Red Ink Runs Dry

The Chancellor’s Budget speech today gives me cause for concern. The first and foremost concern is the size of the Government’s borrowing deficit that will result from this budget, assumed by the Chancellor to be £175bn.

This is s huge figure by any standards, and the Chancellor’s estimation that the UK economy will quickly grow our of deflation and recession, by next year, is highly optimistic, and frankly quite unrealistic. It assumes we will rise above the worst situation this economy has experienced in 60 years, and that it will regain its unusual and record growth rate almost without delay. This is simply totally unrealistic, and I can see no good reasoning behind this assumption.

This therefore gives me great cause for concern, as Government borrowing is far more likely to be balanced once again well beyond the Chancellor’s date of 2017, based on his highly optimistic assumptions.

It is in my view, also a mistake to increase taxes. The fact the Chancellor has raised tax for earners of over £150k from 45% to 50% means there is a greater danger that this will work against generating more income for the Exchequer. These same high income earners are highly likely to re-assess their circumstances after this hike, and consider leaving the UK altogether.

A Mixed Low-Tech Bag
The new technology investment fund is welcome, but unfortunately does not go far enough, in fact it is well short of the real need the Green Party reckons by a factor of 10. If the Government is serious about stimulating the economy and providing real jobs for real needs, then it needs to commit the appropriate moneys to finance this. Throwing the money that is needed in the wrong direction - i.e. trying to save the unsaveable and actually purchasing the so called toxic assets is a bad move - as I’ve said already, these harmful ‘assets’ should have been cancelled, and debtors freed of their loans due to reckless investment practice by the banks. A fraction of this money could have been directed at new technologies development. The Money we needed here has simply been squandered. It is a missed opportunity.

Committing £435m towards energy efficiency measures is sadly not anywhere near enough. We could be making real savings here on costly energy usage, or rather wastage. But we have yet another half-hearted measure, a shortfall I’m afraid.

The £525m earmarked for off-shore wind projects should be effective - for a community of around 3m homes, but this is hardly the answer for addressing the greater part of the country’s needs.

The 405m earmarked for small-scale project development of new technologies in energy generation is probably one of the more likely effective solutions, but again, I see no clear Government initiatives that show any signs of joined-up government. I expect a government to take a lead in showing the way forward, so I am sceptical about our fortunes here, but very glad something is being done, however little. Human endeavour - especially in the UK - is constantly triumphant in the face of tall challenges, and this will be no exception.

The £750m emerging technologies investment fund is again a little less than could have been expected, but is still good news, and I can think of one such project a good deal of this money could be ploughed into - a UK equivalent of a biomimicry research centre. This is on my agenda, but it remains to be seen if the Government will see the light when confronted with this proposal.

Giving Businesses & Shoppers A Break
The 40% capital allowance is a good move, especially as it is retrospective. But businesses need far more help. One way I suggest is to de-couple business rates form rental values, as town centre businesses especially are invariably hit by greedy landlords, and often cannot survive in town and city centre locations, which is a pity, as the bespoke retailers for instance are what makes our towns and cities bespoke and interesting. As it is, they have a tendency to look the same. Now would be a great time to give such businesses a chance.

And the businesses I mention here would also benefit from shoppers who are not worried about leaving their cars on meters that suck out their life-blood. To encourage greater spending, you must incentivise shoppers to shop. To spend more time in town, in a relaxed way. So, government - more especially here local government, has to give some slack and allow shoppers to breather a little more easily. Cut the exorbitant cost of parking in-town, and you’d be doing everyone a favour - shoppers and businesses alike. We are developing an aggressive and stressful climate in our town centres, an uncivilised climate, where not only shoppers, but businesses and all who want or need to be in town, are having to constantly look over their shoulders or at their watch, and invariably do battle with the ubiquitous traffic wardens. These poor guys are fast becoming the most reviled people on our streets due to the punitive measures local government have implemented up and down the country. It is about time this was addressed, taking a fresh and fairer look at the situation. I suggest here what I consider to be a fairer system of charging for town centre parking, by limiting cash based meter charges to 10p per 10 minutes, and additionally, as a more convenient way to pay for parking - as who of us has always got the right change in the car? - using a scratchcard system, where you purchase the card you want form say the Post Office, scratch to card to redeem your parking date time required, either for a day, a week, month, quarter or year. Charges could be as follows:-

Suggested In-Town Car Parking Fees
Day Rate - £5
Weekly - £20
Monthly - £50
Quarterly - £100
Annually - £300

Carrots v Sticks
It makes sense to reduce the pressure all around, taking such measures as I have suggested here. Moreover, to address the pressing need to re-ignite confidence and stimulate the economy, surely it is obvious one must use a carrot, not a stick. This would be more civilised and better for everyone, including the Treasury.

I say empower those that can make things happen - us the tax-payers! Us the savers - given incentive to save, and us the spenders - given a civilised town and city centre to seduce us into parting with our hard earned money.

Lets drop the punitive measures, lets be fair, be sensible and start using carrots, not sticks to engender relaxed confidence. All else will only send those with money to spend to the hills - cash n’ all.

Stimulating economic activity creates wealth all around - for the so called consumer, for business and for the Treasury. It sounds obvious, but, in order to stimulate economic activity, nothing works better than incentives. These can come in the form of lower taxes, lower business rates, sounds silly but lower parking fees - people spend longer in town and therefore spend more, which benefits business, which provides more taxes and more constant revenue from business rates from businesses who are not forced to close down or move on due to punitive rates.

