Snouts in the Trough

We seem to get an almost unending stream of articles in the press about house prices. Some ‘experts’ claim we’re in a house-price bubble and are heading for a crash. Others maintain housing is affordable pretty much everywhere apart from London and some parts of the South East.

So, who is right? The ‘bubble brigade’ or the ‘keep calm and don’t panic’ lot.

Actually, both are right in their own way because they use quite different measures of affordability.

The ‘bubble brigade’ usually use the ratio of house prices to earnings (click to see more clearly)

This shows that prices are at around 5 times earnings (the blue line on the graph and the left-hand scale) and so are about 25% above their long-term average of 4 times earnings (the dotted straight blue line). Conclusion – we’re in a house price bubble and prices will fall.

The ‘keep calm and don’t panic lot’ judge affordability by the amount people are having to pay for their mortgage (the red line and the right-hand scale of the graph). This measures the percentage of the average disposable income that a mortgage on a home costing the average amount would represent; for example, a mortgage taken out today on the “average house” would represent 28.4% of average disposable income – well below the long-term average (the dotted straight red line) of about 37% of average disposable income. Conclusion – housing is still affordable.

Of course, on this measure housing only seems affordable because the Government is holding down interest rates to avoid itself going bankrupt as our national debt rockets up from £700bn in 2010 to over £1.4trn by the time of the 2015 general election. But if interest rates were to rise, even slightly, borrowers – both the Government and those who have over-extended themselves to buy houses above their price level – could find themselves being crushed by the burden of rising interest payments.

Moreover with the maniacally deficit-denying, mouth-frothing, economically-illiterate, financially-incontinent Ed Balls heading for Number 11, there is a serious risk of a financial crash that will make the 2008 episode seem like a teddy bears’ picnic. Moreover, if Gordon-Brown-Clone Balls decides to whack up taxes on buy-to-let parasites or impose draconian rent controls, there might be such a flood of buy-to-let properties being sold that you may be able to BOGOF.

The only thing that can save us from the horrific prospect of McCluskey’s and Serwotka’s two glove puppets – the two Eds – grabbing power in May 2015 is for Dodgy Dave Cameron to lay down his pride for his country and do a deal with UKIP. But, of course, Dodgy is too arrogant and pompous to do that.

As for buying a home at the moment – I’d be more than cautious.

It’s the weekend, so I’ll keep it short. For years, so-called experts have been wittering on about the need for a “Two State” solution to the Israeli Palestinian conflict. The “Two State” solution, of course, envisages two countries – Israel and Palestine – living in peace beside each other with agreed borders.

But what these experts fail to see is that Hamas is only interested in a “One State” solution – the complete destruction of Israel and the murder of every single person living in Israel as is so eloquently explained by the ever-articulate Pat Condell https://www.youtube.com/watch?v=GOgV6Fvc8wc

Israel is struggling in the current fighting and is definitely losing the propaganda war – especially when British newsreaders like the (in my humble opinion and this is just my opinion) ‘frothing anti-Semite’ John Snow fulminate against Israel to millions of their viewers.

The only problem is, Mr Snow and others of your ilk, do really think there will be peace if Israel is over-run and turned from a successful First-World country into yet another corrupt, rotten, faeces-strewn, impoverished Third-World hell-hole? If so, you really are stupid.

Once they’ve got and destroyed Israel, the followers of the Religion of Peace will turn on us. What will you say then, Mr Snow (with your fancy ties and socks showing, I suppose, that you are ‘unconventional’, a ‘ground-breaker’ an ‘independent voice’ etc etc) and others like you?

Oh, of course, you’ll all have retired by then and will be living extremely comfortably and safely in your large country houses on your massive pensions while the rest of us fear for our lives as your friends from Hamas and the IS and other linked organisations turn their rage on us.

Here are some happy, smiling and very rich men (click to see more clearly)

You probably don’t know who they are. But I do. I worked with a few of them when I was helping sell second-hand consultancy projects and often dud computer systems for the huge 140,000-employee IT firm Capgemini.

But why should you care? Because these men and their colleagues have been pocketing an awful lot of your money, that’s why. Capgemini have been hugely successful in persuading British civil servants to give them many billions of pounds of our money for work which was not always (how shall I put this politely?) totally brilliant.

Capgemini won the jackpot when they were given responsibility to run the (as usual) wonderfully named ‘Aspire’ project for our utterly incompetent HMRC. The Aspire deal was costed at £4.1bn in 2004, but it is predicted that the figure will have more than doubled to £10.4bn by the time the contract runs out in 2017.

