Friday, 31 October 2014

Osborne retires South Sea and WW1 debt

This just goes to show how terrible Government can be, politicians have been stuffing us with debt for centuries. It makes me laugh (hysterically) to think that my great-great grandchildren will be writing something similar about the Great Recession debt - but its likely to be true, although with shorter maturities the morass of Government debt will not be so identifiable.

Which, makes me consider on a Friday perhaps it would be better for the Country is all debt raised was hypothecated, so much for defence, the NHS, for investments, for State Pensions. In the short run it would mean nothing, but after about 10yrs the data would start to look more meaningful. All those complaints about say, the Baby boomers sucking up all the money having over-spent in their day, would be much more directly attributable.

No way Governments will ever agree to this then!

Still it's Friday...

The country is running out of money and everyone is fighting. It reminds me a lot of my childhood.” – Conan O’Brien

“Interest on debts grow without rain.” -Yiddish Proverb

“Forgetfulness. A gift of God bestowed upon debtors in compensation for their destitution of conscience.” -Ambrose Bierce

“Blessed are the young, for they shall inherit the national debt.” -Herbert Hoover

“In the long run we shall have to pay our debts at a time that may be very inconvenient for our survival.” -Norbert Wiener

Thursday, 30 October 2014

High House prices will realise the socialist utopia in the UK

Following on from some perspetive comments on the last post, it is worth further exploring just how quickly the UK is running down its historical wealth.

This has happened to many, many countries in the past - Argentina of the ealy 1900's is always a prime example, but of course Spain was a world power and the Chinese empire's waxing and waning over the millenia offers many examples.

The UK itself nearly fell-off the cliff in 1976. An IMF bail-out at the height of the 'sick-man of Europe' phase. It took a decade of supply-side reforms to drag the country back from the precipice, but was thay forever, or a bump on the road down.

I ask, becuase increasingly no just in the UK but all all over Europe and North America, the feeling is that our children will have worse prospects than ourselves, that life is getting tougher and not better. Some of this is illusory, as we accept massive developments in health care, technology and communications whilst attaching no valuee to these. But in terms of income and GDP, the writing is on the wall.

Perhaps a good example of how a country can decline can be seen in the wealth transfers between generations.

In the UK, property prices have meant that the family home is the man source of savings for the vast majority of the population. These prices have shot up, making older people much richer than young ones. Now we are seeing them want to pass-on this wealth their children, who cannot afford to buy a starter home. So far, so what, the wealth is being shared around. But then, the cost of the bank rentier removes the built-up wealth

But in London I note  key affect. English people are selling to foreigners and moving out. No one in my large team at work in the City buys anywhere near central London now, if at all. No on under 30 evens owns a flat. The foreigners are buying up the City. They are bringing in wealth to replace the UK wealth. This then works its way out to the surrounding South East.

However, the parents have to chip in for their children, so the money they have made from the foreigners is expended on bloated house prices elsewhere. The build up of wealth was illusory - but the decimation of it real. The younger generation do not have the incomes, when they in turn come to help their children, they will not have the previous generations pensions or housing gain to support them. The Country will be poorer.

Now, perhaps house prices will crash and the foreigners will sell up, allowing younger generations to buy into a lower market and start the process again. The thing is, this has never happened in the UK and is not the experience of Countries like Japan - where prices stagnate at the top end in an advance economy.

To this story we have to add in the Government deficit and debt crisis, which will entail a spending crunch and poorer services for decades from now onwards for 30 years. The Government is still increasing the total public debt whilst at the same time the private stock of money is being diminished or further poored into housing.

In the end, with the intergenerational stock fo wealth run down, the main hgh priced assets in the hands of foreigners and high taxes there will be a leavening of the living standards or British people - all at the lwo end. Often it is the right wing who agitate for high prices in house and engineer house price booms like Osborne and Cameron have done - but the reaping of what has been sown will prove very painful in the end.

Wednesday, 29 October 2014

Immigration, Immigration

Anyone reading the news or media in the UK today would think that there was a by-election coming up soon that UKIP might win.

Oh, they'd be right.

All the papers, even PMQ's the entire media today is an immigration froth-fest. Yet the one winner is Mr Farage, who I have not even seen interviewed. The more the discussion is about Europe and Immigration, the more people will vote for the only party able to discuss it honestly.

What amazes me most about the media and politicians in that even now the whole debate is utterly partisan, with meaningless statistics thrown around. Only the Migration Watch article in the Telegraph manages to avoid hysteria.

And again, to me, makes most sense. There is no way a couple coming the UK for minimum wage jobs in the fields (which the locals don't do, so we are told) pay any meaningful taxes. Maybe at best between them £1000 a year. Nowhere close to enough to pay for the Schoolznhospitals so dear the people and politicians.

Yes, in the City there are plenty of educated immigrants earning a fortune and paying tax, but where are the studies which show which is which? Where is the plan to encourage and allow the immigrants we need rather than the immigrants we get.

Also, from the otherside, where is the understanding that the massive global population growth being driven in Pakistan, Nigeria and the Middle East is also causing a huge push factor - whether we like it or not. One day soon a moral choice will have to be made, sad to see today with the end of Mare Nostrum that already this is starting to happen.

Tuesday, 28 October 2014

Business Rates reform to be ignored again?

One of the most annoying things about Politics at the moment is that with an election coming up and the rise of 4-party politics, there is complete dropping of all sensible discussion about long-term matters.

A good example of this today is business rates - a system currently designed to keep high streets empty or full of charity shops. Wherever you live in the Country, you are exposed to the detrimental effects of this policy.

Many Government look at this and just run away, the reform is likely to be negative for the Government tax take so there is no interest. Parallel discussions about the need to equalise the tax take from online and high street companies also then get annoyingly ignored.

Meanwhile hand wringing about a billion here or there to Brussels dominates or the impossibility of future funding for the NHS. These are of course real issues to, but it seems to the exclusion of all else. Reform of the Income tax system would fall into this category too - too hard to deal with and no votes in it.

It has then made me think that this position will get worse, the current polls point to another coalition or minority Government next time - one ht eon hadn, great, less law made is for the better. On the other hand, bad, hard decisions kicked into the long-grass ad infinitum. Frustrating.

Monday, 27 October 2014

Some day this war is gonna end ...

The smell, you know that gasoline smell, the whole hill. Smelled victory!
 Someday this war's gonna end...

