Monday 30 June 2014

BNP gets a dose the new American financial medicine

When a nation state is on its knees, it often is reduced to petty theft and abuse of law to try to raise revenues. Where possible, the best targets are 'foreginers' who never get a decent press back home, are seen as easy pickings and due to the lack of any real international law, have limited cause for redress.

In recent years, the USA has been very much at this game. As I wrote last month, the US was in the process of fining Credit Suisse for its activities. At least with Credit Suisse, one could argue that US taxes had been avoided by their citizens and Credit Suisse had been helpful to these citizens in a way detrimental to Uncle Sam. Again, with the large fine for HSBC last year, it was for facilitating money laundering on the behalf od Mexican Drug cartels, again an existential threat to the US.

This proposed fine for BNP Paribas is of a different order though. The fine may well come out at a full years profits or $11 billion. This is for facilitating trade with Iran. This is not illegal in France or Iran, only in America. None of the trades were through American businesses. So this law is pure extraterritoriality. The price of non-compliance is losing your New York Banking licence.

America may argue it has a big interest in keeping Iran down, but as of last week there is strong speculation that Iran and the US are going to end up as Allies against ISIS in Iraq (in fact, this has already happened on the ground in effect). But again, the fine is a shakedown of a foreign bank in the US. For balance is should be noted that the US has also levied large fines on its own banks - but this BNP Paribas one smacks of pure greed. President Hollande phoned President Obama to complain and was give short shrift.

I can only see a future where the US uses this financial power ever more which is bad for the health of world markets and world capitalism as the markets are bent to the will of the State. In the long-term this is very bad for the US, as it undermines the Capitalist ethic that served the Country so well over the past 3 centuries.

Sunday 29 June 2014

The BBC and Glastonbury

The BBC promote Glastonbury like its their very own gifted child. A sea of adverts across their very wide broadcasting spectrum for the king of music festivals. 
But I feel the tone is very much the one they use for Wimbledon. By us! For us! Its one of our own!
 Irritates me. Watching the coverage {Mrs Q is a big fan} it reminds me of MTV from the 80s. A giant Luvvy-love-in. Everyone was brilliant. All bands were awesome. All singers are 'amaaaaazzzziiinnnng"The most banal comment from the most spaced rock star is deeply profound. Every group is either a cutting edge hipster or has legendary status.
 Even Mrs Q tends to skip the chat on the iplayer. While most of it bores me to tears.

But then its not aimed at me. Its for 'us' ..

From the comments of the previous post

What does Glastonbury mean to you?

Now take away 'Glastonbury' and replace with 'The BBC.'

What does the BBc mean to you?

Achingly trendy
Kaftan Wearing
Massively over hyped
Expensive, but not for what you get.


Camp {ing}
Superb Atmosphere
My Dad says its a load of Sh++t
40-50 year olds look out of place
Full of eco loons

Sweet FA
Not interested 
Never watch it
Immensely enjoyable but at a price.
It was OK up until about '98
Used to be great, but .. has been marketed to death as an essential experience
Full of pretentious ok-yah types all trying desperately to be different
Preponderance of self indulgent types

American "TV"is more commercial but we've heard good things about it
The opium of the people.
Bit boring nowadays.
Drug ridden

And its very, very, very .. Wet

Saturday 28 June 2014

Felix Dennis, Poet [?]

So, farewell then Felix Dennis.  What a man.  I find that you chaps a decade (or, ahem, more) younger than me generally have no conception how significant Oz and the rest of the soi-disant underground press were to my generation of London youth (IT was my favourite, and Frendz was good too): and how few have seen the notorious Schoolkids' issue.  You all know about the Beatles and the prog rock giants, and lots of films of the era; but Oz clearly hasn't registered.  So I suppose it was just of its time.

Anyway, in its time it was Big, and Dennis was central to it.  You've probably seen the obits.  As with several people who pretend to be hippies, he was a heavy-duty capitalist au fond, and went on to make serious shedloads of the filthy lucre.  In later life, despite limp protestations to the contrary, he became a bit fixated on his legacy in the form of his superb business deals, his forestry (sic) and - his poetry.

Opinions on this latter are mixed.  Some are quite sniffy about it, though he fills pages of his websites with approving sleb soundbites.  I suppose that when a wealthy man gives public poetry readings with free wine, it makes one think he suspects that no-one would otherwise turn up.

So - is he a real poet ?  I reckon so, in the same way that Karl Jenkins is a real classical composer.  Derivative, yes, but plenty of imagination; and original - and confident - enough.  Not quite as good as Clives James for my money (to name another poet about whom some are not at all complimentary). Then again, Clive James actually charges real money whereas Dennis puts his up for all to see.

If death knows no dominion,
   The dead wield iron claws:
Ghost limbs aligned to pinion,
   To bend us to their cause.

By hoary yews and birches
   We worship gods they chose;
We sweep their empty churches,
   We smite their ancient foes.

If death knows no dimension,
   The dead are with us still;
By custom — and convention,
   They wed us to their will.

Their art a thing of beauty,
   The bait by which we’re led;
Little we bring but duty
   To serve the ghastly dead.

What do you think?


Friday 27 June 2014

Glastonbury. What does it signify to you?

I'd like to try something. I'd like you to put into the comments just what the Glastonbury festival  means to you. What image does it conjure up? What message, if any, does it convey? What are the positives and negatives of the great music festival? 
Do you have tickets? Do you stay up into the night watching the bands. or is the whole thing a massive irrelevance to you.
Put into a few words or phrases..

Some starters.

Middle Class
Self Induldgent
Drug ridden
Free Spirited

Over to you.

Who governs?

Well Mr Cameron. That didn't go well. 
The collective EU don't appear to be listening. 

Not a surprise. Whatever they say in private, in public, they don't want to associate with you. 
  As we said a while back on this blog, the EU leaders don't expect you to be here next year. They are waiting for Mr Miliband,. Or even better, Mr Miliband and Mr Farron in a libby-labby-luvvie pact that will have EU reform/membership referendum on page 68 of their 50 page manifesto.

It was a good effort, but its time to stop assaulting that entrenched and heavily defended position. Time for some old fashioned flanking maneuvers. Want to know how to take out the Europe Elite, Miliband & UKIP, with the happy by product of winning an election? 

Ok then..

