just as the portcullis was coming down. That route isn’t really possible now in most private sector jobs. True, I did have a few good projects, but nowadays in-post promotions are virtually impossible. The  whole working environment has been degraded by increased short-termism, outsourcing and fads like the current daft ‘performance management‘ rubbish.

Having done all the chopping and changing to at least get where I was, doing what I wanted to be doing, I figured it was time to kick back a bit and develop non-work areas of life. I languished for nearly 10 years on the lower grade. I had a good time; the work was interesting and I got lots of foreign travel on the company at the right time in my life, when I was single so being away a lot didn’t cause me any problems.

The second recession instigated by Margaret Thatcher queered the pitch for me there. At least that was eventually the cause of her downfall, defenestrated by her own party who were scared that a second dose of austerity would get them slaughtered in the polls.  Companies don’t promote people very much in a recession because they don’t have to. They know it’s harder to find jobs, and indeed mine was downsizing then anyway. Hence the flatline before the first uptick, 17 years in to my working career, though at least I had an annual increment so I was getting slowly ahead of inflation.

The good times rolled after that with a couple more promotions in the boom that ended in 2007, and we all know what did for that, hence the flatlining again during this bruising recession.

So how did I do, what would I say to that starry-eyed younger self? Financially, I did better than I had expected, I’m now above the anticipated high-water mark about 10 years early. For most of the time I had the right amount of fun, and I didn’t get into any debt other than a mortgage. I was going to try and factor in the mortgage to my career arc but I don’t have good enough data for that. Errors are cumulative and Excel indicates I can’t have paid it off yet. Well, Excel, you’re just plain wrong, pal. I even managed to get away with writing off a whole years gross salary twice due to various life events, one of which was being a dipstick and buying a house in 1989 at the top of the market.

So my younger self did well, I’d buy him a beer or two. I got the idea for this post from Early Retirement Extreme’s What You Need To Know About The Different Kinds of PF Blogs and the graphical presentation. Since I would probably fall into the Career Track classification, I might as well pinch Jacob’s graphical idea and picture my career track :) His graph showed something subtly different, of course.

On ERE’s  scales, I had been following the late retirement track via my company pension scheme. I am too old for extreme early retirement, and marginal to swing his Early Retirement between 40 & 50.

Several things are interesting, and sobering, about looking back over my earnings this way.

I have been working for just short of 30 years. I have improved my nett income by about three times in real terms compared to my first job. The numeric value of my salary is over 10 times that first pay cheque. I can quite reasonably expect to see another 30 years, so I have a visceral understanding of inflation. Rust never sleeps, and inflation is busy eating away at paper assets.

If I were 30 years younger, my prospects would probably be much poorer. I would never have gone to university with the current system of loans. With 33% of people going to university instead of <10% when I started, the only way of covering the costs is to charge the students. I would not have taken that chance, since my parents weren’t white-collar workers, and the idea of starting out in hock would have scared the hell out of me.

I am not so sure that Tony Blair’s idea of sending 50% of 18-year olds to university was so great, as it also meant trashing the support system,  devaluing the entry level BSc degree in the eyes of employers, and trapping young people in debt slavery right from the start.

UK Budget June 2010 ruminations, thoughts and rants

Gideon’s just announced his budget, and I’ve reflected upon it. This one was dreaded by lots of people, and having digested it, I am surprised. Although I am a higher tax payer, I can avoid that part of it quite easily, by continuing to save AVCs to my pension, such that I get a tax-free lump sum from that. Having paid off my mortgage and living simply, I don’t need anywhere near half my salary, but I do need early retirement. Match made in heaven. So while Gideon thinks I am on the right hand side of this chart,

June 2010 budget impact estimate

What George Osborne, a.k.a. Gideon, thinks he'll get out of us

I can swing myself to slot 4-5 without breaking a sweat, and indeed without changing anything. So thanks, buddy, for the extra £1k personal allowance, much appreciated!

Note that the higher tax threshold is being brought down by £1500 when the personal allowance rises next year, so people who are currently just below it need to think about how to use salary sacrifice or other wheezes from April if they don’t want to suck it up. I’ve never liked working nearly half for the Government, I think that’s downright rude, and have used all the HMRC approved scams to dodge that. I’m writing this on a laptop purchased under the now deceased Home Computing Initiative, taken extra holiday paid with salary sacrifice, and bought employee shares tax-free.

