Thursday 31 March 2011

Question Time again

David Dimbleby is joined in east London by
Sarah Teather MP,{ An example of why to vote 'No' to AV.}
Boris Johnson,{Crazy,crazy Mayor of London. Ken got a tough reception from the West London crowd. Boris in the EastEnd? Cor Blimey guv'nor!}
Diane Abbott MP,{ Tribal hypocrite of the worst kind. Quite likeable though.}
Mark Serwotka General secretary for public services union, proper genuine Trotskyist and all round bonkers lefty,} and Clive Anderson, {Legal comedian and broadcaster, who may possibly be the only sane one there.}

YOU choose what you think the panel may be asked by the audience. YOU put those guess questions into the comments... points are awarded for accuracy, style, exclusivity, humour and sometimes just randomly. New entrants welcome and judged favourably.

Winner gets to choose 'who is the most annoying MP'

BQ thinks
1. Should smashing up London be legal?
2. Should Libyan rebels be armed?
3. Will axing police numbers cause more shootings of small children
4. Was the U-turn on EMA a U-turn caused by violent student protests?
5. Was Miliband wrong to associate himself 'with Labour's violence'{or whatever Boris actually said}


New Champ is

Malcolm Tucker -32.5

Timbo614 - 32
Bill Quango - 31
Miss S-J - 31

Botogol - 30.5
Nick Drew - 29.5
Miss CD - 26
Appointmentotheboard - 25.5
Hatfield Girl - 23
CityUnslicker - 22.5
Hovis 21.5
Dick the Prick - 19
measured - 15.5
Steven_L - 14.5
Andrew - 13
Anon -12
GSD - 11
Mark Wadsworth -9
Woman on a raft - 7
Budgie - 5
BE - 3.5
Alan -2

Talking Cr*p Again - Dung-Power Wins Over Sun Power

Some light relief on the energy front before we plunge back into the serious stuff ...

Back in August we noted the DECC obsession with manure,
otherwise known as anaerobic digestion (AD), or turning the brown stuff into electricity. Well, Crapper Huhne is a LibDem ...

"We want to exploit as much as is economically possible of the 100 million tonnes of manures [and] sewage"

This oozes directly from a commitment to "promote a huge increase" in AD, contained in the Coalition Agreement - which for a very short document, contained an incongruous amount of highly detailed energy policy - indicative of a long-seated, nay, anal fixation. We can lay this squarely at the door of Tory junior energy minister Greg Barker.

Barker it was who (according to the Register of Members' Interests) received a donation while in opposition from Summerleaze, a firm specialising in AD. And he hasn't let them down. As a minister he has chaired the Anaerobic Digestion Round Table: "anaerobic digestion ticks all the boxes", he gushes.

And in this month's review of feed-in tariffs that reduced the amount of subsidy to solar power, the Treasury opened the sluice-gates for AD: the amount of filthy lucre on offer to AD projects was increased.

Raw politics - like pigs in muck. We're paying through the nose for this obsession: does something smell around here ? We're being dumped on ...


Wednesday 30 March 2011

UK Nuclear Inspectorate: A Scandal Brewing

There are so many big energy stories around just now, I don't know where to begin. Let's start with a really outrageous piece of governmental dereliction & irresponsibility, dating back to Blair and his latter-day conversion to nuclear revivalism.

* * * * * * * * * * *

Dr Mike Weightman, HM Chief Inspector of NII and Director of Nuclear Directorate, has been ordered by Crapper Huhne to make an urgent review of the implications of Fukushima for the UK’s ambitious plans for 10 new nukes. It isn’t going to be easy.

In 2009, Weightman made a report to the Board of the HSE entitled Briefing on the Nuclear Programme, which has been obtained under an FOI request. Weightman’s paper cited the 2008 Nuclear Regulatory Review: the NII [the Nuclear Installations Inspectorate] is “significantly under-resourced for its predicted future workload, both with and without new nuclear build … Staffing shortage is increasingly severe both due to inability to recruit suitable staff and also age profile of existing staff”.

He went on: “HSE has struggled to recruit sufficient nuclear safety inspectors. … The planned requirement for regulating existing facilities [our emphasis] is 192. This would still leave the NII with one of the lowest ratios of inspectors to plant in the world. [We] need to significantly increase rate of recruitment and sustain it … [our] main office in Bootle not ideal for recruiting and retaining staff.”

He warned that of the 166 inspectors then in post, 40 would be post retirement age ‘within 2-3 years’. He also stated that to carry out the Generic Design Assessment (GDA) – the pre-evaluation of the new reactor types that are planned to provide the 10 new nuclear power plants desired by the government to keep the lights on – the total number of inspectors required would be 232.

How many are there today ? No recent update has been published, but the HSE website says the Inspectorate has ‘some 250 staff’ of which around 60% hold honours degrees. This makes 150 graduate-level inspectors at best which – since the GDA is in full swing - means a shortfall of 80.

