Question Time; there's no money left special.

I'll put it up now because this is the Quango busy time and might not get time tomorrow.
{Point to note. We have never taken so much coin across the counters. People really are raiding the savings jars. its a pain in the ass and a very worrying sign. It takes a family a long time to build that whisky jar back up.}

David Dimbleby is joined in Dagenham by Ken Clarke, Chuka Umunna, Deborah Meaden, David Frum and Mary Bousted.

Just two more to go. Including this one.
If you're on 30+ now, you need a really big win if you want to stop the Bot.

Leaderboard as of
18/11/11

Botogol - 37

Appointmetotheboard - 34
BQ - 34
Measured - 34

Budgie 33.5


Nick Drew - 31.5

Dick the Prick -31.5
Hatfield Girl - 31
Philipa - 30.5
Timbo614 - 30
Sebastian Weetabix - 30

Hopper - 29½
Mark Wadsworth - 29.5
Miss CD - 27
Miss S-J -28
Hovis - 26
Malcolm Tucker - 26½
GSD - 25
CU - 24
Jan - 19

Andrew - 15½
Sean -9.5
Woman on a raft - 8

Electro-Kevin - 4
Anon {1} -3½
Alex - 1½
James Higham -2 {you'll get the hang of it one day JH}

The Attritional Politics of Austerity

No Plan B, then. General Osborne has concluded that his fundamental positioning cannot be improved upon at this stage in the proceedings (von Moltke rules), and so his banner remains firmly planted atop Hill AAA. Everything else is just tweaking, not to say fiddling. It's not wrong to tweak intelligently, and to keep as many of the troops as busy as possible, particularly as there is a bit of a lull before the main engagement. But that's all it is, and improvements to our situation will be tactical at best - a little redeployment of resources here, some extra trench-digging there.

So grinding austerity it is, with inflation to boot.

We've had austerity before: the Depression, the late '40s and early '50s: but the British were more self-disciplined then, and battle-hardened. Literally. If we demonstrably weather the onslaught about to hit the eurozone then perhaps everyone will glumly accept austerity as the price to pay for a strategy of defending the AAA.

In base political currency it is fortunate for the Coalition that both Ed M and Ed B are unconvincing and unattractive splutterers. In time, Labour will find a more compelling voice - but maybe not for years: when you've lost credibility, it's gone (ask Hague, or IDS, or Howard). Huhne will probably soon be wandering loose on the battlefield, one way or another; but otherwise the LibDems have dug in alongside the Tories: Marine Ashdown was steady in the ranks yesterday, and young Captain Alexander knows his duty. So perhaps it isn't a party-political issue so much as a government dealing directly with its unhappy people.

Cameron needs to find a way of speaking to this, a 'narrative' in the jargon of the day. Lots of C@W regulars seem to despise Cameron. I'd say there's no-one better in the Commons for this right now, so let's just get on with the slogging-match.

ND

Autumn Statement failure

Yes, the hallowed speech has not even been uttered yet and already things are a foot. Mr Osborne has a poor hand to play and as those of you who indulge in card games know, you can't bluff forever with a pair of 3's.

The markets are about to show the UK what reality looks like.

Today's statement is along the right lines, some minor cuts, some attempt to increase demand, but nothing too tricky as there is still no money left. However, this won't really do for the long-term. We are in a crisis; this should be an emergency budget with radical solutions, not tinkering. Not many chances left now before the IMF come and do it for us.

However, it is the lack of demand that is the big issue. There is no demand in the UK economy because nobody, no even rich people, feel they have any to spend. Corporates don't want to take the risk either. The fantasy of credit easing is just that, businesses that can make it can borrow, those whining are poor risks.

There is only one way to address the lack of demand and that is to give people back some money. So that means NO cuts to social welfare, much as this is needed in the medium term. Welfare money gets spent. It also means there is a need for big tax cuts of people and businesses to give them more money to spend. These tax cuts have to be paid for by some Government cutbacks that have the least effect on demand - so subsidies can go, foreign aid can go, the defence budget can take another hit and most importantly, the NHS can take a hit - notably pay for GP's which averages close to £140,000 a year, up from £70,000 in 2004. Thank you Mr Blair - I recall him saying ' it is right we make our doctors and nurses the highest paid in Europe.'

Of the taxes to cut, VAT is an easy one, but not very well targeted, capital allowances for business and R&D credits are better because you can only get them if you spend money. For personal taxes, reducing NI is surely a way to go when you cut NHS spending.

However, as stated at the beginning, none of this is going to happen. Airy fairy promises about infrastructure spend are going to be made and sadly, the markets are going sooner or later to wake up to the fact that the UK is in a worse financial hole than Italy or Spain. Our Gilts will collapse in value (massive shorting opportunity here, the price of Gilts is not going any higher) and yields close on 5% at least, maybe worse. The only way to avoid this will be the Bank of England buying up the market with more QE - but at what point does the world notice that we have bought all our own debt with printed money - where does the value of the pound go then. Way below parity with the dollar, and probably parity with a real hard currency like the Aussie dollar.

