Thursday 31 January 2013

Question Time - return of the NHS

David Dimbleby chairs Question Time from Lancaster. 
On the panel are Baroness 'working class' Warsi, foreign and Commonwealth Office minister; Alan 'tax rates are different are they?' Johnson, former home secretary for Labour; comedian Dom Trigger Happy - I found a TH cd only yesterday - brilliant music' Joly; Guardian columnist Zoe 'pregmum' Williams; James 'climate change is hippie biscuits' Delingpole of the Daily Telegraph.

 Enter your guess for what you believe the audience will ask the panel. Maximum of 5 guesses allowed. Various special rules apply ;

rough scoring guide

bang on,as the script, right answer - 3 points
Close enough for government work, right answer -2 points
in the right ballpark - 1point
witty comments - 1 point
sole entrant to guess a question asked - 3 points
guessing a 'catchphrase/bandwagon/party message' spoken , accurately - 1point 
Only choosing 4 questions out of a possible 5, and only 4 are asked  - 1 point.
Posting first - 1 point
Predicting correct colour of Dimbleby's tie - 1 point {must guess before 9pm.}

This tournament is sponsored by Timbo 614
Week 4:

DtP 25

kynon 21
Botogol 22
BQ(MP) 22
 Measured 20
Timbo614 20
GSD 20

ND 19

Hopper 19

Budgie 17
Malcolm Tucker 16
Blue Eyes 14

What Has Parliament To Do With Soccer?

On the matter of overpaid MPs with altogether too little to do ... may we ask Mr Quango what business his colleagues have pronouncing on the shortcomings of the Premier League ?

We have become wearily accustomed to Keith Vaz and his Home Affairs committee grandstanding on any issue he considers is worthy of a sound-bite on the News and fleeting paragraph or two in the tabloids, so I suppose we can't be entirely amazed when the Culture committee does likewise.  But can there be any reason whatever why a nano-second of Parliamentary time is devoted to this topic, or why the Sports Minister greets the 'report' with "If football does not deliver then we will look at bringing forward legislation" ?  

Is a state subsidy required to keep Walcott at the Arsenal ?  Is soccer distracting the yeomen of England from their archery practice?  Does Balotelli's haircut contravene Health and Safety ?  Are soccer stadiums occupying land urgently needed for agriculture ?  Is there perhaps a Trade Descriptions angle: are people falsely being promised cultured football or something like that ?  Is the carbon footprint of a Cup Final going to make the UK bust its emissions targets ?  Was the hair for Rooney's transplant obtained from people-trafficked minors ?  Was Bercow once wrongfully thwarted in his ambition to play in goal for West Ham ?

What is going on ?


Wednesday 30 January 2013

MP's Pay. Bill Quango responds to CityUnslicker

Its not easy being an MP you know.
And as you said earlier CU, the salary is pitiful.

Just £
65,738 + £3,000 for each seat on a committee & £10k for each Quango chairmanship. Then there's the coveted cabinet position that brings an extra £68,827 to the pot.

I suppose there are some minor fringe benefits. A free house with full profits from the sale. Free household items; loo roll, toothbrush, vase and plinth, bathplug, bookcase, trampoline, canteen of cutlery, table lamps, dishcloth, tea towel, flat screen 3d TV,  Hot tub ..etc.

Free travel to the workplace, by any means, from anywhere in UK. Free vehicle. Own office building with paid for staff, telecoms, Internet, TV, business services, free postage, free stationary and utilities, rents, rates plus a pool of eager interns willing to assist with any whim.

Then there's all the food in the fridge. Overnight first class accommodation. New computers, Sky subscription, magazine and newspapers.  Free Ipad 3. Free smartphone. Free laptops..As many as one invoices for.

At the main office there are  subsidised meals in a choice of luxury restaurants, open all hours. There's a choice of good bars and a club, fitness centre, and choice of some of the finest wines in the land. And there's an exemption from the nationwide smoking ban.

Then..the best, gold plated, unfunded, pension provision in the western world. A special golden goodbye in case of job loss. Free healthcare, insurance, private security. Free legal, media and  medical advice. A guaranteed OBE or better in the New Years Honours list.
There's always a retirement job in the House of Lords, which can also be used as a parachute to a job If one has made some terrible foul up.

There's access to first class media teams. The best PR gurus in the world. Top four accountancy firms readily donate their time and experience. As do banking, military, medical, engineering  businesses and such.. A comprehensive library and records department. And you work in an office with the best security and policing in the UK. Its even got its own tube station!

There is the opportunity to employ family members, without the need for all that employment law guff about advertising jobs. Family members can and do cross use the facilities of the MP's home office to run their own non related business too.Which an MP can also be a partner or director in.  There's free overseas travel and holidays for all the family at overseas conferences, requiring little participation and held in truly, luxury destinations.

There are unlimited opportunities for future directorships of FTSE companies. Exemption from the need for tiresome receipts for expenditure. Exemption from libel and slander laws.

There are free tickets to concerts, films , opera, ballet, football, Olympics.. 

There are opportunities to be wined and dined by the most successful companies in the land. Charities. Celebrities.

So you see, £60k odd.. isn’t much for a job with no set hours. No actual remit. No possibility of workplace scrutiny. No line managers or supervisors. No direct boss. No censure for uselessness. No direct performance reviews. Its perfectly possible, even desirable, to have a completely non related well remunerated job, in either the public, union, third or private sector, which can be done at the same time as the MP is working for the government.

  In a safe seat there isn't even a remote chance of deselection except for the most corrupt or those that have gone gaga. There are no real requirements to do anything at all. Its possible to even go off and do a TV show in the jungle, during the working week, & no one much minds. Its perfectly possible to just Tweet all day about what's in the papers and this counts as 'informing public opinion' and is acceptable as actual work.

And there's the chance to be a minor celebrity. Have views aired on social media, television, radio and newspapers. Appear on dedicated political and current affairs programs, pontificating wisely.

