Sunday 31 October 2010

Eigensinn macht Spaß, as they say

Letter from Germany. A public holiday here today, & time for reflection...

The German lawyers I negotiate with bemoan the paucity of their own language when it comes to capturing commercial ideas: all substantive discussion is in English, and all preliminary drafting – even when the ultimate document will be in German. They have fewer words, less nuance, fewer concepts even. A strong claim, but that’s what they say.

Of course German has a handful of terms that find no one-word translation into English –
schadenfreude being the one most frequently cited. That at least can be readily rendered accurately enough in a very few English words, or even deployed in English as an import. But here’s a far more profound, nigh-on untranslatable word, the depths of which genuinely deserve consideration: Eigensinn / eigensinnig.

Generally translated as stubbornness, opinionated, pig-headedness, wayward, wilful obstinacy, headstrong, it comes across as having essentially negative connotations (check your own German dictionary) – which is in itself an important observation.

Because, properly considered, it freights so much more than this, including an entire positive side to the same coin: originality, self-confidence, perseverance, integrity born of personal conviction, unshakeable private determination contra mundum.

The dichotomy has its origins in divergent religious doctrines, of course: whether it is the place of the individual to have any views on significant matters other than those taught by clerical authority.
o a Capitalist@Work in 2010, it is interesting that the negative translations prevail completely (and, by the way, in conformist Germany the negative connotation for the most part prevails as well). It shows how superficial is our regard for genuine independence of mind.

Think of the fates of the various whistle-blowers at banks over recent years. “I label you Not A Team Player” intones one of Dilbert’s evil characters at the slightest sign of independent thought. “Never say anything unless you're sure everyone feels exactly the same way you do” is Homer Simpson’s highest principle.

And of course it’s true: don’t ever be the lone voice of dissidence in an American company (trust me on this one). ‘Headstrong’ sounds, a priori, as though it should be a term of approbation. But it ain't.

Eigensinn macht Spaß, wrote Herman Hesse (a bit headstrong himself): Eigensinn is fun. Or perhaps, makes mischief. Indeed it does. But we need the headstrong independence, the stubborn integrity: and all too often, in banking, politics and elsewhere, we don’t get it.


Saturday 30 October 2010

John Reid's incurable Communist tendencies.

Arghh. Just as the Airline Industry had taken a stand against the over zealous policing of security at airports, we get this news of ink cartridge bombs being smuggled on cargo planes.

Nothing to do with passengers, but nanny-State fans the BBC have managed to dig up (literally I imagine) John Reid. Ex rubbish Home Secretary and all round Communist authoritarian. Amazingly he says that these terrible events show that we must never relax are guard or get on a plane without a full body cavity search.

Al Qaeda truly are winning when we have such muppets reacting to their every move in this Country.

Friday 29 October 2010

Where was the September/October market crash?

Here we are, October is done as a trading month. Through September and October the FTSE and US markets have continued a rally. it has weakened alot this month but nonetheless the momentum is still upwards. All the dips are getting bought out.

Yet most market commentators were predicting a big sell-off; I feared one given I am 100% long on investments. Next week perhaps with Obama taking a pasting we may see the beginnings of a sell-off - or maybe not?

The UK markets have even got past the will-she won't-she Bank of England decision of Quantitative Easing. In the US they are waiting to see how much more money Bernanke is going to print. To my mind this it the real backstop of the markets at the moment - the realisation more money printing and so future inflation is in on the horizon.

Thursday 28 October 2010

Question time again.

Question time rolls around again. Bit harder this week, only a few firm news stories and its from Glasgow, which usually means a very different show.

David Dimbleby is joined in Glasgow
Nicola Sturgeon, deputy first minister, deputy SNP, effective fox in the box.
Ed Davey,Lib Dem Mp for the Bentalls Centre and postie minister.
Chris Bryant,Labour Welsh Mp, 'ethnic cleansing' foolishness, Kay Burley slayer and all round oddball.
Hugh Hendry ,hedgie, most evil capitalist in society and blunter than Gordon Brown's memoirs writing pencil.
and Simon Schama, Labour supporter, historyman, clever, but not nearly as much fun as the Tory David Starkers .

Guess which questions will be asked and add them into the comments.
BQ say: No more

1] Housing benefits cap and social cleansing
2]EU fees, up yours Delores
3] should Scottish students pay fees
4] Police can no longer question suspects without a lawyer {cadder}
5] Postal services bill, PO want a 10 year lock into royal mail. HMG says erm..really?..don't think so.

Special this week is to try and spot the activist. Last week I'm pretty convinced the first questioner was a green, but can't be sure, so he's let off , but the last questioner, Tristan Learoyd, is a labour party activist.. says so here at the Redcar Constituency Labour party site.

C@W looking will be looking out for more sneaky politicos in the audience tonight ..

Falling UK houseprices are essential for the economy

For the decade of 1997 to 2007, buying a house was a surefire way to get rich. Lots of people did it, older people had already bought in and saw bubble profits. The only losers were younger people without the wherewithal to join in and the poor who did not have the funds either.

However, for the last 2.5 years the story has changed. No one is now treating their house like a cash machine and Phil Spencer and his crew no longer sully the airwaves (his firm appropriately went bust last year).

People not using their houses like cash machines means there is less consumer spending in the economy. Also less activity in the market means the housebuilders are not doing so much construction, sparing up capacity in that sector. Then of course there are the poor volumes for those highly cherished estate agents.

Furthermore people are paying back their mortgages, this is profitable for the banks, but leads to an contraction of money supply, as money paid back is not replaced;  the banks are using this money to offset losses, not to re-lend on property where they are massively over-exposed.

So it would seem falling prices are not a good thing. This is what you can read across a range of economic commentators.

However, all of the above should be the normal state of affairs. Trying to have policies which move us back to igniting a property bubble would be insane as there was huge waste of valuable capital and easy profits for people do nothing; non productive speculation is not a long-term basis for a large economy like the UK. At least the City Speculation skims the world markets and not other UK citizens (they register as collateral damage only).

Already we have negative real interest rates, if we have these and still house prices fall it suggests they have a lot further to go. Managing this decline so that it does not distort the economy too much is crucial but falling prices are in many ways essential to a healthy economic recovery - it will show the economy re-balancing to a more stable state.