Co-ordination For The Nation
It is the small things that we need to look to, as much as the large-scale projects. Putting these in tandem, and having a more co-ordinated approach to tackling big and small problems, will for sure, address issues more effectively. Micro and Macro together. Joined-up government has been a much muttered myth until now. Could we possibly have it? Please? If we don’t get it right, the red ink that represents the huge moneys that are being thrown hither and thither, and not necessarily in the right order or quantities, or at the right things, will dry up, only to find a red letter day from the IMF, and it won’t be informing the Chancellor of a free ride courtesy of the tax payer.

Financial Blueprint

In the light of today’s (18/3/09) FSA/Government proposals for the UK from Lord Turner, I offer my pennyworth of thoughts on what we should be doing about the financial services industry.

Lord Turner. Probably predictably - has come up with some outline proposals that are more or less on the lines I would suggest. I generally agree with him - but not entirely. As I thought, there is going to be far more interest in what the banks are up to from now on. Well about time! But I am concerned that there we my find ourselves in a less dynamic investment climate as a nee jerk reaction.

Some people are confusing a heavy-handed regulatory approach with the need to keep a close eye on the banks and any institution who has the potential to destabilise the whole economic system. We can still have a light-handed approach without being cumbersome or inelegant about protecting the system, Joe public, et al. If the FSA and the Bank of England had done their job properly in the first place, we quite honestly wouldn’t be in this mess.

It is true to say, as one commentator said today, that there was a time when all the governor of the Bank of England had to do was raise his eyebrow, and it gave a banker the collywobbles if the gov thought the bank in questionable mode might be contemplating or doing anything untoward or just too plain too risky in his wise eyes. Any banker considered taking leave of his common senses would have be given short shrift and would have hurried back to tarnished ivory tower with his tail between his legs. But of course in this climate of less deference, and where he who risks has been king - if not governor, almost anything goes - and quite honestly actually everything nearly has gone! The ship may have only just been saved from sinking just in time.

My sense is we just have to make sure the BoE and the FSA, indeed any state regulatory body, does its work, unimpeded and with adequate resources. The lesson has to be that the watchman must be at the gate and not sleeping. I suggest a Government inspectorate checks up on the FSA, to make sure it is doing its work. Such an inspectorate would perhaps also drop in on a number of Government sponsored bodies, just so systems are checked to be sufficiently robust, and that even the FSA isn’t sleeping, or neglecting its duties, and is adequately resourced for any future onging or pressing needs, and that in this way, it ensures a cosy relationship is not allowed to develop between the watchdog and any of the dogs it is supposed to be watching. I suspect this is all too easily possible, and probably had some bearing on why we are where we are today.

It does seem entirely sensible to me to separate the commercial banks from high risk investment activity, ostensibly to protect the economy from collapse! If the two areas of activity were to be seperated, then overburdensome regulation can be avoided, and the risky investment ventures can almost do what they like, as long as they themselves make their strategies clear and accessible to the potential or actual investor. But if this is not feasible - and there is differing opinion here on this point which needs airing as soon as possible - then I would suggest some pointers here.

To be succinct, and for now, only in outline proposal, here is my list of suggestions for what should happen next …

1. Closer scrutiny of the banks, financial institutions and lending vehicles.
2. Punitive and preventative powers over banks from using high-risk strategies, or from using investment vehicles that are too complex and opaque (lack of clarity breeds instability and lack of confidence).
3. Establish an international watchdog that meets regularly and has powers to adequately scrutinise the loans and investment industry.
4. Bolster-up the FSA and make sure all financial watchdogs in every country are adequately resourced (money and staff)and meet universally agreed best practice standards, to ensure robust and effective regulation that protects both investors and borrowers and protects the industry form itself.
5. Implement minimum cash reserves to ensure loan do not exceed reserves.
6. Spot checks on banks to make sure of the following:-
   - Sufficient cash reserves are in place
   - Maintaining loan to cash ratios
   - Banks not getting involved in too complex investment vehicles or strategies that
   leave bank over-exposed.
7. Strengthen standards of rating agencies, including spot checks and most importantly that business is not conducted on a commission fee basis which could lead to a conflict of interest between client and agency.
8. Eliminate commissions fees for selling loans, including mortgages (which has led to inflated property prices and unwarranted lending in the past).
9. Ensure greater clarity of accounts in banks
10. Have banks publish data more frequently - at least limited to BoE and FSA.
11. Banks should not be strangled or stifled, but the eye and breath of the watchdog should be felt by banks so they know they cannot get away with unwarranted behaviour. This will do away with the high risk competition between banks that has played a key part in destabilising the system.
12. Separate commercial and investment banking where possible.
13. Government should ensure local government receives adequate financial planning and investment guidance and supervision, so that local government capital is adequately protected and sensibly invested, with an emphasis on best practice.

More IQ & Less QE

Today’s introduction of Quantitative Easing by the UK Government in my view is a mistake. I am very concerned that we are building up yet more problems for the near future. Again, this Quantitative Easing or QE - printing huge amounts of new money for circulation one way or another - is clumsy and does not address the core issue, namely, the access to finance via the banks by individuals and businesses. This in my view will follow when the unknown quantities or the extent of debt that the ‘problem securities’ products represent, are known, and more importantly, are taken out of the system.