And one does have the ability to actually frame the laws of the land to suit one's chosen agenda. To benefit from those laws.
Or to exempt oneself from the more  onerous laws. Its possible to skew the system in one's or one's parties favour. To ensure that money flows to one's supporters and away from the enemies fiefdoms.

Oh..and there's another whole super level of politicking to be had at a later date, in Europe, where the rewards are greater, the taxes lower, the scrutiny even milder. The democracy minimal. The expenses more bounteous and the grandeur and splendor rise as the workload shrinks.

Oh yes, almost forgot. A paid holiday entitlement a teacher could only dream of..As much as 16 weeks.

Don’t we deserve at least another £25,000 on the basic?

Performance related pay for MP's

The deserving poor
This week, as is becoming more frequent in a Country which is on its uppers, there are some big raging disputes about pay and with it the usual class warfare that has become endemic. Yesterday I opined upon the Bankers and their approach to their own pay and rations. Shame is foreign word for them and money tops morality at every turn, especially when there is so much less of it about (OK, we have Quantitative Easing, but that is yet to leak out in a positive form, just inflation), the bonus's on offer are very precious.

Today the focus will turn to MP's pay. David Cameron is keen to restrict this to 1% or less. An MP earns a paltry £63,500 a year. In London, a few secretarial staff at law firms earn this, albeit in other parts of the country this is a very good wage.

The Speaker Mr Bercow, the dwarfian menace, was quick to rise yesterday to accuse Mr Cameron on not caring about MP's pay because he was too wealthy himself to notice. Of course, the same could apply to him but the House of Commons is indeed made of glass and full of stone-throwing hypocrites, but I digress.

What better way of moving forward than assuming the better aspects of banker pay and using this to help with the Gordion knot of MP's pay. MP's should be paid a no salary and a performance bonus.

so for 2012 for example:

George Osborne - A truly rubbish performance, missing targets, unable to co-ordinate with his team and a big fail on financial targets bonus withheld.
Nick Clegg - Approach to work caused many unnecessary divisions with the Government and also leads to confused strategy which heavily impacted on delivery on key performance targets. Bonus withheld
Ed Milliband - Some improvement in performance over the previous year. Still given to talking more than doing, a useless quality. Half rations
Michael Gove - Hyper-active and effective in transforming a difficult education department. 150% bonus payout
Gordon Brown - Failure to attend work at all. No pay, Human Remains to be informed and to be placed on weekly reporting...

I missed off the obvious one - what do you think?

Tuesday 29 January 2013

RBS Bonus row, part 69....

It is fairly wearying reading the wild gnashing of teeth about the latest developments at our state owned RBS bank. The bank is due to announce a fine for LIBOR trading that will be in excess of Barclays but somewhere short of the UBS fine, where the criminal behaviours will be tested in court.

But at £500 million, of taxpayers money, much of it will go to the US Treasury, at a time when our own deficit is climbing and the share of the state taken by our Government is climbing too (back to 49% of GDP now and rising).

Moreover, £250 million is set aside for bonus's to bankers at RBS, this will really stick in the craw of the public. Whipped into a frenzy of hate against bankers by the Anarchists and an ex-Labour Government who seek to apportion blame for their failings elsewhere.

Yet RBS has shrunk its Investment bank, where much of the damage that led to a £45 billion state bailout was done, by some 70%. Of those, not all would have been in place in 2008. So we reach a moment where those under attack are not those who committed the acts of folly.

Luckily, the bank does not have clawbacks in its bonus system that will enable it to reclaim much of the past bonus's of those who have failed. The system is improving. However the principals have not changed and I am at a loss to understand why. Clearly bonus's are paid for performance and if the overall performance is leading to losses then extra rewards should be verboten.

There are plenty of unemployed bankers, and increasingly, algorithms, that can replace traders who say they are special at RBS. Also there are plenty of good people there who will not leave. If the price of respectability at the institution is another few years of no bonus's until the place really is on the mend, then that is the most sensible course. Why every year they go through this charade and wind-up is beyond me, performance related pay should mean just that, performance of oneself and one's organisation.

I note that this week politicians are also voting on their own pay rises again, but more on that tomorrow...

Monday 28 January 2013

Nuclear Endgame - and a Rogue We Will Miss

Looks as though the nuclear strike-price endgame is in prospect.  EDF had softened us up with mention of £140/MWh for their Hinkley output; I had predicted £119.95: DECC seems to be trying to keep it under the hundred, "whatever that means", as the Inde's writer justly puts it.

Because whatever the notional outcome, bear in mind that (a) it will be index-linked, and the electrons will not be in action until 2021; and more significantly  (b) there are so many valuable concessions EDF can be given under the table by way of capped liabilities etc, the headline figure needs to be very heavily qualified - except we probably won't find out in our lifetimes.  (I remember selling diesel fuel to the old GLC / LTE: they would do anything to keep down the nameplate price - the only thing that was reported to the politicians at County Hall - including offering 12 months' interest-free pre-payment !  Easy when you know how.)

Anyhow, we may be sure it will be trumpeted from the rooftops as a great triumph for all concerned - double (prices) all round !
Marchant: Rogue CEO
With impeccable timing, the industry figure who has done most to highlight the outrageousness of all this has jacked his hand in, and we will miss him greatly.  Ian Marchant, the unlikely CEO of Scottish and Southern - only SSE and Centrica of the Big 6 remain as independent British companies - is calling it quits.  I'm guessing not many C@W readers will have met Fat-boy Marchant, but suffice to say he is not a typical FTSE100 boss. His irreverent, flamboyant speeches, and more importantly his plain-speaking comments on the electricity market 'reforms' in general, and the nuclear nonsense in particular, have been a delight over the years.  

Hopefully he will still be around in some capacity or other, and we hope for even more uninhibited outbursts from that ample quarter.


