Thursday 31 July 2014

Afren Non-Shock - Rilwanu Lukman dies and then the stories come out.

Afren has had to suspend its CEO on account of 'unauthroised payments' - this is taking bribes to us more ordinary folk.

Afren Plc is a large listed UK company which was worth about £1.7 billion. On the high risk side though, given that its operational subsidiaries are almost entirely in Nigeria and also in Kurdistan. It makes my old favourite GKP look like a widows and orphans investment by comparison.

The company has a challenging history one of the key founders was Rilwanu Lukman, known for being the Head of OPEC and also Nigerian Oil minister. Suffice to say he followed Dr Subroto of Indonesia into the OPEC job. His reputation is somewhat colourful, a nice edit to Wiki does this no justice. Wikileaks perhaps does a better job.

Poor Mr. Luckman died last week. He only ever had a 3% holding in Afren and brought in Osman Shahenshah to be the front many CEO for the company, likely because they wanted plenty of Western institutions as their investors which would have been difficult with Lukman as the CEO.

With Lukman dying, there are plenty of knives out in Nigeria and so perhaps it should not be that surprising that an internal investigation has quickly revealed payments to Shahenshah and meant that he has been suspended.

It's a murky world in Nigerian oil to say the least!

Tuesday 29 July 2014

Fracking & A Rare Example of Political Will

Fracking has the hallmarks of an issue best left until after the election, like Blair studiously did with Nuclear before 2005.  Swampy doesn't vote, so let him fester in his damp hole and get mistaken for a badger: but actual middle class people are known to take fright at the prospect of a drilling rig in their back yard.  In the likely scheme of any UK shale developments what practical difference does a year make?  I'm as big an enthusiast on shale as anyone, and a great believer in Political Will: and still my answer would be: not a jot.  The gas ain't going anywhere; and there's a good chance there may be nothing to show for any exploration conducted between now and next May.  But there could be some messy headlines.

Nonetheless, the government has got religion on this, and has been plugging on rather purposefully for a good few months.  Do they actually fancy running battles with Greens down country lanes  ? (I'm quite sure PC Plod does ...)  Is this part of the great Crosby playbook ?

For what its worth, I'd say the shale policy is being pursued fairly intelligently (everything is relative, mind) with a 50:50 chance of positive political outcome.  The most recent announcement (full steam ahead but careful of the National Parks) is sensibly cast.  There's a section of the population that likes the smack of firm government; energy security-of-supply is a well-known refuge for political scoundrels (and little Putin is certainly playing his part); and there's another part of the population that generally knuckles down to the inevitable, so long as it is mildly sugar-coated - which this one is.  Even the Guardian's critique is qualified, and resigned to the inevitable.

I can also tell you (from the front line, first hand) that the drilling companies have taken the signal and are intent on playing hardball: not Henry Ford-style, but with serious determination, based on the understanding the government has their backs.  Local councils will generally play along with a determined developer, particularly when there's that bit of sugar-coating on offer; so persistence will win out.  And the academics - who some assume are greens to a man - are in fact pragmatists to a man, always on the look-out for sponsored research opportunities.  They will largely be onside too, with a whole new industry in prospect. 

Yes, 95% go with whichever way the wind is blowing, and the government has decided to blow.  Of course, they're showing the same steely resolve with nuclear and all manner of 'renewables' lunacy too, so it may be viewed as all of a piece*.   Energy policy, misguided or otherwise, seems to have that effect on people.  You don't get forgiven for letting the lights go on the blink.


* Funnily enough, all of this - the fracking and the faffing - is undermined by falling gas prices, happening across Europe and Asia without any help from UK shale !

Monday 28 July 2014

Hague rules against Putin

No, not William Hague, off to be as near as he can to Angelina Jolie, but the International Court of the Hague.

Many moons ago Putin seized a private company after accusing it for tax fraud, Yukos, which had grown to control much of Russia's oil and gas through likely dubious means after privatisation in 1993, was broken up and its CEO - the politically active Michael Khordokovsky, put in prison. The bits of the company were then sold to finance groups, who miraculously then sold it on shortly thereafter to Rosneft - controlled by Putin's ally.

So much, so murky, the numbers involved are fantastic. Yukos controlled 20% of Russia's oil and gas sector. The tax claim alone was for $27 billion!

Whilst there is not tax treaty for shareholders, meaning all Western claims are effectively defunct, the management have been appealing over the years at the various international courts. Today's ruling comes as a milestone and leave Russia with just one last appeal (so a few more years then....).

The timing for Russia could not really be worse, after the shooting down on MH17 and the proxy war it is sponsoring in the Ukraine. Little could it afford in its budget the $50 billion repayments sanctioned - all to oligarchs too, of all people.

