My daughter (3-1/2) and I were talking about percents:
Me: If you had 100 pennies and you gave me four, then I would have four percent and you would have 96 percent.
She: Daddy, I would have lots of pennies. I want to have four percent. Lots of other people could have four percent, too!
Consider me schooled!
BTW, this is not a case of hothousing. She merely asked what was that thing (%) that looked like funny glasses next to the 1 and the two 0's.
Three short articles in the Guardian this morning dealing with the fallout of Britain's spectacular house price inflation.
First, the impact that this is having on farm prices. Not surprisingly, people who have made a packet on their city properties are downshifting into the country, where you can still get relatively good value. Good value for the urbanites, but not necessarily for the farmers.
According to the article, farm land has now risen to an average price of £8,630 per hectare (I make that $6342 per acre). That's a lot, compared with US values (this slightly out-of-date table shows US lower-48 land at an average of $1130 per acre).
What's troubling there is the difficulty in making a living when you pay that much money for land.
What's positive there, from my perspective, is that the £8630 figure does not apply uniformly - a lot of that is skewed by speculators closer in to the cities who reckon on developing farmland.
Still, a steep slope to climb if you, like me, contemplate making a shift to the countryside in the near future.
Second, an article about how home prices are forcing rentals to rise as a percentage of total households. Again, how could this be a surprise, with the average home price rising well beyond the reach of a first-time buyer.
This works in the UK because purchase prices and rental prices seemingly bear little relation to one another. The rules of thumb I brought with me from the US don't apply here - the 1% rule (rent = 1/100 of purchase price) or the 8-9% rule (rent should be set to give the landlord a gross return of 8-9% on the asset value of his home). In the UK, these gross returns are maybe closer to 5%, and the 1% rule is more like a 0.5% rule. So, it's still affordable to rent relative to purchase.
While this makes little sense to me, some point to the increase in renters as a sign that more and more people are steering clear of the housing market for fear of a coming collapse in prices. Better to sit on the sidelines and forego the possibility of further price increases than to risk everything buying at the top of the market.
Which brings us to our third article, a call by economists for interest rates to rise another 0.5%. Not again! This is getting ridiculous. The argument goes something like this: the UK economy is on track for its inflation targets, if you neutralise the impact of housing price rises. UK wages aren't rising strongly. The economy is robust. It's just that UK homeowners are paying too much for housing.
But doesn't this slow down the entire economy just to put a brake on house prices? And aren't home prices driven by supply and demand, as well as cheap money? And isn't this really hitting the voter where it counts? Admittedly, the Bank of England is now independent from the government, so impact on the voter shouldn't really matter. But this rise would put my mortgage up by nearly £200 per month in the past year, straight out of the cash economy and into interest payments. Eventually, rents are going to rise as well. More and more money into the housing sector; into interest payments. Less flowing into the consumer economy.
Together, these articles raise my hackles a bit. Like the bolts are sliding on the exits and we're all getting ready for a burst-bubble rollercoaster ride.
According to an article in today's Education Guardian, Britain's university chemistry departments are under threat. A combination of higher teaching costs, lower "popularity" and the recent imposition of "top-up" fees are leading many universities to pull the plug on their chemistry departments.
One worst-case scenario sees the number of departments plunging more than 80% from today's levels:
There are currently between 35 and 40 departments but the Royal Society of Chemistry is predicting that at best 20 will survive and at worst only six (those at Durham, Cambridge, Imperial, UCL, Bristol and Oxford) will remain in 2014.
The Royal Society is planning a campaign to re-emphasise the place of chemistry in today's marketplace:
Neville Reed, director of communications, said: "[The campaign will] try to get people to understand the importance of chemistry to the UK and EU economies. [Chemistry] is a major employer and we need a firm basis to keep companies investing in this part of the world."
As one who has made a career out of chemistry, my own perspective is informed by what I see: the consolidation and closure of many chemical companies mean fewer jobs for engineers and scientists, as does the decreasing investment in R&D and new plant as companies cut to the bone in search of diminishing profit opportunities. Today's regulatory and environmental costs makes production of commodity products cheaper elsewhere, leaving major British companies seeking to exit these businesses (as ICI has done in the past decade), handing them over to leaner operators.
The "popularity" of chemistry as a subject brings a laugh. It's a tough slog, as anyone battling with Organic or P-Chem will tell you. But what will really keep chemistry departments open is a supply of good-quality, well-paying jobs in industry, research and the academy. Companies need incentives to open their doors to new graduates. The academy needs funding to keep doing a purer kind of research than industry alone cares to sponsor.
The downside? "Theme park Britain", where "Britain will become a 21st century theme park, selling antiques and souvenirs, unless more is done to create an enterprise culture."
Via Robot Wisdom, a fantastic interview with Paul Krugman at Buzzflash.com:
Now if you ask what do the people who keep pushing for one tax cut after another want to accomplish, the answer is they are basically aiming to create a fiscal crisis which will provide the environment in which they can basically eliminate the welfare state.
It is truly staggering to think about a budget deficit of $500bn, or the new Iraq price tag of $87bn.
I have the hardest time...no, I have an almost palpable fear...of trying to imagine what the world economy is going to look like when the defecation hits the ventilation