Monday, 31 December 2012

Reader Predictions for 2013 and Cityunslicker's top 3ish

Malcolm Tucker - Royal baby saves government pushing worst ever economic figures off the front page. After that things begin green shooting.

Syria conflict rumbles on. No one cares. It doesn't escalate. Neither does Israel- Iran. Obama does barest minimum on gun control. What he does fails to pass the Supreme Court anyway and is forgotten.
Blue Eyes - The Euro survives!
The lights stay on!
Electro-Kevin - First gay marriage June 5th (my birthday)
Simon F -  4G auction doesn't raise anywhere near the Chancellors target of £3.5bn. I reckon not more than £2bn.
Demetrius - The West will go bust, the UK government will collapse, there will be a couple of nuclear wars and a small pandemic will begin. Also several volcanoes and nasty big earthquakes. Apart from that it will be a quiet year.
Graeme -  Tiny earth tremor felt in Manchester, so frakking of the Bowland Shale is halted. Cameron pulls out of the coalition.
The Syrian revolt will run along for another 6 months and then Turkey will invade.
 Anonymous (I thought you were in jail?) - Millions of Croatians flood UK for benefits feather-bed
House prices drop 10% in real terms
Huhne gets away with it

 Timbo614  -  A market tumble > 1000 points. 
People start to abandon pension Ponzi schemes in larger numbers despite govt. rules as inflation is let rip in an attempt to pay down the bank and govt. debt.
The weather in the UK gets even worse(wetter still with interspersed heatwaves) affecting farming and therefore food prices. More will need to be imported.
A final taxation increase on the poorer of us could trigger civil unrest as the real cuts/inflation start to be felt(probably later in the year maybe 2014).On a brighter note, Timbo's C@W predictions are 70% wrong :) 
John in Cheshire - The Chinese buy up most of London and move all the social dependents out so the new-comers can inflate the property prices and hedge their US debt holdings.
India bans all gold exports.
The heads of major banks in most Western countries are brought to justice and start to serve long prison terms. They are housed in prisons with glass viewing windows so the public can come to watch them, taunt them and, for an extra fee, pain them with cattle prods.Delete

Jan Middle East continues to squabble with little spats which don't really escalate. Perhaps Assad may go to be replaced by internal squabbling and jostling for power.

The Euro will survive by the skin of its teeth as will the coalition.

Fiscal cliff will come and go with an almighty fudge. Debts in all indebted countries will rise so that taxes raised fail to pay even the interest on the borrowings.

Dithering on fracking/nuclear/subsidies for renewables.

DtP - Interest rates go up (only a smidge) hitting 1 whole percent by this time next year.

A good year for the FTSE with a fair bit of consolidation hitting a vulgar high of about 6400 (too much eggnog maybe!)
 Anonymous (another one, habe you thought what the point of this is...?) said...
 The dreaded Triple Dip
 Big Green protests against fracking
The latest band to be selected to try and the Xmas number one instead of a Cowellista will be Napalm Death ( I can only hope so, I loved Napalam death when I was about 14)

BloggerAndrew - It will be a year where at the end of the year, in retrospect, nothing extraordinary happened.
Cityunslicker - 
The Coalition falls causing a September or November election
Kurdistan allies with Turkey thereby causing another major Middle East (civil) war, important this time as lots of oil involved...
Bahrain gives up its independence and merges with Saudi, so prventing the toops from looking like an invasion
Libya gives up on democracy before even trying and becomes a tirbal kingdom

Tomorrow  (or maybe the day after), with a hangover definitely predicted, I will review how we did on the year just gone collectively...

Saturday, 29 December 2012

Dates for the 2013 diary

January 1st. Fiscal cliff - no resolution- Market panic -doomsayers predict end of America.
Sally Bercow's first libelous tweet of the year.
January 6th. Fiscal cliff fudge moves $900 gajizillion bazoomillion of spending cuts and tax rises to January 2014 . Markets recover instantly, for no reason that any sane person could conceive.
January 9th - 1st prediction of imminent Euro collapse. Repeated every 9th of the month until 2015.

Feb 10th - First of this year's, final ever, £30 billion Greek bailout paid. Next 'final ever' due in June.
Feb 14th  Valentine's Day. Coalition parties exchange cheap cards. Labour send them moonpig specials.."Please stay together..We're not ready"
February 15th - Sooty breaks 40 year silence. Mr Corbett arrested. BBC Director general resigns after it was discovered there was a shelved Newsnight documentary into puppet abuse at the BBC.

March 4th - Law of unintended consequences passes onto statute books. Will now be a legal part of all legislation. 
March 15th; Ides of March. Boris makes classics speech. "Friends, Londoners, foreign born, new countrymen, lend me your ipods; I come to bury Caesar, not to praise him."
March 18th RMT announces strike dates for year. All bank holidays + cup final, Epsom Derby, Boat race, and two weeks in July as the lads are all going to Malaga together.

April 1st. Cameron pledges to get tough with EU.
April 8th Thames Water announce hosepipe ban
April 9th. Severe Flooding across Britain until October
April 16th. Liberal Democrats have much watered down the armed policing in cities bill. It becomes law today. Police can be armed with concealed Nerf guns.
April 30th - Big UKIP win! Lotto Scratchcard nets them £42

May 4th - Order of the Jedi created after popular petition. Ian McKellen surprise first holder.
May 6th. Army budget cuts take effect. Atlantic now protected by Allied jellyfish and the Loos lifeboat
May 21st - Ultra Right wing Tories stage protest over hunting ban. Strong leadership by Cameron reaches compromise. They are given 35% extra pension if they stfu.

