Tuesday 31 October 2017

Halloween Horror - BBC Brexit coverage

"I voted remain, can you tell?" Kamal Ahmed, BBC Economics Editor

OK, so this is a tiny bit samey but wow, has the BBC plumbed some depths today to find its bad news Brexit coverage.

Unsurprisingly it comes for a remoaning journalist by the name of Kamal Ahmed, so bad that he is comes nowhere close to replacing Robert Pestion.

Anyway, read the article, it starts with a bold headline, rows back, throws in some surreal numbers quoted by a man down the pub and then comes round to the idea that it was right all along.

Then is undone by the facts at the end which quote hundreds of job changes, not thousands or tens of thousands.

On the days when Brexit and talking about it just get me down, this stuff reminds me how hard the establishment will fight and lie. I feel for Donald Trump on this basis too, the whole US Government and Media really is out to get him and it must be very trying indeed!

Monday 30 October 2017

Plain(ish) Speaking About the Folly of Energy Policy

Last week, Prof Dieter Helm unilaterally published the report he'd been asked by the government to write on keeping down the cost of electricity.  Fun and games will ensue.

Firstly, the timing.  It came only days after the govt's own (and extremely lame) *Clean Growth Strategy*.  In this, the government said everything was more or less on hold until Helm reported.  Which he immediately did - WTF?  What happened to planning grids etc?  The fault lies entirely with govt, because Helm was only a bit early in delivering his stuff.

Secondly, Helm does not pull his punches.
the cost of energy is significantly higher than it needs to be ... not only an unnecessary burden on households and businesses, they also risk undermining the broader democratic support for decarbonisation ... Much more decarbonisation could have been achieved for less; costs should be lower, and they should be falling further.The current level of detailed, multiple, overlapping and costly interventions is the unintended consequence of a host of ad hoc policy interventions ... These interventions keep on growing, as one measure is layered onto another, increasing costs and inefficiencies. The interventions have been wide open to pervasive lobbying and capture, and the result has been significantly higher costs ... left alone it will get worse ... ever-greater complexity and growing costs ... the longer this is left the greater the impact on the cost of energy, and the more the decarbonisation process will be inhibited.  The costs of energy are too high, and they should be going down ... The detailed mass of interventions is beyond the capacity of officials, regulators and companies to comprehend.  Complexity encourages lobbying by vested interests in each intervention.  Piecemeal reforms will almost certainly fail ... Incumbents often argue against change because they claim it creates uncertainty. In any regime with multiple subsidies and other interventions there are powerful vested interests in the status quo.
Well, yes.

Trouble is, what government enjoys plain speaking?  So they will be sorely tempted to ignore the whole thing, 69 detailed recommendations and all - particularly the ones that call for more transparency on the costs represented by subsidies by bundling them up in a 'bad-bank' account.  What government enjoys transparency?  

(I particularly like his proposal that renewables bid in on an "equivalent firm power" basis, meaning that intermittent sources are forced to confront the cost of their intermittency.)

This brings us, thirdly, to Prof Helm lui même.  Yes, he sees a range of issues clearly, and speaks his mind.  (This whole report is a stream-of-consciousness What-I-Think-by-D.Helm, straight off the top of the head without pausing for breath.  He knew everything he wanted to say already, before he was commissioned.)    Unfortunately, (a) that's not what government much likes - see above; and (b) what-he-thinks is often deeply suspect.  For example: he rehearses his losing arguments in the great late 1990's debate on what should replace the old and very broken 'electricity Pool' system thus: 
a well-functioning wholesale market ... is best achieved through compulsion, and indeed this is what happened in the original electricity Pool ... This model was jettisoned for two reasons, neither of which was convincing at the time. The first was the Austrian argument that compulsion was a ‘bad thing’, and that as the electricity industry moved towards a normal commodity market, the participants should be free to choose the most efficient trading arrangements ...
Yes, they should.  Writing as someone who was on the winning ('Austrian') side of that debate at the time (and helped implement those wicked bilateral markets that supplanted the Pool), it's a pity Professor 'Compulsion' Helm has just fretted for nearly two decades on his loss of that argument.  These people never go away, they just wait for the opportunity to wind back the clock, as we are finding out in spades from John McDonnell & crew. 

So - we watch and wait.  "Much more decarbonisation could have been achieved for less; costs should be lower, and they should be falling further" -  the government should not be allowed to dodge that.


Saturday 28 October 2017

Weekend: See This Film

For the average C@W reader I can't recommend The Death of Stalin too highly. 

That's about it, really.

