Friday 30 April 2010

Image of the Week

What was said at the economy debate?

I only have seen highlights; from what I have seen though a massive side-step away from any admittance of the truth of what is to come.

Two things now strike me: Labour, having had a successful scorched earth policy, are trying to throw the election.

Secondly, The Tories are going to win on Labour's terms - when they have to enact horrible policy they may end up hated for a generation. Will Cameron's be lucky enough to find his own Falklands before his term runs out?

Thursday 29 April 2010

Question Time

David Dimbleby is joined in the West Midlands by Ed Balls, Vince Cable, Alex Salmond, Janet Street Porter and a fifth panelist still to be confirmed.

Hmmm..What could the first question be?
But this goes out straight after the leader's debates so economy questions likely.

Q1. Has Gordon blown the election again.
Q2. Taking money out of the economy by refusing to implement NI tax will cause a Tsunami of cuts.
Q3. Will the Greek tragedy have any effect on the UK.
Q4.Is Mervyn right? Is this the election to lose and is Gordon in fact a genius?
Q5. Something about proportional representation for Clegg.

Winner gets to ask the PM a bigoted question of their choice.

What should be said at the economy debate

Due it it being on the BBC, the election nearly being at an end and a search for someone other than Gordon Brown to be our leader, the TV Election debate tonight might well get the highest viewing figures. The first half of the debate is on the Economy.

Now, as we know from reports this week, none of the Parties are coming remotely close to telling the electorate the truth about what is to come. Whilst this may seem a clever electoral strategy it is of course the worst thing you can do long term. When the cuts come despite the promises not too then the electorate is going to get very grumpy.

So what should the answer be? I think it can be put in a few points quite succinctly;

- Look at Greece, that is where we are headed, we need to attend urgently to the need to stop the national debt rising so quickly. Once is gets to 100% there is no way back.
- To stop this we need to cut borrowing to zero over the next parliament
- This means saving about £100 billion a year spend in real terms.
- To do this we need to cut social benefits by 10%, scrap all Child trust Funds, credits etc.
- We need to cute the payroll of the civil service by 3% per year; a pay freeze in the public sector for the full term of the parliament, and a commitment to only replace 1 job out of every tow where people leave or retire. MP's and senior government officials will have a 10% pay cut.
- A big cut in the international aid budget for this time period.
- To help the private sector create jobs for the ex-public sector workers, we need to scrap the planned rise in National Insurance
- The tax credits system will be abolished and personal rates raised to reduce the cost of administration.
- We need to align public sector pensions with the private sector pension system.
- We will stop investing in inefficient green technologies and focus on developing nuclear power for the UK.
- We will enter negotiations with the EU to reduce our annual payments in line with our new straightened circumstances

The above measures are only going to get us half way to our target. A comprehensive spending review will take place immediately post the election to looking into the departmental budgets. Expected programs that will be stop include: NHS computer system and other large IT projects, ID cards, Aircraft Carriers, Future fighter aircraft.

Its not pretty, but it is what has to be done. What have I missed?

Wednesday 28 April 2010

Gordon Brown: The Man In The Iron Grid

No-one will be the slightest bit surprised by Brown's off-camera mutterings, which are entirely in 'character' - the dismay at meeting someone who disagreed with him, however mildly; the immediate finger-pointing and disloyalty towards his aides; the inappropriate use of language.

His usual response to this kind of set-back is to play the Macavity and disappear.

But he can't. The iron grid of his final-week campaign appointments, starting right away with the third debate and his need to prep for that, cannot be modified to the extent of giving him a few days out of the spotlight.

He will get grumpier and grumpier. The medication will be stepped up. The infelicities will multiply. The NuLab plotters will redouble their machinations. etc etc etc. Can even Mandelson recover this one ?

Oh dear, oh dear. It couldn't happen to a nicer chap.


Is the UK's future a Greek tradegy?

Finally, thanks to the IFS, the media in the UK are waking up tot the fact that the current UK election is an X Factor sham. Sadly the said 'scrutiny' now being advocated will not uncover the answers that the media wants.

The reason for that is that there are none. I have no doubts that the political parties have not made any detailed plans for the real cuts to come, precisely for the reason that they can they say they are not hiding anything from the public. This is a clever Westminster Village PR game, less so a rational way to either prepare for Government or run the county. But our political system is broken after 13 years of New Labour spinning and SPAD's.

Worse yesterday saw big falls in global stock markets. We advised that you keep an eye on Greece last year. it was always going to provide the BIG FLASHING WARNING of the start of the bond market re-trace.

Now today there are direct echoes of Lehman's collapse in 2008  - Greece has banned short-selling of bank shares. Last time we saw that this is the wrong solution, bank shares fall because policy is wrong, they are a trailing indicator not a leading one.

But I am very concerned about the markets for the rest of this week. Greece collapse, UK election looking like a hung parliament, economic debate on Thursday. Lots of events to pull the markets and none of them looking like a good option. Time to increase cash and short positions.

Tuesday 27 April 2010

RBS Tries Its Hand - and Pushes Its Luck

Meanwhile, back in the world of banking ... without much press attention, RBS is trying to get away a fair-sized cash tender, offering to buy back a bunch of relatively high-yielding debt and prefs at a very significant discount – 40% or more - to face value. They do this at the same time as they declare a 2-year freeze on payment of coupon, as they undertook when they entered HMG’s Asset Protection Scheme.

Why would anyone sell up at such a discount, when (a) the amount of coupon they will be foregoing is a fraction of this, and (b) they’ve been able to sell in the open market at roughly the same discount for months ? (Today they are trading higher than the tender price.) The nadir of their market value – around 80% discount to face value - was of course March ’09, since when the improvement has all been to do with improvement of fundamentals.

So unless you see a decline in fundamentals from this point … Let’s see how this tender goes over the next couple of weeks.

Also on the RBS front - they may be suing Goldman Sachs for the payout they had to make in respect of insurance ABN-Amro had written on one of those *odd* product packages GS put together in conjunction with their shorting clients ... Isn't the real story how shockingly bad was RBS due diligence over the ABN-Amro acquisition ? We said (several times !) this was a crazy deal when it happened, and nothing that's come to light subsequently changes the position: by mid '07, Fred the Shred had completely lost it. Sue away, chaps - but it'll be embarrassing in court.


