Sunday 31 May 2009

Sunday Return

I am back online today (Cityunslicker here) after two weeks of no real blogging. Quite refreshing, well partly anyway. How can one spend to much time with their wife and kids after all....?

Anyway, I return to see two things that have surprised me after my diet of SKY news for an hour a day. Firstly, the FTSE has hardly moved, despite the clear end to any hopes of economic resurgence. Last time I looked Chrysler and GM were going bankrupt and British Airways was announcing horrific losses.

Also somehow Labour have become even more unpopular than ever. This is some achievement as they do not actually seem to be doing anything at all, which generally by reckoning is the best thing politicians can do. I saw Gordon Brown on the Andrew Marr show this morning and he did quite well given the oddly tough questioning. His delusion about his own success and intelligence is something to behold. I think Orwell warned us about lefties like this...

Oh, I think I still have my job too, confirmation at 9am hopefully.

Saturday 30 May 2009

Vote UKIP in the European Elections?

The European Elections are on June 4th. Even before the expenses scandal I was confused as to whom I would vote for. I have always been quite eurosceptic in my views, but have voted Tory the last couple of times on the basis that I know this is a party close to my own views.

However, I wonder how much of a message is sent to the leadership by the big share UKIP get in the Euro elections? And not just the Tories either, the Lib Dims and Liebour must see the loss of votes to the single issue and consider their own positions.

Now this year we have Libertas too and is a pan-European approach to reform the right way to go? It could be, but then maybe this is too long a project and the UK simply needs to re-negotiate now.

All advice welcome.


Friday 29 May 2009

How Nadine Dorries blog got taken out.

The Barclay Ultimatum

Synopsis: Nadine Dorries is trying to to run operation Shredstone, the deflection of the media from expense claims to other matters, when the Daily Telegraph's FBI {Frauds and Benefits Investigator} calls with some tough questions his shadowy bosses want answered.

Thursday 28 May 2009

Gazprom "Cuts The Gas"! We Were Warned ...

Russian Energy Policy – The Musical

Back in February, the Russian gas monopoly Gazprom gave us all a chuckle by threatening “cuts in European exports if gas demand slumps”. Well, they’ve been as good as their word, because, as the Times reports, Gazprom now plans to

reduce natural gas output by up to 18 per cent this year due to falling demand from recession-hit countries

That’ll teach us ! Coincidentally,

The company gave no reason as to why it had further reduced its dividend

For those unaware of gas industry basics, there is a very distinct limit to the amount of gas storage available, and it all gets filled up every summer anyhow. You either leave it in the ground, or flare it off; and even the Russians aren’t too keen on the latter these days.

So – gather round and feast your senses on the video-clip above!
A genuinely hilarious contribution to understanding energy policy, courtesy of one of those splendid Russian military choirs.


Fixed Term Parliament for Tory Manifesto

As the furore about MP's expenses drags on, the speaker has stepped down and calls made for a General Election to be called.

I can't see labour going for an election where they will be wiped out. So no chance of that. It is though a disgrace of our system that the elected leaders can game the system like this.

If David Cameron is serious about cleaning up sleazy politics, then having a fixed term parliament is one obvious choice. 4 or 5 year term matters not, what matters is that the Government no longer controls its own destiny. that is left to the people and the ballot box at set interludes. But will Dave just do a Tony and promise things that he would never seriously consider giving up. Election timing is the biggest election advantage an incumbent administration has.

There are other options too, such as electing some members of the Lords etc. All this needs to be decided upon. Yet another of Tony Blair's odious legacy was to leave our constitution in more of a mess than it needs to be.

Cameron called for change in his speech the other day, but would you like to see.
Single chamber?
Fixed terms?
Open primaries?
MP recalls?

Make your preference known because this is the hot topic for 'election-to-10'
{I am still on the beach,barely reading the papers. So if Gordon has resigned or N.Korea fired an ICBM just ignore this.}


Wednesday 27 May 2009

Yet More Realism on Energy Policy

A month ago we reported that a new wave of realism had swept through the DECC (crazy name, crazy logo), and sure enough, a few days later, along came Ed Miliband’s brutally cunning new plan for coal.

We are pleased to say that the new realism continues unabated. This, from a senior DECC official – who can’t be named, it wasn’t that sort of occasion, but it’s verbatim:

The development of considerable amounts of new nuclear capacity – which is base-load – and considerable amounts of new renewables capacity – which is intermittent – is potentially incompatible

Nice civil service understatement, there.

and would result in the need for a great deal more grid interconnection with mainland Europe. The National Grid is working a lot of scenarios

What this refers to, is that the only way Denmark and northern Germany manage (just about) to tolerate so much lame wind-powered generation is that they have ready access to the instantly-available back-up from Scandinavia’s plentiful hydro-power, to which they are connected. We aren’t. The UK’s hydro resource is de minimis.

So - Whitehall knows the score: this is all about Telling Truth to Power. About Power. If you see what I mean. Hopefully, the grown-ups are listening.

Meanwhile, National Grid are loving it. The crazier the UK’s electricity generation mix, the more they have to invest to accommodate it all – at guaranteed rates of return ! What’s not to like ?


Tuesday 26 May 2009

Newcastle United count the cost of failure

One look at the sponsor should have been enough of a warning.

On the radio fans of Newcastle United were putting the blame squarely on chairman Mike Ashley, after the club failed to come close to beating Aston Villa, and will now drop from the Premiership into the Championship. Mr Ashley might feel a little aggrieved at the suggestion that its all his fault.

He spent some £180 million of his £950 million fortune on the club. The 2008 accounts show that having bought the club for £134m, Ashley paid off borrowings of £43m and cleared the overdraft, paid off the previous owners and hangers on, lending the club £100m on which he has chosen to waive interest. He has not declared a dividend nor paid himself a salary.

