Wednesday, 30 June 2010


We had a think about Ocado a few weeks back, wondering what they were up to with the new warehouse, and why would anyone risk an investment. Money Week had a good piece asking much the same questions as we did and in the comments someone mentioned driving times. That's the law see. Prevents fresh food deliveries beyond a certain point. Royal Mail moved all of its delivery times up by a few hours when 50mph maximum speeds came in.
{Well that was the excuse for 1st class post meaning before 4pm}..but we digress

Since then the online grocer Ocado recently signed a 10-year agreement with the supermarket Waitrose, boosting its chances of a £1bn flotation. Ocado's existing contract with Waitrose was due to expire in 2013, but the agreement extended the supply relationship until 2020. The new agreement will also enable Waitrose to grow its own home shopping service without restriction from July 2011 within the M25.

But £1 billion! For a company that delivers for other supermarkets and hasn't made a profit in a decade.. Seems an awful lot.
A £1 billion valuation would see the company trade at 40 times ebitda, compared with Tesco and Sainsburys, which trade on seven and eight times respectively. The founders think this is more like the next Ebay or Amazon, with huge , huge profits to come. And Ocado sent an email to customers informing them they can buy shares IF they have spent at least £300 by July 24th. I do hope customers realise that Ocado delivers for Waitrose. It isn't Waitrose. The John Lewis pension groups investments are expected to be sold at flotation.

So is this the new M&S. The middle classes retail shares of choice? The deal of the decade?
Ocado has made great strides this year but I'm not sure in the budget conscious times about to arrive that this will continue. Remember Nick Clegg in summer 2008, as the recession started to bite, said that his family were "gravitating away from Ocado towards Sainsbury's, just on price. I have to say, the difference is pretty big".
I see Mrs Q has spent only about £100 on Ocado this year. She now goes direct to the store when she is in the town. Combining trips to the supermarket with something else.

Can't say I'm overly tempted to ask her to ramp up another £200 to get those shares.

Labour know the value of everything and the price of nothing

Newsnight last night and an hilarious interview with Ed Balls. The Government are going to cut back the regional development agencies that spend so much for so little. In these recessionary times surely these are very close to the top of the list of things not needed.

In case anyone is in doubt, people don't (or rather shouldn't) start and grow businesses because of regional grants. A better way to help would be to reduce the costs of employment and the business rates. With less outgoings business will stand a better chance if turnover is a struggle.

Still, all of this is well beyond the denial bubble of Labour. Still strong in their mantra, as Guido pointed out yesterday of David Milliband, that cuts are wrong, spending is right and the state is the only thing keeping us together.

It could not be more wrong, the state is what has delivered unto us huge debts. Personal debts are our own fault, national debts is someone else's burden inflicted upon us. A real retrenchment is here but Labour see only a utopia where the money is endless for its client state voters and there is no cost. They see value, but not the price. It proves once and for all that the delusion was not just Gordon Brown, but the whole Labour party.

Tuesday, 29 June 2010

Life after Debt? Part1.

News comes out today from RBS about the real nature of debt problems facing Europe's banks. The FTSE is falling on the back of this as I write, off 2% and below 5000. I did not expect such a big re-tracement this year from the high's of 5800's. Still, I remain somewhat bullish for the rest of the year after this dip is played out; I maintain UK QE will return if the economic figures get poorer.

What is of more concern is that:

a) it is quite surreal for RBS to be pushing this when UK banks are acting in pure schadenfreude mode because they have already gone bust.

b) Having said that, European banks do have a lot of debt that they can't shift. This means no new lending and reduced profitability/increasing losses.

Europe is turning Japanese. The real story in Japan is that quantitative easing has not fixed their economy, it has not generated the inflation needed to wipe out wealth and debt. All Japan has had is 20 years of recession. There has been no life after debt.

Europe is heading the same way. For there to be life after debt we need catharsis, that means banks going under, crazy loans being defaulted upon and not put into 'extend and pretend.' That way is the the Japanese experience.

At least in the UK we have a Government determined to create a life after debt, more austere perhaps, but a life at least.

Monday, 28 June 2010

Is The City losing it?

Two stories from over the weekend may not make for great reading in the Investment Banks and London Stock Exchange today.

Firstly there is DP World pulling its long running idea of a secondary listing in London (which in many ways would be a re-list of P&O, the business DP World bought a few years ago).

Then there is news that Fitness First, the globally expansive gym business, is going to look to list in Asia rather than London - a loss of another £1 billion pound float.

There is a trend not to list in London emerging, but in fact with these two it is not the case. Dubai World is really struggling under its debts and stricken financial position. It clearly can't even get its accounts in order to try and push a float.

Fitness First is a loss-making Private Equity owned vehicle whose owners are desperate to get some return for their investment. In the Far East perhaps they hope to find some less discerning investors who believe their hype about EBITDA growth instead of looking at the bottom line. A classic case of Tourism IPO.

In fact, with BP getting shredded in the US, it is quite likely that New York will see another decline in foreign companies wanting to list there as well. Clearly the threat will be from Hong Kong and Singappore in the future, but it is not all downside for The City yet.