1. have a pact with Farage. Not just a pact. An alliance. A proper alliance. Offer 2 guaranteed seats to UKIP. Let Farage and Nutall pick a lib/con/ukip marginal and tell them no official Tory candidate will stand against them.

2. Then.. time for some realism. The EU battle is being lost. The media like to portray your attempts at negotiations as humiliating failure. Turn that to a strength. Book some good old fashioned, all channel, all radio, online Prime Minister's talk to the nation. Heavily trailed in the media say you have something very urgent that you wish to share with the nation and it will be on 'x' day at 'x' time - just before Eastenders is a good slot.

3. Announce in your best Prime Ministerial fashion that negotiations have failed. That you must now accept that the EU will not, at this time, accept reform. Explain that you are now concerned over who actually is going to govern Britain. Westminster or Brussels? 
"Who Governs?"
Therefore you are proposing a referendum on the UK's continued membership, to take place within 6 months of the election. 

4. Explain that although this may not be new news, the fact you have asked Mr Farage of the UKIP to lead the case for UK exit is. Say {if you wish] that you will lead the case for remaining. But give the actual date for a referendum.

5. Explain that, as it stands, the conservatives are, despite the improving economy, public sector reforms, reduced unemployment, blah blah blah, unlikely to win the election due to the continued rise of UKIP. So.. as Labour are very unlikely to offer a referendum, and the Liberals NEVER will, you have entered into a pact with UKIP, on the simple promise, only, of delivering this referendum.
Both leaders will address their own members in due course to explain what has been agreed. But for the man in the street all that has occurred is that If the conservatives win the election, the date for that referendum is x.
And give your word {without using cast iron} that the referendum will be priority number 1, above all other issues, once the new government is in place. Stress that Farage is being brought in to take the vote forward. to organise it for the government.

Now, you'll have to square this with the pro-euro Tories. very difficult. But again, some realism. They will be free to campaign however they like. Can make whatever case they like. No government line. And also remind them that they are unlikely to be in government without this deal. 

This move should restore the balance. The Mail and Sun and possibly the Times will be back on side. The Telegraph has gone all guardian so who knows.  But this deal before the election will make existing  Lib Dem voters think twice. A vote for Clegg is a vote for 'In'. 
I expect the Miliband camp to collapse into chaos as usual, before trying to have it both ways and eventually coming out with a pro Europe line. 
Should set the camps back into the pre-UKIP era.

Farage will have the hardest time, convincing his anti-all government protest voters to remain. But that's his problem.
The EU, finally understanding that this might actually be it, may just give enough ground to allow the UK to remain in the EU, but on a different deal. 

Whatever.. labour are weakened, Liberals are boxed ever tighter into their 8% vote share, UKIP voters return, the referendum will be held, you will win the election and the EU question that has plagued British politics for thirty years is finally answered once and for all.

Thursday 26 June 2014

BBC Question Time : Red Top edition

David Dimbleby presents topical debate from Wolverhampton, with Conservative defence minister Anna Soubry MP, Labour's former deputy prime minister Lord Prescott, deputy leader of UKIP, Paul Nuttall MEP, anti-extremism campaigner and Liberal Democrat parliamentary candidate Maajid Nawaz and the former executive editor of the News of the World, Neil Wallis.

Tricky one this week as there's two weeks of much news, so could be anything. But does look like BBC, with that panel, have given the audience a big nudge on what they'd like to be asked .

BQ Guesses 5 questions

1. Is there still a need for Leveson's reforms after the guilty{ish} verdict against Andy Coulson - PM's judgement, Criminals in parliament..Yada Yada Yada.

2.Zero hours contracts. Ending the exclusivity clause. And rightly so.

3. And the other demon of the moment, Wonga. Should we all send out fake legal letters to our creditors. Sounds like a good idea. If only it weren't illegal.

4. Britons fighting in Syria. Are they just International Brigade type idealists or lunatic fundamentalists? And is there any difference anyway?

5. Cameron about to be ignored by Europe, once again. How will the QT audience be able to pile on the bile for UKIP, whilst admitting that Europe long ago stopped paying any real attention to the UK?

David's Dimbletie - Owls theme
Winners of 2014

Hopper -2

Measured - 2
Malcolm Tucker - 2

Dick the Prick - 2 
 Nick Drew - 2

DJK - 1

BQ - 1
CU - 1
Steven_L - 1

charity shield winner - DJK 

Bank of England to not really restrict mortgage lending

This Mark Carney character is not having a good time of it. Firstly his attempts at 'guidance' show that he knows no more on the future of the UK economy than the rest of us. Now today the Bank has released guidelines limiting mortgage lending.

The key measures is to restrict Banks lending to 15% of book for loans at more than 4.5x income. Big deal, Lloyds and RBS - nearly 50% of market of lenders- have already reduced their criteria to 4x.

So the Bank, instead of leading the way, is playing catch-up. Plus there is no way nationally of preventing a London bubble.

The way to stop a London bubble would be through local taxes on occupation to stop foreign money pouring in, or tax breaks for new building and a relaxation of planning laws. None of these are the remit of the Bank of England.

Also in the real world in London, restricting access to mortgages of the UK populace potentially gives even more of an advantage to those in say China who are either cash buyers or are armed with loans from foreign countries, not under the FCA auspices. People like, er, the Canadian house hunter Mark Carney.

Tuesday 24 June 2014

She Can Kill With A Smile ...

... she can wound with her eyes,

She will ruin your faith with her casual lies ...  (B.Joel 1977)

Yes, he met her too.  Oldest story in the world.


Interest rate rise instead of unwinding QE

Quantitative Easing, that was a good topic for a long time here and in the UK generally. The magic money tree come to save us from a dearth of credit. It is hard in any meaningful way to say it has work, clearly there are reports from the Bank of England saying it has added over 1% to GDP growth, but they are not really an independent source.

Now though, with the economy growing strongly, the time approaches when interest rates will have to rise and Mark Carney is going to speak today with a view to saying they may indeed start to rise this year.

What is interesting is that there is no discussion of unwinding of QE first. After all, the net effect of QE is to reduce interest rates below zero - therefore surely this emergency source of monetary funding should be the first to be unwound?

Interestingly, the Bank of England and its fellow travellers say not. They say that QE is not inflationary as it has not provided direct capital to Banks after all - they can still create their own reserves to book against loans as needed. As such, raising rates will have a larger impact than reducing QE.

