Monday 30 September 2013

Obama is not very popular

US is today preparing for Government shutdown. It is an interesting concept when the lawmakers will not vote to keep paying the staff. I cannot imagine in the UK for a minute how it would even be possible for the Government to stop paying the staff in the NHS, there would be a march on Parliament to burn the place down again.

America though, is a foreign land, and there the needs of party political point scoring rise even to the level of not paying peoples' wages. It is very peculiar and breaks the first and most important rule of business too, always pay the staff. So why he shutdown, well it comes down to Obama being a lame duck President without control over congress and so their being able to stop his key initiatives, such as Medical Insurance reform - Obamacare.

He is in the position of leading a minority Government in UK terms. All this will have the side effect of crashing the markets this week, how far I am not sure, but enough as the toppy markets are always looking in September and October for reasons for a nice old correction, prior to accelerating into the year end.

It is also interesting to see just how far Obama's star has fallen, the man is a fantastic orator but a poor decision maker and in many ways not even a very good politician. Ed Milliband should take note of Obama and also President Hollande in France; indeed I think he has already. He can see that making wild populist anti-capitalist statements can get you elected. I wonder though how he plans to change the end of the story, where the wild ideas prove impossible to implement and instead the populism dies?

Friday 27 September 2013

Climate crisis: the weather will change!

It's amazing, today the new Climate change study will come out and announce, that in future in the UK the weather will be changeable.

Now, having lived in this country a few years I can definitely attest to the concept that we have seasons which only last a few months or even weeks each and the weather is indeed changeable, often by over 40C in the course of a year.

So the new measurements saying that we can expect 1.8% warmer climate and a similar decline due to the slowing of the Gulf Stream suggests some increased variability. How this is meant to shock everyone into action I don't know. Also seeing as we have variable weather in any case this strikes me as a tautological argument, if it gets hot it will be cliamte change, if it cools down, if anything basically.

How this squares with trashing our whole electricity system and going for wind-buffoonery I don't know. What I can see is that even if you accept the climate scientists claims about the future and accept the inherent unpredictability of their models, there is not much for the UK to worry about in the round. perhaps the greatest threat would be immigration but we have managed to inflict that challenge on ourselves in any event.

Thursday 26 September 2013

Question Time Competition - Keeping the lights off edition

David Dimbleby chairs the topical debate from Uxbridge, with education secretary Michael Gove MP, shadow foreign secretary Douglas Alexander MP, UKIP candidate and Daily Express chief political commentator Patrick O'Flynn, novelist Will Self and journalist Louise Cooper.

I quite like real reason..just do.


2 pt for a correct guess of the colour or pattern of Dimbleby's tie.{before 10pm}
2 pt for an accurate spot for each of the question asked
2 pt for being the sole entrant to correctly predict a question asked

1 arbitrary point for any partially correct questions, witty phrases, spotting the soundbite, joke, tweet or posting in the comments first.

And the league table will be winner = 1pt
Everyone else - Zero.

Twitter- its often better than the actual show. Lots of rants and that moment when you read something written by someone else who is clearly 100% wrong. How can someone be 100% wrong? if you want to know, listen to Larry Lamb on a Sunday morning on LBC 97.3 - 100% wrong on pretty much everything.


BQ believes:
Dimbytie - Pale yellow affair
1. Has Miliband ended fuel poverty...for a bit.
2. Blood stained Mental Patient fancy dress upsets Alistair Campbell - Too many bad memories, Al?
3. Nationalisation of the railways.. Because they were better before? .
4. Damien McBride. Are the revelations damaging to KGB Labour?{KGB was MP speak for Kingsguard of Gordon Brown} Not really. Internally perhaps.
5 . Women..bunch of sluts?

Number of wins - 2013
Mark Wadsworth - 1
Nick Drew -1
Malcolm Tucker -1

The Enron Domino Lesson: Brown Delusion (3)

Quite slowly, actually
The C@W trio doesn't normally sing in unison, but on the Brown Delusion we are for once very much ad idem.   To wrap up CU's and BQ's points that plenty more could have been done by Brown in the full year or more of precious time at his disposal before Lehmans et al went under in Sept 2008, and in case anyone thinks this is being wise long after the event, here is a 'told-you-so' extract from a C@W piece from 14 Feb of that year, entitled Lesson from Enron: How the Dominos Fall 
"Writing as someone who witnessed the Enron saga from *ahem* very close proximity, I learned an important lesson. Well several actually, but this one is to do with how the dominos fall, and the answer is – surprisingly slowly. 
Enron, the pre-eminent market-maker in the global energy sector, went under in October 2001. This brought down the vast and burgeoning ‘merchant energy’ sector, and after that the project finance sector; and at the time I assumed this would happen in weeks, if not days. Not a bit of it: the big energy merchants crashed at the rather leisurely rate of one per month, until the final bankruptcy (TXU Europe) a full year after Enron. Project finance hit its nadir the year after that. 

There isn’t space here to discuss why this happens in such slow motion. The point is that what we are currently seeing on the vastly greater theatre of world finance, indeed the global economy, needn’t be anything other than protracted agony. We can expect wave upon wave of Bad News, each time emanating from some new and unexpected quarter. IMHO, we’ve only just begun - Happy Valentines ! "
Yes, there's usually time to do something - presuming you know what to do.  But then, Brown was a genius - wasn't he ?


Wednesday 25 September 2013

Ed Miliband's conference speech - between the lines

I promise you..conference..that I will make this One-nashion..A nashion of Old Labour!
{hold for applause}

I will ensure that this country has cars that rust within a year...Big, 20 ich flares..I will return the railways to British Rail...{pause for ripple of excited affirmation}

And much more..Conference! ..Let us not forget our historic roots..roots in working class areas with poor plumbing and ineffective power showers .. Our fathers and grandfathers were men with sideburns and excessive facial hair and ludicrous hairstyles..And I want you to have the same opportunities that they had..

 "Colour patches on the knees of your jeans.... Sheepskin denim waistcoats. ..Raleigh choppers. Coal..Smash potato... Boil in the bag Haddock and rice...Rolling Blackouts....
Glam rock..The Morcambe and Wise show... 98% taxation..bow ties..the Milk Tray man..
A choice of up to three television channels... lurid wall paper....The Giles cartoon book.... Increased food and clothing prices by 25%.....Homophobia..Beige..beige everywhere!..Two postal deliveries a day and  almost  compulsory smoking in public places..