The UK forces in Afghanistan pulled out today. Didn't smell much like victory. Despite a few commentators and some military PR types telling us it was worthwhile. It didn't much look like it.
The helicopters packed up the troops and everyone flew away. As quietly as possible with some fear of a surprise attack.

If it really had been a victory don't you think there would have been a big parade? The victorious free world leaders holding a handing over of the keys press conference and saying "Here you are..It was a dump when we got here. But we fixed it up for you..and its all yours. Welcome to democracy."

 And sadly, this was probably a winnable conflict Also a necessary one. The United States could not just sit by while 3000 of its citizens had been murdered. If the Taliban would not/could not hand over Bin Laden, then the US and its Nato allies had to go and get him.
 It was always going to be tough to make a success of Afghanistan but it was at least possible. It was the Iraq adventure that doomed Afghanistan.

Despite the protestations of Iraq/Afghanistan being nothing like Vietnam, both are very like that conflict. The military invade with overwhelming force. They carry out successful attacks on the enemy and occupy the country. But they have not the forces to do much more than police the occupation zones and soon the country becomes an insurgency. The conflict spills over the borders into neighbouring states.Enemy nations supply arms and equipment to the insurgents. Pacification programs are met by terror attacks. The population does not back the corrupt national government that cannot excercise power beyond the capitol city. Warlords rule regions and have to be placated, bribed or cowed into supporting the invader. Casualties mount in a conflict that seems to have no end. At home the public lose support for the conflict and domestic opinion demands an end. 
The mission goals become lost and a never ending war, in which it is neither possible to win, or to leave takes over. Many years later its finally accepted that goal should just be to get out, intact, and without the place toppling over the next day.

 In Vietnam in the 1970s, the United States trained up the South Vietnam army. They gave them very considerable military equipment. And left air assets far in excess of anything their opponents had. 
But when the North Vietnamese army decided to invade South Vietnam the South's Army ran away. Or was bribed. Or was just crushed by better led and better motivated forces. 
Despite a decade long involvement. Hundreds of thousands of troops committed. Billions of $ spent and tens of thousands of US troops killed, the American's and their allies never went back to Vietnam help. Once the boots were off the ground there was little military and zero domestic or political will to restart the conflict.

Once Camp Bastion is finally closed, British regular forces are never going back. Whatever happens to the Afghan army we helped train. Or the political systems we helped put in place. Or the liberal attitudes we helped to foster, we aren't going back. 

The new ISIS can't be far away.

Drones - coming to a home near you

Away for a few days and I come back to the robot take-over. 'Drones the size of 747's' are going to be over our houses and the world is going to be a noisy, crowded place.

Actually, drones are great and as a niche technology and engineering expertise is required, are exactly the right sort of growth industry that the UK could be successful at.

Moreover, the UK is the least worried place in the world about personal intrusion. Kids have the highest take up of facebook and social media, adults the highest take-up of Linkedin, the Government got no criticism for being discovered spying on everyones' emails and phone records. Basically, a supine environment to test out intrusive drone technology.

Nowhere else in the world has such a blessing of large population, technology and friendly legal environment; so the Government should go all out to encourage the new industry to be based here.

If only the weather could be improved a little, eh?

Friday, 24 October 2014

Conspiracy Corner: the French in Russia

A ghastly but typical Russian tragedy - the death of Total's CEO in a 'drunken snowplough' incident, straight out of a Robert Harris novel.  But what was he doing there in the first place?

Total is a pretty good company in my experience - far superior to unlamented, scandal-ridden Elf-Aquitaine which it gobbled up in 2000.  (One of the dodgiest business meetings I ever attended was in the horrible Elf office in La Défense:  made my excuses and left, as they say.)  But like most big French concerns, part of its identity is that of an arm of the French state, much as BAe (or in former times BP) is of HMG.  Its operations in Algeria, for example, have never really skipped a beat through decades of turmoil in that country.

Here's a basic account of Total's activities in Russia, which also cites M. de Margerie as being outspokenly opposed to sanctions over Crimea / Ukraine.  No surprises there: Total has long been a go-to company whenever Russia needed some fancy oil & gas technology, and its Russian interests are significant.  So he'd every reason to be doing the rounds in Moscow.

But here's Ambrose EP telling us that Russia is being squeezed to a devastating degree by sanctions, not least of which he reckons relate to oil & gas technology.  We seem to be playing the game, in a passive sort of way.  It is to be imagined the Americans are.

We know, however, that German industry really hates this lark, having big capital interests as well as very large export flows in Russia.  We also know that sanctions never really stopped South Africa getting oil, or Iran plodding on with its quietly expansionist plans - it just costs more, that's all.  Several of the big commodity trading houses ensure the wheels of global trade keep turning...

This is quite a significant dividing line.  USA, UK and the eastern EU countries against France and Germany ?  Note that Barroso's rebuke to Cameron was couched in terms of 'losing friends in Eastern Europe'.

EU politics are always complex: is there any hope that Hammond is equal to the task ?  Have a nice weekend !


Thursday, 23 October 2014

BBC Question Time: Lone gunman edition

Question Time!

Sorry .. yet another late night meeting. Its all go this time of year.
Don't know who's on or where its from.

Someone kindly reader will put that into the comments.

BQ suspects 
- Canadian parliament shooting and Isis
- who cares more about being seen spending money on the NHS - Lab or Con?
- That actress who dies of cancer - does it give us hope? - I dunno..didn't understand the story really.
- Tesco. What's going on? {A few years ago I asked the readers if they had really had enough of the megacorphypersupermarket or was their misfortune just a blip.. The answer, somewhat surprisingly, was a resounding YES! WE HATE THEM!}
- Ed Miliband / David Cameron cracking down on immigration. {no they aren't - but they say they are. The UKIP panic is causing a total u-turn}
{If you haven't seen what Chucka from Labour has been saying then you should. he's moved to slightly to the right of Godfrey Bloom. Which is a bit know...given his ethnic background and parentage and all.

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Wednesday, 22 October 2014

Big Data: Utilities Are Truly Dumb

One fine day, Aunt & Uncle Drew received a ludicrous water bill.  They challenged it immediately.  The first functionary they spoke to said, well that can't be right: pay 'x' (a more reasonable amount he nominated) for now, and we'll look into it.  So they paid 'x'.