Sunday, 27 June 2010

Capello - Even Further Out Of Joint

Something for the Weekend

Never been a Trot: but this sums up America for me.

"It has never been easy for us Trotskyists to face, but it was America, dear, golden, childish America, that joined the narrative of personal ambition to the myth of a common consciousness, making a hymn, oh yes, to the future, the spirit, and the rolling land. It was all about hope"

From The Life and Opinions of Maf the Dog, and of his friend Marilyn Monroe by Andrew O'Hagan


Saturday, 26 June 2010

Obama's Treatment of BP: Where's The Rule of Law?

As BP's sun sinks slowly in the West, arch conspiracy-merchant Karl Denninger reckons that the $20 bn bought some kind of limitation on its liabilities. But unless that is true in a very strong legal sense, it looks a lot more like Obama is just making it up as he goes along: a new doctrine of liability for consequential losses.

Now this we expect in Russia and third-world countries. Even the big boys - Shell and, yes, the mighty Exxon that considers itself above the fray - have found themselves whacked with retrospective ‘environmental regulations’ in Russia after they’ve made the upfront investment. (Curiously, the remedy turns out to be that Gazprom relieves them of a controlling stake in the venture.)

Then again, most investors never really expect to rely on the rule of law in such places. But for a capitalist, rule of law is even more important than universal suffrage. And where, if not in the Anglo-Saxon jurisdictions, can we expect to find due process ?

No-one should argue we’d do just the same in the UK. As has rightly been pointed out, not least by the IEA, the Piper-Alpha disaster in the North Sea (prop. Occidental of the USA) resulted, not in an anti-US outcry but in a very mature response: prompt government adoption of the recommendations of the Cullen Enquiry, which elevated offshore safety onto a new plane, in the UK and worldwide.

Mr Obama – stuff happens ! It is as incongruous for a democratically-elected leader in a law-governed country to react as he did, as it would be for a priest to renounce his faith because something bad happens in the world.

Stuff happens and – guess what ? - it will happen again.


Friday, 25 June 2010

Political World Cup

Political World Cup

Harman- {Nigeria.}
Just keep attacking even when seriously outclassed. Punched and dived until red carded . Fails to qualify.

Cameron -{ England.}
Limps along not pleasing many. Everyone hopes he has a lot more to offer and the crowd believes he will come good, even though there is precious little sign of it. Through to the next round if only because of soft opposition.

Clegg. – {South Africa.}
Seriously outclassed at this level but everyone wants the Rainbow nation to do well. Fails to get out the group.

Miliband, Ed{Greece.}
– Keep defending the old positions at all costs and make everything as dull as possible. Tries to sneak through to the next round as the others fail to notice he is even playing. Strategy fails and doesn't get through.

Osborne {Uruguay} Much better than anyone expected despite the relative inexperience. Good enough to get to the next round.

Abbott {Cameroon.}
What are they even doing there? Only got to be there in the first place because of ‘regional’ qualifying groups. Fails badly.

Despite a great legacy really struggled and almost failed to qualify for the tournament at all. Had to cheat to get in.
Attacked the wrong targets, got confused. Fell out with everyone including himself. Did not manage to beat anyone and despite being tipped to be a major force finished bottom of the group and went home early.

Miliband, Dave. -{ Italy.}

Looks the part and is always talked of as a main contender yet somehow fails to convince. Predictable and lacklustre displays yet enough talent and support to get through to the final stages regardless.

No one has seen a peep of him since the competition began.

Vince Cable - {Argentina}

Potential world beater but prone to unbelievably silly tactics and nonsensical statements. Supporters think manager is a genius and possibly even a saint. Critics suspect he may be mad. Easily through to the next round.

Need teams for - Andy Burnham, Phil Hammond, Danny Alexander, Alistair Darling, John Prescott, Theresa May or any others you care to add.

BP: The First Trillion dollar estimates

I said yesterday some crazed US courts will start saying BP's costs for the Oil crisis will be a trillion. Little did I expect to be proved right in 24 hours. However, this link is the most bearish you could possibly see. The fun begins and also BP has come out to say today it is not 'planning' for bankruptcy.

No wonder BP's share price continues to sink. It's really sad for everyone affected, I hope they can plug the well soon.

Thursday, 24 June 2010

Question time

David Dimbleby is joined in London by Vince Cable {lib /con business secretary and saint} , Ed Balls {shadow anti-immigration spokesperson and labour leadership hopeful} , Caroline Lucas{is the entire green party} Brent Hoberman {former lastbubble.crash and current Tory new enterprise council member} and Peter Hitchens {marmite mail on Sunday journo, politically slightly to the right of Heydrich.}

Should be good!
Winner gets two to tickets to Wimbledon. Centre Court.

BQ say very budget heavy episode
1} VAT rise and Balls' total rejection of it.
2} Pension age
3} Public sector pay freeze
4} Child benefit cut
5} General Petraeus takes command
6} John Terry should be reinstated as captain.

BP Update: All downside risk

The BP share price is down to £3.30 today, another new low. This is the level that two weeks ago I thought would be a a good buy in point.

But the news is no better, the flow of oil continues, mistakes are still being made. The US Government thinks even the relief wells may only have a 50% chance of success.