Of course, to take advantage of these you have to live below your means… If you can’t do that on an income that is in the top 10% of UK incomes and there isn’t an unusual essential cost in your life then you really ought to take a long hard look at your personal finances. Don’t be suckered by the hype in the Torygraph and the right-wing press – under no reasonable definition of the term can higher-rate taxpayers be defined as middle class by income.

One subtle stiffing that I may take from the budget is outlined in this document, is that the government is well aware of my sort, those at the end of their careers. We tend to have a large disposable income due to paid off mortgages, and often empty nests. We have a healthy interest in getting the taxman’s sweaty mitts off it, pumping money into our pensions with the hope of getting 25% of our total pension pot out tax-free in a few years, which obviously beats 42% tax & NI. The headline is that there would be a lowered annual limit for pension contributions of 30-45k which could be an issue for me at the lower end.

Simple living means I won’t be hit too hard by the 2.5% VAT hike. I won’t be buying items of male jewellery like an iPad, though I will get hit on fuel, insurance tax and the like. I will ask Quicken to tell me how much I spent on stuff last year, and take 2.5% to see if it is more than £6800, which would be the breakeven point for the tax break. I don’t think it was that much last year. Benefit cuts? I don’t get no stinkin’ benefits, so no worries on that score. Half of nowt is still nothing!

However, seeing how little this affects me makes me absolutely furious. Not with Gideon, but with Gordon Brown! Why? Because of this:

Public spending relative to income

Public spending relative to income

Observe the fact that we were running a loss ever since 2002, even while  the economy was steaming ahead in the years running up to 2007. What’s was he on? Just as I am saving now, when I am in the peak of my earning power, for leaner times in future when I will be earning less, so should a Government be putting money aside in booms, so that it has some to counter recessions with. At least it shouldn’t be ramping up the national debt!

Not only that, let’s hear which are the constituencies of the disadvantaged. Oh dear, child tax credits dropped for households > 40k?  FFS, why was I subsidising my colleagues’ children?

Housing benefit for people with a four bedroomed house? I’ve never lived in a four bedroomed house, why am I paying tax so others can? (that’s 1.102 of this)

and restricting Housing Benefit for working age claimants in the social rented sector who are occupying a larger property than their household size warrants.

Now I know that it is in the ConDem’s interest to stitch Labour’s record up as much as possible, so not all may be as it seems. And Gideon’s instincts in the teeth of the credit crunch scare me. Here is not a guy who can hold his head in a crisis, like Alistair Darling was.

If Gideon were the pilot of an airliner that loses all four engines in a bird strike, there’s no Chesley Sullenberger calm in the face of adversity. Osborne’s first instinct was to shove the stick forward and enter a nosedive. But now he has the benefit of a little bit of time to assimilate things, and it appears he has the cojones to carry it through.

So if these moves really can make as much saving as he claims, then Britain was carrying an awful lot of passengers.

One area where I feel Osborne failed dismally is in not tackling or even acknowledging the spectre of youth unemployment. According to the Daily Mail, 1 in 10 18 year olds are neither in work nor in employment. The problem, fundamentally, is that there are too many people in the world, and too many of those are prepared to work for less than the UK minimum wage. This means work that can be relocated will be – to outside the UK. This unfortunately also includes a lot of white collar knowledge work too, which is often eminently relocatable using the Internet.

Colin Wilson, The Outsider

Colin Wilson, The Outsider

I grew up in a world were many things were made in the UK – things like TVs and cars used to be made here. They were unreliable as hell, some of this was the technology of the time, some of it was due to poor industrial practices from management and unions alike. But there was unskilled work. Read something like Colin Wilson’s The Outsider which is set in the 1950s and his description of the ease at which jobs could be got and turned over sounds amazing to me and would be positively alien to an 18-year old today. Many of these “NEETS” aren’t unemployed because they are feckless, they are unemployed because capitalism has failed to create useful roles for them in society in a globalised economy.

Somewhere we need to make a call – do we concentrate our resources on the people with greatest potential, or do we seek equality that we can’t afford. Tony Blair’s idea of sending 50% of 18 year olds to university sounded great, until we realise that to do so means we have to cripple them with debt at the worst point, right at the outset of their careers.

