25 January 2012

The credulous Guardian. Again.

It is headlined and captioned, without questioning, as footage of recruits playing with live explosives.

Yet it is so obviously not.  On the second angle shown, the package is not dropped in the hole from where the explosion then emanates. The package also has some sort of Wile E Coyote Acme Bomb fuse, for Mao's sake! And if it was truly a fragmentary grenade going off, hurling yourself a few yards away like a sychronised breakdance crew wouldn't do much to protect you.

There may be some training points for the PLA squaddies around coordination, speed and other drills. And I'm not saying those soldiers are having a picnic - it's probably a smoke bomb and some sort of controlled charge - or that this is how I'd like to spend my spare time. But it is not 
"Footage of soldiers in the People's Liberation Army of China [which] shows how a live grenade is passed around in a training exercise."
While desperately trying to row back from its own credulousness, The Atlantic has the best explanation of what is going on: a slightly Pythonesque attempt at propaganda. Which is, of course, the real story. 

I've covered before The Guardian's black-is-white approach to 'news' videos. Is this gullibility, laziness or just ideological?

16 January 2012

Welsh Communist thinks he's a 19th century African.

This is Rick Newnham. He is Secretary of the Welsh Communist Party.

Rick Newnham. Not a 19th century African

He's a very confused chap. In Friday's Guardian, he claimed that Wales and the Welsh people face a threat comparable to that imposed on an entire continent by the "Scramble for Africa":
"proposals...showing the same imperial sensitivity as those who carved up Africa in the late 19th century...Lugard, Kipling and Baden-Powell would be delighted."
Now, I've been to Wales quite recently and I am ashamed to say that I failed to detect the onset of any policies that might result in massive depopulation, conflictual territorial division, and aggressive exploitation of natural resources.

That's because Mr Newnham is talking about proposals from the Boundary Commission for Wales to reduce the number of Westminster Parliamentary seats from 40 to 30, as part of a UK-wide reduction from 650 to 600.

Now maybe losing 25% of your seats, when the overall loss is about 8%, could be seen as disproportionate.  But 30 seats for Wales will mean about 48,000 people per MP. In England, the Boundary Commission's proposed reduction to 502 seats will mean a ratio of 98,000:1. Let us not forget, too, that the Welsh also have a 60 seat Assembly for Wales (to which they voted even more powers, last year).

And just by-the-by, tax raised in Wales in 2007-08 was £19bn. Public expenditure in Wales in 2007-08 was £25bn. Now where did that extra £6bn come from, comrade? 

Anyway, isn't representative democracy a bit bourgeois and historically obsolete? Aren't you worried that your defence of it against supposed dangers might lead to (how did Marx put it?) "parliamentary cretinism"?

While you're making your mind up, if you feel the need to comment on devolution matters and the like in the meantime, please, before opening your mouth, ask yourself: "lack of perspective, much?". 

11 January 2012

Are the RMT going all predator capitalist on us?

Kieron Merrett (@kieronam) has raised an interesting question regarding the RMT's latest analysis of the decision to give the Thameslink fleet contract to Siemens, rather than Bombardier. If the contract was agreed in euros and the euro is now losing value, shouldn't the contract now being costing us less?

Now I'm not an economist or a Forex expert (forgive me), and so I'm perfectly prepared to blog corrected here if a more knowledgeable commenter can help out. But I don't think the RMT have got their sums right and even if they had got them right, I don't think they could describe the result as an increase in the cost to the taxpayer. The only way I can see that they can claim an extra £140 million must now be spent is as folllows.

Let's say that when the contract was awarded in June, £1.4 billion was worth €2.1 billion. So an exchange rate of €1.5 to £1 (for argument's sake).

6 months later, as the Eurozone's woes have escalated, the euro has devalued by 10%. So in our universe, £1 is now worth €1.65 and £1.4bn is worth €2.31bn. Siemens is therefore getting €210m more than it was expecting in June. €210m at the new exchange rate (€1.65 to £1) is just under £127.5m. At June's exchange rate, it's £140m.

Can we really describe that as an increase in cost to the British taxpayer? Probably not. Which is why even the RMT appears to row back slightly and call it a "subsidy". Let's say the euro had gone up in value by 10% so that we were now paying £1.4bn for €1.89bn worth of Siemens' services, would the RMT be praising a "saving" of £140m? No.

Given that the RMT's argument is based on the assertion that the contract was agreed in euros, the only way that this could be costing us more is if the original deal was struck at, say (to use our example), €2.1 bn, the euro had increased in value to, say, €1.35 to £1, and we now had to pay £1.54bn (an extra £140m). 

But the RMT can't have it both ways. Either it's a euro sum we're paying and the euro's gone down in which case it's costing us less; or it's a fixed sterling sum we're paying, in which case Siemens took on the exchange rate risk and have benefitted without us losing out. Fact is, Siemens probably (or certainly? anyone cleverer than I able to confirm?) mitigated the exchange rate risk through some sort of insurance or hedging, or had it underwritten by the German government, so that overall the exposure was flat.

Which brings us to the question of what exactly are the RMT asking for in such circumstances? Let's say that it is wrong that Siemens are getting their extra - but worth less against the pound - €210 million. Or that if the euro had strengthened, we would be shelling out more. What would the solution be? As this all comes down to exchange rate uncertainty, the solutions are as follows:

1. Only purchase from within your own currency zone. As the UK's currency zone is only the UK, this could only be guaranteed by putting out to tender in the UK, in flagrant breach of EU rules. So we would have to radically renegotiate our treaties with the EU or leave altogether. Can we expect RMT funds to be supporting the parties most closely associated with those policies at the next election?

2. Join a wider currency zone, which in our case would be the Eurozone. How's that worked out for the workers of, ooh, I dunno, let's say Greece?

3. Hedging foreign exchange risk through something like a currency pair in the spot markets. 

I guess we should look forward to some desk space being cleared in Chalton Street for a decent Forex broker.