Opportunity Missed?

[finlo]

3 hours ago, Josem said:

No, they are (substantially) liquid financial assets.

They're described in more detail on page 17, and pages 141-146 here: https://www.gov.im/media/1375698/pink-book-2022.pdf

The Isle of Man Government was described as having "high reserves" in Moody's last review of the Isle of Man Government's credit rating in October 2021, and "very strong public finances" earlier in 2021. Certainly compared to other government's, the Isle of Man's reserves are very strong (apart from various gas/oil nations like the Middle East and Norway, few other nations have any net reserves at all!)

I like your optimism that the NI Fund is "not the plaything of government", but given that the Isle of Man Government announced just eight weeks ago that they were taking £8.25 million out of the NI Fund* to cover a black hole in recurring spending, I do not think your faith in the restraint of Manx politicians is well-placed.

 

*Source: p.3 of the same link above: https://www.gov.im/media/1375698/pink-book-2022.pdf

I may be missing something here but could you point out amongst all that guff the bit that shows we're awash with cash?

[Josem]

18 hours ago, finlo said:

I may be missing something here but could you point out amongst all that guff the bit that shows we're awash with cash?

We are not "awash with cash" and I have never said or thought that. Rather, I have said that the Isle of Man Government has significant reserves. I have said this because I know it to be true.

This is confirmed by the budget papers (See page 17 here: https://www.gov.im/media/1375698/pink-book-2022.pdf under Table 6 titled "Reserve Valuations" which ascribes a value to the reserves) and Moody's independent review. Those budget papers value the reserves at a little over £2 billion.

With Isle of Man GDP at around £5.5 billion, the Isle of Man Government reserves are worth just over 36% of GDP. This is in the same range as what Moody's reported too.

 

A simple way to compare this is to compare the IOM Government reserves of other nations:

Isle of Man: Reserves are worth Positive 36% of GDP

United Kingdom: Reserves are worth Negative 143% of GDP

United States: Negative 161%

Australia: Negative 93%

Ireland:  Negative 72%

In the case of UK/US/Australia/Ireland, these nations do not have net reserves, but because their figures are massively negative, they have net debt. Obviously, government debt is the opposite of government reserves.

Source: OECD here: https://data.oecd.org/gga/general-government-debt.htm

 

I am somewhat confused why this is a point of discussion/contention. This is, I thought, a pretty uncontroversial fact, and I do not comprehend why there's any meaningful doubt here.

 

Because the Isle of Man Government has meaningful reserves, it is able to spend more money than it takes in each year. This is exactly what is happening, and a contributing factor to the high inflation we are all suffering under. Talk that the Isle of Man Government can't print money both misunderstands who does create money (banks!) and the fact that spending money from the reserves is functionally similar to creating money anyway in this context.

[SleepyJoe]

You can stick national insurance & pension funds in your reserve tables all you like, only a fool, a big 4 auditor, & Moodys would recognise them as such [for their own dubious purposes - they're paid to give the impression of financial stability]

[Ringy Rose]

On 4/15/2022 at 5:46 PM, Josem said:

our politicians already have their snouts in there with their two front trotters as well.

They're using a fund designed to pay for health and social care to, er, pay for health and social care.

I remain eternally grateful I didn't vote for you and, even more importantly, that my neighbours didn't either.

Speaking of pigs at the trough, where does the Manx Taxpayer's Alliance get its money from?

Edited April 16, 2022 by Ringy Rose

[Lost Login]

1 hour ago, Ringy Rose said:

I remain eternally grateful I didn't vote for you and, even more importantly, that my neighbours didn't either.

I would have quite liked Josem to have been elected for a term and the likes of Kieran who stood in Middle. Not that I necessarily agree with their policies, which I expect would be at opposite ends of the political spectrum, but because I think it would be good to have a could of back benchers putting forward far more radical ideas from opposite ends of the political perspective. 

95% of what they come up with might be rubbish but with the 5% there might be something useful that no other MHK would put forward. 

It would certainly liven up Tynwald etc if they replaced a couple of the backbench MHKs who seem to be sat their using The Keys to supplement their income/pension or who are so middle of the road or purely interested on local issues that over a term they are probably going to contribute the square root of FA. I like to think that I take a reasonable interest in current affairs but I think I would struggle if I was asked to name 20 out of 24MHKs and if you put a name or picture in front of me I would not recognise or be able to say what they had done. Even some of those I could it would be down to what they did previously rather than what they had done since election.   