Before the new emergency Weightman review was put on the plate of this overworked team, the DECC website declared: “The Office for Nuclear Development is working to ensure that the nuclear regulators continue to have the resources and tools necessary for GDA. The regulators have stated that they expect to complete their GDA assessment in June 2011.” This completion date – which had already slipped by 6 months - must surely now slip again.

Another 2009 HSE document stated: “Although we have said that we could issue a Design Acceptance Confirmation with exclusions or conditions, this does not mean that we are prepared to undermine the robustness of our requirements for safe and secure designs. If, by the end of GDA, we are unable to come to a satisfactory overall conclusion, then we will not issue a Design Acceptance Confirmation”.

What chance that EDF and the other would-be nuclear developers get their approvals in 2011? Even Clegg has spotted that the enterprise is doomed. What are we doing trying to build a large 21st C nuclear industry with an inspectorate that can't even cope with what we've got ?

To be continued ...


March Trading Update - Keep Calm, Carry ON

Not a good month, now down 2% on the year. The main action in the portfolio is waiting....waiting.

XEL - Will produce its CPR report anytime now which should re-rate the share. Recovered well from horrible HMRC tax assault in the budget.
EMED - Will get 'Administrative Standing' approval which will re-rate the share, anytime from now.
GKP - Longer-term, need to wait for Iraqi Oil Law changes for major re-rating, all drilling seems to go well and the company will be a huge bid target once the regulatory system is eventually sorted.
AST - Buggers, not happy with the management, ran our of money and delivered a placing at 5p. having told the insiders about two days before so the shareprice collapsed 30% as the insiders shorted it or sold out to buy back in lower. Huge dilution, dreadful behaviour and now even with success in drilling the biggest on shore gas field in Europe I am out at 9p rather than 20p. No respect for Management.
XTR - Strong and steady, no real activity expected for a few months, but this is one share that could be a dream share in a year or two.
CAZA - Oops, bought on hopes of success in drilling for gas in texas, now very oversold, still nasty little loss; has to be expected though when so heavily into Exploration plays on AIM.

Tuesday 29 March 2011

101 Damnations

Fabio Capello claims he only needs 100 words to communicate his message.
Could be something in that for the political parties who are always keen on messages with as few words as possible. New Labour excelled at adjectives but was much less comfortable with verbs. Political Parties can probably get by with just 50 words.

So lets start with

Labour: The Next Generation

What 50+ words must they have in their lexicon.?

  1. Tax
  2. Spend
  3. Investment
  4. Fairness
  5. Cuts
  6. Tory-Led
  7. Thatcher
  8. Protest
  9. Lesson
  10. Evil-Tories
  11. Sustainable
  12. Millionaires
  13. Banks
  14. Growth
  15. Unions
  16. Ashcroft
  17. Sorry
  18. Equal
  19. Members
  20. Women's
  21. Generation
  22. Hardworkingfamilies
  23. TUC
  24. Tuition
  25. Poorest
  26. Disadvantaged
  27. Future
  28. Green
  29. Party
  30. Twitter
Over to you for the rest.

Monbiot: Not So Green As ...

As greenie-lefties go, George Monbiot seems to me more admirable than most, being broadly open to honest reason and changing his mind. Of course his earnestness is easy to mock - e.g. his retreat from Oxford to a remote corner of Wales where he tries to live the good life self-sufficiently on half an acre of land.

Recently he was forced to admit that adverse winter weather had completely wiped out his crops. Once again, it is easy to chortle: betting on global warming, eh, George ? But it does at least make a serious point, which he seems - in his earnest way - to have taken on board.

The serious point is one I have debated off and on with the good Sackerson. Where is the balance to be struck between reliance on trade for ones basic needs, and reliance on self-sufficiency ? The downside of trade is that it can become over-extended, and let you down at critical moments, with nothing to fall back on. The drawback of self-sufficiency is that you'll always be deprived of something you can't grow / make yourself, which makes for a pretty limited - not to say primitive - existence: and, as George has found out, you can be wiped out in a single, localized bad harvest.

Well, there must be an optimal position out there somewhere. Personally I'm quite in favour of free trade, as I guess most of us are round here (with a little stash of beans in reserve - and some gold ...)

And I think George - based on his farming experience, perhaps - is backing away from the dafter extremes of hair-shirt self-reliance as well: he wrote this in the Grauniad a propos of Fukushima:

"What [some greens] want is ... we should power down and produce our energy locally. Some have even called for the abandonment of the grid. Their bucolic vision sounds lovely, until you read the small print.

At high latitudes like ours, most small-scale ambient power production is a dead loss. Generating solar power in the UK involves a spectacular waste of scarce resources. It’s hopelessly inefficient and poorly matched to the pattern of demand. Wind power in populated areas is largely worthless. Micro-hydropower might work for a farmhouse in Wales; it’s not much use in Birmingham. And how do we drive our textile mills, brick kilns, blast furnaces and electric railways – not to mention advanced industrial processes? Rooftop solar panels? The moment you consider the demands of the whole economy is the moment at which you fall out of love with local energy production. A national (or, better still, international) grid is the essential prerequisite for a largely renewable energy supply."

