Tuesday, 31 August 2010

Sharing the Crown jewels?

Just out today is another round of speculation that the UK could share its new aircraft carriers with France. Certainly if the French ran the canteens and working hours bit the Brit sailors would be happy. On a wider note though, although this story will be hotly denied, this is exactly the thing the Government should be looking into. The UK is not the USA with the need/ability to project force around the globe. Realistically we need air support for minor ops and defending Falklands Oil.

So spreading the cost with a military partner must be a good idea, as long as we get them to sign up a release for our ex-colonial escapades; which the French will surely do as they have their own ones to get involved with from time to time.

Once the sharing agreement is signed we can then get to working out what planes we will have. All of this actually saves billions of pounds and makes a real difference to the budget strategy going forward. Reducing the number of trident submarines falls int eh same boat. There should be optimism that we can control future defence spending - let's just hope other departments can think the unthinkable too.

Monday, 30 August 2010

Riven Oak: Too Close To Home

Remember the riven oak ? Well at the weekend, a big gust of wind, and ... Only this time, rather close to home. And this time, more than a bough: the entire, mature tree measured its length - across the road, I'm pleased to say, else it might not have been me writing this.

So we're missing a fine tree. Can't immediately think of any metaphors this time.


Friday, 27 August 2010


Everywhere you go in the City at the moment people 'in the know' are preparing for a re-run of Sept/Oct 2008. The FTSE is going to go under 4000, the S&P in the US to 450. Doom, doom, everywhere. Suffice to say most of these people are long in US Treasury Bonds and UK Gilts whose prices have been rocketing.

But what do we find today, UK GDP revised up, US GDP revised down, but not as low as some thought. US unemployment number bad, but not getting worse.

Just sayin'....

Thursday, 26 August 2010

Watching The Lights Go Out - & Listening to Radio Chavez

So here's an example of what happens when it all goes wrong: Venezuela, rich in energy, has been forced to adopt emergency measures (including burning oil inefficiently for power, and reducing much-needed exports as a consequence) to mitigate rolling blackouts.

Chavez, of course, blames drought and a resultant fall in hydro-electricity production. However, most commentators reckon that "the shortages also reflect long-term underinvestment in energy infrastructure". Sound familiar ?

Even 3rd-world dictators know this one means trouble. Comrade Hugo has asked everyone to turn off the lights, and inaugurated a radio programme called 'Suddenly Chavez' which will be broadcast randomly (yes I know it's August but I am not making this up), signalled by

the sound of a harp playing local folk-music. "When you hear the pluck of a harp on the radio, maybe Chavez is coming. It's suddenly, at any time, maybe midnight, maybe early morning ..."

... said the fun-loving crackpot and buddy of Ken Livingstone. Don't see him qualifying for BRIC membership any time soon, oil or no oil.

In our case, I can reveal that the Queen has decided against random broadcasting to distract the populace. Instead, as we've said many a time and oft, it'll be quick-n-easy-to-build gas plants that will bridge the looming UK power gap. Costlier than it needs to be, a bit pedestrian, but at the end of the day that's what will happen, and we must look for our entertainment elsewhere.


Private Placings need review

The new coalition government is proving to be quite a refreshing change from the recent past. With a mantra of reviewing and shrinking regulation rather than adding on the layers in the manner of the old Government though.

Also populist, they seek to bash bankers where they can whilst running an macro economic policy which is designed to save the banks at the expense of all else (Labour did this too, it seems no one has the courage even in power to challenge the economic consensus).

Well, there is one area which really needs sorting out and this is the private placings market. This year may be the busiest ever for private placingss. What they are is a company issuing new shares to private investors at a discount to the current price. The private piece means that current retail investors don't get a look in. In fact what you find is that current investors watch the share price fall for no reason, then a placing is done at a discount to the new lower price, the share normally then hovers around the issue price for a few weeks before some good news (who knew that was coming, eh? ) is released. See the chart for IAE - one of my favourite shares for an ISA - for a classic example. I have not marked the private placing point, can you guess? Retail investors get thoroughly roughed over in favour of wealthy individuals and institutions.

What is so wrong with this is that there is a mechanism for open offers in which all investors can participate, but these are said to be too expensive for smaller companies. This makes no sense, if these are too expensive then so are IPO's and yet these companies are listed.