Six months later, another bill arrived - seeking an even more astronomical amount, plus the 'arrears' from the previous bill, all in menacing red ink.  Another 'phonecall: but this time the water company people sucked audibly on their pencils and said the 'arrears' had better be cleared or there'd be trouble - have you been taking lots of baths?  So A & U demanded to speak to a supervisor, who passed them on to 'debt management', who took a more emollient line.  Since A & U are on the 'senior' side of life, they could agree a 'payment plan' which, provided they adhered to it, would cause the amount to be re-classified from 'arrears' to something less penal.  Then the matter would be looked into.

To be fair, the payment plan was set at a pretty modest monthly amount, and it defused the red-ink crisis.  But after a few weeks, with no progress towards sorting the matter, further pointed 'phonecalls were made until some genius at the other end said: maybe there's a leak !  Could you turn off everything, go and peer at the down-hole meter, and tell us what you see.  This task fell to yours truly (being slightly better able to crawl around on the pavement etc) and lo ! - with everything turned off the little dial was perceptibly turning.  Ahah said the voice on the 'phone, that sounds like a leak !

There then followed some dialogue about whose responsibility this might be etc etc which need not detain us: suffice to say they turned up, discovered the meter itself was leaking, fixed it; and negotiations are ongoing as to what should be the deemed usage during the period of the leak.

Ah yes, the period of the leak.  Can we retrospectively identify with reasonable accuracy when it started ?  Oh yes we can ! - take a butchers at this graph of the average monthly usage, drawn up on the basis of several years' worth of half-yearly bills carefully archived by A & U, plus ongoing personal readings of the meter to ensure justice is served.

Yes friends, we can indeed spot the leak.  A nasty one, I'd say, getting progressively worse until they fixed it.  All that lost water !  And not too difficult to estimate the amounts, either.

Among several points one could make about this kind of nonsense, let's think about simple, nay, trivial data mining.  A usage pattern like the one above (produced by myself using nothing more complicated than Mr Microsoft's excellent spreadsheet) could not plausibly be accounted for by extra bath-nights chez Aunt & Uncle Drew.  Given that the water companies are supposed to be on notice to improve their statistics on wastage etc, not to mention customer service, what could be simpler than an automated check for egregious outliers like this ?  Even if they can't stretch to pre-emptive data mining, couldn't the response to distressed 'phonecalls be based on simple after-the-fact analysis of no greater sophistication than the one wot I did ?  At the click of a mouse ?

Mr Tesco has been doing vastly more advanced - and proactive - stuff than this for yonks.  Ditto the banks, ditto the telecomms companies.  Why are utilities such rubbish ?


Tuesday, 21 October 2014

Who wants to be a millionaire ?

Tonight, the EuroMillions lottery prize is estimated to be £143,000,000.

One lucky winner is going to 'invest' £2 and earn a whopping, life changing sum. And it COULD BE YOU!

But it won't be. not you, or me. This lottery has already rolled over 4 times. That means despite all the regular players, and those newly tempted for a flutter by the prize money, having already each tried to guess the seven necessary numbers, not a single person in Europe has. The odds are 116 million to one. it isn't going to happen.

Still, speaking as someone who won $1,000 at Caesar's Palace, and then dragged the wife over to the Wheel of Fortune  to show her how I did it ..  and won another $1,000 .. for an outlay of $10, it CAN happen.! Dream the dream of totally undeserved megawealth.

But if you did win, good and sensible readers of Capitalists@Work, where are you going to put your oligarch's fortune?

Assuming you buy yourself a Maclaren Supercar. And whatever vehicles the others in your immediate family want to have. .A mansion in Virginia Water. A modest flat in Chelsea..A Monaco apartment. New furniture to fill your new homes as you won't want your old tat cluttering up your new domiciles. And new clothes .. makeover ..plastic surgery .. best sporting equipment and entertainment systems on offer .Super-luxury holiday to Australia, Japan, Dubai.. and then dish out handfulls of millions to your lucky brothers and sisters and cousins and so forth...well, chances are, you will still have at least £100 million left.

That is a lot of money to find somewhere safe to keep it. The banks are only guaranteeing you £85,000 per bank. You can't have a thousand bank accounts. 
The ISA annual tax free allowance isn't even a day's interest. Premium bonds can't take more than 0.0004% of your CASH wealth. You can put money into shares. But..that whole dotcom thing..and Enron..And Disney! Or there is property. But Ed and Vince and even George are just waiting for mugs to buy million pound homes so they can take a few tens of thousands of pounds off them each year.

Personally, I might stash 10 million around the world, in various banks and buildings, just for emergencies,  and then use the £90 million remaining to make a romcom movie staring Angelina Jolie and myself.
After all, people, and governments,  are going to be trying very hard to take this dosh off of me.
At least I'd have a memorable screen kiss with Angelina on a speedboat, whilst spraying bullets at black outfitted bad guys .. Or instead, you could just give lots of it it to Alex Salmond like some previous euromillion winners chose to do.

Assuming you, the good and hopeful, blog readers, would rather invest the remaining money you have decided not to just blow in the initial euphoria, where on earth are you going to put it? Where can you deposit it with a reasonable degree of certainty that it will be there when you return to check on it?

Its a tricky problem.
Though admittedly, a problem it would be very nice to actually have.

Ebola and Nigeria: Quite, Quite Extraordinary

In the Drew household, at the end of a broadcast news item we reserve to ourselves the right to chorus: do we believe this?  We are arts graduates at heart: but when it comes to boring old matters-of-fact, the Drew household tries to be a bastion of rigorous empiricism and the scientific method.  So our chorus is raised in a quizzical, measured tone.  We are always open to being convinced.

But repetition of assertions in the media doesn't count.

Now then.
The World Health Organisation declared on Monday that Nigeria is free of Ebola, a rare victory in the months-long battle against the disease. Nigeria’s containment of Ebola is a “spectacular success story”, WHO country director Rui Gama Vaz told a news conference in Nigeria’s capital
Wow.  And some details:
Persistence, rigorous enforcement of quarantine and disinfection of premises contribute to a success story for Nigeria ... Even though that involved hunting through crowded buildings in streets without door numbers, Nigerian teams managed to trace everybody who had been in contact with Sawyer and everybody who had contact with those who later developed the disease ... the list of contacts reached 898 and they were not all in Lagos. A nurse who became infected travelled more than 310 miles to Enugu, finding at least 21 contacts. But the biggest crisis was caused by one of Sawyer’s contacts, who had been infected, fleeing to the oil capital, Port Harcourt, where he infected a doctor. That doctor, who died, was linked to 526 contacts, including many members of his church who carried out a healing ceremony for him involving the laying on of hands. In total, the contact tracers made 18,500 face-to-face visits to check on people for raised temperature.
Nigeria.  Free of Ebola.  Rigorous enforcement.  Managed to trace everybody.  Everybody.