I Will Lift Up Mine Eyes ...

One should periodically pause for a bit of philosophical reflection. Here's a short essay that should set us all thinking. How many of our basic and unstated assumptions might fail in the years ahead? Broken Britain doesn't get close - this is the broken world.

"not some post-apocalyptic nightmare, but simply a place where two founding empirical assumptions of traditional political philosophy – especially in the Rawlsian liberal tradition – no longer apply"

In true 21st Century fashion, the essay is a trailer. I may have to get this guy's book.

For Christmas. That'll do the festive trick.

ND

On The Brink Of Madness

Word is that we are going to get Plan B this week. I suspect the Boy Osborne will struggle to make himself heard over the crashes and screams issuing from the other side of the Channel, but maybe he'll be happy enough about that, in the circumstances.

Trailed for some months, and now being briefed 'properly' in the usual manner, has been a package of measures to ameliorate the effects of Mad Crapper Huhne's energy policy on heavy industry. A new subsidy to offset the cost of an earlier subsidy. We could all name a simpler way of going about this.

What's really mad is that the whole internal logic of having electricity consumers pay for Huhne's schemes is to make life more difficult for heavy energy users. There are only four proven ways of reducing emissions at the national level on a sustained and large-scale basis, three** of which involve beating up on industry, viz de-industrialisation, recession, and driving efficiency via high prices. Only the last stands any chance of succeeding at the global level, since the others just drive industry abroad, where their emissions are likely to be greater per unit of production. And even if some selected heavy industries manage to lobby for compo, this is self-evidently no comprehensive or long-term solution.

It is a crying shame that the combined forces of Osborne and Cable can't take on and crush Huhne in Cabinet. The costs in treasure, aye, and in blood, of their failure to do so will be tangible: wasted cash, needless imports, dead factories, unemployed workers and frozen grannies. Can we afford this just now? Ever ?

ND


**The fourth - replacing coal-burning with gas - is much too obvious and constructive to merit Huhne's favour. A potential fifth - replacing old coal generation with new, more efficient coal plant, has yet to be demonstrated on a large scale.

Now That's What I Call Capitalism

... in the person of Kostyantin Zhevago, 37, the youngest self-made billionaire in Europe, net worth £1.5 billion. "I was not myself from a rich family", he says. But overall this doesn't seem to have held him back too much.

"He was appointed chief financial officer of the Finances and Credit group, a large Ukrainian bank in which he would become the major shareholder. ... In the mid-nineties, having risen to be president of the bank, he and two partners paid $160 million for the newly privatised Ferrexpo iron ore mine at Poltava, near his childhood home. He later bought out his partners and ramped up production. In 2007 Ferrexpo was listed on the London Stock Exchange and added to the FTSE 250 Index. Today the firm, of which he owns 51 per cent, is capitalised at £1.9 billion."

OK let's do the math ... born in 1974 and he's president of the bank aged, what, 22 or so? with just a part share of $160 million to his name - bit of a late developer obviously, but he gets there in the end, so fair play to the lad.

He's also a philanthropist - just given £100k to an educational campaign being run by the Evening Standard. "Reading is the gift I hope to pass on to these young children". So who says capitalists don't pay their dues ?

"Bought out his partners", hmm ...

By the way, that's 'Reading' as in books, not Berks. Though he probably owns that too.

ND

Scoreboard

Leaderboard as of
18/11/11

Botogol - 37

Appointmetotheboard - 34
BQ - 34
Measured - 34

Budgie 33.5


Nick Drew - 31.5

Dick the Prick -31.5
Hatfield Girl - 31
Philipa - 30.5
Timbo614 - 30
Sebastian Weetabix - 30

Hopper - 29½
Mark Wadsworth - 29.5
Miss CD - 27
Miss S-J -28
Hovis - 26
Malcolm Tucker - 26½
GSD - 25
CU - 24
Jan - 19

Andrew - 15½
Sean -9.5Woman on a raft - 8

Electro-Kevin - 4
Anon {1} -3½
James Higham -2
Alex - 1½

Pre Question Time. The 'Death tax' returns.

THREE

David Dimbleby is joined in Bath by Chris Huhne, {Greener then Robin Hood's tights. The speedy minister is known as Dr Lucky. And he is lucky. If fate hadn't been so kind, he'd now be leading the Liberals . Liz Kendall, 2010 new broom Labour MP. Shadow min for old people. Another one of the many grammar school head girls in the Labour party. Daniel Hannan,outspoken MEP and journo, super-euro sceptic. Had a massive shock when Iceland, his model country for the anti-EU, voted to join the EU in 2009.
Justin King Sainsbury's chairman and someone who knows his onions. Done a good job,
and Jimmy Wales.{the wikipedia guy! I didn't know. I thought he was one of Princess Anne's children}

looking at the lineup makes me feel confident enough to go early
1. The old folks charter. Home care breaches Human Rights. So says axe grinding human rights commission.
2. Maddie's mum, Alan Partridge and floppy lay into the press. Its a very strange inquiry. I have zero sympathy for the press but it does seem a tad, prejudged? freedom of the press/ internet.
3. Egypt. We were told Twitter had saved the Arab world without bloodshed. So what's going on?
4. Is Chris Huhne's new 'take out a loan now, while you can't afford it, and you'll save more overall than you've borrowed because of the increased electricity costs of green energy policies by 2020,' the stupidest idea since someone said "I've 10,000 tons of gold taking up valuable vault space that I want gone by Sunday and I don't care how much I get for it."
5. New hire and fire rules. Is this the most Dickensian government since Thatcher?

