Timmy, you just made my day

A big thanks to Tim Worstall for saying it so very well:

"You see, because if companies don’t pay their taxes then the money just disappears. There’s no such thing as an opportunity cost in lefty world.

Now then, out in the real world what does happen when the capitalist bastards manage to dodge taxes? One of two things.

1) The company has a higher retained profit which it then uses to reinvest in the business. More jobs, higher wages, economic growth, Hurrah!

2) The company pays it out to their fat cat shareholders who simply engorge themselves on the lucre extracted from the sweat and blood of the poor. And investments in companies working in poor countries are seen to be paying higher returns. Which leads to more capital being invested in companies working in poor countries so more jobs, higher wages and economic growth, Hurrah!

It is of course possible to argue that direct spending by governments will do more for the chances of the poor than more foreign direct investment. But to argue that if the money is not paid in taxes then it simply disappears as far as the poor are concerned is simply nonsense."

The reason capitalism works is because it is about generating wealth, and to generate wealth one invests the wealth one has made into making more, which means more jobs, profits, better pay, economic growth and happiness all around for those who endeavour to sieze the opportunity. Hand up, not a hand out - but then we can't even deal with that culture at home, can we?

Time for gin

I have just read through the Budget (again) in the hope that maybe I was in a quantum temporal time loop singularity thing and in fact it was April the 1st all over again.

Sadly not.

So. 50% Tax on people earning over £150k, a raid on their pensions, more Government borrowing, etc etc, a lot of overly optimistic projections and a budget so very political and so very uneconomical.

I had planned for this eventuality. The bottle of Gin on my desk at home is primed, my boston shaker iced and my glasses chilled. I shall drown my sorrows in Martinis (Dry as a bone, ofc). Good job I bought it before midnight tonight, eh?

In the meantime, I refer you to David Cameron, who prepared for this eventuality with a withering critique.

When the mind wanders to tax and economics

Having a curious little thought about tax and the economy, so bear with me.

This little thought comes from a very important question: given all the waste in the public sector, where is all this money going?

Here’s a hypothetical. I’m directing a big IT project at the HMRC. Let’s say a nice, civil liberty infringing database, something perhaps to do with ID cards. These things seem to be all the rage these days anyway. I appoint some Programme Managers and Project Managers, but since we have very little in-house experience, we’re going to need contractors. So we tender the project and appoint a consultancy. Let’s call them Capcenture, for arguments sake.

Capcenture come in, look at our hastily drawn requirements and make some suggestions, the requirements are changed and we then go out to hire a load more contractors to help us develop it – coincidentally, most of these people are one-man-band ‘consultancy’ companies going through an Agency, taking advantage (barely legally) of IR35 to pay as little tax as possible (and who can blame them?). Already the bill is looking pretty swollen, but the project is underway.

Then, someone goes back to the original specifications and decides that there’s more functionality they need out of it. Development has already started, so this means more modifications, and the timetable slips. The budget doesn’t cover for that kind of slippage, so they revaluate the project and go back to the purse holders talking about sunk costs and the importance of this government approved initiative.

More contractors are hired at £500 per day to help with the development. The Consultancy is called back in with their specialists each at £1500 per day. The bill goes ever higher, and the project will run for ever longer. All this money gushing from the purse of the public; but where is it going to?

The Government is giving it to private sector companies, whose tax receipts will funnel some of it back to the Government. The rest they will invest in staff, or save, or spend as is their wont. The shareholders off all these companies will reap the dividends. The consultancies all know this. That’s why there are armies of ‘Public Sector Account Managers’ and specialists. An entire business stream has built up on selling to the public sector, because it is the ultimate cash cow – and they always pay their bills. If it sounds a lot like stealing from Peter to pay Paul, you’d be right.

Where has the money gone? Into the private sector; waste or not, you can’t deny that people have profited from it, even if it is the few rather than the many. Hold up a second there. Did we just say the few rather than the many? Isn’t the point of socialism and social democracy the many rather than the few? Isn’t it about redistribution of wealth and all that stuff? Our taxes have gone to pay for a project that lines the pockets of the evil capitalist piggy things! By extension, the Government has stolen from the many to give to the rich few.