June 1st - Rumours of an actual labour policy prove groundless.
June 2nd - Parliamentary recess begins. Lasts until 23rd November.
June 3rd - Gordon Brown annual attendance at Parliament. 
June 30th - Alex Salmond declares Scotland will be a dual language and currency nation. Pounds and Euros. Language of flowery Bravehart rhetoric and Cuban to be taught in schools. Scottish mint finally agrees with what people have been telling them for decades. No one accepts Scottish currency.

July 5th - Daily Mail royal baby supplement arrives . Has more pages than the leveson report at 2768.
July 19th - Save the Children reclassifies poverty definition. Poverty now includes any home without an ipad mini, Halogen Hob or Kath Kidston towels.
July 23rd Alan Sugar accidentally fires himself from the Apprentice. Joins Strictly as a judge.
July 29th. 4 ramblers sucked out to sea by offshore windfarm. Green campaigners say wind power will be economic as soon as subsidy reaches 200%.
July 30th. China opens 40th new nuclear reactor this year.

August 2nd - Silly season stories turn out to be true. Johnathan Ross new DG of the BBC. Jose Mourinho takes over at QPR. Nigel Farage defects to Liberal Democrats. 
August 4th  Owen Jones is 16 today.
August 15th. Church in turmoil over whether divorced gay couples can marry in non England and Wales churches. David Cameron's messy compromise ensures that divorced homosexuals can only be remarried in mosques by Catholic priests. "A satisfying compromise"

September 3rd. The number of people Ed Miliband was 'talking too..just the other day a {delete as appropriate} school/soup kitchen/ bus stop/ Greggs/ free range poultry farm/ Box at the Royal Opera House; Now reaches 2,500.
September 6th. Francois Hollande moves to Belgium to escape high tax regime.
September 9th: Google merge with Starbucks and Amazon and Apple and form own country GAASleon, and set corporation tax to zero, for founder members. It is the 3rd richest nation of the G8.
September 21st. First sitting of new Court of Public Opinion. Judge Judy presides. Public tarring and feathering of Abu Qatada.

October 6th. Downton Abbey, 4th series, adopts 'X' factor style text voting to determine which character is killed off next. Mrs Crawley tipped to die of extreme white liberal guilt.
October 12th: Nobel Peace Prize awarded to President Assad of Syria.
October 19th: Bank of England discovers its supplier of printer ink has gone bust. QE on hold for two days whilst alternatives sought. Pound falls 30% against the $ until a smiling Mark Carney appears on facebook photocopying £50 notes. Osborne says "See..I told you he worth £420 an hour."
October 28th - ECHR discovers breach of Human Rights and determines locked up prisoners must be allowed their families, possessions and friends and social activities whilst in prison. Work on building housing estates, multiplexes and shopping centres inside Wormwood Scrubs begins. Polish Government delighted at the work this generates for its citizens.

November 5th . EU wide 'clean emissions law' bonfire ban comes into effect.
November 19th. Annual energy companies cartel  fuel bill rise of 92% .
November 24th Coalition splits getting worse. Liberal Democrats move out of Westminster and go to stay at their mother's. Both parties drink more and Tories buy themselves a Winnebago with the college fund. Both shower presents on a confused Ed Miliband, whilst sounding off to him about the lies, betrayals, annoying personal habits and the bad sex of the other party.

December 1st. Silvio Berlusconi becomes Prime Minister of Ireland.
December 3rd. Japan celebrates 15 years of zero growth with total Toyota recall.
December 4th. RMT adds rest of December to its strike days.
December 19th;  John Lewis goes into administration.
December 25th. Queens speech pleads for an end to Paul McCartney
December 31st - Coalitions minimum alcohol pricing, pegged to fuel duty, comes into effect. Tesco White Wine £76.98 a bottle. 


Thursday, 27 December 2012

2013 Predictions - The Reader's Crowd Wisdom

Every year we try to do our best to predict what will happen in the coming year, with some success although the run of 70% accuracy of a few years ago has sadly come to an end - maybe the onset of dementia or maybe the world has just become more unpredictable!

Anyway, this year as well as your 3 regular writers, I am going to post up the best of the readers along with ours, names attached of course. Perhaps with more mind we can increase our accuracy back to the 70% again.

As regulars will know, this blog is primarily about business, economics, trading and politics. So these are the kind of 2013 predictions I want to see. So no chance of getting one in because you say you think Jordan's going to have an affair or Kerry Katona breakdown...

Let's see what you can do!

Sunday, 23 December 2012

Christmas Shopping Frenzy to save the economy?

It is the time of year for hoary old chestnuts and surely this is the most common one. Every year there is a comparisons with like for like sales from the year before, no matter that in recent years relatively strong inflation means that actual falls in sales revenues must be a disaster.

Instead we get treated to TV programmes and news discussing just how many people can get into the Metrocentre or Bluewater. It is all nonsense in the scheme of things, people buying lots of imported goods won't make too much of a difference to the economy, although it will keep a few shops going.

The bit that really exercises me is the sight of of all these poor men being dragged along! What are they thinking. Christmas Eve, the traditional time to buy presents is not until tomorrow and even then the garages are open until past 10pm. What is the Country coming too?

Saturday, 22 December 2012

Night At The Opera - Again!

Yes folks, we are back at the opera! This year it is Der Fliegende Italiener, or Berlusconi Does A Bunka

*   *   *   *   *   *

The scene opens with Toni and Cheri, our perennial seekers after wealth, in one of their vulgar Jacobethan McMansions. They have clearly succeeded in their quest, and are counting vast quantities of banknotes. Beside them is a poker-faced adviser dressed all in grey, with a haughty look and a waxed moustache. 

Cheri is in ecstasy, and sings the piercing soprano solo, Wie nahte mir der Schlummer (we’ve no need to slum it any more). As she climaxes, a familiar face is seen at the door. It is Silvio, at whose fabulous Italian Palazzo they were so often supplicants in the past. He looks hunted and utterly miserable, and sings the baritone air: Ich bin so bös als gut (I’m sick to my stomach). Toni asks why he is so glum: is he, perchance, in some kind of trouble over his taxes? or the young ladies? Silvio responds with Per me ora fatale (the whores will be the death of me). 

