Germany’s Chancellor Merkel is right to call Big Tech’s banning of Trump “problematic”, though Guido is not sure that it can be described accurately as a breach of the “fundamental right to free speech”. The Big Tech platforms are just withdrawing their services, which may seem like an academic distinction in terms of the outcome, it is however important to distinguish between a state enforcing a ban in law and a private enterprise choosing to not provide a service. Germany has strict laws which regulate free speech in ways that we don’t want to import.
Facebook and Twitter saw their share prices fall yesterday as investors worried that regulations were going to hit the firms in the wake of politicians around the globe realising that if it could happen to Trump, it could happen to them. France’s finance minister Bruno Le Maire said yesterday that “Digital regulation should not be done by the digital oligarchy itself . . . Regulation of the digital arena is a matter for the sovereign people, governments and the judiciary.” By which he really means politicians like him.
The de-platforming of Trump and the alternative Parler social network, after Amazon pulled the plug on it, reveals where real power lies. The solution is a return to the first principles of the internet. Resilience is surrendered by relying on the main social networks, which are advertiser funded and reliant on giving brands a safe space. Fortunately the architecture of the internet was designed to allow information to flow even if the network was damaged. New social networks that are self-hosted, distributed and decentralised will be developed, they exist already and could soon gain critical mass. Many have just experienced a surge in new users after the Trump ban.
Some of the decentralised services have millions of members, Mastadon‘s codebase allows you to build your own Twitter-like social network, you can either keep it private or open it out to the wider world. We will inevitably now see decentralised and politically polarised networks develop, possibly in the shadows, unregulated. Information wants to be free and the internet enables it. The Big Tech platforms have probably made the big mistake that Mark Zuckerberg has been determined to avoid from the beginning, it could see them go the way of AOL…
The Centre for Policy Studies has a paper out arguing for low deposit, fixed-rate, long-term mortgages. The “no deposit” aspect of the headline reports triggered a bit of concern among those of us old enough to remember that the 2008 global financial crisis was triggered by defaulting sub-prime mortgages in the US housing market. Prima facie it sounded insane to go down this path…
The CPS’s chief wonk, Robert Colvile, has put out a lengthy rebuttal this morning which he summarises as
“This policy is designed to make mortgages accessible to those who can afford mortgages but not deposits – or at least not the current sky-high deposits.”
Mortgages are usually for terms of 25 years to pay off the borrowing over the borrower’s working life. A hangover from when working lives were only 25 years or so. 25 year fixed-rate mortgages in an era of ultra low rates sound like a great idea, giving certainty to borrowers over the lifetime of the mortgage. Guido and the CPS are at one on this, they could be welcome innovation in the mortgage market.
There are a few snags, a quick Google search has not turned up any 25 year fixed-rate mortgages being offered by mainstream high street lenders, yet. What will it take to encourage them? Well judging by the 15 year fixed-rate mortgage offered by Virgin – fat profits. With base rates at 0.1%, Virgin want 3.0% for their 15 year fixed-rate mortgage.* What does this cost borrowers?
Over the term of their loan, assuming not unreasonably that lenders like Virgin would look to maintain a 200 basis point spread on their financing costs, the borrower of £250,000 would risk having to repay £125,000 more than a floating rate borrower, if rates were to remain static for the term. There is no such thing as a free lunch, the fixed rate certainty generally comes at a higher cost to borrowers. If you can’t raise a deposit, the total cost of borrowing inevitably will be higher, a lot higher.
The fat interest rate margin Virgin are demanding might be driven down by more competition, though wholesale lenders might in turn be wary of backing loans to institutions lending on thin margins to consumers who can’t raise a deposit. A property downturn, say because rates rise precisely as feared, might see borrowers in negative equity sending their keys back to lenders. Paradoxically making fixed rate mortgages with little deposit cushion much more risky for lenders.
Rates could rise quite dramatically over the next 25 years, given that central bankers are thinking about inflation more kindly of late. That is why deposits give banks a margin of safety, given politicians will support banks with bailouts, those deposits also give wider society protection. Making mortgages deposit free for a few could be quite expensive for the rest of us in a housing downturn.
The irony of our situation is that quantitative easing and the ultra low interest rate policies that fixed the banking crisis caused by the housing loan crisis, have subsequently caused a housing price inflation crisis. The Bank of England now believes that the increase in house prices is now almost entirely due to low interest rates. Be careful of clever financial fixes…
*The current risk free 15 year gilt yield is 0.5%.
The Government has been uncritically using the Chinese Communist Party’s coronavirus data in its presentations for days. The numbers, which come from a regime that has expelled and disappeared journalists who questioned them, appear to show a dramatic leveling off of Coronavirus cases. Information obtained by the CIA, first reported in the Mail on Sunday and now followed up in the New York Times, reveals that:
- The regime is incentivising, perhaps inadvertently, nil-reporting of new cases by district governments in Wuhan by announcing plans to give cash rewards to areas that report no new cases of infection.
- Mid level bureaucrats in China have been lying about infection rates, testing and death counts, frightened that if they report numbers that are too high they will be punished, lose their position or be jailed.