Yikes. Who’d have seen that flaw in their logic?

Anyway, it seems to be something of a merry-go-round of money. I think of it as being that there is ultimately a finite source of cash in the economy. This can occasionally be increased in terms of numerical amounts, but the ultimate value of the cash pool cannot change. In my very simple understanding, this is why we get inflation – you can print as much of the stuff as you want, but that only devalues what you have. 100% split into thousandths is still 100% when you add it all up. Growth, and an increase in the base value of the money pool, can only occur when new products are created or resources made/discovered.

The only difference is who determines where that money goes. Is it me, or is it the Government?

The Devil’s Kitchen has for a while now been hunting down, naming and shaming what he identifies as Fake Charities. These are pressure groups and lobbyists that receive significant funding (more than 10% or at least £1m, I understand) from HM Gov. Notwithstanding that I find the principle of the Government choosing to pay my taxes to a ‘charitable’ pressure or lobby group with whom I disagree to be a total affront, the funding for these groups should come from those who support them, not the body politic.

I do not agree with what the Anti-Drinking/Alcohol lobby say, therefore I am appalled that my taxes are going to fund them. I may sympathise with the Anti-Tobacco lobby insofar as I like not having smoke in my face, but the fact they push to actively remove the rights of others to do to their bodies as they please means that I would never willingly give them money. As you can imagine, I’m not best pleased that the Government does on my behalf. Even for charities of which I approve, such as Stonewall, I do not agree with the Government funding them, or indeed any public sector body. Public money should not fund a pressure or lobby group, however admirable their aim.

The Government has decided that it knows best where to spend our money and to whom to donate, therefore these ‘charities’ receive money to advance their arguments to the Government. Right or wrong their arguments may be, the decision of who to support should be mine. On no grounds, be it health, social welfare or civil liberty, should taxpayers cash go towards a pressure group. Unfortunately, it does.

Charity should be private and personal. Charities and political lobbying groups can lobby me for my cash all they like. They certainly should receive none from the treasury.

The State colossus, Big Government, our massive and bloated Public Sector, are the manifestation of that denial of choice. They are testament to a belief that our leaders know best how to spend our money. Which, given the way they throw it around, shows a complete lack of respect for the people from whom they take it on threat of imprisonment. I apologise if that all seems melodramatic, but New Labour scare me and I don’t trust them with my money. Imagine if the Government let failing industries fall. What do you think would happen? My belief is that if there is no market for goods, the companies are on borrowed time anyway. If their departure creates an opportunity, someone with savvy will fill it.

At the heart of all this is one basic difference. One approach assumes that the populace is too selfish or too stupid to spend its money, the other believes in the intelligence and natural altruism of the human spirit. If you like, socialism is the ultimate form of political pessimism. Libertarianism, and to a degree, Conservatism, believes in the ultimate good of humanity and in our ability to decide for ourselves.

Very good question...

Why is nobody asking questions about this?

This could be a chance for the Tories to give Brown both barrels, yet they seem remarkably quiet on the issue. Load up your shotguns, boys, because there's a hell of a lot of ammunition to spare and a great fat target to hit.

I want to emmigrate.

I just caught the Wall Street Journal's interview with New Zealand's PM, John Key.

New Zealand has great wine, good skiing, amazing scenery, temperate weather, and apparently a free-market focused leader who favours small government. And they have Hobbits. What's not to like?

At least ONE Prime Minister in the world seems to know the right way to deal with the recession...

Nanny stating my booze

Via the Scotland on Sunday (the Hootsmon's sabbath-day edition), it transpires that the SNPs are planning on engaging in a little bit more nanny-statism, clearly taking the lead from their ZaNu Lab counterparts in England. As if the Smoking Ban wasn't enough, apparently we have a drinking problem - and they think that the problem is that booze is too cheap.

'MINISTERS are to press ahead with a crackdown on sales of cheap alcohol in a move that could be fast-tracked through Parliament in as little as six months, Scotland on Sunday can reveal.'

Hold up a second, why? We already pay a daft amount of tax on a bottle of wine (as I have blogged before) - now you want to make it even *more* expensive?

'The measures are set to spark a furious legal battle with the retail trade and alcohol industry, which claims the laws will hit customers' pockets, damage the industry, and do little to stop problem drinking.