The club will face a massive drop in revenue with its fall from the top flight. Premiership clubs receive around £30 million from Sky. Championship clubs around £3 million. There will be parachute payments of around £11.5 million to tide them over but with a £73 million wage bill alone there will have to be a sale of players, staff and probably fixtures and fittings too.

Liverpool University’s Professor Tom Cannon said the massive cut in TV money would be added to by drops in season ticket sales, a fall in sales of merchandise and a collapse in money coming from corporate entertainment and sponsorship. I take some issue with the prof in the terms of Newcastle.

1} Luckily the arrival of Keegan and Shearer probably means season tickets for the 2010 season, sold at premiership prices, were well advanced.Possibly for 2011 too.
2} They have the most loyal fans. They will turn up if it was the Conference League.
3} Merchandising will continue. If Mr Ashley does know one thing its how to create a buzz out of nothing. Sales and BOGOFs and Alan Shearer golf clubs and polo tops etc. Its his talent.

However with no relegation clauses inserted into players contracts, as they never thought they would need them, Newcastle will have to sell players. But who have they got? And how much would they get for the 33 man strong first team.
Michael Owen, who takes home 10 per cent of the wage bill, and Mark Viduka are in the final year of contracts and would together cut £9 million in wages. These two are probably the jewels in the team but the pacey young Owen of the 1998 World Cup era is now 31 and injury prone. Mark Viduka is 34 in October. Nicky Butt is also 34, Damien Duff 30. The younger boys may well find a price but Alan Smith hasn't done well since Leeds, and Kevin Nolan has only just signed. Joey Barton the £13 million signing may well end up staying, as who is going to take the risk on him, and Newcastle will probably need a bruiser in the Championship. Obafemi Martins should find a home in the Premiership but Jonas Gutierrez {£9 million}, Xisco {£5 million} and Fabricio Coloccini {£10 million} are likely to attract low bids

So poor Mr Ashley is about to lose more of his fortune. He put the club up for sale in a credit crunch. There were no bidders. Probably be fewer now its in the Championship. And for all the money he spent he gets grief from the fans.

I asked a very good friend of his back in January "Why is he doing it? Why put yourself through this media barrage. He doesn't need it. Why sit on the terrace listening to partisan, unrealistic, reality challenged fans, when you could just sit on the beach? What's he possibly going to learn? "

"Its Mike isn't it. He likes football. He thought why not?" came back the reply. "On balance, he should probably have just bought a season ticket, not the whole club."


Monday 25 May 2009

Weekend post: What would you like to see here

So you are here reading this blog, hopefully you have been before. We want to know why..

What do you like about it?
What issues should we discuss?
What don't you like?
What should we do more of or less of?

Let us know, it will hopefully help to improve our quality. Soon we will have to make a stylistic upgrade, so any feedback now will be most useful.



Sunday 24 May 2009

Brownadder's Bunker

The enemy forces are pressing hard. The Daily Telegraph has been firing heavy artillery shells onto the Labour lines, doing terrible damage to the party. Captain Brownadder and his platoon take refuge in the bunker.

"They're still pelting us pretty heavily sir," said lieutenant Geoff Hoon, withdrawing his head in from the doorway."Moaning Morans, Bouncing Bryants, Moating Hoggs. Its damned lethal out there."

Captain Brownadder sat on an upturned, empty money supply crate and nodded. "Stay away from the door Geoff. How long has this attack been going on now?"
" Since 7 Oct 2007 sir." answered a grubby Pte Ed Ballsdrick," You remeber sir. The day you bottled out of a snap election. That was when the attacks started."
Brownadder shot him a withering look. "I meant 'The Daily Telegraph's' attacks, imbecile. You really are as stupid and pointless as a BNP election broadcast."
"Thankyou very much sir," beamed Ballsdrick.

"Fifteen days now sir. Fifteen long days. I hear the Speaker bought it,"said Lt Geoff.
"Don't be silly Geoff. The Speaker never buys anything. Its all on expenses."
"No sir, its true. Apparantly he was trying to organise a charge against some stolen expenses data disks and got hit by a Clegg. Went off in his red face. And Colonel Chaytor. Tried to cross the taxpayers armed only with a "unforgivable error in my accounting procedures for which I apologise unreservedly" excuse and they found him in no-Mp's land, suspended on the wire."

"Well., its been as bloody as a Glasgow by election," mused Brownadder. "An almightygreat blast of public anger swept through the officer's mess and blew the legs off Captain Andrew MacKay’s re-election plans. Hazel Blears took some of the fire too. She was discovered mortally wounded in a ditch. Next to Shahid Malik's head. And Sergent Elliot Morley's arse. "

"And don't forget those chaps in the RFC,"said Ballsdrick.
"Those Royal Fraud Court fliers who crashed and burned. Lord Peter Truscott and Lord Thomas Taylor. Did a bit of acrobatic ammendments. Tried to loop-the- lobbyists. Went up-diddly-dum-up and down-diddly-crashed and burned."

"Well that settles it. We will stay in here until the worst is over," said Brownadder with finality.
"How about I read some of my war poetry to pass the time?" pleaded Pte Ballsdrick.
"Oh do let him sir. It is really good. Year two sats level at least."
"Well, and with a due sense of foreboding, OK," agreed Brownadder warily.

Ballsdrick stood up and and cleared his throat. "This one is called..

'The election'
Elections are a horrid thing,
Unless we win, win, win.
So to save our skin.
We spin. spin, spin.

"Oh bravo! That was marvelous wasn't it Cap?" exclaimed Lt Geoff.
"Well, it was a bit like a Sir Gerald Kaufman expense claim. It started badly. Exceeded reasonable bounds in the middle, and strayed beyond limits at the end, but on the whole, excellent!"
"I've got another one sir!"
"Oh shame."
"Its called

'The economic cycle'
Boom, Boom, Boom, Boom.
Boom,Boom, Boom -
Boom, boom, Bust.