Monday 26 April 2010

The Standards of Modern Journalism

You know how it is whenever a newspaper writes about something you really know ... this is from the Telegraph's Election coverage - Top 20 Tory Targets:

"Croydon Central
Sitting MP: Laura Moffat (Labour) The Conservatives actually won Croydon Central in 2005, but Andrew Pelling - who won it by just 75 votes - left the party in 2007, declaring his intention to run as an independent candidate in 2010. Gerry Ryan will be standing for the Conservatives this time around and is expected to need a 0.36 per cent swing away from Mr Pelling."

So that would be, err, sitting MP, err, Pelling then ? And Gerry Ryan is standing for, err ... Labour. And Laura Moffatt is, err - who knows ? Not around these parts, anyhow. Tory candidate is in fact the hardworking Gavin Barwell, since they didn't ask. And Google is that website you go to when you need to check something - even unpaid interns are allowed to use it. And finally, Pelling is standing for the Vanity wing of the Self-Indulgent Tendency.

Joking aside, Pelling never left the Conservative Party (though he did have the Whip withdrawn), and as a member of said party he vowed, as recently as last year, to work for the return of Conservative candidates in these elections.

Ah well. Not that I'm a pedant, you understand.


That IMF Bank Tax Proposal : Why So Dumb ?

Amidst all the airborne clag and clegg that pervades our lives, the IMF has given the G20 the advice they asked for on new bank levies in the wake of the Crisis, to contribute (at a national level) to the costs of the bail- outs. It hasn't been given much airtime (Brown simply claimed they all agree with him), but it merits a quick look - not difficult, as the main text is less than 18 pages long.

Furthermore, it's mostly qualitative & non-technical, a very easy read, put together by folk who show a lot of basic commonsense and the ability to speak plainly - they slap town the Tobin Tax in no uncertain terms (tough shit, luvvies). There are also the usual handy factual appendices (did you know that the UK's financial sector contributes a lower percentage of total national tax-take than the G20 average ?)

But here's the curiosity. They recommend a 'Financial Stability Contribution' which

"would be paid by all financial institutions, with the levy rate initially flat [on a broad balance-sheet base]"

A flat rate ? Bonkers! Particularly as they then make the obvious point that we are trying to address risk: they say the levy could be

" ... refined over time to reflect institutions' riskiness and contributions to systemic risk"

Their excuse for this dumb flat-rate approach is of course speed of implementation: but they really aren't doing justice to the capabilities of the existing system. Financial institutions are well used to risk metrics: they all calculate some variant of the standard 'Value at Risk' measure, and are accustomed to having margin levied on them by exchanges using SPAN or an equivalent risk-recognizing system.

We can do this stuff already. Aim straight for the target, regulators, and go with a risk-based measure from the start - never mind Taleb and his Black Swan sophistry. It is rather important to get this right first time.

OK, now back to politics ...


Monday stories to puzzle the Parties

Three stories break this morning, all of which could be taken up by the Politicians with the election on their mind:

First up is that Emerson, long a suitor has put in an offer for Chloride Group. Now last year I owned share sin Chloride as it was a very safe bet in the recession.. A strong UK company with a great manufacturing business, great products and global reach. No surprise that it has finally been snaffled up. But where is Lord Mandelson and his 'Cadbury' law. Chloride really is a UK success story, why not save if you are in the Red team?

Next up is the bid battle erupting for Crest Nicholson, the UK Housebuilder. It must surely be a sign of the times that this market, long dormant and the amongst the worst performers in the recession, is getting glances for Private Equity. The theme for the Politicians can either be robust growth or top of the bounce froth depending on you optimism/fear quotient needed for the day.

Finally, there is UK Coal, another disastrous set of numbers and more poor performance in its business. This is the Coal business that emerged after the strikes of the 1980's. With coal prices quite strong one would imagine a better future for this company, but no, it is not to be. A great example of why a privatisation can save the taxpayer a fortune.

Saturday 24 April 2010

Are you Pompey the great or Pompeii the burried?

As work at BQ industries dried up dramatically last week BQ set the team a task. If you were Prime Minister, what strategy would you have adopted to deal with the volcano crisis of last week?

The idea was to find the best way of getting your voters home, while also achieving maximum favourable press coverage.

Answers ranged from - "They knew what they were getting into when they bought a ticket.I say Let 'em swim!" {show the taxpayers how tough you are on conserving their money} to
sending the Royal Navy to Spanish ports with inappropriate vessels. That last one seemed familiar.

That's you're weekend task.

The entire resources of the UK and European civil service, police, public sector, Foreign office, MEPs and all of the UK's military and financial muscle are at your disposal. The party machine, with the best spin doctors in the business, awaits your strategy to frame it into a caring,decisive and heroic narrative. The election is on and the debt could hardly be hurt by adding a few extra billion, so money is no problem.

There are valuable voters stranded on the beaches. Maybe enough to tip the balance. It really could be political life and death..

*Pompey the Great was the man who had planned for and believed he was destined to rule Rome. He was most annoyed when a more PR savvy pretender called Julius Caesar came and took it from his grasp. History does not record what became of the third party.

Some good entries. Some even came close. The little ships. The Berlin airlift style transport stream would generate terrific photos. But the press were stranded too. So UK focus first. The winner came from BQ Industries.

Authorise a seven day European travel voucher, downloadable from YouGov website and valid for air, bus,coach, rail travel anywhere in Europe. Redeemable from HMG.
Use twitter messages and use Facebook and Government websites telling people to travel to certain destinations in Europe.
In the UK, under the glare of the cameras, organise buses and coaches from the private coach firms, from london transport, from the military and minibuses from the voluntary sector and from schools and private firms and city councils.