Friday 25 January 2013

Adroit Dealings On Europe

However it came about; however reluctant he was to do it, the Cameron 'initiative' is a Good Thing. The cat is among the pigeons, and the ensuing disturbance will throw up who-knows-what.  

The reflex of a startled bird is of course to poop, but we can laugh confidently as the snarling and sniping 'project' promoters threaten to crap all over us. They can't be getting any pleasure from the better-informed public commentary: Raedwald has a good piece on how the intelligent European press knows the score. All manner of insights and opportunities will emerge as the dust and feathers begin to clear. 

Many thought 2010 was the election to lose, including many of our C@W regulars; but I always maintained, and still do, that you are better holding the levers of power - provided you know what to do with them. The ability to take meaningful initiatives is the prerogative of Government.   
That's why my scorn is greatest for Osborne, who sold himself aggressively as a Strategic Genius, and so was given total control of the Strategic Initiatives brief - on which he has singularly failed to deliver.  He really is just the student politician he appears to be, all tactics, spite and silly sneers.  Trumping Brown on inheritance tax was a wizard wheeze, but it doesn't put him in Mandelson's bracket (if you see what I mean).  Mercifully a real strategist has come to town, and if Miliband and Clegg are troubled now (as they clearly are) they will enjoy little sleep on the long road to 2015.

The despair over Cameron has frequently stemmed from his inability to be ruthless with his friends.  But Osborne has let him down; the Brooks woman was nearly disastrous for him; and Clegg's treachery over boundary changes is as big a political betrayal as any of recent years.  We may hope (upon hope) he has learned these hard lessons, and is up for the coming war of euro-manoeuvres.

For now, I offer the following: the precedent of France's stance in NATO.  For decades, France was 'in, but semi-detached' - and they really were in.  When a soldier I met French officers at all sorts of important gatherings - and they were keen to be there; and the rest were pleased they were there.  They maintained a decent division for deployment in Germany, and stuck to NATO protocols. The proof of the effectiveness of this, when the moment came, was how seamlessly they fitted into Schwarzkopf's great campaign for the liberation of Kuwait in 1991 - which was complex, successful, and entirely run using NATO doctrines and protocols.

A rather pertinent model for viable and constructive semi-detached positioning in a European context, I suggest.  And that's if we need to be semi-detached: I'd say there's a decent chance the next 3 years will throw up opportunities for something even better.  Over to Dave: no quarter for Clegg; wean yourself off Osborne; get in the habit of taking proper advice - and march towards the sound of gunfire.


Thursday 24 January 2013

Question Time: In ,out, in, out, in..or out edition.

 David Dimbleby chairs Question Time from Weymouth. On the panel conservative health minister Anna Soubry MP, former Labour culture secretary Ben Bradshaw MP, former leader of the Liberal Democrats Ming Campbell MP, editor of Private Eye Ian Hislop and journalist Angela Epstein.

Enter your guess for what you believe the audience will ask the panel. Maximum of 5 guesses allowed. Various special rules apply ;

rough scoring guide

bang on,as the script, right answer - 3 points
Close enough for government work, right answer -2 points
in the right ballpark - 1point
witty comments - 1 point
sole entrant to guess a question asked - 3 points
guessing a 'catchphrase/bandwagon/party message' spoken , accurately - 1point 
Only choosing 4 questions out of a possible 5, and only 4 are asked  - 1 point.
Posting first - 1 point
Predicting correct colour of Dimbleby's tie - 1 point {must guess before 9pm.}

This tournament is sponsored by Timbo 614
  Week 3:

GSD 20
Botogol 19
BQ(MP) 17
Measured 17
Timbo614 16
DtP 16
kynon 16
ND 16
Malcolm Tucker 14
Hopper 14

Budgie 9
Blue Eyes 7

What will Spanish unemployment be in 2017?

Because it is not a very pretty site today. In fact it is at nearly 60% for under 25's!

As much as we think a potential 2017 UK referendum on Europe is a long time away, it maybe much further than the average man on the street, or even Ed Milliband thinks.

A country like Spain should not have to suffer with such massive levels of social misery. Spain remember did not even stoke up a banking crisis or a have a crazed government borrowing from every body's future.

Spain was a victim of the political decision to join the euro currency. The euro had low interest rates and this over-heated the Spanish economy to epic proportions, causing a huge property bubble which has now brought disaster to the country.

Yet for now, as BQ noted yesterday re Greece, the people are not clamouring for a Euro exit; perhaps clinging to nurse for fear of something worse.

But worse is to come. Spain is in its second recession and won't escape that until next year. Losing jobs at a rate of 2000 a day, that is another half a million people out of work. And in today's fast moving world, having no skills and not keeping up with developments will take huge chunks off your potential earning power.

It is only 2013, the Euro crisis has received a hefty kick down the road last year and people have quickly forgotten about the dreadful underlying macro-economic disaster that is baked into the Euro project.

It may well end up that all this 2017 focus becomes entirely redundant and not just because the Tories probably won't be in Government....

Tuesday 22 January 2013

EU want in or EU want out?

We have avoided mentioning it much here. Mainly because the arguments for an in/out referendum and a further fusing of the UK to to the EU isn't much of a real issue. Much like the Obama election , the result isn't in doubt.

In any referendum the nation would vote to stay in the EU, but to be allowed to have some minimal power restored. Probably the working time directive which we ignore anyway. Immigration would be the issue citizens would like to have control over, but that isn't going to happen. A slight move on  citizens being able to claim benefits in any member country from day of arrival to maybe after 3 or 6 months or something might be as far as Brussels would be prepared to go. 

The EU actually wants greater powers. A larger budget. Control of nation states finances. Its not going to start unraveling what it has already achieved just to placate a nation that isn't going to really leave anyway. Sure, the UK might become 'uncooperative.' But that's about it. 
No poll has the UK wishing to leave the EU over treaty negotiation.
Not nearly enough of the population want to leave and no amount of huffing and puffing and pointing to idiotic banana rules or millions of new arrivals from Bulgaria will change the opinion polls much. So that's that. 