There are many ways to fund companies and as Capitalists we are not in favour of banning things here in general. What is need is a rule to ensure that say only 10% of share capital can be issued in a private placement, after that it has to be an open offer. This would stop insiders in the City abusing the situation. Also companies need stronger guidance about discussing publicly their funding needs, up to a year in advance, so that shareholders know if a big dilution is coming - then they can decide whether to hold or participate.

The City needs to realise too the importance of allowing retail investors some success in the markets, as at the moment volumes and liquidity are low. People are getting wise to the impossible challenge of playing a house game so stacked against them. Hedge Funds and High Frequency trading are topics I will come back too soon.

The Government should realise that a bit of transparency and fairness will do the City of London's international reputation the power of good.

Wednesday, 25 August 2010

A Cauldron Boiling. Thunder. Enter the 3 Witches.

Here at Schloss C@W, we've been anticipating autumn for some while, and what will happen when everyone gets back from their holidays. It won't all be good -

... powerful trouble / like a hell-broth, boil and bubble

Hmm, mustn't get carried away.
Long-term readers of this blog (Sid and Doris Bankers ?) will know my views on dominos - they fall slowly, and another of them is rocking gently. Yes, S&P have downgraded Ireland again.

"we believe that the government’s support of the banking sector represents a substantial and increasing fiscal burden, which in our view will be slow to unwind"

Now which other government hereabouts might need to think carefully about that issue ? Actually, it probably wasn't top of George Osborne's worry-list this summer, and there were some modestly encouraging results published in July from the UK banks. But they weren't so robust as to be proof against any weakening of retail activity or default-rates, still less a full-blown double-dip. Martin Weale, newly-appointed to the BoE's monetary policy committee, has thrown some eye of newt and toe of frog into the brew: yesterday he

"identified rising unemployment, falling house prices and a renewed banking crisis as the threats to the economy".

No rest for the wicked, eh George ? Harpier cries, 'tis time, 'tis time !

And so, back to Ireland: I shall be off to Cork again shortly (hip-flask at the ready, see comments here) and will report on local sentiment in due course.


Update: tragedy looms and Steven L has done the Shakespearean business good & proper, see 5th comment below

Tuesday, 24 August 2010

Cityunslicker's trading update - Aug 2010

Symbol         Last price      Purchase price      YTD 2010

MNR             88                    24                      10%

EMED          10                      9                      -15%

CDN            47                     58                     -10%
XTR              1.3                   3.3                     -40%
AST              3.6                    6.3                     -40%

IAE              117                    47                      40%

KMR             16                     11                      30%

GKP            115                     93                      25%

KDD            10.5                  13.5                    -30%

FTE               4.8                   11.25                   -55%

FUM            43.75                 43.75                     0%

SEY              121                    155                     -20%

XEL               71                      48                        50%

Heritage Sold 570 15%

Chariot Sold 70 100%

Invista European Real Estate Sold 30 30%

Petra Diamonds Limited Sold 80 25%

Pan Pacific Aggregates plc Sold .79 0%

African Eagle Resources plc Sold 4.5 15%

Dana Petroleum Sold 1700 20%

Short Wheat ETF Sold 69 8%It has been a slow summer compared to earlier this year. As ever, my high risk strategy shows a propensity for some really good winners and frankly abysmal under performers. Some long term bets like AST and XTR have not produced the goods yet when its comes to their drilling for oil and it really shows. Equally, Chariot and GKP have more than made up for this. IAE too although suffering after a placing, is recovering well and is now my biggest holding. I had high hopes for EMED this year and it is due permit news soon, once this happens there will be a nice bounce.

New additions to the portfolio include FUM, a tip from Chop Bear, who are about to launch a revolutionary condom and also Kenmare Resources, an FT Alphaville markets live tip for a very undervalued resources company.

Overall for the YTD I am about 15% up, against a market 7% down. Still the aim is to get to 100% up by the year end, but need some luck and good news along the way.

Monday, 23 August 2010

A quiet August - quiet before the storm?

The market has no volume this year. That this is a real phenomena and not just speculation you can see in the results of the LSE and other traders who all report very weak volumes.