Have them meet up at certain ports, met by the PM, where military and civil personnel, firefighters, ambulance crews etc double crew the buses so they can travel day and night. On board are the salvation army and the W.I. and so on, making sandwiches and taking bottled water. This vast fleet is despatched to the pick up cities and returns through the tunnel, by ferry etc having collected the passengers.

They are again met at the ports by the PM and taken to marquees where Tesco/Asda/Sainsburys have laid on vast supplies of food, some clothing, blankets and tea and coffee etc , served up by the scouts, guides, Royal catering corps, charities, Weatherspoons, Jamie Oliver and so on.. Plenty of Union flags on display, plenty of people praising the PM as he says 'it was the right thing to do..'

Then the passengers are reorganised onto same coaches to take them, if they wish, to the regional airports to collect their vehicles. Each airport would have footage of these 'local' people returning home from their ordeal.

PM makes speech from Dover praising the services and the charities and the private sector all working together. Asks if the Tories idea of a a broken Britain isn't rather overblown? Is it necessary to talk down the teachers and council workers who gave their time to rescue others? Makes his odd smile, waves and walks away, thanking the people clearing up the mess, as the cameras pull back to reveal the white cliffs....

Friday 23 April 2010

UK Q1 GDP growth at 0.2%: Treasury fail

Whomever forms the next Government one of their first jobs is going to have to be lining up the Treasury mandarins against the wall and giving them their P45's.

Today's figures for GDP growth are exactly in line with what most independent economists expected.

However, they are far behind what the Government was forecasting. Even the BBC is forced to the old chimera of claiming that the figures will be revised upwards - who is to say they won't come downwards? (Historically the revisions work out about 50-50).

What this shows is how craven the Treasury is tot he wishes of the discredited Labour Party. Clearly the advice for the Budget was fudged to help the Government. This is not the role of the independent Civil Service.

With 0.2% growth there is little chance in the rest of the year of the GDP figures for growth hitting the Treasury predictions - this means more spending on social welfare and lower tax receipts - a double whammy to the budget and national deficits. Remember too the comparatives for this Quarter are still with the dreadful situation of this time last year.

After firing the mandarins it does confirm that a new Government is going to have to announce an emergency budget where they re-work the figures to paint a picture more akin to the truth - and that will be painful for the X-Factor Election voters.

UPDATE: Perfect Darling response to this post. We are all fine and everything is ok, at least our statistics are not dodgy like really, he said this!

Labour is Beaten - A Big Straw In The Wind

On Tuesday I wrote (chez Idle)

"My observation from the front ... Labour is beaten, morale gone"

If you want another calibration of this, pop over to CiF, where the Grauniad is canvassing as to which party it should support. Now CiF harbours no end of NuLab trolls - several probably on Mandy's payroll - as well as the usual sandal-wearing beardies, polytechnic lecturers and social workers.

But they come out 95% for Clegg. I don't see Telegraph readers (or Mail readers ?) deserting Cameron on quite that scale - do you ?


The C@W Real Economy Index: Still Falling

The C@W annual Real Economy index is published today. Based on the change, year-on-year, in the amount of advertising (by page-area) in the Croydon edition of the Thomson Local directory, we first published this in 2009 when it recorded a decline of 29.9 %, see photo above: and again here using the Yellow Pages (23.5% down).

And for 2010 ? *drumroll* - yup, its down again, this time by a further 22.8% - photo below - for a cumulative 2-year drop of more than 45% over two years.

Recovery ? what recovery ?


photos (c) N.Drew 2010

Thursday 22 April 2010

Question time

David Dimbleby is joined in London by Yvette Cooper, William Hague, Ming Campbell, Elfyn Llwyd and Ann Leslie.

Leaders debate into QT so a fair bet it will be all about that again.

Can BQ up his game and get back to winning form. Will newcomer Malcolm Tucker continue to impress, and will old fighter Nick Drew, get out of his last place?

6 questions .. winner gets to choose what is thrown next a whom. A chicken or an egg.

Q1. The leaders debate on Sky: has Clegg now sealed the deal.

Q2 : Should Llwyd, Salmond, Collins and Farage also have been allowed the oxygen of publicity?

Q3. Should the government have done a lot more to help stranded Hardworking sunbathers.

Q4. Should leaders expect to be egged?

Q5 Is a hung parliament now inevitable

Q6. Do Tory scares about the IMF mean they are still the nasty party.

Ken Clarke will be right next week

The big beast of Ken Clarke was unleashed yesterday on the media, warning of the dangers of a hung Parliament. he said quite rightly that history shows the weak Governments which the markets do not expect from the UK, can cause us difficulties in selling our gilts and maintaining our currency.

However of note is the two currency charts below,

These show that since the election started there has been a slight improvement in the Pound's position against the two major trading currencies. A slight blip is can be discerned around the Clegg debate boost, but that is disappearing. However, the charts also suggest that the Pound is nearing the top of its trading range for the Euro and has reached a plateau with the Dollar. The Euro rate is very likely to correct over the next two weeks; whereas the Dollar rate could break up or down. With the election in the UK my bet is the £/$ is going to go down. So Ken Clarke has been wrong up until now, but is about to be proved right for the rest of the election!

Next up is a quick look at Gilts. The price of gilts has been stable for a month, but the weekly trend is now starting to show rising yields - which is falling prices. So again, the mantra of Clarke is likely to be right, with Gilt prices falling into the election. Rising inflation will also continue to drive the prices of gilts down.
UK Benchmark Gilt Yields
Maturity         Yield      Today1 WeekAgo 1 MonthAgo
1 Month 0.53% 0.00 0.52% 0.53%
3 Month 0.54% 0.00 0.54% 0.54%
6 Month 0.57% 0.00 0.57% 0.57%
1 Year 0.70% -0.03 0.70% 0.70%
2 Year 1.14% +0.11 1.14% 1.10%
3 Year 1.81% +0.03 1.81% 1.81%
4 Year 2.30% +0.05 2.29% 2.29%
5 Year 2.73% +0.01 2.73% 2.73%
7 Year 3.36% -0.08 3.36% 3.36%
8 Year 3.66% +0.07 3.66% 3.68%
9 Year 3.92% +0.07 3.91% 3.95%
10 Year 4.01% +0.08 3.99% 4.03%
15 Year 4.48% +0.13 4.47% 4.51%
20 Year 4.56% +0.17 4.55% 4.58%
30 Year 4.57% +0.14 4.55% 4.60%

What all this shows is that the Tories were right to keep quiet for the first two weeks of the campaign, as the facts would not fit the narrative; from now on though it is likely that they will start to fit the narrative. Ken Clarke is very canny and well advised.