In a highly critical report, the National Audit Office (NAO) also disclosed that Capgemini, the contractor, and Fujitsu, its subcontractor, have already reaped profits of at least £1.2bn on the deal, or more than double the £500m forecast.

The NAO revealed that the original contract gave HMRC some of the profits from the scheme. But this right was given away when the deal was ‘renegotiated’ in 2012. Profits received have only been worth £16m instead of £71m.

“It is deeply depressing that once again a government contract has proved better value for the private companies involved than for the taxpayer, with Capgemini and Fujitsu pocketing an incredible £1.2bn in combined profits — more than twice the profit HMRC expected,” said Mrs Hodge, chairperson of the Public Accounts Committee.

“HMRC is planning to replace the Aspire contract in 2017, but its new project is half-baked, with no business case and no idea of the skills or resources needed to make it work. All this gives me little confidence that HMRC’s senior team has the capability to manage large and complex contracts.”

Why this depresses me is that in 2006 I wrote a book PLUNDERING THE PUBLIC SECTOR in which I explained why public-sector IT projects are almost always complete disasters, what needed to be done to make them successful and why the NHS IT system project (which was just starting up then) would be a complete and utter fiasco.

At the time, I was invited to give a presentation to the heads of IT systems in the main government departments. But the attendees were a bunch of arrogant, self-important and frighteningly incompetent buffoons who took the attitude ‘we know what we’re doing and there’s nothing you can teach us’. I believe that if I and a couple of people I know (who are experts in IT project contracts) had been allowed to work with the Civil Service, we could have saved UK taxpayers several billion pounds. But, of course, everything I proposed to the idiots who buy IT projects from consultants was rejected.

The result has been more than obvious – a string of catastrophically badly-managed, hugely expensive calamities. The Department for Work and Pensions has written off part of its computer program for universal credit, the NHS scrapped its new system after over £5bn had been wasted, the Home Office scrapped a £347m immigration IT project last August, a National Offender Management project was dumped after perhaps £250m had gone up in smoke and on and on and on – a few hundred million here and another few hundred million there.

I know the people from Capgemini. They are unbelievably smart and have an almost unbelievable appetite for ever more of our money. The idea of utterly useless overpaid, over-pensioned British civil servants supposedly ‘negotiating’ with Capgemini executives is just laughable. Feeding congenitally stupid chickens to hungry, slavering wolves is an image that springs to my mind.

So, if you or anyone in your organisation ever comes across Capgemini, my advice would be ‘hold on to your wallet’ as your encounter with Capgemini is likely to leave Capgemini an awful lot richer and you an awful lot poorer.

Oxfam must be hoping to have raked in a few quid yesterday and today. Yesterday evening, Channel 4 showed an episode of Undercover Boss featuring some (IMHO) rather clueless dope who turned out to be Oxfam’s  CEO (£108,775 a year plus £35,000 expenses). This allowed Oxfam to use the ad breaks to broadcast an appeal for Sudan.

In Oxfam’s appeal, we were told that “conflict” was causing all sorts of ghastly humanitarian problems in the Sudan and so huge quantities of our money were needed. But who or what is this “conflict”? Could it possibly be that stupidity, religious backwardness, tribalism and overpopulation are leading to a situation where greedy, corrupt multimillionaire leaders are wrecking their own countries by exploiting the competition for resources? Could it be that the more money we give, the worse the overpopulation, strain on resources and conflicts will be? Could it be that organisations like Oxfam never mention the real causes of these conflicts as political correctness makes them terrified of being accused of racism and/or Isl*moph*bia? Could it be that what’s really needed is an emergency programme of birth control?

In the TV programme, Oxfam’s reasonably well-paid CEO blethered on about making the best use of all the money donated to Oxfam. And Oxfam claims that around 74.3% (£286.5m) of its total income of £385.5m was used for what the Charity Commission calls “charitable expenditure”.

I’m no accountant, but I’ve had a quick look at Oxfam’s accounts and I came to a rather different conclusion:

Oxfam seems to have 3 main sources of funds – shops, public donations and government grants.

Its shops raise £89.9m, but cost £67.6m to run, leaving just £22.3m for charity. So just £25 out of every £100 spent in Oxfam shops actually goes into Oxfam’s coffers. The other £75 is used just for running the shops. Not great, considering the people working in the shops are mostly volunteers, what they sell is donated and Oxfam don’t pay any business rates. Perhaps there are a few too many overpaid, over-pensioned managers? Who knows?