Where has the money gone? Well undoubtedly some has gone into bonds, also some has come out of Hedge Funds and Prop Desks and gone into Gold and commodities, plus potentially out of UK and global markets into more exotic stuff - the art market is in a bubble like boom.

But a lot is sitting on the sidelines, waiting to see whether the recession returns or whether things muddle through.

Certainly the FTSE100 is following this path this year, picking up when the Tories were doing well and economic news turning good, but selling off afterwards through lack of faith.

Now in September and October we will have an answer I feel. The markets are more volatile than ever for numerous reasons, the low volume being one of them. Investing is now more correlated than ever to the overall performance of markets rather than individual stocks, so direction is key.

My guess is up from here, but don't bet on it.

Sunday, 22 August 2010

Wonder What This Betokens ...

They've been piling into bonds all right.

Oo-err. Watch out when everyone gets back from hols ...


h-t Rico

Friday, 20 August 2010

"Piss Off And We'll Find Someone Bigger": Machiavelli, Moltke and the Dialectic of Cuts

The meeja must do as they will, of course, but we can safely ignore all the hyper-ventilating over how Osborne is at daggers drawn with Fox, or is toe-to-toe with IDS. (Though Mr Newmania is right to wonder what it says about the internal discipline of the coalition.)

Because this was never meant to be easy, and they are wrestling with the issues of the age. How the hell is the 'iron triangle' of taxation / spending / the perma-NEET class to be resolved ? Is the UK's weight in the world only truly measured by the number of its nuclear warheads ? Massive issues, historical moments, and a privilege for these gentlemen to be entrusted with getting it right.

For what it is worth I'd say Osborne is exactly right to force departmental ministers to confront the full dialectical rigours of their responsibilities in a ring- fenced manner, without the let-out clause of 'central' funding for something that is 'too big for my budget'.
If it's too big for you, little man, then piss off and we'll find someone bigger.

And I trust no-one sets any store by "Osborne being the most popular Chancellor in history", or whatever. If this means he has acquired a bit of political capital, all well and good. But he sh
ould spend it right away: I'd be troubled if this honeymoon effect was still in evidence by Xmas. We have noted before Old Nick's sage dictum, that the nasty stuff should be executed as early as possible - check; and we could add he also counseled that being feared is, on the whole, better than being loved - check.

Which brings us once more to von Moltke: early dispositions, if badly-made, are exceptionally difficult to correct later on. I have in mind some of Cameron's ad hoc policy commitments made in the heat of the election battle. The Coalition has handled the VAT issue deftly and (in political terms if not economic) successfully - check. Having hoped that the NHS ring-fencing could be 're-positioned' as part of the Spending Review, we must also hope that any infelicitous campaign utterances can also be dealt with adroitly at the same time.

Because it really is the last decent chance.


photo (c) N.Drew 2010

Thursday, 19 August 2010

Scorched Earth Week: Badger's Last Stand against Brown and Balls

Poor old Alistair 'Badger' Darling,t his may very well be the last post I write about him as his ignominious career passes into history. If I was trying to be reasonable I would say that he had the worst inheritance as Chancellor of any of the previous occupants of No 11 Downing Street; at best he could be said to have done badly, at worst, utterly incompetently.

Still he has been defending himself and his record this week at the Donald Dewar memorial lecture (can anyone get a memorial lecture these days?). I note he has not defended the actions of the Labour Government. Instead his focus was on the decisions to save the banking system in 2008. Now as said earlier this week, this is true. Without bailing out RBS and HBOS we would have been finished. So well done for doing the bleeding obvious when there was no alternative. Less is said about the saving of the fraudsters at Northern Wreck or various other smaller institutions where illusory profits were generated to get payouts for top executives; all of which has cost the taxpayer billions.