Government Borrowing on track

It is a small story really in today's world of a collapsing Spain joining u-bend bound Italy, Greece and Portugal. But yesterday the Government did announce that despite the economic downturn this year, it is still on track to meet its deficit reduction targets for 2011/12.

Which is quite some achievement, and in fact has only happened because £4 billion of extra taxes have been unexpectedly collected (pity those taxpayers). However, as always, the really interesting bit is the lack of actual, er, cuts. Indeed the usual suspects of Health, Education and Social Care are being restricted to just 1% growth on last year  - but the overall spending is still going up. The rate of increase is being reduced and taxes are coming in to help change the balance, but we are still some way off seeing any actual reductions.

I suppose we should be grateful for small mercies and with inflation at 5% real-terms cuts are being made, if not nominal. We are though a long-way off actual cuts though - who would have thought it if you just watched the BBC and read the papers?

The really good news though is that timing is everything. As the Eurozone collapses with shambolic new apolitical Governments all the rage, UK Gilts are currently trading ever more cheaply as investors flee an area where there is no fiscal or monetary certainty for one that has a plan and is following it through.

Here is something you won't see me write very often; well done George Osborne.

Equity Trading Mea Culpa, Part 11

This year for trading equities started so well - too well as I should have know. My portfolio was up 20% by February and as my hand hovered over selling to take profits, my greed got the better of me.

A painful lesson has since been learnt, greed is not good.

Unfortunately a couple my main holdings dived so quickly that selling out was not even really possible. So now at 50% down on the year, my portfolio continues to flatline and gone are the day so gleefully updating the blog! Instead, it is with a deep sigh that I try and make the best of things.

Clearly the Euro-area break-up (which I foretold, to make matters worse, not even taking my own advice, moronic as even my wife reminds me) is going to be with us for a good few months yet and may well precipitate an even bigger fall in equities.

On the other hand, constant money printing by the Bank of England also will help to temper any falls and make equities a good long-term bet. Certainly UK Gilts cannot go up in price anymore. But whilst the markets rage, there is little to do.

In amongst some disastrous holdings, CAZA, AST, which are both 80% down on the year and unlikely to revive within 12 months, there are some good bets still, particularly at these prices:

EMED - A new Spanish Government means that surely within a few months permission to start mining at Rio Tinto will be given. With the price at 7p and operating profits for year one expected to be worth that 3p per share, there is a long way to go for this one. Long time readers though will note I could have written this 3 years ago more or less...hope springs eternal.

GKP - Actually flat on the year, finding billions of barrels of precious oil every few months makes this a monster bet. Lots of complex politics in Iraq holds it back, but with Exxon moving into Kurdistan a break in the political deadlock maybe approaching - with that this is another share that could easily double from its current price.

XEL - Xcite Energy, sigh, what a rubbish year after a good start. Still though next year will see it start producing 20,000 barrels of oil a day in the North Sea and a become a solid safe company. The highs of 425p per share are a long way off. But at 118p today there is huge upside with a 6 or 12 month view.

At least everyone is losing, even Anthony Bolton.

Coalition fails Housing Econ 101

In an unscheduled break from the unremitting coverage of the euro area pre-Xmas break up, a change of focus for today.

I have a bad cough anyway (2 weeks and counting...), but this was made much worse this morning when I read about the latest wheeze of the Government to push a 'growth strategy.'

Why on earth would we subsidise people's house buying? The single biggest driver of costs in our economy is housing. If we could drop our house prices 30%, rents would be cheaper, mortgages would be cheaper - in fact employers would be able to pay people considerably less to have the same standard of living. Even mobility would improve as people from the North could actually come and live in London and the South East.

Lower house prices are the best route to improving our international competitiveness. Now, normally no one is in favour of this because lower house prices will also destroy a huge chunk of people's savings and all our mortgage banks too. Long-term though, this is a no-brainer.

On the one hand the Coalition says it is in favour of building more houses, another good way of helping to reduce prices - somewhat impacted by the huge immigration levels that push demand - but still sensible.

But really, how can they do these two things at once without seeing the inherent economic contradiction:

Subsidise mortgages = allow people to buy property they can't afford with slim equity

Build more housing = reduce prices, therefore trapping in negative equity anyone who only had slim equity to start with...

Dear oh, dear, this is really Lib Dem ability level of thinking. I have not even got around to mentioning the super low interest rate environment that has helped prevent a crash in house prices during the recession, which will instead now happen when interest rates normalise in the next few years. Long-term, there is certainly little likelihood of house prices rising from here.

