Archives for category: Economics

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These days I live and work in the suburbs about half an hour’s train ride from Central London. As a consequence I only find myself “in town” once or twice a month which gives an interval just long enough for me to observe the changes. I used to enjoy going into London but nowadays I always come away feeling like the place has died a little since last time I was there.

The problem is not, as with so many places, a lack of money; I think it’s the opposite. Too much money. Over the last few years there has been a huge influx of Russian and far-eastern capital. This has coincided with many of the Central London land-leases coming up for renewal and now so much of the city centre is seeing wonderful atmospheric little streets and neighbourhoods ripped apart and disfigured by huge glitzy and expensive developments that can only be afforded by the super-rich.

The places where I used to go after work are disappearing. These are the places where the quirky people, the writers, artists and thespians went. Indeed these are the places where the creatives and the innovators exchanged their ideas and developed new technologies; the places where every young newcomer and student would go to be part of the great London experience. They are fast disappearing to satisfy the immense appetite for development opportunities for the super-rich. Cool London is being crushed by a great golden steamroller.

And I’m sorry to say the super-rich are never cool. Ever. To be cool; to lead in fashion and industry you have to improvise and try the untried. If you can afford whatever you want, whenever you want it, you never need to do this; you follow fashion rather than shaping it. Cool is for the upcoming lower and middle classes. And these groups now find themselves locked out of London entirely by astronomical prices. London was always expensive; expensive but manageable. Now it’s becoming out of reach to all but the very richest.

I watch with sadness as the little nooks and crannies I used to know so well in Soho are trampled over by big money. Every time I go there I find another block where I sheltered from the rain or ate a late-night kebab has gone and been replaced by a new development of executive apartments. The sex workers and the gay scene seem to be beaten back at every turn; often with the assistance of the authorities. Their workplaces and venues closing down in the face of rocketing rents and “gentrification”. Other neighbourhoods are experiencing similar destruction as the groups that gave them their image are forced out by people who think you can buy that image through an address.

In my twenties London was the only place to be and I enjoyed it. I lived in hovels all over the city: Bayswater; St John’s Wood, Brixton and New Cross before moving out to the suburbs in search of more space. Back then my most fashionable peers were hanging out in Dalston and Hoxton. I went to some brilliant house parties there. It was a place they could afford; they made it trendy which then priced their successors out. Previous generations did the same with Islington and Notting Hill. Now it seems there is nowhere left to go.

But there is. Now I mix with people who have children in their late teens and twenties. Those kids still go off to university and do all the things we did and like us they want to go to the most fashionable and vibrant places. There is a new up and coming place where they all seem so keen to go and live. A new place to colonise and make fashionable. What is the name of this latest miracle neighbourhood? It’s called Manchester.

We’ve seen it before of course. Back in the early nineties Manchester was the place to be for its music scene but nobody barring a few diehard ‘Roses fans actually wanted to move there. Most of those bands came down to London as soon as they found fame. But this time it feels different. There doesn’t appear to be any discernible musical movement behind this change. It was the BBC going there that seemed to start the move; other media companies have followed taking waves of young trendies with them. As they decide to stay on and make their lives there in the sort of flats and localities they could never dream of affording in London, they will develop the culture and encourage more to follow and Manchester will boom. Why would anyone come to London when you can’t afford to live here? The city where tacky gold-plated identikit champagne bars are replacing the fabulous, dingy little music venues, comedy clubs and late-night cafés so beloved of previous generations?

I hope, as a northerner of sorts, that Manchester’s boom will spread to neighbouring cities and that transport investment happens to back it up. There is so much potential up there that has just been sneered at by southerners for too long. It would be good to see the boot on the other foot at last.

As for me? As a forty something I have a growing desire to leave London. It’s lost its buzz. It isn’t what it once was (I bet every generation says that), but now to my surprise I see my peers leaving too. They go to get better schools for their children and cheaper offices for their start-ups. Many only make it to Cambridge or Brighton but even so they have left London and moved elsewhere. Their places taken by yet more rich investors with bursting pockets on a quest for gold-plated, diamond encrusted, ostentatious naffness.

London will always be a world city but it is fast detaching itself from the nation that made it.

 

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The second High Speed rail-link (HS2) is designed to give a quicker journey time between Birmingham and London to boost the northern economy. Any investment in the rail network is good news, but links to London are not the only journey times that should be addressed. Routes to London are already fast and the trains are high quality but what about the journey from Birmingham to Nottingham? The current railway infrastructure, reflected to a lesser extent in the motorway network, is very London and south-east centric. 

Urban connectivity between northern cities is a major problem. Rail services linking the metropolitan areas of the north and midlands are relatively poor. Services west of the Peak District are reasonable due to the West Coast mainline but services on the trans-pennine route are less so, whilst those covering the area east of the Peak District between Leeds, Sheffield and Nottingham are poor. 

