Monday 30 June 2008

The Scorched Earth Strategy Rolls On

“This is a green revolution in the making... It is the most dramatic change in our energy policy since the advent of nuclear power". (Gordon Brown)

And presumably quite urgent ? Well apparently not.
While I was abroad last week the clunking Renewables Strategy paper was published, as trailed, and it turns out to be merely a consultation exercise, to inform measures that will be put in place next year. For those who believe the ‘revolution’ to be vitally necessary, this is like opening a 9-month consultation in September 1939 on what might be done in response to Herr Hitler’s encroachments in Poland.
Reading between the lines, it’s fair to say the authors of this document clearly have no realistic expectations of the UK’s share of the EU renewables target being met ("in a market economy, policy alone cannot guarantee outcomes"). Unlike the ‘legally binding’ approach adopted to the UK CO2 emissions targets - whatever that might mean in practice - no such strictures are being adopted on renewables.
And, let’s be clear, this is another of the Cluncker’s scorched earth measures. This strategy will cost us all a lot of hard £££ (3% of GDP is probably the most realistic estimate), but not just yet. Here’s the key sentiment in the document:
“costs will translate into higher energy prices, but the impacts will not be felt until after 2010There will be no immediate impact on bills. The impact will increase as 2020 approaches and our renewable deployment rises, particularly post 2015”
Now, remind me – when is the next General Election to be held ? Ahhh, I see ...

Saturday 28 June 2008

Manchester United under scrutiny

H. Harman
Minister for Administrative affairs


Dear Sir Alex Ferguson
The new employment laws on entrenched discrimination have now come in to force. Sadly our inspectors have found considerable failings in the manner in which you employ your personnel.
As a coach of a high profile national team you must take immediate steps to rectify these appalling lapses.

1] While welcoming your response to our previous diversity and multi-cultural targets and guidelines we feel that more could be done in this area. Of your top 26 players 11 are British Males. Only 2 of these 11 could be classified as Black British or Afro Caribbean.
Some 33% of your workforce is British with the remainder coming from the EU [11] Latin America [2] Korea [1] China [1] . These fit well within our profile for the UK as a whole except that you are seriously deficient in Asian and Middle Eastern and west African personnel.
We strongly advise you to make your next signing from India or Syria in order to balance out the structural integrity and ethnicity of your team.

2] A serious breach. Not a single member of your first team or champions League squad is a woman. Women make up at least 50% of the workforce and as such it is expedient that you divert resources to the recruitment of women players for your next 11 players. This can be achieved and even enhanced with condition [1] above.

3] Pay.There are very serious differences in the pay awards of your players. We note that Wayne Rooney receives some 79% more than Christopher Eagles, yet they are both squad players performing a very similar role. They both work on the same 90 minute Saturday shift so the pay should be commensurate.
The committee takes a very dim view of this practice and it must cease. Equal pay for equal work.

4] All players have a contract that makes them work Bank Holidays. It is not compulsory to work on Bank holidays and this clause must be removed.

5]Sadly another area where you are not following our guidelines is on age. Edwin Van Der Sar has been asked to resign. He is the eldest member of your workforce at just 39 years old.
The mandatory retirement age is 65.
Mr Van Der Sar has a very clear tribunal case if he so wishes. It would be advisable for you to reinstate him as first choice keeper until 2035.
[ You cannot move him to a position less favourable than the one he enjoyed before]

You should also stop discriminating against footballers because of their age. We have noticed you are already offering lesser roles to Paul Scholes and Ryan Giggs, despite their years of loyal service. Perhaps you should consider some of your former players. Dwight York, Denis Law or Ray Wilkins.
Or better yet combine with points [1] and [2] to hire an elderly female lady from Pakistan for the difficult left wing position.

We hope you will act swiftly on our recommendations in recruitment, publish all players salaries and then give them all equal pay and totally re-think your ageist practices.

We wish you all the best in the new season and feel sure that with your record of long running success can easily adapt to our recommendations.

Yours sincerely
Harriet Harman

Making Britain Grate

Thursday 26 June 2008

Part-time women receive 40% less pay than full-time men.

"Part-time women receive 40% less pay than full-time men. Do you think that that's because they are 40% less intelligent, less committed, less hard-working, less qualified? It's not the case."
Harriet Harman.

40% .... this is the figure appearing in the papers, exactly as intended, and its the usual twisted statistics.

So its a 40% pay differential .Why is this a surprise?
The average man, by definition will be on an average wage.
Full time wage is £25,896 or £498 pw or £12.45 per hour [ gov stats 2007]
The average part time worker will be on the average minimum wage.
£10,337 or £198.80 pw or £4.97 per hour. [ confusing as there are 3 rates for minimum wage, but trust me its near enough]

£25,896 x 40% = £10358

So, astoundingly, Ms Harman has discovered that Part Time workers are generally working in the lower paid sectors such as care work, retail, hospitality and areas where no major skills are required. Who would have thought that?