Right. You and Lieutenant Geoff have both been flipping houses ?"
"Erm yes. How did you know?"
"Because you're flippin' useless. Why don't you wait outside until it all blows over. "
"OK sir. Can we take our patio heaters?"
"Just go" sighed Brownadder, as he slumped down to wait out the storm."

Friday 22 May 2009

Thursday 21 May 2009

Weekend Puzzle: Bumper Bank Holiday Edition !

There are three things wrong with this picture of Westminster. Can you spot them ? Answers below !

Which Prime Minister is out of place ?
Answer at th
e next PMQs !

I'm a celebrity.. to get you out of here.

Margaret Moran is back in trouble again today. The F/T has the scoop. It seems Mrs Moran has used her Commons staff to work for Equality Networks (EQN), a non-profit group of which she is the non-remunerated chair. Michael Booker, her fiancĂ©, is one of two company directors. The Financial Times goes on to say they have seen hundreds of documents dated from 2006 to 2008 show that Ms Moran used her parliamentary staff to write funding bids for EQN, telling one that the salary the individual received was tied to working for EQN. Her constituency office also helped organise “great networking opportunities” at EQN conferences with ministers personally invited by Ms Moran.

Recently the home flipping, dry rot claiming, scandal hit MP has received an endorsement from the local Luton Labour Party who are very happy with her. They are happy for her to stand and would not consider deselection. It seems that the sea change in politics has not penetrated Luton yet. We fully expected Gordon Brown was preparing to over rule the local party and find a method of removing a damaged candidates, with Ms Moran featuring top of his list. That was before these new allegations.

The reason for wanting Maggie gone immediately is obvious. A well known media celebrity, Esther Rantzen, has threatened to stand to oust Marge if she runs again. This would be hugely damaging to the government. It matters not whether Esther is a good candidate, or what her policies are on European farming subsidies, or her views on Luton transportation schemes. It only matters what her views are on Margaret Moran. These are what will fill the news columns and airwaves. With every breath she reminds the voters of Luton and the voters of the UK, about Labour sleaze. Never mind that Andrew Mackay of the Tories has been claiming double bubble with his wife Julie Kirkbride, a Tory MP, and both have also just received the full and insane backing of the Conservative Association. As yet they don't have a celebrity standing against them.

Mrs Rantzen can appear on Television or radio just by calling a few old friends. She has a media platform. She knows how to operate. Politically she may come unstuck. But the first attack by Margaret of "What does she know about politics? What skills does she have to represent the people?" will be countered by her Childline charity work.

The expese claimer of the year MP who charges £22,500 for her lovers house to be repaired versus the nice lady who knows that dog that says sausages. Its media Gold!

The actress Joanna Lumley appears to be coming out today to announce a hard fought victory and a total government U-Turn over its policy towards ex-servicemen. The government has discovered that it didn't matter what it said or how it presented its case. Joanna had a perfectly clear message. She pushed it and the hapless Phil Woolass has been forced to cave in.
Esther will just bring more of the same to Luton, Lab majority 5500. Iwouldn't think that would be enough of a bulwark to stop an Esther victory.
And even if it was, why risk all the negative publicity, the repeating of excessive expense claims, charges of corruption etc, when a new shining light, fourth way candidate, can be found within weeks, so ending the story.

So we expect Margaret Moran, and some over toxic tainted MPs to be packing up from at least one of their houses soon.
Ah well...That's Life.

reselectd full support etc.

Wednesday 20 May 2009

Bank of England: no sign of paddle in creek yet

Bank of England: no sign of paddle in creek yet

One issue that has struck me throughout the financial crisis (i.e. since August 2007) is the relative ineptness of policy and control of the economy.

The Bank of England and FSA did not see the disaster coming, when it did happen they did not know what to do. then they sort of said sorry, then they did something, now they are doing more.

Yet 'doing something' has turned out to be a path aiming to take us back to 2007, i.e. the peak of the asset bubble. To achieve this they are trying to buy assets through Quantitative Easing and hloding interest rates low to stimulate lending.

All of this has huge potential to stir up another asset bubble the next few years. At least this time I will know what is about to happen and can plan accordingly.

However, the BOE's statement of last week was quite breathtaking. In it, they said they saw updside and downside risks to their current strategy. In effect, they don't know what will happen, but they are trying anyway, following Friedman's ideas of Monetary policy.

This is a truly bad state of affairs as it seems to me that the Government is trying Keynes, the BOE Freidman. One of them will be wrong and that will cause another economic catastrophe.

If the BOE is right, then we avoid a 1930's depression and merely get 'Lost' decade. If the Government are right, we get a depression and huge deficits. Yeesh.

Roll on 2020. Glad I am still on the beach!

Tuesday 19 May 2009

Bank of England makes £1bn profit

Banks are doing badly?
Well..most banks maybe. For now.

The Bank of England yesterday revealed it has made its biggest profits since its foundation in the late 17th century. £995 million pounds made from lending its money. The bank charges a fee on the money it lends. As the bank is lending far far more than it would under normal circumstances, it has made greater profits.
And the banks themselves are generating greater profits. Or rather greater margins than they could make before the crunch on mortgages and loans. But greater margins will lead to great profits if continued growth and demand can be sustained. Reduced competition as competitors collapsed or retreated to their own countries have left the survivors potentially in a stronger position. Lloyds shares up already since Victor Blank {cheque..OK, MW} decided to slip away yesterday.

The Mail thinks that the Tories may have to split Halifax from Lloyds banking group if they are in power. The worry is the banking groups will grow very quickly and become very powerful once again. Future governments are looking for institutions that are NOT too big to fail.
Would a government do that? With Tesco about to enter the market? And the oft promised, never to materialise Postbank still being vaguely mooted by the government.
I think it would depend a lot on the banking group's situation in 2010.