Amen to that. An honest man, our George: he's willing to learn from experience - though he'll get no thanks for it ...


Monday 28 March 2011


Sometimes, the stories just write themselves. After a weekend of the jobs-for-me&mine and benefits for our progeny brigade in London we have the ultimate dialectic - cuts at Northern Wreck. 680 jobs are to go at this massively loss making organisation (this link is to their annual results for 2010, £232.4 million loss).

Now, readers here will know that right at the start, indeed, before the start, we advocated letting Northern Rock go bust as the costs of keeping it alone would outweigh the merit. Low and behold, Labour decided State Ownership was the path to success.

Now, even the state owners (who, mercifully, are people like Ron Sandler who does have a clue about running a business) have twigged that this old bird needs a nice trussing to make it a appealing. One way is by reducing the costs so that the abysmal returns it makes on lending appear better. Remember Olivant and Virgin Money looked before but could not make the numbers add up.

But the response of the Unions is perfect:

Senior Unite official David Fleming expressed outrage at the latest round of cuts.
"This appalling news of 680 job cuts is scandalous. Another round of brutal job cuts is simply a step too far for this workforce that has already lost a third of colleagues," he said in a separate statement.
"We are witnessing another move to scale back this already lean organisation, in a desperate bid to find a private buyer."

A desperate bid to find a private buyer - so the alternative is a loss-making state owned business. That is the implicit suggestion here. Not even a bone to say that maybe at least the state has saved jobs for a couple of years at fantastic cost to the taxpayer? No, just no job cuts. Imagine if the jobs were going to India....

Proof that you can't argue with stupid people. All of Northern Wrecks rivals are cutting jobs as fast as they can, RBS, Lloyds, all the building societies that still exist. many like Bradford and Bingley and Dunfermline have gone under and suffered a worse fate as they were smaller. Good news too, as all were poorly run and managed. Privat esector companies all realise that in this very strange mortgage market there need to be cost reducations as sales are not going up anytime soon and pricing is tight (except for the banks to whom the state lends money for nothing..).

But as to logic, where does it end? No cuts if you are state owned!

Perhaps they think if they shout it loud enough that will be enough.

Nowotny's Austrian Economics

The sad mess in Japan and the attack on Qaddafi have in the past few weeks proven to be something of a boon for the European Finance Ministers. This year was after all meant to be the denouement for the Euro area, with Greece, Spain, Ireland, Portugal and maybe even Italy in a very parlous place when trying to raise money on the bond markets to keep their economies going.

So using this cover, what have the European Politicians done? Oh, dear, not a lot. The Portuguese have refused to pass an austerity budget last Friday and now last night the well-known ECB bank member has given a rather unfortunate interview of Austrian television. In it he said 2 main things, firstly that Portugal should accept a bail out as soon as possible and secondly that Greece's ability to keep funding itself  (with European loans!) will be on a knife edge for the next 4 years. He also slipped in that Austria's inflation at 2.7% was much to high to be sustained; like a good Austiran should.

Now there are bigger problems in the world than ranting ECB members. However, the passing of time has not really led to any steps forward being taken by Germany. Germany is in an interesting political mood, feeling strong enough not to join in attacking Qaddafi and also not wanting to cave into demands for a European debt union.

The trouble is, with the outer Eurozone countries failing in the heat, there is only a choice between more meaningful bail out (i.e. on terms that actually help the stricken countries), a debt restructure (which will hurt EU zone banks) or a shock as these countries leave the Euro and devalue.

None of these meals is very appetising, but worse is that no decision is being made about which one to choose.

Saturday 26 March 2011

BP's Russian Roulette

Amongst a very busy week news wise there has not been too much notice taken of BP's latest Russian calamity. The Billionaires of TNK-BP have succeeded in a Swedish Court in having the proposed BP-Rosneft deal.

Now Nick Drew and I have dinner bet on what happens with BP. Mr Drew says that the new CEO, Bob Dudley, having been forced out of Russia by TNK a couple years ago, will understand the politics. I on the other hand think the Russian ins Russia know between themselves how to get a Western Company just where they want it.

My thoughts on what happens next are:

1. TNK manage to get a lump of Money out of BP.
2. Rosneft somehow gets to take over TNK as a result of Russian 'intrigue' - possibly by being 'attacked' for thwarting BP
3. BP proclaims happiness with the situation; but in reality has lost control of half its Russian assets in return for a 5% share in Rosneft. Rosneft will now how all the cards in terms of revenue, and BP will get used just for its exploration skills.

The idea that Putin backed Rosneft and TNK-BP being on opposing sides of the table is laughable. The table in Russia has all Russian companies on one side, with the Government and foreigners in the other. It's a very loaded game indeed and I don't hink that as smart as BP are they have the right smarts to deal at this level. There is a good reason the yanks, French and other stay well clear of trying to do 'business' in Russia.

We will see how it develops, but I am glad I am not a BP shareholder.

Finally, for a great read and insight into Modern Russia see this excellent article, its funny and very well written.