Until the newsflow is going to improve why buy this share, sentiment is going to take it down. if anything, I am considering a short position from here, looking at £3.00 for a close - a psychological level.

BP may not survive this crisis, too many US lawsuits to fight and if the oil keeps flowing into September then I expect the US Government will stat talking conservatorship again.

Who would have thought the UK's biggest company could end up in this state so quickly?

Wednesday, 23 June 2010

Inadequacies of the UK Budget

Well, having slept on the budget (not literally, Mrs Unslicker is always talking about 'boundaries'), some deep questions have occurred to me and, on review, many others today.

Firstly, Keynes is dead. The entire budget is a paean to monetarists. Which should be great, as I am one. Tim Worstall notes the nice big experiment should be worth reviewing too as it will prove who is right or wrong.  However, there is an worry for me that the deflationary effect of the fiscal cuts is going to push inflation lower (Blue Eyes was right on this yesterday in the comments), even with VAT rises and commodity price rises. As such, where is the money supply policy - where is more Quantitative Easing suggested? It will be needed if the economy starts to tip over again and money creation drops off.

Secondly, some of the measures of the economy, like the output gap, have little credulity. This is quite a shame, as rather a lot depends on them being accurate. The ever wise Chris Dillow has looked at this at more length as regards the structural deficit - which is another odd concept that is bandied about but in truth is like trying to nail jelly to a wall.

Finally, somewhat like the Labour Government, these cuts of 25% to public sector budgets won't be known until after the spending review. sadly this is before the pensions review that may have made a decent dent in this aim. Burning Our Money has a good point here, even the famous Geddes cuts of the 1920's barely made it to 25% and this caused the General Strike, the Jarrow March and led to Britain having its first ever labour Government - a disaster from which we have never recovered. So are these cuts really going to happen?

Of course maybe some of these issues will cancel each other out, the cuts won't come but then the spending may help to keep the economy out of recession. The output gap maybe smaller in which case the return to growth will be much quicker - time to be positive. A Keynsian budget would have the markets in crisis today - instead they continue there serene drop...

Tuesday, 22 June 2010

AAA Safe - All You Need To Know

There is a mass of detail to grapple with in Osborne's Budget - particularly in the area of welfare reform. Additionally, we will not know for some time how the remarkable 25% cuts will play out that he is lining up for the spending of 'non-ring-fenced departments' (= NHS, International Aid, and leniency for Education and Defence): more on that later.

But there's a bottom line to today's news: the reaction of T'Markets.

And the consensus is ... the AAA rating is safe.

In case anyone doesn't realise, that was the acid test. And how very corrosive it would have been to our prospects if he'd failed.

Even if there is ample scope to disagree with the details, on this alone there must be satisfaction. In the coming months and years, Labour will pooh-pooh the very possibility. Easily said, after the event.


PS: enjoyed listening to the apres-Budget comments of Simon Hughes, who seems to be pretty much on-side. Credit to Clegg, he is whipping in the LibDems, and the Coalition looks strong - for the time being: but what more could we ask for ?.

Ah Well - As Predicted ...

Vitaï Lamenta

There’s a breathless hush, twas a close-fought fight
No.10 gained in a famous win.
A bumpy economy, money tight -
Bad; but at last our man is in.
And it’s not coalition that sticks in the throat
Or the selfish hope of avoiding pain
But History’s Hand on the tax-payer’s scrote -
'Pay up! pay up! and pay again!'

The exchequer’s books are sodden red,
Red with the ink of a bank that’s broke;
And Darling's out; New Labour dead;
And Mandelson gone in a puff of smoke.
The river of debt has wrecked the banks,
As Brown skulks off with blackened name
And the tax-payer hears, as Sterling tanks -
'Pay up! pay up! and pay again!'

These are the words that year by year,
Whenever a Chancellor’s plans are set,
Everyone who pays tax must hear,
And none that hears it can forget.
This they must all – yes, each man must
Bear through life like a ball and chain,
And cursing Brown for his boom and bust
'Pay up! pay up! and pay again!'

(... except that, errr, Sterling isn't tanking)


Instant Budget Reaction

The joy of the Internet is that news is everywhere and instant these days. No doubt there are thousands of pages of analysis of the budget already; and this all adds to the ability of people to see the truth.

George Osborne, whom we at this blog have long found fault with, decided today was the day to go the extra mile. tax cuts and budget cuts, with some rises and the start of an attack on the bloated costs of the UK Public Sector. Overall the right plan, but the really there was poor execution:

1. The VAT rise - This money was used to bolster cutting personal taxes and not cutting the CGT rate. However it is highly inflationary and will surely force the Bank of England to move sooner to raise interest rates. Higher interest rates are a death knell to the hugely indebted UK companies and consumers.

2. He maintained the ring-fence on NHS and Foreign Aid - this was not the year to have anything left out. All must be scrutinised and savings found.

3. Bank Levy - Labour, bizarrely, is correct. Until there is international agreement there will be capital outflows because of this. To Ireland is the plan in the Banks in the City. They are not going to leave precious capital in the arms of HMRC. Daft.