An Honourable Leftie - Revisited

Exactly two years ago to this very day (when Mr CU was once again on his holidays and yours truly was just a humble guest-posting stand-in) I had cause to celebrate the honourable actions of this old buffer.

He is veteran leftie David Winnick, and he's been at the integrity bottle again ! On the side of the angels over MPs expenses, and the need for Speaker Martin to pack his bags - David Winnick ! Once again I salute you.


Monday 18 May 2009

Know a Candidate for Scrappage ?

Peter Mandelson says:

Know a worthless old banger that badly needs to be taken out of commission ?
See if the old crock qualifies for my scrappage scheme !

If so, £2,000 in used notes will help it to a well-deserved early retirement !

HH of Peckham says: this is a Godsend - we can't take another week like this !
MM of Glasgow says:
it'll take a wee bit muir than 2k tae see the back o' me, Jimma !

NewLabour. Support for hard-grafting families.

Sunday 17 May 2009

Is Vic there?

The night is young, the mood is mellow and there's music in my ears....

Shareholders at the troubled Lloyds Banking Group might be pleased to hear that Sir Victor Blank is to step down as chairman.

Shareholders anxious to blame someone for the decision to buy HBOS at the worst possible time at the height of the banking collapse will be pleased he is to go. The acquisition of a bank that had an £11 billion debt in 2008 led Lloyds to take a greater share of taxpayer's funds and therefore government control than would have been the case had they avoided the deal. The Treasury owns 43 per cent of Lloyds. Poor Sir Victor Blank, up for re-election at the June 5th AGM would have had enough trouble convincing shareholders that the deal will eventually come good, that £1.5 billion of savings can be made this year, That he was the best man to continue in the job. He probably could have done without the sharp prick of a knife point between his shoulder blades.

One particular person was desperate for Sir Vic to buy HBOS last year and so prevent a second 100% government nationalisation of a bank. So desperate that the anti monopoly rules were ignored. It would have been thought that Gordon Brown would be more grateful to his man for pushing through a very controversial purchase.

Robert Peston thinks that UK Financial Investments, which manages the stake in Lloyds on behalf of the Treasury, well aware of shareholder anger and the demand for change,would have voted to remove Sir Blank at his re-election. So his stepping down is possibly just a realisation that the game is up and its time to go before being told to pack his things.

Saturday 16 May 2009

Gordon Brown's expenses: Andrew Marr asks questions

Gordon Brown has been revealed by the Daily Telegraph to have made some very suspect expense claims. Andrew Marr is to quiz the Prime minister tomorrow on some of these expenses.

It seems he has been claiming for 30 Billion pounds a year for interest payments on the government debt of the UK. This level of debt had been run up over a long period but since 2001 when Gordon Brown was the Chancellor of the Exchequer it has risen significantly. Since Mr Brown became Prime Minister he has increased this claim to £35 billion, and may ask for up to £45 billion for 2010.
The £30 Billion pounds of interest payments is equivalent to most of the UK defence budget. The defence budget itself also contains some suspect claims.
As we saw a few days ago the government has ordered 232 fighter planes at £86 million pounds each, when the average price of a modern fighter plane is around £40 million.
Mr Marr failed to ask about the cost of two wars that the Labour government insisted were necessary in fighting, but moved onto a smaller claim for £300,000 for four new pieces of modern art for the Welsh Assembly's building in 2005.
Mr Brown had a claim of 2.4 Billion for a running track to be installed in the East End of London approved in 2004. Since then he has added a swimming pool, and various stadiums and a village accommodation to the project, making a further claim for an extra £7 Billion.
When we asked about this, Mr Brown said that it was entirely reasonable and that he may need to ask for another £2 or £3 billion if the project is to be finished to a decent standard by 2012. Asked how long this Olympic village would be required for The Prime Minister beamed " will get weeks and weeks of use."

Mr Brown was also asked about his claim that Labour has more than doubled education spending since 1997 from £29 billion to £63.7 for a world beating education system. Mr Brown has insisted that this money has been properly accounted for and every penny has been well spent. He did admit to paying back , or not spending, some £45 Billion on the refurbishment of schools programs when he realised how much he claimed in government spending for 2009 already.
"I asked the IMF if this level of spending would be within the current financial rules and they said no. So I have agreed not to spend some of it."
Andrew Marr then asked the Prime Minister if he could justify his £65 Billion spending on his second parliament in Brussels.

"This is an arrangement going back to the 1970's. This Parliament makes 75% our laws, so it really is essential" said Mr Brown. But the BBC man then asked "If this is the main law making Parliament then why do we have 650+ MPs and all their costs and upkeeps in Westminster. Plus the cost of the Welsh and Northern Irish Assembly and the Scottish Parliament and all of their members and expenses?"
Mr Brown insisted that these were all necessary to carry out his role as Prime Minister.
Andrew then tried to question the Prime Minister about a further 500,000 examples of waste and incompetence from "The Bumper Book of Government Waste: The scandal of the squandered billions from Lord Irvine's wallpaper to EU saunas"

Mr Brown murmured something about setting up a commission to review the claims...

Weekend Puzzle: Join The Dots

Can you work out what's going on here ?

MP to gag Cityunslicker

CU is off on a well-earned break for 2 whole weeks. Mrs CU is unlikely to stand too much time being spent on the Blackberry (actually, nokia E71), sadly I have 3 key competing concerns:

1- Work emails, lots of them; Ho.

2- Blogs, addiction to reading/writing; Hmm.

3- Shareprices; heavily invested in some real up rollercoasters at the moment, must be monitored to avoid massive losses; Hee.

This will no doubt require more time than is allowable under the t's and c's of our holiday arrangement. I recall the horror of hearing from a friend who had found that his (now ex-) girlfriend had 'accidentally' dropped his blackberry in the pool on first day.
Perhaps inclement weather will strike to save me from spending all day in the pool with the little 'uns - a quick prayer to the rain god is in order. Sadly, Mrs CU has no doubt found somewhere with 14 hours plus sunshine a year and a no rain guarantee; I am therefore looking for a hideout on the beach like the one pictured..

