May You Live in Interesting Times: Does the CityHome Represent the Architecture of Cheap Money?

One of the largely-unheralded casualties of the most recent property bubble in both the United Kingdom and the United States is a group whose relative lack of access to the corridors of power often sees it ignored by policymakers: young adults. With prices for housing – whether rented or purchased – long in parodic territory in metropolises such as London and New York, the lack of posited solutions for such an obvious problem is one of the genuine intellectual disappointments of the twenty-first century. Well-intended proposals such as microflats – tiny apartments that seem designed for large rodents rather than anything approaching a humanoid – have only served to highlight the lack of imagination evident in addressing this crisis; many young professionals have turned to internal or external migration as the only viable exit.

It was with this in mind that our CSO was struck by a novel form of housing being formulated at the Media Lab at the Massachusetts Institute of Technology (‘MIT Media Lab’). The CityHome is an 840ft² property the main room of which – via the use of robotic walls, appliances and furniture – can transform into any number of large rooms at the flick of a switch. One minute it can be a large dining room with space for up to fourteen people; the next, a home gym; the next, a large kitchen. While the project is still very much under development and its limitations for anything other than one-person occupancy are clear, the massive corporate underwriting of the MIT Media Lab means that should the construction industry find this idea a winner, CityHomes could soon be making their way into a newly-constructed apartment block near you.

As brilliant an idea as it is, however, the CityHome does not address the ultimate question of its own perceived necessity. Would there be any need for such electronic ingenuity in the event of a simple rise in interest rates which would end subsidised money and rebalance the housing market? As red ink soaks the balance sheets of financial institutions in both the great financial centres of the last century, it seems almost churlish to ask.

The Greater Depression: UK’s Generation Y ‘Exhibiting Existential Anomie’

10% of British youth will develop an eating disorder >25, c.10% of #students aged 13-16 self-harm; alcohol + drug abuse 'at record high'—
Asad Yawar (@Mediolana) March 25, 2013

Generation shaped by endless entertainment + little prospect of meaningful employment or spiritual growth 'timebomb' tinyurl.com/ccfoqhd—
Asad Yawar (@Mediolana) March 25, 2013

London Property Bubble Latest: Explaining the ‘Blackspots’

Last month, the Financial Times published one of the more interesting maps that our Creative Director and CSO has glimpsed in recent times, a piece of cartography illustrating the change in property prices over the past five years in the triple-dip recession-hit United Kingdom. The picture is a sobering one, with the vast majority of the country covered in one or other shade of red: since 2007, the value of the housing stock of Northern Ireland has plunged 50%;  one-bedroom flats in the Ibrox neighbourhood near central Glasgow presently retail for a measly £22,000.00.

There is one small part of the UK which has proven (at least thus far) resilient to the general reversal in the cost of property, which is London and a select few environs: indeed, the choicest central municipalities of Westminster and Kensington & Chelsea now have a combined real estate worth of more than £90bn, a higher nominal value than the entire property portfolio of Wales.

Yet within this island of house price inflation that may be the only thing standing between the nation’s banks and complete fiscal meltdown, there are some mysterious deflationary tendencies. Boroughs such as Bexley (-4%), Newham (-2%), Redbridge (-2%) and Barking & Dagenham (-11%) have all seen significant price falls in the last five years, with a number of neighbouring municipalities recording almost static growth levels. These are London’s property blackspots, places where a first-time buyer can once again purchase a three-bedroom house for between £100,000.00 and £250,000.00.

But why exactly are they blackspots at all? Why are property prices in these areas falling vis à vis other localities which are arguably at least as overvalued and not nearly as well endowed with new(ish) public transportation systems such as  the Docklands Light Railway, Tramlink and London Overground? After some quick contemplation, we came to the following, tentative conclusions:

1. Historical Perceptions. The east and south-east of the capital has long suffered from a reputation as a crime-ridden, bombed out and polluted part of the world. This may have some truth to it – but it doesn’t correlate with the eye-watering property price hikes in Hackney (33%) and Tower Hamlets (24%) over the same period that the above-mentioned municipalities have lost value.

2. Broader Economic Reasons. The eastern half of London is synonymous with comparative (and in some cases, absolute) urban deprivation. But even within this part of the conurbation there are some locations broadly recognised as aspirational – not least leafy Redbridge. And there appears to be little correlation between the ghettoes of, say, Southwark and its 28% post-2007 property spike.

3. Primeval Swamp. Many of the boroughs where the property bubble has been pricked contain are characterised by possessing an unusually high African, Asian and Eastern European population, particularly recent migrants from West Africa, the Baltic nations, the CIS, China and South-East Asia. Is London a swinging, sophisticated capital? Or a city where novelty + ‘foreignness’ negates the possibility of ‘gentrification’?