We need to find an answer to this, I don’t know if it is in Osborne’s power, but we need to have started yesterday, because unemployment early in one’s career hampers those early stages where much of the direction and confidence is gained. Conversely, the blight of youth unemployment leads to stories like this, as people with delicate and growing self-images at the beginning of their adult careers get shattered by the tragedy of rejections because of too many people chasing too few places.

I don’t know the answers, but this will be a shocking waste of human potential and a source of misery for more than the next five years if it is ignored.

What’s up with this Calvinist Work Is Good For You Thing?

There seems to be a lot of Protestant work ethic out there in the PF blogosphere. We have Frugal Zeitgeist wondering Does a Minimalist Lifestyle Breed Laziness while Financial Samurai is concerned about The Dark Side of Early Retirement and observing Being Overly Content Can Be Detrimental To Your Career.

What’s up with that? We seem to definitely be in the ‘no pain no gain‘ zone. Work is there to pay the rent, not there to give meaning to life. Saying it is necessary and good for the soul seems downright Calvinist to me.

When I started work, true, it did give me some meaning, because it was a continuation of the arc that I had been preparing for, as I accepted society’s view of what a good lifestyle would look like. That path runs along these lines

  1. get born
  2. go to school
  3. go to university
  4. get job
  5. get married
  6. have kids
  7. retire
  8. die

All very 1950s, and I wasn’t even born then, but this expectation ran on through the 1970s.

At the same time, however, I was working and living life, and there was the process of what Carl Jung termed individuation going on in me. According to Jung, it is

the process by which individual beings are formed and differentiated [from other human beings]; in particular, it is the development of the psychological individual as a being distinct from the general, collective psychology.

Psychological Types, Coll. Works V6

Max Weber's seminal book on the work ethic and capitalism

Work is good for the soul is probably the force that drives Western capitalism according to Max Weber’s The Protestant Ethic and the Spirit of Capitalism. I’d go along with him in that the notion that work is good for you is part of western collective psychology, indeed I had to get to middle age before I found it possible to conceive that this was not a natural part of the way life is. That takes some doing, for instance this lady waited till retirement itself to challenge it, she has seen the light now :)

Compare my failure to challenge the status quo with Weber’s agricultural labourers on page 59:

since the interest of the employer in a speeding- up of harvesting increases with the increase of the results and the intensity of the work, the attempt has again and again been made, by increasing the piece-rates of the workmen, thereby giving them an opportunity to earn what is for them a very high wage, to interest them in increasing their own efficiency. But a peculiar difficulty has been met with surprising frequency: raising the piece-rates has often had the result that not more but less has been accomplished in the same time, because the worker reacted to the increase not by increasing but by decreasing the amount of his work.

Compared with those guys I have 150 years of educational advances, two college degrees, the hindsight of the Enlightenment. They spotted something I didn’t – enough is enough, the aim of life is to have a good time and probably a few beers with their mates. They could recognise what enough looked like, where I had to see more than four decades before I could even recognise the concept.

Of course, I’m selling the Protestant work ethic short. It was part of putting men on the moon, it drove people to cure smallpox and all sorts of good stuff that the West has achieved. It’s problem is it knows no bounds, so it also gives us the BP oil spill, climate change, bad advertising, junk food. It adds energy, but little critical direction, apart from the search for more.

It may even be possible that work is good for some people at some times, but it isn’t necessarily good for everybody, all the time. Yes, we should not become freeloaders on society, to that extent we should do enough work to pay our way. Cutting costs and retiring early doesn’t mean living on benefits for me, unless they are ones everybody in Britain enjoys like using the NHS. I’ve paid my taxes and my NI stamps for more than 30 years.

Early in my career I did get meaning from work, because I had not begun the process of individuation and establishing what my own values were.  As I got older, I realised that I was a debt slave, but in a velvet lined rut. I needed to work to be able to pay the mortgage.

Once I jumped to this, I realised that I didn’t like having other people having such control over my life, and looked at how to pay down this debt. I worked that out without PF blogs and suchlike, because there was no Internet at the time I started. It’s not that hard to work out that you have to spend less than you earn, and it was pretty obvious that if you don’t want other people controlling your life then don’t owe them any money :)

Even after paying down the mortgage I didn’t jump to the slavery part, until my declining but erstwhile good employer began to bring in nutty demeaning performance management BS, at the same time as the project I was working on was cancelled. The manager I worked for tried to use this to squeeze me out after having said he’d back me to retrain earlier on, before the credit crunch. It was at this point that I realised working for someone else, particularly in an office, is bad for you. D’oh…. So along the same lines as ‘if thy mortgage offends thee, pay the damned thing down or don’t take it out in the first place’, I realised that my office job was beginning to offend me.