It's Armando Iannucci, so the pedigree is first class, you know it'll be tremendous.  It's beautifully executed (if I may use that word in this context).  It isn't even played for laughs, really - excepting possibly Paul Whitehouse's Mikoyan and Rupert Friend's Vasily Stalin - although of course (coarse) humour is a primary vehicle for delivering the message.  But crisp drama is another, & plenty of it, with multiple great performances.

One of my party was a younger family member, supposedly well-educated, who asked afterwards - was any of that true?  Hmmm.  There really is no widespread knowedge of 20th century history, a state of affairs that will come to haunt us in the next few years.

Anyhow - go see for yourselves.


Friday 27 October 2017

Outsourcing Brexit

What springs to mind when you think of


This image is from the civil service .gov website.
And its not what goes through my mind.
 I'm more of the mind of:

Image result for uk civil service terri meme


What springs to mind when you think of


Wise statesmen steering the nation to greatness ?

Or some different nouns and adjectives.



Virtue signalling

 In the light of such relatively recent political failures as

The Poll Tax
   Exchange rate Mechanism
     Universal credit
       The Libyan Intervention
          Lansley's NHS reforms
            The European referendum
              The eternal Heathrow non-decision 
                 Green energy
                    Eurofighter Typhoon                   
                     Pasty tax
                        Nimrod MRA4
                          Cones Hotline
                             Dementia Tax
                               Treasury Forecasts

Unlimited Immigration
    Asylum Removals
       Pension Tax
          Millennium Dome
             Working Tax credits
                  Child Support Agency
                      Selling the gold reserves
                         Tripartite financial regulation  
                               10p Tax rate abolition
                                  The Iraq war
                                     0% Corporation tax.
                                        NHS I.T. Scheme 
                                            Home Information packs
The Ed Stone.

Edinburgh Trams
Scottish parliament building 

Surely, as a nation we should have outsourced Brexit?

We have asked the very worst possible people to take on this most difficult post war enterprise. 
Departments with a proven history of failure spanning many centuries. Who waste money without thought or care. Who have no idea of deadlines. Contracts. Negotiations. Transactions. Terms and Conditions. Budgets. Costs. Failure Standards. Disruption or consequences.

If we had simply hired the Doctors who negotiated the G.P's out of hours pay deal in 2004, we'd be out of Europe already.
The EU would be paying us for the right to trade here. 
And EU law would be subordinate to UK law for the next 200 years.

Thursday 26 October 2017


One of our anon's asks:   Off topic I guess, but what are your thoughts on biodigesters for small scale generation? 

We never mind a bit of off-topic.  I have a template for looking at these ‘renewable’ sources, anon.  First of all we should park the whole (C)AGW controversy because there’s no point: if you reject the AGW concept you don’t go on to discuss the finer details of one scheme vs another. 

So: (1) does the source of electricity actually contribute to reducing CO2?  Answering this requires looking deeper than just the official line; we have the ghastly example of large-scale biomass burning (wood pellets for electricity by the millions of tonnes) which actually increase CO2 emissions, even vs coal - and the "carbon debt" may not be repaid for decades or even longer.  This all happens (and nearly a billion £££ in subsidies paid annually to Drax and the like) because the regulations simply - and erroneously - deem biomass burning to be CO2-neutral at the point of combustion.   It's actually pretty outrageous.

(2) Where does the scheme sit on the Marginal Abatement Cost Curve?  Logically speaking (*huh!*) there is no point pursuing more expensive approaches when there are cheaper, or indeed self-financing approaches still to be fully exploited.  Of course, it happens all the time but it's crazy. 

(3) What are the *unintended consequences*?  Biomass sources of all kinds are seriously prone to this, from appalling deforestation to direct competition with food crops etc etc.  Tree-burning for electricity is among the worst: the 'particulates' emissions are very bad, much worse even (again) than coal.  I reckon air quality will be a major new front against biomass soon. 

Which brings us to your precise question and biodigestion - which we did once take a pot-shot at before.  (1) There is a reasonable case to be made that it can actually reduce CO2 (and methane-escape) though this depends on the detailed counterfactuals, as always.  (2) It's not very economically-placed on the MACC - worse than many, but better than some (don't get me started on the Swansea Tidal Lagoon).  It's "dispatchable" to some extent, too (i.e. can fire up on demand, more or less), which counts in its favour compared to wind, solar and tidal.