 Free rock festivals and the permissive society..cardigans...Ecology..Sit-ins..pubs..comedians who weren't 'alternative.'

Plastic macs... OPEC... Modern domestic the washing machine or a microwaveable cooker... Robin Day..Decimal currency..Platform shoes..PLO..
Record summer with pipes..Babycham..Jackie magazine..Wooly jumpers..Factories..The Clangers..The cold war..James Hunt..The generation game....the package holiday..Party Sevens..Skyjacking..Wholesale Nationalisation..Suede Safari suits..A heated rear window as an optional extra!

And much more! Conference....!.
Incomes Policy and exchange controls. Boring banking....Floppy discs..Typewriter ribbons..The IRA..Cambodian boat people..Marxism in Africa..Janis Joplin and Jimi Hendrix..Bagpuss...Ladybird books....Tubular furniture..Harmony Hairspray..DISCO..Paisley print dresses and Paisley politics..The GPO..The Pill..Town Planners..Donkey jackets...Stagflation..Thick rimmed NHS glasses..milk floats..TV going off at midnight..The IMF..A drinks cabinet..Cigars..

Darth Vader..British Leyland..Unshaven pubic hair..Blue Nun..Hostess trollies..Marc Bolan..Wimpey Bars..Candles in wine bottles..pocket calculators..Everything closed on Sundays..Big, floppy wedding hats..Black rubbish bins in the streets
 .. Jubilee Mugs..Punk..The Goodies...Brut 33...Bra burning.. G-plan..Racism..Shagpile...Incredibly bad architecture...Pong...Sexism..Milton Keynes..2000AD....Benny Hill...Unhealthy complexions..The electricity board..Rumbellows..Deviant Judges..Monty Python..

And, comrades,  I can foresee...Double digit Inflation..Police on the beat..Children playing outside...Magnetic tape..yogurt..Teabags!..Reggie Perrin..The continental quilt..Economy 7 heating....The common Market..Devolution..Friends of the watches..CND..And Union barons and beer and sandwiches in smoke filled government offices...

And conference..Let us fight the cost of living inequality with a three day week and..{prepare for rising crescendo finish} strike, after strike, after strike, after strike !

{Conference leaps to feet, applauding with the fervour of true believers. Neil Kinnock leaps onto his chair declaring Awrrrighht!! Awrright!!}

Those Whom The Gods Would Destroy, Haha !

More than a year before the 2010 Labour leadership race we identified Ed Miliband as the man to watch - based on a cunning piece of energy policy he hatched when in power.  He seemed to know the score back then.

But his new 'energy price freeze' ?  The man is barking mad !
"It is probably the sort of pledge that Mr Miliband would have preferred to keep under wraps but was forced to reveal because of his poor poll ratings. But it is a thoroughly healthy political move to confront energy market manipulation. ..."
Thus opines the Grauniad's leader-writer, proving that leftist journalists know as little about the real world as leftist politicians.  Miliband will come to wish he'd kept it under wraps, period.


Update: Raedwald punctures the whole Milibubble very nicely here

Tuesday 24 September 2013

Centrica denied subsidy - a small victory

No doubt Mr Drew will update this later, but initial reaction this morning to the news that Centrica won't be building offshore or onshore gas storage is that I am surprised and pleased.

Clearly, without subsidy this project could not go ahead and so Centrica have shelved it. Also, given market dynamics there was no demand for this project without a huge government subsidy. This is as it should be, no market need, no pay taxpayers moollah.

 Moreover, only in April Centrica announced a deal with Cheniere energy to supply shale gas to the UK. So we have a nice diversified supply set, Norway, North Sea, Qatar and the US, with the interconnector as a last resort for Russian gas. This is why the UK does not need 3 months storage like say Germany, which is hugely dependent on the whim of Moscow for its gas supplies.

The only slightly worrying part of this story is that the Lib Dems are in charge of DECC, this means that this subsidy was more likely denied because the Lib Dems hate the idea of a dash-for-gas which puts such a commonsense and commercial hole in their preferred dash-for insanity (otherwise known as windfarms) policy. Sadly the windfarm subsidies far, far outweigh anything Centrica is asking for gas.

So its a small victory for the market and Government policy today, but a small victory in a losing war for taxpayers.

Monday 23 September 2013

Could the banks have been allowed to fail?

The Brown Delusion II.

CU asked 'what preparations did the government take having been given a full years warning of a possible crash to the banking system?'

The answer was - not many.

The Brown memoirs make clear that the government was completely surprised by all the banks debts..far in excess any prudent lender would have risked. The Daily Mail's McBride serialisation has Brown telling cowering bankers the state of their finances, what has gone wrong, where it went wrong, inaccuracies in their balance sheets and that he was the only man in the UK, probably the only man in the world, who could save the banking system. Without his powerful intervention the cash points would have failed and the mobs taken to the streets and looted their way to anarchy and revolution.

And there may even be a very large amount of truth in that. I agree with government intervention in the banks. The idea that the banks could have just been left to fail is supremely risky. 
If we recall Northern Rock only went from a banking failure to a banking crisis and panic because the government did not act swiftly enough. Early on in that train wreck the Brown government had refused to guarantee savers deposits properly so the inadequate £30k deposit guarantee scheme was in place. It was only after the £85,000 amount was agreed, with an implied, if not confirmed, 'unlimited' did the panic slow.

And as the 2008 banking crisis hit the government billions in bailouts did turn a potential Wall Street Crash and the possible end of capitalism into simply a long, long recession. Better that than the sort of riots Britain saw recently, and the vigilante response to lawbreakers. So the Brown government's immediate spend of some £500bn did save us from anarchy and only landed the nation with zombie banks that could continue on life support and a century worth of additional national debt.

A good result really. Better a 10%-20% reduction in living standards and house prices than mob rule and the guillotines. that may not have happened. It didn't in Cyprus. There the banks were shut for a fortnight and the riots never began.  But who wants to take the risk? And HMG only had hours to sort out a rescue, according to Brown.

BUT - if as CU said, it wasn't hours, but months to plan something, why were there not better contingencies in place?

On a micro level, if the banks closed their doors, how could the government ensure the operation of the nation? The people aren't concerned with hedge funds. They want their money. 