It will be interesting to see if Russia ignores the court when push comes to shove, as it will set a dangerous precedent for any Russian company wishing to operate abroad as it will have abrogated key international treaties.

Friday 25 July 2014

Tesco tantrums

Phil Clarke was an excellent CEO, continuing on from yesterday's theme which gerenated a lot of interest here is why:

- Clarke did not see Lidl or Aldi as the competition on the highstreet. The competition is Amazon and Ocado and Google.

- Tesco was investing lots of money in a digital strategy to develop a better at home expereince and try to own the customers of the future - by offering banking services but also home delivery and even a successful tablet. The tablet will be back to fight Kindle.

- At the same time Tesco had to sell out of its disastrous US adventure which has meant reduced returns.

- The overall debate yesterday about out of town dying is not really held up by recession figures of store closures - there are far more on the high street still. Bluewater, Stratford and Westfield dominate the retail market in the South of England - together with Oxford Street for the tourists.

- Clarke paid the price of being too visionary, as often happens with a CEO, particularly when the finances were in poor shape and with their domestic share so great it was only ever going to go down.

No doubt they will sell their land bank and try to reduce prices further, but the new CEO would be mad to stop the digital drive as that is focused on the next ten years rather than the next two.

Thursday 24 July 2014

Trouble at Tesco, & RBS

Enough of the international scene: back to business.  The Tesco crisis seems to have come to a head - well, the head has been chopped off, anyway.  Mr Q will have a better-informed view, but as a simple punter I'm bemused. 

The bottom line is the bottom line, of course, but as I go about my shopping Tesco doesn't seem to have screwed up visibly (unlike, say, M&S clothing).  In fact, I'd say my local 'superstore' has been steadily upgraded year on year, prices are OK, and if you are in a position to optimise the various promotions they run (particularly by buying in bulk and playing tunes on the petrol points) there is quite a lot of £££ to be saved.

I also thought that they'd responded intelligently to the recession with their phoney 'discount brands'.  But no, it seems not, and Aldi & Lidl have done for them.  Old man Cohen would never have let that happen: but since the days of MacLaurin they have been resolutely pushing the brand away from the bargain basement.  To have been caught in a pincer from below (the Germans), and from above (M&S Foods and Waitrose) is a strange outcome.

The new man ('Drastic Dave' Lewis - sounds promising) comes from Unilever.  By a curious coincidence I happen to know a bit about the energy purchasing operations of that company and of Tesco, and have been moderately impressed by both.  This may have nothing to do with the issue at hand but it's a data-point.

With an operation and asset-base as big as Tesco there is huge scope for turning things around: (they could start by selling land).  Sainsbury was languishing for years, but was never a lost cause and has engineered an up-cycle.  Surely Tesco will eventually figure out a formula for the 21st century.

Which is more than can be said for the recidivists at RBS.  Yesterday in the comments, Hovis brought our attention to this, the latest episode in what appears to be a disgraceful story we looked at back in February.  Were RBS putting the squeeze on SME customers in order to drive the into the hands of their investment arm at knock-down prices ?  It doesn't help their case when senior management is caught being economical with the truth.

As with Lloyds, the taxpayer-owner of these wretched institutions can only marvel that, across all the years we have owned the turkeys no-one from Whitehall has taken the management to the back of the bike sheds and marked their cards for them. 


Wednesday 23 July 2014

North Korea Wants to be Back in the Spotlight

OK folks, it's hot enough for the Silly Season to be declared open.  Jong-un the wrong 'un has decided North Korea needs to get itself back in the headlines where it belongs and, failing permision from his Chinese friends to pull any more of his 'war on America' stunts, he's decided to go for broke on the tourism front. 
North Korean authorities have announced an ambitious development project for the east coast city of Wonsan - an underwater hotel ... local authorities are now in discussions on how to build the hotel.
It's easy, chaps. First, Fat-boy inaugurates the project with a little ceremony and tells you to crack on or face the bullet.  Duly motivated, you buy an old Soviet submarine and put in some glass portholes and bunks: they've got one at Disneyland you can copy.  The missile tubes can be converted to dispense cornflakes at the breakfast buffet; and you can charge a premium for beds in the conning tower.    

 Then sit back and watch the crowds pour in - oh, and you'll need one of those complicated queueing schemes Disney uses to keep the punters happy for an hour or so as they shuffle foward to the magical experience.  Li'l Kim can personally monitor the queue from within, using the periscope.  He will be delighted by how respectful and orderly they are.

I will be happy to knock up a business plan and arrange the finance.  My fee will be strictly hard-currency and payable in advance.