If minimum pricing is introduced and promotional offers are banned, many of the offers at supermarkets and off-licences would be outlawed immediately.

A minimum price of 50p per unit of alcohol, as advocated by health campaigners, would result in rocketing prices. A two-litre bottle of cider, currently priced at around £3, would cost £7.50. Wine would also increase in price, with a £3 bottle of wine possibly rising to a minimum of £5. Multi-packs of beer – which are regularly discounted – would also rise in price.

The moves are being pushed through despite concerns within the SNP that the Government should not seek to increase the financial burden on consumers and retailers during an economic downturn.'

Oh holy mother of Dorothy. Where to begin? Now, I can’t remember the last time I spent less than £5 on a bottle of wine anyway, but if a two litre bottle of cider is suddenly going to cost £7.50, how much is a bottle of vodka going to jump up to? Well if Smirnoff is your poison, at 37.5% that equates to just shy of 30 units, therefore about £15, so at worst that’s going to cost you two or three quid more.

Scotland on Sunday neglect to mention who these health campaigners are, but I wouldn't be surprised to learn they were Alcohol Concern, which DK has identified as a fake charity - funded primarily by the Government (and therefore, indirectly, you and me). If it is indeed Alcohol Concern (or one if their ilk), we’re talking about a ‘charitable’ lobbying group funded by the Government to lobby the Government. Everyone see the problem there? Yes? Good.

‘...Scotland on Sunday understands that ministers may seek to place some of the measures – such as the ban on "Buy One Get One Free" deals – in the existing 2005 Licensing Act, which is due to come into force in September.

The Act enshrines "protecting and improving public health" as a key objective of all licensing decisions, so the Government may argue that it gives the power to ban cheap drink offers. The same logic could also be applied to plans to impose minimum pricing.

Such a tactic would enable SNP ministers to push the reforms through more quickly, but it would also prompt accusations that they were deliberately dodging debate. One retail source said last night: "If they use the Licensing Act, it would be simply about rail-roading these plans in a bid to avoid proper parliamentary scrutiny. It suggests that Kenny MacAskill knows how unpopular it is to push up prices in this economic environment."’

Actually I’d say that’s exactly what it means. Worse yet, it’s enacting a Nanny-state agenda avoiding the parliamentary process along the way. Hardly democratic. Besides, pushing up the price of alcohol is not going to help solve the problem. It’s going to hurt people financially, but again, root causes people! Why do Scots have a drinking ‘problem’? Is it because booze is cheaper here than anywhere else in the country? I think you’ll find the answer is no, it isn’t. It’s no less expensive here than anywhere else. Is making it more expensive going to fix what is clearly a cultural issue? Again, clearly not.

In the meantime, as our Southern cousins do the booze cruise to Calais, we'll just have to start a cruise to the Tescos in Berwick-Upon-Tweed.

I won't, of course, since I long ago worked out that given the daft amount of duty on a bottle of wine, if I spent less than about £6 on the bottle, after costs I would be getting the cheapest quality of wine the producer could crank out, but that's another matter entirely...

A stone in a glass house

Sir Fred Goodwin is under pressure from Alistair Darling to ‘voluntarily’ reduce some of his pension, from a pot apparently worth in the region of £16m, which he will draw annually to a sum of £650,000.

I’d love some of that, thanks.

Now, aside from the usual socialist idea that they who have more should give to they who have less (laudable while voluntary, illiberal and despicable when enforced), I wonder what the law of unintended consequences would result in should Sir Fred agree to this.

If Fred forgoes a part of his pension, where will that money instead go? Will those funds make a significant impact on the day-to-day operation of RBS? What would Fred do with the money if he received it? Would he spend it or invest it, thus ‘stimulating’ the economy? Would he bury it under his bed? Would he save it in a bank (thus providing them with deposited capital)?

I am reminded of Frédéric Bastiat, the French economist, and his essay ‘What Is Seen and What Is Not Seen’. What is seen is that Sir Fred Goodwin takes a reduced pension; public anger is doused (maybe), and RBS has a few million Sterling more in its pension pot. This will reduce the deficit the pension fund faces, but I suspect not by a significant amount.