The Cyprus situation showed that with EU consent, limited funds were made available. A daily withdraw limit, set very low - £100. Not great, but enough to prevent riots and enough to prevent bank runs. Not enough for an industrial nation to run its businesses and pay its bills, but enough to get by for a few weeks.

And in the UK there was even an alternative methods to the banks. For example, up until the Blair government the Post Office handled payments of most pensions and benefits. There were some 6 million customers. And it was largely a paper based system. A pension/benefits book. With the switch to a complicated application process for a payment card system DWP deliberately closed about 5 million Post Office accounts. But, with a bit of contingency planning there could have been a system in place to simply issue a card, open an account and receive benefits  that way. The government could have pumped their money through the 12,000 {2008} post office branches. A total of branches greater than all the banks combined. That sorts out mums, and pensioners and the disabled. Online would be dodgy. PO had no current or business bank accounts. But with a year to think about it, it could have been set up.

And, with some planning, the rest of us could have been sorted too. There were around 8,000 large Supermarkets in the UK in 2008. The biggest chains had top notch IT systems. They had lots of cash. They wanted to be banks anyway.
Governments could have guaranteed all our the savings, as they did. Then, over a short period, allowed the transfer of funds into either the new supermarket banks or the post office government owned bank.
{Post Office using the Northern Rock banking licence re-branded as National Bank Of UK or something. It was on the cards. Only Post offices involvement with Bank of Ireland on a 25 year agreement scuppered it in 2010. But if you're going to collapse banks..well..''s an offer for your share...Take it or be nationalised, capiche?' } 

Paystation & Paypoint had around 10,000 outlets too. And would have been able to issue 'daily' use amounts of money as long as the government pumped some of that £500bn their way.

IF the government had set up, ready to go in emergency, quick transfer bank accounts. Business accounts Loan and deposit guarantees. Electronic money injected into the new banks,they may...may..just have been able to let the big banks fail, the shareholders take the hit and keep the revolution from Downing Street.
It would no way be easy. Certainly chaotic and panicky and fraught with great danger. But it may well have been cheaper, and possibly better for Brown once he had rescued the old banks not to continue with the business as usual model.

And all our mortgages ? - Hell..write them off! 
Recession over before its even begun!

The Brown Delusion

The UK under Gordon Brown

Hmmm....I don't think we should let go unchallanged these assertions made about Gordon Brown in the new damian McBride book. If only becuase they show the usual one-eyed perspective expected of an apparatchik. Apprently Brown as amazing during the 2008 crisis because he managed to discuss getting troops on the street. Not only that but he was allegedly very clam with other world leaders and showed good leadership during the time of crisis.


How exactly did this crisis come about? As my colleague Nick Drew described eloquently last week, the banking crisis started in early 2007 and really kicked off when Northern Rock went under in the middle of 2007. Its peak was in October 2008. What did Brown and everyone else do for a year whilst the banks went under. Where were the stress tests and emergency capital calls that could have saved RBS or HBOS or indeed any of the other mutuals that went under. Or where was the preparation to allow the banks to fail whilst preserving the banking system and the deposits of small retail customers? No this was the time for great rhetoric from Mr Darling in hte 2008 Budget; he spoke of 'this other Eden' and about the opportunities that awaited the UK. Even in the teeth of the Financial Crisis there was to be a budget surplus in 201 and growth prediced at 2.25%.

It is hard now, just 5 years later but with so much having happened, to remember just how absolutely delusional the Government was at the time, not even realising there was a crisis until September 2008 and then being left with no alternative but to take over the bust banks which it had encouraged through the noughties to lend money and not worry about that pesky regulator or commercial reality. Tax income was too important for that.

Even in the crisis to say that Brown of Darling were statesmanlike is laughable. They knew nothing until the crisis was upon them and then had to make obvious decisions in the space of a few hours. Where was Brown counselling Bush against letting Lehmans fail or stopping the Wall Street domino crash of investment banks?
Nowhere to be seen, that's where.

They were worrying instead about how to reverse the 10p tax gimmick that had gone wrong. Worrying about whether the current budget was Green enough for Polly Toynbee.
That's where there were busy.

Could any Government have avoided the terrible crisis we have endured, probably not, could it have been handled much better than it was? Certainly. Idiotic scorched earth policies like 50% tax rates show how important political points scoring was over economic reality and also how they were happy to predict a future of easy growth to justify their vast over-spend ahead of what was obviously going to become a huge recession.

Leadership? Bravery? Do me favour. It's a horrific episode in our history that will scar the Country for the rest of my lifetime. Brown and Darling should be arrested for treason.
Finally, let's nto forget that at the heart of this Government, giving advice and inside the small cabal, were Edi Milliband and Ed Balls, the men who will likley be in charge to create the next economic crisis.

Saturday 21 September 2013

McBride Back In Town ?

He's back !
Just like the old times - let joy be unconfined !

The spin doctor is so snide, dear 
And he leaks to Fleet Street hacks 
Just a jack knife has McBride, dear 
And he sticks it in Blairite backs 

On the air-waves, in Sunday papers 
Lies a-plenty, causing strife 
Someone's briefing, paid by Gordon 
Could that someone be Mack the Knife? 

Gordon’s team, they had no pride, dear 
 Lies and rumours that they spread 
You can always blame McBride, dear 
So there's nothing traced back to Ed 

All those Mandys and Wegg-Prossers 
Now they’re making loads of cash 
How McBride loathes all those chappies
Could it be he did somethin’ rash? 

At Westminster on the river 
Former sidekicks of Gordon Brown 
Lie awake at night and shiver 
Now McBride is back in town! 


Friday 20 September 2013

More Weekend Reading (Heavy Division)

This, by Jonathan Franzen in last Saturday's Grauniad review, is the best essay I have read for several months.  Based on his translation and exegesis of the writings of an Austrian I'd never heard of - Karl 'The Great Hater' Kraus (1874-1936), a kind of proto-blogger - the piece is hard to summarise.  (The Graun's sub-editor has failed hopelessly in this task, so don't be offput by the rubric.)

