Weather is what happens on a day to day basis. It is notoriously variable. Even in the last ice age there would have been very hot summers from time to time. To distinguish between the two one needs to have regard to:

1. Long-term trends in the averages of such variables as temperature and precipitation. By long term I mean over hundreds of years. By average I mean that the data is averaged over a period of ten or more years.
2. Changes to the weather caused by events such as vulcanism.
3. Short-term cyclical factors of the order of up to 25 years such as El Nino or the sunspot cycle.
4. Longer term factors such as changes in the orbital characteristics of the earth or on earth factors such as the cessation or diminution of the North Atlantic Oscillation. The NAO is the current that flows from the Caribbean to Northern Europe, then up to Green land and back down the eastern seaboard of the USA to the Caribbean.

Taking these factors into account is not simple. Look for example at the sunspot cycle. Sunspots are dark areas that appear on the sun. The number of sunspots increases to a maximum and then declines to zero and then start to increase, so repeating the cycle. The key fact here is that the sun is hotter when there are sunspots, increasing as the number of sunspots increases, than when there are none. So in theory the earth should get, alternately, slightly warmer and then slightly colder. If the earth is warming then this will tend to amplify the warm maximum and minimise the effect of the cold minimum.

Detecting this change is difficult for a number of reasons. Firstly the cycles are not all the same length, neither is the cold minimum period always the same length nor  does the hot maximum always reach the same intensity. For example the current minimum is one of the longest in recent times and has only just started to turn.  To complicate matters every second cycle or in other words every 22 years, the suns poles change over. What was the north pole becomes the south and the old south pole becomes the north pole.

On earth as well things change. The earth might be in the grip of an El Nino event or there may have been a recent major volcanic eruption or the weather patterns may just be going through an extended ‘random’ change. As a result of all these factors it would be unreasonable to expect a clear cut effect.

If you go to http://solarscience.msfc.nasa.gov/images/Zurich_Color_Small.jpg you can see a chart of the sunspot cycle since 1750.

Sun Spot Cycles

We are currently in the 24th minimum. The peak sunspot number varies between 68 and 250 or in other words by a factor of nearly four!. If you print out the graph and use a ruler you can measure a number of things. First whilst the average length of a cycle from one minimum to the next minimum is around 11.2 years it can vary from 8 years to nearly 15.5 -a range of nearly two times!. If you count the low (cold?) period as starting when the sunspot number decreases to 25 on the way down and to 25 again on the way up it appears that the length of this low time varies between 2.5 and 8 years – a range of over three times – with an average of 4 years! What is more it looks as though the current low time which has already been going 4 years could be 6 or 8 years in length. The peak sunspot number has exceeded 205 only three times in the last 260 years whilst it has been lower than 113 on five occasions. On the other 16 times it has been between the two.

Interesting though this may be what is the effect, if any, on the weather? Between around 1807 and 1827 the two low periods lasted five and eight years respectively whilst none of the peaks around  1805, 1816 and 1830 exceeded 113. This was an exceptionally cold period called the  Dalton minimum. Charles Dickens was a child in this period and it is thanks to the cold winters he experienced then that we owe his later writing about winters and Christmas. The previous minimum was over a 100 years long lasting the  whole of the 17th century and gave rise to the delightful paintings of winter by the Dutch master painters.

In more recent times it is not clear that the weather is linked to the cycles. The last cold period in Hertfordshire where we live was in the late 1970’s to the late 1980s during which time the sunspot cycle was either increasing to a maximum or decreasing from it. If you go back 22 years to around 1962 we get to a cold period once again. The winter of 1962 – 1963 was one of the coldest on record and it coincided with a minimum. Go back another 22 years to 1940. The winter of 1939 – 1940 was severe and in January there were frequent frosts and heavy falls of snow. Go back 22 years to 1918 and you get a year with millions dying from flu. Whilst the winter was only average it was preceded and followed by snowy winters. Go back another 22 years to 1896 and you read in the Stepney diary http://website.lineone.net/~fight/Stepney/weather.htm that the Thames froze over in 1895-6 although the other winters appear to have been relatively benign.

The winter of 1940 came just before a low period, that of 1917-8 coincided with a maximum as did that of 1895. So it is difficult, unequivocally  to link the winter weather fluctuations with the low period in the sunspot cycle, principally I think because there are so many other factors that can upset the relationship.