For eurosceptics the Liberals are in love with the EU and would have the UK join the euro and become a proper , respectful, member state. 
Labour is very keen on the EU and only pretends towards mild euroscepticism to retain its large working class vote share. Its unlikely to want to join the euro anytime soon, but wouldn't rule out joining at a later date. 
Cameron's Tories, maybe as many as a third,  are unhappy with Brussels so he will plot a course to try and win something from Brussels, possibly in exchange for agreeing to that 10 year increased budget that the EU wants.
UKIP, polling nicely, looking a better bet than the Liberals, but would be lucky to gain even 1 MP in an election. That gives them as much power and influence as the Greens. .. None.

Cameron is expected to say he would allow a referendum in 2015, AFTER the election. Good politics. Vote Dave and see if he'll really do it, or vote someone else and never, ever get the chance to vote on even mild reform. 
I expect Miliband, if the election looks winnable for him, will avoid any commitment that he would have to break. The EU is an issue he wants the Tories to implode on and not something that he wants opening any divisions in his own ranks.

So, for Eurosceptics, the future is bleak. The EU is as weak and as divided and as poor, and as unpopular and impotent as its ever been. Yet still the majority favour being in. In Greece, with daily riots, racism, fascism and communism on the rise, real, actual poverty, record 27% national unemployment, no realistic prospects of recovery shackled to the Euro, the populace voted to stay in.  Still vote to stay in.  And they have a party, an extreme party to be sure, but a party that COULD take them out. The devil you know carried the day.

There isn't really much reason to believe a referendum would produce a different result here.

Nuclear Stand-off Hotting Up

The business pages of the Telegraph are a favourite platform for commercial vested interests.  De Rivaz of EDF has used them before to 'frame' the context of the farcical bluffing contest being conducted over what outrageous guaranteed price (and other ultra-valuable concessions) he can screw out of HMG for getting started on just the first of his 4 'promised' new UK nukes.

And here he is again, the little Gallic tease - 'framing' for all he is worth.  We must assume the 'negotiations' are at a critical juncture. 
"Almost all of the necessary pieces are in place. Our new build project at Hinkley Point is 'shovel ready' and only a few crucial milestones remain to be passed. ... Yet I am still asked – should the UK do it? And if so, do we have the industrial capacity and expertise to pull [it] off?"   
Careful with the 'we', monsieur.
"Just two more pieces need to be put in place. First, we await a final planning decision."  
I think you'll find that's a given, matey: this lot have long since bent over for the shafting.  Or do you perhaps want some sort of new environmental indemnity thrown in for good measure ...?
"Secondly, and, most crucially, there must be a balanced, stable and durable agreement on the price of the electricity generated. To be durable, this price needs to be fair and balanced for both our company and the Government."
 'The Government': how sweet.  What about the people ?!
"I believe we can reach an agreement with the Government which will transparently display the economic viability of new nuclear, and which can underpin a robust business case for investors. EDF is now closer than ever to being able to make a decision."
Ah yes, economic viability.  And while we are at it, tell us again will you, about the security of supply for all that uranium you get from, errrr, Niger.  Surely, a great age of eco-satire is upon us.


Rose Delivery

OCADO Share GraphSo, Sir Stuart Rose, a much respected retailer is going to be chairman of Ocado. This has been allied to rumours of A takeover of the Ocado business by M&S.

Now M&S is in trouble on the clothing side but its food business is going quite strong and has been for years. As far as I can see it does a great job in selling to wealthy empty nesters who don't need to make big meals anymore but still want to eat nice food.

How that matches with Ocado is beyond me. Ocado is a slow motion car crash of a business. I am a keen user, as I am of all companies who want to serve me so well that they lose money hand over fist; it always makes me feel satisfied knowing they are going that extra mile (over the cliff...) for me.

The Ocado shareprice since its float is disaster zone and their weird attempts at raising cash last year are ample demonstration of this companies many woes - the main one being that it is much better to have mutiple channels to market and that it is trying to compete in one of our most competitive sectors as a new entrant where size is everything!

If M&S make a bid then I am clearly living in the wrong universe....

Monday 21 January 2013

Snow Joke for a triple dip

I knew it would not take long. The FTSE rally has been very strong this year, as it often is in January as people get optimistic that the coming year will be better than the last. Well here we are 2 weeks in and it is all unwinding quite quickly.

The heavy snowfall in the UK will depress economic activity in Q1 enough that the likely slight fall in Q4 will be repeated and so we will have a triple dip. Having said that, it does not matter too much as the -0.1 readings are hardly like a repeat of the 7% falls of 2008!

But the vibe is not good and no doubt he markets will start to reflect this again in the next month or two.Whilst long-term the switch from Bonds to Equities will underpin a good boost for shares overall, the loo-out for the immidieate future is back to 6000 or less on the FTSE.

The Prime Minister dragging up Europe as a topic is not really helping matters either - that is an issue to be dealt with at key moments when th epublic is focused, not to raise all the time to appease your own headbangers. Oh well, long ago has Cameron shot his bolt. 

Sunday 20 January 2013

RBS: the faliure of Vickers already evident

6 years from the implementation of the Vickers report and its failings are already clear to see. RBS is about to get a huge fine for Libor rigging, as is par for the course for seemingly every bank that had a trading division in the City.

RBS though are using this as yet another chance to re-structure what is left of the investment banking division. The CEO is going to go and maybe one of the deputies too. The remnants of the investment banking division are going ot be split into a pure trading desk for Bonds and Derivatives and a Debt Capital Markets business that will support its more corporate businesses.

Apparently the FSA and some of its own directors think there is still room for considerable reduction in the Investment Banking scale of the bank. There is nothing wrong with this idea per se, but what exactly is this doing to drive shareholder return? It is keeping the regulators happy, but the GBM division has made £10 billion in profits since 2008. Not any more, as the business is radically scaled back.