So I've assembled a little set of extracts.  If you like them you'll read it ... 
"... rather live among the Germans. For although they've strapped art into the Procrustean Folding Bed of their commerce, they've also made life sober, and this is a blessing: fantasy thrives, and every man can put his own light in the barren windowframes. Just spare me the pretty ribbons! "
"Believe me, you color-happy people, in cultures where every blockhead has individuality, individuality becomes a thing for blockheads." You're not allowed to say things like this in America nowadays, no matter how much the billion (or is it 2 billion now?) "individualised" Facebook pages may make you want to say them. 
Vienna in 1910 was, thus, a special case. And yet you could argue that America in 2013 is a similarly special case: another weakened empire telling itself stories of its exceptionalism while it drifts towards apocalypse of some sort, fiscal or epidemiological, climatic-environmental or thermonuclear. 
For Kraus, the infernal thing about newspapers was their fraudulent coupling of Enlightenment ideals with a relentless pursuit of profit and power. With technoconsumerism, a humanist rhetoric of "empowerment" and "creativity" and "freedom" and "connection" and "democracy" abets the frank monopolism of the techno-titans; the new infernal machine seems increasingly to obey nothing but its own developmental logic, and it's far more enslavingly addictive, and far more pandering to people's worst impulses, than newspapers ever were. 
"An invention for shattering the Koh-i-noor to make its light accessible to everyone who doesn't have it. For fifty years now it's been running, the machine into which the Mind is put in the front to emerge at the rear as print, diluting, distributing, destroying. The giver loses, the recipients are impoverished, and the middlemen make a living"
Amazon is well on its way to making writers into the kind of prospectless workers whom its contractors employ in its warehouses 
... the next thing you know, you're translating The Last Days of Mankind as The Last Days of Privileging the Things I Personally Find Beautiful. And maybe this is not such a bad thing. Maybe apocalypse is, paradoxically, always individual, always personal. I have a brief tenure on Earth, bracketed by infinities of nothingness, and during the first part of this tenure I form an attachment to a particular set of human values that are shaped inevitably by my social circumstances. 
Kraus's signal complaint – that the nexus of technology and media has made people relentlessly focused on the present and forgetful of the past ... something that has become a fixture of modernity. The experience of each succeeding generation is so different from that of the previous one that there will always be people to whom it seems that any connection of the key values of the past have been lost. As long as modernity lasts, all days will feel to someone like the last days of humanity. 

You get the picture ...


Thursday 19 September 2013

Question Time - A bigger boy made us do all the horrid things

David Dimbleby presents Question Time from Rochdale. On the panel: 
Conservative Cabinet Minister Ken 'I have no job yet I must be paid' Clarke MP; 
Deputy Leader of the Labour Party, Harriet 'I won an all male selection' Harman MP;
 Liberal Democrat peer Shirley 'I object to the House of lords..oh..wait a mo.. Williams
 Laurie'I'm such a bad advert for youth' Penny, contributing editor of the New Statesman 
and chef and restaurateur Antony 'On the 3rd marriage and some'  Worrall Thompson


2 pt for a correct guess of the colour or pattern of Dimbleby's tie.{before 10pm}
2 pt for an accurate spot for each of the question asked
2 pt for being the sole entrant to correctly predict a question asked
2 pt for
1 arbitrary point for any partially correct questions, witty phrases, spotting the soundbite, joke, tweet or posting in the comments first.

And the league table will be winner = 1pt
Everyone else - Zero.

Twitter- its often better than the actual show. better than lobbing bricks at the flat screen anyway.



BQ believes:
Dimbytie - Purple and gold.
1. Free food for kids Yayyyy! - The subsidy for this is roughly 3 times the royal mail subsidy that apparently cannot be afforded, but what the hey! Its a middle class cash back!
2. Bag tax. As Neil on the Young Ones once said ..I don't want to be heavy..but.. 5p is 5p
3. UKIPpery. Foreigners must have health insurance. but how will that work?
4. Drunk tanks..privatisation of the police says Hattie, who secretly wishes she had thought of it.
5. Veils and the law- As a committed naturalist is it my human right to appear naked in court?


Number of wins - 2013
Mark Wadsworth - 1

Big Lies, Small Mercies

Go, Turbo
In the thick-and-fast documents on its soi-dissant 'Electricity Market Reforms' the government has come up with a mantra to be repeated at every opportunity:
EMR will deliver the greener energy and reliable supplies that the country needs, at the lowest possible cost
It's a shameless, blatant lie, of course - but hey, if repeated often enough ...  The word 'needs' is of course mendacious, but for that they can at least argue they have a mandate.  The real outrage is the pretence of delivering at 'lowest possible cost', and incontrovertible proof is readily to hand in the shape of the CfD 'strike prices' (= guaranteed electricity prices) announced over the summer for the various technologies on offer.  Some examples:
  • Landfill gas:          65 (£/MWh) 
  • Energy from waste: 90
  • Hydro:                  95
  • Onshore wind:      100
  • Large scale solar: 120
  • Offshore wind:      155
  • Tidal and wave:    305 (sic)
For reference, wholesale prices are currently in the range £50-60.  Manifestly, no-one can be offering £155, still less £305, and still claim to be delivering at lowest possible cost.  The real motive is given elsewhere in government documents, for example here (page 7, my emphasis)
[The] CfDs have been designed to provide efficient long-term support for all forms of low carbon electricity generation
Yes folks, the aim is for all technologies, however fatuous, to be given a piece of the action.  In that context I suppose we we must take a crumb of comfort from the Severn Barrage - epic fatuousness on large concrete stilts, being promoted by Peter Hain and 'Lord Deben' - yet again being given short shrift.  Why won't it just go away ?

For the record, I offer to generate on my exercise bike for a mere £295 per MWh.  Turbo my hamster in his little wheel is only slightly more costly at £300.  And we can start tomorrow - which is more than any of these other crazy schemes can say.


Wednesday 18 September 2013

BBC Question Time - Get ready.

The political bubble is excited, preparing for the new QT season that starts tomorrow for real.
The C@W QT app is the most downloaded app in Westminster, after Expenses Calculator V.7 and 
Late Rooms Hotel bookings/By the hour/cheap.

This season much simplified scoring.

2 pt for a correct guess of the colour or pattern of Dimbleby's tie.{before 10pm}
2 pt for an accurate spot for each of the question asked
2 pt for being the sole entrant to correctly predict a question asked
2 pt for
1 arbitrary point for any partially correct questions, witty phrases, spotting the soundbite, joke, tweet or posting in the comments first.