This has not of course stopped some scientists form abusing the data. A recent paper purported to show that sunspot cycles were the cause of current global warming. Hopefully the reader can see that the variability and confounding factors are so great that such a conclusion has to be nonsense, at best. It is, at best, poor science, done by poor scientists. At least they did not attempt to use the data to show the world was cooling. We still have that claim to look forward to!

If you wish to see images of the sun and sun spots go to http://sohowww.nascom.nasa.gov/sunspots/

One question I would like to know the answer to is who was allowed to vote on this issue. If it was just the  “scientifically’ chosen English amongst the 130 then that is one matter. However if it was everyone then the vote is invalidated straight away – The English have never been allowed to vote on devolution in Wales, Scotland or N. Ireland!

How Power 2010 could have failed to select an English Parliament as one of their issues I do not know. Over 50% of voters in England regularly support the idea in opinion polls. They do so because an English Parliament gives the people of England  a government of the English, by the English, for the English, just as the Scots, Welsh and N. Irish have for themselves.

Having a glorified Commons Committee, subject to the other nations simply because it is a committee of the House, does not provide a government of the English, by the English for the English. And what will happen after the Commons? Will the bill go through to the Lords to be adjudicated on by the Scots, Welsh, and N. Irish?

Does this proposal require that Cabinet Ministers for devolved matters (Health, Education, Transport, Justice and so on) only come from English constituencies? And will these and only these Cabinet Ministers make decisions in Cabinet about English matters, sitting on the English, yet again, sub-committee?

A clearer example of confused thinking and poorly thought out logic is difficult to find.

Currently three, 75%,  out of the four nations, having 16% of the population, have their own government. In round terms 20% of the people have 80% of the democracy! This is a clear and absolute nonsense and no clearer example of Pareto’s Principle need be given http://en.wikipedia.org/wiki/Pareto%27s_principle.

When Jack Straw (Lord Chancellor and Secretary of State for Justice in the Westminster government, that most racist of governments!) claims that the English cannot have a Parliament because they constitute 84% of the population he is not showing his ignorance of Pareto. Misquoting Pareto is a ‘cunning plan’ based on a clear assumption that the electorate are a bunch of ignorant idiots who will not recognise his statement as a misquote, but rather treat it as a clever analysis of the issue, which it is not.

Do not vote for this committee approach. It is disrespectful to the English, it makes the English less equal than the other nations, it is extremely unfair to the English and worst of all it will not work!  Better by far to have a Parliament for the English, an elected House of Lords and a House of Commons with, in total, no more elected representatives than currently are elected or debate matters. No extra cost and much greater democracy!

I suppose Power2010 will come up with the usual excuses for putting forward this idea, along the lines of “It wasn’t us gov.”, or “I was only following the rules” or “The committee we appointed made these decisions” -  (whine, whine, whinge, whinge). Shame on you! This is a disgrace!

David Cameron’s motive for putting the idea forward is clearer. He has already said that he does not want to be “Prime Minster of England”, conveniently forgetting, or perhaps never understanding, that the devolved governments are led by a First Minster and not a Prime Minster – not much respect for the English there, then. The real reason he made the remark is of course about Power. It is correct that most of the work of government occurs in the matters that are devolved; Justice, Health, Education and so on. This means that most of the key levers for getting re-elected or gaining the confidence of the electorate are in devolved matters. Given that 84% of the votes are in the 84% of the devolved English matters you can see how Cameron, Clegg and Brown (and Straw) want to keep these matters within reach of their sticky fingers, close to their greedy hearts and out of Control of the English for ever.

It might be of course that Cameron just wishes to distance himself from Bonar-Law an earlier Conservative Prime Minister, a Scot, born in 1858 in New Brunswick (the Canadian Confederation did not occur until 1867) but raised in Scotland, who referred to himself as the Prime Mister of England [The Making of the English National Identity by K. Kumar, ISBN 0521777364]. Bonar-Law became leader of the Conservative Party  after Aurthur Balfour (also a Scot) and became Prime Minister in 1922 but sadly had to resign in 1923 due to throat cancer. His was the shortest Prime Ministership of the twentieth century and he is known as the Unknown Prime Minister. A name Cameron will not want!

The Bank of England helpfully provide a pamphlet to explain Quantitative Easing (Q.E.) http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm#

In this the Bank explains that its approach to Q.E. is to purchase assets from private sector institutions, banks, pension funds, insurance companies and non-financial firms, for example. They do this to ensure that the risk of banks holding on to the money is ameliorated. If the Bank buys gilts from a commercial bank the money will end up as reserves of that bank and is capable of being lent on, subject to the bank’s desired reserve ratio. If the Bank buys its gilts from a non-financial firm or a pension fund the money will eventually end up in a deposit account in a bank, where it is available for lending on, subject to the bank’s required reserve ratio. The money supply effect will therefore be similar.