What is not seen is that Fred no longer buys that yacht from the manufacturing company down south, that entertainment suite from a specialist retailer, that brand new Jaguar or Aston Martin. He no longer chooses to invest in that promising start-up company, or donate to that charitable organisation. Those parts of the economy which might have seen growth from his spending may not now benefit from his money.

RBS is the broken window; is this not simply paying the glazier?

EDIT: Corrected typo. £16m, not £61m!

Alex Salmond has been off pressing the flesh with Madame Clinton in Washington, and amidst his comments on growing the relationship between the US and Scotland (or North Englandshire), he managed to start rambling on about the economy. The most frightening part of his wittering was when he commented that:

“...and in particular I will make the case for Scotland to have the same ability to borrow as other nations... in order to do our bit to inject demand and confidence into the economy.”

To borrow from the esteemed Stephen Fry: O.M arse-mothering G. You wish to allow a bunch of jumped up local councillors the chance to put Scotland into debt? Good grief, these are the people who turned a £40m project into £400m! After the fiasco building the parliament building, you would expect us to trust you with borrowing... Give me strength...

While Wee Eck is possessed of a quick and witty mind, he is not rational. He believes Scotland can and should be independent – ipso facto he is not rational, because rational thought would lead to the conclusion that we benefit more from the Union than we lose. Fiscally, politically, internationally, socially, we benefit from being part of the United Kingdom.

I enjoyed a primary school education in Scotland and a secondary education in England. I have been brought up to feel a part of Britain. I am neither Scottish, nor English, but both – I am British. The idea of a separate Scotland does not sit well with me, and I don’t want to have to choose between the two.

In this case I can only say that I think it is a good thing that he is incredibly unlikely to get his way. Borrowing to boost demand is a short-term measure that fails to address the root cause of the problem – which (to be overly simplistic) was too much borrowing.

Get your SNP/Lib Dem coalition in Edinburgh Council to sort out the trams on budget and on schedule, then maybe we’ll sit down and have a chat, okay?

Pour la France, les emplois

As a comedian and acquaintance of mine once flourished: “...the people who hate the French government most, are the French!”

Given the emotional story he had been telling about his voyage across the English Channel in a Thomas Crapper bathtub, rowing, no less, this punchline was the end to a running theme of obstructions he had faced from the French Coastguard and government, who had even changed the law in order to prevent his brave/insane/ridiculous/British venture.

If anyone doubted the veracity of this statement, I could point you to the French propensity for striking. Rightly or wrongly, they are not afraid of creating merry havoc if they don’t like what is happening. Even if their actions are misinformed or counterproductive. In Tim’s case, the locals had broken in to a French coastal installation to cheer him on as he rowed those painful last strokes to arrive on French soil. Authority? Ça ne fait rien! Hurrah.

Personally, I rather like France. It is a beautiful country, produces some marvellous wines (and Brandy, Cognac, Calvados, Armagnac...), and like anywhere, has some fantastic people. Some less fantastic people too, but you will find that anywhere in the world.

On the other hand, they have a worrying propensity for protectionism, and Nicolas Sarkozy, who should know better, is not helping. As outgoing President of the EU, he should be conversant with the single market, and ought to at least pretend to represent it. In deciding to prop up Renault and Peugeot-Citroen with a €6bn loan, he’s jumping aboard a bandwagon whose engine should never have been started, but in that there’s nothing particularly unique. What is very disappointing is that he has brazenly instructed the companies that they must make no redundancies at their French plants – instead calling for them to close their Czech and Slovenian plants.

Bald, blatant, naked protectionism doesn’t even begin to cut it. The bailout packages for the automotive industry are bad enough, with governments terrified of allowing a proud national institution to fail, but history or not, no industry should become subsidised, and propping these companies up does not solve the underlying problem; demand for cars has fallen, and these companies were trading on a false economic boom.

Mind you, given how the French benefit from the deplorable CAP, should we be surprised?

That kind of growth is not going to come back before the bailouts run dry, and jobs will still be lost. Rather than bail these businesses out with taxpayer money, why not give that money back in the form of lower taxes? That’s the kind of stimulus we need.