(3) is interesting.  What you find is that, even in rural areas, you need to cast your net quite widely to get enough pigshit, soiled straw etc to fire up even a small anaerobic digestion plant.  So a large number of diesel-miles are required to round it all up - which ought to be factored into the CO2 equation.  (To be fair, they do include a bit of allowance for this in the reporting, though prob not enough.)  Secondly, these plants, though not particularly vast to look at, do require extensive foundations to sit on, and a large area of proper concrete hardstanding for the constant arrival and turnaround of shit-laden trucks.  Again, this makes it CO2-intensive (and cost-intensive generally) to set them up in the first place - not any old corner of a farmyard will do.  But sometimes you can find, e.g., a suitable patch on a disused RAF airbase that fits the bill nicely.

I haven't looked into the particulates in detail, but my general understanding is that while the raw material is foul, it's methane that is being burned (= 0 particulates, of course).

Finally, a cow's stomach is more than 20 times more efficient at producing methane than the most advanced biodigester currently available!  This alone suggests the technology is not suitably advanced yet for it to be a Good Idea in the abstract.  But when did that ever influence a lobby-pandering politician?

So there you go.  I wouldn't allow any of them until the cheaper schemes have been fully exploited - but what do I know?


Tuesday 24 October 2017

Failed privatisation

Royal Mail have a problem.

Their shares are 3.84. Down from 4.89 last October. And as threat of a strike looms, they are sinking further.
When Royal Mail was privatised, they were pitched into the competitive world with all their land and vehicles and warehouse, and with a hefty lump sum for modernisation.
But still with their existing, heavily unionised, militant workforce. So it was always going to be hard to change working practices, pensions and pay deals. In Royal Mail the pay is above industry rates, but not by too much. The overmanning was already being brought under control some years before privatisation. Since about a quarter of jobs have been lost and many mail centres closed.
Staffing is as near the lowest point it can be, for the service that they legally have to provide. Effectively visiting every house, every day.

What the current strike is about salary, an effective pay-cut over three years, partially it is about is RM want those remaining jobs to be part-time. They want the early starts to become a thing of the past. They want shifts to begin mid morning and end mid evening. To be more in line with competitors and when people are actually at home.  
Despite the switch to just leaving packets with a neighbour or in a shed, some 20% of all items attempted for delivery, end up coming back to a depot. For redelivery the next day. Later starts should reduce this.
 For Post-people, long accustomed to early shifts, this change is very unwelcome. 

The Royal mail privatisation was a botch from day one. The onerous and ridiculous delivery conditions that a subsidised state monopoly could put up with, are draining in a privatised business. Letters make a loss. They have done since even before email was invented. None of Royal Mail's many, many competitors has to deliver to each house, each day. Offering a theoretical next day delivery to anywhere within the British Isles for a sum that is so small there is next to nothing in a supermarket that could be bought for such a feeble price. {65p}.

Royal Mail workers, unlike their 'gig' {fake self employed} economy rivals are paid for their sickness. Their holidays. They have good pension schemes and a excessive public health and safety regulation and expensive equipment runs throughout their organisation. All this makes it very, very hard for them to match the prices that their competitors offer for delivery. My Hermes drivers are self employed. Supply their own vehicle and have almost no in-work benefits at all. Hermes cuts Royal Mail on price and picks up the juicy parcel delivery work, that used to subsidise the loss making letters business. They have newer and better technology. Cheaper workers and lower employment taxes. Its a very unlevel playing field and has been for a good fifteen years or more. 

So Royal Mail are right to try and make the changes they deem necessary.

What has given them a massive pause though is that despite the newly privatised workforce jettisoning its militant ways, and generally behaving like a non public sector business, THIS TIME, its different.

The CWU could usually expect to just squeak through a strike call. If they mobilised their hardliner depots and activists and proceeded with a maximum effort, get out the vote.
This time the strike action was backed by 89% of members. If that many did go out, all the managers in Royal Mail rushing around to deliver, couldn't manage more than the utmost priority items.
For my money, at this point in the season, with that vote, Royal Mail needed to go back to negotiations.

Somewhat riskily, instead, they opted for legal action to prevent the strike that was called originally for last week. 

Where I think this is foolish is that now, instead of a strike in October, when no one cares, if talks don't succeed the strikes will take place in November when every single business in the UK is looking at its Black Friday / Christmas distribution schedules. 
No one can take a risk. If Royal Mail aren't likely to be delivering, then one of their competitors gets the call. And those competitors make huge gains when RM is on strike. My Hermes went from 5% of parcels to 12%, including becoming the unbelievably huge ebay's preferred carrier, largely on the back of a long and pointless strike by postal workers.
Amazon, which used to be Royal Mail business now mostly deliver their own parcels themselves.