Cheri flippantly suggests that a nice oriental girl would suit him, singing Madamina il catalogo è questo (seek a mail-order bride). Silvio is displeased, and turning to the audience gives us the famous Pensa che sei mia figlia (I think they are trifling with me). Eyeing their cash mountain he addresses the greedy pair again: surely, they owe him a favour? - Ach, könnt'ich nur ein wenig richten (haven’t I the right to a bit?) 

Toni replies that he has indeed got something for him, and Silvio brightens at once: Ich sah das Kind (I say, that’s nice of you!). It is some advice, says Toni, and tells Silvio that he must face his persecutors and bargain with them: negotiate, or watch out for your fate! - Neghittosi or voi che fate

Silvio can see he is getting nowhere, and makes to leave. Suddenly his eye falls on the mysterious third person at the table, and gives him a long, hard stare. The strange man turns away, and softly renders the bass aria: Ah fu giusto il mio sospetto (fuggit! he suspects me!). 

Silvio stomps off. As the curtain falls he can be heard singing Merci doux crepuscule (thanks a bunch, you pair of shits!). 

What will Silvio do next ? Will Toni and Cheri ever be satisfied ? Who is the mystery man ? To be continued.


Thursday, 20 December 2012

Could kids TV be any more Gay?

The experts added that the BBC should be 'more creative and bolder in its depiction of such groups of people, taking care to steer clear of stereotypes.'
The report concluded: 'The LGB [lesbian, gay and bisexual] experts feel that the BBC should seek to incorporate the portrayal of LGB people within programming targeted at children, to familiarise audiences through incidental portrayal from an early age.'

So says a report that thinks there needs to be many more LGBs on kids Tv.
I disagree. Children's TV has been filled with lesbian and gay characters for as long as i can remember.

Now, admittedly, not all of them have come out. Some are still in the broom cupboard so to speak. But..well..its obvious, isn't it?

Take rainbow. Some say Rod Jane and Freddy had a threesome, bisexual existence, but I'm not so sure. However, one member of the team was definately gay. I refer to George. A quiet, shy fellow. But his love of Geoffery and even the ungrateful Zippy, was very real. And ..He's pink!

Then there's Rentaghost. Three flamboyant men living in a menage a trois. Mr Claypole? bit of a give away.

As was Master Mate, Barnabas and ..willy! Captain pugwash was the gayest pirate to grace the seas. He was adverse to all piratey activity, except the pursuit of fancy jewellery. And his frilly shirt was a fop's delight.

I was in a bar in Brighton recently, and serving was Miss Hoolie, a  lesbian icon. 
Not just someone that looked a bit like her..It was either the actual Miss Hoolie or someone who has undergone extensive surgery. What's the story Balamory? Well..I gather she and Josie Jump are a well known item....

And then there was Tinky Winky, who was accused of being gay by the religious right in America, in 1999. Something Mr Winky never confirmed or denied.

Then there's the probables.
Gay spiders from paperchase.
The pink panther.
Bert & Ernie
Monkey - Tripitaka and Guan Yin were clearly transgender post ops.

And anymore I may have missed into the comments.

You Against The Professors: A Challenge

Shale gas has greatly discomfited Greens (and Gazproms) everywhere, but their sleepless nights have been fruitful and they have launched a new "argument". If you haven't seen one of these little jolly little fallacies scampering around you probably think I am kidding; but no. Here, for example are Profs David Knight (structural biologist/ biophysicist) and Robert Whitmarsh (ocean and earth science), writing to the Grauniad.
 "The reduction in CO2 emissions resulting from the switch from coal to gas in the US has been entirely offset by the export of the coal saved". 
It gets worse because, carried away with the point they consider themselves to have scored, they go on: 
"A similar argument can be applied to the UK, as North Sea oil saved by burning shale gas in place of gas will not remain in the ground". 
I could just about conjure up a highly improbable scenario in which one or both of these could logically be the case, but I see no prima facie evidence for them. A huge amount of complex empirical analysis would be required to ascertain the truth of them, not to mention wrestling with labyrinthine counterfactuals, none of which has been carried out by them or anyone else - certainly not the flawed Tyndall Centre work they call in aid, which demonstrates nothing of the sort (though it sort of hints in that direction as a possibility they'd like to believe in - and even then, they only suggest that half of the US coal might have been involved in this way).

So here's the challenge. Assume a world where coal-burning emits 2 units of CO2, gas 1 unit, and renewables 0 units. What would need to be the case for the profs' assertions to be true? 

Bonus question: what would they say, do you imagine, about the fossil fuels displaced by renewables - where will they go ?


Wednesday, 19 December 2012

A new source of funding from banks - a dangerous precedent?

As regular readers will know, there is not much love lost amongst the authors of this blog for the big oligopoly of Banks that Western countries find themselves lumbered with. They played a big role in pushing the leverage in 2003-2007 which has led to the depression which we are now only about half way through experiencing. More exasperating in the UK is the lack of punishment for the criminal behaviour of many of the former executives, as discussed ad nauseam.

However, Banks are businesses and like it or not they now lay at the dead centre of a capitalist economy, controlling the flow of money from savers to borrowers and, increasingly, from central governments. They have their own balance sheets, regulations and shareholders to report to.

Yet in fining UBS $1.6 billion, the Governments have found a new substantial source of revenue. After all in the US the money is going straight to the US Treasury and David Cameron has changed the game here to in order that the FSA does not become too rich. The money will go to the treasury, other banks too are going to settle soon, such as RBS - so there are more fines to come and collectively it could make a small dent in the deficit.