Friday 25 March 2011

Compo winner

Too good to let languish in the comments

Pyjamas in the House

Some pyjamas are red and some pyjamas are blue,
and some pyjamas are budget pyjamas with a definite orange hue.
Some pyjamas have a rope or a cord which are made for classier folk.
Some pyjamas are budget pyjamas, a good bet for lads who are broke.
Some pyjamas have stripes and a slot, through which you're supposed to pee,
but some pyjamas are just right for a nap while on TV.

(C)Timbo 2011

Silver Market Re-visited: Trading Update

Back at the trading pit ... precious metals, and more particularly silver, have surged. I was asked by commenter Sean last week for an update on the conspiracy theories surrounding silver, and at that time the rumour was of $36 being a price- level above which disproportionate losses would accrue to the deemed Big Short, viz JPM (allegedly).

Such dynamics can sometimes be in play: for example, Enron's descent into melt-down was pretty much assured when its share price fell below a very specific level, because various parent-company guarantees etc kicked in at that point. By way of 'evidence' to back the JPM/silver/36 story, $36 did indeed seem to be some sort of ultra-resistance level, and successive 'attempts' to break through had been unsuccessful (or 'repulsed' if you follow the theory).

Anyway, in the last couple of days silver has breezed through 36, hitting 38, at which point yours truly took profits on half of Jan's acquisitions, averaging (in £££) 753 for a 29% gain. This was a bit of a judgment on $/£ too, as the dollar has perked up a bit lately. For once, I picked a top & it fell back thereafter: but will need to be nimble if I decide to get back in again. Since the credit crisis, we're not obliged to mark-to-market any more, are we? - so I shall not disclose the value of the remainder...

As for the fate of JPM - who knows ?


Friday Joke

This used to be a regular feature, not sure why we let it drop.

An RAF Typhoon pilot was flying a mission o
ver Benghazi when, to his surprise, he spotted two flying carpets in his vicinity. Deciding they looked pretty hostile, he shot them down. On his return to Gioia del Colle, the base commander was furious with him:

"those were Allied carpets !"

Hmmm, perhaps that's why we dropped the Friday joke ...


Thursday 24 March 2011

Question Time predictor

Who's on? - Don't know
Where is it? London. Maybe an Olympics/ Boris question. Boris and HSBC?

Winner gets to choose new style pajamas for Ken Clarke.

YOU choose what you think the panel may be asked by the audience.
YOU put those guess questions into the comments... points are awarded for accuracy, style, exclusivity, humour and sometimes just randomly. New entrants welcome and judged favourably.

BQ thinks
1. Is Osborne the new Karate kid? Tax on - Tax off. 1p fuel.
2. Growth figures undermine coalition. Questioner or Labour rep says "it isn't working its hurting."
3. Is Gaddafi a legitimate war target? {No one will answer..just waffle about UN mandate}
4. Inflation rise. Should 5% cause concern, or wait until its 17% like Vietnam?
5. Liz Taylor .. Celebs ain't what they used to be.

Winners were Timbo614 and Measured who can choose some sort of sleepwear for the former chancellor.

New Champ is

Timbo614 - 30

Malcolm Tucker -29
Bill Quango - 28.5
Botogol - 28
Miss S-J - 27.5
Nick Drew - 25.5
Appointmentotheboard - 23
Miss CD - 22
Hovis 21.5
Hatfield Girl - 21
CityUnslicker - 18.5
Dick the Prick - 17
measured - 13.5
Steven_L - 12.5
Anon -12
Andrew - 11
GSD - 8.5
Woman on a raft - 7
Mark Wadsworth -6
Budgie - 5
BE - 3.5
Alan -2

Budget: Green Figleaf for Clegg's Shrunken Manhood

And so it came to pass as we foresaw back in January: Osborne has scrapped one of our few 'green taxes' the Fuel Duty Escalator (a move funded personally by CU in a noble & selfless gesture, via additional North Sea taxes to make good the reduction in Duty).

Proving once more that when push comes to shove, GDP trumps GHG. Come to that, public protests at the pump trump GHG as well. So what price the rest of the green agenda ?

Green fig-leaf, more like - just enough, perhaps to cover Clegg's shrunken manhood. The Green Investment Bank might just, one day, be allowed to issue debt. And the much-trumpeted 'Carbon Price Floor': which is in fact another tax, though it has the spin-off effect of being a windfall to existing nukes (= EDF) and wind-farms. (And no windfall tax - FFS !)

But does it satisfy the greedy greens ? Does it Hell.

'Ben Caldecott, head of policy at Climate Change Capital, said that although the carbon floor price would benefit investors in low-carbon generation, it did not give certainty because the level could be changed in future budgets. To give investors real certainty, he said, the level of tax should be guaranteed by long-term contracts.

"To highlight why low carbon investors might find it hard to trust this new tax based mechanism, just look at what else was announced today – scrapping the planned rise under the fuel duty escalator. The same could happen to planned rises in the carbon tax that sets the carbon price floor."'

Well spotted, Benny-boy: you've been reading C@W. He might have added last week's back-tracking on subsidies for solar farms. And Air Passenger Duty. GDP trumps GHG.

