Archive for the ‘UK’ Category

Why so many empty seats in London Olympic 2012?

2012/07/30

Since Olympic is considered the greatest show on earth, it is assumed that there would be a huge demand for tickets and thus gallery will be full of sports fans.

But we can all see how many of the events in London Olympic so far have got plenty of empty seats!

How did it happen?

First let us understand how Olympic seats are sold. The seats are grouped under different categories. Roughly, there are two major categories – open to public and official allocations. Open to public is a fraction of the total seats. The rest are divided among corporate sponsors, Olympic officials, political dignitaries etc. The sponsors are officials are given a large number of free tickets (in return for their sponsorship or as perks in case of officials). These groups, theoretically, are expected to re-distribute the tickets among their own people.

Clear, this did not happen. After receiving the free tickets, the sponsors or officials often did not bother distributing them to their employees or associated. Even when they distributed, it went to people who were not that interested in the events – so never bothered to turn up in the events.

There is a demand from public that why empty seats are not filled by waiting public then and there. The Olympic organizing committee is yet to announce their plan of how to fill those seats up going forward during the rest of the Olympic session.

This incident surfaced the unethical nexus between Olympic organization committee and corporate sponsors where general public’s interest is sacrificed in favor of corporate sponsorship and officials’ personal agenda.

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Why Barclays bank was fined £290 million?

2012/06/28

In June 2012, British bank Barclays was fined £290 million for trying to manipulate LIBOR  rates.

What does that mean?

Just like normal people borrow money from banks; banks themselves borrow money from other banks. They do this for various reasons but often due to cover cash flow in short duration. LIBOR is an indicator or how much one bank has to pay to another bank for borrowing money. In other words, it is a rate at which one bank pays interest to other banks. Just like a customer with good credit score gets a lower interest (as he is considered lower risk), a bank with good reputation gets lower LIBOR rate. How the banks’ credit scores are determined? It is calculated from bank’s financial numbers like how much it is actually costing them to borrow etc.

Barclays actually lied how much it is costing them to borrow. This, in turn, makes them appear lower risk to other banks compared to what might have happened if they quoted their true financial numbers. Thus, they lied to get a lower interest rate from other banks. So, if they had disclosed their true financial data, other banks could have charged more interest to lend them money. Thus investors who lent money to Barclays lost money in interest.

Just like a country’s share index is measured upon how some big businesses are doing, a country’s LIBOR rate is also a measure of how healthy its overall banking sector is. If one bank reports wrong financial figures for its own health, this will affect the overall LIBOR rate. Many financial (both business and retail) interest rates are directly dependent on LIBOR rates. So, wrong manipulation of LIBOR rate is considered a fraud.

Barclays’s traders also bribed and coaxed employees of other banks to make them submit their figures so that it looks better in Barclays favor.

The common British public demanded a full enquiry on this unfair practice as they suspect other banks might be doing this as well. However, so far current British government did not show any move to initiate such enquiry. People believe that this is because wealthy bankers pay hefty donation to political parties and thus neither Conservative nor Labour party are willing to upset their billionaire donors.

Can you use typical Hackney cab as personal transport?

2012/06/16

The London cabs are ubiquitous symbols of the city.  Most licensed cabs in London and other UK cities are of this type. Although there are few other licensed cabs which use other cars. Please note that minicabs (which must be pre-booked and can’t be hailed on road) use normal vehicles.

The way interior of these vehicles are designed it is easy to push pram/wheelchair inside. It is also specious inside to carry enough luggage to airport.

But why don’t people use it as personal car?

The first reason is the cost. Typical cost to buy these vehicles new is around £30,000 – which is quite expensive considering you can buy various luxury cars at this price. Secondly, these cars are not very comfortable for long distance travel. Seats in normal passenger cars are usually more comfortable. Thirdly, even if you buy one, you may find that many people are trying to hail you on streets assuming it is a cab!

Typically, these cabs don’t carry passengers besides driver. All 5 passengers seat behind the driver. There is a rear bench seat for 3 persons and there are 2 additional seats which are stowed away when no one is sitting on them. This explains why it is not very comfortable.

How does day light saving work?

2012/05/30

If Daylight Saving Time (DST) is not in operation, then during the middle of year (May-Aug), the Sun will rise in UK around 05:00 will set around 19:00.

If we use DST, then clock will go 1 hour forward so that it will appear that Sun rises at 06:00 and sets at 20:00.

This means, you can switch on your lights in your house after 1 hour every evening (well, sort of).

So this will give you one extra hour of daylight every day. For most people it is a benefit.

However, if you have the habit of getting up very early, then you will have to switch on the light (if you get up at 05:00, till 06:00). That means, even though we are saving day light in the evening, we are losing day light in the morning.

As most of the people do their own entertainment in the evening (after finishing off work), it is argued that DST gives more daylight to most number of people. People are expected to spend more time outdoor and likely to buy stuffs till there is light, which indicates a more active economy.

Of course, same benefit can be achieved by re-adjusting opening and closing hours of business, say 09:00-17:00 instead of 08:00-16:00.

Ok, so if day light is saved by making clock fast forward, why not observe the same time thruout the year?