The occupations with the highest earnings in 2007 were 'Health professionals', (median pay of full-time employees of £1,019 a week), followed by 'Corporate managers' (£702) and 'Science and technology professionals' (£670). The lowest paid of all full-time employees were 'Sales occupations', at £264 a week.

So the 40% is a totally fatuous statement. Like saying Apples are 40% rounder than Bananas.
That's not like her at all.....

Much later on, and of course largely unreported, is the actual 12% pay difference between men and woman. This isn't very surprising either considering career breaks, family commitments and the different departments and areas that the respective sexes choose to work in.

PS: Listening to Yvette Cooper on Question Time apparently this is nothing to do with equality really. Certainly nothing to do with "positive discrimination". Reading The Guardian the phrase "positive discrimination" is clearly used. Inverted commas and everything.
Its to allow employers to make the decision that they want to make without fear of facing a tribunal. A tidying up of existing legislation.
It seems a very confusing way to it.

The high cost of insanity

The Government is always keen to talk about de-regulation and getting rid of red tape; I have always felt this to be an Orwellian statement like war is peace etc. Socialists have no intention of deregulating anything as they seek to control everybody's lives as far as possible.

A prime example of this madness is made in The Times today. New laws mean that literally millions of people will now have to have background checks to work with children:

"Instead of just having their records checked, all teachers, nursery staff and youth workers will be required to register with a new agency, the Independent Safeguarding Authority (ISA) at the cost of £64.

Ministers have also decided that thousands of other adults should pay for the ISA ‘seal of approval’ including, most recently, parents who have overseas students to stay under school exchange programmes.

In total, 11.3 million adults will have to be vetted, according to the latest estimate from the Department for Children, Schools and Families and contained in the new report."

So that will be £732 million to be spent on this programme, mainly by government agencies. This all does not even mention that there are not the resources to do the checks in any event, leaving many people unable to start jobs they are qualified for and children without teachers and nurses.

The Labour state belivies by doing this that it is helping, instead it is encouraging people to rely on it for everything and to abandon their own instincts of trust and judgement - all at a huge cost to the taxpayer.

Where was this promise in the Labour election manifesto (don't bother it isn't).

Wednesday 25 June 2008

Barclay's fund raising

I wrote on Monday of the woes that currently betide HBOS. Now today Barclays' bank have decided to look to clever sovereign wealth funds for capital.

The FSA had asked them to repair their balance sheet and thanks to RBS and HBOS (and Bradford & Bingley) the markets have had enough of giving capital to stricken banks.

Not much cheer for for UK shareholders with a dilution to the investment; How times have changed since the beginning of the credit crunch.
Will the new investors do better than Singaporeans and the Chinese, who have lost half their money since investing in Barclays' just a few months ago?

Tuesday 24 June 2008

Fancy a London Property

News in today suggest rents on London office space will fall another 20% this year; worse news for owners (errm...usual suspects, banks, pension funds etc) is that 650, 000 square metres of new property is being built over the next 3 years.

Tomorrow the real lay-offs begin at Citigroup UK, with Goldmans having already started the ball rolling by clearing out its M&A and fixed income groups. So even more space will become available.

Still for those looking to get on the housing ladder, it may be that office space could drop far enough to compete with housing rents (albeit in Chelsea...); maybe Alice could finally afford the upgrade.

These good news stories just keep coming and coming.....

Monday 23 June 2008

HBOS car-crash

We have written a few times on the credit crunch impact on the UK financial services industry.

Nick wrote an excellent piece here on how slow the effects can be to feed through into the system. I contributed with a couple of posts a few months ago on the weakness of HBOS in particular. Even IPM picked up on this.

So today's revelation that Hedge Funds have some quite large short positions in the stock is no news really. However the impact is huge. Just last week another bad trading update has seen the shares slide to well below the Rights Issue price. This means it is quite likely there will be a poor take-up. In turn this means the underwriters will have to sell the shares in the market.

HBOS will get the money but the underwriters will potentially lose. Now seeing as they always make money on these deals, effectively for nothing, then this does not cause me (or others) to well up with tears.

However, it does mean more losses for the sector as a whole and the possibility of another big drop in the share price of HBOS. Where will the bottom be? Who knows, but it will leave HBOS very exposed to take-over or worse in future months.

Many journalists and financial players are bored with the credit crisis and are calling a bottom because they want a new angle and a new story or more profits. I think this episode highlights how far we are from that being the case.

NB A further point to make is that the FSA can't even get enough evidence to prove insider trading when it is obvious to everyone what happened; a bad state of affairs. I am never keen on extra regulation - but without it markets cannot operate efficiently. I am glad the FSA made the Hedgies expose their positions, a false start maybe, but signs that at least they are trying something to help investors understand the full picture.