It is not a bad budget and a far better effort than anything the Labour Party could come up with. It is delivered with a healthy view of reality not the delusions of those in the Bunker. It is a big step forward, but more risky than it needed to be. Other savings could have been made and taxes not raised in such an inflationary matter. Time may yet be a harsh judge.

Budget Surprise: No Rise in VAT

There is always a surprise and this will be it today. Raising VAT is a crap idea, pushing up inflation just as it is about to come down and affecting the least well off the most. Surely when reality strikes this is one that will be billed as the 'look what we have not done, how generous are we to the plebs' moment.

That is my guess - come back in 2 hours to see if I was wrong.

UPDATE - FAIL. They did it...

A pain for AIM

Capital Gains Tax is a certain riser in the Budget today; much to our dismay. Capitalists are all in favour of employing capital to make more of the stuff - so taking chunks out to pay for Diversity assistants is not really the right answer.

That said, there is something in the overall concept of pain now, joy later and to get the feeling of 'we are all this together.'

For the London Stock Exchange, recently relegated from its own FTSE100 list, there is bad news. The much derided AIM market is a focus of many day traders and small investors looking to make a quick buck. By definition these are also people who will be paying the capital gains tax. You can't put AIM shares into ISA's.

So logic dictates the next few weeks are going to be a sad affair for many AIM companies - in fact, the more successful they have been, the worse they are going to do as people cash in their chips and invest in a more tax efficient product.

AIM has its critics for micro-companies ripping off investors and dodgy foreign companies getting a listing; but as the raw face of capitalism, it will take a hit. And for these Capitalists, this is a heavy price to pay for Labour's profligacy.

Monday, 21 June 2010

Budget: ND on LBC

Following the Drew debut on LBC's election-night broadcast, I shall be back between 12:30 and 4 pm tomorrow, alongside Dale.

Can be found at 97.3fm, DAB, Sky 0124, Virgin 973 or you can listen live via the
LBC website.


Budget: One Chance To Get It Right

is for Budget, and for a Big Day in the life of the Coalition.

Machiavelli had it right: if the new Prince has anything he wants to achieve that may be unpopular, best that he take up his New Broom and do it straight away. This is exactly what the UK populace is braced for right now, and no better opportunity will ever occur.

Cameron and Osborne enjoy one other major advantage: Parliamentary conditions could scarcely be more favourable, with the LibDems formally onside, and Labour's response to come severally from an ineffectual stopgap leaderette, a peeved pussycat of a former chancellor, and five lacklustre leadership candidates, mewling and posturing as they try to differentiate their empty oppositionist brands. The Government benches hold vast stockpiles of ammunition with which to blow them away at each PMQ for five years, and Cameron is man to do it.

More dangerously entrenched are the legions of subsidy-wallahs, special interests and, yes, genuine interests, armed with arguments and heart-rending cases by clever lobbyists (who will encourage them to part with their last pennies to pay for professional pleading), fronted by more or less persuasive advocates (who will not all be as repellent as Bob Crow), gleefully hosted by the BBC and Channel 4 News. Hard-case atavistic big-staters and revivalist Trotskyite impossibilists dream of mass movements marching on London to bring down the walls with their charmless chant: "no ifs, no buts ..." Anti-CGT poujadists stamp their feet on the other side of the field.

So the battle-line
s are forming up. And just as Old Nick counsels early action, so the great strategist von Moltke (the Elder) cautions that early dispositions, if badly-made, are exceptionally difficult to correct later on. Ring-fencing the NHS might be an example of just such a poor early call. Act quickly - and act cleverly as well ! No-one said it was going to be easy.

We've never been entirely convinced about Osborne in these parts, and now is his (only) chance to prove us wrong. We may be pretty sure he's read his Machiavelli. Let us hope his Big Budget meets the Moltke test as well.


Saturday, 19 June 2010

England Fan.

Riven Oak Update: Metaphor Maturing Nicely

More from the mighty riven oak. First, the tree surgeons sliced up the fallen bough and took it all away, leaving a scar on the tree but little other evidence of the bough, or its dramatic separation. No unforeseen additional material here for developing the putative metaphor, (though it did occur to me that this prompt and tidy outcome illustrates that no man is indispensable, that the waters close over etc etc.)

Then, they returned to lop the tree extensively.

Their expert judgment, evidently, is that over many years it had grown far too big to be sustainable, and that only by a round of decisive cutting could it be restored to health and vitality.

Let us hope they know what they are doing, eh ?


photo (c) Nick Drew 2010

Friday, 18 June 2010

Sants: Couldn't He Just Go ? Please ?

Never much enamoured of Hector Sants after the FSA's shocking failure to sort Northern Rock before it collapsed.

So first, we were pleased to learn he was quitting. This week, we discover he's not.

Now, we are to believe he has come up with a tremendous wheeze: let's broaden the duties of company directors to include a requirement to 'contribute to the common good' !

WTF ? Companies have legitimate partisan interests which, provided they obey the law, they should be free to pursue. The 'common good' is served by each company striving to thrive in competitive markets.

Couldn't we just go back to where Sants was leaving ?