Update:  quite forgotten this until BE reminded me in the comments, but many years ago on another planet I had one of me turns ...
Start spreading the Juche
The D-P-R-K
wants us to be a part of it – Pyongyang Pyongyang !
The Lee Myung Bak group
Urge peasants to stray
way from the very heart of it- Pyongyang Pyongyang !

I wanna wake up in a city, that doesn't sleep
And find I’m King of the ’Ill - Kim Jong Il - top of the heap

These running-dog blues,
are melting away
I’ll make a Mangyongbong of it - in old Pyongyang
If I can make it there,
I’ll do it in Kim Il Sung Square
Its up to you - Pyongyang Pyongyang !
Yup, the silly season.  You can google all those crazy names.

Tuesday 22 July 2014

The Oil-Price Dog Still Isn't Barking

Catching up with the newspapers, one might be forgiven for thinking that Armageddon looms.  But then we turn to the market data for the traditional calibration and yes, the price of oil is gently falling: we are back to $108.  The combined agonies of Gaza, Iraq and Donetsk do not register on the curve.

European natural gas prices continue to fall even more markedly.  The premium over the the US price - for several years a very scary thing for European industry and economy as a whole - is down to under 50%, the lowest it's been for a long time.  (It was more than 200% as recently as last November.)  Even more striking, Far East LNG spot-prices are back down to pre-Fukushima levels.  Of course it's a hot spell in summer right now, but this goes beyond the usual seasonal dip. 

Putin shows every sign of being personally very uncomfortable, and low prices for his primary exports aren't going to improve his humour.  What on earth will he do next ?


Monday 21 July 2014

Dollar, Donetsk and US Dominance: Ending Any Time Soon?

"The dollar's 70-year dominance is coming to an end", writes Liam Halligan in the Telegraph.  "Within a decade, greenbacks could be replaced as the world's reserve currency."

He isn't the first to predict this, and it seems to be received wisdom in some quarters.  BRIC Development Bank plans are cited in aid by Halligan, along with stats on growing BRIC GDPs, and speculation over what currency (or currencies) the big Russia-China gas deal is denominated in.

Well, people have been announcing the end of oil priced in dollars for a long time, and it really hasn't happened.  The banking crisis seems to have reinforced the dollar's standing.  Given the haste with which the Russians came to the signing-table on the gas deal (reflecting their Ukraine-based desperation to show Europe we aren't needed), the chances that they came up with a fancy new currency arrangement are rather small.

In the long run, I have no doubt China will be up there vying for the Top Nation accolade, but as often argued hereabouts their hesitancy and false-footing in foreign affairs doesn't make them likely to achieve this any time soon.  Timing is everything and "within a decade" for the end of the dollar as world reserve currency looks wildly premature.

I'd go further.  The fact of China as putative Top Nation doesn't really map one-for-one onto currency at all, any more than we'll all soon be speaking Mandarin.  'Currency' means a lot more than 'politico-economic muscle', as the Euro-bloc is painfully finding out.  A complex alignment of reliable legal system, flexibility & pragmatism of authorities, understanding of markets, ease of access, liquidity, adapatability & readiness to embrace change, lack of doctrinaire stubbornness and other factors is required - a combination not readily associated with, errr, China.   Or indeed France, another country that has perennially tried - well, perenially hoped - to be some sort of global player.  The City of London's dominance of the financial world has long outlasted the British Empire.

Changing the subject, but bringing it around to a similar conclusion, the Ukraine situation has obviously taken a very nasty turn while I was on hol.  To chuck in my 2 bits-worth: as Raedwald has suggested, it's rather probable the Americans knew what SAM kit was available to the separatists.  He asked - who did they tell ?  which is one way of looking at it.   I'd guess the USA has an absolutely top-notch vantage-point on everything in the region (just as we do in Cyprus for the Eastern Med) and could tell chapter-and-verse down to the very smallest detail.  It probably won't, though, for the time-honoured reason of not showing its hand.

Yes, it's the USA and its dollar for a while to come.


Friday 18 July 2014

Dangerous waters

The United Kingdom's Task Force to recapture the Falkland Islands had set sail from the last reasonable hope of no conflict point, Ascension Island, on the 18th of April. By the 23rd April the fleet was still seven days sailing away from the 200 mile exclusion limit that the British government had imposed around the Islands.

The Argentinians had been shadowing the fleet for a while. ARA Narwal an electronic surveillance trawler, of the cold war type nations used to add to their fishing fleets, had been dispatched to shadow the ships. Along with their diesel electric submarines they were to monitor the progress.