Sunday 22 June 2008

Always read the small print

Royal Mail and the government have been a little at odds over the future of the Post Office.
As shutting local offices was revealed to be a big vote losing factor in the recent local elections the government has been keen to draw a line under the closing of post Offices and 'Move On'.
However, the Post Office management unhelpfully hadn't been as definite, committing itself to keeping open some 7,500 offices against the governments commitment to 12,000.
Why the discrepancy?

As usual the answer is in the small print.

"The government has committed funding to allow a Post Office network of 12,000 offices UNTIL 2011, and a strong ASPIRATION to continue beyond this date"

What does aspiration really mean?

  • a manner of articulation involving an audible release of breath
  • inhalation: the act of inhaling; the drawing in of air (or other gases) as in breathing
  • a lofty goal
  • An ambitious plan
  • A fervent hope

  • pick any one you like.

Saturday 21 June 2008

Renewables: Reality at Last ?

Or still tilting at windmills ?

In today’s Grauniad the government is trailing the headlines of a new ‘renwables strategy document’, and it sounds as though reality is beginning to dawn.

‘The long-awaited renewable energy strategy … will say Britain needs to make a £100bn dash to build up its clean power supply if it is to reach its EU-imposed target of producing 15% of the country's energy from renewable sources by 2020.’

Long-time followers of Drew’s energy ramblings here (Sid & Doris Bonkers) will know that we have long said the scale of costs and efforts required to implement the EU plan will be commensurate with events like mounting a war or, in more peaceable terms, German reunification. £ 100 bn ? Well at least this time they have put roughly the right number of noughts on it.

And in another outbreak of realism:

‘The renewables strategy concedes that the target will only be achievable if there is a completely new approach to generating energy. "We might just possibly reach 15% renewable energy by 2020. It will require maximum build rates and a very rapid response from the supply chain," says the document.’

. . . But more probably, ahem, we won’t reach 15%. Of course we won’t. Some of the required £££ represent investment, but a very large part is pure cost. Remember, this is over and above business-as-usual. OK, 12 years, say £12 bn each year in money-of-the-day (actually it’ll need to be more: inflation in engineering costs is really racing just now), starting right away . . . so where can we see the first few of these annual £12 bn slugs going in ?

We can’t. Because it’s mostly just talk, for the moment. And in the 2-year run-up to the next election, which brave Prime Minister of our acquaintance is going to slap another £24 bn on electricity prices, or general taxation, or whatever ?

Yes, that would take a very brave Prime Minister … ’nuff said.


Friday 20 June 2008

Competition Results: Friday is Prize Day !

You cannot hope to bribe or square
Thank God ! the British villager

But seeing what the man will suffer
Unbribed, you can ignore the duffer !
(with apologies)

Doubtless it was a under a misapprehension of this sort that Gordon Brown had hoped to dump his nuclear waste at low cost. But no: we demand payola ! And some creativity with it.

First prize: 100 kilos of the green stuff to . . . Idle !

(what - you were hoping for a racehorse ?)

Second: 200 kilos to . . . Grumpy Granny !

(you won't need lightbulbs,
energy-saving or otherwise, after you get your hands on this lot !)

And third: 300 big ones to . . . Tuscan Tony !

hope it cures the olive blight !)

Referred to the Parliamentary Standards Commissioner
. . .
Bill Quango MP (corruption is a nasty word !)

Keep those bids coming - there's more where this came from.


Retail Shock

The media reporting a big "Retail Shock" as sales rose 3.5% for May.
Food sales rose 3.3% as people bought salads and stocked up for barbecues, while clothing sales jumped 9.2% as shoppers sought out new summer outfits. Household goods put in a 2.6% increase. All categories showed growth in May. Overall sales at non-food stores climbed 3.9%, the largest rise since March 1991.

But there is a recession, how can this be they mused.

"I'm staggered," said Philip Shaw, chief economist at Investec. "The figures are just on a completely different plane compared to market expectations. They contradict other anecdotal evidence suggesting retail sales activity is softening.

We reported back at the start of May 2008 that summer 2007 was severely affected by widespread flooding, rain and strong winds almost every day. May/June 2007 was a disaster for the sale of summer goods and foods. We confidently predicted a far better set of figures for 2008 that would have very little to do with the economic climate.
The weather up to around the 12th of this month was glorious sunshine and if you can cast your mind back just 4 weeks Mr Shaw the Ice-cream cabinets were empty, the steaks and burgers were missing from the supermarket freezers and everyone was sporting their newly purchased shorts and T/shirts.
Plus shops anxious to clear last years poor selling summer lines had kept stable or reduced the prices. Plenty of bargains were around to be had.