Sarkozy, like Brown, is proposing a vote winner, cheating at the expense of the taxpayer. While I was amused by the way the French President savaged Brown over his handling of the economy, I think he was way off the mark. The VAT cut was a ridiculous waste of time and money, but cutting taxes is the answer, not spending more as Sarkozy intends. It is time for lean government and smart thinking. On that count, neither Brown nor Sarkozy show any proclivity for either.

Banks say sorry...

So Sir Fred and Co. have apologised for their part in the financial crash... but we're still waiting for an apology from the politicians (*cough* Gordon *cough*), the Bank of England and the FSA for utterly failing to do anything about a situation they - by the own admission - saw coming.

The banks are an easy target, but since you're all so keen on blethering on about the moral high ground, how about you admit your own culpability while you're at it?

Added Bonus

It was probably inevitable. Actually, it was inevitable. I've been waiting for it to happen, and I've not been disappointed. Northern Wreck were first in the firing line, and now the other banks are following suit and announcing this year's bonus payments for staff.

Since the collapse of the sub-prime market triggered, or contributed, to the worldwide recession we are now sliding deeper into, Politicians who should know better have taken easy potshots at overpaid bankers and their obscenely generous bonuses. It is this bonus culture that blinded them , in their greed, to the greater and more dangerous risks they were taking.

And maybe they're right, maybe the bonus award schemes that some of these high-flyers were on did encourage reckless behaviour. As such, perhaps the way these bonuses are constructed needs to be reviewed, but I think that perhaps it is a little rich of the Government - who sang the praises of our Financial Services industry - to condemn them so roundly.

The morning press seems to have split its attention between Jacqui Smith (who 'denies all wrongdoing' - journalist speak for 'guilty as sin') and her immoral (if maybe not illegal) expenses fiddle, and Brown taking a tough stance on bankers' bonuses. Yvette Cooper's performance on the Today Programme blunted what would otherwise have been a strong moral argument (not helped by Jacqboot's startlingly brazen abuse of public trust), on which Iain Dale has a few words to say.

In this instance, Cooper called for bankers to exercise their moral judgement and not accept their bonuses, even if contractually their employer was obliged to offer one. Perhaps a fair point, but who are these bankers? The once high-flying investment monkey, the one who 'caused' this mess (rememeber him?) and his massive six-figure-plus bonus, or the teller in the branch, with a much more modest bonus related to customer service and product sales?

Chances are, the tellers, Customer Advisers, Mortgage Advisers and so on and so forth, are on relatively modest wages as well - their bonus makes a big difference to them, and is a reward for good performance. Who is to say that these front-line staff don't deserve their bonus? They've worked hard, fulfilled their contractual obligations, and it's time for them to get their reward. Whether or not my taxes are propping up their business or not - and let me make this clear, the money that pays that bonus has nothing to do with the money from the Treasury, operational budgets will be covering those payments, not the capital liquidity provided to encourage lending.

Much more thorny are the executives who stood by, fingers in ears and eyes tight shut singing "La la la" and hoping that the disaster would never come and the good times would never end. Have they performed well? Have the investment monkeys who took the risks and rewards and drove us to the precipice performed well? Do they deserve their bonuses?

Here's where I agree with Cooper, but not wholly. I'm not sure it's fair to ask anyone to turn down their bonus if contractually, they were only doing what they were encouraged to do. If we look at their performance review and it turns out that whatever the consequences were or have been, they have ticked all the boxes for what they were supposed to do, it is manifestly unfair of us to then move the goalposts and say they shouldn't have it.

Instead, given the noise being created over this, I would suggest that the banks need to review their rewards schemes to ensure that bonus payments can reward high performance but not encourage irresponsible practice. This is one area I think the regulators should have been involved, not just in terms of how the banks operated, but how their pay and reward systems were structured.

It would be dangerous, though to tar everyone with the same brush. Most of the bonuses paid aren't for the fat cats - but they'll certainly see the largest slice. Just don't let that blind you to those who really do deserve it.

UPDATE - entry by Dr. Eamonn Butler on the Adam Smith Institute blog, makes my point but a lot more succinctly.

Canuckleheads?