This is all very well and all very technical. But as you raise interest rates, then the price of Bonds will fall. This means the Bank will be losing money on its investments, the more rates rise the worse it gets.

So what? Well if you are not going to reduce QE then perhaps you monetise the debt? or Perhaps the losses do not matter as no one knows who owns the Bank of England and its debts anyway?

But this is too clever by half in my view, people in the Country will see that money is being created and destroyed at will and it undermines the concept of fiat money altogether which would be a bad thing.

Worse is to leave QE and experience the high losses, as any taking of these losses were they ever to sit with Government would cause a huge political problem for the Government of the day.

I can't see how keeping QE is good in the medium term, it should be unwound before the Bank starts to raise interest rates.

Monday 23 June 2014

National Team shame

For the first time ever the national side, the labour party, has failed to win any of their opening matches. 

Under Ed Miliband’s leadership the Labour party lost out in both the local elections vote and Euro election Zone A-West matches. 
Miliband's labour lost out against a struggling, only 55% fit for office , David Cameron and his Toryaguys, and then against UKIP. A team so underrated that FIFA ranked them just 129th in the land – .

Ed Miliband said he was gutted to have to quit so early. “losing the first two means I can’t be qualified to lead the Labour party into the last 2016,” he said.
I thought that against such feeble opposition we would be able to win easily, without really even trying, but thiat just wasn't so."

There have been calls amongst the left wing press for Miliband to resign and make way for someone good.

However a spokesman for Unite, the professional labour MP’s association, made it clear that Ed Miliband would be staying ‘for now.’

“With the Shadow Cabinet team that he had available , a mix of old has-beens and young, fresh faced, Spaddy youths, we believe that Ed did as well as he could. He tried a lot of old, obvious, left wing tactics that sadly, if predictably, just didn’t work out."

"But we believe Ed is building a powerful team for the future when Labour may once again have world class, working class, politicians, like it did in the 1966 Wilson government. ”

Asked if the influx of highly paid foreign-holiday type politicians into Westminster has reduced the selection of available manual trades types, coach Miliband said 

‘Obviously this has had an effect. Who wants to go down a mine when you can become a special adviser straight from university? Write a few silly articles for a lefty think-tank. Be parachuted into a safe rust-belt constituency, and become a junior shadow nobody for nothing important on £70 grand plus a year?”

Ed Miliband faces the Scottish Nationalists in a pointless final contest on Tuesday, the results of which are a forgone conclusion.

One Eye On Oil and Gas Prices

But only the one, because oil really isn't doing very much.  $115 has been breached, but it looks like a bit of a resistance-level for now.  Bullion much the same.  $120 can't be ruled out but the Russians have been pretty quiet on Iraq - in principle (if such a phrase has any meaning in Realpolitik) they should be onside against ISIS, so unlikely to act in ways deliberately to stoke the price of oil, however much it would suit them.

Gas is strategically important too, and the price more interesting recently.  It's been falling steadily since the start of the year (more than just the usual seasonal effect), here and in the Far East, interrupted by a one-day blip last week - a kneejerk on Gazprom's recent action against the Ukrainians.  Then back on its downward path.  Cutting off supplies to one country means, errr, more available for others ...  

Yes, gas is over-supplied right now.  This could change when European coal-fired power plants stop maxing out, as eventually they will: though even some of those are converting to biomass, and of course Germany and Poland are still building more.  So 'eventually' could be a few years off yet.  

Thus, UK energy policy, long predicated on ever-rising gas prices, looks ever more stupid.  Can HMG really be going to sign that crazy nuclear deal with EDF ?  I attended an excellent academic conference on energy last week, and every speaker - most of whom are working on some green-oriented project or other, if only because that's where all the money is - rolled their eyes at the mention of £92.50/MWh (the EDF price before index-linking kicks in):  they all seem to view it as the highest price that will in practice ever be paid for a large-scale electricity supply, along with the next few UK offshore wind contracts of course.  As such, they see it setting a ceiling.  

Even better, of course, it should be seen as a nightmare from which we will all wake up and get on with life on a rational basis. Can the EC please get on with its ruling that the CfD constitutes illicit state aid ?


Saturday 21 June 2014

Less from Alibhai-Brown would be Welcome

The other week I was watching the BBC World programme, the one that for better or worse dominates hotel-room TV listings all over the globe.  The topic was Ukraine, and the panel was (a) a polite Russian "journalist" (= official Russian POV); (b) a polite Ukrainian-American academic; and (c) Yasmin Alibhai-Brown.

A short while into the discussion, after Russia's contribution to WW2 had tangentially and fleetingly been dropped in by the Russian, suddenly YAL pipes up.  "Wait a minute!", she says, "I learned last week, for the first time in my life, that Russia sacrificed 20 million people in WW2!".  Quick as a flash the Russian says "Soviet people, actually" and YAL goes on "OK, Soviet people: but I only learned this last week: it is not being taught in schools!  I had a good British education and no-one is teaching this!"  The Ukrainian is completely stunned: "Excuse me?" but she is not to be stopped and repeats it all again.

Now my kids' history lessons comprised: The Nazis and WW2, most definitely including the 20 million.  The Tudors.  More Nazis / WW2 / 20 mm; and I'm sure yours did too.  What ought to have happened, of course, is that the chair should have stepped in and said: YAL, if that's your level of general knowledge, we obviously got the wrong person and we don't want to be hearing from you again today.  Needless to say, (i) she was allowed to prate on; (ii) I switched off. 

And I expect they paid her for being there. Gah !  Put the soccer and the rugby out of your mind and have a nice weekend.


Thursday 19 June 2014

History repeats

Tony Blair is being interviewed by Der Stürmer and is asked whether the original invasion was a terrible mistake.

"Look..let's be clear here.....invading Russia was the right thing to do. Stalin's communists were not some well respected rulers loved by millions. They were killing their own people. Its a documented fact the Soviet dictatorship murdered several million of its own. And they had no respect for the law or human rights. Many hundreds of thousands were imprisoned without trial or shot after a televised show trial. Many hundreds of thousands more were denied access to basic foodstuffs. I mean..guys..just think.. That maniac dictator even purged his own ruling party! The only political party allowed in that country, I might add.. And  he purged his own red army of its top leaders...
The bolshevik state is not a humane society. And, as we know, there was no democracy there at all. Kulaks and Tartars were very unrepresented in government.