The Argentinian air force also decided to overfly the Task Force using Boeing 707 civilian airliners and Lear jets in a reconnaissance role. On 21st April a 707 was  spotted by radar and a Sea Harrier dispatched which shooed it away. Commander Woodward contacted Westminster and made clear that he wanted the rules of engagement changed, so that the actual task force, and not just the 200 mile exclusion zone, should be considered a war zone. Meanwhile the Argentinians continued their reconnaissance flights over and around the Task force

The UK War Cabinet politicians saw the danger and so for the safety and security of the military they issued this communique to the Argentinians.

 On 23 April 1982 the British informed the Argentine government that..
 "any approach on the part of Argentine warships, submarines, naval auxiliaries or military aircraft which would amount to a threat to interfere with the mission of British forces in the South Atlantic would encounter the appropriate response."
 At the same time it stated that ..
"all Argentine vessels, including merchant vessels or fishing vessels apparently engaged in surveillance of or intelligence gathering activities against British forces in the South Atlantic, would also be regarded as hostile."

On the same evening, 23rd April, a high altitude contact was detected heading directly towards the Task Force. Fleet Commander Admiral Woodward ordered his new powers to be used and the target to be destroyed. A Sea Dart anti-air missile was prepared.

Less than 60 seconds to launch Woodward noticed that the plotted course of the intruder held a direct course from Durban in South Africa to Rio de Janeiro, in Brazil. He cancelled the attack and instead sent a Sea Harrier to investigate. 

The Sea Harrier discovered the "Intruder" and correctly identified it as a Brazilian airlines DC 10 with over 100 passengers and crew on board.

How public opinion would have reacted to the first UK response to the invasion being the shooting down of an unarmed, neutral, airliner in international airspace was luckily never discovered.

the Learjets were used as decoys, pathfinders and raid leaders as they were equipped with such superior  navigation systems. A Learjet was shot down near the end of the conflict by a Sea Dart missile from HMS Exeter.

The surveillance trawler was badly damaged by Harriers and captured by the SBS. Taken under tow it sunk.

A Boeing 707 reconnaissance mission by the Argentinian airforce was attacked by 4 sea dart missiles on the 22 May and miraculously evaded them all. But no more missions by airliners were attempted.

The Sea Dart was a capable missile at high level but was affected by 'clutter' from the waves at sea level. Only 11%  hit targets at low level. The Argentinian's were well aware of the Sea Dart/Type 42 destroyer radar limitation, having two Type 42 destroyers of their own. So Argentine pilots flew very low, which is why so many of their bomb hits failed to explode.
The Exeter had a newer, better,  radar system.

Putin's awkward fact

It's another terrible story about MH17 being shot down. As with any story the complexity is huge, who fired? Why was the plane there in the first place?

Neither the Ukranian nor Russian Governments have a record of honesty so little of what they say about the situation cuold be taken at face value.

The most salient fact is this though, the rebels have no airpower so the Ukranians have not been trying to shoot down aircraft. The Ukranians have been using airpower for groundstrikes, but as this is confirmed as a Surface to Air missle the only question has to be whether it was the rebels or russians themselves who fired.

Thursday 17 July 2014

UK Self employment - nothing to be pleased about?

To continue yesterday's theme, here is a view expressed of the Left in the Guardian of late.

I can quite see from the links there that there must be some correlation to people seeking to keep benefits and not wanting or being able to do jobs to become 'self-employed' as a way of keeping most of the benefits. This would account for a big jump in the self-employed whilst a the same time the benefits bill is not dropping. To this extent perhaps employment is not so healthy.

On the other hand there are many figures suggesting that income from self-employment has dropped. This may be linked to the above if you look at averages, but also it corresponds to key tax issues - such as the few business that turn over more than £80k which would mean they paid VAT.
As an example of this there was the hairdresser named and shamed in 2013 by HMRC for not declaring income.

Either way, it is an interesting thought for me. I am all for self-employment as part of self-empowerment. But with the way the tax and benefit system has been structured, it either seems to be a route to access benefits or a route to dodge taxes; neither of which is a very good result for the Country as a whole.

Wednesday 16 July 2014

The unemployment/wages conundrum

(Apologies for the slight break in service, both Messr's Drew and Cityunslicker have been travelling a lot over the last week...normal service now resumed. Thanks to Mr Q. for filling in, pity he was again overlooked in the re-shuffle)

So today we have good employment numbers, with unemployment down to 6.6% (Germany is at 6.5%, USA at 6.3%, Canada 7.1% , Holland 7.2%, Sweden 8.3% France 10.4%, Italy 12.4%). The UK is well placed in the Western world in terms of unemployment rates overall. The levels have come down significantly in the past year and continue to do so. With a 4% probably around the lowest  any economy could sustain (even China has over 4% and Japan too), the UK is on track to get back down in the next few years to the trend rate of 5.0%.