In its pamphlet the Bank describes it monitoring process. It will monitor

1. The terms and conditions offered on loans?
2. Are corporate debt markets easier for companies to borrow in?
3. What is happening to asset prices (such as shares and house prices)?
4. Are banks lending again?
5. What is happening to the supply of money?
6. Is household spending increasing?
7. Is company expenditure increasing?
8. What is trend in inflation?

Whilst the Central Bank is buying government securities and lowering the interest rate, the government, struggling to deal with reduced tax revenue as a result of the recession, will be selling government securities and finding it is helped by the central bank buying them in. This is called ‘monetizing’ the government’s debt.

In effect the government is printing money to buy its own debt. There is a risk that the government will become addicted to monetizing its debt, pimping its central bank to buy more and more. The classic case is, of course, Zimbabwe where things went so far that in the end the currency had to be junked. In truth many Central Banks are up to it.

But this is not the only economic stimulation in the UK. There is the matter of the governments deficit budget spending. Currently in excess of £175 bn in the current financial year this provides a huge stimulus. Moreover Prime Minister Gorden Brown is driven not by financial prudence, but by a constant concern for his image and by his reckless desire for reelection  at any cost, to anyone. As a result we are told that this stimulation will go on for years. This season should remind us that after the gifts of the kings there followed the slaughter of the innocents!

This gives the chancellor and the Bank three choices. The first is to stop or reverse Q.E. whilst continuing with the budgetary stimulus. The second is to continue or stop Q.E. whilst reducing the budget deficit by a material amount. The third is a mixture of the two. For example this could mean stopping Q.E. whilst making some adjustment to the deficit by increasing taxes generally or cutting government expenditure. A start on the latter has been made by the recent increase in VAT back to its original 17.5%.

If Q.E. is not reversed there are two key risks. The first is that there will be a large stock of bonds in the Bank’s hands “overhanging” the market. This is likely to lead to higher volatility and possibly higher interest rates as a result. The second risk is inflation, possibly severe inflation, and a return to a credit boom. The risk of cutting budgetary expenditure is increased unemployment and reduced demand in the economy.  It seems that you are dammed if you do and dammed if you don’t!

So, let us get back to basics and see what is happening to the eight indicators of the Bank of England.

1. Loan terms. A recent report in the International Financial Review was entitled “From Famine to Feast – a review of the corporate bond market”. The bond markets were open for the entire investment grade spread
2. In Europe certainly corporate borrowing appears easier.
3. Asset prices are increasing
4. Banks are lending but the government has had to increase its support for SMEs
5. The liquidity preference of corporations and individuals is still high
6. We have seen record retail spending this Christmas
7. The trend of company expenditure is not yet clear.
8. Inflation is increasing.

So, what should the Bank of England do? Is it time to reverse Q.E. or are the hints of the Chancellor, that there will be budget cuts, sufficient to dissuade them from this action?

Why not make your own choice and take part in the polls on the sidebar?

Next post will be on climate and weather and how the government and local authorities could have made better forecasts of the chance of cold weather than they appear to have done. There really is no place for the string of excuses we have been treated to!

When you make a deposit into the bank, the bank will lend out that fraction of the deposit that will leave it with its desired or regulated reserve ratio. So if the reserve ratio is 10% the bank will lend out up to 90% or £90 out of every £100 you deposit.

The bank into which the £90 loan is deposited will in turn lend out 90% or £81 of this deposit. The money merrygoround continues until the banks have lent out £1000. Your £100 represents the 10% reserve ratio. This represents an increase in the money supply since all depositors can access the £1000. But if there are many hundreds of thousands of depositors the chance of this happening at the same time is very low, unless there is a run on the banks. Banks therefore depend on the average of all deposits and withdrawals  in a day netting out to almost zero.

This simple analysis is, in fact, not quite correct. If the £100 you deposit has been withdrawn from another UK bank then that bank will have had to reduce its loans setting up a merrygoround in the opposite direction. So in this case there will be no net change in deposits. For this reason it is possible to treat all UK banks as one when doing this sort of analysis.

The Money that comes from central banks, however, is new money. When it is deposited in a commercial bank it can be lent out and start the money merrygoround without any corresponding opposite reaction.