 And lets not forget Stalin has weapons of mass destruction like the tanks, artillery and planes and the submarines that we know he possesd. We know because we swapped armaments with him for oil under the Molotov–Ribbentrop Pact.
That made the USSR a militarily very strong regional power. And Stalin was using that military power against his weaker, non-communist neighbours. Japan. The Baltic states. Finland. 

 There was a very real threat that if we didn't invade within 45 minutes, Stalin would be in Berlin.

Now, some people may say, and in fact did say, "Hang on a minute Chancellor Blair. We are still fighting in North Africa and the whole British Empire and Commonwealth. Surely we should finish these wars before starting a whole new war against a much stronger foe?"

Well I say .. events can change.. If events change then action must be taken...It was fine to contain Soviet Russia in the 1930s, through sanctions. through restrictions on trade and such..but that policy was just no longer viable.
Soviet Russia was being run by a murderous dictator..Someone who had a proven track record in killing his own people..I simply had to act. So we, and our pact of steel allies invaded.

Now..I believe that invasion was a success. Militarily very successful. In just 5 months we were at the gates of Moscow itself. The Ukraine did initially welcome our soldiers with flowers of liberation.  ..

OK, I admit, there was a bit of a partisan problem in some regions. There were some unavoidable civilian casualties. We sustained some casualties to our armed forces too. And there were pockets of  resistance that proved troublesome to quell. 
 And , yes I must admit that early on, some of our soldiers kit was inadequate or in short supply. Especially the lack of winter clothing and the under-gunned panzers. But we overcame those difficulties and pushed on again in the spring..

Now, I know you want to ask me about the current situation. Should we have committed forces  in the latest warzone that suddenly sprung up and is causing all sorts of regional conflicts.  These terrorists that are now on the march.. 
Well let me just say this.  I believe that the declaration of war on the United States of America in December 1941... it was the right thing to do..

True, our commitments in various war zones had spread our troops quite thinly. 

The ongoing fighting against the USSR and their allies in the United Kingdom. Canada. Australia. Egypt. India. Malaya. Burma. Poland.  France. Greece, Norway. Belgium. The Netherlands Denmark, Syria. Algeria. Tunisia. Morocco. South Africa. Eritrea, Iceland, China, Iraq, Iran, Palestine, The Philippines,  New Zealand, Samoa, New Guinea, Yugoslavia,  Czechoslovakia,Slovenia, Latvia, Estonia, Lithuania, Fiji, Singapore, Cyprus, Crete, Malta, Gibraltar, Falkland islands, all the countries of the Caribbean,  Bermuda, French Polynesian, French Indochina, Equatorial Africa, Chad, Senegal, Ethiopia Nepal, Trans-Jordan. French Somaliland and Madagascar..

Well some say that lot might have..might have been enough ... without adding the world's superpower, The United States of America, to that list.

But i believe those people are wrong. And the stability and prosperity that even now, that our forces are bring to areas like Sevastopol and Vichy France mean that it was the right thing to do..

This whole ..Stalingrad incident.. must be seen as just a...a  tiny setback in our mission to bring freedom and democracy to the people's of the world.

There can be no backward steps..If anything we should add Switzerland and Sweden to the list of countries we ought to be at war with..There can be no neutrals in the war on terrorism.

Now, I really must go...Lovely to see you again, guys.  Help yourselves to drinks..If you have any more questions, Alistair Goebbels of the propaganda ministry would love to answer them....I think he has some fact sheets for you.. I must dash..Got a photo shoot for Hello!  Me and the Spice Fraus! Fuhrer of the year! .. ciao..

Tony Blair
Interview from December 1942

Berkeley Group shows the power of capitalism

Berkeley Group has come out with its annual results today and these are a very strong set indeed. Profits are up by 40%, more completions than pre-crisis and a huge pipeline of current builds all set to make the company a fortune in the next couple of years.

But canny CEO, Tony Pidgely, knows a alot about market timing. The Group turned on the taps of construction at exactly the right moment 18 months ago when others were fearing to tread. In addition the focus is on the Southeast and London in particular which gives the Group a key position in exploiting the hotspot of the UK market.

Also though Pidgley is well-known in the  City for his 'excessive' pay packets. Every few years he and his executive team promise to double the size of the company and get a 10-20% share stake as a reward. This has been going on since 2003. Pidgely has made over £100 million as a result.

This causes much consternation elsewhere, but the reality is that apart from 2008/9 the team have delivered on their promise every time. The current one is due to last 8 years and demands over £1.7billion payout to shareholders during that time - so a £200 million a year odd dividend. This year will see something nearer £200 million so they are well on track to deliver as always. The management will earn £280 million if they succeed. It's a big pot, but then the shareholders will have earned 3x as much as the shares are up 450% over the last decade. Most shareholders will long have been in the company for free if they account for their dividend payments.

Everyone on the Left is keen today to discuss rewards for failure and boardroom greed. Berkeley Group is a good answer to them. Pidgely was born with nothing and is entirely self-made, no silver spoon for him. He earns a fortune, but his investors can earn as much, if no more. All the while increasing the UK's housing stock in the area of most need. It's a great story for Capitalists.

Wednesday 18 June 2014

Lovestruck Hague, Dame Angelina, and an Unexpected Factoid

Search on Hague / Jolie / Images and you get this extraordinary photomontage, straight from the secret scrap-book the Foreign Secretary keep under his bed.  'Dame Angelina', indeed.  William Hague isn't the first to behave in this lovestruck manner (and I'm not the first to make the comparison): Jack Straw blazed that unseemly trail with Condoleezza Rice. But - oh dear, oh dear.

Do they not have advisers ?  As it happens, of course, we know Hague does indeed have advisers: they sometimes camp out in his hotel bedroom.  But they haven't saved him from making an eejit of himself this time.

Anyhow, on to the factoid.  You've heard of Six Degrees of Kevin Bacon ?   Well, I am a mere 3 degrees from Dame Angelina, being related to her by marriage.  Bet you didn't know that.


Monday 16 June 2014

Greenpeace FX Losses: It's So Easy, Isn't It?

So Greenpeace have contrived to lose €3.8m in currency speculation !  To quote the great man, one must have a heart of stone to read it without laughing.