England should lose to Algeria to secure gas supplies

Not very patriotic for our football team, but few int his country probably know about the vast Algerian Gas reserves. These are real too, not like the fantasy oil reserves in Saudi or the expensive and yet to be tested shale gas.

The prospect of shale gas has in Europe has kept gas prices in the UK low. Despite our total lack of investment in new Gas fired powerstations we are a high gas consuming nation. The LNG platform means that the UK can rely on Gas to keep help keep the lights on when we crazily switch of our Nuclear capacity.

But the UK's own dwindling supplies of gas are not enough and in future we have often been told we will need to rely on Russia for supplies. We can't bully Russia or trust it to act fairly. Luckily Algeria is much closer and has supplies that can reach Europe easily.

All we need to do is strengthen relations now and play the long game. The first step could be allowing them to progress in the World Cup. Perhaps we should lend them our goalkeeper as their's is accident prone?


Thursday, 17 June 2010

Question time quiz.

David Dimbleby is joined in Witney by Chris Huhne {LD/CON Secretary of State for Energy and Climate Change}, Peter Hain {Labour Mp for Neath}, Jeffrey Donaldson {Northern Irish politician}, Baroness Helena Kennedy{Labour peer / human rights and civil liberties} and Amanda Platell.{Journalist and likely to join Helena in the lords.}

Some clues there then.

Can anyone better Budgies 'beginner's luck or maybe sharp predicting, of 4 correct?

1} Bloody Sunday. Should there be prosecutions
2} BP no dividend.
3} Beaker's cuts
4} New FSA is it going to work?
5} Vuvuzela's
6} Bound to be something about 'uman rights. Maybe control orders.

Spain: An Early Test for Macro-Prudential Mervyn

Ever since I first met CU, he has been warning that Spain would bring about the demise of the Euro; and we may be about to find out.

Whether the Spanish crisis goes the whole way, this type of event is akin to a Lehman or an Enron - a trigger for dominos to start falling. Systemic risk, in other words.

And of course Mervyn King has just been given responsibility for 'macro-prudential oversight', the cure-all for managing systemic risk. Let us hope he's been thinking about what it really means, he's had well over a year since the Turner report highlighted macro-prudential supervision as a missing art - in the UK, at any rate.

Distressed Spanish properties all round.

PS: see that Osborne has pulled off a 'coup' in persuading Hector Sants to stay on. Hmmm ... not sure about that one.

PPS: notice how many very well informed stories Pesto runs about the FSA and how wonderful it is ...? He's a great one for his sources, our Robert.


Wednesday, 16 June 2010

BP Again: Edging Into Enron Territory

The downgrading of BP’s credit-rating to BBB – on the very brink of ‘Investment grade’ - takes the hapless firm into Enron territory, which ain’t a good place at all.

It increases their cost of debt, which is bad enough: but the problem goes a lot further than that. BP’s business model, like that of Enron (though not to the same extent), leans heavily on wholesale energy market transactions – trading and other deals, including derivatives - on a very large scale: far more so than other oil majors.

Very many companies have a prudent policy of never dealing in derivatives or other forms of long-term contract (beyond, say, 1 year) with any firm that is below Investment grade – for the simple reason that they want to be sure the counterparty will be around to stump up in due course, be that to make a payment, or to deliver a cargo of oil or whatever. BP had made forward purchase commitments beyond 1 year ahead of $62 billion at year-end 2009, and held $ 4.9 billion of in-the-money positions on derivatives of more than 1 year maturity - exactly the type of business that can't be done at sub-Investment grade (figures from BP's 2009 AR).

If BP is thereby excluded from such lucrative markets, and/or forced to post a great deal more collateral (and this may have started already), it is in ever deeper doodoo.

Enron was famously ‘asset-lite’, but it still managed to retain Investment grade until near the end. Its tortuous efforts to maintain this precarious position, which finished it off eventually, were 100% driven by the need to keep doing those profitable long-term and derivative deals.

Obviously BP is an asset-rich company: but it has been brought to the brink of the very same precipice.


BP Update: Still not buying this

The news out of BP just gets worse. When it comes to trading those who read my posts know I tend to go for a high risk shit or bust approach. Sadly Mrs Unslicker's spending means this is the only path available to me.

So only a week ago I had looked at BP and thought, well below £4 has to be a steal. Well the share price has dropped far below that and is still falling.

But I can't buy yet. The news flow is horrible. The US President is gunning for the company, that just isn't good news. The US Class action suits are going to be horrific. I can see mad US lawyers putting trillions in damages on the table, not billions (this is their bid-em-up tactic after all).

I am looking at a new level of under £3.30 for my entry now. There should be a technical bounce at this level, but the flow of oil and bad news has to be stopped.

Tuesday, 15 June 2010

May Inflation Down

Some good news for the Bank of England at last. Both CPI and RPI inflation fell in May. The Bank has been way out, on the edge even of its ridiculous fan charts, for some time. In a more normal environment the pressure to raise interest rates would be extreme. Now at last there is a shroud of respectability in the constant predictions that inflation would fall off.