What has this to do with the Vickers Report? Well the guidance form the report is to split banks in theory but not in practice. Investment Banking has been given extra risk weighting and the retail banking is ring-fenced to protect taxpayers.

So now we have this. IN stead of RBS selling its investment bank and there being separate units, we have investment banking scaled back and nearly killed off - but not allowed to be set free to see if it can work independently or not.

This is going to be the same story at Barclays soon. It is the worst solution, splitting the banks would have been easier, safer and probably delivered better economic returns.

Friday 18 January 2013

Danger: Molesworth At Work in the Financial Markets

I have long held the view that many Germans who should know better just don't understand markets at all (e.g. here and here).  And now, meine Damen und Herren, we have another entertaining example
Competition: Europe seeks the most dangerous financial product 
It is known that many [financial] products are dangerous. They are opaque and complex and thus threaten consumer protection with concealed risks and high costs. They harm third parties such as the global poor particularly in developing countries by speculation with food and land. They put the stability of the financial system and sustainable development at risk because in some cases they cannot even be sufficiently analysed by financial markets experts or regulators and because they exacerbate price volatilities (also for currencies, credits, etc.). Other products might harm the environment by inefficient investments in non-sustainable industries or resource consumption... Please submit your proposal that should be banned here.
No, I am not fabricating this - it is a construct of the fertile mind of one Sven Giegold, a German member of the European Parliament. Nor am I making up Markus Henn, one of the 'jury' that will judge the competition, described as 'Financial Markets Expert, WEED' (sic).  Nigel Molesworth, it seems, grew up to be a star trader for a hedge fund, chiz, and still persecutes Fortherington-Thomas to this day.

If we may be serious for a fleeting nano-second (and I'm not sure why we should be in the face of such provocation), it is a fact that there are some 'exotic derivatives' that do indeed defy all rational analysis and are clearly the result of some over-indulged traders jerking off in the corner of the trading floor.  But any bank whose policies permit these things to be transacted has got much bigger problems than just hyperbolic gamma or whatever is the resulting exposure-dynamic.

I'd say pensions are pretty lethal - you put aside a lifetime of savings and some Brown, Balls or Osborne comes along and trashes them.  Not to mention Equitable Life.

Hopefully this earnest competition will attract some creative entries ...


Thursday 17 January 2013

Question Time competition- To be or not to be {in europe} edition

David Dimbleby chairs Question Time from Lincoln.
On the panel are Conservative Party Chairman Grant 'Schnapps' Shapps MP; Shadow Energy Secretary Caroline 'useless' Flint MP; UKIP leader Nigel 'one note' Farage; Chairman of RLM Finsbury and founding Chairman of Business for New Europe, Roland 'new labour -but open to persuasion' Rudd; and Dr Mary 'Domum Regite Romani' Beard, Professor of Classics at the University of Cambridge.

Enter your guess for what you believe the audience will ask the panel. Maximum of 5 guesses allowed. Various special rules apply ;

rough scoring guide

bang on,as the script, right answer - 3 points
Close enough for government work, right answer -2 points
in the right ballpark - 1point
witty comments - 1 point
sole entrant to guess a question asked - 3 points
guessing a 'catchphrase/bandwagon/party message' spoken , accurately - 1point 
Only choosing 4 questions out of a possible 5, and only 4 are asked  - 1 point.
Posting first - 1 point
Predicting correct colour of Dimbleby's tie - 1 point {must guess before 9pm.}

Davos: Your Chance To Set The Agenda

In these unnerving times, it's good to know that GSOH still prevails in the upper echelons.  Yes, Dr Axel Weber, chairman of the disgraced UBS, is to chair the WEF forum at Davos next week.

It all sounds like the first draft of a James Bond script.  Or like the account of Magna Carta in 1066 And All That:
Article 6:   That Barons should not be tried except by a special jury of other Barons who would understand
So who else should be on the top table at Davos ?  I myself will be chairing the session entitled Catalysing Markets through Philanthropy, naturally. Below are some of the other main items from the programme listing.  Here are a few suggestions: 
  • Renaissance Woman  - Hatfield Girl
  • The New Aesthetics of Leadership  - Gordon Brown
  • Smart Girls - Silvio Berlusconi 
Your nominations to chair some of these sessions ? 
  • SoirĂ©e on the Magic Mountain (sic)
  • The Moral Economy: From Social Contract to Social Covenant 
  • An Insight, An Idea with George Osborne
  • The Art and Science of Emotions 
  • Man of Character 
  • War against Obesity — Fat Invoice? 
  • Can Capitalism Evolve? 
  • The Garden of My Soul 
  • Catalysing Multistakeholder Value 
  • The Dangers of Hubris to Human Health 
  • Women in Economic Decision-making 
  • Reshaping Business with the Global Shapers 
  • Africa's Promise 
  • Life Lessons from Jazz — Improvisation as a Way of Life 
  • STEM + Art = STEAM 
  • Avoiding the BRIC Wall 
  • The Rise of Unconventional Monetary Policy 
  • Experiencing Mindful Leadership 
  • Thinking, Fast and Slow  

Tuesday 15 January 2013

HMV Reaction

This is a very delayed reaction given I heard about the administration a good few hours early on Sunday! Such is the state of my work situation currently that blogging output has to take a secondary place to merciless capitalism; c'est la guerre.

I do wonder though about the future of the high street, Bill Quango has written some excellent posts here recently. of course HMV was a business whose time has passed. We are not going to but CD's and DVD's in shops when you can download them at home, its just a societal change and companies will go with it.

However, the sheer cost of high street space with rents and other taxes means that the Internet always wins. And the Internet creates fewer jobs and destroys our high streets. On the one hand, I think this is a sign of progress, times change with technology and no doubt people moaned about the passing of the horse and carriage as a form of transport 100 years ago. So be it.