But it's easily done, isn't it ?  We're short cable, so that means, errr, we're long, errr ... what was it again?
"to be really clear about what happened, the staff member who lost their job didn’t gamble on stock markets or speculate on currency. ... What went wrong was that someone without proper authority signed contracts to exchange currency. And that ended up losing money because the value of the Euro fell. It’s like choosing a fixed rate mortgage rather than a variable rate mortgage to avoid risky fluctuations - but this time we would have been better off with a variable rate. The staff member didn’t have the authority to make such a big decision" - (Marie from Greenpeace, writing at CiF)
So: speculating, then.  I know it's a nasty word, "Marie from Greenpeace", but there it is.  First the Co-op Bank, then this.  Capitalism, eh?  Short, long, delta, forward curve, mark-to-market ... so many difficult things to learn.   Still, with a budget of €300m ...and if you need some expert banking advice I believe Fred Goodwin is still at a loose end.

"Donors will rightly be surprised and disappointed ... we welcome your comments or questions."   But not so much as to let you post them on our website, you understand.

Yes, we understand.


Gazprom turns the screw on Ukraine whilst the West is distracted

It is a very strange world we live in currently. With simultaneously 3 major crises' in the world and yet the majority of its people looking to Brazil and the World Cup.

The Crisis is Iraq is perhaps the most immediately serious as we all now have seen the full horror of Jihadism and the terror and destruction that it can wrought. Next would be Ukraine and thirdly would be the South China Sea crisis.

Unluckily for the West, the current leadership is not competent to manage foreign strategic engagements having made such a hash of it for many years, the appetite and ability is weak.

So step forward the more focused Russian's. Putin must think all his Christmas' have come at once. The Ukraine is on its knees and with a subtle but effective piece of arming the militia's the Country is set to be de-stabilised enough to be played with at whim by the Russians. Yet also the Iraq issue has forced up the price of oil, critical to Russia's budgeting and also distracted the West. China meanwhile can carry on its aggressive assertism in the South China Sea and again the US is too distracted to really seek to control the situation.

With all this at play, Russia has decided to end any credit to the Ukraine and force gas sales for cash payments only. There are lots of made up excuses as to why this has come about, but the net effect is to put further pressure on the Ukrainian Government and its short-term finances. It is not really a bold move, but will further trouble an already troubled Country.

All three of these areas are massive, resource rich zones - in a world where resource rich zones are being less frequent. There is no chance of an easy ending to any of these conflicts and yet the West's response is a confused mess of nothing-at-all-ness. Long gone are the days of hegemony and empire is this 21st Century.

Saturday 14 June 2014


Vietnam war comparisons are going to be inevitable. When the victorious NVA arrived at the Palace they found the main gates locked so knocked them down with a tank, pretty much ending the military phase of that conflict. I guess the photographer sneaked in through the broken gate in the background to capture the moment.

Searching the web for Iraq/Vietnam yields hundreds of pages of comment which sadly, are mostly partisan and highly biased in favour of their owner's viewpoint. Trying to find someting objective is actually quite difficult. Even trying to find something simple such as "Did Tony Blair encourage the UK to war?"  brings up endless illegal war-5million dead-Mossad-Tory plot-Saudi-militaryinustrialcomplex that is mostly just people sounding off and sheds little light.

In military terms the US could have won in Vietnam. In the same way that the US could defeat any nation on the planet in a conventional 1vs1 fight. But the US military did not manage to win the Vietnam war of 1965-1975.

Throughout that conflict the US did cripple the NVA regular army forces more than once. They did damage the Viet Cong insurgency to such an extent they became ineffective. They had air superiority over all of south Vietnam and controlled the coast and seas from the very beginning. But as we know they lost the war.

As part of the aftermath the US military looked at its role and its tactics and established a new military doctrine for conflicts in countries like Vietnam. And they also discovered the limits of their power.
This book , lessons and legacies is pretty comprehensive, though at £145 its a bit steep. So we shall sumarise just a few.

1. If you are going to use strategic bombing, bomb early and  bomb often. 
Contrary to my own feeling the lesson from Vietnam was to bomb much more heavily, many more targets, and much earlier. Its a different situation to Iraq though. The USAF waited far to long to bomb Hanoi and suffered heavy losses and political pain from doing so. The lesson seems to be Rolling Thunder should have been implemented with its original objectives of attacking 100+ targets in North Vietnam and not the watered down version that actually happened..{this does rather ignore the political aspect though. Which was the war might escalate with Soviet or Chinese forces becoming involved.} General Maxwell Taylor, in his assessments of the chances of US success in Vietnam before forces were committed, stressed North Vietnam's vulnerability to strategic bombing. 
Anyway, that lesson was learned. The shock and awe really was shock and awe. I still feel it was counterproductive in the longer term, but in order to win the land war against conventional Iraqis the air force destroyed most things of any military value. But Iraq was never going to be conquered by strategic bombing.

2. Secure all land borders. If you can't, don't even begin operations.
This was crucial and a major reason for the failure of Vietnam. The North Vietnamese infiltrated all along Southern Vietnam's long  border with Laos and Cambodia. The geography and topography assisted the North with staging positions , concealment and infiltration options on a scale that US forces could never contain. It was decided that any future war must be able to seal or operate on the borders.
On paper this must have looked good in Iraq. Lots of borders and some really unfriendly nations adjacent. But clean, clear barren zones, suitable for air power to operate and recon to spot any movements easily.

Didn't really work out. The border too long. The enemies too many.The factions too great and with too many resources to draw upon.  And the decision to actually do it not taken. An insurgency developed that proved to be every bit as impossible to prevent destabilising the country as the VC had been.
Korea was almost perfect for UN forces in terms of borders and access and terrain. Vietnam could hardly have been worse. Iraq, somewhere in the middle.

The others are the usual. Win hearts and minds. Establish clear mission goals and achieve those goals. Avoid insurgency and counter-insurgency battles. Attack the enemies strength. Commit appropriate numbers of forces for an appropriate duration with appropriate resources for their mission. .. and so on.

Well, can't learn much from any of this, so its probably the political and academic conclusion of the Vietnam war that apply.