Enter the PF blogosphere. I had failed to think independently and PF blogs made me realise that with grit and determination you can save enough to retire early, particularly if you spin off alternative income sources. I can only do the preparatory work  and learning with alternative income while I am still working as I’m bloody well not going to pay 42% tax on any alternative income streams, sod that for a game of tin soldiers.

I managed to get one final, and pretty high-profile project in an unusual area for which I happen to have the right skills, which is due to complete in 2012.  I have screwed down my outgoings to less than what I would retire on, and save well over half my earnings to the end of retiring early.

So I don’t get the Calvinist angle one bit. Work is not good for you per se. If you’re the sort that needs work to give you meaning, as I was to stage 4 of the list above, then yes, it is good for you. One you have individuated, you can make your own decisions. Work may be good for you, it may not. I’m with Max Weber, when he says

the care for external goods should only lie on the shoulders of the ‘saint like a light cloak, which can be thrown aside at any moment.’ But fate decreed that the cloak should become an iron cage.

Work isn’t good for me. What’s wrong with enough? Meaning in life can also come from who you are and who you relate to, not just what you do and what you own. To paraphrase the words of a song

I don’t need no stinkin’ iron cage…

Calvinist work ethic be damned. Freedom for self-determination is my birthright, and I’m going to claim it in the second half of life and continue the Jungian path to individuation. Know thyself…

A ropey copy of The Protestant Ethic and the Spirit of Capitalism can be read free on archive.org. Go for the PDF, the text version is rough as guts

Page 2 of the Foreword lends credence to my viewpoint that for modern Westerners this work ethic is an atavistic echo of a religious nature. Like any element of the psyche that is part of an unconscious archetype, challenging the concept that work is an inherent good is met with fierce resistance and rejection. We had it right as part of the 1970s ideal of greater leisure, but urged onwards by those who could not brook the repudiation of such an archetype, we are unable to say enough is enough. We are still paralysed by monetary systems that require a long-term increase in GDP, despite the consequent environmental despoliation that is becoming increasingly clear.

The central idea to which Weber appeals in confirmation of his theory is expressed in the characteristic phrase “a calling.” For Luther, as for most mediaeval theologians, it had normally meant the state of life in which the individual had been set by Heaven, and against which it was impious to rebel. To the Calvinist, Weber argues, the calling is not a condition in which the individual is born, but a strenuous and exacting enterprise to be chosen by himself, and to be pursued with a sense of religious responsibility. Baptized in the bracing, if icy, waters of Calvinist theology, the life of business, once regarded as perilous to the soul

summe periculosa est emptionis et venditionis negotiatio

acquires a new sanctity. Labour is not merely an economic means : it is a spiritual end. Covetousness, if a danger to the soul, is a less formidable menace than sloth.

It’s Midsummer, June 21st, the Oak King is at his Zenith

It’s the longest day and the shortest night today. Something I’ve noticed from busting lots of consumerist junk from life is that I become more aware of the changing wheel of the year. Now is the time when the Oak King has vanquished the Holly King and reigns supreme, but in his ascendance lie the seeds of his own decline, just as for the Holly King the darkest time comes before the dawn.

A lovely day, blue sky and fluffy clouds and just the right temperature for the bike ride to work. My cycle journey wends through the outskirts of the town, runs by the side of farmland and onto heathland before returning to the town. All around birdlife is in full song, from the sparrows making out on the rooftops to the lovely sound of the blackbirds duelling it out across the streets. I took time to appreciate the birds that sang to grace my ride:

  1. blackbird
  2. house sparrow
  3. chiffchaff
  4. wren
  5. wood pigeon
  6. goldfinch
  7. magpie
  8. greenfinch
  9. chaffinch
  10. starling

I missed the yellowhammer that is on the farmland, he’s quiet today. It is a good midsummer, too good a day to be spent in the office but good nevertheless.