 

[snowman]

Post 1 Flint talks about asylum seekers.

 

Post 3 Teapot talks about immigration policy.

 

Josem talks about the UK being more welcoming than anyone else in Europe, yet in absolute numbers Germany has taken more people

 

This thread is all over the place.

 

Migration, illegal immigrants, asylum seekers .....

all different issues yet mixed together

[P.K.]

The "reasoning" behind this "Rwanda" policy as espoused by Priti Vacant Patel and totally amoral narcissistic serial philanderer and inveterate liar Bozo Johnson is a false narrative:

Twitter:

#RefugeesWelcome #Migrants https://t.co/OU47gpWr6m
(https://twitter.com/natalieben/status/1464262672699043850?t=By2zde3TfQOoxQnGQO-09A&s=03)

[Lost Login]

1 hour ago, P.K. said:

The "reasoning" behind this "Rwanda" policy as espoused by Priti Vacant Patel and totally amoral narcissistic serial philanderer and inveterate liar Bozo Johnson is a false narrative:

Twitter:

#RefugeesWelcome #Migrants https://t.co/OU47gpWr6m
(https://twitter.com/natalieben/status/1464262672699043850?t=By2zde3TfQOoxQnGQO-09A&s=03)

It also appears she was not truthful to Parliament.  https://www.theguardian.com/uk-news/2022/apr/17/fury-as-patels-borders-bill-found-misleading-on-safe-routes-for-migrants Quelle surprise.

I am not sure that the UK Government expect or believe this policy will get through or work. Rather it is all about playing politics. The policy will appeal to a reasonable percentage of voters, especially those that the Tories see as critical to retaining what were red wall seats and many of whom will simply consider that Rwanda will simply be a place asylum seekers will stay whilst their claims are processed.  The Govt and its supporters are already selling the false narrative that they are processing centres rather than deportation centres. Which goes along with the deliberately misleading impression they give about the numbers claiming asylum, that the majority are economic migrants.

If the policy does not get through or succeed the Tories will simply blame it on leftie judges, the Labour Party etc and are all ready doing that. If that becomes the accepted narrative to a section of the UK voters then job done as far as the Boris and his mates are concerned. This is a policy being set out not to genuinely try and resolve an issue it is simply an exercising in trying to gain votes. Whether or not the policy succeeds or is lawful is secondary.

It is virtually impossible to claim asylum in the UK via a legal route barring the odd scheme as currently applies to Ukraine. Quite simply the UK Government appear at present to want to basically give asylum to nobody, bar the odd situation like the Ukraine, but do not have the guts to simply stand up and say that. 

[P.K.]

Johnson is completely toxic in that he sets appallingly low standards and then completely fails to meet even them.

Unfortunately he drags every person and every institution down with him and that includes the UK's international reputation....

[tuono]

On 4/14/2022 at 11:40 AM, Derek Flint said:

https://www.bbc.co.uk/news/uk-politics-61097114

The proposals to send asylum seekers to Rwanda could cost up to £1.4bn

Obvs that isn’t all going to go to the Rwandan Government, but it looks like a bit of an earner to me. Would it have been an opportunity for the Isle of Man to set something up and take a cheque  from Whitehall? A darn sight more humane too.

No chance, if the UK won’t do it themselves the IOM should stay clear of it too.  Hope you’ve suggested this may be be a good earner to your local authority.

[Phillip Dearden]

23 hours ago, Josem said:

We are not "awash with cash" and I have never said or thought that. Rather, I have said that the Isle of Man Government has significant reserves. I have said this because I know it to be true.

This is confirmed by the budget papers (See page 17 here: https://www.gov.im/media/1375698/pink-book-2022.pdf under Table 6 titled "Reserve Valuations" which ascribes a value to the reserves) and Moody's independent review. Those budget papers value the reserves at a little over £2 billion.

With Isle of Man GDP at around £5.5 billion, the Isle of Man Government reserves are worth just over 36% of GDP. This is in the same range as what Moody's reported too.

 

A simple way to compare this is to compare the IOM Government reserves of other nations:

Isle of Man: Reserves are worth Positive 36% of GDP

United Kingdom: Reserves are worth Negative 143% of GDP

United States: Negative 161%

Australia: Negative 93%

Ireland:  Negative 72%

In the case of UK/US/Australia/Ireland, these nations do not have net reserves, but because their figures are massively negative, they have net debt. Obviously, government debt is the opposite of government reserves.