On the key point of Scorched Earth though there are some very telling phrases. Commenters' so far this week have said that proof is needed of intent over incompetence, but what of this quote:

''By failing to talk openly about the deficit, and our tough plans to halve it within a four-year period, we vacated the crucial space to make the case for the positive role government can play.''

i.e. by lying about the situation they hoped to win the election. I like this piece from The Scotsman too:

"In the run-up to the final budget before the election, Mr Brown tried to sack Mr Darling and replace him with current leadership candidate Ed Balls after he refused to co-operate with him in setting out a "giveaway" package of measures designed to lure voters back to Labour.
The ex-chancellor later revealed that a frank assessment of the poor state of the UK's economy given in an interview had led to the "forces of hell" being unleashed by Downing Street.
Last month, Lord Mandelson revealed that during the campaign Mr Darling wanted to commit Labour to a VAT rise as part of a tougher set of measures to be put before the electorate in a bid to be more realistic about the deficit. According to the peer, it was vetoed by Mr Brown, who was said to be fearful of the electoral consequences."

I don't see how there is much wiggle room left from the above statements. The Chancellor was recommending VAT increases to deal with the deficit which was spiralling out of control, Brown and Balls were advocating more spending to win an election. By definition Darling knew this would make the situation worse for the UK - to some extent he helped to stop the worst excesses - but this proves that Brown and Balls wished to do anything to keep power. Of course at this point it was more realistic to think of a narrow defeat rather than victory; and of course, a terrible inheritance for the next Government.

Wednesday, 18 August 2010

Scorched Earth: Nero fiddled. Rome burned.

From the comfort of the BQ holiday sun-lounger ...
I read in the original post comments that some doubt that Mr Brown really was on a 'scorched earth' policy. Accidentally he may have pursued such a strategy, but not on purpose. The explosion in debt was just a by-product of the usual political machinations that have been going on since the 1960's when Tory chancellor of the exchequer, Reginald Maudling, left new chancellor Jim Callaghan a note saying..

"Good luck, old cock ... Sorry to leave it in such a mess." Similar to Liam Byrne's "There's no money left" .

But there is a very clear pointer to what was happening in the bunker. Gordon Brown was as convinced that spending was the way to win an election, as a more notorious dictator was convinced that retreat was defeat. Talk of cuts was like talk of surrender and could not be countenanced. Victory or death. When the end came for Germany's 12 year Social Democratic experiment the Fuhrer ordered :
1) All military transport and communication facilities, industrial establishments and supply depots, as well as anything else of value within Reich territory, which could in any way be used by the enemy immediately or within the foreseeable future for the prosecution of the war, will be destroyed.

He tasked this so called Nero Decree to his minister for the economy and loyal supporter Albert Speer. Speer decided that destroying every bridge, collapsing every mine and dynamiting every factory was too much and refused to do anything about it.
In 2008, during the height of the credit crunch not only did the PM insist the spending taps remain turned on , but that the taps be smashed off the spindles so they could never be turned off. He refused to accept cuts to spending programs and simply demanded more.
It was Alistair Darling, the good nazi, who said no. He knew that the recession was the worst in 60 years and that the boom was over. Northern rock had already gone down, yet when Darling said that we were in a damaging recession he had the 'forces of hell' unleashed upon him. There were calls for the chancellor to be sacked. He came under increasing pressure to resign over his expenses claims, when others who had similar did not.

The calls came from the usual Brown brusiers, Charlie Whelan and Damien McBride, instructed by Brown, according to Rawnsley's book. Up until then Darling was often referred to as a sock puppet chancellor {mostly by us} and
for a while, the number two man in the government actually got the blame for the global recession.

In 2009, Mr Brown decided that the Chancellor would not do as he was ordered and despite Darling being the ablest of his ministers, decided to sack him and replace him with ultra loyalist Ed Balls. Does anyone believe that Ed Balls would not have carried out his bosses wishes, whatever the consequences? Even now, running for the Labour leadership himself, Ed Balls denies there is even a deficit problem.

As Guido reported Ed Balls saying just today “Halving the deficit in four years by cutting public spending… I think was a mistake. .. in 2009 I thought the pace of deficit reduction through spending cuts was not deliverable… I’m not happy to accept cuts in any part of the budget…”
It was only the dangerous Purnell coup that allowed the chancellor to remain. The price for Alistair's loyalty was for Brown to face facts, which he only paid lip service too until the next coup.

After the third failed coup in 2010 the chancellor had 'frank words' with the Prime Minister and insisted if Labour stays in office, the UK faces its toughest spending cuts for 20 years. Labour will "absolutely not" entertain a core-vote strategy at the election, "To me, cutting borrowing was never negotiable," the Chancellor added, before adding: "Gordon accepts that, he knows that."