Quango's Law. 
Learned from years and years in retail management meetings.
Never mess with anything in quarter four that you can easily mess with in quarter one.

Monday 23 October 2017

Something Really Interesting in ... Flitwick!

I have been a big, unapologetic and, OK, obsessive critic of subsidies in the energy sector for a good few years.  I'll come on to a possible, partial defence of them in a second, but let's pause to acknowledge a Big Day in the history of "green" energy.  A subsidy-free** solar-plus-battery-park has opened in our very own Flitwick, Beds!
Rather dull photo: Anesco
Steve Shine OBE, Anesco’s Executive Chairman said: "For the solar industry, Clayhill is a landmark development and paves the way for a sustainable future, where subsidies are no longer needed or relied upon. Importantly, it proves that the Government’s decision to withdraw subsidies doesn’t have to signal the end of solar as a commercially viable technology."
Yes, the government is quite properly chuffed about this, as may we all be.  Maybe it will work out, maybe it won't.  Maybe it's a dumb use of large-scale batteries, which (I strongly suspect) could make even more money selling quick-reaction services directly to the grid.  Who cares - ? because it's private money!  People make and lose fortunes all the time with their brilliant / dumb ideas: it's what makes the world go around.  C@W, see?

The collapse in 'costs' of offshore windfarms since proper competition was introduced for access to those subsidy-pots is another good sign.  They still want - and get - subsidies, though; and aren't made to contribute to the cost of balancing their intermittent output.

Of course, it's early days, and outrageous subsidies are still being paid to / on offer to:  legacy projects;  Hinkley Point;  biomass-burning power stations that, disgracefully, actually increase emissions of CO2 vs even coal ...  the list goes on.  But hopefully the points are slowly being registered that (a) subsidies needn't be required; (b) subsidies can lead to grotesque unintended consequences, as well as unnecessary costs being heaped onto (in this case) electricity users; and (c) whatever scheme you are going to come up with, it will be better if you put it out to auction / competitive tender.

Not required?  The subsidy lobby (which includes people who aren't even beneficiaries! - and who probably be most dismayed to meet the flinty-eyed subsidy-farming bastards they have helped to enrich) would argue that without the R&D and the 'new industries' helped into being by the first decade and more of crazy bungs for crazy schemes, we'd never have reached the happy position where this may soon no longer be needed.  There is, of course, a soupçon of truth in this.

But (a) it could have been done better by (i) funding only the R&D and (ii) ensuring proper competitive conditions every step of the way.

And (b) it didn't need to be done by us!  Let other coutries waste their money on the R&D - they won't fail to sell their stuff to us in due course.   We know this, because that's exactly what they do right now.

If, of course, every penny spent in the last decade of British subsidies went to British universities, R&D shops, engineering firms and manufacturers on competitive terms, it might be seen in a more favourable Keynsian light.  As we know, that is far from how things have been.  And we're not done yet with this monstrous waste.


** Everyone is saying "subsidy-free" but I wouldn't be surprised to learn there is actually some modest form of subvention going on here in one form or another.  Cynic?  Moi? 

Friday 20 October 2017

Brexit: An Old Negotiator's Story

Some years ago when I made a brief foray into the software business, a big overseas client ordered our top-of-the-range enterprise software suite.  I had a strategy / troubleshooting role and one day the CEO said; Drew, we have one of those 'strategic' situations you enjoy so much.

The idiot sales manager (whom he promptly fired), ecstatic with having landed a mega-deal, had omitted to send over our standard terms & conditions.  The client, however, had thoughtfully appended their own standard terms to the order and, our having allowed a month to lapse and already having started the implementation, they pointed out to us that under their Civil Code, we were bound by that contract.  I knew enough of the relevant law to be sure this was indeed the case.

Of course, their terms didn't at all suit our requirements (not least for revenue recognition).   We had only one immediate source of leverage - otherwise they wouldn't have bothered to talk to us at all - viz that their contract didn't suit them ideally, either.  It was manifestly a cut-and-paste turbine purchase agreement, with 'the turbine' tippexed out and 'the software' typed in its place.  It talked about the need for fireproof clothing for workers operating in the vicinity of the fuelling system etc etc; and the testing regime too was a complete nonsense in context.

Hence, we were summonsed to the negotiating table; but the overall weakness of our position was made very clear.

So, as we were leaving, I took our onsite team to one side and told them quietly to install a dongle.  A week or so later when the clients' staff booted up in the morning, a message appeared on their screens:  This software is made available under a temporary licence that will expire at midnight on 31st, after which the system will become inoperable

At our next negotiating session (some time before 31st) this matter was raised by the other side, as casually as they could contrive - and they weren't very good actors, the puddles of pee were there on the floor for all to see.  Oh, I said, don't worry about that - I'll have the lads put a one-month extension on it.  