PS The Tories are of course right overall, check out the bond yields on that FT link - the UK is in deep trouble compared to the US and the bigger European countries. Even Italy is faring better than us!

Tuesday 20 April 2010

Amateur Coalition Strategist @ Work: 5-Point Plan

Consider Saturday 8th May. In the scenario of an outright Tory victory (which, as it happens, I believe to be viable) no strategy is required, only a satnav that can locate the tradesmen’s entrance to Buck House. But a Hung Parliament is another matter and unless Clegg has a concrete pact already in place with the Milibands, he will wish to know what Cameron has to say. What’s a Dave to do ? As Iain Dale has said, you take power when you can, and in the Hung scenario that means treating with Clegg.

Enemy position: Labour will have more seats than the Libs, though quite possibly less votes. Brown will have already offered Clegg full PR and several Cabinet seats. Leading Labourites will also have pledged Brown’s head on a platter, though the decapitation is unlikely to have taken place by 8th.

Libs, for themselves, have some red-line issues. Manifesto not to be taken at face value, of course: but Europe and PR are pretty totemic, maybe Trident also. The rest is either common ground(-ish) with the Tories, or negotiable.

Own position: probably the highest number of votes; possibly of seats too, but ex hypothesi not enough. Right wing restive
& deeply suspicious of anything the Libs will demand on Europe or immigration – needs to hear something congenial inside 48 hours before discipline starts to crumble.

But Clegg hates Brown: there’s plenty of scope here. Solution, in 5 bullets:

1. Offer Clegg a very mild form of PR (e.g. regional top-up seats with a very high % threshold) that includes a mechanism to cure the current structural bias against the Tories stemming from the demographic ratchet and the interminable lag in Boundary Commission changes. This package would need to be very well thought-through, and compelling to Clegg on first reading – there’s no time for extensive back-room deliberations

2. Go for the ‘in-or-out’ referendum on Europe that the Libs already advocate (free vote). Ideally this would be packaged with whatever cunning constitutional wheeze Hague and Grieve have been hatching to institute German-style legal priority and leverage the inevitable opportunities presented by the next accession treaty. But these are not ideal circumstances

3. Scrap Trident, but develop a truly independent nuclear cruise missile platform. (Trident is an expensive floating turd in any case.) Clegg will love the symbolism of this: Tories will love the independence. BAe will love the missile work.

4. Hatch a tax plan that delights both Cons and Libs: given that Cable wants to reduce Income Tax for most, this shouldn’t be beyond the wit of, well, someone with half a brain, really.

5. Tell Clegg he ain’t getting his amnesty of illegals. He won’t mind.

As I say, this is Plan B because Plan A is outright victory and I reckon that’s on. But hey, you always need Plan B.


Green shoots are not going to do much for the recovery.

listening to the Green leader, Caroline Lucas, on R2 now.

I shared a platform with a Green-sustainer yesterday night. She had a fair few notes but not many facts. Lots of aspirations and ideals..fewer practical solutions and no contingencies.
Can't say I enjoyed it much. Like talking to someone without a common language.

1. {Green} We can all share our skills, if you're a hairdresser and you're a plumber then why not skill swap.You fix my tap, I'll cut your hair.No money changes hands.

BQ- "How does that work except for low-semi skilled trades? A doctor spends 10 years at med school and gives you open heart surgery in exchange for a massage? What skill would a furniture designer be able to offer a roofer?

2. {Green} Stop globalisation. Food in Africa being thrown away because there are no planes to fly it at the moment. Keep produce local and this would not happen. Then some more points about self-sufficiency for the UK and anti-battery intensive farming that seemed to contradict the self sufficiency.

BQ- UK imports about 45% of food need, but about half of that amount is luxury food we wouldn't really miss. So we are around 80% self sufficient, up from 40% before WW2,
mostly due to modern farming methods, mechanisation, pesticides and new strains of crops.
And how do third world countries then find hard currency to buy power stations or hospitals? They grow them? {this then degenerated into the slave economy/raising poverty levels worldwide argument, which is not one to debate on. Emotion over reality. See Patently blog for a good piece about it}

3. {Green} We are at peak oil. The oil price is rising as the oil will run out in 20 years. Sustainable energy is the future..wind farms and solar panels, and allowing solar panels in conservation areas.

BQ- Partly..but oil is $67 a barrel. Not that high. Its the devalued pound causing the spike. And The Falklands? Is there oil there? As the price of oil rises oil exploration becomes more cost effective....Wind farms ..subsidy..well you know the rest.

4- (green} Grow your own food. If we all just grew enough for even two meals a year it would make a difference.
BQ- No it wouldn't. How could that make a difference to anything?
{Rebuttal-} But our grandparents grew their own food in the war.They showed us how.
BQ- Not really. They had too. Grow, or starve. No-one wants to eat gooseberry pie. And...why? Why do it?

And so on...Luckily we didn't get on to their taxation policies.

The trouble is this green position depends an awful lot on trickle down. Recycling older computers for pensioners, setting up community recycling, setting up community shops. It all depends on pre produced goods or voluntary services. Personally I can't see much sustainability in that.

One idea that I did like was a new hospital. The architects were there talking about all the biomass burners and special underfloor heating etc.The artists were showing their sculptures, skylights to starways and living space ideas. Looked very impressive.
It is a fairly small £15 million hospital. There were quite a few 'extras' such as wood paneling instead of plastic, non institutional furniture, cut through corridor walls with glass panels for extra light..trees and shrubs..footpaths, local stone use in the entrance, etc.
What I liked was that the NHS { not PFI} agreed a sum for the development. the county Council agreed to raise additional funds and private groups and individuals had raffles and fetes and whatever to raise the money for the additional extras. Some £1 million.