Apportioning Blame: Alessio Rastani and the Culpability of the Financial Classes

A bit like Russia Today, Press TV is an international news network whose rather obviously selective coverage of certain topics – particularly those directly concerning its purported backers – all too often obscures the fact that it puts out some genuinely superb content. A recent edition of Epilogue (16th December 2012), a book review programme hosted by the avuncular former Conservative Party MP Derek Conway and featuring Shabbir Razvi – the Founder and Managing Director of International Finance Solutions Associates – and the legendary Santoro Projects Limited head honcho Alessio Rastani.

Rastani, a man famous for telling us as much about the global economy in four minutes as most analysts manage in a lifetime of television interviews, pulled no punches as the presenter and panel discussed the 2010 John Lanchester classic Whoops!: Why everyone owes everyone and no one can pay. But one contribution in particular lingers in the memory as Rastani explained his fatigue with much of the media’s insistence on collective guilt for the ongoing global financial crisis: ‘The average person…will not sit down and go through the equations [that will lead to a crash]…I would say if there is a collective [element to the] fault, it is…95%…the banks’ responsibility, and the rest with the people.’

On many levels, Rastani’s statement is more than persuasive, and a reminder of why nearly 18 months after his fateful BBC interview he remains one of the most authoritative and cogent financial analysts anywhere in the world. However, we do wonder whether the people at large should – despite the indubitably incredible conduct of many of the globe’s financial institutions, and the governments that were meant to be regulating them – shoulder a slightly higher share of the burden:

1. No Questions Asked. Particularly in certain now familiar crisis-ridden polities – the tier-two eurozone economies, as well as the United States and the United Kingdom – many members of the public were all too happy to rejoice in the ‘good news’ of an artificial credit boom, lapping up endless programmes about property speculation and wolfing down both government and private sector Kool-Aid about how the ‘new economy’ meant that economic busts were the stuff of history books and funny-looking monochrome film from another era.

2. We’re All Bankers Now. As pondered over by Nobel laureate Joseph Stiglitz in another excellent 2010 tome, Freefall: America, Free Markets, and the Sinking of the World Economy, recent cohorts of the best and brightest students – particularly in countries hosting the major financial hubs of New York and London – have felt no higher calling than investment banking, with surreal power trips and telephone number salaries trumping any temptation to contribute to the commonweal.

3. Living High on the Hog. With financialised economies having squandered any pretence of moral authority in their quest to gorge ever-more stuff without so much as paying indulgences to the state, an ironically self-certified economic crash of gargantuan proportions was guaranteed. To make lots of money and fast – this was the only salient criterion that most people really cared about. But over five years on from the tangible beginnings of what may yet be the greatest financial crisis ever, has anything really changed?

Celebrating An Own-Goal: UK Government ‘In Raptures’ Over Net Immigration Decline!

Immigration to the UK slashed by 27.8% in twelve months; number of visas issued for study slips 20% to 209,804, 'new' EU immigration -27%—
Asad Yawar (@Mediolana) March 03, 2013

Government target of reducing net immigration to 100,000 by 2015 'not at all' inconsistent with economic aspirations tinyurl.com/ct3n27f—
Asad Yawar (@Mediolana) March 03, 2013

Mean, Moody’s, Magnificent: UK Government Debt Undergoes Historic Downgrade!

#Chancellor George Osborne 'seen dancing in the streets' after UK debt downgraded just one notch to #Aa1; '1000%' debt:GDP ratio 'ignored'—
Asad Yawar (@Mediolana) February 24, 2013

Moody's downgrade means #Germany and #Canada only G20 economies left with intact #AAA ratings; revisions 'inevitable' tinyurl.com/bwzjnos—
Asad Yawar (@Mediolana) February 24, 2013

Wake Up and Smell the Coffee: McJobs in the UK are Finger Lickin’ Good!

1,701 candidates apply for 8 jobs at new branch of #Costa coffee in #Nottingham; applicants include former #Costa managers, new graduates—
Asad Yawar (@Mediolana) February 19, 2013

Applicants-to-job ratios for 'routine' low-paid work now reminiscent of those for professional positions in mid-2000s tinyurl.com/au79muf—
Asad Yawar (@Mediolana) February 19, 2013

Immigration Policy in the UK: Biting the Hand that Feeds Us?