And I never mentioned it again.  Didn't need to, really.  We got a fairly satisfactory deal, eventually.

Now, about that Brexit thing.  How about the next time the Irish gas and electricity grid operators import a big, vital slug of UK energy, something pops up on their screens ...


Thursday 19 October 2017

May's Brexit Weakness, Corbyn's Strength

Some very interesting developments at the Brexit negotiations farce.

As we knew all along, the October Hostage Deadline will come and then go.  Well, who was ever going to sign up for "whatever amount you say it is, Monsieur Barnier" in order to move forward?  So now, according to the well-briefed Graun (which has faithfully taken dictée from its euro-source):
European Union leaders seek to publicly talk up [May's] efforts in the Brexit negotiations because they fear that the prime minister’s domestic weakness will leave her unable to make vital concessions on Britain’s divorce bill ... The member states are acutely aware that the prime minister needs to come out of the summit with her dignity intact if she is to get her cabinet and party to accept concessions on the divorce bill ... the instability of the British government makes it vital for them to soften the blow for the prime minister, who will need to take the political risk of further major concessions on the financial settlement in the weeks to come ... EU’s collective hope and expectation is for a deal in December, but diplomats insisted this need not be the end of the road. “If not, no one will be ready to throw in the towel, but we will be ready to think of another milestone, another threshold of time to move on.”
How charmingly considerate of them.   Another milestone, another threshold of time.  Another hostage deadline.

It's certainly true May is a hopelessly weak negotiator, as the awful Hinkley incident showed everyone all too clearly last summer.  If, in a funny sort of way, this actually parlays into a bit of a dynamic with the euro-wallahs, well, that's where we are anyway.  Perhaps ... perhaps they don't much like the thought of McDonnell either.  Why would they? - he's really hostile to the Lisbon Treaty, much more than (for example) I am.

Which brings us to the other development, which is that Corbyn is on euro-manoeuvres.  Well of course he is - or rather, the euros are on divide-and-rule manoeuvres.  Of course.

In principle there's a prize for them here, but (equally, in principle) a problem.  Nothing could be neater for them to arm Corbyn for a struggle that might end in (e.g.) a big enough revolt in the Commons for Brexit to founder.  The trouble is, Corbyn (or more cogently, McDonnell) wants the freedom to nationalise / selectively ban cheap immigrant labour / ignore property laws etc etc.  So the gameplan has always looked like: let the Tories do all the heavy lifting, and sweep to power in 2022 with a working majority and no EC / ECJ to worry about.  Five years to dismantle the armed forces / security services / NATO etc etc ... what joy!

So - no deal to be done between Corbyn and the EC?  Unfortunately, this is where Drew's 4th Law of Politics cuts in:  The lines of logistic in politics are short.  Nothing could be easier than to tell Jezza the Jejune over lunch that he can have his nationalisations and selective migration ban, in return for engineering a Commons defeat in coordination with a couple of pre-planned one-twos at the negotiating table.  Nothing in writing, mon cher Jérôme - but that's the way things are done, we know you'll understand.  Of course, we'll be asking you to join the Euro-defence force, and hand over GCHQ to us - but you never really wanted to get involved with all that stuff anyway, did you?  So much safer with us ... oh, and your seat on the Security Council, such an anachronism ...  yes that's right, you could raise taxes as high as you like!

Yep, that can happen in 20 minutes.  Doesn't mean they like him.  Doesn't mean they'll deliver on a word of it!  But it can happen.


Wednesday 18 October 2017

This Is One Smart Belgian

You'd kinda expect to hear more about this
The wi-fi connections of businesses and homes around the world are at risk, according to researchers who have revealed a major flaw dubbed Krack. It concerns an authentication system which is widely used to secure wireless connections. Experts said it could leave "the majority" of connections at risk until they are patched. The researchers added the attack method was "exceptionally devastating" for Android 6.0 or above and Linux
Presumably (if it's for real), the www & banking industries are in utter shock, as well they might be.  As well might we all.  As usual, the bigger the issue the less attention it gets...  

A sounds like a pretty thoroughgoing *patch* will be required.  A massive kick in the nuts for a priori reasoning about what's "mathematically proven" to be secure.  Safely encrypted?  In the real world, there's always a flaw!  No limits to human ingenuity - "what one man can invent, another can discover"  (S.Holmes, 1903).