The takeaway here for me is that it means interest rates are going to stay low for a long time; if only to preent a housing crash that will occur if they are moved up swiftly. There will be a strong correlation with falling house prices and low interest rates (until rampant inflation gets our of control, but that is a story for another post).

Wednesday 27 October 2010

£400 pw in London gets you..plenty

This nice semi in desirable Camberwell.

Or this under £400 gets you this lovely townhouse in Denmark Hill.

Or How about Battersea - a nice 4 bed there for £390 a week.

You can even have a 5 bed near seven sisters for £400 per week.

I really am confused by this nonsense I am seeing on the BBC News at Ten about how tens of thousands of people are to be made homeless in London. I am 35, have 3 kids and a good job, I have never paid £1600 a month to rent or on a mortgage; even in good locations in London, never mind ex-council housing there are plenty of places.

OK, maybe if you have 9 kids a four bedroom won't do, but then why should taxpayers house 9 children families in swanky London addresses. I really can't see how Labour are think they are onto a winner here....

British Airways; Bastion of Common Sense and Slayers of Political Idiocy

Really pleased to see Martin Broughton (scourge of some Americans) come out today to rail against the excessive security checks we have to go through at airports. As a regular traveller, it is obvious that these have become far to onerous. In addition, the lack of profiling is a disgraceful give way to political correctness.

Having watched mothers clearly going on their hols with their brood having to throw away baby milk and open sealed packets of baby food to taste - something is clearly awry.

The key message too is that the US have their own demands (not made for domestic travellers, interesting as 9/11 targeted domestic flights because that was where security was low), then the EU and then the UK. Also more powerful scanners have been brought in - so in effect security has got tighter and tighter.

I don't want to see any more attacks, especially as I am a regular traveller, but clearly bureaucracy has had its normal field day in expanding beyond the necessary; So I applaud Broughton for standing up and saying the Emperor has no clothes.

Remember too that it was Willie Walsh last year who was so strident in saying the Ash Cloud was not as dangerous as the Governments would have us believe. Bravely he flew through it and although was ignored and castigated, until  he was proven right. Willie Walsh, now a Government adviser, is also quoted today as a keen proponent of growth and not worrying about socialist propaganda about a new recession.

We should celebrate having a company where the management are not frightened of the truth and are willing to challenge the vast Government machine consensus.

Tuesday 26 October 2010

I'm not biased but...

On the BBC's radio 5 program this morning was Stephen Haseler, professor of government at the London metropolitan university.

He was asked for his views on the economy and said " All the evidence from around the world is we are about to enter another recession and the much trumpeted recovery is petering out." Asked if he supported the spending reviews cuts he said. .. "No. Not any cuts really. The coalition government..has a fundamental flaw in their argument. They are not going to get the private sector to grow. They say that cuts to the public sector will allow the private sector to grow. this won't happen. The recession is global, we won't be able to export out of it and the banks won't lend to support it. .. Its just not going to happen."

Interesting so far. It is all a bit dependent on private sector growth, and that could be being stifled by Vat rise, PS cuts, lack of confidence etc. He may be right. So what does the good professor propose as a solution?

The only way to grow the economy and get more tax receipts through the treasury is to expand the public sector. Just keep borrowing and keep spending..spending on anything. When you grow the economy your tax receipts increases and therefore your deficit decreases. The coalition plans mean a deficit increase program. It completely ignores all the lessons of previous recessions. The public sector grows you out of trouble."

Then he was asked to put some ideas to labour .. "New Labour are still in this mindset of free market liberalism that has led us into this mess. You must keep printing money until the economy is running well again. that's how it was dealt with in the 1930's."

Hmmm.. two small issues.

1} He has avoided any mention of the world war, inflation, no strong Asian economies or what public spending on uncompetitive industries did to this country.

2} The 1980 recession to deal with inflation cut spending, which, eventually, led to massive growth.. too much and eventual overheating..but ..still worked, after a fashion.

The profs
wiki is that of a full blown left wing academic. GLC, Stood for a Labour seat, Founder SDP member, European Republic supporter and so on.

Why do they insist on having these people on? Stephen Haseler has a long list of published titles, the reviews of which are clear. A very clever man who has a very entrenched view that gets in the way of objectivity. A Social Democratic view of a 100% committed European Unionist. He gave these same views at the
Lib Dem conference, on a platform with blogger Guido Fawkes. Was it just his forthcoming book that got him on the show?

We here could all collectively come up with a theory that fits the opposite narrative.
We could say if the public sector was cut 70% then there would be little government spending and no debt at all... All employment benefit could be insured or limited to 300 days. Schools could be faith or private, and as there are few taxes, everyone would have money to pay. And charities sort out those that can't . Home defence only army, Police on a volunteer basis .. Abandon the EU immediately, and Nato.
Would this nonsense get any airtime? Its not that far removed from the spend until you're out of debt approach advocated by the eminent professor. Yet we aren't likely to get an invite to spout it on the breakfast show any time soon.

I'm not criticising the prof for his beliefs. He is qualified to hold them. He is a regular guest all over the media because he holds those views. And the USA may still yet decide to try them out and then we'll see if he's right.

But the whole thing smelt of 'lets have another no to Tory cuts' story....Squeeze another one in before the anticipated poor GDP figures come out.
Even Nick Robinson mentioned this theme on the 10 o'clock news. 'Labour and parts of the media are driving this 'cuts strategy will lead to a double -dip' message.'

Yes, Nick. Parts of the media indeed...

Once You Have Paid The Danegeld ...

… you will never get rid of the pillaging hordes.

This subsidy business is getting right out of hand. In the beginning, various players in the nuclear lobby decided the best way to promote their uneconomic monstrosities in the 21st Century, when state electricity monopolies are no longer on offer and the s-word is out of fashion, was to ask for a ‘floor price’ to be set on carbon credits under the EU emissions trading scheme. What particular floor price ? Earlier this year they were suggesting EUR 35 / tonne (vs current price of around EUR 15).

Back when the Coalition took power, seemingly in favour of the floor price as an unobtrusive way of ripping off electricity consumers (that’s, errr, everyone, a.k.a. a TAX), the nuclear lobby let it be understood that actually, they probably needed, ho-hum, let’s make it a round EUR 50.