This is the cancer that is eating the economic body of most every country around the world. These highly dangerous products have to be taken out of the system. Yes, this will mean institutions get hurt along the way, and it may even mean cancelling huge volumes of mortgage debt, which after all is being partly addressed by the US strategy of committing a part of its own form of QE to relieve mortgage debtors who might otherwise suffer foreclosure and end up relying on the state. But, it cannot be any worse than what we have now - which, if left to fester, will only worsen the situation.

But the huge amounts of money that QE represents is not necessarily going to reach the people and businesses that need it anyway. It is perhaps better to place this new money directly into the hands of people who actually need it and aren’t getting anywhere with the banks. Throwing bundles of cash from helicopters amounts to roughly the same thing, but would of course lead to chaos and even incite violence and accidents in the mad scramble that would inevitably follow form such stunts.

To be serious though, pumping huge amounts of extra new money into the system is like trying to bring a patient around by pumping him up with excess blood, when the system or economic body can only stand and function so much before major repercussions develop. Surely we are more intelligent than this! Intelligence is a funny thing. Perhaps the real intelligence abounds in the common sense after all.

Most people I speak to agree that the government have got it wrong, at least here in the UK, and that the sensible thing to do would be to do just about the opposite from what the current government are doing right now. I say current, because I cannot imagine, come the next general election, that the saving population - chiefly the older generation - are going to tick a Labour box, but would rather, given half a chance - tick off Messers Brown and Darling for effectively ‘robbing’ them of their life savings and leaving them with mounting problems and worries as to how they are going to pay care home fees for either their own parents or themselves in the near future.
For many people, the money they have saved is not only not growing now that interest rates are slashed to 0.5% but their savings are dwindling to the point that they cannot afford to pay for their family’s basic care needs, medical bills and energy bills, never mind live comfortably off.
And if the resources of the saving population dry up, they will have no alternative than to sell up their houses - in this property slump? And even if they do manage to sell their property - their homes - their life’s work, where would they go? Would they be able to afford the rent and pay the bills? I’m sure the stress this is all causing many people will also have a knock-on effect on their health and consequently the National Health Service bill to the exchequer.

But medical issues aside, it is inflation that is the next bugbear now QE is a reality from today in the UK. We now need cheap energy and transport solutions more than ever if we are to ride the inflation storm soon to come - if and when the patient has been re-inflated. Can we please think ahead with a head, rather than blindly and dangerously squirting money willy nilly into an already dangerously ill patient.

Hopefully, and probably, the patient will survive, but at what cost? Quantitative Easing sounds like one of those sophisticated phrases that is designed to assure people that someone knows what they’re doing. Didn’t all those other sophisticated securitized products also have clever and sophisticated names? Weren’t they also pumped into the system with as much gusto and smugness?

I really feel we have lost a grip of the weapons of finesse, and are shooting from the hip with a bazooka - at an enemy we can’t see - in a greenhouse! Ah yes, the delicte balance of the green economy. Now doesn’t Nature get a look in anymore? Now there’s a thought - a self regulating system that seems to have lasted how long? Nearly 4 billion years. Now there’s a number we’re getting very used to these days.

Don’t worry, I’m sure all this mess will be over by the time of the next Olympiad - the one they’ll have to cancel due to inaffordablility, after this next one we can ill afford either. I am actually more of an optimistic pragmatist than a pessimist. I just can’t stand waste, whether its £2bn squandered from VAT, or £75bn - or more no doubt yet to come from Quantitative Easing. But then I’m not that sophisticated.

In the current system as we know it - which is not necessarily the only workable system, but the system we have and for whom most are comfortable with, money is the lifeblood of the economic system. Whether its a government or a Central Bank, it is their job to maintain a balanced system of money flow, and to ensure that that money does flow in and around the system without impediment, getting to all the organs of the system without impediment, so that the system is healthy.

I believe by and large, the system will look after itself, as long as there is adequate supervision and monitoring, and this can be done partly through self-regulation, and a light touch from the powers that be - the government and the central banks essentially.

Economic Proposal - a ten point plan for economic recovery for 2009 & beyond

Paul Heaney © 2004

Overview
There is an underlying necessity for re-introducing ‘confidence’ back into the economic system. This can be done is the several ways I have outlined below. But essentially, there needs to be a re-introduction of liquidity into the system, both on the consumer side and the commercial or personal and corporate banking side.

For this to happen, it is necessary for the banks to know they can lend at a worthwhile profit. So, they need to be able to lend at rates that are not too low, nor too high that will harm or endanger the well-being of both the borrower, and therefore ultimately the lender or bank.

The banks are currently going through a period of consolidation, and whilst they are reeling from the shock of huge recent losses, they find themselves in uncertain times, not sure in absolute terms as to their eventual losses from the contagion arisen from bad investment decisions and products over recent years. They therefore need time to finalise their losses and draw a line under them. Whilst they are going through this period of uncertainty and unknown extent of their losses, they are not prepared to commit to lending that they cannot guarantee in the event such loans are dishonoured or default.

Government and Central Banks can help by guaranteeing loans to an extent, in order to re-introduce liquidity into the system, freeing up the money that already exists in the system, and introducing sums if required on a loan basis to the banks, but at sensible levels of interest, not too high, but actually at lower levels than is generally commercially available through LIBOR.

Once risk is minimised, then confidence returns and feeds through the system.