Oxfam raises about £295.6m in donations with a cost for raising this money of £23m (7.8%). That looks pretty good. But £159.8m of these donations come from government, large institutions and public authorities giving Oxfam enormous piles of our money while cutting public services in Britain because we can’t afford them. So, actually only £135.8m is raised from us directly at a cost of £23m (17%). Not great, but not disastrous either.

Now we know that of the £385.5m raised by Oxfam, £90.6m (shops – £67.6m plus fundraising – £23m) of this is spent getting the money in. That leaves about £294.9m to be spent.

Then we have to knock off about £31.9m for support and governance costs, leaving £263m – 68% of the £385.5m raised – available for charity work.

Now comes a bit of guessing. Oxfam’s staff costs are £59.5m in the UK and £42.3m overseas – total £101.8m. If we’re generous and assume that only a third of these staff are in administrative and managerial functions and that two thirds are doing real charitable work, then the administration and managerial staff costs would be £33.9m. This would leave around £229.1m for charitable work (59.4% of the £385.5m raised).

Of the £229.1m available for charitable work, about 40% (£90.6m) isn’t spent directly by Oxfam, but is handed out in grants to other charities. As they will certainly have managerial and administrative costs of 20% or more, that’s another £18.1m not available for real charity. That leaves us with £211m – 54.7% of the £385.5m raised by Oxfam (click on chart to see more clearly)

By my reckoning, about 50% or less of the money given to Oxfam is actually used for real charitable work. That’s pathetic. And it’s not anywhere near Oxfam’s claim of using 74.3% for charitable purposes.

Then there’s one other not so small problem – most experts and UN special studies suggest that around 80% of aid given to Third World countries disappears due to corruption and incompetence.

All in all, you’re probably wasting your money if you give it to Oxfam and you’re probably wasting your time if you’re one of the 22,000 volunteers who help out at Oxfam. If you want to give to charity or help charity, why not choose a small local charity or hospice where you can see what your money is being used for? But as for huge, bloated, bureaucratic, self-serving Oxfam – waste of time, waste of money?

Israel has not been making too many friends over the last few days. And this weekend, the usual helpful fools were out demonstrating in support of the Palestinians and against ‘Israeli brutality’. The demonstrators didn’t seem worried about the fact that new Islamic State (IS) has slaughtered hundreds of innocents in cold blood by shooting, beheading and crucifixion. Nor did the Lefties seem concerned by the fact that the last few hundred Christians in the IS have been given an ultimatum – ‘convert to Isl*m or else be put to the sword’.

Nope, it seems like the only ‘bad guys’ in the area are the Israelis.

In fact, it’s almost a miracle that Israel has survived for so long. Israel’s population is about 8 million – 6 million Jews and 2 million others (mostly Arabs) and Israel’s land area is a tiny 20,770km2. Compare that to Iran – population 76 million and land area 1,600,000km2. Or Egypt – population 81 million and land area 1,000,000km2. In fact, Israel is surrounded by hostile countries with a population of over 371 million and a land area of about 7,000,000km2.

And, of course, most of these 371 million people loathe tiny Israel. They loathe Israel because it is a liberal democracy and not heading rapidly back to the Dark Ages. They loathe Israel because it is an economic success, not an incompetently-led corrupt cess-pit of poverty, filth and ignorance. They loathe Israel because Israel represents the kind of future they could have had were they not so educationally, socially, morally and religiously backward. They loathe Israel because it is a tiny beacon of hope in a huge area of self-inflicted misery

But can Israel really continue to exist? Once Baroness Ashton and her successor have allowed the Iranians to get nuclear weapons, will that be the end of Israel?

This would be celebrated with jubilation by the anti-semites at the BBC, the Guardian and all their idiotic fellow travellers.

Yet if Israel were destroyed and the Lefties suddenly found that Arab fury and hatred of and violence against the West continued or even increased, who could the Lefties blame then? It couldn’t be the Israelis. After all, they’d be gone and Israel would have been reduced to a poverty-stricken, corrupt, stinking hell-hole like most Arab countries.

This could be a real problem for the Lefties. Without Israel, they’d lose their excuse for supporting people who would like to kill us all and obliterate a thousand years of progress and enlightenment.