So it is over to Mr Quango for a while (with help from Mr Drew of course). He has promised me several long tracts to account in full and public for this expenses for the last 23 years. Should keep the readership riveted.....

Friday 15 May 2009

Eurofighter. HMG bites the 27 m Mauser BK-27 cannon shell.

A nice puff piece about signing up for the third batch of the Tornado replacement, the Eurofighter. Gordon Brown announced the decision saying it would strengthen Britain's defence capability and "create new jobs in advanced manufacturing that Britain needs to emerge stronger and fitter from this global downturn".

The reality is not quite as heart-warming as the piece suggests. UK government has been exploring every possible legal avenue to escape from buying a very expensive and unnecessary third tranche of the Cold War planes, designed to defeat the USSR's SU 27.
Under the original deal for the aircraft -- being built by Britain's BAE Systems, Italy's Finmeccanica and EADS for Germany and Spain -- Britain was obliged to buy 232 planes. The majority are already in service, but the third tranche, which involves a further 88 aircraft for Britain and others for Spain, Germany and Italy, has yet to go into production.

The Eurofighter project, announced in 1988 was originally costed at £7 Billion. Then £13 Billion.
By 1997 it was £17 Billion, then £20 Billion. Since 2003 the Ministry of Defence have refused to release updated cost estimates on the grounds of 'commercial sensitivity'. The MOD press release said that at peak production, the Typhoon programme will help sustain 5,000 jobs at BAE Systems, 4,000 throughout aero-engine maker Rolls Royce and its supply chain and up to 16,000 in total in the UK aerospace industry. So around 25,000 jobs. No small amount. But with a conservative estimate of say £27 Billion it would have been as cheap to pay 25,000 people 1/2 a million quid each for 20 years and to buy the latest USA F16/E. At 27 million each we could have had 500 of them. {Actually as MW points we couldn't. £250 billion that would cost. Which is high even for defence contracts.! }

Ironically it is the MOD itself who created the problem. Some 15 years ago the UK, desperate to tie the Germans into a deal that they wanted to back out of, wrote the contract so that it was almost as expensive to pull out of the deal, and receive no planes, as it was to just pay for them. The UK might incur fines of up to £2 billion, more than the cost {£1.6bn} of the next
40 planes the UK must take.

The Ministry of Defence can't afford the aircraft and will probably try and sell them on, at a loss. When defence cuts, that have to start in autumn 2010 other, more necessary programs will be axed instead. Another in a long line of successful defence procurements ....?

Thursday 14 May 2009

EDF's Expensive Nuclear Sideshow

So EDF have finally promoted a 20% slice of their BE acquisition to Centrica. A smaller chunk, and for a lower price than initially advertised last year; and Centrica took the opportunity to offload onto EDF a large piece of SPE, their unloved Belgian asset: but that was the inevitable consequence of the softening of energy prices in the meantime.

This confirms (a) that EDF paid too much (- fine by me !); and (b) Centrica’s understandable fixation with running a more balanced UK energy book: they’d become the standout structural short position once EDF had squared itself up with the BE purchase. As we commented back in November, the UK gas & power market is slipping back into vertical integration, with baleful consequences for wholesale market liquidity, the viability of the merchant model, and hence for competition and consumer energy prices. The big structural imbalance now belongs to generator Drax (long coal) who, whilst continually up against it in PR terms, are sticking with their simple business model for the time being.

Does the government care about competition and prices ? Well, Ofgem does, and the more market-oriented faction in BERR. But the pragmatists at BERR (and their canny new figurehead Ed Miliband) reckon it’s more important to give the utilities an easier ride – at our expense – in order to encourage them to build new power stations on the back of higher prices.

But there were never any guarantees from EDF, and there aren’t any now, notwithstanding the spin. Their latest efforts to promote even more of their UK operation – they only want to own 50% of their much-hyped, but still only putative ‘4 new nukes’ programme – demonstrates clearly that it’s all too big, even for them. So – they’ll be holding the options-to-build they’ve acquired so expensively; asset-stripping (started already); and watching to see what happens on the coal front. That’s where the real action will be – and that’s what will keep the lights on.


'Rotten' parliament distracting from real danger

As the Telegraph has its moment in the Sun this week and exposes the pure egregiousity (very American, like it?)of our Serving Members, a darker, longer story has temporarily faded into the background.

The moats and non-existent mortgages are enough to get ones blood boiling. In fact the list of extra MP benefits; subsidised drinks, extra weeks paternity leave, platinum plated pensions, the list is endless. No doubt the rest of this week will be taken up with the first resignations like that of Andrew Mackay.

However, I think more sanguinely, this week has seen the end of the green shoots recovery:

- Property companies likes Land Securities see no upturn in business
- Manufacturing is still suffering an unprecedented downturn (see graph above)
- Unemployment is still increasing rapidly
- The Bank of England doesn't know what it is doing and has admitted as much by saying it has no idea whether inflation will rise or fall in the coming months.
- Bank shares have fallen back as the reality of the recession to come sinks in.
- The FTSE as a whole, very buoyant this past month, is on a big rest as the 'Sell in May and Go Away" tendency takes hold of the City.
- Food inflation continues unabated.
- The £ is falling again thanks to Quantitative Easing and Government debt requirements.

It is not a pretty picture. I would be surprised if we are half way through this recession. maybe the worst of the falls are over, but the downward trend is still well established. Anyone who thinks house prices, jobs etc are going to recover this year is living in a New Labour dreamworld.

Ans whilst the worst economic crisis of our lifetimes is going on? Our glorious leaders drink their subsidised beer and moan about getting caught stealing.

Wednesday 13 May 2009

Food, glourious food..