Midsummer Poppies

Oak Tree with Midsummer Poppies

Blackbird in Hyde Park and a great view of the Serpentine

Had a bit of work to do in Park Lane and some time to kill before the meeting, so I crossed into Hyde Park. It’s been sharpened up somewhat since I last spent some time there, and the edge of the congestion charge has made the traffic on Hyde Park corner truly stupendous. As a student I’d cycle round that occasionally, despite it being basically a six-lane roundabout. I’m not hard enough to even think about it now.


It’s amazing how quickly the racket falls away with distance, and by an old tree this blackbird was making himself heard above the roar of the city. It was a good breath of the natural world; London is blessed with many parks for its size, spread across the city.

One of the benefits of the assignment was that the view across Hyde Park from the survey location was pretty good!

View over the Serpentine from Hyde Park corner

the bearish argument ALWAYS sounds smarter

Hat-tip to Monevator for the phrase. He’s right, dammit, particularly in a time when Mr Market is feeling down, but perhaps more generally. The bearish argument always has more drama to it, since it inherently assumes a change to the status quo. There’s no news buzz in ‘sun rises today’, no excitement to draw the attention.

There are a lot of things that I could name, that indicate that the world is going to hell in a handcart.

  • Peak Oil
  • population increase
  • the increasing risk-aversity in the West
  • the baby-boomers retiring and stiffing the stock market for the next 20 years by selling out of it
  • inflation fallout from the credit crunch of 2007

The problem is that at any time in history one could find a litany of things that were going to end the world. In the 1960s and 1970s it was nuclear armageddon, starvation, global cooling (!), oil running out.

Some part of me still sees an incoming crapstorm, as the West surrenders its economic and intellectual fire to the East, and it is hard to insure against that sort of thing. Turning paper investments into real stuff is the only way to hedge that, and in the extreme you end up hoarding tins of lentils and lots of ammo. I’m old enough to come to the conclusion that’s not a life I want to live.

I’m older than Monevator. I remember watching the moon landings on the black and white TV at primary school, and being enthralled. There were no limits to growth, then. My optimism survived the 1970s, and my college years, but something went badly wrong in the 1980s. Ever since watching Survivors on TV in the late 1970s I’ve had a penchant for the apocalyptic vision.

Jenny from the 1970s Survivors series, played by Lucy Fleming

At that time I also had a penchant for Jenny :) So I tend to be drawn to posts like Early Retirement Extereme’s The Wealthy Shall Inherit The Earth.

I’m on the general same wavelength, though I hadn’t thought it out anywhere nearly as well as Jacob. Peak oil will roll back the advance of globalisation by increasing the costs of transportation, and will probably define the high-water mark of living standards as measured by stuff.

Britain isn’t in too bad a position as far as Jacob’s prognosis – largely above 50 degrees North, with ample water, reasonable amounts of coal and fertile soils. But it does probably have too large a population.

Peak oilers and folk like Jacob are well outside the mainstream, but their ideas seem to be spreading. Insurance group AXA are taking a pretty dim view of future life in Southern Europe and in particualr the PIGS economies. EC head honcho Jose Barroso is anticipating dictatatorships in Club Med, purely from the financial fallout, rather than rising oil prices etc.

We seem to be in a phony war with the recession, and losing ground as time goes on.

And yet…what if Monevator is right? More recently, the UK has looked better relative to other European countries. Some part of that is the promise of an end to the profligacy of Gordon Brown, though overall I’m glad he and Alistair Darling handled the crisis itself, rather than the as yet untested Osborne. I’m not sure I would go as far as to say Britain is booming again, but I sure hope it is. How do I get exposure to the upside of that?

Well, to some extent I do already. My AVCs are invested in L&G Global 50:50 FTSE and it’s the best investment I’ve made so far, which is just as well as it has most of my cash in it :) It makes sense to do it in my pension savings, which I don’t plan to access for up to ten years. If Jacob’s vision comes to pass, then pension savings have no real meaning anyway, for the debased currency will hold no value. It will be destroyed by successive waves of inflation in booms and busts as the oil price see-saws, choking off each recovery as it gets off the ground when the increased demand for oil meets the implacable limitation of declining production.