So, Farwell (for now) Martin Johnson

Oh dear, it really didn't work out at all. If ever proof were needed that generalship and strategy are entirely different from leadership and execution, here it is.

No-one expects a manager to be able to cover all the bases himself, and Heaven knows the RFU can afford as big a coaching team as it needs. So he's no tactician ? Hire one. Doesn't know back play ? Get a specialist. etc etc.

But ... he does have to be able either (a) to select players, and then frame the strategy to suit the chosen team, or (b) devise a strategy, and select accordingly. And in particular he needs to be able to pick a captain - he of all people should know that.

Instead (to take just one example) England has a tremendous pool of back-row talent, and no coherent back row: compare and contrast with the one that was driving Johnson's arse forward all those years. Oh, and no captain. Whatever Moody's undisputed talents and bravery - leading from the front, fine, but - being permanently face-down in the mud after yet another over-the-top solo charge doesn't really do the job.

Whatever Clive Woodward imagines, the 2003 World Cup belongs exclusively to Johnson; and no-one can take that away from him. He's still a thoughtful and deeply knowledgeable sportsman. The very best of luck for whatever's next.

ND

weekend rest

While we wait to see if the Euro is still here come Monday, a caption comp.

"Think about it. Take your time. Silvio and George chose wrong."

"Its not a Panzerschreck. Its a Lugerbefingern. And its loaded."

"No Tobin Tax? So !!!...You're name is also going on ze list!"

"Ann Widdecombe? Yes, I know her stylist well. Why do you ask?"

Can the Euro make Christmas?

I had written that headline a few weeks ago, I am pretty sure I would have ended up with no readers in short order. Today though, there is some (not much) plausibility to it.

As always lets review the day's news:

1. Spain and Italy bonds under 7% only due to ECB bond buying
2. ECB Finance chief points out that Germany has 82% Debt to GDP ration and is not safe
3. Reports that Japanese investors are liquidating Euro assets
4. Rumours in the City that Germany is preparing to exit the Euro
5. Realisation that Germany's funding commitments total nearly e500 billion and could sink the Country.
6. Cameron and Merkel meeting so that he can tell her the Financial Tobin tax is off.


So, another typical day in the Eurozone with each point being worthy of a crisis and yet this is just today's news. With no real plan the EFSF forgotten about already and continuing riots in the the new Authoritarian states of Italy and Spain, the clock ticks closer to midnight.

The worst issue is that the failure to grasp the nettle and move to a two speed euro or a managed set of defaults is going to make the end of the crisis even worse. Yesterday a senior Fund Manager at a major US institution remarked to me: 'It's all over and this is going to make 2008 look like a picnic.'

Oddly, the more people tell me that the more I think something will turn up - the general view is often wrong - but what that might be I can't see.

Question Time : Its the Tories, isn't it? edition

FOUR!

David Dimbleby is joined in Aberystwyth by Grant Shapps, Chris Bryant, Elin Jones, Will Hutton and Sir Simon Jenkins.

BQ's birthday today. Not staying in for a Welsh one when the restaurant beckons. Might be back in time for scores.
BQ says
1. Think of the children. Youth unemployment highest since 1994! {I'm class of '82. These youngsters don't even know what unemployment is.}
2. Are the English racist against Sepp Blatter?
3. Winter fuel payments. Is it right for rich pensioners to give their allowance to poor pensioners?
Isn't that the big soc in action?
4. Work Experience interns. Has Hazel Blears finally had a good idea?
5. Smoking in cars causes more deaths to infants than Malaria. Possibly. Lets ban it anyway!

Leaderboard as of
18/11/11

Botogol - 35

BQ - 32
Budgie - 31

Measured - 30.5
Nick Drew - 30.5
Appointmetotheboard - 30
Dick the Prick -29.5
Philipa - 28½

Hatfield Girl - 28.5
Mark Wadsworth - 28.5
Timbo614 - 28
Sebastian Weetabix - 28

Hopper - 26½
Miss CD - 26
Hovis - 26
Miss S-J -25
Malcolm Tucker - 23½
GSD - 22.5

CU - 22
Jan - 16.5
Andrew - 15½
Sean -9.5

Woman on a raft - 8
Electro-Kevin - 4
Anon {1} -3½
Alex - 1½

Northern Wreckage

Announced this morning is the sale of Northern Rock to Virgin Money for £747 million, with a potential for some more funds to come to push the deal over the £1 billion mark.

No doubt this will be spun as some achievement, getting a bank back to to the Private Sector. Of course, there is a slight issue here. There are two Northern Rock's, this profitable retail bit and the loss-making money sucking turd which is Northern Rock Asset Management.

Conveniently the nearly £8.2 billion of loans from the BOE still outstanding to Northern Wreck are to the Asset Management business. This business, although paying down the BOE loans, is still making losses of £250 million a year.

We don't have enough info really to decide whether this Asset Mgt Company will ever release enough assets at profit to repay the loans and its own winding up costs - let alone make a judgement on the true cost of support in terms of our Gilts rates which were so impacted by £30 billion of loans and £70 billion of guarantees. No doubt all of this will be hidden from Public View given the terrible nature of the decision not to let the business go under in 2008.