This is deeply impressive, and a lesson to Spain, Texas, everyone.  I hope and pray it's true.


Monday, 20 October 2014

Energy: Large-scale Unintended Consequences

Wherever you look, 21st century energy policy has been hatched by people who know far less than they need to about the subject in hand.

It's sometimes necessary to disagree with the 'experts'.  Prior to liberalisation of the energy markets, the experts - all wedded to the extremely comfortable monopoly model - declared with absolute certainty that gas and electricity were inevitably and essentially matters for monopolies to control.  Not really commodities at all: something magical and different.  Competition ?  Trading ?  No, these were simply impossible.  Trust us.  We are as efficient as it is possible to be. (© Denis Rooke, 1985)

On that, the experts were utterly wrong.

But that doesn't give a licence to greenish, or green-appeasing politicians and civil servants, to announce that electricity grids can be run on windfarms and wishful thinking for zero CO2 emissions, when people who genuinely know better can prove otherwise.  Sadly this is not enough to stop them giving it a try, armed with vast amounts of our money.  But it ain't gonna work: and the harder they try, the more bizarre will be the unintended consequences.  To list a few that had already made themselves apparent a year or so back:
  • Germany, which has gone further and faster than any country (and, some would say, with the least planning) has seen record levels of expenditure on renewables, record high power prices to residential customers, and, yes, rising CO2 emissions
  • ... and, yes, rising CO2 emissions in the UK also
  • ... and around 50% of 'renewable' energy in the EU coming, not from the antiseptic, sunlit windfarms / solar farms / hydro plants of the brochures, but filthy biofuels, whose only claim to reducing CO2 emissions comes from the fact that they are deemed to do so, irrespective of the truth (which is that in most cases they don't)
And now we have the UK 'capacity market' in the electricity sector, being introduced this year to rectify the problem that in an era when no-one moves without a subsidy, no-one seems willing to build unsubsidised power plants to relace the coal stations that are closing with each passing year.  I may write on the technicalities of this 'market' another time, but for now we need simply to look at the recently published details of who are bidding into the auction process for being awarded 3-year or even 15-year wads of 'capacity payments' (i.e. standing charge contracts) for the 'new capacity' they promise to bring onto the UK grid.  

A fair chunk (by volume) of the bids are made by would-be developers of new CCGTs (large gas turbines in their most efficient configuration).  This is what the government hoped for.  But new CCGTs are costly, and unlikely to win at auction, because even more capacity is on offer from other sources, e.g. bids from companies offering to put old, mothballed CCGTs back into service (again, anticipated and welcomed by DECC).

Then come the unintended consequences.
  • one of the largest 'new build' CCGTs is in fact two-thirds already built, and starts up next year anyway, whether it gets a capacity contract or not!  (The capacity payments don't start until 2018)
  • a large chunk of the bids comes from owners of existing coal plants, offering 'new capacity' by way of eking out extended and better performance from their ageing kit
  • the biggest bidder is bloody EDF, hands out again, pretending that its long-announced life-extension projects for its existing UK nukes are also 'new capacity'.  Again, these are money-for-old-rope projects that will go ahead anyway

Needless to say, this is not what DECC or the greens initially expected from the capacity market, though the logic of it had begun to dawn on them over the summer.  The howls of outrage greeting the coal projects in particular are hilarious to hear.  Anyone could have told them: it's always cheaper to refurbish existing capacity than build new plant.

Looking back at several years' worth of C@W energy postings, I find I have invoked reductio ad absurdum several times: and it is time to roll out this venerable tool of formal logic once again.  The absurdities are there for all to see.   The logicians' answer is that the original assumptions must be wrong.  That's the correct conclusion, and one we urgently need DECC to draw.


Friday, 17 October 2014

The Eagle has crash landed

This social media thing is amazing.
There was veteran Labour obfuscator, Angela Eagle, sitting happily on the Question Time panel. She knew the 'big question' was coming. She was prepared. She knew she had right on her side and could expect a big round of applause once she'd said her prepared piece.

But it all went horribly wrong for the poor old moo.

Dimbleby asked the Lord Freud question.

" Should Lord Freud resign from his post as welfare reform minister following his comments about the disabled?"

Angela Eagle waffled a little and then went in with "I do think he should resign. His comments were offensive. he has caused a great deal of offence to disabled people. His solution to weaken the minimum wage and make disabled people work for less than the minimum wage .. which is the legal minimum..he didn't go out and evangalise about the benefits of disabled people, talked about putting their wages down to £2 an hour"

Jeremy Hunt, Isobel Oakshott  and David Dimbleby ALL told her that the government would make up the difference to the minimum wage. So the worker would get the same as anyone else, but the employer, would pay less.

Then, in a very very rare event, the audience, which had been very left leaning, turned on her as well.
Two different, and unrelated, men both attacked the old bird for deliberately misunderstanding what the minister had said. The first man said Freud had expressed himself clumsily. But it was perfectly clear that his intent was to find a solution to how employers can be subsidised to take on severely disabled workers.

When the Eagle tried to imply again that the government was going to pay only £2 an hour because they were evil Tories, this chap was having none of it. And he told her so.  He even told her that she knew she was being deliberately obtuse, as evidenced by the semi smirk on her face as she answered the question.

The next man asked to speak retold the story of how the phrase 'not worth a full wage' had come about and the events surrounding it and explained that it was a poor choice of words. But the minister's intentions and the man who asked the question of him, were both seeking genuine solutions.

When Angela tried to stoke her outrage a final time the audience booed her. 
Actually, genuinely booed her. 

Not her opinion. but Herself. 
Booed and catcalled her for her faux outrage, pretend offense and her attempt to deliberately misunderstand an event for pure political gain.

That's social media. The audience, used to having a say on blog and media and webpage, were not being fobbed off with a platitude. They wanted to speak and they did.

The Eagle has crash landed.

 It was wonderful.

Thursday, 16 October 2014

BBC Question TIme :

From Newbury. Which is a nice part of the world. 
 Among the panelists tonight are Conservative health secretary Jeremy Hunt MP, Labour’s shadow leader of the commons Angela Eagle MP, former leader of the Liberal Democrats Menzies Campbell MP, author and commentator Isabel Oakeshott and broadcaster Giles Fraser.
Real 'B' list fodder.

BQ may just make it back in time to watch.