And so the Nero Order, whatever it may have been, did not get enacted. A reduction in the lowest rate of income tax to zero to wipe out the disastrous 10p tax botch? A cut in VAT to 10% to prove that it worked the first time? To make good on that mad promise to make the UK the electric car producer of the world? But there can be little doubt that that was the chosen strategy and if the chancellor had been replaced in 2009, then all the taps in the house would have remained firmly on.

{reading the comments on the electric car - A classic from Scrobs.
"Its the economy 7 stupid"}

Scorched Earth Week: Energy

There is something paradoxical about identifying a would-be environmental policy as having ‘scorched earth’ characteristics. Nevertheless, NuLab’s setting of wilfully infeasible targets for emissions-reduction and renewable energy development, can have that effect. And, they seem to have scorched the brains of the Coalition to boot.

This has nothing to do with the ‘legally binding’ aspect of their targets, because upon examination it turns out (of course) that under the legislation the Secretary of State retains for himself the right to change the targets more or less at will. No, the threefold damaging aspects lie elsewhere.

1. the stymieing of extremely useful technology, to wit, the new generation (no pun intended) of ultra-efficient coal-burning technology which needs no subsidy to let it prosper, and which is the ideal replacement for old coal plant. All it needs is to be freed of the open-ended obligation to fit (or retro-fit) carbon-capture systems.

2. the dreadful and unnecessary cost we will be put to, when after years of hiatus in mainstream development, and expenditure on windfarms, solar arrays, and the whole panoply of remedial measures and monstrous feed- in tariffs needed to accommodate these inefficient toys, we finally need an emergency programme of new gas-fired plants to meet our needs.

3. worst of all, the looming trap of signing up to international ‘penalties’ for failure to meet the certain-to-fail targets. To be fair, NuLab was prevented from taking this one final insane step by the chaotic non-result of Copenhagen. But they greatly encouraged the ravening international-taxers by their manic willingness to sign up for ever more ludicrous commitments.

= = = = =

How badly scorched is this earth ? We are certainly doomed to a needlessly expensive resolution of the coming power-generation gap (see this blog passim). However, I’d say the greater problem is that NuLab’s enviro-policies seem to have scorched the brains of both the Coalition parties. The differences between all three manifestos in this area were mere matters of detail.

There is one glimmer in the gathering gloom: a recently-reported willingness in the Coalition to rethink the threatened Environmental Performance Standards for power plants, which are part and parcel of (1) above. Might this be the first sign of a U-turn ? More anon.

Otherwise, the prospects for near-term relief from these crazy policies depend on us being overtaken by highly undesirable events – energy prices so steep that it all becomes irrelevant; and/or a second round of recession/depression that so reduces energy demand, and our ability to pay for crazy green schemes, that once again it’s no longer an issue.

Not a happy prospect.


Tuesday, 17 August 2010

Scorched Earth Week: Macro-View

Here at C@W we first did a post on Labour's Scorched Earth strategy in November 2007 - long before the financial crisis (and long before the phrase was being used more widely ;o) ).

Today I am going to see how credible this in. In that Post nick Drew wrote of the stupidity of trying to build too many houses, a useless energy policy and a proposal to make all children stay at school until 18. Typically uncosted measures from New Labour.

The real story though is in the macro-view of what Labour was seeking to do, especially after the economic collapse of 2008. The choice at this point was to repair the economy or to march on as if nothing had happened.

Here are a couple of graphs which provide some evidence:

This one is the UK budget deficit accrued each year as a percentage of GDP:

This second one shows the effect on the national debt of the recession.

Finally, the superb Nadeem Walayat shows the last forecasts made by Alistair Darling of the budget deficits, note the November 2008 forecasts, long after the recession had started.

From the above we can see that there was no attempt to reign in spending into the recession. Keynesiasm was tested in the 1970's and failed then monetarism was tested in the 1980's and worked. But Labour chose Keynesiam - but why? Could be that the spending was all on Labour votes? The two biggest recipients of public money are the NHS and the benefits system. Neither has faced any kind of reform, instead they have had spending increases in real terms for nearly a decade and this continued right up until Labour left office.