But could we do something to change the terms of the tax incentives which are so skewed against bricks and mortar businesses? Would this help a create a better society with more jobs and social interaction? I doubt for example that grocery home delivery will ever approach 100% of the market, the scale of the producers is such that it can withstand the competition from dark stores, the internet won't always win.

So how about an enquiry into retailing off and on the net - should we push for one?

 You beat me to it CU..So busy at the moment..not busy enough mind. Trade shows mostly.

As for HMV we looked at it properly almost exactly two years ago.

The consensus then ... 'They were doing the right things but had too little time to achieve them'..And we should have added , if we had known, the recession, triple dip will drag them down quicker.

That was the big, big problem. Something we discussed way back in 2008. A long recession is not survivable except by the strongest or newest or richest. Comet, HMV and even Jessops could have survived a shorter one.

Improved cashflow would have helped them continue with their transition to multi platform retailers.
But they've been getting a smaller slice of a smaller cake. It was not enough.
And the government hasn't any money either. The Portas money had 12 towns being given £100,000.
A tiny drop in a large, leaking, bucket. It won't achieve anything, even if it really knew what they wanted to achieve.

If you look on local papers websites the employees of both Jessops and HMV have generally only good things to say about their companies. Unusual for businesses that have struggled for years. Shows that the chief execs carried their people with them.
A real shame.

And a big problem that hasn't been much discussed is that each failing chain,especially specialist chains, gives one more reason not to visit the high street at all. If its all just Primark, Cafe Nero and The British Heart foundation, why go at all?

BTW - Who knows the link between Jessops and HMV ?

The Only Solution Is My Solution

The following Grauniad headline gets my prize for best of 2013 so far:

Rogue geoengineering could 'hijack' world's climate
The deployment of independent, large-scale "geoengineering" techniques aimed at averting dangerous warming warrants more research because it could lead to an international crisis with unpredictable costs to agriculture, infrastructure and global stability, said the Geneva-based WEF in its annual Global Risks report
Haha !  They don't like it up 'em, Captain Mainwaring.  But aside from 'independent' not fitting with 'dictated by the green lobby', what exactly is the problem ?   Let's turn to the report:
A long series of ethical, legal and scientific questions quickly arises about countless knock-on effects that might be much more difficult to assess ... Almost any change in weather and climate patterns is likely to create winners and losers, but determining causation and quantifying impacts on any given region or country would be a massive challenge.
What, unintended consequences ?  Well, b****r me !  That would be like, err, when you subsidise biofuels and discover that entire forests are being felled, and food-stocks diverted, for use as fuel ?  Or when you subsidise solar power and find that your electricity grid can't cope ?  Or when you implement 'green' policies and find that your CO2 emissions are rising ?

"Determining causation and quantifying impacts would be a massive challenge" !!  

Are they reading what they are writing ?


Monday 14 January 2013

Assassination Alert

This, ladies and gentlemen, is a slow-motion political assassination in progress.

That nice Damian Green, hero of the wrongful arrest incident of 2008.  What can have precipitated a-rummaging in the old files ?  This, perhaps?  A shot over the bows before Cameron's EU sally ?

It's going to get rough.


Sunday 13 January 2013

The FTSE has started strongly but some sectors look ripe for a pullback

When and where will the party end?

The New Year has seen big increases in stock prices amongst most major markets since the last minute fudge over the fiscal cliff in the US. It seems that the markets have become somewhat sanguine with regards to the shenanigans by US Politicians in their brinksmanship over all things economic and largely take things in their stride, with volatility back near recent year lows even as we hurtle towards the debt ceiling issue in a little over 8 weeks….
With the backdrop of continued QE in the US, there is a good feeling amongst investors at present it seems.  I posted some months back that despite the doomsayers, the FTSE should be trading at 6500 if it were to stick to its long-term trend from the 1980’s.
Markets though do not go up or down in straight lines and the last 3 years have seen early New Year bounces fade away as the largely bad macro news gathers pace. In the UK for example, the economy likely shrank again in the last quarter of 2013 and we could well tip into a technical recession yet again in this current quarter.
In the meantime, the rally could continue for a week or two yet.  Two of the sectors that are doing the best are Banks and Homebuilders. Indeed, Taylor Wimpey and the other homebuilders now stand at post recession highs as of Friday. The de-regulation of the planning laws has given these companies a boost, along with their strong organic results. The re-rating is to my mind, a little too high now though at approaching 100% in just a couple of months. I can’t see this being sustained when mortgages are still so hard to come by and the UK property market outside of London remains largely in the doldrums. As soon as the market turns there will be a big pullback here on such overbought stocks such as Taylor Wimpey and Barratt Developments. although short interest is currently declining as can be seen in the graph below for Taylor Wimpey, where shorts have been hit hard this past few months and probably explains a large part of the strength in these 2 stocks in particular:

Taylor Wimpey Short Interest
 Taylor Wimpey and Barrat Developments 4 year Chart

 The second sector which is undergoing its traditional start of year boom is the Banking sector. Every year it seems, in the run up to their results, the bank’s share prices increase by at least 50% as investors hope that profits and dividends will return. Every year they disappoint and this year I expect the disappointment to be worse than predicted due to the Libor and other fines as well as a terribly weak investment banking market. Yes, the workout areas of the banks have started to reduce loss provisions substantially from a year ago, but the former factors will still weigh heavily on their results. RBS, to me, at over 400p is certainly ripe for a large pullback and Lloyds and Barclays have similar issues to that could warrant open short positions.

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Friday 11 January 2013

Friday fun - Von Rompuy's Express

A long while since we've done a Friday fun easy day.
Today, we are looking for the best altered film titles about UKIP

BQ offers -

  •  Von Rompuy's Express
  • {Not} Being There
  • The Exitist
  • The French Coercion
  • The French Coercion II
  • Sunday bloody Sunday working time directive

And yours into the comments.
Winner gets to add a sentence or two to Cameron's upcoming Europe declaration.