Now the writers of this blog are split. I am with the deflationists in seeing no move yet to high inflation (ultimately of course this is the policy goal of all major Western Governments except Germany faced with Chinese mercantilist policies), but with it building up in 2011 and 2012. As such my forecast has been for low rates until the end of this year and then a sharp rise, much more than will be comfortable through to 2013/14 or whenever the next bust begins.

Nick Drew and Bill Quango are far more of the view that the Bank of England is wrong and that inflation is here already to stay and can only go up - hence buying Gold and stocking up on baked beans.

We will see, but this is an interesting point, a return to inflation in the next 2 months will mean a rate rise, a continuation of the fall will mean rates staying ultra low, possibly well into 2011.

S overall, more bad news for savers and good for debtors.

On Me Head, Son ! Digi Capello

Not that he's losing his shape or anything ...

Monday, 14 June 2010

Lunch is for wimps

A survey from Monster, the recruitment website, says a quarter of workers don’t take full lunch hour.
19% of employees take under 15 minutes for lunch and over 10% admit they never take a break at all, according to a new survey.
The study, conducted on behalf of employment website Monster, also showed that, even when we do take a break, the most popular activity is catching up on e-mails and phone-calls which means never leaving our desks.

Monster said that the survey highlights a “growing trend in a climate of job insecurity to be present at our desks at all times”.

I wonder if this trend is repeated at all levels and all sectors. I doubt it. When I was a cashier I got an hours break, which was an entitlement that was always given and always taken to the minute. As a courier, ate in the van, while driving, but that was to finish up earlier.. As a manager I had lunch around 4pm' and very often only 15 mins and NEVER hot food as the interruptions would mean it would just end up cold food. As a regional manager I had lunch maybe twice a week.
Other days not even eat at all. Always had lunch when working at Head Office, but 99% at the desk while working. Everyone else there had lunch out. I never once saw personnel or accounts go without lunch, or eat at desks, whatever the deadline. The directors and department heads too never missed a lunch.
As the boss today I have lunch for an hour , maybe 90 minutes almost every day, and hate it when I have to miss it.

Is there a difference in public and private sectors? Can a nurse get a decent lunch hour without interruption? Can a policeman go to a pub for a break?

Is lunch just for those without responsibility and those who have craftily delegated their responsibility to someone else?

Let us know.

OBR: The Truth hurts...a little

Well, today is the day the Government has been looking forward too only slightly less than the budget. The new Office for Budgetary Responsibility has published its report. A nice piece of pointing the shotgun at your own feet and pulling the trigger.

Well, first up the OBR is copying the Bank of England in using fan charts. This is a way of making it seem that your predictions are never wrong. Two lines with a nice spread in between. The BOE use this to show inflation is within their guidelines when plainly they have been wrong for some months; now the OBR joins in this charade. They would be useless company down the bookie.

However, the central prediction (page 13) is that the economy is likely only to grow at around 2.8% for the next 3 years. Below Alistair Darling's heroic 3% growth forecasts, but I say politically so. Not enough to really dent the public finances and yet a little to show Labour were wrong - a perfect political fudge. However, not much approaching the truth there and an ignorance of the fact that with GDP growth below inflation there seems to be a continuing diminution of the Country's wealth in real terms for the whole Parliament.

Page 16 has an output gap too, I am yet to understand what this is. Many people have tried to explain it too me, but in reality it is a bogus economic concept. There is not real way of knowing if there is slack int he economy or not. The inflation rate and money supply creation rate will give you the answer eventually.

The final page says it all, Government spending is to fall considerably, whilst Private Investment takes up the slack to produce good GDP growth, along with house prices and exports. Quite a bet, better than pouring more Government money in forever, but somehow this set of predictions does not sit well with the world we live in.

Darling Demands an Apology !?

Alistair Darling, it seems, has decided he is due "a very big apology". From the Tories, that is - not, as you might have imagined, from G.Brown.

Well well well.The goal-keeper has rushed out of his area flailing and shouting, and the ball is at our feet. What shall we do ? Chip it over his head ? Side-step his rash charge and tap it in ? Pass it generously to a team-mate who hasn't scored so far in this one-sided match ?

I have a feeling that Cameron's script-writers will be enjoying themselves in the run-up to this week's PMQs. Let's have a little try ourselves.

*clears throat*

Alistair, we are so, so sorry

Sorry that you were so badly treated by Brown, Ball and their Forces of Hell. Sorry that you didn't feel able to resign, or draw the line at their outrageous postponement of necessary economic measures until after the election. That when you first became Chancellor in 2007 you didn't immediately realise the storm was about to break - and do something about it. That you let the banks dictate terms to you in 2008, and get away with murder as soon as they'd drawn breath ...

Roll on PMQs !


Saturday, 12 June 2010

Riven Oak: An Omen ?

A sad sight on my running-route: this fine oak has lost a mighty bough.

Now I'm not one for o
mens or portents: but I might just keep these photos in reserve for future metaphorical deployment - who knows what the future brings ? Events, dear boy...


(c) Nick Drew

Friday, 11 June 2010

China Exports, US $ and UK GDP all point to more QE - and higher markets

China announced a huge rise in exports yesterday, which has helped to lift the limp World markets. However, these huge exports are the result of a mercantilist policy that is keeping the world unbalanced. As the EU and USA have sunk in record quick time, the Asian Countries need to rise.