Now, it seems, Huhne is being lobbied by the usual suspects for “between EUR 80 and EUR 90” – or an equivalent amount in a more complicated package they have in mind to disguise the bung they want even more thoroughly (because it will mean 25% on your bill).

Which is no surprise really, is it ? In May, we wrote:

"of course, €50 would only be the start. When, after a couple of years, the government notices that no new nukes have been started, and that the preposterous targets for new wind farms are not being met, they will solemnly be told by the subsidy-wallahs that the floor is not high enough."

Except we were out by … a couple of years: it only took the sharks a couple of months.

Why ? Because they smell blood, or rather, sweat – that of a Government scared that the lights will be going out and, they detect, showing every sign of being willing to throw someone else’s money at it.

And so does every other mother’s son in the industry. We know about the wind farm wallahs of old, but get this one from yesterday: Centrica wants someone to dream up a new subsidy to bribe them to build more gas storage facilities. Because, don’t you know, they’ve heard the government is really rather keen that we should have some more – and they sure as hell ain’t going to part with their own money when they hear everyone else just sticks their hands out. (“Sources described the economic climate as ‘extremely challenging’”.)

When do we suppose this is going to end ?


Monday 25 October 2010

October Trading Update

First day back from hols so need to be a bit quick today. So here is a post for those interested in my trading for the year to date. The last six weeks has been very active, disasters with SEY and HAIK were unpleasant; Luckily with HAIK and SEY the investments were only £2.5k each so the big hits were not so bad.

On the plus side, XEL has more or less doubled in a month and is now 200% up on the year, GKP has continued its strong run from 68p (my last top up was at 73p)  to now 155p - so over 100% in the last 8 weeks. Of the other major holdings, EMED has gone nowhere, Minerva similarly and I have sold down a bit there too, IAE has recovered from 100 to 130 odd.

Of some long term pain providers, both Ascent and Xtract have perked up hugely, meanwhile KDD has merged with FDI so I now own a larger diamond producer, not that the performance is anything to get excited about.

In terms of new buys, I have topped up XEL and IAE and bought AEY which is another North Sea explorer, quite a long horizon for that one into end of next year to see real gains, but looks good with a new partner to develop its key field. Also I have bought back into HOIL, I sold much earlier in the year, but the shareprice is languishing and there is lots of good news to come out of Iraq before the year end and it has already performed well in a just a few weeks.

On the downside, missed big moves in both Futura and Nautical, but you can't win em all. Overall up just a tad under 50% for the year, which would hit my conservative aims. However, Mr market is well over bought so I expect a retrace for November before a Santa rally.

Sunday 24 October 2010

Back to reality or fantasy?

After a not very relaxing but quite enjoyable holiday, I am back. I managed due to poor connection to not even look at a computer screen for a week and the blackberry barely worked either, which has proved therapeutic for my RSI. So quite a lot to catch up on back in Blighty. Can't say much has happened that I did not expect (portfolio of shares seems to have done pretty well though!).

Having been away though, I am not sure I can stand years of this to come. Basically, the departments, quango's BBC and leftist media are going to sulk in a collective binge of whining that their idiotic policies are being rolled back.

It makes the mountain the Government has to climb so much more challenging, due to  New Labour so effectively leaving its placemen behind (this is another pathetic whinge from the head of common purpose no less). Also because the public sector is to be shrunk by a relatively modest amount it seems the actual departments themselves feel free to join in the scrum.

Meanwhile no doubt, the real world will march on, hopefully with more sanity than the past 13 years allowed for and with some hope that the mountain, thought steep, can be conquered.

Friday 22 October 2010

Where there's muck there's military brass

A historical post .

skip it if you hate the whole 'lessons from history' thing..

Within about 5 days of the German's May offensive in 1940 the battle for France was effectively over. No one knew that at the time. The French army was the largest in the world. The French and British armour was numerically superior, and the best French tanks qualitatively superior to the panzers. 14,000 artillery pieces, parity in the air on numbers if not capability, the forces of Belgium, UK, Holland and France combined to about 3.5 million men under arms.

Churchill became leader on the day the German's invaded. Ever the battler, he promised much support to the French. Lord Gort was in command of the British forces. Once the German's had punched a hole through the French at Sedan he was tasked with assisting the French in making a joint counter attack to snap off the German advance and win the war.

But Lord Gort was worried. He had had little contact with the French high command, the Dutch had surrendered and the Belgium's, securing his flank, were shaky. Churchill had already promised reinforcements for the French and promised to mount the counterattack. He went into a customary, rage barely suppressing his belief that field Marshall Gort might be a coward. { Bit unlikely as 'Tiger' Gort was a holder of the MC, DSO and of the VC }. Gort was insistent and began making his plans to pull the army out of the line, retreat towards Dunkirk, and establish a collapsing perimeter to defend against the panzers while the army awaited rescue..

Considering the first world war, where Gort was decorated, had lasted 4 years without a really significant breakthrough how could anyone to even begin to think that the battle was lost after a fortnight? but it was. And Gort was right.
Churchill sent General Pownall {that's Pownall looking at the map} to stop Gort being so 'windy' and put some 'backbone' into him. Instead of planning his atack, Gort showed his plans for a retreat to the channel ports. When Pownall reported back that the situation was seriously grave and fully supported Gort, Winston backed down. Lord Gort, who had not been a good commander of the BEF so far, saved them at the end. Without his decision to tell Churchill to stuff it, and to effectively commit treason by refusing to carry out orders, the British army saved by the Royal Navy from Dunkirk, would have been lost to the prison camps.

At the same time Churchill was promising fighter planes to France. German local air superiority was allowing them to win the battle. Air Marshall Dowding, head of all the fighter planes refused.
He wrote a very famous letter to Churchill spelling it out, and demanding that not one more fighter plane be committed to France. Churchill went ballistic again. he had flown to France himself and had promised his wavering allies more squadrons.
If France fell then the French Navy could fall into German hands and that would be a disaster. The french aerodromes would be home to German bombers, suddenly well within range of England and bypassing the UK's North sea facing defences. Fascist Spain might pitch in on the axis side. Italy almost certainly would, adding the modern Italian navy to the Axis and shutting the Mediterranean, adding thousand's of miles to the trade routes to India and Australia and the oil from Borneo. All the resources of France would fall to Germany and its considerable colonies around the world too..And the Americans, taking a bath on all the arms it had sent to France, might not be so keen to send anymore weapons to Europe unless it was cash up front.