Thursday 10 January 2013

Question Time - New Season, old faces



David Dimbleby chairs the first Question Time of 2013, from Lewisham in south London. Joining him on the panel are: Ed 'windmill' Davey, the energy and climate change secretary; Lord 'lardy,shaggy,punchy' Prescott, former deputy prime minister; Nadine ' kangaroo nuts' Dorries, MP for Mid Bedfordshire; John Bird, founder of the Big Issue;{can't say anything bad about him- one of the most upfront and sensible people on the planet} and Times columnist Camilla Cavendish.{another pretty sensible person. Especially for a journo}

 Enter your guess for what you believe the audience will ask the panel. Maximum of 5 guesses allowed. Various special rules apply ;

rough scoring guide

bang on,as the script, right answer - 3 points
Close enough for government work right answer -2 points
in the right ballpark - 1point
witty comments - 1 point
sole entrant to guess a question asked - 3 points
guessing a 'catchphrase/bandwagon/party message' spoken , accurately - 1point 
Only choosing 4 questions out of a possible 5, and only 4 are asked  - 1 point.
Posting first - 1 point
Predicting correct colour of Dimbleby's tie - 1 point {must guess before 9pm.} 


Season opener guesses are supplied by  Kynon -

1. Does the panel think it is appropriate for serving MPs to appear on "popular" (I use the term very loosely) television shows if it prevents them representing their constituents (aka - Dorries gets a kicking)?

2. Something about fracking/renewables, since Ed Davey is there.

3. Someone is bound to talk about the proposed 1% cap on benefits (it is a Big Issue, after all).

4. M&S's disappointing annual results - beginning of (another) decline/fall of a UK institution? {I'll allow jessops here, as you went early}

5. Two Jags/Shags/god-knows-how-many-houses-Prescott to get a shoeing for hypocritical mocking of Tory expense claims when his own were, um, just about as dodgy (broken toilet seats etc)?


Wednesday 9 January 2013


David Dimbleby chairs the first Question Time of 2013, from Lewisham in south London. Joining him on the panel are: Ed Davey, the energy and climate change secretary; Lord Prescott, former deputy prime minister; Nadine Dorries, MP for Mid Bedfordshire; John Bird, founder of the Big Issue; and Times columnist Camilla Cavendish.

 Enter your guess for what you believe the regional audience will ask of the panel. Maximum of 5 guesses allowed. Various special rules apply that are hidden even more cunningly than on a apple iphone update.

Return of the league table?
Joker play?
Guess the soundbite?
Scoring the panel ?
Weakest link? 

Which gimmick{s} shall we employ for this season ?

Hector Sant's should not accept his New Year Honour

Did not find time to re the the New year's Honours list for businessmen last week, espcially when the real interest seemed to be on how many athletes were given more baubles to go with their gold ones from the summer.

One though does really stand out, as the Telegraph mentioned at the time. Hector Sants, now on a packet at Barclays, has been knighted for this services to "Financial Serices and Regulation." Quite what these services are has to be written to be believed.

Hector Sants ran the FSA before and during the Financial crisis. He has some lovely lines used int he past, such as he had no power to stop the RBS-ABN deal, despite being head of the regulatory approval body. but as a reader writes in, there are other scandals too, such as the that of the PPI claims.

This has become a multi-billion sore for the banks and was an unprecedented rip-off of consumers, with profits fo 80%  for issuing companies. Complaints were being made and upheld as far back as 2005 - but the FSA did nothing until well into the Financial Crisis, preferring to ignore their own criteria of 'Treating Customers Fairly.' It hardly smacks of firm or even competent regulation.

The whole 2008 disaster wwas fuelled by mis-applied regulation and greedy bankers, to make the man in charge of this a Knight of the Realm is another sick example of the powerful looking after their own. Perhaps Mr Sants knows where too many of the bodies are buried.

The final piece of the cake is for him to declare that HIS knighthood is a recognition for ALL the staff at the FSA for their hard work. This is a David Brentism of the first order - he mustsurely realise how terribly crass this sounds.

There is a rather lonely e-petition attempting to get the Government to change its mind, but I doubt this will go anywhere. Hector Sants regards himself as a man of honour, perhs the right way forward is for him to humbly refuse his bauble?

Tuesday 8 January 2013

Benefits cap fantasy politics

Hard to ignore the media today making such a song and dance about the vote on capping benefits rises at 1%. The bizarre PR campaign from the Coalition Government is to say that this is only fair as this is what public sector workers have to live with. No  mention of the 80% of private sector workers who contribute their taxes to paying for everyone on benefits AND in the public sector yet have seen pay falls in the past few years.

Also, capping benefits rises is a little like putting a plaster on a arterial wound. The Government is spending £300 million  a day of money it does not have and this will be but a small part of it. After all, it is still a rise although it is presented as a real terms cut (I note how the BBC has jumped on that straight away, given its anxiety about the cuts which one day are going to it).

Yet the shrill tone from the Labour benches about hitting the poorest hardest I think is very bad politics for once from Labour. It's fine to be anti-everything, but it is not credible to try to say you will manage the economy sensibly whilst not having any plans at all to reduce the hideous spending levels back down to 40% odd of economic activity that the UK economy could actually sustain.

Monday 7 January 2013

Starbucks, 'Fair Taxes' & a Morality Tale from Germany

We haven't really addressed the hot populist topic of 'fair taxes' here at C@W: I am guessing it is a non-issue for most of us.  The law is the law: no-one seriously suggests Starbucks et al are guilty of tax evasion, it's rather basic avoidance they are all up to (plus exploitation of folk's willingness to overpay for the product), and the politicians had better legislate if they don't like it

(In the case of a business-model based on a globally-traded and market-priced commodity like coffee ("the defining symbol of capitalism" - BQ), it should be pretty simple to clamp down on transfer-pricing tricks - oil taxation, for example, has long been based on market pricing to prevent the obvious transfer-pricing games that vertically-integrated oil companies might otherwise play.)