My post-tax savings in ISA and cash I am using to buy productive assets and investing in establishing a business that I can use to generate an income after finishing office work at The Firm. That way I am riding the bulls with long-term pre-tax savings while trying to hedge the bears with more immediate post-tax savings. I hope the bulls will pull ahead, and that my attempts to hedge the bears will turn out to be misallocated resources

Wake Up Call – Is Fear Standing In My Way

There’s a guy in the office whose worked for The Firm for 39 years, he’s been with it man and boy. Let’s call him X, he’s 59 now, working as a project manager, on a project which is basically doomed. The suppliers were screwed down so much on price that they lied about the functionality of the products, and as a result it has no chance of being launched on time. They’ll be lucky if it does anything at all even when it is launched.

X highlighted this, and as a result he’s been shifted to the bench. Don’t be the bringer of bad news, people don’t like it. Last week he wasn’t at work, and we found out why this week. He came in looking a shadow of his former self, apparently having suffered a TIA. Wikipedia doesn’t pull any punches – under treatment there is the stark phrase

TIA can be considered as the last warning.

Last year X discovered he had late diabetes, and generally the toll of working is showing on him. We’ve been getting onto him about it’s time he listened to his doctor and indeed his body, and simply pulled his ticket and left. He’s entitled to within a whisker of full pension, so money isn’t an issue.

The tragedy is, that his whole world-view is associated with going to work. He has interests outside, but he has no vision, no mental model of what his life would mean if he didn’t go to work.

He is holding, ready for the final approach, but has no map, no concept of where he is going to land. And so he fears leaving work, though he doesn’t need the money.

I thought of X as I read McKenna’s book. He needs to take a look at where he is, where he is going, and why the hell he is still working when warning sings are flashing Wrong Way, No Entry, Do Not Carry On. He doesn’t need the money, but something that beggars belief is that he is hung up on it. Yes, his pension is about half his salary. But he’s got no mortgage, he isn’t raising kids, what’s he need all that for. One thing is sure. He’s not taking it with him if the warning signals continue to get louder and one day they stop all of a sudden.

I thought of another guy who I used to work with, in his 50s. He hadn’t progressed as far as he would like, and could be bitter about it. He lived to go hiking with his wife, and was saving massively in AVCs and the like so he could leave early. He was physically very fit – you don’t get to do all that hiking without developing muscles like steel.

He never got there – in his mid 50s the clockwork stopped, and he died of a heart attack.

I would say mental health at The Firm is below average, partly because as an engineering facility it is male-dominated, and partly because its age profile is skewed towards the middle-aged. It can’t hold young-uns because it doesn’t attract many of them in the first place, and it is deskilling so they see a lack of future potential. This isn’t a great problem for HR, as it probably needs to thin out the ranks a little bit more.

Dmitry Orlov - Reinventing Collapse

Looking at it I would say that as people get over 50 they become vulnerable to the stress manifesting as physical ailments. Dmitry Orlov, in his book about the collapse of the Soviet Union said that the 45-60 age group was particularly sensitive to the stress of the loss of meaning and what they had worked for. They would look at what they expected and what they now had, and the fire within their minds would surrender and they’d top themselves.

That’s not unknown at work, though it’s always hushed up – I only heard about it through a guy that worked for me that was in the volunteer first aid service. I’ve never looked at a particular cracked paving slab in the same way after hearing how it got that way.

I thought of X when I read Early Retirement – Is Fear Standing In Your Way. Everything about him is trying to flag him down, his body is telling him that he is running out of road. And yet like a rabbit in headlights, because he cannot see a meaningful life without work, he is frozen in fear despite all the warning lights flashing red. What part of

TIA can be considered as the last warning.

does he not understand…

So often we stay with the tried and tested, either because we lack inspiration to do otherwise, or we fear the unknown. It is sometimes good to be reminded that it doesn’t have to be this way, and the inspirational RetiredSyd did that for me today, introducing me to Early Retirement – Is Fear Standing In Your Way and to Early Retirement Extreme’s The Voluntarily Dispossessed. A reminder of what is wrong about the status quo is neatly summarised in Never Forget.

Sometimes it’s good to come up for air.