And the league table will be winner = 1pt
Everyone else - Zero.

Twitter- its often better than the actual show. better than lobbing bricks at the flat screen anyway.




What is it with these people. There we are pootling along, all happy in the knowledge that the people of Scotland are merrily talking themselves into Independence. Braveheart, Bannockburn and all the other other rubbish being spouted by the SNP...along with some more salient points about the poor quality of leader on offer from Westminster.

Then NEISR interrupts with yet another credulous doom and gloom report on how Scotland will face years of austerity and hard times if it leaves the UK. Where is the balance here? What about the years of hard times Scotland has already faced as it is part of the UK?

Scotland is a basket case of an economy, rapidly deteriorating towards a Middle Eastern model of non-competitive jobs and subsidies for all on the back of oil revenues, all the while knowing that these are going to end in a generation or two. Equally though, the people of Scotland are fixated on this issue and the key driver for them appears, from ballot box results, to be arguing over the distribution of said monies. This is why Labour and the left wing SNP do so well. Neither are too fussed about business or the wider economy, instead its all about re-distribution.

Scotland is welcome to this game, its a democratic one and its their choice. English scare stories about their loss of oil revenues are just that, there will be strong oil revenues for Scotland from the North Sea for at least one more generation. If then they want Independence, they should have it.

In fact, it should be encouraged, there is much to be said for losing the Scots from the UK. They will be better off emotionally whilst the rest of the UK will be better of financially. We just need to stop all this crazy talk of them being in penury forever, lest they believe it and decide to shackle themselves to the Union forever....

Tuesday 17 September 2013

Lehmans: Lest We Forget

History corner (guest writer: A.Pedant)

The airwaves are full of the 5th anniversary of Lehman Brothers going under, with people like Peston lazily saying that it marked the "start of the banking crisis". He really, really ought to know better.

The latest possible candidate for the start-date is a full 12 months earlier.  On 14 September 2007, Northern Crock went cap-in-hand to the Bank of England: and even before that a handful of German Landesbanken had gone under.  Each case was different, but only in detail.  And of course they were smaller: but when the canaries are dropping off their perches, the poison gas is already there.  We needn't bore you with a string of links to C@W posts of the time - but we could.

Why does this matter ?   Because no-one should be allowed to get away with either of these two fallacies, which we may justly term 'Brownite':
(1) Lehmans came like some bolt from the blue;  and/or (2) it all started in America.  The Brownite fallacies are an attempt to deflect blame from UK banking regulators and from, errr, Brown.  And of course Balls.

As I said, if you want the C@W links they are plentiful.  But for now, 'nuff said.


Monday 16 September 2013

St Leger's Day

This was on Saturday and then this morning I find even the sickliest of poor AIM shares that I have in the bottom draw are moving up nicely. What is strange about the old City Phrase 'sell in may and buy again on St Legers day' is that it does often come true.

Not so much this year on the FTSE as you would be down about 2.4%,plus then you would have your divi's and trading costs to add in; but as market sentiment goes things are certainly looking frothy.
Now is also a traditional time of year to worry about the impending doom of an October Crash, as in 1987 and 2008.

Yet with the Syria crisis easing (for everyone except the Syrians, unfortunately) and few major macro economic issues looking like they are to blow, up, things look set fair for a calmer end to the year. Events, as we well know though, have a habit of blowing up quite fast!

The big driver, as ND wrote a week or two ago, will be the German election. Once Frau Merkel is back in place resolution of the Eurozone mess will gather pace. Still though, as it is governed by politics, that will become next years news....

Friday 13 September 2013

Weekend Reading: A Strong Capitalist Recommendation

A couple of weeks ago an old mate of mine (from *ahem* Enron days, since you asked) let me know he was putting out a book - on investment, trading, entrepreneurship, business in general, gambling - and Enron.

Now of all the stuff written about Enron - and that's a few forests' worth - not a single book has come from a true Enron insider.  The omerta has been 100%.  (And before anyone cites Sherron Watkins against me, she wasn't very deep inside at all - double meaning intended.)

So I was quickly into Kindle for Lucky and Good: Risk, Decisions & Bets for Investors, Traders & Entrepreneurs, by John Sherriff.   (At mates' rates it was free, but it'll only be pence anyhow.)  Sherriff was a true Enron insider, as well as being the most creative, energetic deal-maker I have ever met, with the best intuitive feel for risk / reward trade-offs   - and that's from a cast of very many fine dealmakers at the Crooked E.  He's a damn' good poker player, as well ...

Sad to relate, though he peppers the book with Enron stories to illustrate his many excellent points he tells nothing about the scandalous stuff: so the true insiders' book is still to be written.  But that's the only disappointment in an otherwise truly first-class read.  I can't recommend it highly enough for the typical C@W reader (and not just for the traders and investors), who won't just enjoy it tremendously but will probably do better business having done so.  There are so many powerful - and practical - points made, all of which are IMHO entirely correct, on critical issues such as market pricing, liquidity, how to think of sunk costs, macro-trends, marginal advantage, fast feedback, long-term vs short-term, finding free options, understanding what your long and short positions are: and he goes as far as it's probably possible to go in helping people learn to be commercially creative.

In summary, the whole Enron arsenal.

Even better, it's written with a very light touch - for an American (if I dare say this) Sherriff has a very Anglo-oriented sense of humour.  (He's complimentary about several aspects of our regulatory and legal systems as well.)

And he's brutal on the subject of the legal profession ...

Whenever I find myself teaching on business-related topics, students always ask what they should read before attending the course.  I've never before had a single book to recommend, but now I do.


RICS suggests limiting house price rises

..By controlling mortgage lending via the Bank of England. Where do we start, probably by noting that the RICS is hardly made up of the world's best and brightest, I doubt too many people have dream of being a property surveyor from an early age. The key issues:

1 - SUPPLY AND DEMAND - simples really isn't it. If we built more housing (social or private) there would be a better, supply and prices would fall. Or we could further restrict immigration. Reform planning, tax breaks for new build etc. It's not hard is it...