This is generally done through exchange rates, ours will fall (along with our living standards) and theirs will rise (to their populations joy). This after all is the fair reward for all their hard work.

However, the Chinese Government is determined to grow its economy at a superfast pace, over 10% a year. it fears its impending slow down as the country ages rapidly as a result of its one child policy (see picture). Other Asian economies take their lead from China.

How can the US and UK get any growth going when they can't find Asian export markets due to the artificial currency differentials? Well, they can't. The US in up in arms about this, the UK not so much as the Pound has fallen.

The answer though will come if the situation is left. The US and UK will keep their economies from a double dip by unleashing more Quantitative Easing; it is the only tool they have left. Cut the deficit and print money. Of course who suffers - holders of US Treasuries - the biggest of which is the Chinese Government.

Whilst this macro story is interesting (and I will do a post soon on the insanity of the current German government too) the story for us is thus. Deflation will not be allowed to run, there is nothing to stop it - no interest rate rises etc. We are out of monetary tools. So instead QE and inflation will be used to prop up the economies of the US and UK if we start to falter. Remember what happened last time this was done - asset prices rocketed.

Ignore the naysayers who say the markets are going to go to new lows for ages - it just won't be allowed to happen.

World Cup cash in.

Weekend fun.

If you were a betting person would you bet on

1} Wayne Rooney getting injured
2} Wayne Rooney getting sent off
3} Wayne Rooney getting sent off and injured
4} David James does the save of the tournament and then a cross /lob causes him to backpeddle with the ball into the net.
5} Maradona plays Tevez .. in goal
6} England beat USA. Obama declares sanctions on the UK.
7} France will hand ball in the box and then score.
8} Germany somehow limp into the final despite never appearing to have scored a goal.
9} If England win, team are invited to Downing street. If they get knocked out they are still invited, but only meet Clegg.
10} Disallowed goal by North Korea leads to war.

Any more?

Thursday, 10 June 2010

Question time

David Dimbleby is joined in Plymouth by Jeremy Hunt, { con - culture and nonsense minister}Ben Bradshaw {Lab - ex minister for cultucha an' meeja}, Salma Yaqoob{leader of respect.}, Toby Young,{restaurant critic and journo/writer} and Katie Hopkins {nightmare, oddball reality TV apprentice contestant. }

Unusual panel. And not much new news.Will be tough to get 4 or more.

{usual rules, usual random scoring based on whose line is it anyway format.Congrats to Mr Drew for setting his personal best last week,yet still no grand prize. }

Q1. BP and Obama's Sons of Liberty rhetoric
Q2. Roy Whitting and sentencing
Q3. Tuition fees and Lib Dem deputies.
Q4. Dianne Abbott and tokenism
Q5. Is it right to end tax credits and tax rises?
Q6. Something about flags and England.

Winning prize is to choose what goes onto the next edition of commemorative stamps

Mapping the Spill: the Toxic Brown Stuff Spreads

Though hopes are high that its worst effects have been capped, the Brown stuff has left a stain wherever it went, and has certainly hit the UK hard.

Here's one of those handy widgets that allows you to see the extent of the spread of the toxic sludge.

It is being said that in order to deal with the fall-out from the spill, traditional payments of stakeholder benefits will need to be suspended. According to a Government spokesman:

"It is much worse than the perpetrators have admitted. Clean-up will take years, and it will change the way of life for all those affected. We are all in this mess together."

The organisation responsible for the disaster announced: "This is something that started in America". It is expected to appoint a new CEO in time for its next AGM.


Wednesday, 9 June 2010

Red or Dead Redemption.

The labour leadership contest is really a matter of supreme insignificance to the country at the moment, so we won't mention it again for a while. But well done to Dianne Abbott for beating the odds and getting a ticket to the debates.
But it is worth noting one of the most skilled operators, outside of the Mandelson / Campbell / McBride operation, has pulled off another little coup.

Harriett Harman did not stand for the leadership herself. There is a feeling that she rather likes the power of being deputy leader, without the difficulty of being the actual leader. By backing Dianne yesterday, Harriet cemented her election platform of women's rights, and added some minority agenda to it too. She has pleased the left wing of the party, pleased hers and her husband's union backers, looked considerate about the wider interests of the party and, most importantly, avoided having to back any of the other candidates who are actually going to win.
She has gained an ally from the ranks of the old guard and further embedded herself into the deputies role.

Lots of pitfalls in a leadership contest. Just ask Dianne's friend Michael !
Ms Harman seems to have avoided them all, and actually strengthened her position.
No wonder the civil service called her Hattiavelli.

Gold vs Resource Equities; Capitalists@War

Hmmm..Gold hits a record high yesterday (in price if not in real terms). Meanwhile, Oil and Resources shares continue their enormous sell off.

So being June it is half way through the year and the score at half time is:

Tuesday, 8 June 2010

Quick ! Dave ! Offer Leahy A Job !

Terry Leahy is a businessman of rare quality. I have met few men of such towering ability and - equally significant - intellectual integrity, and readiness to take personal responsibility: no 'search for the scapegoat' when things went awry. They breed 'em at Tesco - Ian MacLaurin was pretty formidable, too.