Expect the experts to be as baffled next month when the retail figures show a very modest rise or a small fall too.

From my own retail sources June is already looking like tough trading. Mr King can safely ignore these particular inflationary retail figures.

Rain dampens retail sales figures in May


Published On 5 June 2007 at 12:14:59

Bad weather during May was partly responsible for the poor retail sales figures which small and medium-sized enterprises (SMEs) in the UK recorded in the month, a new report argues.

Thursday 19 June 2008

Discussion of future tax policy

I read this story on Iain Dale's blog this morning and the original article in the Telegraph.

The only conclusion I can reach is that both men, fine members of the conservative party, both understand little about economics and government policy.

Firstly, as I have noted before, the government finances are in such a poor state that more funding is needed for debt and PFI servicing alone. The only way round this is a big cut to services; not some fantasy about not growing government spending over the medium term. the economic situation faced today is fundamentally different from the past few years.

As such the only way to deliver tax cuts is through spending cuts; many areas are out of bounds like defence spending, PFI contracts are signed for 20 years and government pensions are also a big chunk. Transport surely requires investment.

This really leaves social services, tax credits, the Home Office as was and the NHS. There are some big projects here that could be canned - ID cards, NHS IT, CSA, tax credits system.

This is what needs to be discussed, openly and loudly. Also the quango culture needs to be tackled.

All this is honest though and I doubt the Tories yet have the courage, even riding high in the opinion polls. But mass jobs cuts would not be the medicine the country needs heading into a recession - whatever the ideological merits. Spending cuts would have to be focused firmly on waste not generic targets for reductions.

In addition, there is discussion again about raising the tax threshold and removing people from paying tax etc. All this misses the point that in a recession we need to encourage spending, the most regressive taxes are consumption taxes so any cuts should be on VAT - including fuel.

Tax policy as being discussed by the tow gentlemen is a variation on Gordon Brown's tinkering with tax to achieve social outcomes.

Let's focus tax changes bringing about economic outcomes a task for which they are far better suited.

Wednesday 18 June 2008

The Limitations of Gordon 'Cnut' Brown

The BBC’s Nick Robinson seems to have reverted to type of late, neutrality cast to the winds, parroting regime-speak. Here’s his homily to Brown’s Cnut-like mission to talk down the price of oil, swallowed whole from a No.10 briefing:

"This Sunday he travels to Saudi Arabia, for a summit with the king. What's his aim? It is not a short-term increase in the supply of oil and therefore a cut in petrol prices, we're told. It is, instead, to reduce the significance of speculation in oil by City commodity traders.

This is classic Gordon Brown, wrestling behind the scenes with something he genuinely believes is a major long-term problem. It will be fascinating to see what progress he can make in the weeks to come."

Wrestling behind the scenes ? Or (with a little help from you, Mr R) grandstanding in the hope British voters will gather that inflation is Someone Else’s Fault ?

If Brown wasn’t such a cluncker, one might argue he’s doing exactly what Cnut did – putting on a demonstration of impotence to prove to his followers the limitations of his powers. But a deliberate public display of impotence ? Doesn't sound much like Brown to me. More plausibly, he may actually believe he can stay the tide.


Tuesday 17 June 2008

Blogging Business links

It has been a while since we last looked at this and it is about time there was a better set of links to the best business blogs in the UK (and our US cousins):

BBC business blog - Robert Peston does a sterling job of explaining complex issues in a simple manner and has a take of events that is far from the BBC norms of behaviour.

Tim Worstall - Excellent intellectual comment on business and economics stories each day.

Burning Our Money - Expose site of UK Government waste, not for the financially faint-hearted.

Mark Wadsworth - Accountant with attitude

Two Wolves - Perspectives from an City insider with a personal touch

House Price Crash - The very opposite of property porn!

UK House Bubble - Scary analysis of the state of the UK housing market

Stumbling and Mumbling - Insightful comment from a confirmed marxist, you won't read that too often....

iii blog - Richard Beddard writes a good corporate investor blog

new economics - UK based think tank

Labour and Capital - A view of economics from the left - thoughtful.

adam smith institute - Premier institution that publishes a great range of well thought out economic arguments and fights the fight against economic illiteracy.

economics uk - Top UK economist shares his views

Mediaocracy - Economics professor with a fantastic angle on modern society

And for our US cousins here are the 5 sites I visit most often - between them they don't miss much if anything:

Mess that Greenspan made
The Big Picture
Discursive Monologue
Abnormal Returns
Hedge Fund implode

Any I have missed please make them known in the comments - no doubt I have committed a howler and left of someone great by accident....

Monday 16 June 2008


Blogging for a year now and I’ve been tagged, by Tom P over at Labour and Capital (he’s, err, Labour - I think). Which three bloggers do I agree with on almost everything?