Lowering interest rates merely lowers commercial profitability for the banks, which tightens or squeezes lending. So interest rates need to be at a level that are profitable for the banks, but are also not too burdensome and affordable for the borrower, both commercial and personal such as mortgages.

Pumping too much money into the system is an unbalanced approach to the current situation and will lead to inflation. And judging by the sums employed, probably will lead to hyper-inflation in 2010-2012.

As has been seen with reducing VAT recently, this does little to encourage confidence or movement in the commercial world. It actually costs business to alter their pricing brochures, and is not significant enough to increase sales as the consumer will not spend in such uncertain times, nor should the consumer be encouraged to do so, as this would be reckless. Instead, the action of lowering VAT by 2.5% has merely squandered a large amount of money to the tune of several billion Pounds, precious tax income for the exchequer, which the Government can ill afford, and only adds to the national debt burden, prolonging the time it will take to redress the debt balance.

The banks need money in at this time, as much as they can garner. For this to happen, they need to encourage saving, and for this to happen, they need to set a savings interest rate that is worthwhile for the saver.

To be able to afford to offer a decent savings interest rate to consumers, banks need to make a decent profit from lending, therefore their lending interest rates need to be higher than savings interest rates. Borrowers expect to pay higher interest rates for loans than on their savings, and they can stand a sensibly set interest rate for borrowing. So, the system has to work both ways, to be able to satisfy both lender and borrower. Anything else simply will not work.

The free market economy can work if it is not hampered. However, it is vital that watchdogs are employed, so that an eye is kept on financial activity to the extent that conflict of interest is mitigated, investors can be confident their interests are being looked after, and bankers or lenders can be confident that proper valuations and credit reports are accurate, in order to minimise risk, and so as not to ultimately undermine financial products and instruments.

Property valuations have been artificially high for several years, and they should be allowed to revert to more realistic values. It will be painful for some, but it needs to happen, and always has happened, as it is a natural phenomena. Repayments on property loans are not sustainable at levels where there is such a large discrepancy between prices and incomes. The loan multiples based on income have to be lower to reflect a more sensible and more risk averse scenario.

Tax regimes should be sensibly and fairly set, otherwise the wealthy and businesses flee to better tax regimes. Penalising the wealthy does not work as there is then no incentive for them to remain in the country. Similarly too high a tax regime is not favourable for attracting entrepreneurs and businesses into the country.

"If there is one rule that is the best general guide, it is - balance in all things"

Aside from the immediate needs, we also need to be looking at the wider picture. What do we need to look at? We need to instigate creative training schemes and apprenticeships, ensuring a sufficient skilled workforce is on tap with foresight looking 5-10 years ahead, always mindful and encouraging a suitably skilled, strategic, resourceful and balanced economy is maintained wherever possible.

We need to ensure the adequate resourscing of schools in efficient ways by instigating resource sharing wherever possible. This can be achieved through the use of digital resources such as educational webportals.

Government’s Responsibilities & What We Should Expect
The advantage of Government is that it has the power and ability to oversee and facilitate on a grand and collective scale in integrated ways. What this means in practice is that it can facilitate more effective and efficient communication between communities at a distance from each other.

It can help bring to the attention in a collective and unified way, matters and points of best practice that might otherwise go unnoticed or ignored. Government has therefore the ability to act as a great catalyst and facilitator, helping to improve the lives of people in ways that are less costly and more effective by communities learning from each other. This has nothing to do with homogenisation or instilling a dogma, but empowering people to live peacefully, leading vital harmonious lives, in prosperity and harmony with the world around them.

It is Government’s responsibility to look around and look ahead, in order to see future needs and respond to market conditions, and anticipate them wherever possible so the country is always adequately skilled and resourced.

Government should encourage and facilitate the following:-

- Balance & Stability
- Foresight
- Justice
- Support
- Best Practice
- Integrated Effective Communication
- Integrated Efficient Travel
- Diplomacy & Inclusive Communication
- Protection

Freeing-up the financial credit system
Financial systems across the world have ceased up. The financial blockage needs to be dissolved before the patient dies. Where there is free flow, there is life. At the moment though, the life blood has stopped flowing and the patient has suffered a stroke. If the blockage is not removed in good time, the patient will die at worst, and suffer long lasting adverse consequences at best. We will have cabbage states the world over.

So, what are the practical options available to us? Here are some ideas …

1. Interest Rates & Savings
Set around 7%

2. Interest Rates & Lending
Set around 10%

3. Tax
Personal allowances should be raised in such difficult times to around £10,000 for at least the next 2 years.

Set tax bands at:-
10% up to £15,000
15% up to £25,000
20% up to £45,000
25% for all incomes above this.

4. Banking
Government should instigate loan guarantee schemes via the banks. By banks, I mean the Government owned banks. This is because the mainstay of high street banks are currently unsure of their real and probably as yet undiscovered liabilities.

We need the shortest route to market for this emergency money to hit the streets as soon as possible. So Governments should use existing channels. If for any reason those channels are not able to offer this facility, then a new bank should be established to facilitate this, although this would prolong the pain and increase the number of business failures and administrations.

5. Regulation
Instigate rigorous scrutiny of the financial sector, including investments, lending and pensions. This is Government’s responsibility ultimately.

It is Government’s responsibility to ensure and maintain stability throughout the financial and economic system, and secure the welfare of it's citizens.