Churchill was right to lay out the strategic and political consequences to both his commanders. And they were both right to tell him he was wrong. And they both stood by their comments and basically stated if he wanted another opinion he would need to get another Field or Air Marshall. Both knew Churchill could just remove them. Both had ambitious rivals just waiting to take over their commands.
However Churchill backed down to each. The army was rescued and there were just enough planes and pilots to defeat the air armada of the Luftwaffe in 1940. After the crisis both Dowding and Gort were removed to backwaters and never held field command again. This was not wholly spite. They were old men in a young mans war. But it showed how risky it was to cross a PM.

So, when a PM asked the army to undertake an invasion of Afghanistan in 2001, did any senior officer object? When the same PM asked them to undertake another, larger war, in Iraq, while the first war was still going on did any senior commander stand up and offer a warning?
Surely the nation shouldn't just start a new battle, especially another one in which the army again was to bear the brunt?
When aircraft carriers were dangled in front of the Admirals, 'free' of the budget, to be funded by overspend for mostly political reasons, did any of them ask what might happen when 'the giver 'government was gone, and 'the taker' government came along. Did they think that chopping the fleet would be necessary? Where are the stories of a Dowding or a Gort?

General sir Richard Dannatt did not say much on question time, hence the post. I had hoped he would have said a little more on the defence review. A bit of insight into what went on during the last ten years. How come we ended up canceling the Nimrods. And the Ark Royal. And why we didn't have enough helicopters and do we have enough now? Unlikely as half seem to have been axed.

I wonder if he or his most senior colleagues had been a little more forceful during the decade of war, whether the conflict would have been resolved sooner? Or did the memory of what happened to the most senior commanders in 1940 give them pause.
Gort was made Head of the Home Guard and Dowding envoy for aircraft production in the USA .

Thursday 21 October 2010

Question Time quiz.

David Dimbleby is joined in Middlesbrough by Philip Hammond MP { minister for transport and railstrikes.} , John Denham MP {one of the better Labour MPs, Anti war and former business and uni ministers }
Caroline Lucas MP {Green Mp, but Green in the watermelon sense. Red on the inside. Expect 'fairness' and 'banker' to be the watchwords} General Sir Richard Dannatt{ warhorse CGS, Tory defence adviser, and someone with an awful lot of explaining to do tonight.} George Pascoe-Watson {spinner, former sun journo and former squeeze of Kay Burley, alegedly!} and Polly Toynbee [ unbearable liberal media columnist. Used to be all Vaseline thighs over Nick Clegg..after same gushing over David Miliband, Gordon Brown, after Tony Blair. Probably a bit cooler to Nick now..}

Those still struggling with this quiz please follow the advice of a good prep school teacher.
"The answer is in the question"

Philip Hammond => Minister for transport => Commuter fare rises up by 25% => probability of the bbc producer deciding to pick out this question from the audience ..high. OK? Or just follow the regulars and put down the first thing that comes into your head. Bonus points to anyone who can decipher all of Hatfield girl's coded questions..

Q1. How is it 'fair' for the poorest to be hit hardest
Q2. How many jobs will be lost in the private sector
Q3. How useless was Alan Johnson. The tide was out.
Q4. Why have we ordered aircraft carriers for our two desert wars and why haven't they got any planes?
Q5. Wayne Rooney. Struggling to understand through sir Alex's strong Glaswegian accent I think the gist was .."He wouldn't...even if Wayne was on fire."

Winner gets to axe the foreign aid budget and add it to a department of their choice.

The Morning After

Managed to watch bits of Osborne on his feet yesterday on, and (as a long-time critic) I gotta admit the boy done OK.

He seems to have slipped some £££ out of the ill-advised NHS ringfence, exactly as we advocated here (though not as much as I’d have liked), and generally staked out a strong position. Social housing reform is a good first step – they have to press harder with this in a series of future measures, just like Thatcher kept coming back and back again on Union reform. Bank levy is good, too: they must pay for their de facto state insurance policy, but it should be moved onto a risk-weighted basis in time.

Will need to work through the energy package (loads of docs released by Huhne the day before), but it’s right that there should only be one publicly-funded CCS demonstrator – how many do we need ? (Zero might be an even better answer, of course.) By coincidence, if we believe in such things, E.ON chose yesterday to announce they are withdrawing plans for a new efficient coal plant at Kingsnorth – lamentable, because efficient new coal replacing nasty old coal would be a genuine step forward and needs no subsidy: but exactly as we predicted when the initially smart Labour CCS policy (prop. Miliband-Ed) started going off course (also Miliband-Ed).

So the game’s afoot and it now moves to the implementation phase – always difficult when the strategy is a radical one. Osborne seems to be up to his task: now we need the whole Cabinet to step up to the plate. (If I were Cameron I’d hold a reshuffle next week, based on what he must have learned about his motley crew so far.)

We’re in uncharted territory, where I have long reckoned there be fighting-in-the-streets ahead. Does the welfarist underclass have to get something out of its system, just as the unions did with the Miners’ Strike, before finally being defused as a menace to society ?

On a good day, I think maybe not: we’re not France; the Unions are a busted flush; the Coalition rhetoric has been consistent; the public psyche has been prepared; the chance has been taken.

But has the press been squared ? and are the middle classes quite prepared ? Are those poll-tax rioters burnishing their rusty metal stakes in their dingy garrets ? Will Newmania come steaming up from Lewes ?

What do you reckon ?


Wednesday 20 October 2010

Shave and a haircut..

First thoughts.

Seems that benefits will be hit hardest. £7 billion cut to welfare. Not really a surprise. Welfare is the government's work and if it has to cut then that's where the cut comes. Council spending looks like being significantly more than Osborne's 7% cut claim. Will have to look at the numbers a bit more later on.

The government said it needs to cut £83 billion in public spending over the coming four years in order to wipe out a £159-billion deficit — the largest in Europe after Greece and Ireland.