2 - MORTGAGE RESTRICTIONS - Yes, its all the fault of those horrible young people and there pathetic demands to own their own home, their sad desperation. Punish them! That's what we need to limit, aspiration. Never mind the inconvenient facts such as mortgage lending is well down from the boom of the naughties and indeed, without Government support, it would be even further down. Look at the graph above, its not mortgage lending that is causing the nascent property bubble is it?  It's more likely overseas equity investors into London and a trickle down from there.

3 - INTEREST RATES - Terribly old-fashioned, but hey ho. Raising rates will help savers, make mortgages more expensive and take the heat out of any boom. This is a good idea, along with running down or stopping QE.

4  - HELP TO BUY - Why not just stop this or recommend this is stopped. It's a much easier way to cool demand as this policy is pure politics and does indeed risk stoking a bubble. Better to end this subsidy than to restrict mortgages.

It's rare for me to agree with George Osborne, but he said some looking at the facts rather than the Vince Cable populist approach would be a good idea. He is right in this case for once.

Thursday 12 September 2013

BBC Question Time, New series 2013

Tonight: With Justine Greening, Chuka Umunna, Caroline Lucas, David Aaronovitch and Colleen Graffy.

ARGGHHHH...Chuka is my nemesis I am not sure I can cope with his meaningless platitudes and lies. greening is very good, although is less competent in Government than she thinks. Lucas is a moonbat and Aaronovitch the silliest kind of ex-marxist on a journey to fascism journo-type.

Who is Colleen Graffy? One extra point for that before 10.45pm. I am refusing to google so I am sure it is someone off Eastenders..

It's a new season and with BQ MIA I will let him off and he can start the new rules next week.

This week points are for:
1 for each correct question from Dimby
1 (and only one between all entrants) most apt and rude comment about a fake audience member who is really a party activist/councillor
1 for Dimby tie
1 for entering the competition
3 points for for plausible comments after 11pm proving that you might actually be watching...

Good luck all, pesto at the ready for the Green onslaught...

CU's uneducated guesses:
- Fracking, it makes Lucas popular
- Barroso, EU is fun subject
- Syria, it makes Lucas popular
- Employment - 'no recovery' Chukathon

Re-Balancing in the UK - what the indicators tell us

You can tell how balanced the UK recovery from the Great recession is from two sets of results out this morning. Firstly Morrisons, the King of the North and source of fresh, but cheap food, has had a bad time of it of late. Sales our down and the CEO is forced to come out with 'we are working at pace' type of rhetoric.

In contrast John Lewis, the owner of Waitrose has come out with some more very good results, despite in general retailers tailing off a little over the hot summer in terms of performance.

To me what this amply demonstrates is that the recovery is still very Southern and London based. Wealthy areas are seeing the benefit of better jobs and payrises and are able to generate new jobs. Indeed the ONS figures out yesterday bare this out. Of the 207,000 new jobs created, 200,000 are in London and the South-East. Also, the confidence people get from their house price going up by big margins has brought renewed optimism, but only in London and commuter land

By contrast, in the north of the country, the fall in public sector jobs continues and there is little private sector kindling to inspire a recovery. House prices are not rising at the same rates and so a steady state continues, albeit at a much lower level than in the now distant past of the early naughties.

And yet, despite this obvious contrast in the economy, many Labour and Tory MP's are dead set against HS2. Willing to believe any scare stories about the massive cost over-runs which are now up to 4x what the original plan was (most large projects that I have seen or watched tend to come in between 2-2.5x initial estimates, so £40-50 billion, over 20 years is about right for the full project).

We desperately need to upgrade the roads and my default position is usually to invest in roads as this accounts for 95% of traffic and journeys. However, in the very long-term, surely connecting the rest of the Country more easily to the growth region of the UK should be a high priority. Not only that but there is record money availabe in Europe in Infrastructure funds, pls long-term bank debt available too - the private sector can easily be tapped right now for investment. It must be worth a billion or two a year out of £700-odd billion spending to try this. After all, this whole North-South divide thing is not exactly a new phenomen is it?

Tuesday 10 September 2013

Make satellite dishes compulsory

 Allister Heath of City Am nailed it on his post re TV in the 21st century and the BBc licence fee. A great suggestion and summary. To continue on a little...
drag British TV into 21st century
drag British TV into 21st century

drag British TV into 21st century

In a landmark declaration Judge Lead ruled that any household without a Sky dish will now face criminal prosecution and a fine of up to £1000 or even imprisonment.
Using a database system, enforcement officials may call at any home and if they cannot spot a satellite dish they may question the owners as to why they failed to get one.

Judge Lead summed up with ..

"...The law is clear. It is an offence to receive live broadcast images on a television or computer or digital device without a valid satellite receiver.... Every home must have a BSkyB dish that costs around £145 a year.
It does not matter if the owners watch Sky television or just the free to air channels or even cable, internet or foreign TV.  Or even if they don't watch TV at all. They must have a dish capable of receiving the network."

And he added ..
"And naturally they must pay £145 for a new dish every year, oh yes. "

Rupert Murdoch of BSkyB beamed happily that .."Its the unique way we will be funded that will allow us to pay our executives whatever we will be fab..
But there are concessions of course. Anyone aged over 75 will be exempt from the satellite installation fee . And anyone who has somehow buggered up their flat screen's contrast and colour settings and lost their remote and so now only watches in black and white need only pay £49...the sad losers.."

In Islington, North London,  many residents said that they would never have Sky TV. But on inspection at the rear of the premises or concealed inside the gables or up a tree at the end of the garden we could see slimline satellite dishes.

One owner of a terraced mansion, who initially denied having any subscription television, later explained that he only watch Sky Drama or Sky Arts.

 "I'm not paying a £145 a year just to watch the Wire and Game of Thrones...I barely view anything else..except that Etruscan pottery show..And the opera, obviously.  And I only hid the dish in the attic so as not to chav the place up and reduce the street's house prices."

If you want to know more about this story press the red button. Or try Goggle on your smart TV. Or use your phone or laptop or desktop or Xbox or tablet like everyone else. But do make sure you have a BSkyB dish installed or we'll get you!

22 September: What Happens Next?

In case you hadn't clocked it, the German go to the polls on that day.  We are told that everything has been put on hold in the EU for fear of startling the Pferde, but that all manner of horrors will be unleashed thereafter.

So - what do we reckon will happen after that - by the end of the month ?  By Christmas ?   We'll be taking notes and checking back as our fate unfolds.  Or perhaps more imminently, the fate of the Greeks ...