 Most academic writing on the war advances the view that the political failings of the South Vietnamese state made it virtually impossible for the United States to achieve its objectives, 

And that is true. There in a nutshell is why the US lost. because South Vietnam was a corrupt, divided, factional, military-dictatorship without strong support from its own people, totally reliant on US aid and US combat units. And the US wasn't fighting just North Vietnamese communists. It was fighting the communist bloc.
The North mobilised for total war. The South never did. The North used terror and terrorism and was very successful in intimidating villages to support the communists through fear and terror. The communists also spent huge amounts on propaganda and it was also extremely successful. They likened US troops to the colonial French, only recently pushed out. They promised a better future often under pain of death. Hanoi pumped out the most outrageous lies about their victories and enemies lies and atrocities, .But in a closed society without access to external media, it was believed.
But the VC was also able to impose order in the areas it controlled. The possibility of a US airstrike was ever present but the possibility of bandits and deserters stealing and murdering was not.

And that's probably also why ISIS is on the march.

Historians also tend to agree that the fatal blow for South Vietnam occured when the North violated the Paris agreements and the Nixon administration did nothing, despite their treaty obligations. The NVA knew their was no appetite for restarting the conflict from the United States and acted accordingly.


Which led to 

 In the end it all boils down to one question: Could we have won a military victory in Vietnam? Record's answer is: Yes, but not at any price even remotely acceptable to the American people. One thoughtful former infantry battalion commander told me he had reflected long and hard about what would have resulted from unlimited war, including an invasion of North Vietnam: ''We could have won a military victory without question. But today my sons and yours would still be garrisoning Vietnam and fighting and dying in an unending guerrilla war.'' 
The war was ours to lose, and we did; it was for the South Vietnamese to win, and they could not.

Friday 13 June 2014

Passports: Worse Than It Seems

The passports thing is an amazing nonsense, and symptomatic of worse.  Let's start with the present furore.  Isn't Teresa May on serious manoeuvres to be next leader of the Tory Party ?  Doesn't every ambitious minister ask their Permanent Secretary to keep them fully apprised on all the known bear-traps that can swallow them up out of a clear blue sky** ?  Doesn't everyone over the age of (say) 35 recall the previous passport chaos which came to a head in (IIRC) 2001-ish ?

For the record, that previous episode was solved comprehensively - presumably by the application of an appropriate amount of political will and, yes, resources (of whch a good project manager was probably the most important).  I had to renew mine in late 2001, by which time the system was working brilliantly; and then again in 2011, when I renewed by post and it came back so quickly I could scarcely believe it.  So it's been working fine until quite recently, at least as a mechanistic process.

We therefore conclude that, as well as May taking her eye off the ball, some idiot civil servant has taken resources off the job.  I'm guessing that demand for passports has increased steadily with the decade's worth of massive immigration; though it's not obvious to me why this should have mushroomed since my good experience in 2011.  We can't rule out dumb-insolent sabotage by the Yes-Minister brigade, of course (you want cuts, Home Secretary?  Leave it to us.)  Though that still doesn't explain May's indolence in her own cause.

But there's a bigger point, signalled by the important (though hardly surprising) Grauniad revelation that staff processing passport applications were told to relax checks in order to speed the plough.  

We know that's also how lengthening airport queues have been handled in the past: and from my vantage point of local politics (with the biggest Home Office processing unit based in the centre of my manor), I can assure you it's par for the course.  Other examples:  staff in many parts of the civil service that need to deal with passports and other forms of ID are left completely up in the air when dealing with documents not written in Roman script (which is of course rather a lot of the world's itinerant population these days) so they just nod them through none the wiser;  occasional spot-checks reveal there is rampant personation in citizenship exams, many of which are written papers or computer-based tests.

But nobody cares enough to put two and two together.  A big chunk of unwanted immigration (see all main political parties) could be switched off at the drop of a hat by simple attention to these details.  Are minor budgetary savings more important than this ?  I'd have thought this was 'flagship policy' stuff: Labour, yes Labour, are making hay with the Tories' failed promise to reduce immigration substantially. 

One way and the other, Teresa May has really screwed up.  Doubtless, Genius Osborne thinks this is all just fine and dandy, and his path to the top is all the clearer.   I'd say it disqualifies both of them.


** yeah, mixed metaphors, I know 

Thursday 12 June 2014

BBC Question Time competition : Carivale edition

David Dimbleby presents topical debate from King's Lynn. Panellists include Conservative work and pensions secretary Iain Duncan Smith MP, Labour's shadow welfare reform minister Chris Bryant MP, Liberal Democrat Tessa Munt MP, editor of Private Eye Ian Hislop and former leader of the Respect Party Salma Yaqoob, who leads the Hands Off Birmingham Schools campaign group.

looks like a decent lineup.
But if you think I , or anyone else, will watch this over Brazil vs Croatia then you are a politics nerd.

BQ thinks Oscar to get first goal of the tournament with Neymar making it 2-0.
.. oh..wait...

Dimbletie - Brazilian Yellow and green.
Q1. Trojan horses. Schools inspectors and the May/Gove split.
Q2. Passport failures. Why does it take 6 weeks to get a passport? 
Q3. Jobless figures. The best ever. Recession is over? Why don't we feel it then? I certainly don't.
Q4. Vince 'house price' Cable. What's his new lunacy? Maximum of 3.5 times mortgage. Actually, that's not too looney. But won't that crash the housing market?
Q5. Water canon. Is something up? A hosepipe ban imminent?

Winners of 2014

Hopper -2

Measured - 2
Malcolm Tucker - 2
Dick the Prick - 2 

DJK - 1
Nick Drew - 1

charity shield winner - DJK 

Wednesday 11 June 2014

Enter Dragon, Stage Left, with Smoke and Mirrors

China week in C@W continues, with another great story from the South China Morning Post

A mainland Chinese businessman, one Zhao Jingjun, bought 998 kg (worth HK$270m) of gold bullion in a consignment from Ghana (sic).  But when he came to sell it on, and his customer asked to check the goods, well bugger me it was a pile of base metal ! 

Just fancy that.  By coincidence he was staying in the hotel next door to mine, but I didn't hear any sobbing.

This immediately brought to mind the tale that FT Alphaville has been telling for a couple of years now: that the Chinese metals markets is massively distorted by the phenomenon of traders etc using metal inventories as collateral for finance - often indeed collateral against multiple loans - so that the huge quantities held in warehouses bear very little relationship to any underlying economic activity.  And if the gold turns out to be base, then presumably the base will sometimes turn out to be sand ...