I just like the idea. The state funds 'X' for everyone but you can add your own 'Y' if you can raise the funds. I like the idea for schools, for playgrounds, parks and so on. .
The argument against is that poor areas always get bog standard or a richer area will receive less in initial funding.

Still, it did look good.

Come on Mervyn King, when will the UK Inflation rate fall?

News out this morning is that the CPI inflation rate for the Uk has hit 3.4% and RPI is at 4.4%. In normal times we would have interest rates at 5%+ to control this inflation.

But these are not normal times, the economy likes wrecked after the worst recession of our lifetimes. The Bank of England has predicted that we can expect rising inflation and then a sharp fall. Above is its latest published inflation report, published in February 2010.

The devil is in the detail , if you look at the Q1 2010 line above you can see that inflation is expected to have peaked at between 3% and 4%, but their central analysis is for a peak of under where the inflation rate is now.

So on the one hand it may be thought that the Bank is happy and we are still on course on their methodlogies, but alot rides on the April figures. For a start, Oil prices have been very high and pushing up core inflation. Wage inflation we won't know about for a couple of months. The third big piece of the puzzle at the moment is the Pound Sterling; which is sickly and the prospect of a hung parliament is making is worse.
Thus the pressures on inflation are mainly upward at the moment. not downward.

The Bank fo England is clearly expecting some large deflationary pressures to come to bear - perhaps they expected a Conservative victory in the General Election?

The result is that we are on a knife edge in terms of monetary policy - one more month of higher prices and then interest rates will have to start ticking up. Once this process starts there will be rises every month of every other month - deadly in short-order to the over-borrowed companies and people of the UK.

Monday 19 April 2010

Going for Goldmans

A great and ‘gleeful’ feeding-frenzy on the Goldmans scandal over at Alpha- ville and elsewhere – and why not? The accusations get to the heart of one of the lasting critiques of capitalism: that few great fortunes are built without recourse to exploitation of dominant market positions or privileged information (‘monopoly’ and ‘insider trading’ are ugy words …)

So will prosecutions follow ? The lack of punitive actions
has been a feature of the Crisis– imprisoning Madoff, a mere con artist, hardly counts – in stark contrast to the readiness of the US authorities to lock up everyone in sight after the Enron debacle, and finish Andersens into the bargain. Safety in numbers ? It’s being suggested that there aren’t enough lawyers or courts in the land to go after them all, nor auditors to go around if another of the Big Boys were to be taken down..

That’s to miss the point. Making a salutary example of a small number of egregious CEO-level offenders will have most of the effect that’s wanted. And Fabulous Fabrice could do with the smile wiping off his face, while we're at it. Very few nice middle-class people went to spend any time in the cells at all, and every generation should have its sharp reminder.

And of course this might be quite popular. In Mid-Term Year …


Recession was made worse by Labour

Amid all the media hype over the Lib Dems and ther 'shocking' peformance since last week, there is a report out today which should finally bury Gordon Brown and Labour.

It does not say anything new that you will not have read here over the past 4 years, but nonrtheless adds academic rigour to its judgement. And that judgement is that Labour's frankly insane policy of running a budget deficit at the top of the economic cycle has made the recession far worse than it should have been.

Not only has the spending caused the recession to be worse, but of course it will last for much longer, as we are all taxed to death (and beyond) to try to pay back the money we have borrowed. The Tories were spot on in their economic analysis of 2 years ago, you cannot borrow your way out of a borrowing crisis.

I desperately hope this report focus' the election campaign back on the economy. The lack of details and lies told by all the parties is shocking. They all denounce each other whilst not addressing the gaping hole in the finances. Any company run this way would be in insolvency within a few months - the real truth is the UK risks the same.

ITV shows the X-factor but the company has been in dire straits for a long time, UK politics may like the X-Factor approach but its finances and business model issues are more like ITV.

Sunday 18 April 2010

C@W digital switchover complete

Post to check systems after the switchover. The big digital SO has buggered up my freeview too. Infuriating.

Sunday competition.

Who's manifesto contained ..

"Protection for working class people. Strict limits for inflation. Guarantee of no increase to income tax. Raise the threshold at which peole pay no income tax at all. Help for first time buyers. Guaranteeing the overseas aid budget at 0.7% of GNP. Looking to improve the lot of the people of Britain as soon as economic circumstances permit..."

And it also had plenty about change.

The answer was the 'Sunny' Jim Callaghan manifesto of 1979 that tried to appeal to everyone.
Maggie Thatcher's manifesto was rather bland by comparison. Tiny hints at immigration, union reform and council house sell offs.
She won by 43 seats and put Labour out of power for 18 years.

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Sorry for the interruption & and any inconvenience - & thanks for your patience.

Thanks also to Mike Rouse for fixing it !


Saturday 17 April 2010

Interruption in Service

Trying to get it fixed - suggest you scroll away before Firefox or IE crashes!

Any one who thinks they can help drop me an email...

Friday 16 April 2010

The analysis of the analysis.

Popular reporting has it at

Clegg - 10
Cameron - 7
Brown -4

As Jerry Springer would say..
"What have we learned?"

And Jerry Springer may have been a better format.
Bring out the protagonists, Brown and Cameron.. and set up the scene. One has been stealing the others money, getting into fights with other countries and breaking things, like the country.

They argue and swear at each other.

Then Springer brings out the Third Party. In his softly softly style he says "Dave..are you aware that Gordon wants to have a secret parliament liason with Nick?" Nick walks on in a mini skirt no wider than a cable tie and suddenly the chairs fly. All the time the bouncers are restraining them Jerry keeps his fixed secret smile on his face. He's still got Alex Salmond and Herman Van Rompuy to bring on yet.

What the debate has done is something that the parties already knew. It has killed off the idea that a politician's politician could be leader of a political party. A sour old Michael Foot or an uncharismatic Michael Howard or an ageing Ming. These figures are consigned to the soap box of history.