It's great politics too, bashing evil bankers and getting money back for ex-servicemen and schoolz'n'ospitals. There is not much incentive to stop the party, in fact they could beef up the regulatory powers and try and make this a regular thing.

In doing this, we further cripple an already busted market. banking is shrinking at a quick rate globally, volumes are low, transactions non-existent; RIF (Reduction in Force) is all the rage. In many ways this is good news, yea to smaller banks, but as an industry its a disaster and for Government to be extracting huge sums on top of new banking taxes already imposed, the push can be too much.

The economy can't recover if the transmission mechanism for money supply is broken. I doubt the Governments' can help themselves though when they see new sources of revenue with positive voter appreciation attached to it.

Tuesday, 18 December 2012

The Disingenuous and Dangerous Mr Yeo

Tim Yeo's extensive financial interests in the renewable energy sector have been well-documented elsewhere. (Search on 'Tim Yeo', and 'conflict of interest' is the first thing that google suggests.)  So by rights he should be disqualified from being Chairman of the Select Committee on Energy and Climate Change.

Such is the corruption of modern life, he ploughs on regardless: and now he plans to sabotage the only strategic aspect of UK energy policy that makes any sense.

The story so far:  for discreditable reasons the government has carried forward most of the scorched-earth energy policy made by Ed Miliband when last in power, endorsing fatuous green targets of various kinds and, most stupidly, sticking with the 'legally binding' charade.  However, in the knowledge that much of this is not just daft, it's physically infeasible if we wish to live ordinary civilised western lives, a strategic let-out was engineered into the Energy Bill - there are a few grown-ups somewhere in Whitehall - by setting the EPS (emissions performance standard) for a power plant at 450 gCO2/kWh until 2045. 

The significance of this is that, while it disbars even the most modern coal-fired power plant without CCS (the sort they are building as fast as they can in Germany) , it allows modern gas-fired plant to be built and operate efficiently for its entire working life, without fitting CCS.  (It also allows gas-fired plant to run in less-efficient back-up mode behind windfarms etc.)  
Coupled with the government's recent pronouncement that it wishes to encourage 26-37 GW of new gas-fired plant to be built, we have a policy that at least offers a physically feasible way of keeping the show on the road. I accept, of course, that security of gas supply is an issue.

The government has already swatted away the proposal of the CCC (under our friends Gummer and Kennedy) to set the EPS at 50 gCO2, which of course means that all fossil fuel plant must install, or be liable to retro-fit, CCS - thus ensuring none (I say again, none) gets built.  The speed with which Ed Davey delivered his blunt rebuke was such that I'm guessing he actually understands the game.

Enter Yeo, who intends to amend the Bill to reinstate a CCC-ispired EPS: "He would accept a compromise of a range for the target, of 50g to 100g. 'I see it as a helpful contribution'".

I see it as reason to have the whip withdrawn, and Yeo deselected forthwith.  Happy Christmas and goodbye, Mr Yeo: it's uncooked turkey and stone-cold pudding for you. 


Monday, 17 December 2012

Triple Dip 2013?

I think this is unlikely on balance because you need 2 quarters of negative growth to officially be a triple dip and they need to be consecutive. I can see Q4 2012 being low but not too low. Although the FTSE is wobbling in the year end as companies like Aggreko deliver yet more sets of poor results. Clearly, with the Coalition having been in power for 2.5 years now the austerity hits to public sector spend are really biting into a whole section of the private world. In the long-term this is great news for the Country, in the short-term there are adjustments to be made.

on the more positive side, the excessive stimulus in China seems to be having the effect of driving better growth there and in the US there is a steadying off of gains, but nonetheless growth is above 2% which is also positive. As long as the US and China stay in good shape this is good news for the rest of the world.

So on balance, the OBR forecast for next year of 0.8% is pretty accurate, as this may well infer at least one quarter of negative growth, but two in a row is unlikely so a triple dip will be avoided, albeit not by much!

Sunday, 16 December 2012

The Cameron We Can All Applaud

By way of a note of optimism re: our disappointment of a PM (see Mr Q's posts below), let's just mention the heartening case of David Kennedy.

Kennedy is the 'chief executive' of the Committee on Climate Change, the quango with statutory consultative powers headed by John 'Severn Barrage' Gummer, of 'Gummer is a Bummer' fame (© Jasper Carrott).  Quite why a consultative committee needs a CEO is beyond normal comprehension, but there we go.

Anyhow, he was widely considered a shoo-in for the vacant position of Permanent Secretary at DECC, what with being a critic of government energy policy from the green zealot perspective etc etc.
'Kennedy was unanimously selected as the best qualified candidate by an eminent panel and endorsed by the head of the civil service and the energy secretary Ed Davey. "In four years at the head of the CCC, Kennedy's intellectual rigour has won the support of both industry and the green lobby. This would have qualified him very strongly to tackle the many challenges facing DECC," said Tim Yeo, the Conservative MP who chairs the committee that scrutinies DECC.'
Now of course by "industry", Yeo meant the green industry - so not much of an achievement, really; they all love subsidies.  A candidate supported by Yeo (he of the manifold vested interests) is to be viewed askance in any case; but our man Cameron went one better and vetoed the appointment, to much wailing and gnashing of teeth.

And that is the smack of firm government.  Well, a little slap anyway.  Needless to say, Climate-Change Kennedy has renewed his vocal opposition to government policy: one may google his pronouncements and form one's own view on his 'intellectual rigour'.  I wouldn't spend too much of your time looking for it, though.

See, Dave can do the right thing when he puts his mind to it.


Saturday, 15 December 2012

Cameron on the wrong side of opinion..{continued.}

So far not a single voice of support for Cameron? That's very worrying.

Well, worrying for him.
In fairness the coalition have pushed for many reforms. Some quite excellent. On welfare and education and parts of local government in particular. But I always said they'd gone a bridge too far. Several bridges too far. He hasn't the team, the talent, the time, the money, the majority or the support to do things properly.