This will cause problem during winter. The Sun will appear at a later time – which will force children to go to school during dark hours in early morning. In fact, this is one argument often used in favor of turning clock back during winter. As clock goes back, the evenings will become darker sooner (e.g. at 16:00 eveything becomes dark when UK follows GMT during winter). That means, all the day light hours saved during summer are lost in winter! Supporters of dual time argues that during winter no body wants to be outside anyway so no harm if it becomes dark sooner. To some extent, it is true.

Unexpected item in bagging area

2012/05/30

Typical self-checkout till

 

This is common message you hear if you have ever used self-checkout tills at supermarkets!

Supermarkets are increasing using self-checkout tills to reduce cost (i.e. they don’t have to pay someone to manage tills). Most shoppers just hate these self-service tills.

It usually consists of 3 slabs. On left most slab, you keep your items. On central slab you scan barcodes of each item and then put them on bags on your right hand slab.

The machines checks that weight of scanned item (as obtained from store’s database) should equal to the actual weight on your right hand slab (which has a weighing gauge internally).

When you scan an item and place on the bagging area, the computer cumulatively adds the weight and expects the theoretical weight be equal to actual weight of items placed on bagging area.

If shopper scans something and barcode is read wrongly by the computer (a very common problem), it then finds that weights on scanner vs bagging area are not matching and shouts “unexpected item in bagging area”. It requires a store employee to reset the terminal for further use.  Naturally this irritates the shopper. From supermarket’s point of view, this message indicates a fraudulent behavior from customer. They think customer might be trying to steal something and thus not placing it on the bags by not scanning! Thus, the message is heard loudly which is to attract attention of a store employee.

In contrast to other European countries, in UK shoppers are often likely to start a conversation with till operators (although this tradition is dying down within younger generations) and thus UK shoppers hate (especially older generation) absolutely hate self-checkout tills.

Why Social Mobility is important?

2012/05/22

Social Mobility is a measure of to what extents someone’s parents’ income/education/status will dictate how much someone can achieve  (income/education/status)  in their adulthood.

Social Mobility = Parent’s income / Their Child’s adult income

For example, when you were young, your dad earned $20,000 per year in his 40 years of age, which is in today’s terms, say $40,000.

You are an adult today and in same country you are earning $80,000 at same age.

So, your social mobility score is = 40000/80000 = 0.5

If the score approaches towards 0, it indicates higher social mobility. On the opposite scale, if it becomes 1 or more than that, it indicates lower social mobility.

All countries should aim for higher social mobility because it signifies that even if you were born in a poor/disadvantaged family, one should still be able to rise at the top. So, technically speaking, if you live in a country with higher social mobility scores, you are more likely to become CEO of a big company even if your parents pushed trolleys in supermarkets in their whole life.

When a child is born to a rich parents, s/he is more likely to get better care, better education etc. This often leads to successful life at adult stage. Social Mobility measures the extent of cumulative advantage.

So, to sum up,

poor parents, rich kids = higher social mobility
poor parents, poor kids = lower social mobility
rich parents, rich kids = lower social mobility
rich parents, poor kids = bad social mobility (shows that situation worsened over time)

Although how much one can rise in life often depends on individual’s capability, government rules can also influence the outcome. For example, if studying in law school requires expensive upfront fee payment, then only rich people’s kids can afford that – which will lead to lower social mobility score. However, if government can ensure fees are less so that any meritorious student can get admission, then  kids from poor family can study and earn good money, which indicates higher social mobility score.

Some example scores:

Denmark    0.15
Austria    0.165
Norway    0.17
Finland    0.182
Canada    0.191
Sweden    0.274
Germany    0.32
Spain    0.32
France    0.41
USA    0.47
Italy    0.48
UK    0.5

This indicates Denmark has a much higher social mobility than United Kingdom.

 

How big corporations avoid tax?

2012/05/17

In 2011-12 there were several news in the British media about how big multinational companies like Amazon, GSK, Vodafone etc. avoided millions of pounds of tax using loopholes.

A documentary by BBC Panorama outlined how they achieved it.

Multinational companies create instances of their companies in many countries. On these occasions they created their subsidiaries in Luxembourg where corporation tax rate is around 1%. (against UK’s rate of 25% or so).

They showed as if Luxembourg subsidiary lent billions of pounds loan to UK company. Then UK company paid millions of pounds as interest. This will appear as expense in UK company’s account statement and thus not taxable.

Although this is somewhat over simplification, the basic concept remains the same.

These corporations use well known accountancy firms like Price Waterhouse Coopers as ther advisors. PWC also advises UK’s main political parties as well. So it is alleged that government is well aware of these loopholes but shows no real initiative as they themselves have vested interest in assisting large multinationals tax avoidance.

All these loopholes are entirely legal as per European and UK laws.

Which whole milk and skimmed milk cost the same?

2012/05/10

Whether whole milk is cheaper than skimmed milk or not, depends on where you are buying it.

Milk is produced as whole milk (i.e. with fat). Then it is pasteurized (i.e. killing of bacteria via heating the milk but not altering its taste or nutrition value). After this, the excess fat is removed to create skimmed or semi-skimmed milk. Now removing this fat is an additional process for skimmed milk. So that indicates skimmed milk should be more expensive. However, the removed fat can be put for other uses – so there is an intensive to selling skimmed milk

The price of milk often reflects whether it is placed as a lifestyle choice or based on actual cost of processing. For example, in UK, whole milk and skimmed milk cost the same to encourage people consume less fat. However, in India, whole milk costs more than skimmed milk because the former contains additional fat.