Q1 - Ebola airport screening. The right decision or, in light of the nurses catching it .. too late.
Q2. Are the disabled worth only £2 an hour. Dreadful bit of politicking. But its how these things go.
Q3. Unemployment at a 7 year low. So are tax receipts. Are we all on zero hours?
Q4. Why aren't the greens worth a seat on the debate? Apart from the obvious reason, I have no idea why they were potentially excluded...most strange.
Q5. Nurses and NHS strikes. Something about NHS..

Dimbletie - Could be the flying pigs one. Or the toasters..I'll go for the toasters.

1 or 2 points for each correct question asked. Depending on how close to the actual wording.
5 points for guessing the colour/design of  the Dimbleby tie. 2 points for nearest match if no outright winner

1 point for each witty comment/excessive punning/ lampoon/mock/clever theme  that you put into the comments
1 point for the first entrant each week 
1 point for random other reasons

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"UK Blocks Russian Deal" - Interesting

The issue of sanctions against Russia over Ukraine has gone a bit quiet of late:  they don't play at all well in Germany (I wonder how they are being circumvented ?) - and then there are those assault ships sitting in a French dockyard ...

Anyhow, in a rather passive manner the UK seems to have played the game with a straight bat by denying Mikhail Fridman a 'comfort letter' re: his planned acquisition of RWE's North Sea assets - something else that may not sit well with our German friends.

RWE, it will be recalled (click on label), along with its fellow German mega-utilities is right up a gum-tree, courtesy of Berlin's demented energy policies - wildly, infeasibly green + anti nuke.  They will all be making big asset sales in an attempt to steady the balance sheets: and RWE is in the bed nearest the door.  They need the dosh, and now we've stopped it.

This is the thanks Germany gets for letting the Hinkley Point nonsense go through the EC?!
EDF Radioactive Turd

But on that front, there is someone else with a mighty beef: the French have let EDF's CEO go !  Just hours after his Hinkley triumph.  Not green enough, they say.  Of course he's not:  FFS, he's the bright orange, glow-in-the-dark head of EDF !  Le Turd Radioactif lui-même !

Couldn't happen to a nicer chap:  I laughed until I stopped.  In this country he would have been given a peerage.  Perhaps Cameron will.


Wednesday, 15 October 2014

Oil: $83 and the Pips are Squeaking

Wow.  Oil fell off a cliff this morning, touching $83.5 at around 09:00.

And the pips are starting to squeak.   "Saudi billionaire Prince Alwaleed bin Talal said the world’s top oil exporter should start worrying", calling the situation "catastrophic".

As well he might.  They won't exactly be looking forward to bringing the news into Putin's office, either.

But I smiled this morning, to read the following from Dr Doug Parr, chief scientist at Greenpeace UK (sic): “the biggest problem for gas in the UK right now isn’t the changing energy mix, it’s dirt-cheap coal”.   Doug doesn't seem to be a fan of cheaper electricity.  Oh, how everyone loves high prices.

Me?  I'm a consumer.


Tuesday, 14 October 2014

Beware the Ides of October?

Chart forFTSE 100 (^FTSE)

It is an easy post to write every year, that stock market crashes happen in September and October. The major ones nearly always do, but the evidence is more mixed in years when there is not a major crash. The 3 largest declines in  recent times though are 1987, 2001 and 2008 - all those happened in September or October as did the Wall Street crash.

Since the beginning of September 2014, the FTSE and other markets have been hit pretty hard, as can be seen on the chart above. After a peak at very nearly 7000 in early September the FTSE is off to no only a year low, but touching the low for last year too. In fact you have to go back to the tail end of the Euro Crisis to find the FTSE performing so badly.

There are, as ever, many causes for this, one of the main ones is the FTSE still being resource stock heavy so the fall in Oil and Mineral prices - generally good news for the world in terms of inflation and prices, turns into bad news for the FTSE.

However, it also shows that finally the geopolitical effects of ISIS, Ebola and Russia are having an effect on the global sentiment. The latter is more or less forgotten, but in reality the sanctions are causing major dislocations in the oil markets - which is what the West aimed for, but still, the world is not harmonious.

Worse for the pension investors and others is that none of the above 3 issues is going to go away. Nor are the falls in resources prices, although they may level off - albeit another 10% down or so from here.

We'll just have to hope the Santa rally kicks in from next month as per usual!

Monday, 13 October 2014

China and Hong Kong: Awkward

It's hard not to take an interest in China, which may already be the world's largest economy - quite a bit ahead of schedule, it seems.  I am a sino-novice, but have had a very positive experience of Hong Kong, which is a start.  Things like the Chinese reaction to MH 370 I find puzzling:  and their foreign policy is clearly naive in many respects, endlessly tripping up over things it should take in its stride. But they'll get smarter.

In the meantime ... while I was in HK earlier in the year there was a big anniversary demo, but the recent protests hadn't started.  Although these seem to have peaked, there are still daily events in the series, faithfully chronicled by Wiki - at least for western audiences - so the embers are still glowing.  Where does all that lead ?

On the one hand, it seems China is steadily and unsurprisingly trying to nibble at the quite tangible freedoms granted to HK and Macau for 50 years under the 'one nation, two systems' set-up.   They are up against a young, dynamic, well-educated, quite stroppy population that enjoys those freedoms very much.  Can anyone imagine them signing up for old-style communist clap-trap ?  (For a glimpse of what old-school 'monolithic ideology' is all about, it's worth reading the 'Ten Principles' of China's old buddy, North Korea.  Who'd buy that without a gun in his temple?)

Strategically, I strongly incline to the idea that China - surely the country with the longest and most patient historical viewpoint - must have as one of its highest considerations the desire to re-integrate Taiwan, just as the old West Germany was fixated on reunification.  The odds of this must be many times better with a happy HK in the fold.  Another source of optimism must be that there are still some 33 years to run under the 50-year dispensation: surely over such a long period there is likely to be still further liberalisation in China, and softening of 'communist' doctrine.  The very existence of a state of affairs in HK that is broadly satisfactory to China might even act to deflect the compass systematically in that direction.

On the other hand, there is the observation that the 2008 Olympics didn't have the fundamental effect on China that many (including me) thought would happen.  And then there's the famous story about the Emperor's concubines.  One day, the Emperor decided his giggling concubines should be made to parade and march in orderly ranks, but early attempts to achieve this were like trying to herd cats, and greeted with gales of laughter.  

The Emperor called in one of his generals.  He, too, found chaos when he barked his orders to the assembled harem on the parade square.  So he had two of them beheaded on the spot. And the rest all immediately fell in line.