One question remains, why are none of the executives of the business in court. Their wreckless plan has cost the taxpayer billions of pounds - which equates to thousands for each taxpayer. I rarely agree with the trots of Occupy London - but where is the trial? Applegarth got a £63k a month pay-off instead.

Mr Drew Takes a Haircut

Being a big believer in diversification, and having no great faith in the FTSE, four years ago I invested one of those structured products: Protected Capital and Growth, meaning a guaranteed minimum 21% return - or more, if the FTSE over-performs - and my original investment is secure. Note how I didn't use inverted commas there, trusting soul that I am. You know what's coming.

So. Today Legal and General write to me. It starts innocently enough.

"We'd like to let you know ... oh? that's kind ... about an important change we've made to your investment ... and how it will affect what you get back when your plan ends ... but isn't that, err, 'secure', to use your word ? ... Your investment works by investing in a fund, which in turn invests in a number of financial institutions ... go on, I am beginning to get the picture ... These provide the return of your original investment plus growth potential."

OK, so by now I am guessing that the next bit will effectively read: "Or not, as the case may be." Right?

"The institutions invested in were: A, B, C, D, E, F, and ... wait for it ... Irish Life & Permanent plc."

Bastards !

"As you can see, one of the institutions was Irish Life & Permanent... Irish financial institutions are less likely to be able to pay back what they owe. We've sold this investment earlier than intended and received less than the original value ..."

16% less, in fact, resulting in a net haircut of 2.63%. AND it is not covered by the Financial Services Compo Scheme, it seems, because Legal & General itself has not failed to meet its obligations. Or so they tell me.

And this, I suspect, is increasingly what we will all be confronting as the postman makes his daily deliveries.

Still, good old A, B, C, D, E & F; and praise the Lord for diversification, eh? Until the next letter hits the mat...

ND

Youth unemployment goes through the million mark

Plenty of hand-wringing in the media will ensure on this news. The Government will get blamed and implored as usual that 'something-must-be-done.' Whatever it does, it will be interesting to see how little in published articles the few homes truths are ignored:

1. Education - We have created a huge amount of graduate over-supply. 73 Graduates applying for every job currently. The solution is less university places and less waste which the Government is actually doing, but it gets brickbats for this rather than praise. As for school education, a generation and more has been betrayed by low standards.

2. Immigration - These low attainment levels mean that people can come here from 3rd world countries and plausibly be better workers than our own people. A terrible state of affairs. One thing to try is to reduce immigration but this has proved challenging. Another would be to encourage people to take jobs and learn skills through reducing benefits - but this is not very palatable to hand-wringing types.

3. Age bias - the Government will do something to encourage young people into jobs, but in reality it is older people who need money to look after the young. Why should older workers by penalised? Is it really harder to get a new job at 19 than at 57? Addressing the lack of job demand and over-supply of labour through an age-based rationing system is grossly unfair.

4. Job Creation - UK Corporates are sitting on huge cash piles whilst they watch the Euro-maelstrom. meanwhile the Government is slowly cutting a few non-jobs away. To get more job we need more private sector investment which won't happen this side of the Olympics. To at least try and make it happen we could reduce taxes, but that will require a leap of faith in making further cuts to the Public Sector. Hand-wringing types will be frothing if they have read this far.

All in all, its a hard problem to which  at least there are some clear answers, but because the answers are tough and divisive and not cute and cuddly there will be inaction. My estimate is youth unemployment will stay over a million for at last 2 years, possibly more as the population is continually boosted with young immigrants.

'Allo 'Allo !

Someone's leedle tank seems to be on our lawn.


And she seems to be wearing the uniform ...

Quote of the Day: Godwin's Law Edition

News from the CDU's annual rally. Err, congress. Not 'rally' at all.

'Germany’s economic strength gives her leverage that policy makers who built the euro didn’t have. “[Merkel] can have much more of a German stamp on this political union than 20 years ago,” Brzeski said'.

Great choice of words Mr Brzeski, the whole of Europe is greatly comforted.

The Euro disease gets hit by Wideboy tactics

Blimey, even by their own poor standards, the Eurocrats have been at work today, undoing every positive with a negative. As a result, Italian yields have not moved and the markets are heading south again. Bravo indeed.

The main culprit today is on Jens Weidmann, President of the Bundesbank. Herr Weidmann has seen it fit to declare that the ECB is not the lender of last resort for the Euro. Which begs the question, who is?

Unfortunately for the Euro-member countries that is not a question that should be regularly asked aloud. Rather in the mind of constantly asking ones neighbour as to whereabouts of his spouse for whom you know has eloped with someone else.

With no lender of last resort the world's 2nd largest currency has ever decreasing credibility. All this on the day when Super Mario was appointed in Italy to save the Country from the hands of its politicians.

For all the the plentiful problems with the Euro a new one must be chalked up; communication. If senior representatives of the nations within it cannot but help undermine each other's attempts at fixing any problems during a major crisis then indeed the 'project' is doomed.