Rather than make cuts, Labour engaged in Quantitative Easing, a policy which did help to stabilise the economy (and may still yet do so if there is more), but was an alternative to reducing Government spending in 2008-10.

Then, as electoral doom approached, the foot was placed on the accelerator. For all the achievement of staving off financial doom in 2008 (and it was a possibility, mishandled still, but Darling and Brown at least did not fail in keeping the economic system alive), Brown and Darling saved the best till last in 2010. With the budget deficit out of control at 12% they simply put off a new spending round and changed the game to suit their electoral needs.

This last point is worth dwelling on, as there is no cogent explanation for this fudge at all, other than wanting to not discuss impending cuts and the serious situation the Country faced. it is the ultimate shoulder shrug to the people they were meant to be serving. I look forward to reading the memoirs of the two men to see what weasel words they can try and find to get out of this.

Finally, in the run up to the election, the years of spending to keep power meant that a last splurge was felt necessary. Both the Times and Guardian have decent lists of the last minute spending. Here the idea was to commit future Governments to spending that could not be easily reversed, making cuts in other, more essential areas, more likely.

It does seem as if that was all Labour new how to do, spend other people's money. They even had their own epitaph in the 'There's no money left' note left to David Laws. What is sick is that the joke was meant to be ironic.

Monday, 16 August 2010

Scorched Earth Week at Capitalists@Work

With a bow to it being 100 Days of Dave at the weekend, now is a good time to review one of the biggest criticisms laid at the door of the outgoing Labour Government. Here at C@W we proclaimed for more than 2 years before the election that the Government knew the game was up and were going to try their best to leave a terrible state of affairs for the incoming Tory Coalition administration.

From a pure party political perspective this makes perfect sense to do, it ensures that best chance of a one term administration and so a swift return to power from Opposition. From a national perspective it is a gross abuse of power which should really be a matter of treason. To accuse the Labour Party of being more interested in themselves than the Country is a big call, one which would be furiously denied by themselves at all costs.

So this week, amongst the usual posts, we are going to run a series of posts looking at the evidence for a Scorched Earth policy and see what has actually been left for the new Government.

Sunday, 15 August 2010

Politics and the Military

Somehow it comes as a bit of a shock to see Cameron addressing cadets at Sandhurst, even if the political content of his speech was fairly anodyne. Notwithstanding your Montgomerys and Walkers, your Roses, Jacksons and Guthries, the British have managed the separation of politics and the military better than most.

Other countries don't have the same scruples in these matters. In 1985 I attended a hand-over between the outgoing and incoming commanders of a West German infantry brigade. The entire formation was drawn up on a huge parade square, around three sides of a huge central dias. The incoming one-star rode up dramatically on a white horse, and was received with great ceremony by his predecess

This latter then gave a lengthy speech, broadcast on a very adequate sound system. In the course of this harangue he expressed, inter alia, his displeasure at the leftist and unpatriotic tendencies of the Green Party in the region; and he went on to attack the local Lutheran pastor - by name! - for being a pacifist. Aside from the Brits present, nobody turned a hair: it was par for the course in the Bundesrepublik.

How unlike our own dear Army. Incidentally, the new Chief of the General Staff, General Sir Peter Wall, is an excellent man I know well from my own limited military career. In public he is gruff, dry, and minimalist in his pronouncements. Out of the limelight, he is a soldier's soldier, inspiring immediate confidence at all levels - think John Wayne in The Green Berets (in his leaner days Wall even looked like Wayne). He also makes an accomplished and fruity after-dinner speech. In private, of course.

He can probably handle the politics, too. And we'll need that.


Friday, 13 August 2010

Thoughtful Reading from ... the LibDems (sic)

Not words I expect to use often: but (Huhne notwithstanding) there are some thoughtful strategic thinkers in the LibDems. Exhibit A (well, the only exhibit, actually) is this think- piece on how they need to develop a strategy for the Coalition years. Because, as it says:

"We have [heretofore] based our strategy on the implied assumption of opposition at Westminster"

I'll pick up on
just one theme. The author - one Gordon Lishman - is subtly seeking to make space for the possibility of a Lab-Lib Coalition at some future date. This is clever (and all of a piece with the tactics we identified during the post-election negotiations - remember ?).