I have a feeling this story gets told around the CPC Politburo table from time to time.  Let's hope the 'Taiwan Strategy' faction predominates, and is not just a fiction of my optimistic imagination.


Friday, 10 October 2014

The EDF Hinkley Deal: We Have Been Shafted

When I started in business I was dealing in physical stuff: oil, gas, electricity, coal.  Standard, commoditised stuff.  Whenever you were selling, you tried to add value in different ways - credit terms, service levels, devising fancy pricing clauses, throwing in a few options - anything you could think of to customise, rather than sell on price.  I became an 'originator', hatching complex contracts with as much creativity as I could muster.  The margins got better as the deals became ever more bespoke.  On a good day, you could add so much value that the customer was only too happy to pay the premium: genuine win-win all round.  But it was still basically margin.

Then I moved from physical energy to being a service provider.  The creative value-adding thought-process served me well: but at the end of the day, it's just fees.  And sometimes it is a bit galling to see the client make a real packet from your very good idea.

So the notion of profit-sharing rapidly takes hold.  And lo!  One day a client liked a particular proposal, and offered a profit-share on the upside.  Kerr-ching.  We tied down the details, and away we went.

Everything went pretty much to plan: the idea worked out, the sales were made; and then came the day of reckoning.   In I go to the client's office, to be met with long faces.  No profit, you see.  Look, here are the accounts.  And it all seemed to be going so well, but - there it is, Nick.  Just your flat fee after all.

Well of course I pored over the books but they had been well and truly stacked, and I had been well and truly shafted.  

And now we find that UK plc has fallen for the same trick, but on a scale with so many noughts added, I'm not sure they can be counted.  The EDF Hinkley deal, which the EC so comprehensively demolished 9 months ago, has been passed because of a small alteration which makes it just fine: an upside sharing device for the UK to claw back a bit of the gargantuan subsidies, in the event EDF's profits are above a certain exorbitant level.  

Ah yes.  Profit on the construction and long-term operation of nuclear power plants, operated by an arm of the French state.  Does anyone on the planet reckon that the books which will be presented in due course will bear any relation to reality?

For many years now I have been predicting the French will get the rest of Europe to pay for its nuclear industry as surely as we all pay for their agriculture: and so it has come to pass.   The gormless gits in Whitehall have served it up on a platter.  There are some early rumours as to how the political fix was achieved, but we may never really know.  Will the Germans and Austrians really block it at the eleventh hour ?  I'm not pinning much hope on that.

This 'French Tax' on UK plc will run for 35 years, and will end up being an identifiable percentage of GDP.  Countries have gone to war for less.  The 'deal' (which, incidentally hasn't yet been signed) needs to be repudiated fast:  I might even join UKIP if they make it part of their manifesto.


Thursday, 9 October 2014

Teenage kicks

Look at that classic car. Italian Ferrari red. Italian lines. Electric windows and slatted rear window . 

My first car was a Lancia beta - this model - the '79. The 1600hp model.
They were not very expensive to buy. On account of they were rubbish.
Mine actually rusted away within 2 years.Totally rusted to nothing. Even the stainless steel rusted. Even the rubber tires rusted. It was all rust. Cheap Italian steel and terrible weatherproofing and too few coats of paint.

This example was how mine went. In those same areas. The entire windscreen and rear screen would fall in.

so .. why the nostalgia ? {Actually would be a good post on its own - my best and worst motors}

Coming back from the clients tonight I stopped into a fast food area. A Little Chef, KFc and Burger King place. They close at 10pm, which as I only arrived at 9.40pm was when I was leaving. And as it's a rural location the garage and shop was closing too.

As I'm eating my early starter and drinking my tea  I notice that the young people are washing/sweeping/cashing/ clearing up and that there are a number of older people, hanging around.
Not really doing anything. Passing the odd comment. Sitting at the tables but not buying anything. Just reading the papers and watching the telly. 

And then as I'm leaving I notice lots of headlights as cars arrive and I realise these people are the parents. They have come to pick up their sons and daughters. There are no buses. The locations are only vehicle accessible, not within walking distance of many places.

I doubt if more than 1 in 10 of the workers had a car of their own. The vast majority were collected by mums and dads. 
I thought back to when I was 19, and worked in a garage. I had a car of my own. That Lancia. That I paid for on my garage monkey's wages. And insured and fueled on the same low wages {before minimum wage so it wasn't a lot} . 

And so did all my friends. Everyone could drive and everyone had a car. A car that, in the main, they bought and paid and INSURED themselves. From their lousy jobs that they did while attending college and university. Or from their actual poorly paid first real jobs.

I just did a quick check for a 19 year old looking to insure a Fiat, in one of the safest postcodes in the nation, kept in a garage, 3 other vehicles in the household, used only for college.

 £3,507.73 If its got that black box mile limiter installed.
 £4,500 was a good  quote. With a £1,000 of excess.

This is insane. Insurance is 50% of an annual likely wage for a part time working student.
Back in the day, I think it was nearer 15%. Always pricey, but never prohibitively so.

in 1995 the no win, no fee .. was introduced allowing a claim to be brought with very little risk to the claimant. It was for specific cases only. But in 1998 it was extended to most of the civil court system.

Geoff Hoon said at the time "No-win no-fee conditional agreements will result in better access to justice. Access will be given to the many people who fall between those who are very rich or those who are so poor that they qualify for legal aid.
"In future, the question of whether one gets one's case to court will no longer depend on whether one can afford it, but on whether one's case is a strong one." 

And with that we abandoned the UK's old compensation payout system of " what is reasonable" and adopted the American system of 'what is available?' 

And so mums and dads of today are hanging around petrol stations and fast food outlets at night, collecting their offspring, who can't afford to drive.

Thanks Cherie Blair.
Thanks a lot.

PS - it was actually the rise in the value of payouts rather than the rise in the number of claims that led to the insurance rises. Particularly in the car insurance market where medical advances and safety features meant an accident was more likely to result in long term injury than death.
But its never wrong to blame Cherie Blair.

BBC Question Time: Ukip if you want to..edition.

I am with clients well into the night, so will miss the fun. {and the football}
Scoring will be from the twitter -

David Dimbleby presents topical debate live from Clacton-on-Sea in Essex on the night of its by-election. On the panel are Conservative communities and local government secretary Eric Pickles MP, Labour's deputy leader Harriet Harman MP, UKIP MEP Patrick O'Flynn, Liberal Democrat deputy leader Malcolm Bruce MP and novelist Jeanette Winterson.