Which is great news for the Government. However there is a big BUT coming. Wage growth has fallen back again to only 0.3% this month. There is simply no pressure on employers to have to pay more for their staff, even if supply is tighter, clearly in many sectors this is not enough to actually engender any wage inflation.

Again, the core reason for this is the increase in self-employed workers. This can skew the statistics, as self-employed people on the whole earn less than employed people. Reality of course tells me something different. Self-employed people are able to claim all sorts of expenses and costs, as well as potentially take cash in hand payments. Many industries with high earning workers like IT have gone almost entirely to a self-employment consultant model. The companies gain great labour flexibility and reduced taxes. The workers lose rights but gain in taxes and flexibility too.

This may well be the model of the future, however it also leads to downward pressure on wages as a per day rate or per hour rate is hard to negotiate on an individual basis - after all, this is why Unions rose to prominence in the first place!

Also some very under-employed people are likely to call themselves self-employed for their own needs of self-esteem.

No doubt overall there is more work available as the economy grows, but how this is shared out and how much tax people want to pay on their earnings is there for all to see.

Tuesday 15 July 2014

That refloated ocean liner begins deck chair arrangements

Well, I kept the essential  post I've had for 4 years.
"Junior minister for constant viewing water and solvent or oil based liquid colour which slowly evaporates to allow the forming of a hard film surface with a gloss or matt protective coating."

But Gove is out. 

Is this a brilliant move to draw the poison from the teaching unions stings. Or just cowardice? I would have tried to use the factionalising Gove as an asset. 
"We are doing what's right, what's necessary and what the Labour Party beholden to union money will never dare to do! To put children, rather than teachers, first!"

Clearly this is an election reshuffle, designed to promote  media friendly, gender politics faces, at the expense of divisive and difficult ministers.

Ok, so nothing much is going to happen in government between now and May 2015. It doesn't usually, and with liberal divorce looming, it's even more unlikely anything would be proposed that could actually be passed.
It all looks a bit Crosby. Remove toxicity...present a more inclusive narrative...get some women into the chumocracy. 
Only, isn't it all a bit late? It's a necessary strategy. But it looks desperate to me. 
Cameron should receive praise for sticking with his ministers and not shuffling them around all the time so nothing ever gets done. But this latest women wheeze does look to me about a year to late.
Better late than never ? 

Thursday 10 July 2014

What business lessons have we learned from the World Cup?

What business lessons have we learned from the World Cup?
Extract from Bill Quango's soon to be released cash-in business management book

Ed - Change Image depending upon the final winner

  1. You get what you pay for, more often than not. But there are never any guarantees.
  2. An invaluable asset is an invaluable asset.
  3. No matter how much the very best cost, they are worth it...its open cheque time.
  4. That a good track record is only a guide. A very good guide, but still only a guide.
  5. Youthful stamina and energy are not a substitute for experience.
  6. Quality leadership is essential to success.
  7. If a key member of the team isn't at their best, don't give them extra responsibilities.
  8. If a key member of the team begins to go a bit rouge, bin them fast.
  9. A big fish in a small pond may not be a really big fish in a big pond.
  10. Set clear goals .. and score them! 

Ten chapters of insight and wisdom from the business guru..
But just for you lot, the chapter summary.

1. Messi, Ozil, Torres to pick at random. Brilliant, average plus, and dire - And their current price, if not their last sale price, reflects that.
2. If you have something or someone that the competition doesn't, you will beat them.
3. Naymar..Thiago Silva...Ronaldo..Bale.Suarez....and on and on.
4. Rooney had a good season, then a mediocre one. That doesn't mean he will have a worse one next season. But if he did, the stats says he needs to go.
5. Ghana the youngest squad. Argentina the oldest.
6. Neuer.Silva.Pirlo.Van Gaal, Jorge Pinto,Peckerman, Klinsman..Joachim Loew..
7.Rooney. Ronaldo.
8. David Luiz. Marouane Fellaini, Nani, Costa..
9. Gerrard. Jo, Cassilas.. Hazzard ..
10 7-1

And then a final chapter on German efficiency. American can-do attitudes.Latin passion British indolence, Far Eastern  rigidity..up and coming BRICs  etc ..etc.

World Cup Capitalism
By Bill Quango MP 

Coming soon to an airport paperback stand near you.

BBC Question Time: We know where you live...and who your Facebook friends are, edition.

David Dimbleby presents Question Time from Inverness. 