And the rest of Crapper Huhne's 'electricity market reforms' ? They will all go the same way as soon as the resulting electricity price-rises start hurting the government in the polls. It doesn't take long.

So: energy policy once more unraveling. The only thing that will keep the lights on is $150 oil followed by serious efforts at energy conservation, renewables that don't need subsidies at those prices - and demand reduced still further by another recession.

Switch off the light as you go, CU ...


Wednesday 23 March 2011

Not a boring budget for me

George Osborne delivers his budget speech
I just need to say; wow do I hate George Osborne. What magnificent ***** he is.

People always say your paranoid, 'they' are not out to get you...

Well Osborne, who I have never been slow to criticise, has his revenge.

Today's budget has cost me £10,00 on the nose thank so to the collapse in share prices of our North Sea oil companies. Such companies have been doing really well of late, discovering bigger fields and eeking out a longer future for the UK as an oil producer - all the time with 50%+ of the profit going straight to the Treasury.

Sadly in recent days our lunatic attack on Libya has pushed up the price of oil, along with the results of our failed Middle East foreign policy. So to help the Government have decided to take a couple of pence off a litre of fuel by taxing our own oil industry (not Gaddafi's obviously!). It is a real budget gimmick too, petrol is up over 40p since last summer so a couple of pence neither here nor there.

The huge tax rise has really affected the City view of the smaller North Sea oil companies though.

And for me, this is the tipping point, they took child benefit away, I welcomed it. They put my taxes up to 65% by taking away my personal allowance. I grumbled but put up with it. They raised VAT, sigh. They allowed inflation to run away and I moaned a little. They even attacked my trading by upping capital gains tax and I was ok, because it was to pay the deficit.

But this time, this is it, now the Government have taken to smashing directly my portfolio. It is a purely personal attack on one of my last attempts to keep earning. Well I am never supporting the Tories again. Whatever I try to do the Government rob me; once you add in VAT, council tax, petrol and insurance taxes I am paying directly over 2/3rds of income to the Government.

Singapore or Switzerland?

The most boring UK budget in years...

Yup, its all set up to be a damp squib; no firecrackers, no alcohol (taxes up), no smoking (taxes up) and no nookie behind the bike sheds.

Yes today is budget day, a day normally associated on this blog with days of pre-amble and err..insightful comment (by those who leave comments).

However, I have found nothing even worth thinking about this week in comparison to previous years. There was the inflation non-shock of yesterday and that is about it.

George Osbourne did the heavy lifting in an emergency budget last year. Also the Tories have continued to silly political tradition of making everything happen a year late; so most of last years announcements only take effect in April this year. As some are quite drastic, there will be few announcements for things next year. it is all a bit strange, CEO's in the Corporate world don't pre-announce sales and redundancies by over 12 months - but this is the public sector after all.

However since 2008 we have had emergency budgets, Alistair Darling calmly announcing the worst deficit numbers ever and the biggest debts ever, tax rises aplenty and general calamity. This year is different, this year is dull  - and that in itself is a welcome improvement

Tuesday 22 March 2011

Back to Business: Ofgem Roars, No-one Trembles

From grand energy strategy to the nuts & bolts of the market. Ofgem has decided it smells a rat in the retail gas & power markets, and among its various conclusions & proposals it wants to redress to a modest degree the vertical integration within the electricity sector.

Well, b****r me. And who exactly was it that allowed the nicely non-integrated industry of the late 1990s to re-integrate via mega-mergers in the following decade ? This includes the final nail in the coffin, the waving-through of the purchase by EDF (biggest short position in the UK) of British Energy (biggest long position) just a couple of years ago, with the predicted and baleful consequence of a reduction in wholesale market liquidity. As Paul Golby of E.on responded:

... he was "sick and tired of being threatened every couple of years with the Competition Commission". Pointing out that Ofgem CEO Alastair Buchanan had been in post for eight years, he said if "after eight years you say the market isn't working, is that my fault or the regulator's?"

Indeed. There has been no shortage of voices arguing against allowing vertical integration every step of the way.

But do the much put-upon 'Big 6' really care ? Not while Crapper Huhne needs them so badly for his grandiose 'decarbonisation' plans: (they know that
several of his 'Electricity Market Reforms' are directly inimical to enhanced market liquidity). And that's for a little while longer, I'd say: although the whole game will probably come to a juddering halt inside the next year or so when 3-figure oil prices prove stubbornly robust; neither nukes nor full-scale CCS plants get commissioned; and inflation & GDP take their rightful places centre-stage.

There's other sport to be had. Yesterday's coverage of this on Newsnight featured a little lecture on how the UK was failing to achieve the pre- conditions for competitive energy markets from non other than Herr Walter Boltz, the Austrian Energy Regulator. This would be Austria, the country that hosts the gas system conveying the largest single source of inbound gas in the EU
(Russian imports via Baumgarten), and which somehow manages to squander this vast potential liquidity in the least liquid, least competitive gas market hub in Europe, the CEGH. Thank you, Walter, we'll call when we need you.