Big day for UKIP. Could be the opening of the second front.
Historically, even after the allies were ashore in Italy and France,, the WW2 German military still expended 9 out of 10 of its resources solely against the reds.
Expect Tory HQ to follow suit, whatever the result.

1 or 2 points for each correct question asked. Depending on how close to the actual wording.
5 points for guessing the colour/design of  the Dimbleby tie. 2 points for nearest match if no outright winner

1 point for each witty comment/excessive punning/ lampoon/mock/clever theme  that you put into the comments
1 point for the first entrant each week 
1 point for random other reasons

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Hinkley Point passed! Woe for Capitalism

Oh dear, for once we want the EU to intervene on state aid grounds and it decides not too. I guess the greenie influence is too strong and in a very warped way they don't want to scare the horses re UKIP and a UK referendum.

The counter-factual to this decision to underwrite via a derivative contract the cost of energy of 35 year is this:

The price of oil is collapsing as is the price of gas. The derivative contract would mean in this situation that the UK taxpayer becomes more and more 'out of the money.' When this happened in 2008, the banks that had written these contracts and the firms that had placed them all went bust. The biggie here still being worked out was derivatives that were supposed to protect against rising interest rates, when rates went down instead, the purchasers were left with huge losses that Banks foreclose on.

In this case, we get a nuclear power station that is sucking money direct from UK taxpayers to French owned EDF - and the more the price of oil decreases, the larger the amount will wend its way across the channel.

Tuesday, 7 October 2014

Euro Crisis: Round 2

The papers today and tomorrow will be full of the story of the IMF reporting that Europe needs to follow the UK's lead on austerity and how wrong that have been to criticise the Government in the past.

However, they are all missing or will miss the two really key issues:

1) The UK has not undergone real austerity. The cuts in some areas have been made up by tax cuts and increases in other areas of spending such as Foreign Aid and the NHS. The IMF say the UK has obtained fiscal credibility - oddly, this is because the UK has engaged in a massive exercise in money printing. This could not have happened in the eurozone as the central bank will not do this.

2) Germany is rapidly falling towards recession, driven by a drop of exports to Russia and the continued downturn in its export markets around Europe and in China. With France and Italy not really out of recession, this means the Eurozone is heading back towards trouble. No growth and huge debts leave many of the Countries in the eurozone very exposed indeed.

2011 was not a pretty year, if 2015 repeats it then the UK is in for a tough time given our own debt dynamics.

Monday, 6 October 2014

Google and its Enemies

Google has a lot of friends, and why not ?  A company providing a mind-blowing array of incredibly useful services for free, within a fabulously successful business model, and with more and better promised: it seems perverse not to be positively inclined.

Enemies, then ?  Well some aren't exactly smitten by Google's many charms.  A lot of jealous rivals, obviously.  Those who don't enjoy the thought of their every keystroke being analysed as part of a Big Data exercise and then, shock horror, made available to advertisers (- just like the supermarkets).  The "don't be evil " injunction invites us to apply high 'ethical' standards which any commercial enterprise - particularly one operating in uncharted territory where there are few rules - is likely to find hard to live up to.  (Google is scarcely the only organisation on the planet that bows to China's wishes as regards censorship: must post on Hong Kong soon.) And we can diskard uterly those of the Max Mosley brigade who don't like the idea of their past public-domain misdemeanours being accessible via a search engine.

But Google does have some real enemies.  Murdoch is feuding hard with his anti-google campaign, suggesting the old pay-wall strategy isn't a roaring success.  Good luck with that, mate.  As the music and book-publishing industries have also discovered, (and shopping, and education, and TV, and translation, and taxis, and medicine, ...) the world has indeed changed.

More interesting is recent observation that Facebook is the enemy of Google - and at a deeper level than just the straightforward, long-running battle for investors' and advertisers' favours.  How so ?  Because Facebook lures people into a closed, self-contained world wherein to spend their hours; whereas Google is seeking to make money from providing services to people doing Real Things in the Real World - travelling, researching, shopping, eating, going to the theatre, reading articles from foreign-language sources ... they'd love you to help them extend the list.  The more time spent with Facebook, the less time googling tourist destinations.

To the extent Facebook is a threat to Google's interests, those mad online 'games' that tie people to their screens for days at a time must be even worse.  Preference for the virtual vs the real world is increasingly a choice people make for the use of their spare time - indeed for some sad types, of almost all of their time - and some would argue there is more at stake than just Google's revenue potential.  

A very strong case against the virtual is made by the fascinating Ian McGilchrist (Fellow of All Souls teaching Eng Lit, and Fellow of the Royal College of Psychiatrists, Research Fellow in Neuroimaging, & Clinical Director of Acute Mental Health Services).  His thesis runs along these lines:  the left brain (specialising in abstraction, maths, linear reasoning, theorizing, virtual world) should be a tool of the right brain (intuition, empirical reasoning, metaphorical thinking, creativity, real world), but starting in the 20th century the left has started to predominate - and not in a good way.  In fact, he reckons, in a very damaging way.

608 pages of this later (The Master and his Emissary), you may or may not agree with him.  It's a value judgement at the end of the day: and I'll take real-world Google against virtual-world Facebook any time.


Friday, 3 October 2014

Oil Price Falls: and UK Energy Policy, Too

Brent's run below $100 is sustained, and everyone's noticed now.  There are no signs any of the big producers can afford to stop the oil flowing - quite the reverse -  and a number of people's cunning plans are looking a whole lot less clever than when we were in 3 figures.  Russia / Ukraine and Saudi / Syria come quickly to mind: but let's not lose sight of something a whole lot nearer to home, viz DECC's entire energy policy.

This, as you will recall, is predicated on gas prices rising forever, so that the subsidies to nukes and renewables will provide us electricity that is costly, but "cheaper than it would have been otherwise".  This was always the merest sophistry, but they'd rigged their forecasts to make it look possible.  

However.  As we've been reporting here for months, gas prices have also been falling markedly all year, to the extent that even DECC has noticed.  (It is fun to imagine the agonised sessions between Sir Humphrey and Davey.  Must we really change the numbers, Humphrey ?  They are only forecasts, after all ... )  They've felt the need to 'update their forecasts' - downwards, of course - which is to say they never knew what was going on and they still don't.