It's worth taking a look at the lucid write-up** by Mathy Vanhoef, the bright Belgian who discovered the mighty cockup.  That is one articulate geek!  Beautiful prose on a complex topic in what, presumably, is not his mother tongue. The whole thing reads like the remarkable Enigma exploits of Turing, Tutte et al at Bletchley Park

If only all technical issues had such excellent advocates, eh?  (Bit of a coincidence, the timing of that cartoon).


** in the original version of this post I linked to Vanhoef's 'KrackAttack' website.  Subsequently, McAfee has started warning about that site!  Who knows what to think?!  But I've removed the link.  There are plenty of places around the www where you can read Vanhoef's fine prose.     

Tuesday 17 October 2017

Still no news on Brexit or interest rate rises...

It is both surprising and unsurprising that there is no movement on Brexit.

It is not in the EU interest to concede having set the field of battle on their terms, the longer they play hardball the harder the battle for the British to win.

Having said that, it is amazing that the Government is still struggling with strategy and tactics having taken to the field over 6 months ago. Everything that has happened was utterly predictable, indeed, the EU have simply stuck to their announced position.

The only two ways out are a capitulation by the UK on money and ECJ (read immigration) that leads to a Brexit in Name Only deal - really a lot of effort for no reward or a real move towards a 'no deal' type scenario where we just focus on stuff like how customs borders are going to work and how we keep the planes flying etc.

I don't see the civil service or the MP's/Lords allowing the latter so BINO it is at the moment. Which will amount to the most colossal waste of time ever!

Meanwhile, the Bank of England observes inflation at 3%. Thank the Lord it must be saying, after all no one in Government is planning to start living within our means anytime soon to inflating away the value of all those non-indexed UK Gilts is all part of the plan. The fact that wages are still shrinking is just a side benefit. Oh, and the oldies will do better again with higher interest rates than the young-uns with mortgages - what a blinder of a play. best leave them on hold for now, no point rocking the boat then...

Saturday 14 October 2017

Tory Trainwreck: A Modest Insight

Much as I try to banish negative thoughts at the weekend, it is pretty hard not to catch oneself musing on the unedifying spectacle of senior Tories participating in the slow-motion trainwreck that is Theresa May's decline and fall.  What good do they imagine will come of their bitching and backstabbing?  Is it not weakening the Brexit negotiations?  Are they not conscious of the prospect of handing over the whole shop to the marxists-in-waiting?  Can they not imagine what irreversible damage could be wreaked by McDonnell in just a year?  Who would wish to go down in history as being instrumental in that?

Then something came back to me: perhaps obvious, but (IMHO) enlightening in its stark simplicity.  Years ago I came across a quotation - that inevitably I now can't find** - from a senior politician of the 19th(?) Century which ran roughly as follow:  to be Prime Minister of Great Britain for even a single day!  Did ever a Roman emperor of old wield even one tenth of the power? 

That captures a particular world-view rather neatly, and it occurs to me that the problem resolves to this: there are enough shameless politicos for whom it is their one and only guiding light, so that they will risk any amount of collateral damage to achieve it.  So what if it lasts only a month?  That it ends in utter catastrophe?  That their name will be dirt forever?  They will have had their 'single day'; and that reviled name will at least forever be on the roll of Prime Ministers of Great Britain.

It's even better (or worse) than that.  There is so much time before the putative 2022 GE, they might get hundreds of days!  And in such a long time, Something May Turn Up!  It's a no-brainer - what's not to like?!

The will to power (© F.Nietzsche 1883) is so powerful that for people like this, no further details are required.  As Robert Redford's newly-elected President asks in the closing sequence of The Candidate:
"What do we do now?"  Then the media throng arrives to drag them out, and he never receives an answer.

 ** a small prize for anyone who can turn it up

UPDATE:  reader Carl Edman has turned up the quotation
  - it was Melbourne,  see comments below.  Good man! - he can come again.

Friday 13 October 2017

A copper-bottomed bet?

It's been a bloodbath for many years in the commodity sector. Many shirts have been lost (a few of mine even, tear-stained ones...). The price of oil is normally one of the key metrics along with gold for assessing asset inflation.

However, gold is only around $1300 an ounce, which whilst double the 2008 low is a long way off the $2000 plus highs. In fact, there has not been much movement in gold at all this year, as compared to say Bitcoin which is rapidly taking shape as the future of independent store of value.

Then we come to oil, off its $30 lows of the post-shale revolution, but still only around $50 a barrel and that is after some small, but actual, production cuts from OPEC. The supply side still looks strong though and this at a time when global non-recessionary GDP growth is de-coupling from the oil price/supply for virtually the first time in a hundred years.