On this question of public and party opinion I think he's drawn a poor conclusion from Mandelson's/Campbell's Blair's diaries and memoirs.

They pushed Labour where it didn't want to go,. reasoning that the policies they pursued would attract more people than they lost, and that those that quit in disgust had nowhere else to go except to the graveyard of the extreme left.

Recent polling has shown that disaffected conservatives are quite happy to move further right, away  from Cameron's liberal centre.

They won't achieve anything much there. But unlike when the communists and Union dinosaurs stood against new labour in elections, UKIP will actually take votes from Conservatives. Enough to ensure a Tory defeat in many of the target seats that they need to win.

AND ... He is still fighting the battle that Blair won. To make the Tories 'the nasty party' by demonising them and portraying them as racist, homophobic, bigoted, mean, old fashioned, boring, eurosceptics, at a time when the country was into eco loving,fair trade, compassionate,European cafe culture neighbourly, handouts, parties , credit card spending and pay rises for all.

The mood in the country is no longer that way. People are less charitable, less caring, less compassionate, less willing to pay high taxes for crappy, expensive government and high fuel, food and services costs. Public are almost, but not quite, ready to see the NHS get a bit of a public clipping. That's how changed things are.
Few are in any mood to give the precious little they can amass for themselves away to anyone else. Especially those that are perceived as doing nothing for it.

Look at the constant outrage over the ring fencing of the foreign aid budget.  This paltry sum attracts little but anger from most sections of UK society. We can read it on the comments here week after week. Its hated, even though it costs us each about only a third of the Licence fee {£52 per year.. well the Department for International Development's bit is..actual foreign aid is about the same as the licence fee for every citizen..Which makes it 3 or 4 times dearer than the licence fee..} and does actually do some good. World Vaccination programs. Disease treatment. Land and property rights. Schooling etc.

But its still despised because a proportion of the money goes to perceived wealthy countries and  that's unfair. Its money being given to rich foreigners or despotic and corrupt rulers.

Instead of ring fencing the aid again recently, Cameron should definitely have said he was going to reduce the budget to , say , 0.4% GNI, and have an impressive set of stats from DfiD of areas where the this money will only be spent. Agriculture. Textbooks. Schools. Vaccination and as many 'caring, compassionate' programs as they can cram into the list.
He then rattles on about ending funding for spaceships, palaces, Swiss bank accounts, and dictatorships.

If he still wants to fund all those things,bunging cash to China to buy our stuff or hoping that in some mineral rich, skills poor African sinkhole, today's Idi Amin will morph into tomorrows Nelson Mandela, he still can. Just take the money from another bit of the FO budget and call it something else.

That way Cameron could mollify some in his party and in the country about having to borrow money  we can't afford, to give to others, who never seem to even benefit from it.

The mood in the country has changed Mr Cameron. It isn't 2005 anymore.
The country, bar the liberati, would be more than happy for you to say , "Sorry..We're all out of cash for aid at the moment..maybe next year."

The nation would love it if you said "New..Romanian and Bulgarian citizens must have special visas. We will have a reciprocal arrangement with them..A sort of visa lite arrangement..Sorry..but we're full up..We took so many last time.."

And just let the Eu kick off. Just allow it to happen. That becomes the front page fight for the red tops.

"The main news again...Maverick Prime minister, David Cameron, ordered Abu Qatda deported to Luxemburg...the cleric arrived there this morning and the UK immediately said if he was returned to their shores he would be subject to arrest and imprisonment without trial. The ECHR cannot now send him back as he would face a breach of his human rights.."

Pick fights that are popular.  As long as you are on the right side of public opinion you'll have support.

And that must be easier than fighting them all the time, surely?

Friday, 14 December 2012

Cameron. Does he like being on the wrong side of the argument?

Why doesn't Cameron seem to understand where the argument's line is and which side to stand on?

He seems determined to pick fights on issues that he then fails to satisfactorily resolve. 
EU referendum. He won't have the In/Out that the party wants, because he is not sure he would win it. So he whips up a storm over not going to give any more powers to Europe and jolly well taking one or two back if they don't decide to let us have a bit more say in our own affairs. 

The party is annoyed by this lack of commitment to a central issue. The EU is annoyed by his foot dragging when they know full well UK won't leave the EU. Supporters are annoyed. Opposition are overjoyed. UKIP are ecstatic! There is no easy answer to our EU membership. Not addressing it doesn't help. Faking a referendum pledge won't help either.

But at least an EU referendum is a serious issue that he must dodge. 
Cameron is happy to pick fights he doesn't need to, on issues few are concerned with,  on subjects he can't satisfactorily resolve anyway. High Speed rail. Heathrow. Wind Farm subsidy.  Leveson's Press regulation. Votes for prisoners. ECHR. Gay marriage. Student immigration, Alcohol pricing. ..Drugs legalisation..

Take the 50p tax rate. The Brown government had set the trap, raising the rate from 40 to 50%, daring Cameron to reduce the tax rate back on entering office. Dave wisely decided to avoid stepping onto the rather obvious, land mine shaped mound, and opted to keep the tax high. This angered some in the party, who wanted an end to Brownite mentalness.. But others saw the political necessity of having a high tax rate if you are going to use 'all in it together' as the slogan foundation stone of your tenure.
Come  the budget the rate is cut to 45p. All the hard work in portraying millionaires as paying their fair share is lost. And the rate not returning to 40%, undermines the Tories own argument for lower taxation=growth. No one is pleased. 

This sort of wrong footed decision happens too often, on too many issues, many of which have little importance. 