The Conservatives certainly have no shortage of ammunition to fire at New Labour - they've manifestly failed to deliver on education (a key pledge way back in 1997), stuck a broken bottle up the backside of the national economy by spending like an old dame in a casino, given even more of our sovereignty away to the EUSSR than I care to think about, increased Government spending beyond sustainable levels and inflated the public sector into a gargantuan mess. To name but a few.

Still, their latest billboard does raise a question - have they got something against Canadians, or do they have a rep for bad maths that I just don't know about?

Propellorheads feat. Dame Shirley Bassey

Snow.

Strikes.

Labour Government.

Recession.

It’s all just a little bit of history repeating... *cue Shirley Bassey*

Protecting your own

Barely did his feet settle under the table of the Oval Office than Barack Obama has had the EU hounding at his door. As much as I may despair at the bureaucracy in Brussels, when it comes to making statements about free markets and trade, the EU is usually on the money.

The ‘Buy American’ policy the USA is proposing in their massive recovery package seems to be attracting a lot of fire, and echoes with our current ‘British Jobs for British Workers’ palaver. It’s not just the EU - the Canadians are antsy about it too, along with the best part of the participants at Davos. America In the World have suggested that 70% of Britons will be less favourable to Obama if he implements a protectionist policy; we Brits have good reason for feeling that way. America is a world leader, promoter of capitalism and up ‘til now, a shining example of the free market (at least on the surface). If anything, America needs to be defending those principles and seeking to restore our faith.

The critics are dead right. A protectionist policy would do more to harm the US and slow the global recovery than it would protect American jobs. Sure, in the short term it might sound like a great idea, but free trade works on the principle of swings and roundabouts – you may lose on one thing but you gain on the other. It forces companies and entrepreneurs to be better than their competitors if they want to succeed. Protectionist leads to ‘jobs for the boys’ and suffocates competition, which in turn stifles innovation, so on and so forth.

It’s a crowd pleasing idea that makes it sound like you’re standing up for the masses, when the reality is that in the long-run, you’re going to make things worse for them.

Sourcing from local suppliers isn’t necessarily a bad thing, and you may have ample justification for doing so, but it needs to be on sound economic terms and you need to encourage competition for that business.

I’m pretty sure I heard rumblings about this even before the ballot boxes in the US had closed. Obama is playing a populist card with his stimulus package, and I wonder if he’s getting a bit too caught up in playing to his electorate rather than doing what is best for them in the long run. The global effect is likely to be marked as well, and it sets an awful example for other nations. Tit will inevitably follow tat, and governments would end up subsidising local businesses and products produced nationally. This would be an utter disaster for the global economy.

The US has a massive budget deficit inherited from the previous administration and it has to deal with this. Any incoming government in the UK is going to have the same problem, but the US has an advantage we lack – it is a major exporter. Protectionism isn’t the answer – John Redwood nails it when he says that borrowing less and exporting more is.

Of course, given that about the only thing we export these days is Whisky, I’m not sure how we’re going to solve that particular problem any time soon.

Maybe we can just get the rest of the world drunk?

Jonah the destroyer of hope

A study from the Spectator Coffee House shows the predicted effect on GDP and employment figures over the next five years as a result of his economic 'stimulus' package based on the PBR, courtesy of Oxford Economics. Follow the link to see just how short-term Brown's thinking has become, and then pray for an election.

Fuck's sake...

Epic Government Fail

A friend of mine e-mailed me this picture this morning, raising a weary smile to my face...

So true.

So very, very true.

Unelected, unable to admit his mistakes, and let's face it, generally unappealing.

Iain Martin at the Telegraph has a good measure of the man's current state of mind. This is the man leading our country. We should all be very afraid...

Independent has some independent thinking...

Two very good articles on the Indy website today - one pointing out the spinelessness of politicians in their response to 'pakigate', the other a witty submission to the credit crisis and delusion of Flash Gordon's economic policy. Worth a read.

Correspondent's Diary, Lagos - Day Three

Lagos is hazy in the morning, a persistent cloud that shrouds the air, though the sun still beats through. It is the time of the harmattan, dust carried on the wind from the deserts of the north. It is ever-present, but only seems to affect the air high above. At ground level the air is balmy, if humid.