The arguments for and against are pretty clear. Cut now, say Labour, and the recovery will end and tax receipts will plunge at the same time as unemployment will rise. The government points to a record £43 billion a year in debt interest alone and worries that a % point increase on borrowing would necessitate even deeper cuts later on.

In 2008 the debt was an already dangerous £525bn. Mr Brown was trying to find some way of pretending the phony 'golden rules' were still in place. Then the credit crunch. And the debt is doubled. So Labour's wait and see is not an option. When a nation has spent two years doubling its debt trying to buy off a recession its just not an option to suggest doubling it again just to be sure.

The 490,000 job losses will hurt if those people don't find other work. { suspiciously just under the 1/2 million tag George?} Something we should remember. When the 30,000 workers of Woolworths were kicked out with 4 weeks notice and a paltry statutory redundancy, no one thought they would never work again. Surely the same with public sector workers. If you listen to Unite you'd think people were being confined to their homes forever more. In shopping centres and high streets across the UK they haven't seen as many 'opening
soon' units being readied for Christmas since 2007. Osborne is probably just about right. The recovery is on.. so why wait?

And anyway, he can't wait. The coalition cannot follow Alan Johnson's advice even if they thought it was correct. For a start they can't do nothing. What kind of chancellor would George be if he decided that on obtaining power after 13 years he considered 'It's OK. Everything was already under control.'

Politically the coalition must act early on. They must cut and pray, fingers crossed, that it all works out and the early pain can be overcome by later tax cuts and spending commitments. The weakness of a fragile coalition, the public's temporary and only semi acceptance of Labour's wasteful spending, and the need to prove Blue was right and Red was wrong have driven the government to gamble on a cuts strategy.

Tuesday 19 October 2010

Super Carriers update.

Super carriers.. Back in July 2008 Capitalists@work foretold....Here

-The carriers will cost 4 billion pounds At least £4 billion as defence procurements have a history of overspend.
The price of the carriers is accepted to have risen to £5.4bn already.

- One report is that the carriers can only use the F-35B Lockheed Martin built in the USA. This is a kind of new generation Harrier part of the joint strike fighter program. But there is a superior F-35C model already under design that won't be able to be used unless modifications to the aircraft carriers are made.
It now appears that one of the carriers will be converted to take catapults enabling them to take the F-35c. Much cheaper and mostly better. {The F-35b is a VTOL design like the Harrier} *Of the 800 supposed orders of F-35 II only 5 have definitely been ordered. 3 by the UK.

And in the many, many comments..Worth reading, as we had little news just the RN's CGI 'artists impression'.
Also to defend the ships the navy has had to order the type-45 destroyer [8, now possibly being reduced to 6] and the astute attack nuclear submarines. Thats an awful lot of shipbuilding. Plus the new, and very late, Nimrod anti-sub plane is needed to defend them too.

- The 6 destroyers and the subs have survived but the Nimrods are cancelled. I don't believe we have any maritime surveillance aircraft at all now.

There is a heavy political lesson for the ConDems here. The coalition is facing the flak for decisions that they had to make, based on the legacy of the previous government.
Very good round up by BBC defence correspondent halfway down the page

There was laughter with Ed Miliband's comment of aircraft carriers without aircraft, which is exactly what HIS OLD Prime Minister ordered, also deliberately signing no-cancellation deals to secure the work for his own voters shipyards. Yet in the media, Cameron's must take the blame.

Welcome to Obama's world Dave.

National Security Slipping Away

Letter from Germany

There’s a piece in the
Telegraph today, lamenting the lack of strategic thinking in the UK (in the context of the Severn Barrage non-decision). In my main sphere of interest – the politics of energy – I can only really point to a handful of good, truly strategic UK actions taken by The Authorities:

- the meticulous and very extensive preparations made by the Thatcher regime, in opposition and then in government, for the Miners’ Strike 1984-5

- the building of the UK Interconnector (the gas pipeline to Belgium), a story I have recounted here before

- plus some rather arcane regulatory interventions to improve the workings of the gas and electricity markets that I won’t bore you with just now

Which leads me to the new National Security Strategy. Armchair strategists everywhere will have a field day with this earnest but ultimately unsatisfactory effort. I’d just make one immediate point. The threat to the UK of ‘Conventional War’ has been downgraded to a third-tier affair - which seems more-or-less correct just now - so we can be sure that (as soon as the ill-conceived Afghan adventure is concluded) there will be a lot less squaddies, sailors and airmen on the pay-roll.

That may be OK vis-à-vis a reduced threat of Conventional War: but just look how many of the identified higher-tier threats will end up with us wanting to call upon disciplined bodies of men in large numbers: an upsurge in terrorism, including N.Ireland; big natural disasters; foreign civil wars spilling over into the UK; WMD attacks on UK soil; and that’s before we get to the third-tier threats.

Sitting here in Germany, with Angela Merkel inveighing against the failure to assimilate large immigrant populations, and glancing across to the flames in France, it isn’t difficult to see a plethora of medium- to severe threats of all sorts.

When we’ve had a large-ish standing army, albeit founded mainly on the evaporating Russian threat, we’ve automatically had access to tens of thousands of men in disciplined formations, be they to rebuild flood-damaged bridges in Cumbria, man emergency fire-engines during strikes, put a 'ring of steel' around Heathrow – or mount an unexpected assault on the Argentinians halfway around the globe.

Downgrade the threat of Conventional War, for whatever sound analytic reasons, and you probably end up losing your ability to respond to others of the varied contingencies of life. Events, dear boy, events. They’re always with us.


LBC radio and Iain Dale

Talk type radio. I've been a fan for years. I have an IMP on my desk that gives me 2000 odd radio stations worldwide.

Celebrated blogger Iain Dale has been broadcasting on LBC for about a month now. He's done fill ins many times before of course and has made plenty of media apperances. Often at LBC a member of C@W has gone along to assist with political or business stories. {Shame Mr Drew is in the land of chocolate or he could be on tonight. Nuclear power debate Nick!}

I listen to radio a lot. An awful lot. It stems from having been UK regional driving all day and from being easily distracted by TV. So its radio on all day and I have it on instead of TV at night a few times a week. The BQ office likes Radio 2, which is fine. Sometimes Sky news but I find it repeats too quickly. BQ much prefers R5 or LBC talk radio. I was delighted when Mr Dale joined LBC. Firstly, I have listened to that station for years and years and felt it could do with a few more 'right leaning' views and secondly he pushed the very average Petri Hosken off the evening slot.