Gay marriage is the obvious one. Its earth shatteringly, fundamentally important to about 2% of the country. Total number of civil partnerships formed in the UK since the Civil Partnership Act 2004 came into force is 53,417.  Not even 0.001% of couples in the country. The rest of us shrug with indifference.. Why even visit the issue? Polling must have told him he would lose more votes than he could gain, or at the very best the extra votes from homosexuals would slightly outweigh the blue rinse losses. A handful of votes. It angers the Tory party and conservative values and makes them look as out of touch as Bishops.

This particular bill enables and outlaws gay marriage at the same time. Its hopeless to everyone.

Cameron knows that he must attract a wider base or the Tories will never hold power in their own right again. He doesn't believe that a lurch right will do any good. He has some justification. Romney showed the folly of that approach.

But making useless, wrong sided compromise decisions,  isn't going to achieve anything except drift from both wings of the party.

Thursday, 13 December 2012

Question Time : Frack You! Edition.

David Dimbleby presents Question Time from Bristol. On the panel: Justine Greening MP,{recently sideways demoted MP for airports and speedy trainz} Secretary of State for International Development; Stella Creasy {one of the big beasts of team Ed. Yet to show why he feels this is this case.}MP, Shadow Home Office Minister; Cross-bench peer Lord Bilimoria, founder of Cobra Beer;{says it all}  author Will Self, { perennial QT plant. Highly conceited and often hugely entertaining, in a liberal sort of way.} and Peter Hitchens, {Highly conceited and often hugely entertaining, in an illiberal sort of way} Columnist for the Mail on Sunday.

BQ reckons
1. Gay marriage fudge
2. The insult law must be reformed
3. Fracking. Its the new class war.
4. Government collusion with assasination
5. School league tables

Too busy at the moment to post, even though sales look very patchy, its still busy. HMV look like they are about to fall over. Amazon go from strength to strength.  Action was really needed in 2001 during the internet infancy. By the time my fellow politicos realise they should have done something it will be 2020. Still, the biggest beneficiaries have been us, the consumer.

Fracking Will Be A Great Game

On the capitalist side of the Great Ideological Divide, everyone is salivating at the prospect of the seemingly limitless quantities of shale gas available right under our own green-and-pleasant noses.  George Osborne has at last got the message that we can't go on for long with the USA enjoying wholesale gas prices less than half of those we pay.  The cry has gone up: we don't want to be dependent on Russian gas! (as if we get any gas from Russia) and the tax-breaks will soon be in full swing.

The greenie-left is also looking forward to renewed fracking with much glee.  They have every intention of using it as a delightfully emotive rallying-point against the wicked Tories, and will be developing it into a form of large-scale outdoor relief for the youthful unemployed masses.  If they can cause a week's worth of trouble at a major new gas-fired power plant project under the relatively obscure cry of 'no dash for gas', how much more difficulty can they create for a series of small, isolated drilling sites ?

Yes, the antis are relatively well organised.  It is clear from the little nuggets of sophistry on their website that there are 'intellectuals' involved, and we may expect some well-coordinated rentamob stuff, with academics and lawyers and clever media campaigns, the whole works.  The malicious left has long hankered after harnessing the summer-of-2011 lumpen-nihilism; and as a commenter on these pages suggested some months ago, from the ranks of the unemployed graduates may arise an officer class. Oh, how leftist intellectuals love egging others on to violence.

And on the other side ? How much enthusiasm does PC Plod have for stopping them ?  In the past it would have been the appealing twin prospects of massive overtime plus cracking a few swampie skulls, and and let joy be unconfined. In 2013 I am not so sure.

We should also recognize that Cuadrilla and all the other would-be UK drillas have been truly amateur in their PR efforts to date.  They are of course being used as front-runners by the majors, who will keep well away until the minnows have proven up the geology and the reserves.  Who wants to see their corporate image tarnished ?

Finally, has anyone seen any signs of resolve from our great coalition ?  The nous to parlay dismay at rising heating costs into cheaper energy as a populist cause ?

Because that's what it needs to be.  But I can easily see them blowing it over the next year or so, then bottling it for the election.

At least the gas won't be evaporating any time soon ...


Wednesday, 12 December 2012

Government to lend to sub-prime business direct

Vince Cable demonstrates his knowledge
of Lending and Finance
As we get towards the time of the year where people start making their annual predictions about the future. , here is an easy gimme for them all. The Government has announced that it is to lend money through peer to peer funding websites like Funding Circle.

Now Funding Circle provides an interesting new market for people to lend directly to small business, a sort of entry access VC business for retail punters. It is still quite new in that it was formed in 2010 - so loans over 3 or 5 years have not yet reached maturity meaning that the low default rate being marketed is to be expected. On the plus side, starting in 2010 means that business founded then or looking for finance were doing so in a recessionary environment so hopefully had well founded business plans.

However, it won't always be the case and some of the big lends will go belly up  - then we will find out if Funding Circle can cope in a way that a larger institution can. Who remembers the Lloyds names disaster of the 1980's - I see many parallels here and the cry of something must be done to help these small investors who have risked their money way will be very voluble.More so if they then can say they have lent into Government backed loans.....

Why though is the Government getting so heavily into picking winners? Why with money directly - we are all paying taxes only to see the Government give them to Private companies to lend out again. Surely much more efficient would be tax breaks for lending to Funding Circle or tax breaks and incentives for investing full stop. The Government hate these schemes because there-in lies the kind of Jimmy Carr type tax evasion. It can't trust us so feels it must take our money and distribute it as it sees fit.

In addition, I am not a big fan of big debts being run up by small ventures. Money yes, but there is this thing called Equity. Equity is better for the long-term as you get a better reward from a business - debt is something to be reneged upon. Plus of course debt  comes with interest payments and cash flow at small businesses is the be all and end off of everything. How well did it all work out when we decided in the 2000's to load everything in sight up with leveraged debt - ah yes, our ten year recession.