“Pick one that most closely mirrors your own personal philosophy, one that most closely mirrors your politics and one that offers the most consistently attractive analysis."

Hmm – I have had healthy disagreements with everyone, not least the good Mr “short oil & gold” Unslicker. But for three different blends of the three criteria, particularly the attractive analysis, I shall go with:

Sackerson at Bearwatch – who comes and goes periodically (active at the moment, happily) but whose basic rationality and humanity beckon to a safe haven in turbulent times

Hatfield Girl at Angels in Marble, whose constitutionalist thesis is subtle but powerful: she elaborates it with a light touch and much art – and after 18 months following it on comments and blogs I believe I am beginning to grasp where she’s leading

The Raedwald of Raedwald – unfailing gentleman and scholar, (if a little optimistic on the potential of localism).

OK. So now my taggees. Blue-eyes, ElectroKevin and Tuscany Tony. All occasional visitors here; all chaps who in very different ways offer us humanity, and truth as they see it. And some tall tales


Sunday 15 June 2008

Sunday Business round-up - 15/6/08

Politics has taken over the news agenda this week - even the fuel crisis is seen through a political lens. And yet the economic news is nothing short of grim - I have never known it like this in my 33 years. Very few sectors are unaffected, as can be seen from the selection of stories below:

Nuclear Fallout - British Energy wants too much money and the bidding war has fallen apart. Glad I sold this of my portfolio out a few weeks ago. Even in an oil crisis, we are still struggling to get Nuclear going!

Staglfation - A view on whether we can avoid this ...have the horses already bolted though?

Energy costs surge - On the theme of trying to keep inflation down, firms might get hit with 100% energy cost rises.

Housebuilding slump - Very few new homes started, despite the overall shortage of property.

Short Selling - All the rage this week is criticism of short-selling, here is a good article explaining it all.

Estate agent news - Not only are the agents in trouble but their omniscient private equity backers - perhaps some good news after all!!

RBS sale gets going - Angel trains finally sold and the rights issue complete. £16 billion banked to pay the sub-prime debts.

Barclay's Rights Issue off - The bandwagon has gone, perhaps more sovereign wealth involvement will be required?

BP on the run - The Russians are coming for their oil. Another share I am glad I ditched a couple of weeks ago.

Saturday 14 June 2008

Weekend Competition: Your Bid for Nuclear Waste !

Tutored no doubt by Sarkozy and his EDF-serving brother, McBrown is going down the French route on nuclear facilities: bribe local communities to roll out the red carpet, with whatever they ask for.

What would your town / village / tower block / stately pile ask for, in return for accommodating several tonnes of glowing, toxic waste ?

Competition: devise a creative bid !

Prizes beyond your wildest dreams !!!

Entries particularly welcomed from Scotton Pinkney.
Have a care, though, you may get more than you bargain for


Friday 13 June 2008

Proud to be Irish today!

What a day for the Irish, saving Europe from the undemocratic forces of the Eurocrats. Perhaps we can hope that the anti-democrats will be stopped for a few more years at least!

Thursday 12 June 2008

Why 42 was the chosen number

Mr Brown thought long and hard and decided to use a number without any bad connotations.

1 .. One career in the balance
2 .. Two pence fuel duty planned rise
3 .. Three % is now even the CPI inflation figure
4.. Four. Channel Four making that documentary about where it all went wrong
5 .. Five years in Iraq..
6.. Six % is likely the real inflation figure
7 .. Seven days a week Mr Brown spends thinking about helping the UK
8 .. Eight Billion pledged to spend on affordable housing
9 .. Nine thousand number of jobless claiming benefits increased by in May
10 .. Ten is the Number of my House
11 .. Eleven is the number of my old house
12 .. Twelve % was the drop of the Pound to a basket of currencies in April
13 .. Thirteen !! No Way
14 .. Fourteen days between rubbish collection now
15 .. Fifteen pounds average loss of a low paid worker due to 10p tax rate change
16 .. Sixteen mobile phones since October
17 .. Seventeen Percent swing to Tories in Crewe and Nantwich
18 .. Eighteen hundred jobs announced to be axed by Aviva last week
19 .. Nineteen.. n n n nineteen... average age of a soldier
20 .. Twenty Percent. Liberal Democrats Poll Ratings
21 .. Twenty one pence rate of rebate truckers want to end fuel protests
22 .. Twenty Two % was the doctors pay increase awarded in error 2006
23 .. Twenty Three million pounds of Labour Party debt
24 .. That TV show all the media are pinching the graphics from
25 .. Twenty Five hundred Post Offices closed 2008
26 .. Twenty Six percent is Labour Party poll rating
27 .. Twenty Seven percent increase in factory gate inflation figures this year.
28 .. Twenty Eight days is the current number of days for detention without trial
29 .. Twenty nine seats the government held in 1906. the wheel turns full circle..?
30 .. Thirty. number of Cleggovers.. Don't go there
31 .. Thirty One hundred new criminal offences created in nine years by Mr Blair
32 .. Thirty Two % of people who still trust Alistair Darling on the economy
33 .. Thirty Three % of students currently overdrawn by more than £1250
34 .. Thirty Four normal number of rebel Mps
35 .. Thirty Five Labour MPs that the GMB Union has decided to withdraw funding for.
36 .. Thirty Six weeks since Mr Brown didn't call an election
37 .. Minus thirty seven is Gordon Brown's personal poll rating [ from a high of plus 48]
38 .. Thirty Eight thousand rise in UK unemployment figures for May
39 .. Thirty Nine Billion was pledged to be spent on government projects in the first 7 weeks of Mr Brown's premiership.
40 .. Forty % increase in the price of eggs this year.
41 .. Forty One Percent. Mr Brown's poll rating when he became Prime Minister