People often moan about the liberal nature of UK broadcasting. { The piss poor vapid Victoria Derbyshire is a personal switch off for me.} But I would suggest that unlike the comintern style borefest emanating from the ever so serious and endlessly introspective left wing blogs, the left leaning radio hosts have actually made the most entertaining shows.

On LBC in the morning, someone not to get into an argument with unless you're sure of your facts and can use reasoned argument is James O'Brien. He is sharp and demanding, yet he allows time for discussion and encourages callers to try and articulate their points. He takes no prisoners with ranters but will afford anyone time to talk if they can get across their theme.
Often accused of being an apologist lefty {with some slight justification} he does not often take a party line and will happily attack either side of a political divide or, almost uniquely on our airwaves, will change his original viewpoint and concede defeat.

On BBC Radio 5 Stephen Nolan {Biassed BBC blog really don't like him but I find him very fair} is my favourite of all. Why he isn't used more for his political interviewing is a mystery. He caught all three of the political parties candidates out during the election. Harriet Harman in particular was face pullingly awful, a result of unprepared and over confidence I shouldn't wonder. BBC must have different rules for the after 10pm slot as its much harder hitting than daytime.

Nick Ferrari is the right wing version of O'Brien, but is a bit too unsubtle. I often agree with him, but unlike O'Brien I doubt he is converting many opponents. Both presenters are excellent at what they do and both have a style that seems to encourage people to talk,which really, is the point.

Iain Dale fits in well here. He has a very relaxed manner. More than that..its a friendly, non-threatening voice. A kind of Stephen Fry meets Giles Brandreth. This is very useful for Mr Dale who is covering the evening slot which tends to have more touchy feely items than the daytime shows. The morning shows have the newspapers and the story of the day, by evening its a fourth item left over from the news or, if lucky, a top story still running. But mostly its non news topics. Last night it was " Do you agree that we have no alternative but to commission a new set of nuclear power stations? followed by Home births - should they be encouraged by the NHS or not? and Assisted Suicide."

The great thing about independent radio is it allows the presenter to present. Jeremy Vine, on the flagship Radio 2 lunchtime show, is just a mouth. He presents very well but its not possible for him to give an opinion, so he might as well just be the producer.
BBC don't like a program without 'balance'. Even when the show achieves its aim of making the listener vent at the radio, Jeremy just rolls on, reading the plethora of absurd, ill informed and just plain stupid texts and tweets along with the wise, reasoned and measured, attaching equal weight to each.

Iain Dale does no such thing and that's good news. He had Nadine Dorries on giving her opinion on home births and said in his soft, favourite cardigan, voice "I don't agree with her? What do you think?" Its incredibly refreshing to actually have a presenter express a view. I heard him disagreeing with the solicitor on the legal hour and offering his own opinion. Imagine that on watchdog?

Iain is able to soften' the right wing' message on the political parts, because he has an ability to look at the whole picture and not just trot out party lines. {Think Michael Portillo on This Week}.
He is prepared to concede well made points, is able to pour scorn on ridiculous falsehoods, expose dodgy statistics and weed out the party hack callers on both sides. All with what sounds like a wry smile or a thoughtful pause.

Its still early days for Mr Dale, but he does seem to have gelled rather well very quickly.
A few ill thought out phrases " phone in with your stories of suicide" that once they are out must have him jamming his headphones into his mouth , but that's just experience of finding the appropriate idiom .On tone he has already managed to sound fun when its fun and sincere when there is a need to sound sincere. That's not that easy . Gordon Brown never managed it despite thousands of hours of media coaching. He has even mastered that way of suddenly speaking differently, that makes you look up at the time and realise the news is coming up. All radio presenters do it,subtly running out the clock. It must be in the welcome pack.

LBC used to be known as Black Cab radio and it still is. If a cabbie doesn't phone up it can only mean the city is fogged in or the firefighters have hogged all the phone lines. But there is also a very varied mix of callers. If you want a change ,want tougher debates and stronger politics, don't mind London based news and traffic bulletins, aren't worried if Mayor Johnson and former mayor Ken Livingstone turn up a lot and want to try something stronger than nanny knows best radio, try LBC.
Its free.

Monday 18 October 2010

Overseas trade boosts profits

Just ahead of the cut quick / don't cut quickly positions of the chancellor / shadow chancellor, it mighty be worth noting that many retail firms have reported mild growth up to September. But an awful lot have reported growth from overseas... here's just a sample from various PR department's output last week.

Spirits Group Diageo has reported a 5% rise in first quarter underlying sales despite weaker trading in Europe. The group said sales rise was driven by growth in emerging markets including Russia, Latin America, Africa and Asia.
Sales in Greece and Spain were markedly down year-on-year, reflecting the debt crisis in the European economies.

Online fashion business ASOS has posted yet another strong set of results as the company continues to grow. 
In the three months to September 30th, the company saw retail sales rise 47% year-on-year, with UK sales up 21% and international sales up 128% in a period which saw the launch of the company’s US website.
is forecasting sales to reach more than £247 million this year compared with £236 million in 2009.
...plans to bring the Versace label back to Japan in 2011. The Italian fashion house withdrew from the region in 2009, after reports it was struggling financially.

N Brown Group ... we are encouraged by the strong demand from our younger titles, the international performance of Simply Be Germany as well as the launch into the USA.

Retailer Mothercare today said its "rapid" international growth meant it was now generating more sales overseas than in the UK.

Cut backs on UK spending may be somewhat offset by growth overseas.

We may all be in it together, but those able to take advantage of the low £ to export may not be so badly affected by the UK slowdown.

Friday 15 October 2010

The doctor is in.

This weekend the Bill Quango MP constituency office will be open as usual. But as part of BBC get online week the digital age community will be welcomed. Post your questions or concerns in the comments and the Honourable member for Surreysex East will do his level best to reply to them and ease your fears.
{Or possibly an intern will. the Hon. mem. normally slopes off for golf at around 11am.}

Recent topics have included ..

"My Neighbour, a teenage mum of two, wonders around naked in the night-time. She doesn't have any curtains and my living room looks straight into her kitchen. What should I do?"