So this is wrong on at least 3 levels, one in creating a new market that the private sector is already serving thereby interfering unnecessarily (not that the CEO of Funding Circle will agree, he's pulled a blinder), secondly but overcomplicating something by handing out money rather than incentivising through the tax system which is far cheaper and finally by encouraging debt into smaller businesses, in obliviance to our very recent lessons on this issue.

Who is championing all of this - why Vince Cable of course!

Tuesday, 11 December 2012

King Coal Slips Sadly Away

Here's the last sad chapter in a mighty volume.  UK Coal is settling down in the bed nearest the door.  I know a bit about this, and the banks have been fairly constructive (although the article doesn't credit them at all).  So it's probably the best that can be done in circumstances where (a) our politicians are fixated on green-pandering energy policies and (b) the global coal trade is fairly buoyant.

My views on this have been stated often enough, summarised here 5 years ago:  new coal plants should replace old coal, as they do in Germany.  Whether UK Coal could play a long-term part in this (as opposed to imports), it's hard to say.  But the one consistent aspect of recent UK energy policy has been No New Coal Without Full CCS, i.e. no new coal whatever.

And, as the article says,“Coal is keeping the lights on at the moment”. What a history is coming to an end !


Monday, 10 December 2012

Monti shows the challenge to the Euro continues

After the main centre right party withdrew it support for the EU imposed technocratic Government, the end was always going to be insight for Mario Monti's Government and he has gone today.

What is worse for Italy though is it looks unlikley he will get his budget law passed and instead it will be straight to elections. Silvio Berlusconi has said he will run again and with a well financed campaign he could end up as Prime Minister again, despite the two court cases hanging around his neck. This instability will do no good for the Italian debt and Stock markets.

This situation also highlights the desperate desire of people not to undergo austerity measures for a prolonged period. It is just too tough and it is increasingly becoming obvious that the process of long-drawn out austerity is unable to win any public mandate in most countries.

What is the alternative? Well in the pre-euro era a Mediterranean country in such trouble would simply devalue its currency to the point at which it regained lost competitiveness with Germany and the other northern states. Everyone would collectively be made poorer in the Country, but the shock was short and sharp.

Nowadays this is no yet an option - although who knows how long the euro will hold together as a stable currency. But the populations of Southern Europe are simply not accepting of such fierce financial governance, especially when it has also led to such a large amount of social instability with unemployment at such high levels.

For these states, austerity can't be the right solution, I hope Berlusconi wins and tries a new option for Italy. It's the only way this mad phase of fiscal and monetary experimentalism will come to an end.

Saturday, 8 December 2012

Have the loan markets ruined my AIM Xmas pressie?

The reality of the terrible financing situation in the UK for many small and medium sized firms at present is very clear in the markets when you look at volumes and the share prices of the harder to finance smaller firms. The bank loan markets, for so long the source of the majority of funding, have had a terrible year. Indeed, in a little known fact, the volumes are now at the same level as the post-Lehman’s crash.

Many in the financial press compare this to some kind of sporting event, as they focus on the collapse in Debt Capital Markets whilst pointing to the strength of the government bond markets in contrast. However, as usual, they miss the bigger picture. Large companies like Vodafone and Shell can indeed get away bond issues at such attractive levels that their traditional reliance on bank debt funding has fallen away. Also, the dearth of M&A activity has meant that demand for loans is also at record lows. Earlier in the year some big M&A deals really helped Q1 but this has also become somewhat more muted.
The summer was really bad and although a degree of late year rebound has occurred it is not much. Of course Shell and Vodafone and Xstrata are good credits but the secondary and junk markets for bonds are quiet.

What this means is that but for the big beasts, the credit markets for smaller and medium sized company bonds are closed and so consequently the demand for debt is very low. So, for an AIM company there are two huge challenges.  One is that any financing needs are going to be hard to fill as the companies are not seen as good credits. Secondly, is the exit routes  are via take-out or merger or acquisition. With banks not funding these, nor even being asked to draw up facilities, it suggests that M&A is still off the agenda for some time to come.

This challenge in the loan markets is a big part of why AIM valuations have not caught up with the current FTSE100 rally, in 2010 and 2011 volumes in these markets were back to 2006/7 level. Now they are at 2009 levels – and lo and behold – AIM companies share prices look more like 2009 than 2010.

The bad news is, no one in the City sees a very good year next year and the pick-up in volumes on AIM will likely take a while. So absent some big event changing news, pricing on AIM is going to remain tough.

The upside to this is long-term plays. Good entry levels are now available to these macro trends, and SBM favourites likes Xcite Energy and EMED mining sit at huge discounts to NAV’s. OK, so the markets suggests this will continue absent news, but with good events likely in the next quarter, these companies are still priced to go.

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The Farce that is Energy Policy

So the Energy Bill is published, the lights will stay on, everything's gonna be alright ... and then EDF announce they are "delaying" once again their decision on the first of their 'promised' 4 new UK nukes.

Well, there's a surprise.  The timing of the final investment decision for Hinckley C has been 'by the end of the year' annually since 2009: but each year-end comes and goes.  (I was present in the room when the man from EDF assured then-energy minister Charles Hendry to his face that 2011 was the absolute deadline for making the decision.)

Of course we've also recently had a positive development from the same bunch of wasters: they are extending the lives of 2 existing UK nukes - but everyone knew that anyway and it was already factored into the planners' forecasts.  Still, it must have given the EDF PR people an amusing hour or two of grid-planning:  better not announce the delay until after the Bill ... but the Bill keeps slipping, and we've a Contractor's option to decide on ... well, announce the extensions before the delay, in any case ...

Imagine the long faces at the next 'negotiating' session between EDF and DECC, where the size of their guaranteed price for Hinckley's electricity is being thrashed out.  Somehow, with much sucking on teeth, a Frenchman is going to find the courage to let it be understood that the price has just gone up...