Monday 9 September 2013

GKP key day

I very rarely post about share trading any more. Partly as I have been locked into some poor share choices for a number of years, partly because all spare cash goes on school fees and partly because my day job is now all too consuming to allow for any minute-by-minute study of the markets.
However, one of the shares that I am still in is GKP. This Iraq (Kurdistan) oiler has been happily finding oil on gargantuan scale since 2009. Luckily for me I bought in at 28p some 5 year ago, so even today's 190p is still a good ride.

Tomorrow should act as a big catalyst though. Last year, when rumours of Exxon buying out the company were strong the price spiked to £4.50. Since then it has been held by by a piece of litigation that goes back to the founding of the companies assets in Iraq. Rex Wempen reckons he is owed 30% of the deal and that current CEO Todd Kozel kept him out of it by sleight of hand. Anyway, it seems unlikely he will get that far, but we will find out tomorrow at 10.30 AM finally, after 3 years of the case building up.

If it is thrown out then expect a small rise in the share price (it's up a lot anyway these past few weeks), in the short term but then a big payday when the business is taken over at some point next year. If it goes the other way, expect a 30% drop in price, but a nice entry point, as with the litigation clear, a takeover is still on the cards and buying in at the low point would still make you smart money.

Sunday 8 September 2013

From The Abyss

Seems that the famous Reading Gaol is to be closed, which cannot but turn one's thoughts to Oscar Wilde.  With Mr Q's post also in mind and gas in the air, my apologies to Mr W:

I never saw a man who looked 
With such a wistful eye 
Out of the ‘spital tent of blue 
And upwards to the sky 
At every glinting plane that went 
With trails of silver by 

The vilest deeds like poison weeds 
Bloom well in Syrian air 
And Sarin gas strikes man and child 
And innocent woman there. 
All men oppose the Sarin gas 
All men pretend to care 

I know not if Assad’s the worst 
That could these folk befall; 
All that we know who watch from far 
Is, if the West stood tall 
And acted as its words require 
Assad would surely fall 

And this I know, that every hour 
The West stands idly by 
And wrings its hands, and stays its power, 
And waits for “Certainty” 
Then tyrants all will nod and wink 
And innocents will die 

And they of the swollen purple throats 
And the burning lungs and eyes 
Wait for the bolts of Shock and Awe 
That come down from the skies 
When statesmen stir themselves to show 
Their sayings are not lies 

In Westminster in London town 
There is a House of shame 
And in it lies the honour that 
Could once boast of the name. 
A fratricide’s base stratagem 
Has doused the flickering flame 

“All men oppose the Sarin gas!” 
By all let this be heard 
Some do it with their fingers crossed 
Some with a sophist’s word 
The coward with appeasing vote 
The brave man with a sword! 


Friday 6 September 2013


 'Gassed' by  John Singer Sargent

So the G20 has agreed to disagree on Syria. Russia and China are in the definitely no military action camp. America and France are in the limited punishment by missile means. The UK is out of it. Which is good news for us. The last thing the country needs is involvement in another expensive conflict with a nation that we have no strategic interest in. Led by the USA who is out of step with the UN and the Church, and a lot of their own citizens. Where the charge of a war against Islam can be laid at our door and so only increasing our own risk of revenge terror attacks. And all in exchange for involvement in a foreign civil war in which we secretly hope both sides lose. So we are better off out.

However, in fairness to David Cameron and president Obama, their principles are quite correct. The use of chemical weapons is a breach of the Geneva protocol of 1925.

...prohibits the use of "asphyxiating, poisonous or other gases, and of all analogous liquids, materials or devices" and "bacteriological methods of warfare"...

The treaty needs to be seen for what its intention was. Its not just some old 100 year old ancient irrelevent piece of hippy thinking.

1925 was only 7 years after the bloodiest conflict in human history had ended. WW1 casualties are difficult to estimate but it seems that by the end of 1918 the planet was coming up some 15 million human beings short of its 1914 total. 
And then immediately followed the Spanish flu that killed another 20-40 million people. There had never been so much death and suffering. 

The Geneva protocol was an attempt to restrict the use of a deadly weapon. Pacifism had broken out throughout the world. Countries wanted an end to nation warring. Peace was the ideal of the day . And banning chemical weapons would be a major step to achieving that. 

Recently people opposed to conflict in aid of  Syria "so they can shoot 1,000 civilians a day but not gas them, then?" ..Well...yes. Exactly that. The Geneva protocol was a first step in global arms reduction. More would have followed. However the depression and the subsequent fall of capitalism and rise of socialism and fascism put paid to peace.

But the chemical  biological was the most important step. It was the nuclear non-proliferation treaty of its day. The bombing of civilians in WW1, by Zeppelin and bomber, had shown how vulnerable to attack a nation's homeland could be. The advent of the true bomber aircraft in 1918 had made all nations aware of a new air threat. The Vickers Vimy that entered service with the RAF in 1919 could carry 2500lb of bombs. An impressive amount for its day.The Heinkel 111 that came 15 years later only managed 4000lb. And the Vimy was famously used by Alcock and Brown to make the first ever non stop crossing of the Atlantic. 
Military theorists were predicting fleets of bombers {770 Vimy had been ordered in 1917-none arrived in time for war} flying unopposed over cities dropping high explosives and canisters of mustard gas or Spanish flu or worse and killing not hundreds but hundreds of thousands in each attack.
 It was a real live horror on a par with nuclear war in the 1960s.  But in many ways it was a worse spectre. There is nothing difficult about making chlorine gas. Any marginally technically proficient industrial nation could do it. And there was nothing very technical about aircraft. Of ships and submarines and tanks and heavy guns ..the aircraft of that era were the easiest to produce. No heavy equipment or specialist engineering or metallurgical knowledge required. 
So there was a very real possibility of even a peasant nation like 1920's Spain effectively acquiring gas/bombs and planes and having the modern equivalent of an independent nuclear capability.
Something that all nations recognised in the inter-war years and that, coupled with the genuine horrors of gas attacks on the western front in world war one made the world ready to sign up to reject these vile weapons.
The devastation caused and the relative ease of use and difficulty to resist is what caused the deliberate use of chemical attacks by military means to be absent from world war two, despite the fear they would be which was behind much of the appeasement that allowed that conflict to get out of hand in the first place.