Travelling from Leeds to London takes two hours to cover approximately 270km; to Sheffield takes over an hour to cover 45km and to Manchester takes an hour to cover 60km 

You can work out average speeds from those figures. 

Sheffield to Manchester and Sheffield to Nottingham each distances of roughly 50km take about an hour, whilst Sheffield to London takes about two hours to cover 230km. 

On all these routes the trains to London will be eight or nine coach inter-city sets with a restaurant car and first class accommodation whilst the others will be formed of short overcrowded multiple units with limited facilities and under floor diesel engines. 

The quality disparity between rail services on inter-city (read to London) routes and other routes linking major cities is stark. The latter have over the years been downgraded to near branch line status with direct lines removed or served only by stopping trains. The product being delivered is not of the standard required by business people, academics and other professionals on tight schedules who might wish to combine a journey to see a contact in a neighbouring city with a quick lunch on the go. 

The geography of northern England places a number of large cities including Leeds, Manchester, Sheffield, Nottingham, Derby, Birmingham and Stoke-on-Trent around the green lung of the peak district. Others including Liverpool and Leicester are not far beyond; however the rail links between many of them are slow and sporadic. This population distribution is not greatly different from the Dutch Randstad where far more efficient services are provided – possibly because in that case they include the capital and largest cities, or the German Rheinland.

London will always be the dominant city in the UK but there’s no reason why the gulf between it and other British cities should be so great. What would help our own round-city would be a fast and efficient network of inter-city trains in the true sense; providing a high quality of on-board service and only stopping at major interchanges. 

Inter-urban connectivity is key to the northern regional economy. At present our transport system takes all the blood to the brain instead of circulating it around the body starving other parts of the oxygen needed for growth. Strong links between neighbouring cities would do more to keep capital circling within the regions and stimulate long-term economic growth which will ultimately benefit the whole country including the over-heated and overcrowded south-east.

 

Bitcoin is a virtual currency exchanged electronically. Nobody is quite sure who exactly created it but it appears to have emanated originally from a group of developers working under a pseudonym. It was first launched in 2008/9 and initially used to carry out online transactions in the gaming community.

The currency was created to automatically increase its circulation based on algorithms running on a finite number of servers. Coins are issued continuously at set intervals using encrypted alpha-numeric strings which are then harvested by private computers and smartphones equipped with bitcoin mining software optimised to compete for new coinage by solving mathematical problems. Mining software is readily available in the marketplace and the more efficient the software, the more expensive it is thus coins are most easily gained by those who already have the most money and processing power. Money supply is increased in an ever decreasing geometric curve until it reaches a hard limit some time in 2140. Each transaction is verified by a timestamp and recorded in a logfile stored on every device on the network. It synchronises around the network every few minutes to keep up to date. 

There is no central bank. The currency flow is controlled solely by an automated process independent of any outside factors or economic fluctuations. When I began writing this last week bitcoins exchanged for around US$60 each but with wildly varying values however the trend is rapidly upwards and they now appear to have passed the US$100 barrier. 

Since its creation the bitcoin has expanded in appeal. Its usage has moved beyond its intended purpose (if indeed it ever had one) onto the online silk road and thence into the terrestrial black market where it’s been used for drug transactions and money laundering among other things. Now it has started to become more mainstream. Increasingly bitcoin is becoming a tangible currency with notes and coins being produced in various places and is not-surprisingly seeing its greatest growth in usage in places such as Cyprus and Spain where traditional currency is becoming harder to come by. It has also become a haven for anti-capitalists; a subversive, anarchist currency. 

The problems here are beginning to look obvious. Bitcoin has no central bank controlling flow. It has no state to back it up; no gold reserves; nothing. It maintains its value solely by users’ belief that it is worth something. Its value is increasing rapidly as more and more people buy into it; either because they have to or because it’s “cool”. At the same time the increasing supply is slowing down due to the ultimate limit to which the programme is working. As the value increases sharply it is at the mercy of hoarders sitting on it whilst its value increases further thus reducing the amount in circulation which brings the risk of stimulating hyper-deflation in the bitcoin zone. 

Now we have the absurd situation of anti-capitalists speculating on a currency created for gaming which is being used by the poor to buy bread. It has had its first crash and at least one hedge fund is dealing in it. What could possibly go wrong? Here is a currency which was seen by many as the antidote to the current financial situation but it is still a currency and behaves like any other. Only this is a currency which now appears to have more in common with a Ponzi scheme than its advocates would care to admit. What happens when its fragility becomes apparent and its users lose faith in its purchasing power? Shares in the South Sea Company anyone?