Friday, 7 December 2012

So how's that Socialism working out for you, France?

And to France, where the Socialists are behaving just the way Red Ed would like them too. Raising taxes and attacking even capitalists.

There are though some side effects. One being that people who own your industry don't take kindly to being abused and then tend to think of ways to retaliate. Lakshmi Mittal is one. Now Mittal was born into a dir poor family in Indian and now is one of the world's wealthiest men. Perhaps the biggest move of social circumstances by anyone in history? Now I very much doubt he did this without happening to be immensely clever. So attacking him would always ahve consequences.

The French have been very upset he may close a steel mill at Florange for sometime and there has been much hand-wringing about this - and much criticism of Mittal. So what is his response, firstly to close another plant elsewhere but also to pull out of a key piece of research into new technology that would enable Florange to stay open.

It's a high stakes game when Government take on multi-national billionaires I feel - and not something that should be done lightly. After all Mittal has to date saved the french steel industry (well, its remnants) and kept lots of jobs in France and made money. What are the French to do, nationalise it? It's a very slippery road and we will be well advised to point our politicians to look at France since the Hollande victory and its very rapid fall into difficulties due to some rather pointed ideological campaigns that are making international investors run for the hill

Thursday, 6 December 2012

Question Time: Balls ballsed up his big speech edition.

David Dimbleby presents Question Time from Liverpool. On the panel: Francis Maude MP, minister for the cabinet office; Andy Burnham MP, Labour's shadow health secretary; Tim Farron MP, president of the Liberal Democrats; Lionel Barber, editor of the Financial Times; and Leanne Wood AM, leader of Plaid Cymru.

Might even make it back in time to watch.

BQ hasn't a clue 
1. Autumn statement
2 Starbucks paying more tax than they were asked too. That's very nice of them.
3 Preggy  Princess
4. Looks like the panel is stuffed for some sort of NHS cuts question. Lets say A&E.
5. Max Clifford..whoever next? I always thought Peter Glaze on crackerjack looked well dodgy.

EDIT: From this day forth it shall be decreed that the first born of the royal house of Windsor Saxe-Coburg shall be known as 


that's put a bit of a crimp in the teatowel sales.

Wednesday, 5 December 2012

Autumn Statement

As expected, rather a lot of ho hah about not very much. Some niggling with taxes around the edges and some more disincentives to build up decent pension pots - as well as some Brownite stealth in freezing benefit rises and also holding down tax thresholds below inflation.

Cunning, but not earth shattering.

The real issue for London is around the 15% proposed charge on non-person buyers and we won;t find out about this until next week. There are plenty of deals being held up by this and plenty of property dumping potentially linked to this issues.

For me the most interesting piece is the forecasting. We all know that Governments are trying to raise money today and for the future based on predictions of where the economy maybe. Yet here there is a huge amount of hot air and little light. The OBR has heavily revised and been wrong in virtually every prediction it has made since 2010, normally being too optimistic.

Without any real guidance, who knows what to do re the Government finances...more austerity, less austerity. With 20/20 hindsight it will be clear, but the reality today is that we don;t really know what it going to happen in 2 months or 6 and certainly not in a year or two.

Which is probably why the Chancellor is not doing much - it a conclusion to draw, but I doubt it's the right one.

Tuesday, 4 December 2012

Banks and their Toxic Loans

There was an interesting article by Liam Halligan in yesterday's DTel, in which he advocates banks being forced to 'fess up to all their toxic loans forthwith. 
What's needed is "full disclosure", forcing the banks to recognise such losses, taking the hit, and moving on. Some banks would fail, of course, executive egos would be bruised and reputations would suffer. Banks would be restructured, while protecting retail and commercial deposits, with the weak being taken over by the relatively strong. Then, though, banks could recapitalise, the wheels of finance could once again start turning, and capitalism's "creative destruction" would be able to take its course.
Over the years, several of our long-time commenters have also warmed to the idea of precipitating a spot of creative destruction to purge the system.  In normal times, as a fervent free-market capitalist I'd be among their ranks: but just now I beg to differ.  

Back in 2008, one of the remarkable steps taken by authorities worldwide was to require banks to stop marking their positions to market, writing off or provisioning for all bad debt etc etc. - for the probably very well-founded fear that it would start an unstoppable avalanche.  I was surprised at the rapidity with which they did this, but in retrospect I don't think it was wrong.

(By the way, some of these new strictures - or perhaps we should say 'reverse strictures' - now apply to corporates, too: it is far less easy for them to make provisions now than previously.)

In other words, we may be sure that astronomic amounts of trouble are stored up behind the newly-erected walls of opacity in the accounts.  Release this deluge at your peril.  Has to be done eventually, of course, but under careful control.

(By way of an illustration of the prudent management of a far less extreme, but nonetheless dangerous situation: after Enron melted down in 2001, the gas and power sector was plunged into financial darkness.  Many highly leveraged power stations became worth very much less than the value at which they appeared on their owners' books.  Their banks were therefore in (relatively) serious trouble - these are billion-dollar loans - and the project finance sector froze for almost 2 years.

If any one bank had decided to write down its distressed power-plant loan book, a market valuation signal would have been established, and there would have been carnage.  But - even under the stricter rules of the time - by a miracle of, *ahem*,  spontaneous identicality of views being taken, this never happened.  The entire sector was quietly and very methodically restructured - hence the 'dominos falling slowly' effect I wrote about a long while ago - and three years later you would scarcely have known how close to the brink the system had been.)

Carefully does it, guys - there is a lot at stake here.


PS [for pedants only] - technically speaking it appears Halligan knows not what he is talking about. "UK banks need to maintain capital buffers against unexpected losses. Such "provisioning" is crucial in any economy."  Nope: provisions are taken against expected losses - it is risk capital that is held against unexpected losses.