Risk On?

Last week the markets were in one of their periodic fits of crisis. The Tsunami and Nuclear Crisis in Japan, allied to problems in Bahrain and then Libya made conditions perfect for a huge flight away from risk equities and into bonds. Even commodities and Gold suffered.

This week the turnaround (including a bit of Friday too) has been pretty strong, maybe all those worries were not so bad after all? Actually, nothing has really changed. There is no progress at the Fukushima although the irrational fears about some sort of major fallout incident have receded. In the meantime the US/UK have started a new war in Libya which has in some ways created more instability by preventing Qaddafi from ending the rebel revolt. Nothing has change in Bahrain either except the lack of international focus on the country. Indeed, in Yemen and Syria the Arab revolutionary fervour is burning ever stronger.

So in many ways it is strange that the markets have bounced so strongly, is it the famous Dead Cat Bounce or is it they were too oversold? As usual, these things can only be worked out in hindsight but it will be interesting to see.

Also interesting in the crash of last week is the phenomenon of linkage across most asset classes. Gold and Silver fell 3% and the FTSE fell 5%, oil fell nearly 10%. Only the US dollar and treasuries/gilts do well in the new market of sell-offs. Perhaps when Armageddon arrives Gold and Silver won't quite be the havens of goldbugs dreams

Monday 21 March 2011

Libya: The Great Game, Part 94

There has been occasion hereabouts to make reference to conspiracy theories quite recently, (I shall return to the silver markets another time).

And when we see deployment against Libya of armed forces from not only Italy, France and the USA Med Fleet - all fairly proximate - but the UK, Spain, Canada, and Denmark*, within hours of a widely unexpected and essentially unheralded UN vote ... you may be sure the plans were in hand for quite a while before that.

I have commented elsewhere that NATO is in fact quite good at this planning & deployment stuff, particularly of air forces; and France never left the command structure even when she absented herself from actual NATO formations for many years. But even so. What's going on ?

It isn't difficult to 'follow the money', and notice the sheer quantities of oil & gas involved. France has always conducted itself vis-à-vis Algeria so that national champion Total has been able to conduct uninterrupted operations in that country before, during and after the 1960's war. Likewise, it is a pressing feature of Spanish, French and Italian policy to exert as much control as they can to stem the tide of African immigration. Neither of these factors is new, so evidence of pre-planning is not to be marveled at.

But even so. We read a lot about how aggressive China is in its quest for control over raw materials; and how Russia has been gradually reasserting hegemony over the natural resources of the FSU. But these could be painted as rank amateurs when it comes to the decisive colonial instinct: China can barely restrain North Korea, and Russia's 2008 adventure in Georgia amounted to a demonstration of its ineffectiveness.

On the subject of Russia, early reports indicated that they had "stepped up gas supplies to Italy to 2.5 times normal levels after Italy's supplies from Libya were cut off". This may be genuine assistance to the Italian cause, but it may be no more than the Italians nominating winter-maximum supply levels during relatively mild weather, which (in March) they are contractually entitled to do at their own discretion. Nonetheless, if Moscow had given the nod for curtailment, Gazprom would have complied. It is thinking like that which leaves Germany on the sidelines: they pride themselves on being very strategic in their energy policy, but it all boils down to a lame single strand: grovel to Russia and, errr, grovel to Russia. (Oh, and keep those lignite mines open, just in case.)

So - it's not difficult to paint this operation as part of a considered plan, at very least to defend certain lines-in-the-sand as regards stability of access to oil & gas, plus damping-down of reasons for refugees to hit the boats. When push comes to shove, somehow wind-farms don't quite cut the mustard as the future of European energy supply. Actions (or non-actions) in Egypt, Bahrain etc can be seen in the same light: ditto the fact that Qatar - small in numbers, huge in gas supplies - is onside. Oh, and did we mention that little Qatar is perilously positioned as regards Iran ...

To conclude: we can follow this camel-train of thought all the way to the most lurid conspiracy-theories: see this, this & this. But at an absolute minimum we are seeing a measure of self-interested post-colonial steel that many assumed the Old Continent had completely lost. The traditional Capitalism-at-Work-by-other-means, if you like. Russia and China mere bystanders - for the time being, at least.

So: watch Turkey, watch Iran, watch gas prices. This could be a very serious indicator of the shape of politics to come.


*PS - Denmark is interesting. They were deeply worried by German reunification, and vowed to demonstrate that their soldiers no longer wore hair-nets, so to speak - e.g. deploying tanks (which actually opened fire) to Yugoslavia to make the point. I'd guess today's air deployment is more of the same.

Saturday 19 March 2011

Interesting article for the weekend

Hard to tell what is Pseudoscience and what is not? Of course magnetism is a huge factor in sustaining life and controlling the earth - so I was interested to read more about it.

This article seems pretty informative though.

Freedom in Britain, 2011

Prompted by the estimable Anna Raccoon, can I suggest that anyone who cares a whit about personal freedom read this - a lengthy but mind-blowing set of Hansard minutes. You'll know whether you are interested or not just by reading the first few pages.