Silvio: the Opera

Time for a cultural outing, so we're off to the opera again ! This time, it's the tragi-comic Silvio, with a well-loved cast of characters. You remember the plot ...

* * * * *
Fabulously rich Silvio is sulking in the Palazzo Fribi when he hears a commotion. It is Toni and Cheri, two perennial seekers after wealth, who have come to Fribi once again in the hope that he will have a little something for them. Standing under his window, they sing the plaintive duet Deh vieni, non tardar (get yourself down here, don’t hang about !)

Silvio throws open the window, his face as black as thunder, and he calls down angrily: Follie! Follie! Sempre libera (You’re both mad ! Always after a freebie !). Cheri is non-plussed: you know we’ve always liked a bung, she says.

You lika bunga ? replies Silvio, and his demeanour changes at once. He invites them in, and sings a wistful aria: Caro nome che il mio cor (you’ve named something dear to my heart).

Once inside, Silvio plies them with wine, and once again listens to Toni’s well-rehearsed apology for his wife’s grasping nature: she was brought up a humble scouser, and consequently is rather keen on personal advancement – Toni sings La donna é mobile (she’s a terrible social climber).

Seeing Cheri getting increasingly tipsy, Silvio is emboldened and, turning to the audience, delivers the sly refrain: Dio! mi potevi scagliar! (Egad, I can have this scally!) When Toni steps outside to take a phonecall, the crafty Silvio leads her to a bedroom, and invites her to slip into something more comfortable, singing Eccomi in lieta vesta (come, put on this light chemise).

Toni returns to the salon and finds Cheri and Silvio gone. Guessing what has happened, he cries out: Io l'ho perduta! (yo ! the slapper has lost it this time!) - and rushes off in search of them.

To be continued ...

ND

MF Global: What Counts As Safe Anymore ?

A short while ago I wrote, can't recall where, that I'd assumed back in '08-09 the financial system itself might collapse - credit cards not accepted, wire-transfers not possible, funds frozen etc etc; but that apart from one Sunday evening when apparently the ATMs were nearly turned off, for most people this actually never really happened.

So - can we afford to be sanguine this time around ? Once again, I'm assuming not - and as Exhibit A we have the ghastly case of MF Global.

Hopefully not too many C@W readers have been personally affected by this; but some folks have been seriously harmed. Read this and gulp. When segregated client funds start going walkabout, the end is nigh. What - or who - is next ?

It's the reason (in my personal opinion) why sticking to physical is best if one wants PMs as a hedge against the worst. Even then, unless its under the mattress ...

ND

Euro-Meltdown: Hands on the Levers of Power

We've suggested that only the grown-ups get to play when the chips are down: and also that the big players have big levers to hand - Which They Will Use. Careful if you're in the way when it happens.

Well, the euro-chips are down all right. Who are the grown-ups now? The Germans are in no doubt: its themselves, them and a few of their trusties. That was the thrust of the Bagehot piece last week, and here's an interesting article from the Speccy consistent with that view. Many of us will doubtless have had lectures over the years from German acquaintances along the same lines: you Anglo-Saxons (oh the irony) and your irresponsible, short-termist market games - someone needs to be planning for the future !

Then again, perhaps they are kidding themselves. Is it inevitably to be the real Big Boys to sort out the mess ? Evans-Pritchard thinks it is.

And does Britain get heard in all this ? I'm afraid that to my ear the noises from the Westminster play-pen sound just a bit plaintive.

ND

Question Time comp: Pagliacci edition

David Dimbleby is joined in Newcastle upon Tyne by Michael Moore,{Lib Dem and someone who normally makes a bold statement, only to have it completely overturned the following day. He tries hard though.} Rachel Reeves,{Labour Mp: Ex banker but long time labour supporter makes her stick to party line, even when she knows its rubbish. Hopefully more than just a mouth on a stick tonight.} Nadine Dorries, {Batswoman, as she is known in the tea room. Plenty to say. Entertaining if nothing else. Professor Colin Blakemore {erm..?? {wik-wiki..} genius doctor,neuroscientist and total hate figure for animal rights protesters. Badly upset Tony Blair when he complained he wasn'tt allowed on the honours list for not being PC enough. I think I'll like him, and Stephen Pollard,{editor of the Jewish chronicle?}

[What is going on Dimbleby? This looks like a set up.. Well, you have all been warned.]
BQ goes with the early Q's

- Poppymania - Stand up to Fifa
- Berlusconi - - Can't wait to read the memoirs. HG can you get an English language copy of Angelo Rawnsli's "The end of the bunga-bunga party"?
- May or May not be telling the truth on immigration
- Healthcare .. Opening up privatisation by the front door
- Alzheimer's its alright to divorce says priest. What does the Rabbi say?

Looks like 5 more shows to go, including this one. So..in Tracey Island voice-over mode -FIVE!