Since the 1990s, there has been a notable increase in the popular stigmatisation of immigrants to the United Kingdom, with substantial sections of the mass media turning terms such as ‘asylum seeker’ – the usage of which was previously the prerogative of the courts or human rights NGOs – into insults to be hurled across a playground. However, perhaps the acme of this trend was not reached until very recently, when the UK government – which seemingly overnight became aware once again of its obligations under the Treaty on the Functioning of the European Union (‘TEFU’) – seriously considered launching an advertising campaign in the EU’s two newest (2007) members, Bulgaria and Romania, attempting to dissuade prospective (and, from no later than 1st January 2014, entirely legal) economic migrants from attempting to seek their fortunes on this shores.

The presumptions behind this line of thinking appeared to be numerous, but two in particular stood out: ‘lazy’ immigrants are a drain on the United Kingdom’s benefits system; and they will ‘flood’ into the country (immigrants never settle somewhere – they always flood it). However, unlike the policy wonks who clearly never meet an immigrant knowingly, we at Mediolana had another – and dare we say, more empirically-sound – perspective:

1. Adding Up. The Financial Times recently reproduced official government statistics showing that a mere 7% of foreign nationals resident in the United Kingdom claim working-age benefits – as opposed to 17% of British nationals. The idea that immigrants as a group move to the UK for the purposes of exploiting an ever-more parsimonious system of state aid (financial institutions excluded, natch) is simply untenable.

2. Entrepreneurial Zeal. The above-mentioned figures do not encapsulate the tiny percentage of immigrants who fill (often, though certainly not always) unproductive positions in the state bureaucracy – jobs coveted for, amongst other things, their short hours and minimal risk. Conversely, one cannot walk down a high street in reasonably-sized British town without coming across an entrepreneur – whether it be a restauranteur, shopkeeper or pizza delivery person – willing to work insane hours just to make something more of their lives.

3. Geography Lesson. Are people more likely to move to countries with which they have strong linguistic and cultural links, and where there are already substantial communities of compatriots present? Will people move to the other side of the continent to find work when they have a booming megalopolis next door?

London 2012 Olympics Legacy Latest: Underground ‘Off Limits’!

Weekend of 09-10/02/2013 sees 10/13 lines partially shuttered for planned #engineering works; full service seen during #Olympics 'for show'—
Asad Yawar (@Mediolana) February 09, 2013

Just Give Me Some Truth: The Austerity of Question Time

As regular readers of this blog will doubtless be aware, Mediolana’s CSO is one busy bunny these days and rarely has time to watch any television unless it is truly essential viewing (the progress of the Democratic Republic of Congo at the 2013 African Nations Cup just about falls into this category). However, between the end of his evening shift and the commencement of a session of late-night staring at the World in 2013 earlier this week, he found that someone on another floor had left on the latest edition of Question Time (BBC 1, 24th January 2013). A few minutes of watching this programme left him wondering what any outside observers – including but not limited to the Communist Party of China, United Russia and Partai Demokrat - must think of the United Kingdom.

The key moment revolved around the issue of the ‘austerity’ policies currently being pursued by the Conservative Party-Liberal Democrats coalition. This set of policies has seen the implementation of some cuts to various elements of the UK’s budget in an attempt to reduce the country’s stupefying debt, which was estimated by US investment banking behemoth Morgan Stanley at just under 1,000% of GDP towards the end of 2011 – the highest debt load proportionate to output of any country in the G10. However, this approach has not been enough to stop the growth in borrowing, with the budget deficit reported as being £15.4bn in December 2012 – £0.6bn higher than at the same point in 2011.

Anna Soubry – a Conservative MP and the Parliamentary Under-Secretary of State for Health – was challenged on this point by the Ben Bradshaw, a Labour MP and former cabinet minister who ascended to public office at the start of Tony Blair first administration. But instead of berating Soubry for not reducing the deficit, Bradshaw advocated that Britain follow Barack Obama’s lead by imitating the United States’ ‘growth-oriented’ path – by borrowing yet more money. A few minutes later, the MP for Exeter – to general approval – argued against cuts to the armed services, despite the fact that the United Kingdom has the world’s fourth largest military expenditure budget yet is placed only 22nd internationally in terms of population; is surrounded by neighbours with which it has no territorial disputes; and, as underlined by the Barack Obama-Hamid Karzai meeting of 13th January 2013, has an ever-diminishing role in Afghanistan.

The choice the British public are being presented with – and will be presented with for the foreseeable future – is that between (a) reduced government spending which fails to stop the escalation in indebtedness and (b) increased government spending which ratchets up the escalation in indebtedness; in other words, two varieties of hitting the wall. The comedy value of British politics has rarely been so apparent; the joke is unlikely to be lost in translation.