"Most of the small number of dissenters understand and accept the validity of the arguments for coalition even if they have come for the time being to a different conclusion ...

It is likely that the new Labour Leader will continue for some time in the aggressive attempt to portray the Coalition Government as a single entity. It may well be that, nearer the next Election, the Labour leadership will start thinking about how to promote and achieve the idea of working co‐operatively with the Liberal Democrats. Our leaders will need to manage that journey and our relationship to it in a careful and balanced way ...

We need to establish a broader understanding, already shared by the overwhelming majority of the democratic world outside England, that different coalitions can be a useful and effective form of politics

Oh - and I enjoy the idea of LibDems trying to figuring out ...

"How does the Party help its members to counter the effects of [media] scrutiny?"

Have a read, if you like this sort of thing.


The patient lived, but the Doctor died. Dr Kelly's death

".....Lord Hutton? Lord Hutton, sir? Just one more thing.."

A group of medical experts has demanded a full inquest into the death of government weapons inspector Dr David Kelly saying it unlikely he could have bled to death in the way the authorities claim.
This story is rearing up again. Dr Kelly did not kill himself, so it seems from a group of doctors who study the medical evidence. Actually, thats not what they say. They say that

Insufficient blood would have been lost to threaten life from the wound to his severed ulnar artery"

So the story can rumble on. Cutting his wrists didn't kill him. The doctors don't say what did, as they did not perform the autopsy. They just conclude that the wrist injury would not of itself been fatal, which contradicts the Hutton report.

Conspiracy theories can make normal people irrational and irrational people unstable. These theories rely heavily on concentrating on inconsistencies or minutiae of evidence, but usually ignore a massive great piece of incontrovertible evidence. Like , the Twin Towers were dynamited. The video clearly shows puffs of detonation like clouds of smoke blasting from the sides of the Towers. The argument then moves to disproving that these are explosions at all but just the pressure caused by the floors collapsing. Experts are bought in on both sides to discuss complex demolition techniques. Scientists build models to prove/disprove the video images. And all this obscures what should be the fundamental question. The Colombo question. Means, opportunity and MOTIVE. The WHY? question.

The government has the means to blow up its own buildings. It might have had the opportunity but thats' pretty unlikely considering the buildings were occupied by 10,000 people all the time, and the government has trouble keeping even a data disk secure, but, OK.
But motive? why? Why use Saudis to attack USA from bases in Afghanistan to provide a 'causus belli' to attack Iraq? There were plenty of existing resolutions, plenty of weapons inspectors. No need to destroy your domestic airline industry and severely damage your nations financial centre, so mush so it caused a recession, just to declare war on the stone age Taliban.

Human rights abuses would have done. And how does Iraq and oil get involved? That was separate to 9/11 ... And look how far off the point we are of Dr Kelly. That's the beauty of conspiracy theories. Any argument reinforces the theory.

The Kelly story was about leaks. Kelly had claimed that the 45 minute insertion was nonsense, added to sex up the dossier. Pretty serious stuff. i heard the Today program at the time and thought .."BBC just openly called Blair a liar...wow! They better have some evidence because he cannot allow that to stand." Dr Kelly leaked very sensitive data to the BBC, who did not protect his identity sufficiently well. The Labour government immediately went off on one of its well rehearsed smear campaigns. Dr 'Walter Mitty'. 'Not taken seriously' etc. And to smear Gilligan too. The government wanted the story to go away. They wanted a war. The very last thing a government wants is a death. Even worse, a suicide, by someone THEY are hounding. How big did the story suddenly become? What was Alistair Campbell's nightmare? A story being fuelled. Especially a story in which he himself and PM Blair featured so prominently. Surely if MI5 was going to incompetently kill the doctor they should have done it before he talked, not after.

So to the weekend Colombo question.

If doctor Kelly was murdered, WHY was he murdered? If anyone can provide a convincing explanation as to WHY, then I would appreciate it. Don't care how, or who or where. Just WHY?

Because in the 2 billion odd Google hits there does not appear to be a single credible explanation

Thursday, 12 August 2010

The price of executive reward

So last night Fabio Capello, having coached an England win with some new stars, manages to ruin all his good work by sacking David Beckham in passing. The guy is really not with it at the moment, still lost in a post World Cup dystopia.

