The spending database

No-one at the moment really understands it enough to come up with information other than possibly-interesting tidbits. At least the Guardian has broken it down so one can look at it in a spreadsheet - by month is small enough. In April 2009, for instance, total spending net of negative spending by about £57bn, in November (far less money in receipts) it was £81bn. The largest items are - as you might expect - state pensions, the NHS, social security and so on.

The big question surely is - does it pass Benford's Law? This is where the first digit of numbers, regardless of scale (so 10, 150, and 1120 are all "1"), follow a distribution in these proportions:

d p
1 30.1%
2 17.6%
3 12.5%
4 9.7%
5 7.9%
6 6.7%
7 5.8%
8 5.1%
9 4.6%

Anyway,the answer is yes, it does pass, so nothing to see here.

US debt

I'm not too sure about this Liam Halligan argument (my bolding).

The dollar fell particularly sharply last week, though, as traders were reminded of the patently obvious – that the White House actually wants the dollar to fall. US Treasury officials have lately taken to staring into the TV cameras, puffing out their chests, then stating: "We are committed to a strong dollar." That's nonsense, of course, because a weaker currency boosts US exports and lowers the value of America's external debt.

Surely if you're debt is denominated in foreign currencies a weaker local currency increases the value of your debt in your own currency, and if it is denominated in your own currency (as is the case with almost all of the US's foreign debt) it makes no difference? I think perhaps he is thinking of inflation. I suppose it decreases that value for (say) the Japanese in yen terms, so perhaps they will care less about getting it repaid? Or is there something I've missed?

British business sells £80m of goods to Spain

Ah, that explains why Sterling has been so strong today.

Economists and the financial system

I thought this article by Benjamin Friedman in the NYRB was worth reading. Early on the makes the point that the financial services sector is essentially a means to an end, which is allocation of capital to where it is needed. The great expansion of such sector in the 1990s and 2000s therefore can be seen - to some extent - as a cost, and its benefits weighed against that.

Car scrappage schemes

Are all the rage, but the British one is apparently not generous enough:

Julia Smith, who lives in Basingstoke in Hampshire, is one of those who initially thought the scheme would be useful, but has since decided against it. She was going to scrap her 13-year-old Volvo, and buy a new one instead. With the scrappage scheme discounts, a brand new Volvo would have cost her in the region of £21,000. But she then found exactly the same model with less than 10,000 miles on the clock for £17,000. A saving of £4,000 proved irresistible. "In practice this scheme is just not working," she says. "I think it just hasn't been thought through terribly well."

Er, that's a second-hand Volvo, not a new one. It's comparing apples and oranges.

It wasn't worth what you paid for it

Many countries seem to be realising that when they exchanged their shiny new manufactures for lovely US dollars (or in fact euros, pounds and so on), they got a bit swizzled, and the dollars weren't worth what they paid for them. Now they're a tad angry, and propose a new system.

Well hang on. The £6.99 I paid for a set of PC speakers from Mikomi (Taiwan) wasn't well spent either. Neither was the cycle helmet, £8.99, the set of knives, £0.99, the shredder, £Free. In fact I have a very long position in all manner of manufactured junk that seemed cheap, and turned out cheaper.

This works both ways. In fact perhaps the legacy of the last 20 years will turn out to be that economic growth was artificially boosted by the simple technique of pretending everything was worth more than it actually was - dollars, cheap tat, houses, equities, Mercedes Benzs, so on and so on. Perhaps Laban et al are right, if not quite for the right reasons.

Ok, you didn't like the Orwell piece

How about the Sen one?

How will you spend yours?

The Bank said it would expand the amount of money in the system by £75bn

That's £1,500 per adult, oh goody. I think I will spend mine on a nice holiday, or wine.

Right-wing economics

It's sometimes hard to keep up. In this post Tim Worstall is at his cryptic best, but as a seasoned Worstallite, I can decipher. When he says 'My word, you mean prices and incentives matter', he is implying that those on the left don't believe this.

As I note in the comments it is loopy, or idiotarian as Tim would say, to suggest that the left doesn't think higher gasoline prices, whether through the market price or higher taxes, curbs consumption.

One of his commenters (who I don't believe is the football commentator, although he is as excitable) seems even further down the line:

Johnathan Pearce // Feb 6, 2009 at 12:26 pm

Amazing, high prices produce an effect. Someone tell Polly, Richard Murphy and Paul Krugman.

Mmm, Paul Krugman doesn't believe that high gasoline prices have an effect.

Is there an addition for Firefox whereby with a simple keyboard shortcut a list of bogeynames is inserted for you that have very little to do with the topic but simply save time? Something like control-shift-B Paul Krugman Pol Pot Stalin Lembit Opik Arthur Scargill Richard Dawkins Boutrous Boutrous Ghali George Clooney Gordon Brown David Hare ... bloody hell it's stuck!

Devaluation

Oliver makes a few criticisms of this Telegraph article on the euro (Chris Dillow says some aren't important, link somewhere on the right), and I would add another, which seems to be ignored by many right-wing experts on the economy (and bloggers such as Tim Worstall), although used to be widely known, which is not everyone can devalue. The Telegraph says:

The one-size-fits-all inflexibility of the eurozone deprives single currency members of the vital weapons of devaluation

So Spain needs to save its economy by devaluing against Germany, and Germany, whose economy is hardly doing any better, needs to devalue against Spain. Meanwhile the UK and US need to devalue against both, and in turn they need to devalue against the UK and US.

It doesn't take a genius to work out this isn't going to be possibe. Perhaps they could all devalue against China? But China isn't big enough to mean that was a major devaluation for any of them, and in fact China isn't keen on that idea - it's exports are falling too.

In fact, of course, there is kind of one way in which everyone can devalue, and that is through higher inflation - devaluing the currency against the price of goods and services. And deep down perhaps this is what they want -- it's certainly a justifiable position, but not one that used to be made by Conservatives.

UK growth prospects

I find it rather strange that the press, in particularly the Tory press, hasn't made more the IMF's truly awful economic outlook for the UK updated yesterday. The Fund now predicts UK growth will slump to negative 1.3% in 2009, from its previous forecast of negative 0.1%. This is mainly, however, due to the collapse in 2008 growth, Q4 to Q4 GDP change in 2009 will be negative 0.5%, better than 2008's Q4 to Q4 change of 0.9%.

It might possibly be related to the collapse in George Osborne's popularity, at least measured in certain ways.

You'll get equal pay when you get off the beach

"Women shortchanged on pay" is common cry from groups like this, complaining the women's earnings are at a large discount to men's. Well it's not surprising is it when they spend so little time in the office? Article such as this, to be found in every tabloid newspaper today and tomorrow, are pretty damning evidence that groups of women tend to hang around beaches on work days. And it's the younger generation that seem particularly workshy. Note you don't seen any rapidly approaching middle-age men like myself in those pictures.

Holiday reading fact no.2

By the early 1960s, the private micro-farms that Kruschchev had sporadically encouraged in the Soviet Union and accounted for 3% of cultivated soil were yielding over 33% of the Soviet Union's agricultural output, and by 1965 2/3rd of the potatoes and 3/4 of the eggs.

Source: Same as below.

Northern Rock

George Osborne lays out the alternative options:

"Then we could have some kind of Bank of England reconstruction or we could have some private sale options which until yesterday we were told were available," the Tory shadow chancellor said.