Labour were the first to try out just having a front man who looked good, spoke well, appeared sincere, had a sense of humour, charmed the media and radiated confidence. Tony Blair took the Clinton success to Britain and made it work. The Tories very belatedly, and after many false attempts, took notice of the idea.

The choice of leaders of David Davis or David Cameron would give much the same result.
The Lib dems, even sooner than the tories realised that an old school politico, however venerable, was never going to charm anyone except those watching from a Care Home.
Huhne or Clegg. Equally adept at New media.
"Its the personality, stupid!"

Only Labour, who had discovered the formula in the first place, seemed not to want it anymore. In the early Brown days they even tried to make a virtue of 'no more soundbites, no more smiling - Not flash, just Gordon."

It didn't work. In a 24 hour news cycle the leader IS the party. He has to be on form, on message, on fire. Every day. One of the posters on Guido said
'people who aren't even interested and cannot know anything about politics still vote. They vote for something, even if its only the choice of shoes the leader's wives will wear to the polling booth."
Probably true.

It was very apparent that even allowing for Brown's disabilities in his sight he wasn't going to do well last night. He doesn't have IT. He just doesn't and its no surprise to find that out.
What is a surprise is that Labour are still trying to position Harman and Balls as successors. They don't have IT either. Alan Johnson has affability and humour, but not competence or charisma. Maybe one of the Milibands when they get the chance? But certainly a Miliband over a Darling any day of the week.

If you want to know the secret to this new turn up in UK politics look only to Obama. He has IT. He always did. That's why they all want to touch his magic. But so does Sarah Palin. It isn't a manifesto. Its..well, whatever it is..the lesson from the Presidential debates is clear.

"We are all Americans now"

Thursday 15 April 2010

The Debate: First Thoughts

And so the leaders faced off. Some partisan first thoughts.

> very advantageous to Cameron that it was a 3-way affair. Single combat with Brown wouldn't have been nearly as effective as being the unruffled one between two sometimes-gibbering opponents.

> Brown just can't help himself, and I assume it comes across this way to most viewers:

- "I don't like these words" (FFS !)
- pre-prepared smart-alek lines
- agenda-laden answers, disingenuous segues
- tractor-stat lists & jargon
- defensive laughter when over-ruled by moderator
- blame the Taliban for helicopter-shortage
- snapping-back and (like Clegg) talking beyond his time
- forgetting the questioners' names

> pretty good moderation by Stewart: I'm guessing the other channels' moderators will adopt a similarly abrupt line (which favours Cameron - he reads the mood & the timing better and has less sophistry to ram into his responses)

> Clegg as keen to distance himself from Brown, as Brown was to bind himself to Clegg:
- "Nick agrees with me ..." "No I don't !" Clegg also keen to advocate a tri-partisan approach on a couiple of issues - why? I've missed the tactical point here. But GB is obviously rattled enough to be reaching for the tactical voting levers.

> Cameron wins on the NI policy tussle: Brown feels compelled to fight it, but he hasn't found the words, whereas Dave had a couple of simple & telling lines.

What do you reckon ?


Question time Quiz.

David Dimbleby will be joined in London by Ed Miliband, Michael Gove, David Laws, Nigel Farage, Shami Chakrabarti and John Sargeant

Hard to do as its the election. Will it be all political or will they try and do a normal mixed show?

BQ say..
* With such a poor record on delivery why should anyone trust any of the parties Many-festers ?
* With the polls so close will the leader's debates be the decider?
* Does Brown's admittance of regulation failure mean he doesn't deserve another chance?
* Poland president death.
* Vince and Nick inseparable should one of them wear an 'I'm the leader' badge.
* Wembley stadium. Is this the perfect New Labour metaphor to take over from the Dome?
Impossibly expensive, unnecessary, symbolic, impressive and totally unfit for purpose.

6 guesses. Winning prize is a copy of all the manifestos.
2nd prize. Two copies.

Special update. Guess the leader debates main soundbites and win a trip on a battlebus. Or bottlebus in Gordon's case as he's not on it or pacifist rickshaw if you are a Green.

I have ..


" Cameron...I know Jack Dromey. Jack Dromey is a friend of mine.
M..m..m..Mr Cameron...You're no Jack Dromey"


"Where's the beef? And is it free range?"


“I'm here as a clean up man. I'm just a guy showing up after the party with a shovel and a broom. No really, I get paid extra for that.”

“I don't have any experience in running up a £1.5 trillion pound debt. But I'm willing to learn”

Election Man-of-the-Match (so far) ...

... is Andrew Neil. Wearing his learning lightly, the redoubtable Brillo drags admissions from his interviewees more often than most, proving that the boorish Jon Snow technique is neither necessary nor effective.

But he's a cruel man. Hide behind the sofa and watch this, if you can muster the courage, from about 29:30 in.

Oh dear, oh dear. First Guido on Newsnight, and now this. Do we never learn ?


Wednesday 14 April 2010

Do the Lib Dems pass the economic competence test?

OK, so I am going to try to be reasonable. As some readers may know I think Vince Cable is a massive charlatan and detest the way the LIb Dems campaign with different policies in different seats - the absolute depth of political cynicysm.

Bu what are the key ideas they have offered today to try and turn the UK economu around? Well one is the moving of the free tax band to £10,000. I like this idea. It works in combination with cutting back on benefits - someting which the Lib Dems allude to but do not say. It is a step forward to making work pay.

Also they have a good idea in breaking up the banks - whatever people say, too big to fail is true. We need to get out of this mindest and also the huge scale of the banks makes them unweildy organisations even if the profits are good.

They have identified some good cuts for public expenditeu too, £3.1 billion, not enough but a start.

Sadly then it starts to go wrong, a huge greenwash scheme to flush all this money away on useless windfarms and other green guff. Oh dear and a limit on bankers bonus's - oh dear, the politics of envy. And then the need to publish public companies salaries of more than 200k, again, why?
And then onto the mansion tax, and the increase in pension taxes for all higher rate tax payers and then a ludicrous idea of regional stock exchanges - AIM is struggling how on earth are regional ones going to get any liquidity.