The recession is not hitting all sectors equally. It seems to have been good for many retailers within the food sector. Premier Foods, the UK's biggest food manufacturer, has said total group sales rose 3% in the 16 weeks ended April 25th. Greggs has continued to grow sales, total group sales increased by 5.2%. Sainsburys profits are up 11%. Tesco have been taking 1 billion pounds a week. Domino's pizza had a good start to the year too. Morrisons had good figures up 7% as did Asda. So supermarkets, fast foods chains and associated suppliers and services seem to be doing well, not really hit by the downturn. What will they do with their profits? Who is likely to be the rival that an agressive board may like to aquire?

Marks and Spencers
34% fall in profits for first quarter must be encouraging some competitors to have a peek.
M+S suffered badly from poor clothing sales, along with many other fashion chains. Clothing has not recovered much yet and will probably continue to pull down the groups profits.
A good summer range and very good summer weather will be needed to help lift M+S.

1000th post

Gosh, that is quite a number when I saw it come up today. 1000 posts between Honourable Member MR Quango, Nick Drew and myself. I wonder what the next 1000 will bring given that we started this in the middle of 2006 in the sunny uplands of the falsified Labour boom!

Yet today, the scene is much bleaker. Companies are reporting poor results and the rally we have just experienced in shares seems to be petering out. No doubt all the boards are having endless discussions about further cost cutting to try and break even or even turn a profit.

This is the worst news of all as 224,000 more people lost their jobs in the first quarter of this year. Taking the total to 2.2 million. Given that the government don't count another couple of million at least because they are mums/students/carers then the real number is really horrible. What a sad state we are in.

Redundancies announced at my place of work Monday, so will soon see if I am added to the tally. I will be on hols for 2 weeks at that point, hoping it is not made longer than that...

Tuesday 12 May 2009

Be Brutal, Mr Cameron: Leadership Needed

Cameron is in a bind. He has the look of someone who’d like to do something extremely fitting to the occasion - that is, something rather more drastic than he’s done today - but is constrained by a number of factors:

- he’s personally wealthy, and wide open to a bitter ‘it’s OK for you’;

- if he indulges in a bout of decimation - which, let’s face it, is what’s called for, and they could all be replaced – the Government’s line will be, yes, the really bad cases were the Tory ones who had to be sacked;

- there doesn’t seem to be a truly egregious Tory candidate for a token ritual disemboweling pour encourager les autres (though I could nominate one if asked).

So he may content himself with having been the swiftest and sternest of the party leaders, instead of taking the opportunity to mark himself out as the truly outstanding leader we need.

Because warning off the next generation of MPs from expenses abuse is only the start of the needed reform of the body politic.

There’s still just about time, Mr Cameron. You’ve built up plenty of political capital: invest a little now. Find an adroit way to do something breathtaking. Take remorseless retributive actions that will astonish the Party and the public alike; and make the man in the street say, that’s more like it.

And gain yourself a free hand for further reform (not to mention a bunch of extra Euro-seats). You won’t get many opportunities quite like this.


My new love: African Copper

I posted on FT Alphaville, during their excellent Markets Live ( a must read for any traders surely), on Friday of my investment in a company call African Copper.

Now I had done this on the basis that the company had seen off a bid and so in the background this suggested that it must have some re-financing arranged. As I said in this post last week, I have been looking to invest in companies that are about to announce a refinance.

Beyond my wildest imagination though something happened yesterday, the company announced a large investment which will secure the financing for the foreseeable and actually allow the company to mine.

The net result, I bought at 4p on Friday and have just sold at 12p on Tuesday morning. My best ever trade by some distance. Lots of luck for a change!

Now to look for some more companies about to announce refinancing....

Monday 11 May 2009

The apology bandwagon

In light of the recent outcry surrounding the Telegraph's unwarranted publication of MP's expense claims, I have been asked by my parliamentary colleagues to join the Prime Minister and the Shadow Prime Minister, and the other fellow in apologising for the recent scandal..

We are very sorry.

Very sorry that the gravy train has temporarily hit the buffers. We are sorry we have been found out, despite our best efforts at maintaining secrecy. We are very sorry that the security arrangements for keeping expenses from undesirable elements was not adequate.

We apologise for not being able to tippex and indelible marker pen away the names and addresses of MPs quickly enough before the claims were published.
The house is extremely regretful of ever having been stupid enough to have voted into law the freedom of information act, that was clearly meant to be in relation to corporations, and not parliamentarians. This inexplicable lapse of sound secretive judgment cannot be excused.
We are very contrite at having failed to prevent publication using tried and tested methods.
Through the courts, the European court, the Speaker of the House of Commons, the official secrets act, gagging orders, the terrorism act , the Metropolitan police, MI5 and other proven methods of publication prevention that have worked so well in cases as diverse as 'Spycatcher' and
the Saudi arms deal. In this instance, for reasons that have yet to become clear, these formidable institutions failed parliamentary democracy.

We, the Honourable Members of Parliament, are regretful that we have been found out, compunctious that we have been exposed. We remain penitent that some members may have taken the expenses system too far, while others secretly think, in light of some truly amazing claims, that they have ,perhaps, not taken enough themselves. We fully realise that the current system of second homes allowances is unsustainable. The whole house has therefore pledged to reform the system to ensure a less transparent, easier to conceal, much more impenetrable and significantly more secure to access, and hopefully more profitable arrangement.

In conclusion, MPs of all parties are mightily sorry.
Sorry that you found out. Sorry that we are embarrassed. Sorry that a temporary loss of income must inevitably take place and sorry that our MEPs in Europe are carrying on as if nothing has occurred there, where of course, nothing has.

Finally, with the coming cuts in public spending and inevitable massive tax rises and looming inflation I should like to indicate that in the not to distant future, you, the taxpayers, will as likely be as sorry as we are now.