Getting on My Bike And Saving Fuel

It stands to reason that if I bike to work I get to save money on fuel, but it’s nice when Quicken backs me up on that :)

Quicken chart of spending on fuel over the last 15 months

I spent £600 on fuel over the last 18 months. Unfortunately I hired a car for work this March and I wasn’t smart enough to break out work fuel as a separate category though that was of course reimbursed. This year I spent about £130, minus about £20 for the work trip so I spent about £110 on petrol this year. At last year’s run rate that would have been about £250 so I’m getting reasonably ahead. It also nicely confirms my earlier estimate of about £300 a year as I’m up £140 in half a year. I’m not yet sure that biking is really the frugal thing to do given that I had to buy a new bike for about £270 to get a more upright position so I felt reasonably safe in traffic. That takes me to the break-even point by Christmas. When it comes to staying alive sometimes you have to flex the strictly frugal approach…

On an unrelated note, I absolutely love Quicken and treasure my old Quicken 98 CD. Intuit were absolute jerks when they tried to move it to a subscription model. What, Software As A Service? Do they take us for mugs, and don’t they know that one of the PF axioms is Control And Kill Your Drip Feed Outgoings. They were never going to sell that to their customer base.

I tried Microsoft Money when Intuit got out of the UK and hated it, and MS got out of that game too. There doesn’t seem to be a replacement with the backing of a big software company, nor does there seem to be an open source equivalent I know of. And I’m not trusting all that data entry to some fly-by-night small outfit with a proprietary format, so I just have to hope that future versions of Windows continue to run Quicken 98. It works well for me, but it is kind of disconcerting that if my CD and its copy get toasted my financial history gets lost :(

How Can We Have Forgotten How to Make a Decent Corkscrew?

Repairing things is part of frugal living, and far too much of what we buy is built only just good enough. Sometimes I wonder if the people who ‘design’ some products have ever used them.

My parents were into decent wine in the 1970s – this was unusual at the time as the British palate for wine was not noted for its discerning tastes. Revolting sickly-sweet whites like Blue Nun and Liebfraumilch were all to common in British homes. Somewhere along the line they purchased a fine corkscrew, and it served them well. I must have cadged this when I went to university, well, the sophisticated chap in London town has to have a decent corkscrew, natch, along with the other student paraphernalia like the frying pan and electric kettle.

My 1970s corkscrew

This has served me well for the ensuing three decades, but a couple of days ago it snapped – the stepped shaft failed in service, leaving the corkscrew part in a bottle of French Col de la Ser. Disaster – firstly no wine, and secondly, the loss of an trusty old friend. I extracted the corkscrew with a pair of mole grips and DGF and I got to our wine.

Some time ago, when stuck in a Scottish B&B on a rainy day we’d got ourselves a bottle of wine at Tesco along with a similar model of corkscrew. Frugality is served by having our wine in, but I don’t want to be caught short with a bottle of wine and no corkscrew – my days of cracking the neck off bottles had finished on graduation :)

I was rushed some £4 for the modern specimen, but the trouble is that it is a victim of style over substance. Consider the business ends of old and new, shown below

The 1970s corkscrew - this is a good 'un and works well

the 2000s corkscrew, this puppy just doesn't cut it

A moment’s inspection shows that the new one is pretty much a three-inch wood screw on steroids – the damn thing bores a hole into the cork, and the flutes on the side might just get enough purchase to hook out the cork. Or not, as happens all too often, when this puppy just acts as a large gimlet and comes out leaving a cork with a ragged hole in it. On the upside, it works a treat on plastic corks, but the less said about them the better.

Whereas the old-skool version has the flutes filed down so there isn’t a massive core boring a hole straight down through the cork, so the flutes gain maximum purchase. Although DGF had binned the parts on the principle that nobody fixes that sort of thing, I fished them out again.

The problem had been caused by fatigue in the stepped shaft which was made of some sort of sintered alloy which had bubbles or voids inside. It had given way at one of these voids, so I drilled a 2.5mm hole along the axis of the shaft and into the handle, tapped the hole at M3 and splinted the shaft pieces with a long M3 steel bolt all retained with some JB Weld. As long as 4 cm of M3 thread can hold, I’m back in business.

I’ve been on the lookout for a lever type corkscrew with the old design of corkscrew but all I come across is the new crappy design. That’s one of the downsides of globalisation I guess – there’s probably one Chinese factory making all the lever corkscrews in the world. And they’ve failed to road-test their product, or they have all plastic corks, or they don’t drink wine in China. There’s something satisfying about repairing this old friend – I hope it gives me another few decades of service :)