6. Investment
Reduce tax on stock market investments, or make exempt for at least 2-5 years.

7. Property
Raise Stamp Duty threshold to £500,000 for at least 2-5 years.

8. Employment & Training
Instigate creative training schemes and apprenticeships, ensuring a sufficient skilled workforce is on tap with foresight looking at least 5-10 years ahead.

9. Education
Instigate digital resources such as educational webportals.

10. Best Practice
Instigate best practice comparative studies webportals, both national and EU

Nature’s Economy ... in a nutshell

'Economy'

"Economy is a beautiful thing
Purposeful in its simplicity
Superior in design
Fruitful by nature
It leaves no waste behind
Balance is its function
Order its state
Efficiency its feature
Elegance its trait
Inclusivity is its hallmark
Beauty its face
Harmony its effect
Our home is its place"

- Paul Heaney, 2009


In a nutshell
I am a simple person. I have no formal background in economics. I am Joe Bloggs who blogs!
So what makes me think I have anything to contribute to this great and profound subject?
Well, from where I’m standing - as a photographer and journalist, many of us have blinkers on, and from what I see through my barely focused glass eye - sharp enough to spot a few things - some of us are galloping in any direction as fast as we can ‘in order’ to get out of the mess we seem to be in, while some others are standing still with a sense of bewilderment. While yet others are caught in the headlights of blind panic - or indifference! Perhaps we should take a long deep breath, and open our senses to where we are - quite literally. Have we seen too many one trick ponies that are only good for a while? Are we missing a trick? A trick that we’re tripping over every day without realising it - is there anything out there we can learn from that may have learnt how to manage things very well thank you, but strangely has been ignored for so long. Lets face it, after all this time we still haven’t got economics right - yet!

And yet, we live on and in the midst of the most economically sound and most efficient system there is - no, I’m not talking Brown economics, Reaganomics, Bush or Keynesian. But there is a system that does work, and we could learn from, and its right under our noses. It is in front of eyes. It is in our nostrils. We touch it every day. What is it?

The way I see it
Well, let me first and foremost say where I stand and why I am putting this blog together. I am driven to creating this blog out of the importance I see that economics has on not only in all our lives, but in regard to the welfare of the Earth and beyond. My sense is that getting economics right - or ‘house management’ as the ancient Greeks saw it - is vital for the welfare of the greater system. Or if you like, a well managed house residing within a much greater home - a home to all life - planet Earth.

My standpoint is that no man is an island and that the world is intricately and inextricably interconnected - both the human and natural worlds. This goes beyond globalisation. All systems affect each other. Therefore we must look to getting it right in whatever we do, and that whatever it is we are employed in, has minimal harmful affects on the rest of the system as a whole. A system that looks after its surrounding systems, by default looks after itself. It is both giving and selfish - a perfect system if you like.

If the local and national economy where we live is our home, with all the implicit necessities of care and maintenance that entails of looking after it, then the garden is the Earth - partly ordered, partly wild - the perfect garden I suggest, but cherished and well maintained by us - it’s guardians, or gardeners.

My sense of economics is one that is a system that is mutually beneficial to all within that system. As an example, we can see in Nature - the most efficient of all economies - that balance is it’s hallmark. There may be short term fluctuations - earthquakes, tsunamis, hurricanes (all ways of releasing pent-up energy), and species populations can grow out of proportion left to their own devices, but over time, any imbalances are balanced out. One species may be eaten by another predator species at some point. Without such imbalances that humans are capable of, the Earth would appear to be a self-sustaining system. The are checks and counterbalances that occur naturally. It seems to me that we have to find ways to devise and maintain our economic systems that are in harmony with the natural world, where excess is minimised or curtailed - using our own checks and balances, albeit in a ‘free market’ system - in an attempt to maintain a balanced system that is not harmful to either humans or the natural world. Indeed, both can feed and help to sustain each other. A symbiotic relationship.

I started this blog, summarising my thinking on ‘economy’ with the efficiency of a poem, and a sub-heading - ‘In a nutshell’. Perhaps by way of example, we can say that the model of a perfect economic system is a nutshell and its nut - fruitfully productive, efficient by design, feeding other elements within the system it inhabits, being that it is beneficially nutritious to more than one species - squirrels and humans for instance, and is the basis or seed for more nut producing trees. It is a self-sustaining and holistic system that profits more than its own species or sub-system. It is a representative example of an holistic economic system. A virtuous circle - in a nutshell!

My background & interest
In my life I have barely sustained myself as a photographer and food writer, but very early on, before I embarked on this career, having initially sketched out a life for myself as an interior designer or even architect, I went back to the drawing board before I got to ink any grand designs, and picked up the camera. Like father like son. There was a certain economy about this too I have to say. A certain sharing of resources. But at an even earlier point than this, I had discussed my future with one of my mentors, an eminent and highly successful and cherished family friend - Emeritus Professor Malcolm McDonald MA(Oxon), MSc, PhD, D.Litt. FCIM FRSA of Cranfield School of Management, who suggested I take up a PPE course (Politics, Philosophy & Economics).

I never did follow this route, and I’m not entirely clear why, but that perhaps my natural leaning was to using my hands, and brain, not at the exclusive expense of either one. And after all, I took joy in the immediacy of being able to create ‘something’. And after all, being that my father was and still is a photographer, I guess it was in the blood. So perhaps a natural impulse there.