No-one, I think, underestimates how difficult and ugly some social-services cases can be. But even disfunctional people must have the right to appeal their cases openly, and contact their MPs. And if the courts, the lawyers and the council officers get the taste for beating up on little people, it isn't long before they get into the habit generally.

Much as all 'establishments' like to extend their powers, I can't imagine the Government has any real interest in letting this state of affairs persist. They are pretty busy just now, what with the economy, Japan & Arabia. But less dramatic things are important, too.

Thank heavens for diligent back-benchers.


Friday 18 March 2011

Libya Intervention - Realpolitik on the hoof

So we go to war with Qaddafi at last and the markets react by going up half a percent. Unsurprisingly Oil has jumped up too to $103 per barrell for WTI.

As there has been no action yet against Qaffadi I have come to the conclusion that the yanks are positioned to do it right with their carriers and the planes are no in place yet in Cyprus or Sicily to take any action. Perhaps this suggests the UN Resolution rather took NATO by surprise?

Anyhow, Qaddafi is going to be very keen to get this war over quickly and will send his troops into Benghazi very quickly now. So that is not going to end well for the people there. Perhaps that won't bother they yanks as there angle on the population of Benghazi is skewed by this - for them indeed Qaddafi maybe doing them justice?

It is very complicated which inevitably means it will last a long time and not work out very well. In addition, how do the Saudi's/Bahraini's  feel now that the US has given backing to overthrowing Middle Eastern Dictatorships who attack their own protesters?

Thursday 17 March 2011

Question time

David Dimbleby is joined in Eastbourne by a producer who is too clever by half and has actually assembled a parody of a QT panel that belongs on Not the nine O'clock news.

Baroness Warsi, { Once labeled anti-gay by Labour. How will she cope with the ugly sisters?}
Chris Bryant, { Ultra annoying political version of Graham Norton, only without the latter's understated subtlety.}
Simon Hughes,{ Another run out for the anti-government, government minister. Can be good on his day.}
Caroline Lucas { the only green in the village.} and
Kelvin MacKenzie. { The right-wingers, right winger.}

BQ feels very ill, so will probably not watch. And Mrs Q has organised a paddy day party too. So double ill. Answers may be taken from twitter.

Update 18/3/11 {few changes - Malcolm still rules}

Malcolm Tucker -- 28
BQ -- 27.5
Timbo614 -- 27
Miss S-J -- 26.5
Botogol - 26.5
Nick Drew -- 24
Appointment to the board - 21
Hatfield Girl --19
Miss CD --19
Hovis - 19
CU - 18.5
Dick the prick -15.5
Anon -12
Steven_L - 11
Measured -- 10.5
Andrew --9.5
Woman on a Raft -7
GSD -- 6.5
Budgie 5
Mark Wadsworth
- 4.5

Blue Eyes - 3.5

BQ chooses -
1. Should Britain ban nuclear power
2. Is the no-ish fly zone too little, too late.?
3. VAT on fuel. Is labour right to pretend they weren't going to do it as well?
4. Should Hague have personally made sure rescue workers can get a visa for Japan?
5 Should we worry more about racial equality in Midsomer or the fact that the murder rate is 50 times the UK average?

Japan Crisis / Bahrain Crisis = stasis?

The latest chart of the price of oil makes for interesting reading as the price of it remains under $100 a barrel. This is a big jump up from earlier in the year, but much less than when the Libya crisis started a couple of weeks ago.

Yet this is at a time when Japan has shut its Nuclear facilities as has Germany. These countries are going to need a lot more gas and oil in the next few months. Longer term too, there will be increased pressure on fossil fuels with the review of Nuclear power globally.

This is all before we get to the Shia/Sunni stand-off in the Gulf. Iran and Saudi Arabia are now interfering in Bahrain which looks increasingly unstable. This region of the world is not Libya, it provides a significant percentage of the World's oil.

However, as of today, markets seem to view the downside of economic growth thanks to the Japan catastrophe as more than matching the troubles in MENA. I doubt this situation is going to last...hopefully Japan will get control of its nuclear issue (I keep saying this everyday and it keeps not happening sadly); but the result of this is going to be a big spike in oil prices.

Wednesday 16 March 2011

Where is Labour on Nuclear Power?

Who is Meg Hillier? Anyone? She is the Labour shadow for Energy and Climate Change.

A quick review of her recent pronouncements is very revealing about the current lack of strategy within the Labour party and their total unreadiness for returning to power at all.

She is to be seen running around the country promoting worthy green, expounding on purely 'Green' issues. having nice conversations about how nasty the Coalition is with media like 'Business Green.' Or wittering on about the creation of 'Green' Jobs - a term where being polite you could say the meaning is somewhat ambiguous.

And that is it. No comment on the events in Japan, which is very telling. Labour had a terrible record on  Nuclear power in Government. it lefty sandal wearers dead against and Blairites all for corporatism and supporting the big energy companies who were lobbying for it.