Bill Quango MP.

Very, Very . . . Odd

“You are odd, Father Gordon,” the young man said,
”And your party is in disarray;
And now your delusions have gone to your head –
Do you think you should call it a day?”

“In my youth,” the Prime Minister said in reply,
“My integrity mattered a lot;
But, now that it’s obviously gone by-the-by,
Depart? I shall certainly not!”

“You are odd,” said the youth, “as I mentioned before,
And widely considered a twat;
Yet you seem to be planning to stay a year more -
Pray, how do you justify that?”

“Notwithstanding” said Brown “my late father’s advice,
My ethics have always been *supple*.
And now all my scruples are yours for a price –
Allow me to sell you a couple.”

“You are odd,” said the man, “and too clever by half,
And you give yourself socialist airs;
Yet you smash telephones and you bully your staff -
What causes this state of affairs?”

“I have answered two questions, and that is enough”
Said the PM with angry display.
”You are merely a voter: do I give a stuff?
I’ll have Jacquie Smith lock you away!”

(apologies to Lewis Carroll etc etc)


Sunday 10 May 2009

Everyone has Rights these days

Recent moths have seen a phenomenon virtually unknown in UK history. Massive numbers of UK companies have engaged in Right Issues; that is, raising more capital from shareholders and others.

As with many recent economic developments, it started with the Banks, but RBS and Lloyds did not take enough and ended up having to go back for more. So much that shareholders left it to the Government to take up the slack.

This weekend has seen two very different businesses tap the market. Lonmin, a solid mining business affected by the collapse in demand for metals on the one hand. On the other Debenhams, a solid and dependable UK retailer. Debenhams was one oft he companies saddled with huge debts after a private equity buyout. Luckily its 3 main directors all made £50 million each when the company re-floated a couple of years ago.

Here are he reasons I think Rights issues are now very interesting and somewhat unpredictable:

1. They are nearly all to pay back debt and obtain cheaper finance. They are Ocean Finance adverts for larger companies.
2. Share prices are reacting strangely, Sometimes jumping because sentiment says the company will survive after all, sometimes falling as shareholders seek to avoid dilution.
3. So much money is on the sidelines in the stock market, that oddly there is plenty of capital for rights issues; it can be seen as a cheap and simple way back into the market.

Currently I am looking for more opportunities for companies seeking to re-finance their bank loans through rights issues. As long as this rally continues, the companies that take this route see their bombed out share prices recover strongly.

Saturday 9 May 2009

Weekend Puzzle: PM's School Visit Special

Kids! Careless Gordon's office is in a mess, and several items seem to be no longer fit for purpose! Can you sort through this wreckage to find out how the broken pieces should fit together?

Do you think Gordon will survive a complaint under the Civil Service Bullying and Harassment policy? Will the TUC be after him for shouting at his staff? What will his next book be about?

Friday 8 May 2009

Bank Profits: What Do We Imagine Is Going On Here ?

Further to CU's post, there's an interesting strand running through the BARC and RBS results. Here's Pesto:

RBS "generated record income for the first 3 months of the year - due in large part to astonishingly strong results from investment banking .. But the billions in extra revenue were wiped out by losses on loans and investments that have gone bad"

Barclays "is actually growing profits again - thanks to a boom in investment banking and the business of raising finance for big companies - which more than compensates for increasing losses on loans that are going bad"

So - the mainstream, 'real economy' banking is looking ugly. OK, Barclays is ahead of the game and RBS behind. But investment banking in today's climate ?

It seems most likely that it means the exploitation of a rich seam of opportunities for financial engineering in this bizarre era of TARPs,
QE, restructurings, recapitalisation ... in short, tapping the epic (and poorly supervised) flows of global bunce.

Good on 'em ? Up to a point: it may as well be good old British banks that hoover up jonny foreigner's largesse. But isn't this just more of the same self-referential nonsense that got us here in the first place ?

Take a long, hard look at those
increasing losses on loans that are going bad ... oh - and have a nice weekend !


Thursday 7 May 2009

Once Upon a Time on the Net

A story I was aware of today was the long expected, overdue, demise of Mr Draper, editor of Labourlist.
The main blogs, Guido Fawkes and Iain Dale and the followers were discussing whether its best to let a defeated foe escape the battlefield or to pursue after them with all forces and wipe them from the earth.

The argument reminds me of the film 'Once upon A Time In The West'
"'Morton', the railway magnate, is a cripple and dying of polio, and who's ambition is to reach the Pacific ocean. Morton had previously paid for gunmen to kill 'Frank'. They failed. Frank turns up at Morton's rail car after a shoot-out looking to get revenge.
Should the cold eyed killer, 'Frank', kill Morton or let him be, as he presents no threat?"

Morton, crawling towards the muddy water from a leaking pipe, demonstrates his immense inner strength and appalling physical weakness. The music, overlaid with the sound of the Pacific surf breaking , just reinforces the man's powerful determination, while the spectre of the killer, with the thinnest of razor thin smiles, watches on.

What has this got to do with Derek Draper or Quantitative easing, or the LDV deal?
Nothing really.
Its just a masterpiece of cinema, without a line of dialogue, where the actors perfectly convey the directors intentions. Enjoy it.

I'm pretty sure its Hannah Montana the Movie for me this Sunday.
There is no justice.

Banksters update 2; Divide of the banks

A very interesting statement out of Lloyds Bank today. A lot of people in the City and Private Investors have run up the share price on the hopes of good news to come from Lloyds, in a similar vein to Barclays.

However, today's statement by Eric Daniels pours a lot of cold water on this. The losses from HBOS seem expected to be large enough to need the Government asset scheme after all. Plus Insurance business is down 22% (Aviva up 11% yesterday) and retail banking is more or less flat.

That leaves the Bank with only a good angle on cost-cutting post the merger, which it does seem to have got an early grip on. This will deliver savings for years to come. This also won't bring back any dividends to shareholders.