Bizarrely, however, Starbucks now proposes to pay 'tax' it doesn't owe to the Exchequer, as a sop to public opinion.  They must reckon the 'fair taxes' notion has some traction with the Man On The Clapham Omnishamble.  So I thought it might be interesting to look at the 'fairness' concept as it has existed in a country with a less capitalistic, more socially-oriented  public ethos in the business sphere, with a tale from Old Drew's Book of True Stories.  Draw up a sandbag, swing the lamp, and harken to Nick ...

Some years ago I worked for a large energy company (no, not the Crooked E this time) that had operations all over the place, including a very profitable one in Germany. The company's natural instinct was to remit substantial dividends, as it was legally entitled to do, but it had been solemnly advised that in socially cohesive Germany, where everyone had conveniently forgotten where the 'Saxon' comes from in 'Anglo-Saxon', there were 'social norms' as to how much dividend was appropriate for different types of business. Thus, for risky entrepreneurial concerns, high dividends were 'socially sanctioned': but for the energy business, catering for a basic human need, it was somehow 'understood' that only modest dividends were appropriate.  

A pretty tangible notion of 'fairness', one might say - just the kind of thing that presumably wins the approbation of woolly-minded Guardian writers. But we're not finished with the story. The same German advisers who counselled against a norm-busting dividend also pointed out that financial reporting standards in that country are a good deal less stringent than those of the despicable Anglo-Saxons (which remains true to this very day, see below), and that nothing could be easier than to spirit the earnings away unobserved.  By the expedient of establishing an affiliate in a convenient island location, the desired funds were channelled to said affiliate and thence to the ultimate parent's coffers.

How was this simple trick not picked up and reported upon consolidation of the German affiliate's books ?  I just told you:  German reporting standards are lax !

What, then, of the social norm on dividends ?  Why, it was ostensibly observed for the edification of the German public, of course, and flouted freely in practice.  Readers who may wish to deploy this tale as a metaphor on German morality in general are welcome to use the comments section, but as this is C@W I shall content myself by recalling that the first 2 European banks to go under in the present crisis were not feckless Spanish outfits or even Northern Crock: they were German Landesbanken,  supposedly models of provincial probity and conservatism, but in fact playing the mortgage derivatives markets for all they were worth (quite literally), via - yes, you guessed - under-reported (and uncontrolled) overseas affiliates ...

To hell with your 'fair taxes'.  Legislate, or shut up.


Friday 4 January 2013

High street observation.

Raedwald has some good observations on the future of the high street.

But in Suffolk's little market towns over Christmas I saw signs that the High Street isn't dead, but in a process of change. The home-knitter who started buying wool in bulk and selling the surplus on eBay has now filled a shop-front with bright balls of wool and irresistible baby garments as a boost to her eBay shop; the ironmongers founded in 1823 that have gained new life by putting 6,000 of their 40,000 stock lines on the web, the farm-direct shop also with its own website, the shop window filled with old planes and woodworking tools from a collector and dealer who also operates on eBay, only opens the shop erratically but mans the computer in his workshop to the rear for about 16 hours a day. 

That's a good spot. The niche provider is a part of the future. The artful retailer, like the ironmonger in the piece above, will have an existing business that is currently successful, and will add an online presence. That business is adding brand new sales, at a minimal additional cost. And there is a move for craft type businesses to band together to share the space and the costs and staffing of their enterprises. 

But many, many more online sellers refuse to move onto the high street, even though they could quite easily sell products there. 

At present it costs £1000 Sq/foot to take a spot in Bluewater. Its £45 sq ft for the warehouses in Sheffield where some of the largest online fashion chains operate from.  Rates are pegged to rents, so the rates bill is less too. And retail rates are determined by a strange method whereby 'frontage'  and front of store, customer area , is rateable at a much higher than rear area storage space. And warehouses are all storage/office space.

Distribution and warehouse and headquarters staff operate from the warehouse facility too, as any high street multiple would. But the the high street business has to fund its HQ and warehouses from its shops. The online trader funds no shops.

A person selling on ebay can operate from their home. Then, as they grow, they move to either a bigger house, local business park or a high street. In the high street they must staff their shop. Someone must be there all the time. They need display equipment, signage, labeling, point of sale and tills and credit/debit facilities and banking issues that they don't really need with a paypal buyer.
They have to have business insurance and liability insurance. They 'should' have full health and safety in place. Trained first aider. The fire 'risk assessment' and so on. They have parking and delivery time, loading/unloading issues.  Alarm companies and security measures. Rubbish collections are less frequent. Theft is likely at some point. Cleaning
And they have to deal with people. Actual people. Something the online business never need worry about. 

Its expensive to be on the high street. Even with the small business rates relief, its expensive compared to a shed unit somewhere. 

I am aware of some quite well known ebay sites, that have sales feedback in the 100,000s that operated solely from their homes. One had planning for a triple garage and indoor swimming pool and extension approved. All that space went to stock. The swimming pool  had nothing but trainers in it until the house was sold a few years back. A husband and wife team. They didn't even need childcare. After school the kids were at home with the working parents. In their own house. Something that could not be done on the high street.

That's how some online ebayers manage to profit on just a 20% margin. Their costs are minimal. No rent. No rates. No bureaucracy. No extra insurance. Minimal extra utilities bills.
Its a risk. If the house burns down, or floods , no insurance company will pay up. But its cheap working from home. A high street business trying to survive on 20% margin is in trouble at the first downturn.

But even with all the disadvantages of the high street traders will still come. Some goods just sell better being seen. And eventually even the government and the local councils and the landlords will realise that unless they offer a reason for businesses to move into their retail premises by tax breaks, rent free periods, rate capping, funding, advertising, parking free services etc, they will have filled the barns of the countryside with small businesses, whilst leaving themselves with long stretches of tarmac with very large, empty windowed, unusable premises on them.