42.. ???????????? Yep that's the one!!

43.. Forty Three percent current UK taxation level
44 .. Forty Four out of the 101 is the number of missed targets set by Gordon Brown at the last spending review 2007...
45 .. ..................... etc

Davis Seizes the Colour

Sergeant O'Connor winning the Victoria Cross at the Alma - leading the charge with the Queen's Colour

There comes a moment in the heat of battle where the issue can turn on a single hot-headed, individual action. To seize the Colour and rally the troops for a charge was never a deed ordered by High Command.

But cometh the hour, cometh the man. Davis is our man.


Wednesday 11 June 2008

Capitalism Works. It Really Does

Today’s Grauniad leader “In Praise of Cheap Laptops, captures nicely how little the left understand about the ways of the world. They praise, but are clearly bewildered by, the fact that a new generation of cheap computers is being developed in response to the limited purchasing power of people in Africa et al.

Big corporations are now piling into … cheap computers for poorer people … in search of "the next billion computer users". It looks as though we may be entering a whole new era of cheap computers triggered by the needs of developing countries. Capitalism works in mysterious ways.

No, guys, capitalism always works that way: driving free-lance solutions for practical problems – the bigger the problem, the greater the efforts and the better the results ! So please take your dirigisme and your ‘picking of winners’, and go … and read this.

Capitalism just works ! OK ?


Afterthought: I suppose the Kalashnikov works too …

Tuesday 10 June 2008

Yuk; UK Interest rates

This story in the Telegraph caught my eye. Just look at the graph, it shows the market view of interest rate expectations; In short the high inflation figures hitting the economy have switched the market to expect UK interest rate rises this year.

Raising interest rates in the face of a recession will cause the economy to go 'off a cliff' - no if's or but's about it.

Higher interest rates will also mean higher borrowing costs for the government when it is already in deep dark water over the excessive borrowing it is needing at the moment. That will only get worse as tax receipts fall and unemployment claims increase.

Ouch this is going to be tough. As of today all my hopes of a soft landing are gone; the next 18 months is going to really hurt if the above scenario comes true.

I know some of my readers think high interest rates will do us good, but they won't. Forcing small businesses to the wall, homeowners to be repossessed and the government into huge debt is not the answer to our economic problems. When that happens inflation will be a distant memory as the economy shuts down and the bloated public sector goes on strike.

Inflation now is not an indication of inflation tomorrow, it is a reflection of th recent past; as such the BOE needs to keep a sound mind as regards interest rates at this most difficult time.

Monday 9 June 2008

Polyclinics (2): Fisking Alan Johnson

The Poll-Tax on Steroids – aka Polyclinics – is predictably under fire as it continues its onward march. In yesterday’s Observer, Alan Johnson made a slippery and disingenuous crack at promoting it.

We dissect.

Soon we will publish our vision for the next decade, the Next Stage Review, led by the eminent surgeon Lord Darzi.

Well OK, he may not know much about GP services – but he is a respected surgeon – and believe me, this is all about the Knife ! (my little joke)

We want to create GP-run health centres that open from eight till eight, seven days a week. No current GP practices will be closed.

Just physically re-located to a different building and submerged within a vastly larger practice. Yeah, OK, fair cop, we're closing them. If you insist.

Most important, our 150 GP-run health centres will offer patients appointments and walk-in services without registration, so families can make use of them while they remain registered with their existing GP.

Or indeed not registered at all: “transitory populations”, you know …

In some major cities, such as London, clinicians and managers want to go further than GP-run health centres and develop polyclinics - centres that offer an extended range of treatments.

Yes, interesting, isn’t it - a spontaneous, grass-roots movement – probably something to do with the estuarine climate. “And who are these clinicians and managers in London ” did someone ask ? – oh, just some managers we met … American chappies, as I recall … well, who do you imagine runs something that goes further than a GP-run centre ?