The mess, as my co-author Nick Drew has said many times, has left the UK with no energy strategy and facing the potential for either the lights going out in 2014/15 or huge bills from France.

None of this is currently acknowledged as Meg Hillier stays on the safe ground of appealing to emotions only and refusing to address any real macro issues; just like the Labour Government's record on Energy when in power.

Tuesday 15 March 2011

Risk Off

This is the common phrase used in the City to suggest that things are not looking good and you should be buying defensive stocks and getting out of high risk investments. Certainly AIM and other risk indices are well down on the worrying situation in Japan and the tragic disaster there.

But it is not just Japan, Iran is making incendiary statements about the move of UAE and Saudi troops/police to Bahrain. In Europe we know the clock is ticking on Spain and Greece as to when they default on their debt.

All of these are major global risks and the markets are not going to like them. To be frank, neither to do I; can any readers remember a period when there was so much macro instability in the world at one time?

(I remain an optimist, the Japanese will somehow save their situation from the worst nightmare, the ME will quieten down once Qaddafi wins [gutting!] and Germany will agree a haircut).

The Phoenix Phenomenon

In 1988 the most ghastly accident occurred on the Piper Alpha platform in the North Sea, killing 167 men. The cost of the commodities we consume so enthusiastically is not measured in $ alone.

The Cullen Inquiry that followed did an excellent job in identifying the measures required to prevent the recurrence of such an event. Its recommendations were accepted worldwide: on the engineering side this primarily involved the installation (and retro-fitting) of non-return valves to protect any manned platform from the possibility of fire being transferred along a pipeline. This approach works the trick and it is just lamentable that so often it takes a tragedy to move us forward. But,
uncomfortable though it may be to acknowledge, that is the way of the world.

One immediate outcome of Cullen was that the material cost of offshore oil & gas activity looked set to soar, and it was widely assumed that the industry would decline: new manned offshore platforms would, it seemed, rarely be economic.

However, after a brief hia
tus it was realized that if unmanned platforms could be made to work, new developments might once more be viable. The technology was just around the corner and, with a couple of other engineering breakthroughs a new generation of developments were based around small, unmanned, 'single-lift' platforms that could be prefabricated onshore. Paradoxically, the costs of development thereby fell significantly, giving a massive boost to an industry that was reeling from the disaster, and permitting the safe extraction of far greater reserves of oil & gas than had seemed possible.

It may seem heartless to recount such a story at this time. But when thinking through the consequences of Fukushima, as I am sure we all are, it's worth having a full perspective, including the counter-intuitive possibilities. It's the way of the world.


Monday 14 March 2011

The New Politics of Nuclear Power

Cards on the table. (1) As readers will know I am strongly opposed to subsidising the building of new nuclear power plants in the UK; (2) I am not any kind of engineer. As such, I very much hope that this sanguine assessment of the situation at Fukushima is correct.

But base-level 'democratic' politics is at best lightly concerned with fact, and it is at least a strong possibility that
as regards new nukes the terms of trade, only recently minted for the benefit of EDF et al, are set to change.

Wind back the clock to 1986 and Chernobyl, a Soviet plant that was hardly representative of worldwide state-of-the-art nuclear technology at the time. Yet, when it blew, the CEO of a then-obscure Texas gas pipeline company (Enron) immediately predicted that no-one would build another nuke in his lifetime. But people still need electricity, he reasoned, and thus correctly foresaw, and triumphantly acted upon the 'dashes for gas' that swept the USA, then the UK, and subsequently went fairly global.

In 2011 the UK, as elsewhere, is on the brink of what could be - or could have been - a mighty nuclear renaissance. After lengthy lobbying by EDF the stock was sold, the press was squared, the middle class was quite prepared - yea, even unto Chris Huhne, against his better judgment.

What happens next ? Obviously we don't even have a definitive outcome at Fukushima, still less a measured analysis. But I'll wager any money you like that at the very least (a) the timetable for any programme of new nukes in Western countries (already slipping badly for reasons inherent to its own dodgy dynamics) has just taken a considerable extension; and (b) that the costs have just gone up significantly**, and the economics correspondingly down. At worst (if you are Areva) the politicians take fright & the shutters go back down for another decade or so.

But the pressing need for more generating capacity still needs to be met. For sure, it will be offset by a steeply rising oil-price. (Japan's need for reconstruction on a gigantic scale will potentially drive up commodities prices still further, as did the Chinese rebuilding after the Sichuan 'quake of 2008). However, just as 25 years ago, the main effect is likely to be yet another round of dash-for-gas. Perhaps high-tech coal will also get a look-in. Even some renewables will become genuinely economic eventually ...

As we've endlessly written, there's plenty of gas around - at the moment. But it will look different after half a decade of 'new dash'. Just as with Enron back in 1986, the race will be to those who make simple (& correct!) judgments on these things and act boldly. Memo to Huhne: this doesn't need subsidy (which we can't afford anyway) but it does need you to turn your politics around, as quickly as possible.


there is the possibility of a counter-intuitive opposite effect, which I'll write about later