Bill Quango MP responds "In my experience the best course of action is a pair of Zeiss 20x60 Image Stabilising Observation Binoculars on a tripod"

"In my street there is a dog that barks all night. despite repeated attempts to have the owner do something the animal continues to bark ferociously. The police are not interested..what can be done."

Bill Quango MP responds "Dear constituent. I contacted Police Inspector Truncheon who informed me of some new developments in the borough that may help you. Apparently 'Sticker' Hughes is out on parole. If you go to the Red Lion in Jacob Zuma Road with £200 the problem should be resolved to your satisfaction."

"The council are insisting that the trees in my road, Ebola Terrace, must be removed as the roots are damaging the pavements. Will the residents be eligible for compensation if the council succeeds in removing landscaping and reducing house values "

"I have been to your street to see for myself. The house are truly ghastly. There's one near to you that even has a family of fake plastic badgers in the shrubbery. I doubt wether removing the trees will have much impact. I'll ask councillor Sponge but I doubt they'll offer more than £6 a household. My advice is to take it and also to try and do something about your dilapidated car port. There's a Wickes not 200 meters from you for goodness sake!"

If you have a question on any issue please feel free to leave it in the comments and the MP will respond over the weekend.

Remember - We Work for You!

{and for Quango and Partners, the city law firm, but that's during the week and does not interfere with my Mp duties which really do consume an inordinately large amount of time.. no really! they do.. Honestly}.

Nos vemos en un poco

A short break for Cityunslicker, terrified by the prospect of the spending review next week I am fleeing the Country for a break. Sadly the wife and kids are coming too, so it won't be very restful..
(The terror comes from thinking the Government are going to bottle it and not take this chance of a lifetime to cut back the State).

Anyway, I must leave you in the capable hands of Bill Quango MP, still morose at the destruction of his industry when I spoke to him last night; he has taken the disbandment of the Horserace Totalisator Board pretty badly.

Mr Drew remains living out his Auf Weidersehen Pet fantasises at a car park somewhere in Deutschland.

All in all, Posting may be light.

Please do try not to break the global markets whilst I am away, many thanks.


Thursday 14 October 2010

Question Time

David Dimbleby is joined in Cheltenham by David Willetts MP {'Two Brains' Willetts is minister for students,} Tessa Jowell MP,{shadow 'mortgage' minister..erm..Olympics minister.} Lord Phil Willis,{long serving liberal democrat, Life peer and Trident scrapper} Sir Max Hastings {Journalist, Tory supporter/Labour supporter, now Toryish again} Dr Maria Misra {university lecturer and QT regular}

Hmmm..does anyone think universities might be on the agenda?
Pick up to 5 topics you think may be asked and put them in the comments. Winner gets to choose the preferred bidder for Liverpool FC.

BQ's picks {oops, no offence Chilean miners} 1] University funding, fairness. 2] Quango cutting 3] Pension tax relief changes. 4] Postal services bill 5] Chilean miners rescue .

Where to for UK Interest Rates in 2011?

Well we are well into Q4 of 2010 now and the consolidated predictions of the City economists I published a year ago have been proved good to date; but the future is rocky.

The Bank of England is trapped in the zone of a UK economy experiencing internal deflation and yet importing inflation (from China, commodities) via its trade deficit. A peculiar and hard set of circumstances to judge; so hard that it has not done anything year to date....

This is very much as was predicted by economists last year. However, now they all thought that in Q42010 the recovery would be well underway and interest rates could begin to rise. Instead we find the Bank of England thinking about lowering real rates further by doing more Quantitative Easing.

So are rates going to shoot up next year? The answer to which maybe is will it matter? Already the cost of funding to UK banks is currently only low because they are accessing the UK Special Liquidity Window (i.e. more taxpayer lending, albeit profitable) and the European scheme. As comments to the previous post pointed out, this will end next year and force banks to come to market. This is then going to push up real rates and Libor may again climb 100 or more basis points (1%) over the Bank of England rate. banks are going to have to raise capital to avoid a bigger crunch than this - so this is No time to won bank shares either.

What is unlikely to happen is that rates this time next year are at 0.5%. Last year it was pretty clear that the headwinds were such that rates would stay low; Cityunslicker took out a variable mortgage with a low rate to take advantage of this. Next year the economists may well be proved right, with Bank liquidity needs forcing real rates to rise (in which case the Bank of England will have to follow, or else disband itself as it becomes meaningless - but it won't be sold to the public this way). However, given the weak state of demand in the economy, rates are not going to shoot up to combat external inflation that we can little about and 4 rate rises will be a lot - still then keeping rates under 2%.

Time yet then to wait before fixing a mortgage - less time though to get one as Banks suffer another bout of credit crunching.

Wednesday 13 October 2010

More Bank capital raising

First off the blocks, just like last year, is Standard Chartered. A mere £3.5 billion capital raise to ostensibly help it prepare for Basle III; the rules of which do not come into play for another 3 years.

This in turn has caused a fall in the shareprice of Barclays Bank - rumours in the City suggest that Mr Diamond's toy needs about £8 billion to meet the Basle III requirements.

Lloyds has a pretty bullet proof balance sheet and RBS, well RBS does not really but then is a state entity. What becomes of the bank if it needs to raise new capital is very bad news for shareholders, already down to only 17% ownership.

making banks safer by forcing them hold more money is a good thing; extra good is that it seems the capital markets are now strong enough to digest a new funding round. It is a very good sign of a turn in the Credit Crunch that markets can do this...if only they could do it without Government intervention at all.

Tuesday 12 October 2010

The Media vs Sky, part 2

The media giants of the UK, with the notable exception of Virgin Media have whined to Vince Cable today about News Corp buying Sky. Below are a quick sample of key numbers. As a quick glance shows, DMGT apart none of the other businesses are doing very well at all. Even ignoring the huge costs of the BBC and Channel 4, SKY is happily raking in far more in profits and growing its business.

No wonder the competition hate it, its business model has been well executed and is working well. New platforms like HD TV both delivered on time and prove to add customers and revenues in quick order. Meanwhile newspapers try to move online and cannibalise their own revenues. Even News Corporation is struggling with its own traditional media business model.