Leaderboard as of
11/11/11

Botogol - 32

Budgie - 31

BQ - 30

Nick Drew - 29
Timbo614 - 28
Sebastian Weetabix - 28
Appointmetotheboard - 27½
Measured - 27.5
Philipa - 26½

Dick the Prick -26
Hatfield Girl - 26
Mark Wadsworth - 26
Hopper - 25½
Miss S-J -24
Miss CD - 23½
Hovis - 23.5
GSD - 22.5
Malcolm Tucker - 22½
CU - 22
Jan - 16.5
Andrew - 14½
Sean -9.5

Woman on a raft - 8
Electro-Kevin - 4
Anon {1} -3½
Alex - 1½

Gas: An Interesting Development

Ofgem, it seems, is instructed to report on whether "further action is needed to ensure that medium- to long-term gas supplies for consumers remain secure".

Given the signal success of the free market in supplying our gas since we became a net importer in 2004, this sets alarm-bells ringing in Capitalism Towers - but a positive outcome might also result.

First alarm: is this part of a campaign of denigration? Gas - sounds nice but it's running out, and comes from nasty places like Russia.

Cui bono ? The nuke and renewables lobbies who would have us turn our backs on the only proven positive way to reduce CO2 emissions in a country like the UK, namely by replacing coal-burning with gas burning. (The other way - recession - is pretty effective but not terribly constructive.)

Second alarm (paranoid ? me ?): is "further action needed to ensure ..." code for more subsidies? It usually is: and from the same DTel article:

"Separately, the regulator said yesterday that it plans to strengthen the incentive system for suppliers to deliver adequate gas supplies if a gas shortage occurs."

Cui bono ? We've fingered Centrica - regular little bung-hunters of late - hoping for newly-minted subsidies to gas companies last year: and they are not the only gas company in town.

But on the positive side ... it is going to be hard for Ofgem to ignore the potential of shale gas. This, of course, goes a lot further than 4,000 holes in Blackpool, Lancashire: because even if we are slow off the mark, others in a whole range of countries will be fracking with a will, and the quantities are market-moving wherever they come from. We know this because US shale production has already moved the markets - theirs, and ours.

Cui bono ? All of us !

So - roll on May, when Ofgem must report. Perhaps by then we'll have a new ... there I go, wishful thinking again.

ND

Silvio goes, Italy bond yields hits 7%, students riot

I would have lost my bet over just a few hours difference!

Silvio Berlusconi has finally given up the ghost in Italy and still the markets are pushing up Italian debt costs. 7% is well beyond the means of the Government to fund long-term. In the UK you would be currently looking at another £40 billion a year in debt servicing costs - imagine the pain of those cuts.

However, I am really looking forward to the riot today - something fun to watch out of the window!

Economic Growth: Stick It To The Greens

It's never really been in question with the mainstream parties: but now the drive for economic growth has moved decisively centre-stage.

Who is it, then, that opposes economic growth ? Ans: the Greens. And, I'm willing to hazard, a fair number of the great unwashed assembled outside St Pauls. These, from the Green Party's website:

"money drives growth, which drives consumption, which uses oil, which damages the planet"

"Other political parties strive for ‘economic growth’, which may sound impressive, but ... in a world of finite resources, it cannot make sense to depend on economic growth. Only the Green Party seeks an economic system which recognises the limits of the natural systems of the planet"

And this from Occupy LSX:

"Why do we rely on a global economic system based on infinite growth ... leading humanity and the environment to destruction [?]"

OK, we all understand the arguments: but we need to remind everyone just who's on which side of this fence. Can we perhaps get Miliballs to preach the usual vehement Pro-Growth sermon to the representatives of the 99% on the steps of St Pauls ?

And of course the Greens would rather like to keep their heresy quiet just now, and Caroline Lucas is careful to advocate "growth-in-the-green-economy" whenever she's on Newsnight.

There are rather a lot of battles to be fought just now. But perhaps, when time permits (and if it doesn't look too much like bullying poor Dr Lucas), opportunities might be found to drive a decent-sized wedge between her and the St Pauls brigades on the one hand and, well, everyone else on the other. That's - the whole of mainstream of western politics.

Footnote: Dr Lucas' absence from the encouragingly measured Parliamentary debate on shale gas was noted by her fellow members of the E & CC Committee ... low-profile time, is it ?

ND

QE2 vs QE1 compare and contrast

Last time we had QE is managed to put a good 13.1% on the FTSE within a month, after this the FTSE jumped up by the same amount again, topping out at well over 40% up in the end. This time around the FTSE has put on  8% - so as people have been saying perhaps you do not get the same effect second time around.

Having said that, when you consider the storm-force headwinds that QE2 has sailed into with the eurozone crisis - as opposed to 2009 when the recession was bottoming out - it is still quite impressive.

It is easy to say the markets are toppy now and heading down from here, but perhaps looking at the QE impact from last time would lead to a conclusion that the markets have some way up to go yet?

BBC On Energy Policy: Worm Turning ?

Well, first the supertanker shows signs of turning, and now it's the BBC worm. Just finished watching Panorama, which dubs Crapper Huhne's madness the Great Energy Gamble, as well it might.