Which leads one to look further afield and this for me is to copper;

Copper looks interesting, the world's biggest miners have been struggling with various geopolitical events and supplies are not increasing that rapidly. The building of China still is eating capacity but the new found desire for electric vehicles also implies a long-term demand surge for the metal that is the core of the electricity transmission industry (of course, Lead/Lithium are looking good too). So demand is growing whilst supply is relatively flat.

I wonder if long-term there may even be a good long/short bet on copper versus oil as the switch away from petrol and diesel cars takes hold over the next five year?

Wednesday 11 October 2017

Look at What's Waiting in the Wings

While the Tories indulge themselves with petty policy-making and fratricidal follies (of which more anon), just look at what is stirring in the swamp.
"UK state should pay for housing, food, transport and internet, says report. ‘Universal basic services’ costing about £42bn could be funded through higher taxes, say academics. Free housing, food, transport and access to the internet should be given to British citizens in a massive expansion of the welfare state ... a raft of new 'universal basic services' using the same principles as the NHS."
Yup, these people have never gone away - just biding their time.  And they see that time a-comin', just as soon as McDonnell gets his hands on the economy. 

PS, the Graun does see fit to comment that "Voters may balk at the higher taxes required".  But which voters?  If the promise of free university education won the student vote, why shouldn't free food win the bariatric ballot?  The 'academics' writing this crap may be on to something ...


Tuesday 10 October 2017

Whither the Pound Sterling - how low can it go?

Currency valuation

This is an interesting graphic from Deutsche Bank, out today.

It shows a trade-weighted view of the major currencies.

The interesting parts are that the Chinese Yuan in the most over-valued currency in the world, no wonder so much hot money is leaving China to be invested elsewhere. However the Swiss Franc has also been top of the list forever, with no signs that will change any time soon.

Whilst the US Dollar is perfectly in the middle, the British Pound is well placed on the list, a little lower than the Euro and thus prone to generating some inflation in the economy which is what we are seeing. Bizarrely, QE happy Japan remains the world's cheapest currency and also a country of near-zero growth. The monetary economy of Japan is clearly not working or functioning properly anymore, but that appears to matter little to its wealthy denizens.

The reason I went looking for this is I was wondering what a no deal on Brexit situation will do to the pound, currently the markets are very pro-GBP as they judge we are in a low of Brexit inspired political morass. This can unwind quickly. However, it would seem to me they look at charts like the above and see there is far more upside than downside to the GBP position, especially as interest rate rises are now on the near horizon.

FX is notoriously hard to predict which is why traders make so much money...out of commissions rather than the gambling! However, even in no deal scenario it looks like the fundamentals of the UK would keep sterling at parity with the Euro or thereabouts and at no worse than around $1.15 to the £1. It would be a case of buy the dips.

We can also tell from other data that the UK is currently, under-priced, tourism is at an all time high, which is always suggestive of an undervalued currency.

Monday 9 October 2017

Planning for No Deal is nearly as hard as trying to negotiate a deal

So, after a long-time trying to negotiate with the EU, the intervention of Macron and Merkel over the weekend has seemingly woke-up the British Government to the reality of its situation.

The EU is asking the impossible in return for a deal, extra-territorial rights for it citizens, a united Ireland in effect and a huge cash bribe. None of this is either desirable, or frankly, even deliverable by the UK Government. The UK had been patiently waiting for the German and French elections in the autumn of 2017 in the hope that the crazy demands might get watered down.

Predictably, this has not come to pass. The EU needs to try to save itself from further break-up and dis-order and is in no mood to accommodate the UK. Plus there is finally a chance to put one over on a trade/power rival - they have not gotten very far with Russia to date, nor America, after all. Let's not even start with China....

So, the problem is that No Deal is in fact a really bad place to start. It was always going to be this way, but with only a year to plan, it is hard.

Let's just take the WTO-rules. We are not really a member of the WTO, votes are required by all members to make this happen - this sounds a lot like negotiating with the EU 27. In fact, the most likely route is that we do not join the WTO but become and 'Observer' this way we can sigh trade deals.

Also, collecting tariffs, a net benefit for the UK, also requires customs points everywhere- real ones. These now need to be built and a eighteen months is a tight schedule.

Then there is air travel, this needs some sort of agreement to continue the status quo as a minimum. These discussions need to start.

Euroatom is another one, though over-hyped. Who is going to come and switch off-off our nuclear plants in reality?