Perhaps it was the course of least resistance, or a natural path to follow and channel my energies. I’m a great believer in intuition, and have found this - what I believe to be a natural attribute in human beings - slowly developing, with attention, within me. But I’ve always maintained an interest in all three subjects (PPE) - from an amateurish distance! The nearest I got to anything vaguely formally economic was studying Industrial Studies at school - so no prestige there!

Although I did subsequently study a course in practical philosophy run by The School of Economic Science, which had its root and origins in economics - an enquiry into economics root and branch, and a quest into a better economic way as a result of the Great Depression. It was a course that taught efficient use of energy on the personal level, based on the premise that true philosophy, or ‘love of wisdom’ is worth pursuing, in order to seek answers to fundamental questions about life. I also took up mediation as a result of this.

Now, back in the mid 1990’s, I noticed a friend of mine was doing rather well with his personal investments. I suggested he commercialise his very successful system. Well, after many interesting years of research and development and honing this ‘value investing’ methodology, we realised we had something very special here. It has evolved into quite a comprehensive, if not ‘holistic’ set of algorithms and methodology - in fact two distinct methods or 'products' now, one for investing and one for trading, both of which we think are now ready for commercial exploitation. Hence my even keener interest in the subject that continues to rock our world - that of economics, and the dynamics and effects that investors, traders, bankers, politicians, even the media and rumour mongers have on the world. And now here I am blogging about it all.

Having developed a keen interest in the stock market over the past 13 years - albeit once again at a distance - I am now throwing myself to the wolves as an investor and trader, and with this interest in investing, I’ve become more interested in economics and who and what influences we are all subject to, and how might we find a better way out of the current mess. After all, the macro view naturally informs the whole process.

For those who have a direct and significant impact on the world of economics at the macro level, I think the holistic approach is obviously a useful one to adopt. The nearest to such a scenario the politicians seem to have come to this more unified approach is what they call globalisation, but this is hardly the whole answer. It merely recognises the fact that the world does not work in isolation. Our economic systems are though now perhaps too fragile, and interconnected as they are, it is a bigger ship that is floundering in choppy waters, if not in danger of sinking, rather than a fleet of smaller ships.

I’m interested to see if we can’t find an economic model that works on more sustainable and holistic lines - or even curves! One that is rigorous, unified and sustainable. There is evidence for naturally occurring models, and it is obviously beneficial to see if there is anything to be learned from naturally occurring models, to see how the world works. pragmatically successful models. The quest for a hitherto economic model that is more rigorous and unified and practical, that is not so much mutually exclusive from the natural system, but inclusive and works in empathy with the Natural world.

It seems to me that we humans like to bend the apparently unruly world of Nature - straight and ‘true’. In fact, there is precious little in Nature that is straight. Interesting point perhaps? Poignant especially when you realise the world is full of cycles, positively revolves around cycles. Maybe we shouldn’t take on a ‘line’ of thought, but rather a ‘curve’ of thought. Many are the property and stock market investors who have been blind to the historic cycles that remind us from time to time of certain irresistible forces that upset our neat linear view of the world. Perhaps we should see life and systems more as an evolutionary curve or even a spiral.

Jay Harman - a naturalist, entrepreneur and award-winning inventor certainly seems to think in these terms. He terms it ‘the pax principle’, after his business. There is much evidence to support this view of life fundamentally being none-linear. From stock market and property cycles - crashes and corrections, to polar flips, to the movement and paths of celestial bodies.

There is far more evidence that the world and all life adheres to a non-linear pattern. Maybe we should take more notice of this and build this into our own systems and methodologies. In line perhaps with a ‘bendy’ world rather than a resistant, in-coherent, repeatedly fractured and consequently more painful world.

Averting a greater crisis
What I’m keen to comment on and help point out (in my humble view) are what I see as the various mistakes we seem to be making, in the hope that my comments may be helpful to anyone out there who may have some influence on the subject. And indeed, I’m certainly open to comment in return. After all, I believe we stand a much better chance of ‘getting it right’ by having reference to one another and kindly assisting in the peeling back of the eyelid for greater clarity and insight. After all, just when we think our eyes are open, its always nice to have some other person of superior vision, ably assist us. Or indeed to have someone gently wake us from our dream! I for one prefer the light of reality - in theory! Though there is of course a place for dreams, such as those that offer a vision or remarkable insight for a better way.

It seems to me that Governments the world over seem to be floundering, and rarely taking pre-emptive measures that are sensible. In a way, you could argue that major economic fluctuations are inevitable, or natural phenomena. There maybe something in this. Life is peppered with recurring cycles, and this can also be an evolutionary process whereby these cycles are gradually modified over time.

Rather like any other system in the natural world, when there is an imbalance, something happens to correct this. In other words, ‘corrections’ seem to be a natural and inevitable feature of life, whether its in the financial markets or in the natural world, this is just how life is. The trouble is of course, human beings have a tendency to forget this tenet of reality. Perhaps we should look at this more closely and accept it. This would perhaps ensure that corrections in our systems are shorter lived, with deeper penetrating routings of weak and inefficient bodies, as in Nature.

We are going through an opportunity at present to flush out the weaknesses and causes of imbalances to the economic systems that are plaguing and destabilising the world of human affairs. This is natural. And my sense is that it must be a swift and thorough ‘cleaning’, so we can move on as quickly as possible. Many astute thinkers I know of and have come across are of this view. The consequences of not allowing this to happen, or of not taking effective remedial action in good time and in depth, is for the same problems to return in the future - but with a vengeance! Delaying the inevitable. Though the repercussions of such delay or tinkering will be far worse. The imbalances far more pronounced. And this is my great fear. Hence this blog.