When a crisis hits the banks they have a problem of knowing which of the loans or investments they have made are sound. Because of this they will all decide to hold more cash, perhaps 30% more, so that their desired reserve ratio is now 40%. If the banks had £1000 of loans and £100 of cash they will now wish to call in any loans they can, like overdrafts, so that they now have £250 in loans and £100 in cash in order to meet their, new, desired reserve ratio. This 75% reduction in loans would, if allowed to happen, cause havoc in the economy.

The solution is to give the commercial banks sufficient money to stop this happening. In this case deposits would have to increase by £300 to have the desired effect. Now with £400 a loan base of £1000 can be supported.

To do this the Central Bank buys government securities and perhaps high grade corporate bonds from the banks using new money created for the purpose. This gives the banks more money, so allowing them to increase their deposits to the desired £400 required to stop the loan recalls.

Buying in the government securities from the banks causes their price to increase and this means that, happily, interest rates drop. Just what you want in a crisis!

If you now do nothing the crisis will abate and banks will now increase lending so as to get back to their 10% ratio. But they now hold £400 to act as reserves. This means that deposits, and hence money supply, will increase to £4000 compared to the original £1000. So much money going into the economy so quickly will lead to massive inflation. What can be done?

Well the central bank will now try to sell the securities and bonds back to the banks in return for the excess cash. The bankers will protest. After all they are lending to companies and people just as the government wanted them to. But, eventually, they will sell the securities back, not of course at the high price the central bank originally paid, but at a much lower price. This will give the banks a(nother) good profit and interest rates will as a result of the lower price go up, so helping to choke of any incipient inflation.

Of course the Central Bank must commence selling the securities back to the banks at the correct moment. Too early and any recession is extended, too late and rapid inflation occurs.

What could possibly go wrong? Next week the grizzly story!

So the heavenly duo (they come from up there after all, don’t they) have come up with the bright idea of selling off English Assets. Gordo’s list of quick sales; the Dartford tunnel, the Chanel tunnel, the Tote and so on are all English. When he says that he will be asking local authorities to make sales of their assets he is referring only to English local authorities.

Note that he will not be selling off Scottish assets, even though the two worst offenders in the current Banking crisis are Scottish Banks. That is because Gordo, when he worked on the legislation to form the Scottish Parliament and give the Scots Home Rule, made quite sure that it completely protected the assets of Scottish local authorities so that Westminster could not direct the sale of their assets as he can those of English local authorities.

This means that every school playing field, every public space, every local airport, the pride and joy of the local people as well as a source of employment will be up for sale, quite possibly to foreign European companies flush with back-handers from their governments. And are they going to employ local workers or will they bus in their own people?

However when it comes to preserving their own power and egos it isn’t just plundering English assets that the heavenly duo are so good at. They also deal a good hand in cynicism. On Wednesday  14th October 2009 the government announced a plan to spend £12 million in 130 white working class wards. Where is this money coming from? From the £16 billion of English Assets. In other words the Labour government intends to buy votes in next years general election by returning to the English less than 0.1% of the money it gets from selling their playing fields, leisure centres and employment opportunities.

The Tories are no better. Despite the fact that their web site calls them the English Tories their leader, David Cameron, is on record as saying “I do not want to be the Prime Minister of England”. Well Mr Cameron, the Leader of an English Parliament would be the First Minster, as in the Scottish Parliament. Only someone totally uninterested in England and the English could make that mistake.

The best that can be said about the Liberal Democrats is that they simply ignore England.

Only a few days ago the Sun newspaper transferred its allegiance to the Tories from Labour. Gordo’s response was proudly to  announce that it wasn’t the Sun that would decide who ruled at the next general election, it would be the British People.

Wrong, Gordo! it is the English people, as always, who will decide who rules next.

Will they vote for Gordo, the financial genius who sold off more than half of England’s gold at $275 and ounce or $3.5 billion when at today’s price of  $1063 per ounce it would have been worth $13.5 billion, the financial genius who claimed to have put an end to booms and busts, the financial genius who claimed to have saved the world?

Will they vote for Cameron, surely he must be a Scot, who cares so little for the English that he has stated that he doesn’t even want to lead them?

Will they vote for Nick Clegg, a man indifferent to the aspirations of the English?

Or will they vote for a party that will put England first, that wants England to be a nation once again, a party that cares for England, English jobs and English assets?

Only time will tell!