As far as any such programme can, they spelled it out: it's the gamble that gas prices keep rising as fast as those of oil & coal. Because if they don't - and there's a good case to think they won't - then however pro CO2 abatement you may be, it is necessary to admit we'll be paying more than we need for electricity. In the long run, much more.

They skewered Huhne and he repeated his sophistic nonsense one more time for the camera. But reason is beginning to prevail. And if the BBC is moving onside, perhaps the outright U-turn isn't so far away.

Y'see, I am optimistic - sometimes !

ND

It's a knockout; Italy vs Greece

Well, we can't complain that Monday's are boring anymore in Europe. Italy's bond spreads are headed up at a remarkable rate today.

What level do they have to reach to force Berlusconi to resign? I think 7% but can anyone show me a decent price on this? He has to reach a vote on the 9th November so I guess he may hang on to this on the other hand

Meanwhile, Greece is also looking for a new Prime Minister to do the decent thing and roll over for Merkel and Sarkozy. All without the people having their say. In the long-term, the politco's are going to really regret the way things are working currently. With little legitimacy for events that are more economically damaging than wars, they are not going to avoid massive social unrest. All those calling for politicians to do their jobs are underestimating the gravity of the situation. Also, unlike in say WWII, the people have been lied to for a long-time and so are neither amenable nor acquiescent to the decisions being made of 'their' behalf.

Nice start to another exciting week...

Miliband backs the protesters

Ed Miliband has clearly read that Obama has backed the occupy Wall Street cause in the US. So in aping his actions he has backed those in London.

Miliband says this is a battle of 99% against the 1%. Where is the justification for all this rhetoric. This is a battle between the want everything for frees and the realists. I met some of the Finsbury square protesters the other day.

Well meaning socialists as you would expect, but none had a job or had ever run anything bigger than a one man band magazine. None appeared to have current jobs which suggests benefits show they finance their stay. People like this, with no experience of the realities of trying to run complex systems like businesses or economies are not adding anything to the debate of trying to improve the world.

Worse, Ed Miliband's Labour party have made the current situation much worsen with their awful overspending during their time in power to buy their votes.

What a ridiculous position to take to back these people when you yourself were key to causing the problems faced by the country. He has little going for him as a man, but he certainly has a lot of chutzpah!

When The Grown-Ups Take Charge

Many of us in these parts are pretty hostile towards Euro-federalism, and it’s easy enough to have a chuckle at the apoplectic reaction to Papandreaou’s referendum. Seeking democratic endorsement for fundamental economic interventions, perish the thought, ha-ha ! These Euro-democrats, they don’t like it up ’em, eh ?

Maybe, just maybe, it was a calculated Machievellian move. But it looks like, and certainly counts as, an entirely childish act, in circumstances where only grown-ups are welcome. And this particular Boy George has shown himself to his Euro-peers to be delinquent. Juvenile.

Look at the haggard faces of the main players, look at their negative body language. Hear them lost for words. See their mortification at the disapproval of China and the USA. At times like these, the only contributions wanted are those intended constructively, by the lights of the crisis itself. Anything else is to miss the gravity of the point.

The Mediterranean debt crisis is the equivalent of war: we might as well all be facing an invasion from the planet Zog. In real war, of course, the position is clearer: the generals, the War Cabinets (no children appointed there) take the powers they need and their actions require no further legitimacy (until, of course, they lose and victors’ justice prevails). Those that by temperament would be minded, or even likely, to raise issues of due process, of morality or balance or consultation or constitutional propriety or any number of happy peacetime considerations - of anything that falls short of iron resolve, immediate purpose and utter expediency – will never make it into those counsels.

[“Open fire on that building.” “But Sir, there may be some of our own men, taken prisoner, inside!” “Fortunes of War. Carry on.”]

There are almost as few constraints in evidence in the boardroom when a full-blown commercial crisis is in progress – and certainly none welcomed, in the person of weak-willed HR directors or meddling non-execs. [“What about the accounting treatment ?” “We’ll take a view.” “Fiduciary responsibility ?” “Let the lawyers tidy that up tomorrow.” “The Risk Committee ?” “They’ll do as they’re told.” “The unions? the works council ?” “Stuff ’em. Get with the programme ! (& get rid of this man ...)”]

And in democratic politics, replete as it is with oppositions, awkward squads, disaffected back-benchers, ambitious and unscrupulous Disraeli-opportunists, parliamentary rules freaks and newspapers with copies to sell and agendas of their own ? Ah yes, it all gets a bit more difficult. But the same basic rules apply: adults to the front, children to the play-pen; Whips out, cards marked, threats made – we know the score. Oh yes, everyone knows the score – except, it seems, Papandreaou (and the eternal smirking schoolboy Berlusconi).

And is this an endorsement of expediency ? Hardly – we know that ghastly mistakes are made when counsel is no longer sought, when ‘yes’ is the only correct response – don’t we, Sir Fred ? For many years Churchill was the juvenile – until he took charge of the war room.

But, seriously. This is serious.

And in these circumstances, they stop at nothing.

Nothing.

And where does this leave Cameron, Hague and our own Boy George ? We should all read this, from the Economist. And ponder.

ND