You have to be cruel to be kind
It is said that Nature is cruel. Well if that is the word that explains the efficiencies of the natural world, then so be it. Nature has had billions of years to evolve systems that are more efficient than we have been able to achieve in our relatively short history as a species. And my sense is that it makes sense to take note of how Nature functions and deals with imbalances.

It occurred to me in the late 1980’s that we should use our intelligence to look at the much greater intelligence of Nature, to learn her methods and to see how we could apply her evolved technologies to our needs, in countless ways. I’m actively working on this line of thought in order to establish a foundation in the UK dedicated to this very idea - what in her seminal and catalytic book in 1996 biologist Janine Benyus termed ‘Biomimicry’. In other words, mimicking the most efficient systems and technologies that the natural world has very conveniently evolved for us - all for free!

Biomimicry seeks to emulate the evolved and honed strategies and technologies of countless species on this planet, in order to improve how we human beings as a species live on this planet, in empathy and harmony with all other systems. It is a subject that looks at life’s systems the way they are. It is the study of the economy of life and how we may bring a greater economy to our lives. This has been a long standing dream of mine, to find a way of living in synch with Nature by learning from it. Surely this is the ultimate economic model - one that actually works! So why aren’t we paying more attention to it? I think it requires a more dynamic way of thinking. Of opening up to the world of possibilities that Nature’s hidden treasures can afford us.

We need to cross reference and cross fertilise our ideas and observations more, with different and diverse fileds of research and endeavour talking to each other, with scientists and designers sharing strategies. Lets find ways of having conversations with each other across the scientific divides. Lets have more open access in sharing knowledge, stimulating each others endeavours with fresh insights, giving ourselves a fresh and different perspective on the way things are done and how they might be done better, at less cost, by re-engineering our world to fit the more natural organic model. Simply open our minds to what is actually going on all around us in the natural world. Just think how many eureka moments there may well be yet to be revealed once the momentum kicks in. Life will be simpler, less stressful and a far better quality of life will ensue.

Because I have not focused over the years on this subject in hand, whilst pursuing my career as a photographer - albeit a professional observer if you like - I failed miserably to come up with a term for this whole subject matter and fascinating idea for exploratory endeavour, dipping in and out of the tantalising possibilities my thinking afforded me. But thanks to Janine Benyus, a woman of great insight, vision and energy, who is a great communicator, we have a tangible way of explaining this whole concept, with which we can get to grips, and proceed to act sooner than later. For it is my sincere belief that if we do not heed these issues and adopt and adapt Nature’s technologies, that in their beautiful economy are both harmless and beneficial to all other systems, then we are probably doomed - and I don’t say that lightly - I’m an optimist by heart! I like to think of myself as the pragmatic optimist.

The path of least resistance
Nature always takes the path of least resistance, so wouldn’t this make so much sense as an economic model? Examples of such natural models have been eloquently exemplified not only by Janine Benyus and her Biomimicry Institute, but by other open eyed people and Nature pioneers or so called ‘bioneers’ such as Jay Harman. Well worth taking the trouble to look into their work, inventions and discoveries. Beautiful and fascinating stuff. And once you see the practical examples of how Nature does economy, it opens up a whole world of possibilities. And that’s the exciting thing about it, when people of all walks of life and ‘segmentations’ start to talk more to one another and discover with delight what Nature has known for countless millennia. One starts to get a glimpse of how life really could be a paradise on Earth. Efficient and beautiful, elegant science is to be found naturally - everywhere - right under our feet, in the air, in the water. Biology in particular has much to teach us about economy.

So, we have in biomimicry, a model economy that holds great wisdom as the way to go, that is not so much contrived - as has been our way over recent centuries - as honed in the full rigor and light of life’s unforgiving yet abundant and intrinsically life affirming evolution. A paradigm to live by.

We have much exciting work to do based on a rigorous enquiry into Nature’s most intelligent and pragmatic economy. Thank goodness we are starting to wake up and smell the coffee - if not the roses! We are taking at the present time our first tentative steps in the right direction in biomimicry, towards a more sustainable way of doing economy across the design board. The likes of BMW, The Jet Propulsion Laboratory, Nike and the like have all taken notice and taken a leaf from Nature’s book, learning from more successful examples to be fond within Nature, of how to design systems and processes with greater elegance, efficiency and beauty, using less energy than we have managed to achieve to date, being as we are, divorced from Nature and her naturally efficient systems. We have upset the balance with our ‘sophisticated’ and over complicated, flawed approaches. Surely we can muster enough intelligence and awareness to recognise a greater intelligence around us. Surely it is time for an intelligent change.

Time for change
The enemy of change is complacency. But is the force for change also dependant on money? Or energy? Can we afford to be complacent? Of course not. It is clearly time for a more sensory economy, a more sensitive yet resilient economy, a more organic economy, one that grows naturally and reacts to changes more instinctively and effectively, with more dynamism. One that is ‘green’ in essence - root and branch. An economy that bristles with a vibrancy and sparkle, as clean as Nature’s own, not dulled or stifled by overly complex instruments. It is time to stop swinging like an erratic pendulum from crisis to crisis, implementing consequential strategies that hopelessly chase each other and only serve to compound the problem long term, if not short term, and destabilise the system rather than address the fundamental flaws. We need a stable economic system that has in-built measures in place that can take shocks and hack changes in extreme conditions, rather like a well designed bridge or an insect’s leg.