That might be achieved by bringing several GPs into a single building or they may be 'virtual', with GPs in their existing practices collaborating more closely.

Several ? well actually, several dozen GPs: these shiny new communes clinics will have patient-rolls of 50,000, you know. ‘Bringing’ ? yes, you know, as in “I am bringing these turkeys to market …”

I will insist that such decisions are taken in consultation with local people and driven by clinical evidence of what works.

But mostly whatever Lord D decides (which, let’s face it, is more or less the same as clinical evidence!), since the early consultations were *ahem* disappointing.

Controversy may well be caused by some GPs, worried that they themselves will lose out. But we have made clear that they are not going to lose funding in this process.

Indeed, taking our cue from Aneurin "I-stuffed-their-mouths-with-gold" Bevan, we intend to bribe them, as usual. Or bully them. I don’t mind which.

The Tories’ plans would make it harder to see a GP.

Well, not harder than now: harder than when we force the buggers to stay open. “My own GP ?” – no no, not your own GP, a GP, there will be loads of ’em wandering around ! The idea of a GP who actually knows you is very elitist, we can’t have that.

The scaremongering and misleading claims we have seen from the Tories, and sadly from the BMA, should have no place in the crucial debate about our health service.

Indeed, Jacqui has suggested we make it illegal for Tories and the BMA to say anything at all. Just a small amendment to her Terrorism Bill, apparently …


Sunday 8 June 2008

Sunday Business Aggregation - 8-6-08

The really worrying thing this week is the price increase in Oil by $10 this last two days. Mainly because I picked shares last week with the idea that oil would fall, like British Airways. Also though, I can see no way to avoid a very painful recession with oil prices at these levels. When I started this blog nearly 2 years ago i said that stagflation would be the result of Labour policies and now it has come to pass. The worry is that it accelerates over the next few months and we have a terrible economic situation.

The Sunday's all have this theme as their main points of business news, but there are some other good nuggets too;

Oil prices rocket - The Guardian has a good summary of the events which have hit the markets at the end of last week.

FTSE100 shake-up - More miners to enter the index, showing the full effect of the resource super-cycle.

India Fuel protests - A good example of Asian governments giving into the high prices too, inflation in Asia will slow the dragon rapidly and could undo much of the economic gains of the past few years. Still, outsourcing could retrench as a business.....

North Sea Oil - On the plus side, we have plenty of oil left with high prices, as long as the Government does not insist on hobbling the industry with extra taxes.

Stelzer's oil view - He thinks it will all be ok a decade from now. Shame we have to live through that decade though eh?

Hedge funds hide - None have signed up to the voluntary code. The old phrase comes to mind "money talks and bull...."

B&B hits rates - Stricken Bradford & Bingley raises mortgage rates. Egg gives up on the market all together. Not a good time to try and get a mortgage nowadays. The real question is...will we have waiting lists again like we did in the 70's?

Cars hit by negative equity
- Thanks ot excessive government taxes. Thanks Gordon and Badger!

Al Italia 'Fraud' - Everyone agrees saving this utter dof of a company is both illegal and irrational. With high oil prices the weak must fall in the market, national sentimentality can take a back seat.

BBC spin-off makes good - Working with China on the Olympics. And people say privatisation would be a disaster for our media market...

Friday 6 June 2008

Doha ad infinitum

World trade talks are dull enough even to make only passing mentions in the serious media, let alone getting near the television news. Big Brother need not worry over its ratings.

However, the latest round of trade talks, called Doha after the city at which they were launched, are close to falling over. With the US presidential election in sight, the US trade representative has little wiggle room. Also India and China flex their muscles more these days and are not prepared to do deals. The EU too, as always never keen to give up farm subsidies, is not a leader of the pack.

All in all, the outlook is bleak and it could be years before there is another free trade agreement. All of which is a shame as a new agreement is exactly what the world needs to help it through the bad economic situation in which it finds itself.

The growth of protectionsim is no good for anyone, not poor african farmers who cannot access foreign markets and not UK banks, caught by protectionist US rules.

Still at least Europe is represented by one of our foremost minds and most capable leaders, Peter Mandelson. Surely if anyone can get an agreement going it is an ex-communist, who twice had to leave the UK government on sleaze grounds?

Thursday 5 June 2008

Having an old friend for dinner.

TUC visiting No 10 ?
The Labour party has run out of cash. they need some fast from some old associates.
How did that meeting go do you think ?