Scotland votes on independence in September 2014, and the panel features campaigners for both sides from a range of occupations: singer-songwriter Ricky Ross, Daily Record columnist and agony aunt Joan Burnie, businessman and chairman of Orion Group Alan Savage, and the Scotland and British Lions rugby player Scott Hastings

Oh dear - Not another independence special? let's hope not.

BQ guesses
1. Independence, rephrased slightly differently from the last 10 times..maybe the poll lead for yes in dispute?
2. Government emergency snooping. Civil rights groups getting vexed about something the government already does.
3.Public Sector strikes. Can't say I noticed.
4. Hamas and the Israelis looking ready for a brawl. Why have Hamas lost so much support in the Middle East?
5. Paedos in the government..Now, usually my tinfoil hat detector would be beeping like a reversing recycling lorry..However, with what has been going on in NHS, schools and TV...
Plus, someone I used to know very well when i was a teenager, just got 10 years for this very crime.
So a cover up seems not very far fetched at all.

Season almost over - lets hope it doesn't go to penalties.

Well, Measured gave it a good go but ultimately the world champions of guessing the topical debates of a Thursday night were


Nick Drew 

Well done to them.
And well done to you all

Back in the autumn.

Winners of 2014

 Nick Drew - 3
  Hopper -3

Measured - 2
Malcolm Tucker - 2

Dick the Prick - 2 

DJK - 1
BQ - 1
CU - 1
Steven_L - 1 
Timbo614 - 1

charity shield winner - DJK 

Geldof Fronts Smart Meters: Mustn't Laugh

There is a strong possibility the £12 billion 'smart meters' programme will be right up there with NHS software projects and the CSA on the all-time fiasco list.  North American utilities where smart meters have been installed reckon the main benefit is for detecting illegal cannabis factories.  

It's off to a great start here, with an image of 'Gaz' (any relation?) and 'Leccy' bursting through the concrete like one of those explosions in the pavement that make such alarming youtube footage.  And all in the name of cutting our bills and making the planet safe from CO2.  It's hairy, it's trying to be cool, it wants a lot of money, it's telling us what to do for our own good.

Who better, then, to front for this dubious venture than Bob Geldof!  It parodies itself.  And there won't be snow in Africa ... global warming's done for that.  Feed the meter, feed the meter ...
The silicon chip inside its head
Gets switched to overload ...
And nobody's gonna escape its net
It's going to monitor your home
And daddy doesn't understand it
He always said the bills were written in code
And he can see no reasons
'Cause there are no reasons 
What reason does a government need?
Tell me why ...


Wednesday 9 July 2014

World Cup Nightmare

What is one supposed to do now...

1. Germany. I like Germany - nice food,  nice people, nice country quite sensible on things not related to energy or comedy. But not when it comes to football, after all, they always win and normally with some style, which as an England fan, is desolating.

2. Argentina - Beautiful country, nice food, but large prediliction for cheating and unprovoked military attacks. Nil points, can't ever support them.

3. Holland - Boring country, nice but worthy people, say they play stylish football but seems to involve a lot of fouling and cheating (esp. Arjen Robben) in actualite. 

A Germany-Argentina final means that I'd be cheering on Germany, ouch. A Germany-Holland final means what? Probably for me supporting Germany.

I don't like this position. I don't like this position at all. 

(Comments saying don't watch it or care as I have really enjoyed the world cup [certainly after last night's result no one can ever claim its fixed!] I will just delete them).

What is the right call to make in this sad situation?

Tuesday 8 July 2014

Meanwhile, Over in Germany: the Madness Accelerates

Just spent a few days in Germany on energy business, and there is a new piece of economic madness to report.  This time, it's at the individual level.

Readers will probably be familiar with the Energiewende, Germany's extraordinary energy policy, which embraces such entertaining elements as truly mind-blowing subsidies for solar and wind power (including paying for windfarms that haven't even connected to the grid), building more coal and lignite (sic) power stations, and closing nukes that have many more serviceable years in them.  The consequences of all this include vast electricity price increases to households at the same time as plummeting wholesale prices; an almost infeasible grid that is often on the brink of serious blackouts and frequently putting the rail network and high-tech manufacturing plants at risk (they need very steady frequency power); and, of course, rising CO2 emissions (sic).

Anyhow, it is by now well-known that grid systems with massive intermittent power sources such as wind and solar are in big need of efficient electricity storage, and lots of it.  Indeed, cost-effective storage is the holy grail of modern energy policy, and at present only pumped water-storage offers this on the necessary scale.  And it's not in sufficiently plentiful supply, being highly capital-intensive and geography-dependent.