Every civilian and military man woman and child in Germany, France and the UK was issued with a gas mask. Babies had incubator gas suits. Initially everyone carried their gas masks, fearful of the bomber getting through.
Even on D-day all the pictures show troops wading ashore loaded down with extra equipment, and all still carry gas masks. In fact the USA was so concerned about a beachhead gas attack theyissued a special anti-gas coated uniform that only caused a large number of their soldiers to become violently sick.
This picture is of a drill in 1941 when the bombers were still flying over UK cities. All sides still feared a mass chemical/biological attack that would kill tens of thousands and potentially knock a country out of a war. By 1941 few civilians actually did carry a gas mask.

There have even been attempts to strengthen the original protocol over the years. To make use by any nation a cause for all the other signatories to automatically be at war with the aggressor.

So any transgressor should be punished. Obama and Cameron are right on that. Chemical warfare is a terrible genie to allow out of the gas bottle.

A multipolar world and no role for the UN

You know the world has really changed when America can't get its allies on board for a foreign adventure. Worse still the Russians, driven solely by realpolitik, can deliver China, Brazil, South Africa and India onto their team. The US get France and Canada.

Following David Cameron, who he pushed into acting too fast, Obama might even lose his own Congressional vote. Pity the people of Syria, left to die in a war between a mad dictator and Al-Qaeda jihadists. One would have thought in this new world, with a declining superpower and more evenly distributed wealth than ever before (well, since we all had equal access to caves anyway), that the UN would grow in stature and be used as the grand global bargaining institution it was meant to be. Sadly not a bit of it. Instead, like the League of Nations before it, its impotency is fully exposed by the weakness of the need for unity. The US vetoes anything attacking Israel, now Russia and China defend Syria come what may. A total impasse is reached and the G20 is used instead for politicking.

The UN does many good things, but the political element is a failure, we should stop funding it and use the money more productively than paying diplomats to sit in New York and shout at one another. We have our own parliament for that. We have the G20 that is by far a more rational forum in that it consists of the wealthiest countries and the only ones with any ability to use hard power beyond their borders.

Thursday 5 September 2013

Glory Be! A Subsidy Scam Rejected

Miserable beggars
The Telegraph reports that Michael Fallon, the all-purpose safe-pair-of-hands-around-Whitehall (with energy as one of his many responsibilities) has rejected Centrica's sustained lobbying to have a monster sub bunged their way for building a new gas storage facility.  Centrica, a company I admire in many regards, has form on this (follow the Centrica tag below if you're interested) and its propensity for putting out the begging-bowl is vexatious.  However, 
"ministers have rejected calls to subsidise new gas storage facilities, insisting Britain has plentiful gas supplies and that subsidies would be an expensive waste of bill-payers’ money."
Good man, Fallon ! This has been a lengthy saga - it dates from 3 years ago and we wrote about it then - and should have been rejected out of hand ab initio.  But exactly the right outcome has eventually resulted.  It's against the run of play because DECC is busily destroying the electricity market with ever more complex and interventionist subsidy schemes in that sector: but we should be grateful for small mercies.

*  *  *  *  *  *  *
In case anyone here has fallen for the Centrica's security of supply pleading - always the last refuge of the scoundrel - let me rehearse the facts.  The UK has quite a bit less gas storage capacity (as measured in number of days' supply) than some European countries.  But there's an excellent reason: we have still-extensive (although declining steadily) and fairly flexible indigenous production, whereas the countries regularly cited as having more storage, don't.  France has almost no indigenous production; German and Italy very little; Belgium absolutely none at all.  They are also big importers from, err, Russia which, whilst a very reliable supplier per se, is prone to letting the side down once in a blue moon when it punishes the Ukraine for stealing gas, and interruptions to western supplies are collateral damage.

In fact, 'strategic' storage (for countering threats to security of supply) has many of the characteristics of a red herring.  The raison d'etre of the UK's large storage facility (there is only one very large such facility) is for seasonal use, based on the fact that demand, and hence price, is reliably lower in the summer than the winter.  If the price differential is sufficiently great, it makes sense to store summer surpluses for half a year.

So how do we handle seasonality with UK production declining ?  Easy: we let the market determine whether it's more efficient to build hugely expensive offshore storage facilities (our onshore storage potential is for small, short-cycle, non-strategic facilities, of which we have plenty with more on the way, completely unsubsidised because the economics make good  commercial sense) - or to solve the seasonality (and maybe also security) in other ways.  And lo ! - it turns out to be cheaper to run a combination of (a) not producing so much in summer, and (b) exporting our summer surpluses and buy them back in winter !  How so ?  Because continental European seasonal storage capacity is in significant surplus (they over-provided it, for 'strategic' reasons of course, haha) and so we are, in effect, simply using theirs. It's cheaper that way.

And the strategic aspect ?  Seeing the easily-predicted decline in UK production half a decade before it started, the market concluded there was money to be made building new import facilities.  Which it did - massive new pipelines from Norway, and even more capacious new LNG terminals which, taken together, more than replace 100% of our own North Sea gas production capacity.  Even better, two bi-directional pipelines were built connecting the UK to the continent, allowing the seasonal trick to be played in large quantities.  (I have recounted before how the first of these was initiated - a great tale and an important lesson in practical government.)

So now we have the seasonal requirement completely cracked, and (thus far) a very fine solution to the strategic issue via diversification of sources of supply.  The key point is: no government money was involved.  If something makes commercial sense, it doesn't need a subsidy.  And if there is no commercial sense, one should be very suspicious before proceeding at all.

 Is everything in the garden rosy ?  Not entirely.  To start with, when the seasonal gas-flow trick started, it occasionally ran into problems when the French imposed arbitrary dirigiste regulatory requirements on their gas suppliers to buy every molecule of gas available in winter.  Our protectionist friend Budgie always avers that this is exactly what Johnny Foreigner will always do and we should plan accordingly.  Pleasingly, as I've said before, in this case sanity has been restored by beating up the French under EU free-market law and it all works satisfactorily now.

The bigger problem of course, is that the lion's share of our LNG imports comes from Qatar, which is awfully near to, errr, trouble ... but that's not going to be solved by another week's worth of UK gas storage capacity, and is a subject for another time.