Among the several consequences of this:
  • as per the item I recounted at the weekend on collapsing HK retail trade, when the Chinese government suddenly decides to intervene on these scams, there can be dramatic and instant consequences (often involving a bullet in the back of the head as well as economic stuff)
  • people who depend on Chinese metals demand (e.g. the whole nation of Australia) must be having a fairly nervous time
  • who can believe any of the economic data issing from China at all?  
A bit unnerving for the many decision-makers large and small who must cater for China as being the driver of the world economy or whatever it is people say.  They are all flying blind, which is bound to end up in some messy crashes.

Incidentally, why is Mr Zhao importing gold from, errr, Ghana?  That's another illuminating story.  It turns out that for several years, Ghana has been a gold-rush territory for thousands of Chinese, including some very modest individuals who have been prospecting in a manner not dissimilar to the old pan-handlers of California and the Klondike.   It's all coming to grief there now, apparently: the locals have decided they don't really like these Chinese incomers.

We read a lot about how China is quietly taking a dominant position in raw materials across Africa, and that we'd all better watch out.  Really?  I bet the details are a lot more complicated and, just as they found with their 'oil assets' in Libya when the old Colonel got the chop, these Chinese investments may not be very secure at all.

What a game.


Tuesday 10 June 2014

China playing a risky game

Recently it was GSK, highlighted by the Chinese for the corruption in promoting their drug sales in China. Not only was GSK caught, something not really denied, but the Chinese Government has a well focused communications strategy too. Using Social Media, the focus on the corrupt foreigners is quickly whipped into a storm with state owned media also joining in with leader writers in papers piling on the pressure.

Before long GSK was in a very bad place and its future in China very bleak. And for what, doing what everyone was doing in a bent market. Now, this is not to excuse them because in business if you take those kinds of risks, then you can't complain too much if you get your comeuppance.

However, GSK was part of a pattern quickly emerging. Now it is the turn of McDonalds to face the test of Chinese media aggression. A woman was sadly beaten to death by a cultist group in broad daylight and now the Chinese Government is pressing to blame McDonalds for not having security in its restaurant. Clearly the real story is the murderous cultists ability to get away in broad daylight - but as ever with China (and many countries) it is easiest to blame the 'corrupt foreigners.'

A pattern is emerging of trying to undermine Western brands and there are several reasons for this.

1) Strong Chinese nationalism is being promoted by the Government as an alternative and control on any wish for democratic change
2) Corruption is openly rife in China, accusing the rest of the world companies of being behind this serves the Chinese Government well to muddy the subject.
3) Western companies seek market share whilst Chinese companies do too, hurting the Western brands domestically will be seen as helping to promote China own corporate base.

There is little that Western companies can seemingly do about this, particularly McDonalds who surely in business in China to serve food and not provide civil security - but it will be very uncomfortable in the boardrooms of any major Western brand-led company who has China growth as their central strategy, knowing they could be next.

Social media in China too is an interesting issue, perhaps for more depth in another post - it certainly is showing all the signs of being able to be as misused as the printing press and camera were too by repressive regimes.

Monday 9 June 2014

The great game anew

Poor little Bulgaria. Known for its endemic corruption, which even the EU has described as breath-taking, is having a hard time. In the recent past it has been known for its place as being the only Country in the EU where a former Prime Minister has been jailed for corruption.

Now though the US has stepped in to make sure Bulgaria is involved in the Great Games on the side of the EU and US. Bulgaria had agreed to help Russia build a South Stream gas pipeline (funded by Gazprom) which would mean that gas could come from Russia via the Balkan states and avoid Ukraine.

With the recent events in mind, the US has stepped in which EU backing to put a stop to this project and called into question the process of bidding  - as Russian and local firms helpfully won the tender process which seems to have not included major Western manufacturers, natch.

So little Bulgaria, caught rigging its own processes and taking the Russian rouble, will now have to be paid up member of the EU. Best of all Bulgaria has said this is unhelpful interference by the EU and just this morning the Energy minister has said the building of the pipeline will prove 'irreversible.'

Russia has yet to make a meaningful comment as it must decide what step to take next. Russia may well find it harder to work with full EU members than putting pressure on the Ukraine and former CIS Countries who have no NATO guarantees.

We will see how this plays out, it is possible the Russians have expected this and after all, if they conquer Ukraine they won't need the South Stream project anyway.

Saturday 7 June 2014

Weekend Letter from Hong Kong

Buddha: he's Big
An excellent week's business in Hong Kong, not to mention the Dragon Boat racing, and the 25th anniversary of a Certain Event that is commemorated here but not over the border.  With everything wrapped up I've gone tourist:  been up the mountain to commune with the Big Buddha, payed my respects at the Po Lin monastery, and walked the Wisdom Path.  
Wisdom Path:  a bit spooky

So: time to review the week's (English language) papers for the insights they offer to a culture I know nothing about.   My pick of the Hong Kong headlines (South China Morning Post):

Jail terms delay Triad elections

The Triads, it seems, go to the polls to elect their leaders every two years - but it's been postponed.  "The delay is to avoid creating an unfair election for those who will run but are likely to be jailed for criminal charges they are involved in."  Good to know the Triads have such a flexible constitution.

Drop in retail sales biggest in 5 years

Rather scary this:  "Consumption fell 9.8% year-on-year ... some economists blamed the gloomy figures on the continuing effects of the anti-corruption drive Beijing launched in 2012."  That's how much HK's economy depends on mainland Chinese business.

Textbook asks: can you match the races?

Well fancy that: primary schools are using a textbook that asks pupils "to match jobs with nationalities - Filipinos as maids, a South Asian as a construction worker, a white guy in a suit as a teacher, Japanese for restaurant owner; and choose the physical characteristics of different races, such as curly hair, thick lips, very dark skin ...  Who knew that racial stereotyping existed outside the UK ?

Arrested freedom / Facing the past

"Despite the changes made to China's human rights legislation after June 4 [1989], progress has been slow ... in recent years the situation for civil and political rights has significantly deteriorated."
"Reluctance of mainland Chinese to discuss the events of 1989 stems from both fear and shame, and open discussion would help foster trust in the government.  The Communist Party does not want to confront its mistakes because it is afraid."