Source: OECD here: https://data.oecd.org/gga/general-government-debt.htm

 

I am somewhat confused why this is a point of discussion/contention. This is, I thought, a pretty uncontroversial fact, and I do not comprehend why there's any meaningful doubt here.

 

Because the Isle of Man Government has meaningful reserves, it is able to spend more money than it takes in each year. This is exactly what is happening, and a contributing factor to the high inflation we are all suffering under. Talk that the Isle of Man Government can't print money both misunderstands who does create money (banks!) and the fact that spending money from the reserves is functionally similar to creating money anyway in this context.

Josem

I don't think I actually disagree but the position is not simple and there are a few points here I would like to expand on.

1. Re Reserves - these figures only make sense if you take all of the various Reserves, Funds and Revenue Accounts together. They currently stand at a negative figure. There are positive reserves but they are offset by a significantly negative Revenue Account (and associated Adjustments Account). The negativeness is much enhanced if you take out the NI fund, but I wouldn't.

2. Reserves are not cash. Much of the Governments assets are not convertible to cash. In order to assess ability fund expenditure and debt we would be better advised to look at cash flow, as opposed to reserves.

3. Whilst banks can expand the money supply by loan creation, they also require repayment which reduces the money supply. Most governments can expand the money supply to fund expenditure, whilst risking inflation/devaluation, but they rarely reduce their issued money so the increase in money supply caused by Governments is permanent. The IOM Government cannot do this and so it is in a different position from most governments. In fact it is in a tricky position as the UK Government might cause inflation whilst funding its own expenditure but the IOM Government receives no benefit but must suffer the higher costs.

4. It is not reserves which allows expenditure but cash flow. If you look at the Government accounts you will see that cash flow does vary from positive to negative over recent years and in 31/3/20 was negative ie there was a net cash outflow but very positive in the prior year.

5. The Government does have a significant asset which is not on its accounts and thus not reflected in reserves, which is the power to tax. If I were a credit rating agency I would be looking at projected cash flows - we don't see these but the ratings agencies might.

6. Whilst the IOM Government could expand its Balance Sheet and increase demand and so put upward pressure on prices I can't see that this effect could be significant. Most of the prices we face are determined elsewhere and the IOM Govt's effect must be small.

I am using the audited accounts as these are presented in a conventional format and are audited.

[Derek Flint]

1 hour ago, tuono said:

No chance, if the UK won’t do it themselves the IOM should stay clear of it too.  Hope you’ve suggested this may be be a good earner to your local authority.

We don’t need the money. 

[Josem]

1 hour ago, Phillip Dearden said:

Josem

I don't think I actually disagree but the position is not simple and there are a few points here I would like to expand on.

6. Whilst the IOM Government could expand its Balance Sheet and increase demand and so put upward pressure on prices I can't see that this effect could be significant. Most of the prices we face are determined elsewhere and the IOM Govt's effect must be small.

Yes, this is all very reasonable, especially if in #1 you include the unfunded liabilities of both Government employee, and non-employee (State) pensions

On #3, true that loans require repayment, but they also tend to create an asset at the same time. I believe that fractional banking is a huge wealth creator of the last 400 years, because it has created money supply (and while I'm not familiar with the Manx experience specifically, I believe that in other jurisdictions, it is corporate lending which is the prime driver of such creation, rather than residential mortgages)

On 6, I suspect that there's ultimately a correlation between Government policies and end prices. I believe that inflation is fundamentally an interaction of the total money supply chasing the total goods and services supply - and that when the Manx Government spends more than it takes, we inflate the amount of money chasing goods/services, leading to our current inflation issue. 

[TheTeapot]

10 minutes ago, Josem said:

 

On 6, I suspect that there's ultimately a correlation between Government policies and end prices. I believe that inflation is fundamentally an interaction of the total money supply chasing the total goods and services supply - and that when the Manx Government spends more than it takes, we inflate the amount of money chasing goods/services, leading to our current inflation issue. 

This would be correct if it was the on island demand for stuff causing the price rises but it isn't. It's the cost of goods produced elsewhere and their distribution that is causing the inflation. The monetary policy of the isle of man government doesn't have an effect on the cost of swedish building timber. english gypsum or german natural hydraulic lime but these rise nearly every time you take a trip to the builders merchants. It might contribute to inflation, but doesn't lead it. 

[ManxTaxPayer]

1 hour ago, Derek Flint said:

We don’t need the money.