"David Reid, the company chairman, said: 'Terry has made an unrivalled contribution over a prolonged period. He is undoubtedly one of the leading businessmen of his generation'. You can say that again.

And he's retiring, aged only 55. Now it must be accepted that the Tories have not necessarily *ahem* benefited from some of its dealings with prominent figures from Tesco: Shirley Porter, this means you.

But this shouldn't stop Cameron acting fast. The Government needs the services of this man ! Act now.


Oh woe are the cuts...but not for thee

In conversation with House of Commoner Bill Quango MP I have come up with an alternative list of cuts the Establishment won't make. I see Guido has an alternative approach, but of course he forgets the crucial information, cuts are always for other people and not for oneself. As a local MP it is important to keep:

1. The BBC - Especially the regional news which is easy to get on and make a point for an aspiring back bencher or candidate. Yes the tax is £140 odd a year but it really is important to have a medium on Politicians can see themselves on a daily basis. This of course ignores the fact that newspapers manage it with no tax, but lets not let the facts get in the way of perception. Real Saving £2 billion a year to taxpayers.

2. Subsidised Food and Drink in the Commons - VAT is going to rise for everyone else and taxes on beer, but in the House of Commons all will be as we still live in the early 1980's. Real Taxpayer saving £7 million +

3. NHS - As an MP private health cover is not really in the affordability matrix. Therefore no cuts to the NHS, despite it being a huge budget with massive amounts of waste, like the £12 billion failed IT system. Potential Taxpayer Savings £10 billion out of £106 billion spend.

4. International Development - Highly important that junkets are kept for free family holidays. The Government pays for MP's to go and glad hand some grateful African dictator or Indian Regional Governor for us topping up their Swiss bank accounts. meanwhile the family accompany go along on the side and the hotel gets upgraded. A nice saving for MP's holiday expenses. Real Taxpayer Saving £5 billion, we can increase this by £500 million a year as the economy recovers to 2020.

5. Theatre and Museums - Very important that the country subsidies the Ballet and other such arty nonsense beloved by the Nick Clegg's of this world. Free Museums too are very important as again they are a service which can be taken advantage of by Notting Hill folk. After all what was the Lottery funding for? Real Taxpayer Saving £2 billion (of £5 billion).

There you go, £19 billion of savings, a nice downpayment for the first year in Government. All low hanging fruit - and none that will be recommended as they threaten the Establishment.

Politicians@Work: Doorstop Demagogues

How important it is to be in tune with the man in the street: and how useful when he gives you such clear, yet nuanced input that's so in keeping with your own views.

"Plumped on Andrew Marr's soft seat on Sunday, David Miliband kept a straight face** as he claimed: 'What people said to me on the doorstep was we think you're doing the right thing with this points-based system; we think you're doing the right thing with the phased entry of Romania and Bulgaria, but why did it take you so long?'."

And I expect that was lots and lots of people wasn't it, David, who had these nice and detailed things to say about phased entry and points systems ? But it isn't just Banana-Boy who encountered these acute street-level political philosophers: Ed Balls did, too, and they said:

"Look, we're not racist, and we support our EU membership and we know that immigration's important for the NHS, but look what it's doing to my community, to my child's job prospects, to our housing queues."

Well of course MiliBalls would mostly have been knocking on doors in Labour areas. When I went canvassing during the election, what people said to me was:

"Look, we agree with transferring macro-prudential oversight of the financial sector to the Bank of England, and you are doing the right thing on the introduction of smart-grid technology, but we don't think David Cameron should wear that green tie."

What did they say to you on the doorstep ?


** which is quite difficult for him

Monday, 7 June 2010

Market turmoil humour to cure the blues

Still, at least can distract from the World Cup.

We are so going to be tripped up on Saturday, I have it on good authority that the US players are insisting that they England players boots are covered in oil before the match as a penance for the Gulf of Mexico oil disaster.

At least the BP share price is up today, as predicted here yesterday. However a measly 2% is not doing very much, but with the market of 1.7% what else can we expect.

Also I see Hungary is at risk of default which is causing this market famine. Apparently Thirsty is in trouble and the markets are expected to be parched for the rest of the week.

Sunday, 6 June 2010

How 'Common' are you?

In response to all those POSH tests doing the rounds


Answer yes to three or more of these and you are considered common




Do your toddlers have pierced ears?


Are any of the doors of your car a different colour?


Have you ever purchased an item using the television?


Would you know how to cash a giro?


Do you own a snake or a lizard ?


Do you have tattoos over more than 25% of your arms ?


Do you shop at Iceland?


When you go out for a family meal does it come in a bucket?


Do you watch ITV 2 ?


Do most of your relatives live within walking distance?


Have you ever been involved in a paternity test


Do you enjoy dog racing?


Do you shop at Sport and Soccer?


Do you have an account with Kays?


Have you ever been on holiday to a caravan park?


Did you name your children after celebrities?


Do you take off your top when you go shopping?


Do you own a 50" television?


Do you have an England flag hanging from a bedroom window ?


Do you watch Jeremy Kyle?

source --made up research