Brendan Barber: [leader of the trades union congress] Why did you go to the business leaders, the celebreties and the millionaires? Why didn't you come to us first?
Gordon Brown: What do you want of me? Tell me anything, but do what I beg you to do.
Brendan Barber: What is that?
[Brown gets up and whispers in the TUC leader's ear]
Brendan Barber: That I cannot do.
Gordon Brown: I'll legislate you anything you ask.
Brendan Barber: We've known each other for many years but this is the first time you've ever come to me for counsel or for help. I can't remember the last time you invited me to your house, Number 11 or Number 10, for an exchange of political views, even though we share many of the same aims and ideals from the old days. But, let's be frank here. You never wanted our friendship and even our money. NuLabour were keen to distance themselves from the Unions and even you were afraid to be in our debt.
Gordon Brown: I didn't want to get into electoral trouble. The voters.. the 1970's and Arthur and the miners and all that... Tony wanted to avoid any connection.
Brendan Barber: I understand. You found paradise in the landslide election victory. You had a good deal of support, made a lot of new friends, the EU protected you and there were banks and finance houses and rich donors and you didn't need friends like us. But, now you come to me and you say "TUC, CWU, GMBU,NUT give me funding." But you don't ask with respect. You don't offer friendship. You don't even think to call me Comrade.
Gordon,Gordon. What have we ever done to make you to treat us so disrespectfully. If you had come to us in friendship then your bank book would be overflowing. Your creditors would be paid this very day. And if by chance an honest man like yourself should make political enemies then they would become our enemies. And then, they would fear you.

Gordon Brown: Be my friend... COMRADE.

Brendan Barber: Good. Someday, and that day may never come, but it will probably come very very soon, I'll call upon you to do a service for me. But, until that day, accept this cheque as a gift.
Gordon Brown: Grazie, Comrade.
Brendan Barber: Bene. Now kiss all our rings and get out.

Wednesday 4 June 2008


As we reported back at the start of April the Post Office Card Account {POCA} is becoming another protest story for the government.

The current contract for Post Office Card Accounts (POCA) runs out in 2010. It has 4.5 million users, and generates £1bn of revenue for the Post Office. It is what brings up to 30% of people into the Post Office and is absolutely fundamental to Royal Mail's "Forward to Eleven" back to profit by 2011 initiative. However the card account is out to tender and rivals have put in strong bids. A shame really as the POCA is a government benefits payment system that works exceptionally well as it is.

So this week Save our Post Office campaigns are springing up again.Printed leaflets are going out to pensioners, petitions are being signed, and MP's lobbied. A very powerful, and extremely media accessible story has started running, one that the government may wish it could avoid.

It will be very easy for opposition parties to ask questions about the future of the Post Office network. Lib Dems are always very keen to highlight this perceived lack of concern with communities. They may ask for clarifications of the governments stated aim of no-further planned closures and a network of around 11,500 offices.
Unhelpfully Royal Mail have refused to back this statement and they have said that they could operate with only 7,500 offices.

Further questions about how many offices would close if the card account is not retained will be equally unwelcome. [it will be around another 2000-4000]
Why would the government feel the need to seriously jeopardize its own plans for the network and enrage the population on what in effect becomes a local issue so soon after a terrible showing in local elections?

The answer will not help Mr Brown either. A European ruling on competitive tendering means that he has to act this way and open the tender to competition regardless of his own domestic wishes.

Tuesday 3 June 2008

Energy Economics, Part 94

A serious green policy would fix energy prices at a guaranteed constant high to make everyone use less and to make green technologies economically enticing for investors - and make incomes fairer.

- Polly Toynbee

(a) Suggest what the 'constant high' should be, in which currency etc

(b) Discuss generally


Monday 2 June 2008

Changes to portfolio

Some small alterations to the CU portfolio on the side of the blog; after a few changes recently, booked good 20% gain on BP and sold on the news that they may lose their TNK Stake. Good long-term play though and I will no doubt buy in again after the price drop.

Also so oil and gold ETF's with not much gain overall (bought late in the cycle) and have replaced with a short gold for the moment; bit of a punt that on hunch that the dollar will strengthen further in the next month or so on the back of less dreadful US economic news and worse news elsewhere.....

Also re-invested BP funds into more Latin America funds and British Airways, right on the bounce from Silverjet failing - what a lucky break. Still I think oil will pull back a little in the near future and BA is bouncing along at very low price.

Still stuck with RBS and buying into the rights issue which ruins much (but not all) of the good stuff above!

Sunday 1 June 2008

Sunday Business Aggregation - 1st June

Not too much in the business news this week, the summer has started and the main issues around energy are both energy and business:

End for B&B CEO - Another profits warning and B&B is on the brink, no access to funds and a very poor looking book.

New nuclear stations planned - Horses have already bolted as the Government is 10 years behind in the market demand...

Land of Nothing - Leather chain to disappear, my hunch is the high street is going to get into deep trouble over the course of this year.

Broadband inflation - Ofcom set to raise charges for broadband, nice to see one hand of the government bolstering BT's profits and helping to raise inflation at the same time; really nice.

FSA appointment - City insider given the top job, not many internal candidates were there....