China has form on this – silencing the doctors who initially tried to raise the alarm about Coronavirus. Now the Chinese Communist Party (CCP) is seemingly using carrot and stick approaches encouraging no reporting of new cases. Not that the cases have actually gone away…
Downing Street is aware that the figures are suspect yet still includes them in the data presentation charts. This seems to only be muddying the international comparisons.
On the wider point of Chinese integration with the global economy, you don’t have to be a Trump supporter to think that relying on China for strategically important goods is no longer going to be considered a great idea. In recent years China has made great play of it being a force for good in international affairs. Pundits even started comparing it favourably to the Trump administration when it came to the global rules based order. No longer.
Since President Xi extended his term of office the signs are that China is reversing liberalisation and becoming more of a technology-enabled totalitarian state, with increasing repression of minorities and continuing suppression of human rights of dissidents. On the international front it is becoming increasingly belligerent in the region, not forgetting it is North Korea’s protector.
Hong Kong fears that it will end up as under the leash of Beijing as Tibet. The Chinese communists are waging a cold war on Taiwan, which has been cold shouldered by other nations under economic pressure from Beijing. After this crisis is over Western countries are going to re-evaluate relying on China for strategically important technology like 5G. It goes without saying that production of critical medical materials and technology will be repatriated. Predictions of globalisation being reversed are overblown, de-Sinofication of the global economy however is a given.
The gentlemen of the Lobby are as thin-skinned and status conscious as a gaggle of gay hairdressers on a night out, currently they are up in arms about Downing Street insisting that their briefings be held at their offices. Usually ebullient Lobby chairman Christopher Hope is complaining that they now have to nip across Parliament Square and pop into Downing Street to hold the government to account. The truth is it is way past time to open up the government’s briefings, make them transparent and disintermediate the gatekeepers of the political news agenda.
In a digital world where news happens in realtime, not to inky deadlines, it is time to just put the briefings out live, streamed to everyone on all platforms. During the election Boris livestreamed his “People’s PMQs” on Facebook, demonstrating there is no technological reason why the briefings can’t be broadcast via a free digital feed to everyone. Hacks will still get to ask the questions, they just won’t be able to spin off-camera, privately delivered answers as they do now.
The reality is that it isn’t in the interests of hacks to open up the Lobby system or insist more often that quotes are on the public record. Intermediating allows them to more easily introduce their opinions into their new reports. Transparency will devalue their role because information scarcity makes their possession of a spokesman’s phone number so much more valuable. A start to improving and opening up the system would be to put the people’s briefings into the open, in realtime as it happens…
As much as it amuses Guido and generates television producer pleasing social media buzz, hasn’t the rise of the TrotsApp generation of talking heads on our screens undermined the Labour Party more effectively than the “billionaire-owned media” could ever do? In the postmortems the effect of the continuous platforming by broadcasters of far-left types – just because they are extremely active on Twitter – by current affairs shows should be reflected on. It normalised people who would in the past have only been selling Trotskyite papers outside train stations.
The negative effect is two-fold, firstly the zealous Labour activist base become ever more radicalised as the self-defined Trotskyites and communists normalise policies that are far away from the views and values of traditional Labour voters. As we found out last week.
Secondly, it just encourages polarisation, pitting Katie Hopkins against a silly luxuriating communist might make a noisy and watchable bunfight, does it really inform the viewers much? Policy development is made in think tanks of the left, right and centre. It is made by single-issue campaigns with deep knowledge of their subjects. It is not made by people who scream about billionaires and want “to kick the Tories out of Labour” whilst describing the Prime Minister as a fascist and “alt-right”. Shouting slogans and their well rehearsed soundbites doesn’t add to the sum of political knowledge in any meaningful way.
This is not to say they should be no-platformed. When Paul Mason or Owen Jones has a book out, let’s hear from them. They are articulate voices of the left, that articulacy alone does not warrant giving them almost continuous airtime. Do we really need them on our screens every day? That hasn’t done the Labour Party any good. Producers and bookers may want to reflect and seek out more representative left-of-centre voices.
Eurosceptic MPs have had a lot of thinking to do over the weekend. Do they hold their nose and vote for May’s less-than-perfect deal, or do they roll the dice again and run the risk of losing Brexit altogether? Some Brexiteers believe if they just sit tight Britain will automatically leave the EU next week. ERG supremo Chris Howarth – a hero of the long fight for Brexit – argues that it’s a “certainty” that so long as the ERG MPs hold their nerve that the UK is “leaving the EU on 29th March without a permanent backstop.” Guido would love that to be true, it is however a triumph of optimism over reality. Before MPs make their mind up, they need to face up to the political reality of where we are…
Let’s look at Howarth’s arguments in turn, because they are at the heart of the divide among Brexiteer allies:
- There isn’t enough time to stop us leaving on 29th March.
- The Commons won’t back a second referendum
- The PM’s deal will never pass
- The PM won’t want to seek a long extension if her deal is rejected a third time
Howarth argues these are certainties, Guido disputes that:-