Lithium battery technology (and indeed several other possibly prospective devices) marches on, but right now it is totally uneconomic for most power-balancing purposes.  But - and here's the joke - it's becoming fashionable in Germany for households to buy massive battery rigs and stick them in their cellars!   There is a modest subsidy available, which doesn't in any way make the batteries economic: but such is the 'aspirational' nature of this trend that people buy them anyway.  Tens of thousands have been shifted already (this fad only started last year) and manufacturers see it as an absolute boom and are gearing up to shift them by the hundreds of thousands.

To be clear: the upsurge in residential solar installations, and indeed co-op-owned local windfarms - can be viewed as entirely rational on the part of the investors since the level of subsidy makes them guaranteed 'profitable'.  But these batteries cost the price of a car and are guaranteed loss-making! - the manufacturers don't even pretend otherwise.

Such is the power of fashion.  Or the fashion of power.  Underestimate it at your peril.


Monday 7 July 2014

France - the Euro Killer?

Continuing our whimsical themes from last week, today we are going to look at France why such an economic basket case is threatening to replace Italy and Spain as the biggest threat to the federalist dream of the eurozone and European superstate.

France has predicted growth of 1% this year and 1.7% next year - but according to the international experts this is quite a heroic estimate. In June many of the key manufacturing and business indicators put France on warning for a mild recessionary event in the second half of this year.

French Unemployment is above 10% and the population is growing fast - faster than the UK. Also it is for the same reasons as the UK - immigrant mothers and record levels of immigration are both boosting the population. Not so long ago (up to WWII and until the 1960's) France had a much smaller population than England. Now that has changed and it is no coincidence that UK and the FN are both rising int he polls rapidly on both sides of the channel.

France too has a leftist Government that is the most unpopular of all time - a great accolade for President Hollande. With Government spending at 57% of GDP there is little for private business to do in France. To pay for this, taxes have gone up from 44% of GDP to 47% of GDP in the past three years.

To do this France has relied on huge increases in social taxes, in effect, employment taxes. A business colleague of mine opines that in his business, on euro spent on salary requires 9 euros to be spent on employment and corporate taxes. Not only this, but French tribunals find in favour of 'unfair dismissals' at a rate of 75% success for employees who then get 6 months pay. The net result is no one is ever sacked and instead there are huge bribes paid to make people leave on mutual terms and not submit unfair dismissal claims - typically 3 months pay, natch.

Together with this micro-economic mess, France has played for years in the world of state subsidies and ownership - to great effect historically too. TGV's plough the country, the farmers are paid from EU funds. There is a rosy glow from the past, however manufacturing is in decline and has been for a while and all French companies look to build up there foreign units where possible to avoid French labour laws and tax laws.

At the next elections is is hard to see what will happen. The Left will be defeated, but whether by the traditional right or the Front National is harder to see at the moment. France is the sick man of Europe currently and its saving grace is its low budget deficit, much lower recent times than the UK's, which to date has prevented any kind of run on its bonds. However, with sclerotic growth and no reform, France is headed in only one direction.

Friday 4 July 2014

In the comments there was some suggestion that pre and post WW2 the UK and France considered joining together. Well, there were proposals.  The Churchill one was a desperate idea to keep the fleeing French in the war. By the time Reynaud's government received it they were just 12 hours from surrender. The later one, the Guy Mollet one, was a serious suggestion for France to merge with the UK as one nation, or to join the Commonwealth. Quite astonishing for a French Prime Minister to have suggested such a thing and it was unlikely to have been supported by the French people, who were never asked. He was a terrible, terrible socialist leader, creating a new word for duplicity.

CityUnslicker was rightly horrified at the thought of the UK and French economies attempting any kind of economic or political union. We are so different.

As the UK was privatising during the 1980's the French were nationalising. They are still nationalising as their private companies look elsewhere. Historically England and France are the bitterest of enemies. A hundred years war is a long time to do battle. 
The Triple Entente , which we will be hearing a lot about next month, sprung from the Entente Cordiale, only signed in 1904. Up to that point all British military plans had had France as the most likely enemy. France, then America.

And then there was the disaster of WW2.. the rebuilding .. the EEC..leaving NATO .German reunification... The EU .. The Euro..we just don't see eye to eye on very much. If we were to marry, it wouldn't last long.

However, there IS a solution. 

France is a left wing, monarchy free, republic, that favours state intervention and state control over privatisation and free markets. They are beset by occasional periods of centre right government which never seem to help them very much.

The UK is a right wing, constitutional monarchy, that tends to believe the opposite, but is occasionally beset by periods of centre left government which never seem to help very much.

The solution is obvious! 

The right wing thinking and voting French public pack their bags, hop on a ferry, and arrive in the UK, ready to move into the vacated houses of the die hard socialists and EU Liberals who have been moving the other way.