There is no reason for Vince Cable to block News Corporation's bid for SKY - it is already the effective owner as established by the ITV competition inquiry.

Profits and Customers of 2010 major UK players:

SKY - £1.17 billion, increasing customers 3%
News Corp UK - £27.7 million,  customer numbers 4% falling

Telegraph - £53.1 million, 5% fall in customers
BBC -  it costs £3,450 million odd in tax, Falling market share of TV
DMGT (Daily Mail) £240 million, Customers increasing by 4%
BT - £1,000 million operating cash flow for BT Retail (the bti that competes with SKY), no profit breakdown reported for this unit.
Northcliffe - £0 (part of DMGT)
Channel 4 - £3.9 million - Falling market share of TV and gets subsidy out of the TV tax.
Trinity Mirror - £72.2 million, 11.8% fall in customers
Guardian Media - £171 million loss, 10% fall in customers

However, I bet our nice shiny new Business Secretary can't see the commercial reality and goes for a nice political punishment for SKY to sate his moronic Lib Dem activist base.

Monday 11 October 2010

UK tops joblessness league, apparently

Another day, another hand wringing report,  issued this morning. Firstly, it is Monday and let's face it those of us on the way to the office this morning are likely to be filled with pangs of jealousy amongst the rage the report is trying to generate.

The report says that the UK has more non working households than Germany or France. Given we have not such a greying population as Germany, perhaps things are worse than we think.

There are some big questions raised here though - the biggest one for me is just how huge is the black market in Britain. With high taxes and high benefits it seems the system is designed to make people actively seek out the black market route.

The few people I know who claim benefits all do cash work on the side, c'est la vie.

I am less worried by the number of workless households (although per se this creates difficult inter-generational issues) being compared to France and Germany. In France the idea is that you only have part-time jobs in any event and they don't even try and count the workless of the banlieue. Plus who knows what figures the CPS study is using to compare as they have not deigned to release the full report yet except the to Daily Mail.

Anyway, my money is on the black market being much bigger in the Uk than the Government allows for; it is not something 13 years of New Labour wanted to shout about, but today we live in the Country of their making.

Sunday 10 October 2010

Whither the High street?

There will be always a need for things you can go out and buy. However, there are also industries that are surely going to disappear. One that appears today is here, with Thomas Cook merging its high street stores with the Co-Op.

When was the last time you went to buy a holiday from a shop? I am 35 and have never in my life been near a travel agents shop. I can't imagine many do when you can search on the web so easily.

So overall, this is another move to consolidate a business model that is not going to last for much longer. I often wonder with companies why they don't just go the whole hog in one step - are they too wedded to a failing business model?

Friday 8 October 2010

German Elf-n-Safety (2)

Letter from Germany

As promised on Tuesday, my pictorial guide to Germany's robust attitude to safety continues with examples from the railway. In fair Düsseldorf, as in so many cities worldwide, the old dockyard area is being developed into something rather trendy.

Naturally, in the past it was criss-crossed by railway lines, most of which - but by no means all - have been grubbed up. But the means of access to the remaining tracks is entirely accessible by trains which, were they to trundle down the slope from the main line, would g
reatly surprise the pedestrians, cars and indeed new buildings, which are in no way protected from anything trundling down the line, were such a contingency to strike. Not even a level-crossing any more.

In the pic above, a marks a track that has been grubbed up and is now a public footpath (note its unprotected proximity to the main line): b is a disused track that is still in situ, connected to frequently-used lines by perfectly serviceable points to the right of the photo; and c is a track still in constant use by goods trains - big buggers, hauling (inter a
lia) coal, and oil tankers.

The interesting one is b, which splits a little further on into two serviceable tracks, both also in use as footpaths that run downhill, unhindered, into the old
dockyard area. The area that's now trendy and well-frequented.

Did I say unhindered ? Well, not quite. The right-hand
branch is adorned by this small red tin square on a stick.

The left-hand branch has no such impediment to runaway trains.

I have a feeling that this approach to life comes with, err, lower capital costs than that of our own dear Blighty. Of course, it doesn't always work out so well ... How's a chap to strike a balance, eh ?


Manchester United in worse financial position than Ireland, Greece

Sadly, there are not many places for the poor citizens of Greece or Ireland to seek solace these days.

Perhaps a small ray of sunshine can be that they can console themselves that they are not alone in having delivered themselves into a structured finance mess.

Although given Irish predilections for supporting Manchester United, perhaps the news out today of Man U's £80 million loss will be a source of yet further woe.

However, Man U are in a terrible financial straight, saved by a canny re-negotiation of debt earlier this year, the underlying issues are still pretty gruesome. To translate into the Sovereign arena it looks like this:

                        % debt GDP/Revenue        % Deficit 2010     Interest rate on debt
Ireland                           80                                 30                          6.5
Greece                          113                               12                          7.81
UK                                73                                10                          2.9

Man Utd                        182.4                          28.4                        8.75

Of course, Governments tend to be able to raise money easier than corporates, but nonetheless I think the above shows the scale of the challenge they have, trying to keep total debt down when it is eating 40% of revenues can only be achieved by selling players.

As a Leeds fans I can only convey my deepest sympathies....:o)

Thursday 7 October 2010

Question Time competition

David Dimbleby is joined in Birmingham by Baroness Warsi,{loose lipped chairperson of the Conservatives, and electoral fraud challenger, } Charles Clarke {Labour MP for nowhere, fierce Brown critic and serial Home office bungler} , Susan Kramer {Liberal democrat MP for nowhere, losing to Zac Goldsmith on what was described as a narrow victory, but was actually a big swing. Free tip Sue:Don't stand on a mansion tax platform in the place with the most expensive houses in England} , Max Mosley {former leader of the British union of fascists.or possibly that was his dad. Recently removed head of FIA and successful newspaper defeater. Still challenging the UK privacy laws.} and Rageh Omaar {journalist for Al Jazeera and interesting former Iraq correspondent for Al Beeb. }

Usual rules ....Winner gets to try and do something about the Child Benefits fiasco that will dominate tonight's program.

  1. Child benefits withdrawal, middle class burden and 'unfair' government.
  2. Benefits cap of £500.
  3. CCTV in Muslim areas scandal and the terror threat.
  4. Big society is hot air.
  5. Election fraud