However, much worse are the FA of England. I was at Wmbely last night, one of the big things I noticed was the fact the match sponsorship was only Mars, the rest was FA.com advertising. This is not a good sign, the FA have no big sponsor after backing England to do well in the world cup and not signing up with Nationwide (I think Mr Drew would take issue with their risk analysis on that one, given how poorly England perform at World Cups).

Then the main issue, which is the media and the players have given up on Fabio Capello. But he is locked into a pay scheme of £6 million a year which can't be broken. If I was paid that money I would not walk either!

The wider point here is executive reward, giving contracts is daft when you could employ people on normal rolling terms, or better on rolling one year contracts - certainly ones open to annual review. This problem plagues British business which incur high costs to lose incompetent staff.

Given Martin O'Neil's position the FA must be cursing themselves today that they are stuck with a canny Italian negotiator....

Wednesday, 11 August 2010

Econometric Forecasting: Astrology With Numbers

We like a flutter at C@W, and have been known to make the odd year- end prediction (actually, some rather good ones, though we say so ourselves). Really great market judgments - like John Browne calling the bottom of the oil price at $10 in 1998 - have led to great commercial triumphs (like BP buying Amoco and Arco in 1998-9 ... err, perhaps I could come up with a better example).

But 'econometric' forecasting that claims a mathematical basis, is a bad, expensive joke. The FT has recently caused a bit of a stir - and done us all a favour - by detailing just how bad the Bank of England's forecasting has been, and there should be a great deal more scrutiny given to the performance of professional forecasters in general. The commercial producers of costly forecasts-for-sale are remarkably shy when it comes to offering up their track-records for a bit of retrospective scrutiny, and there's a good reason. (Strangely, their clients rarely ask.)

The US Energy Information Agency - an authoritative source on a range of things - is honest enough to post all the long-term energy-price forecasts it has made over the years, and one can ridicule them at leisure, marveling at how bad they are (around 50-60% wrong over time! - i.e actual out-turn prices have on average been more than double those predicted).

Problem is, (a) many people view EIA price forecasts as being as 'authoritative' as their other output; (b) upon publication they are broadly 'conventional' / 'consensus', meaning that all the commercial forecasters forecast energy prices to be at roughly the same levels - and charge their clients a packet for the dross. On average, it'll all be equally wrong.

Even more troubling for those who believe in this nonsense - if they'd take their fingers out of their ears for a second - the EIA has an excellent track-record in forecasting energy supply and demand. In other words, even with a good grip on the 'fundamentals', there is really no hope of translating this into price forecasts of any value. There are dozens of reasons why this is so.

There is nothing wrong with people cudgeling their brains to come up with a patent algorithm that tells the future. The more you study markets and prices in a scientific, statistically rigorous manner, the more you understand. But let no-one hazard any money on the output, that they can't afford to lose. It's speculation, pure and simple.


Are you Middle Class ?


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


researchDo you dislike everything about California except Cabernet Sauvignon?


Do your slippers come from the White Company?


Do you regularly fall asleep in front of the Grand prix?


Do you complain about immigration but have a Latvian Au-pair?


Is Ocado one of your friends and family numbers?


Do you still own and use outdated electrical items such as a PS2 or a video recorder?


Did you ask for a Michael Mcintyre DVD for Christmas?


Do you own a breadmaker?


Would you consider changing your name to have a better 'family ancestry tree’ to research?


Are your tennis tops actually worn for playing tennis?


Do you find the programs on BBC4 interesting?


Do you have a Black's Outdoors loyalty card?


Do you own a bicycle designed by your car manufacturer?


Do you think Next Kids is a bit downmarket?


Were your children named from your spice rack? Rosemary, Saffron, Cassia, Tansy..?


Have you considered buying a second dishwasher just to fit the Le Creuset in?


Did you move to the suburbs and ‘get religion’ just as your children reached school age?


Are you a committed recycler yet own a 4x4?


Do you kind of miss wine bars?


Have you ever had a fantasy about Kirsty Allsop?


source --made up
If you could, would you have everything Cath Kidston ?

Are you common ?