In principle you'd say the timing of this couldn't be worse for EDF's nuclear power contract which is now even more out-of-the-money than it always has been - but is not yet signed !  However, Brussels is telling everyone that the last act of the outgoing Commission will be to give the thumbs-up to the wretched thing; Cameron has boasted about his new nukes very recently indeed; so there's every sign that sheer political momentum may carry EDF over the line.  (Apparently Austria is trying to veto it, but do they really have the clout ?)

For the UK there is one modicum of comfort: Osborne only signed off on the nuke + renewables subsidy schemes after placing an absolute cap on the cost.  As gas prices fall, this cap will be reached all the more quickly and we will be lumbered with less wind farms etc.  This is actually important because they cause a lot of practical problems for the management of the grid, and raise a lot of other extra costs that (wrongly) aren't counted as subsidies and so do not count against the cap - we just pay them anyway.

There's an equally modest bit of comfort for Putin, too.  Last time gas prices fell (2008-9 and again 2011), the oil price was not falling in parallel.  This meant that the massive oil-indexed wholesale contracts used by continental gas buyers for their Russian (and other) supplies became horribly out of the money: and all the big buyers initiated 'price review' actions against Gazprom.  The sums involved were big, and it got very nasty - most of them couldn't be resolved in the smoke-filled room and went to arbitration, one even to court - and Gazprom lost the lot to nil, coughing up very large rebates as a result.  This time, it looks as though oil and gas prices are falling sufficiently in parallel that another series of bust-ups may just about be avoided.


Thursday, 2 October 2014

BBC Question Time - Willy Wonga edition

David Dimbleby presents topical debate from Northampton. On the panel are Conservative Party chairman Grant Shapps MP, Labour's shadow business minister Stella Creasy MP, Liberal Democrat MP Julian Huppert, Fleet Street Fox blogger and Mirror columnist Susie Boniface and the founder and chief executive of Pimlico Plumbers, Charlie Mullins.

Unusual panel. Fleet Street Fox is probably the leftiest of the lot. But with a sharp mind.

1 or 2 points for each correct question asked. Depending on how close to the actual wording.
5 points for guessing the colour/design of  the Dimbleby tie. 2 points for nearest match if no outright winner

1 point for each witty comment/excessive punning/ lampoon/mock/clever theme  that you put into the comments
1 point for the first entrant each week 
1 point for random other reasons

BQ suspects.

Will raising the minimum allowance for low paid workers make a difference to anything?
UKIP. Did a certain person's rude speech gift the kippers a million quid?
Is it right for a certain on this panel newspaper to entrap a minister citing a very suspect 'public interest' defence.
Who can spend the most on the NHS ? Are Tory NHS promises credible?
Wonga - Bowing to public pressure or writing off debt that was never going to be repaid.

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Wednesday, 1 October 2014

The comfort zone

Cameron has announced a BIG shift in the disgraceful threshold of the 40% taxation band. From the current catch-all £41,000 to the better £50,000. AND an increase in the personal tax-free allowance from £10,500 to £12,500. 
The Tory conference has also promised to punish those feckless benefits cheats by having a sort of food stamps cash card. And stopping benefits for young people under 21 too lazy to go to work or too stupid to go to university.
That may not be exactly correct as I read it in the Mirror. But its appealing to the Tory activists sweet spot, comfort zone, all the way to the election.

Or it would be if he had actually promised any of that, which he hasn't. It was a sort of a Blair promise. An aspiration promise.for.  "You know...for know...things {long pause}....have only got better..."

Well, at least he mentioned the economy. Unlike someone else who retreated even further into the comfort zone than Dave.

'Minimum Wage' Ed also promised to deliver something that is probably going to happen anyway. Miliband was in a slightly worse position, going to bat first and not wanting to have the Tories tearing his unfunded fantasies to pieces. He gave himself plenty of maneuvering room by promising to do things within "10 years time!"

He shouldn't have been so worried. Poor forgetful lamb.
The Tories just "Did a Labour" and  ignored the difficult payment bit with Brownian fantasy growth forecasts and gobbledegook.

Both sides have decided that its not worth worrying about the usual marginal men and women, and just preach to their respective choirs. Things are so bad politically that neither can even guarantee the 30% support of their core voters and have decided to just try and persuade those they already have to give them another chance.

No Blairite consensus,middle ground, middle class, vote grab
No Thatcherite aspirational ideology for the workers.
No real attempt to reach out to floating voters

Quite astonishing really. Miliband's decision to just bank on his 35% in the bag, and Cameron's indecision on exactly how to tackle UKIP have forced both into their corners. Neither side look like they want or even expect, victory.

Older readers may recall the episode of Porridge where Godber and another inmate go into the boxing ring, both determined to lose. They exchange a couple of feather powered half swings, make the slightest contact  and both fall flat onto the canvas glad to be knocked out..Both lose.

The only one delighted with the result was Fletcher. He had bet on a draw.

We shall see if 'Norman Stanley' Clegg's promises are any more believable.

France and UK future united?

France is today battling against the Eurozone. Being part of the Euro means that the Government has to justify its debts to a third party in a way that does not happen in the UK. Depending on your view this could be a good thing, like mega-OBR or a bad thing in that is undermines the sovereignty of a nation.

Either way, France is making excuses about its budget deficit and its inability to hit the 3% or lower target demanded by Euro membership. France is due to miss by 1% every year until 2017. Oh for the UK to be in this position, our budget deficit is 6.5% and none of the UK politicians are making any real noises about how to reduce this beyond saying cuts are coming after the election!

That France has higher public net debt to start with makes things more difficult. But the truth is that France has tax rates that overall are not too dis-similar to the UK, only about 2% points higher on balance. However, with its vast public sector, powerful unions and left-wing Government, no one is in a position to force real change; or even to want it.

This same situation will likely appear in the UK after the next election. A Labour government led by Ed Milliband will have no appetite for real austerity. Taxes can only be raised a little given their historically high point has already been reached - there are severe diminishing returns for pumping up taxes from here.

Reforming or cutting services will not be on the ideological agenda so instead they will hope that economic growth outstrips the debt growth. However, this is unlikely to happen as the high point for growth in the current cycle is around now in all likelihood, not in 2015/16 when instead you would expect a slight slowdown or, if unlucky, recession.

Also in France, President Hollande is very unpopular, with the right wing Marie Le Pen seen as the main challenger - this surely gives hope to UKIP too in the UK that given the above set of circumstances it can replace the Tories as the party of opposition in time for 2020 when a sad Labour Government will be beaten out of sight in the election - having delivered a dog's dinner of hollow promises for its 5 year term.