France becomes a true left wing socialist paradise with all the public sector comforts that brings, and the UK has the opportunity to test its ideas on low taxation and less regulation to see if they work.

And, I would suggest the French let us take their semi-private healthcare system and they can take our fully socialist one. We should probably let them have the state funded BBC, in exchange for their state owned but expansionist energy companies?..Oh..They are already here! 

Job done!

Thursday 3 July 2014

BBC Question Time: ROFL -or is that ROLF ?

David Dimbleby presents the topical debate from Croydon, south London. On the panel are Liberal Democrat business minister Jo Swinson MP, Labour's former home secretary Alan Johnson MP, Conservative chair of the Public Administration Select Committee Bernard Jenkin MP, Mail on Sunday columnist Peter Hitchens and general secretary of the National Union of Teachers Christine Blower

Good mix on the panel. But a poor week for news.

BQ Suggests
A fruit theme - apples and lemons

Q1. Rolf Harris and a BBC/NHS cover up question? Makes Dimby very nervous as people stray into 'Leon' legal territory.
Q2. Big public sector strike coming. Is it right to strike for purely political ends?
Q3. Airport threat warning and why has Obama picked Jimmy Carter as his foreign affairs role model?
Q4. NHS - waiting lists, cancer treatments, made up statistics..
Q5. Wow..Can't think of anything..London house prices ?

Winners of 2014

 Nick Drew - 3
  Hopper -3

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

DJK - 1
BQ - 1
CU - 1
Steven_L - 1

charity shield winner - DJK 

Is Housing the biggest risk to the UK economy- no, here are 5 bigger risks

This is what the Bank of England say. here are 5 much bigger risks though:

1. FRANCE - The Country is on its knees and led by a completely ineffectual left-wing Government. At the rate of decline it is experiencing France is going o drag the Eurozone back into a crisis.

2. EUROZONE - This has never gone away as an issue, the currency will not in the long-term work out for the Southern European states. We are only ever a quarter or two away from a renewed crisis.

3. SCOTTISH Referendum - If the Scots vote yes there will definitely be a run on the markets and a big hit to economic confidence for a few years.

4. CHINA - There is a huge debt bubble in China, no idea when it is going to break, but surely it will, if China catches a cold, we will get pneumonia.

5. IRAQ - A further escalation in Iraq, which may include fighting South of Baghdad would see a big jump in oil prices- oil prices over $120 have always caused a recession in the West - 100% of the time.

Tuesday 1 July 2014

Engineers Are The Worst

News is filtering out of a nasty piece of malware rather nicely called Energetic Bear, which has been deliberately and systematically infiltrated into western energy systems: fingers being pointed, ahem, eastwards.  Where the Bears live.  (Now there's a surprise.)
The powerful piece of malware allows its operators to monitor energy consumption in real time, or to cripple physical systems such as wind turbines, gas pipelines and power plants at will. The well-resourced organisation behind the cyber attack is believed to have compromised the computer systems of more than 1,000 organisations in 84 countries in a campaign spanning 18 months.  (FT: registration needed)
That would be very nasty indeed - and its impact greatly magnified if the so-called 'smart grid' ever becomes reality in the way its proponents fantasize.

I was once heavily involved in the software industry, and it seems to be a truism that the worst profession for gullibility and general slackness when it comes to admitting malware into systems is - engineers.  Bankers (who are under constant and very determined cyber-threat) and other businessmen appear to have enough native suspicion and skepticism to avoid more of the come-ons and tricks employed by the bad guys (a favourite one being a bit of simple profiling of key individuals, then sending them emails with carefully selected bait-links).  I've been involved with enterprise-scale software being sold to banks, trading-houses and utilities: and it certainly seemed to be the case. 

No doubt there are appalling cases involving bankers, too: but engineers are the worst.  Trusting, inclined to take directions, overly optimistic about systems and human nature - who knows?  

Any ideas ?


Bulgaria's Bank seems peculiarly inexplicable

Interesting to see the coverage of this story. So last week the US is putting pressure on Bulgaria to stop investing in the South Stream pipeline which Russia wants to use to avoid Ukraine.

This weekend, there was a bank run on two Banks in Bulgaria. Whilst the Country is known for its endemic corruption, the economy has actually been pootling along OK with plenty of Euro subsidy for the locals to feast one - €2 billion a year is a lot of money to share around.

So why the bank run? Why two random arrests of men said to be starting it via text messages? With Bond's at 3.7% yields and a deficit lower than the UK's what was the problem?

One view is this is an oligarch spat which has got out of control, but this feels implausible on its own.

Nobody currently knows, but I would be very suspicious of their friends in Moscow having had a little say in this. It can;t be much fun being a broke pawn in the great power game!