All in all this is less Lefty Wibble than it could have been, but is far closer to the Labour manifesto than the Conservative one. There are some good ideas, but the tinkering and social micromanagement is more statist than Labour - where is the Liberal in Liberal Democrat?

How odd!

My long post on the Tory manifeso has disappeared over night, very strange indeed, never had that happen before!

To summarise, there were some good bits on addressing pensions, lowering NI, focusing on reducing the deficit and reducing the costs of government by reducing MP numbers and public sector pay.

It missed badly the slimming of the tax code, merging of NI and Income tax and increasing the thresholds for tax free earnings.

Oh well, I will do something on the LD's later.

Tuesday 13 April 2010

Labour Manifesto; Top 5 economic fails

Well, a fail from Labour as expected, half motuhed platitudes and aspirations with very little they would actually do. However, manifesto's always look like this and I am not convinced about the other ones being any better. here are my top five fails in economic policy:

 1.  Full employment - The manifesto says they will create a million new jobs and so restore full employment. Lots of these in health and education, so they really do mean Government increasing its payroll. Also there are 8 million economically inactiv people of working age. So a million does not cut it. Plus of the last million jobs the economy created, 950,000 went to immigrants. Rating: Delusional.

2. Tough Choices - £38 billion in public sector savings, no real plans beyond £20 billionof where these will come from. So no truth at all in what so ever and no way to judge what cuts they are going to make. Does not compute with point one either. Rating; Deception.

3. Deficit reduction - Well not detail at all, except some laughable tax pledges to keep taxing the rich and not raise basic rates. No mention of fiscal drag, eh? No commitment not to raise VAt despite accusing the Tories of it: Rating: Hugo Chavez populism

4. Bank breaking - The Government will break up the banks in state ownership. Thi is not very good news for the taxpayers as the shareholders are going to flee when they twig that any sales will repay Government whilst overall value is hollowed out. Plus Northern Wreck is to be mutualised, haha, no mention of the toxic books hiding on the Government balance sheet. Rating: incredulous.

5. High tech economy - This is to be done with taxpayers money. After all if there is one thing British Leyland taught us, is that it is the Government that knows best, not that bloke who sold Bebo for millions having started with nothing...naah. Tax breaks or innovation zones which may spur investment are not in favour either, instead it is money for distribution by regional quango's etc to favoured lackeys. Rating: Trator Production Statistics Generation.

Also bad, silly ideas in corporate Governance and a singluar drop off of the idea of Football fans buying their clubs. Maybe they read this blog....

Monday 12 April 2010

Your 'Future': Safe in Gordon Brown's Hands

"We are proud of our record on civil liberties ..."
(Labour Manifesto, April 2010)

So how does that work, then ?

"A protest march to fight the Government's decision to close RAF Cottesmore has been called off due to safety concerns. The Campaign to Save RAF Cottesmore group had hoped to march through the streets of Cottesmore up to the air base on Sunday, April 11. But following meetings with Leicestershire Constabulary and the RAF Police, the group was told the march would present 'significant risks' to those taking part"
(Rutland Times, April 2010)

"We are proud of our record on civil liberties ... but we are also determined to keep our streets safe"
(Labour Manifesto, 2010)

Ah yes, safety concerns. How safe we all feel now.


Election slogans you won't hear "Immigration - Immigration - Immigration"

"My three priorities for the country are .. Immigration, Immigtration, Immigration!"

Tony Blair 1997

All the TV and radio stations are sending out reporters that they want out of the way to specific regional areas or marginals. The comment that keeps being heard from Harwich to Hartlepool is "There's too many immigrants. taking our jobs, services, houses..etc"

The reporters express surprise that the economy isn't the number one priority. The immigration problem is very real but effects some areas severly and others hardly at all. Yet so far I haven't heard any marginal or city or family say it isn't a problem. In a Capitalists@work poll it was the stand out failure of New Labour's political tenure. 41% voted it as a worse policy than Iraq {15%} or Financial regulation {12%}.

“At our local primary school, Fulbridge, which has a roll of 675 pupils, 27 different languages are spoken with only 200 of the pupils having English as a first language. The first-year reception class has 90 pupils, of which only 17 are white British. Every day new arrivals are turned away. Registration at the local doctors’ surgery has rocketed with more than 90 per cent of the new arrivals being from the EU.
Daily Mail

Staff at UKIP's campaign centre in Westminster were left feeling overwhelmed when they were flooded with calls following the unveiling of their controversial billboard advert.

Stating that 5,000 new people arrive and settle in the UK every week, the advert calls for a halt to mass immigration.

The flood of Eastern europeans into Peterborough was staggering. The local authority was completely swamped and central government was very slow to assist. Its not the immigrants themselves so much as the numbers and the speed of the immigration. It is estimated that one in ten of the population is from eastern europe.
That alone highlights the problem. The estimate as no reliable figures were ever taken. No proper checks , no planning, no consideration for the existing population or cash allocations on the necessary scale. And even if it was a hospital or extra schools or housing cannot be built overnight.

The scale of immigration was denied for political purposes and so its effect worsened by the denial of any problems. Its very easy to say people are racist. Its much harder to build new roads and services. The nonsense that immigration was a boost for the economy didn't help either. If a family on minimum wage moves into social housing and recieves social benefits it cannot possibly contribute more than it is taking. A 40 hour minimum wager pays around £3,000 in taxes + all the stealth taxes of VAT etc. But if one child goes to school that is a net loss to the country. The Rev Tim Hastie-Smith, chairman of the Headmasters’ and Headmistresses’ Conference calculated in 2008 that it costs £9,000 a year for each child. Even if the figure is half that it still means that tax raised falls far short of expenses incurred.

However, Its not all bad. When I was recruiting for a store in Middlesex with an unemployment figure of just 0.5% the vacancies went unfilled for over two years. Anything below 1% unemployemnt means the unemployable. All the other stores and agencies and hospitality sectors were similary effected. The Immigrants were welcomed with open arms. This is repeated everywhere where vacancies existed.
The NHS could not possibly operate its wards without imported nurses, cleaners, maintenance workers. The factories and packaging firms could not run night shifts. Agriculture imported workers to work on the farms. There was a definate boost for employers in having a motivated,educated workforce to recruit from.