We need an economic system that has a more natural pulse, that is in synch with the natural world, in tune with the seasons - especially when it comes to the food we grow and eat. We need to establish a food chain that is more suited to localised needs. Where there is an emphasis on local produce and all the positive ramifications that entails, with greater benefits for producer, retailer and consumer. Biodynamics is a very interesting system of farming that is a less forced approach and is successfully implemented on 60% of farms around Europe.

Biodynamics (not to be confused with biomimcry) has its origins in Rudolph Steiner’s work from the early part of the 20th century. It is simply a more natural way of farming, yet potent, using natural fertilisers. It is based on a more systems inclusive, kinder, more natural science, and utilises the amazing properties of horn, and pays head to the cycles of the Moon. It works! Those farmers that have implemented this system in the UK have found that in areas where the bird and butterfly populations had dwindled, this wildlife happily returned, a rebalance was restored to the land and environment in general. It is a step further than organic farming, and because it is not dependent on industrially produced fertilisers and pesticides, it is kinder to the land (and humans) and doesn't cost the Earth.

We need to establish an economy that is self regulating, but with the watchman in place who doesn’t take his eye off the scene. Deregulation released a torrent of energy and creative activity in the financial markets over recent years. Unfortunately that was all spoilt by not only corruption, but a lack of diligence, corporate mismanagement, and a lack of checks and balances to ensure conflicts of interest were avoided, and that data was accurate and not misguided or corrupted. It was also a result of over-complication, of apparently smart bankers devising complex instruments in the securities sector, which only led to undermine confidence in the whole system as this secretive 'dark arts' complex world led to confusion and lack of clarity. We let a handful of people spoil the party. Some who were delusional, some who were fearful - that they would be left behind in the race for profit - and some who were careless and anything but risk averse. It was risk without sense driven by fear and greed. The herd instinct and mentality played its part too. We do not necessarily need to throw the baby out with the bath water. We just need to be sensible. Fearless, yet sensitive. Open and watchful.

It is time to realign ourselves with the rest of the natural world, to learn from Nature’s most efficient economy, and practice it ourselves. This approach will help us to look after ourselves by looking after the Earth, which supports us - but only just - now we’ve created so many imbalances to the greater system.

Issues of money & energy
Whether we need to completely rethink, redesign our economic systems, that may not even use conventional monetary tokens of exchange, is perhaps a question, if not for now, then perhaps for the not too distant future. But however we decide to exchange our goods and services between one another, to exchange value or energies, it is obvious we cannot go on the way we have been going. At the heart of this matter may be the question of energy - what we use, what form it comes in, how we distribute and generate it, how we use it. Perhaps we can find the philosopher’s stone for our energy needs by looking more closely at Nature and how energy is exchanged between its various components. This might actually be key to arriving at a more balanced and workable economic system.

Energy in Nature is abundant and free. On the whole, the natural world - where man does not interfere too much or adversely - seems to manage to find energy for sustaining itself quite happily thankfully without the need for money! Worth thinking about perhaps. What is more, Nature has developed highly efficient systems for harnessing abundantly free energy in one form or another. So do we as a species not have the wit to do the same? Have we not enslaved ourselves to some extent, on forms of energy that are not only ‘expensive’ on us, but on the planet too? Surely we can remedy this. In fact there are some of us who are looking at alternative and abundant forms of energy - and free energy at that! This is not necessarily biomass based - an option that is likely to lead to more problems than it fixes - but there are less labour intensive and less costly forms of energy we need to discover and apply. Biomimicry can play its part in that. This is one of the most important aspects of economy we must work on now. It may even be the most pressing need.

When you consider that more and more people are becoming energy poor - defined as spending 10% or more of their income on energy for the home, this is unsustainable. We also need to redesign our homes so that they are less dependent on such expensive fossil fuels. All forms of intensive energy use must undergo a radical design shift, at least while we are so dependant on fossil fuels.

In fact energy, food and water generation and distribution are probably the three most important areas we need to address when you consider the dire consequences this can have if we don't get it right - famine and war! We need only look at recent past and current conflicts to see from where the real origins of conflict have arisen.

In conclusion
I suspect there is much wisdom in looking at how we utilise energy in all its forms, but I also think the future will not be energy poor, but rich, and free. It is the natural condition.

Nature’s economy is worth investigating. Its benefits are manifold. The Nature or biomimicry based model is by far the most dynamic and exciting future which we can implement for the sake of a totally harmonious economic system. Indeed, for our survival. It is the fabled philosopher’s stone. Nature as archetype. It is the actual blueprint for sustainable systems coexisting in harmony for life on this planet. It is our happiness. It is a happy Earth. A happy Gaia. It is life, not currently as we know it, but as Nature knows it. But it is hopefully the way we will come to know it. For Nature is our ultimate home, and it is Nature with which we ‘feel’ most comfortable, awake, and excited, especially if we can harness Nature’s principles to help sustain ourselves most efficiently in the most life affirming ways possible. It is the only way to balance the book of life here on this planet. It is literally, the economics of life - in a nutshell!

In my next blog, I hope to be able to share the fruits of my thinking as to how we may better manage our economies - in a nutshell - the holistic, sustainable approach. We’d be nuts not to!