On the same day, Barclays has announced at 15% rise in business in the first quarter. Barclays almost looks like it is away again now, like HSBC.

RBS is due to report tomorrow, on the basis of the moment, the Government owned banks look like the laggards. A small short position for me on RBS today at some point.

Wednesday 6 May 2009

Banksters update

It has been a few weeks since we last looked at the UK banks. Last time we saw them, they were on their knees begging Gordon Brown for help and the Labour MP's in parliament were salivating at nationalising the core of UK capitalism.

Yet the recent stock market recovery has been a wild one for bank shares since March:

Barclays - 58p to 300p
RBS - 10p to 50p
LLoyds - 38p to 121p
HSBC - 350p to 517p

Long-term investors have still seen massive value loss - but have recovered quite a lot in the case of Barclays and HSBC in particular.

The UK Government is now in the money on its Lloyds investment and only 30% away from being in the money on its RBS investment. All this on the back of some spring optimism and a duff set of stress testing in the UK. Not long until Brown will start boasting about this is my reckoning.

On a personal note my investments in RBS and then Lloyds have me smiling a little more as I near break-even from last years 40% loss on my portfolio. But I have been selling down my shares, this bank rally seems to be built on sand. A case of making hay whilst the sun shines...

Tuesday 5 May 2009

Gordon Brown is invincible.

Gordon Brown is invincible.

He must be.
Checking back on blogs, such as ourselves, Raedwald, Mr Wadsworth, even Mr Dale there has been a visible descent of tone when writing about Gordon Brown since 2007. A change of style in discussing Prime minister Brown's leadership. From initial scepticism, but respect for his office and of his appointment, followed by some bafflement, on issues such as the very clearly demonstrated weakness of his cabinet. To smirking behind the hand at his misfortunes { Like the Olympic torch, or hiding in Lisbon.}
Then came unrestrained guffaws at his by election defeats and paint on the head, right up to the current outright pointing and laughing at the boy with his head stuck in the park railings and a "kick me really hard" sign taped to his shorts.
The bloggers, and so the voters, respect for the Prime Ministers office, and the Prime ministers ministers, has reached new lows. He has lost all credibility except to his die hard supporters.

No one thinks twice about saying "Gordon's bonkers". The PM's full name need not be used. Clearly the phrase "Gordon's bonkers" refers to Brown not Ramsey.Yet it could equally, if differently, apply to both. But it doesn't. Bonkers, crackers, loony tunes, mental applies to just one person.

He is still here. Disaster after disaster, followed by poll drop after poll drop, have not hurt the man. Ridicule, revelation, economic catastrophe, social inadequacy, lies, smears, spin and failure after failure have had absolutely no effect on his position as leader. It was tenuous a year is no worse now.
Brown will continue looking over his shoulder for plotters, and the rumours, like this weekends tales of Blears, Harman, Cruddas, Johnson seeking to depose him will continue. Balls, Straw, Smith, McFall next week.
But lets face it. No plot to oust him is coming.

The highest level of peacetime debt ever. the worst housing figures ever. The worst individual leader ratings for a year from election ... pick anything you like. Industry order books, car sales, crime, healthcare provision or even his personal favourite of poverty. They are all bad.
Add the worst Euro election polling for a sitting government later on and ..He will still be here.

There just isn't a good enough reason to ditch him. Things may, in fact almost certainly will, get worse, but so what? They are already past the point of retrieval.
£100bn - £200 bn - £600 bn of debt. So what? As a colleague might say. How many seats will be saved by switching to another PM? Not enough to make a difference. Its hard for the Labour party to sink slower or lower than is already happening. If you are going to lose by 5 goals, is it worth the bloodbath and schisms just so you only lose by 4 goals? No.
So, no matter how bad it gets,the tipping point was reached a while back. Gordon survived. The banana kid lost with a very weak speech, while Gordon was getting his missus to make the faithful feel sorry for him. It worked.

Gordon Brown is a level 12 political black wizard. Miliband is a neophyte elf. In the hard politics of the labour party, it would take something mighty powerful to challenge him. The 20/1 bet that he will be gone by Xmas shows the reality of how unlikely he is to be ousted.
In the Long Good Friday Hoskins asks " is there anyone from the old days who could be doing this..challenging me?" Then he reflects " Nahh. They're all dead." Brown toppled his rivals long ago.

So let us hope he starts looking a little less like someone recently back from a trip to a sausage factory in Mexico city as he should really be sleeping very well indeed.
From now until next May he can cuddle up safe in the knowledge that no matter how bad it gets, he really is unsackable.

Harriet Harman: Got Talent, Destined for Greatness

Harriet Harman wins an ovation for her famous Janet Street-Porter impression. She beats Hazel Blears' "chipmunk" hands down, and the Labour leadership is hers, by acclamation.


Sunday 3 May 2009

Is Manufacturing the answer: Debate

Read this link here first. It is even at a skim a very good report by PWC on the manufacturing sector in the UK over the last 30 years.

It makes some key points such as:

The sector has grown substantially, doubling in size since Thatcher came to power, just not as fast growth as the services sector.

Under the Thatcher Government (it does not say this, but look at the graphs) and Major Government manufacturing increased hugely; by comparison it has been weak under the Callaghan and Blair/Brown Government.

All countries, even Germany and Japan have suffered similar relative falls in employment in manufacturing, due to both globalisation and productivity improvements.

So, should a new future UK Government have an industrial policy? Is the future of job creation to go back to having a larger manufacturing base?

My view to start the ball rolling, is that Government's are poor at picking winners and should use tax breaks rather than state interference for most areas of manufacturing. Also service sector growth and employment rates are better globally, so re-orientating the economy back towards manufacturing will lower the growth potential of the economy. Manufacturing has a key role in the UK and should be seen as a key sector, but not a special one....