Where I live now there is no immigration. In the primary school there is 90% white, English. 9% Commenwealth or Western European and just 1% ethnic other. A group of some 30 Poles work nearby farms but rarely come into town. Its a white area.

Yet I guarantee that if the question "is the country taking in too many immigrants?" was asked, the answer would be an unequivical yes.
So, if immigration is such a big issue, what, if anything, should be done?
Is it really a race issue? Should asylum seekers be treated seperately from migrant workers. Should unlimited EU immigration be allowed? Should dependants be allowed to come with?
And all these jobs that have been taken? Who will do them? No one was doing them before. No one wanted too. Remember a minimum wage here is/was a medium wage in Europe and a fortune in Lagos. Do we need to take asylum seekers from a devasted war torn country like Afghanistan here? We did invade their country so do we have a moral obligation? Or could we allow then to live in say, Pakistan, and the UK pays {a far smaller re cost of livng differential} that country to house and keep them?

Crime? Should deportation be an option? What about the EU? Just tell them to stuff it.Its happened before on other issues. Other EU Countries say Nein or Non to their own rules.
Britain has done sod all about the criminal database ruling for instance. And students. Baroness Scotland's cleaner was on an expired four year old visa. So was the shot man in the tube. How many students never return home? Isn't that the easiest to fix.

The main parties aren't going to talk about it except in vague and unspecified terms so here's your chance.

What should be done about immigration?

Saturday 10 April 2010

Protectionist Labour Tied in Knots

As CU posted last night, Brown is now reduced to protectionist last-refuge stuff which we know is against Mandelson’s better judgement. So how about this for an early test case ?

Our good friends Gazprom – yup, them as will be providing ever more of that gas we are going to need so much – look to be a bidder* for the Lindsey Oil Refinery and associated assets. Current owners Total have had enough of all the Union disputes – a bit of an irony, eh ? We know how much inward investors love Union trouble.

Now this is a prime piece of infrastructure. And not just a big refinery: there is a large and very efficient gas-fired power-plant integrated with it (though that is in separate ownership). Seems to fit the bill for a big Brown ‘no’, based on what we’ve seen leaked last night.

At the very same time, the FT reveals that Labour is going to let fly with a dirigiste policy on security of gas supply. A great time to go pissing off Gazprom, eh ?

So, Mandy - what’s a girl to do ? Ask your chum Deripaska, perhaps ...


*PS: it’s being suggested Gazprom would have to pay around £1 bn for this lot. I doubt it – as we’ve commented several times before, Gazprom never pays cash for anything. They’d do an ‘asset swap’ with Total, who’d get a piece of some remote Siberian gas-field in return.

Labour Manifesto Pledge - Shut that Door!

Watching the media tonight and the Labour Manifesto has begun to leak as they try to get back some momentum in the election campaign.

Now Labour have been doing badly but not too atrociously so far, but now I think they have gone and done it. They have decided to make it much harder for Foreign firms to buy UK firms. Only it appears that the UNITE union has forced it on them.

Moreover the last few years of their Government has seen many UK companies taken over by foreign ownerhsip... BAA, ICI, Corus, Imperial Energy, Cadbury's. A chunk of the FTSE100 in fac...and just today BA has merged with Iberia.

Also Gordon Brown was out yesterday at Innocent Smoothies bestowing his curse on them as another UK company was taken over by Coca-Cola yesterday!

 This policy is real bolt the stable door after the horse has long gone. Where is their credibility to do this 10 years after reversing the rules?

Not only that but the lame claim that somehow other countries are protectionist, we should be too. What rot. France is protectionist as is Germany, they have double the unemployment of the UK and less than half the Forieng Direct Investment - go figure. Just because other States want to throw rocks in their Harbours does not mean that we should!

Weak, Weak, Weak.

Friday 9 April 2010

More Where Those Coffin-Dodgers Came From

That Twitter scandal ... ah, c'mon - it's just that the Celtic nations see things differently ...

Oh, God, he hates the sick. And the poor as well.

The poor really got on his nerves.

And the needy. Them as well.

Ted: What was it he used to say? He had a term for them.

A shower of bastards.

Ted: That was it.


Friday Fun; Ignorance rulz

The Labour Election campaign and the media/votes reaction to it has brougth to mind a quote for me - but who can tell me who first uttered it?

"If nothing else works, a total pig-headed unwillingness to look facts in the face will see us through."

Thursday 8 April 2010

James Caan in training for Lib Dems

OK, so the guy is rich and has an ego to match Mandelson's. But even allowing for this today has been quite a special day for James Caan.

Firstly he wrote a letter supporting the Tories and implying his long term support for labour must be at an end. Of course as  Non-Dom James has done well out of New Labour. So by the time he got on Newsnight tonight he had done a 180 degree turn. Much to the annoynance of Paxo who instead of a debate had Caan agreeing with everything Baldemort said.

Anyway, this Volte Face is very impressive inteh spaceof 12 hours. it can mean only one thing, really Caan is in training to be a Liberal Democrat, quite capable of doublethink andhaving lost all sense of self-persepective.

More Businessmen sign Tory NI letter

Yes, this must now be getting on for a big chunk of the FTSE250, let along getting a Small Business' letter together - I would imagine that could fill the Telegraph, let alone the letters page..

My take on this part of the election though is that it is still a sideshow, well managed by Labour. For Labour have stuck to their mantra of Tories being irresponsible. Whilst the Tories fight this they are missing the main game.

It is the current Government who have saddled us with a multi-generational debt normally found only after a major world war. not the opposition, it is they who lack all credibility.

It is also the Government who ducked a spending review that would allow the public to see the truth, which is that £6 billion is nothing, compared to the £60 billion a year that will really need to be found in real cuts from public spending. Not time for distincition between front line or back office (incidentally I always feels for the back office people here, much maligned we all need IT and HR etc), there will be massive and painful cuts.

Ideologically the Tories are right, but they are missing the focus on the real issue, which is the Government's total incompetence.