Chris accompanied me out to the Federal Hotel where I was to exchange £500 Sterling into Naira. My mother reckoned the exchange rate was about 206 to the pound, at least according to the internet. I had envisaged walking in to the hotel lobby where there would be official travel exchanges set up. I couldn’t have been more mistaken.

We arrived at the hotel and Chris led me to some wooden huts set up outside the hotel. They looked like market stalls, filled with fabric, threadbare chairs and local carvings. I got the impression from Chris that he knew one of the guys here was better than the rest, and we went inside. I left the talking to Chris, sensing that this was not the time to flex my negotiating skills.

After a few moments of barter and chuckles – two I didn’t exactly expect to go together – Chris beckoned me to come outside, then asked me again what the rate on the internet was. He nodded when I told him, then he took me back in and spoke to the guy again. After a few minutes he motioned to me and I pulled out the sterling, counting it out to Chris, who checked it and handed it to the trader, who did his own count. Several rolls of Naira were handed to me, and I stashed them out of sight after a quick check.

Heading back to the car, Chris explained that the traders knew the internet rate and would immediately offer that to ‘Whitey’, but he knew they did this and would negotiate with them for a better rate. Sure enough, he got us 210. Doesn’t sound like much, but it amounted to an extra 2000 Naira, which at present rates is about £10. Worth the few minutes of bargaining.

After my Dad finished work we headed to the yacht club again, and Elias, the assistant Bosun who also looks after the Tarpons, helped us push my Dad’s GP14 in to the water. He and I had a quick sail on a close reach, broad reach and a run, then back to the club. The winds were dying and as most of the boat-boys had gone home early we had no safety boat. Getting stuck against an ebb tide with scant wind wasn’t on our list of things to do, so sensibly we got the boat back out the water and de-rigged.

We had arranged to meet up with two of the other expats later on in the evening at an English place called Pat’s Bar. It was your classic English home-away-from-home sports bar, and the kind I usually avoid like the plague. It was also filled with mosquitos, though not the malarial biting kind. Some very svelte Nigerian girls were in, with a clear objective on their minds that would inevitably involve a transaction of some kind.

Not a transaction I was interested in making. Unfortunately, with homosexuality being rather illegal over in Nigeria, playing the gay card wasn’t really a viable option. Instead I just had to grin through their attentions and play along, knowing that at least I had some backup and an escape route. My brother fared a little better than I, having experienced the phenomena in Thailand.

For my part, I wasn’t at all sorry when we called home-time and headed for the safety of our Toyota 4x4.

What are you afraid of? Ze Germans?

Actually, Gordon really ought to listen to them. When he dismissed Peer Steinbruck's criticism of Labour's economic policy as 'internal party politics' because of the Grand Democratic Coalition in Germany, he didn't anticipate being contradicted at the source by Steffen Kampeter, Angela Merkel's Chancellor.

Mr Kampeter said: "Peer Steinbruck's comments have nothing whatsoever to do with internal German politics, as Prime Minister Brown has suggested. In questioning the British government's approach, Peer Steinbruck is exactly expressing the views of the German Grand Coalition. After years of lecturing us on how we need to share in the gains of uncontrolled financial markets, the Labour politicians can't now expect us to share in its losses. The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy."

Despite all of this, David Milliband raised his head above the parapet to claim that the Germans backed UK policy.

No David, they don't. They are willing to provide fiscal stimulus, but they are not prepared to borrow vast amounts of money to do so. How about you go back to Gordon and explain to him that since borrowing got us into this mess, maybe trying to borrow our way out of it isn't quite such a good idea.

UPDATE - Quote added.

It's official: Gordon Brown is the saviour of the world (in his own mind)

Priceless.

The worst of it is that this little freudian slip is probably what he tells himself every night over prudent milk and cookies.

Even the BBC found it hard to put a pro-labour spin on this one.

1205: David Cameron starts by sending his condolences to the soldier's family. He asks how the government is going to get the banks to lend to businesses. He says Bank of England Governor Mervyn King has said recapitalisation should ensure the flow of lending returns to normal rates. Mr Cameron said on this basis the PM's plan has failed. In his reply Mr Brown says he has saved the banks, then raises laughter by accidentally saying he has "saved the world".

Flash! Ah-ah, saviour of the universe...