Free speech still thriving hereabouts though, obviously.

Dragon Boats: they're fun

 pics © Nick Drew 2014

Thursday 5 June 2014

Plastic Taxes

Rimmer : That's eight lemons, Can we have a bag ?
Kryten:  This is 23 A.D, sir. The dawn of civilisation. The Bag hasn't been invented yet.
Cat:       Really ? So what did they do instead ?
Kryten:  They dropped things.

Red Dwarf series X : Lemons

The plastic bag tax is a tax on a problem that has long since disappeared. Its a policy plucked from the bottom of the box of easy to introduce, cheap, sounds good when you say it, niggley but not vote losing, time wasting bills that governments dig around in when they have no ideas left.

Whatever..its a stupid idea. An annoying imposition that raises a bit than more bugger all in tax and achieves a littleless than bugger all too.

When CU was a whippersnapper, fresh from university, he worked for one of the pioneering green, recyclable manufacturing plastics  companies just then setting up in the Eurozone.
And, as he tells it, no one was remotely interested.
 Not supermarkets. Not governments. Not business. Not manufacturers. Nor shipping, waste management, factories, household, leisure, transport .. No one wanted to try and sell £5 rolls of bin bags when a bin bag roll retail price was just .75p.
No shops wanted to INCREASE their own cost of carrier bags that they were giving away free from 0.06p to 16p.

Only Hippies and green politicians were impressed. And they weren't that impressed.

Move on 15-20  years and its a different story.
Recycling is the norm. Its the law! Its drummed into every toddler by the eco-school teachers. 

The big corporations, coming under threat from their customers  about causing melting ice-caps, or the coming ice-age, or ozone ending callousness decided to think again and embrace green ideas. At first in spin. Then in practice too. Because they discovered that amazingly there was money in it!

The prosperity of the 1990's allowed the 'organic' 'fair-trade' 'offsetting carbon footprints' and 'handcrafted' markets to flourish. 
It was a boom and people felt happy spending a little of their wealth to assuage some of the guilt for being a first world consumer and earning more in a day's house price rise than a Guatemalan would in a year.. A Sting CD was a small price to pay for a new CD player. A jar of foul tasting coffee a small price to pay for a guilt free new espresso machine for one.
These were the Blair years- The anti-Thatcherite 'caring' Nineties and Millennium were all the rage.
Time to feel good about yourself. But not too good.

If Organic foods and carbon offsets have largely been eradicated by the long, long recession and the unfriendly face of realism, the attitudes the boom times fostered have remained.

For instance, the plastic bags themselves. 
These are no longer the mighty heavy plastic heavyweights that you could hang a hoover on the back of your door hook with. The 20 micron bags that you actually had to use force to fold. These are flimsy constructs that barely make it from the trolley to the car boot.
Bags are made from 100% or very near 100% recyclable materials now.  
The 1000 year bag, always a bit of a dubious claim, is even more unlikely now. A bag in your cupboard falls apart all by itself over a fairly short time.

Boxes are not wrapped in plastic before delivery to the supermarket. If you've seen a delivery being unloaded then you've seen the very small amounts of plack-wrap used today. Less packaging all round. The oil price, so the plastics price, and the profits squeeze has already made businesses  reduce any costs all along the line. 
 The plastic sheeting that was seen all over the countryside stuck in trees and hedges is also largely absent. I don't know what farmers use now but they too must have been affected by the same market forces and sought alternatives.

Reusable bags for life or clip-on bags are available everywhere. In fashionable designs and colours instead of the drab oatmeal smug piousness of the originals. They can be found nestling in the back of any vehicle you care you care to look in. Plastic bag holders are available on key chains. In umbrella handles. In purses, etc.

And, if anyone still goes to shops, you will notice that a plastic bag is no longer automatically offered. 
In the old days a store bag was 
1} for advertising. So dishing out as many  as possible was encouraged by bosses
2} a visual security check. Anyone leaving with items not in a bag was unlikely to have paid for those items.

But today the usual question is " Do you need/require a bag today?" - The inference clearly being that you don't.

We at BQi  purchased a load of bags 8 years ago when our supplier went bust. I estimated that quantity should last us 2 years.. We still have around 20% of them left, eight years on. Because bag usage has collapsed.
Its the customer who decides if they want a bag and if they don't, which is the norm, then they say so.

"Sainsbury’s says it has seen the use of free carrier bags drop significantly in the last six months, in favour of longer-life, re-usable bags.
Use of disposable bags has dropped by 10% compared with last year, while sales of re-usable bags have soared by 44%."
 That was from 2007.

So this tax is going to fall squarely on the people who are buying goods for which there is a need for a bag. 

Its a stupid tax. A petty, pathetic tax that tries to address a problem that has long been solved.
Solved mostly by consumers, environmental pressure, market forces and best practice.

Politicians wade in.. 15 years too late..

Which is a shame for the young CityUnslicker. He could have been a multi-multi millionaire by now if the politicians had got their act together when it actually mattered.

Question Time : Good Queen Bess edition.

David Dimbleby presents Question Time from Llandudno in Wales, with Conservative secretary of state for Wales David Jones MP, Labour's shadow minister for care and older people Liz Kendall MP, Plaid Cymru's Hywel Williams MP, assistant editor of The Spectator Isabel Hardman and the businessman Nev Wilshire, star of BBC3's The Call Centre. 

No idea who any of those people are and I work with some of them!

The ever tricky Question Time Welsh regional edition. A chance for the locals to get some issues off their chests. Plus its usually the most socialist of the sessions - so best of luck!

BQ expects 
 - The Queens speech and the plastic bag tax.Smugly as the Welsh already imposedhave this pointless cost burden.
- Fracking under your house. The homeowner does not own the land 1 mile underneath their house? Who knew? Apart from everybody!
- Newark-UKIP must be some anti-UKIP/UKIP are racist bigots questions. Make it a whole month of attacks from QT that way.
- Gove-May. Extremism in schools or a leadership bid?
- Possibly that Race Track that no-one is going to go to. Hardly Monaco is it? And if the Valley gets a grant for a race track why can't Silverstone have cash for a facelift?

Winners of 2014

Hopper -2

Measured - 2
Malcolm Tucker - 2
Dick the Prick - 1

charity shield winner - DJK