Then there is the status of EU citizens, again, actually this is quite straight-forward if we just offer them all the right to remain, but there is a lot of paperwork for a lot of people. Plus we will need to decide how many visas to offer so that we do not get a cliff-edge employment scenario.

Of course, taking this route will also drive the remainers insane. they are going to go to court, demand referendums and crazed attempts to undermine the Government. It will be a rocky road. Business too will freak and we will have to start dealing with some tantrum moves by international companies and City businesses, as well as some actual needed ones from supply chain companies.

Overall, the big challenge to me is that No Deal requires some very different conversations with the EU as compared to 'Deal' conversations. Due to their nature, we can't really do them in parallel, this means that if it is to be no deal then the Government needs to announce this by the end of the year.

Thursday 5 October 2017

Waiting for something


The shower in Manchester was both in and outside the conference hall.
As was the general depression. 
Eisenhower also supposedly said  
 “I’d rather have a lucky general than a smart general. They win battles.”
 I don't think he ever did say that. Eisenhower was a very optimistic, straight talking, rational and purposeful military leader/president.  However, if he'd been at this conference, he might have thought it.

Unlucky Field Marshall May had a stinker. And not just in her cotton wool head and sore, itchy throat. 

This was her moment to put aside the failures of the last election. The failure to achieve anything much on Brexit after a year and a half. And to set out her vision for what the future could and what it should be like. A vision of a positive future where the country can set its own path in the world. Make its own deals and cope with its own challenges. 

She could have said she was going to scrap HS2 and Hinkley point and use the money earmarked for those projects for new, affordable housing. That she was going to guarantee got built by using the land the government already owns to build new villages and new towns. Connected by new roads. To new hospitals and new {grammar?} schools. She was going to begin building tomorrow. And her new 'minister for the creation new towns' was starting right away.

She might even have realised that it was a Conservative conference so could put her hand into the foreign aid cookie jar for the rebuilding of hurricane flattened Commonwealth countries and for yet more house building in the UK. 

That would have been a start. with some more about reforms of university fees. and pricing of university courses. 

Some talk on taxation. More talk on jobs. Especially about the numbers already created and how the government wanted to tackle the loss of fair conditions at work for so many. 

A big bit on the divisive and troublesome Brexit. Not something any PM wold want to tackle head on in a hall split between leave and stay. But she did need to say over and over, we are leaving. the clock IS ticking. But she's made her offer and awaits a proper EU response. And that sadly, we cannot wait forever. And if no significant movement had occurred by Christmas, then the following year would see a rapid expansion of the government in order to put in place the customs and border controls necessary for the first stage of our leaving without a deal. And leave the ball in the EU's court.

Then the usual platitudes about the NHS. Working together. Fairer, stronger, faster, fatter, funkier or whatever focus grouped buzzword fit on the slogan.

Instead though. ..well...just ..more of May.  An edge tinker here. A worry about the cost of doing something there. A half promise, for sometime in the future, to do far less of something that Corbyn has already promised for all.

The problem for her wasn't the unfunny heckler. The revamped 'strong and stable' sign falling off the wall. Or even her losing voice. It was that her voice didn't have much to say. 

So here's something Eisenhower did say.
 “Pessimism never won any battle.”
Dwight D. Eisenhower

Video highlights of the Tory conference.
Quango exclusive. Pass the Strepsils edition.

Energy Price Cap. *Sighs*

We begin in History Corner.

I started my career in energy when of all the great sources of energy, only oil was broadly a free-market commodity - in between price-interventions by OPEC.  Gas and electricity were produced & sold under various monopsony/monopoly arrangements around the world (with the honourable, and at the time rather quirky exception of Norway, where plentiful hydro-power made wholesale trading easy).  Nobody gave this much thought: and, interestingly, there were academic accounts of why gas and electricity couldn't - as a purely technical matter - be traded in open, competitive markets.

Well, as with much a priori reasoning, this sounded logical but was utterly wrong.  Propelled mostly by the vision (+ willpower + implementational skills) of the mighty Enron, *ahem*, it was triumphantly proved that you can trade natural gas (it's much more difficult than for 'conventional' commodities, but still possible) and electricity (staggeringly difficult, but still possible).  

Resistance to this movement was universal across the globe - there were a lot of very powerful vested interests defending the extremely comfortable status quo, and the sums of money involved are stupendous.  All the way through the nay-sayers declared that not only was competition in gas and electricity a Bad Thing, it was (contrary to the ever-growing body of evidence) technically impossible.  The Germans and the French were prominent in this resistance; but the European Commission, completely captive in this instance to British policy (sic), ground them into submission as only the EC can and, twenty years on and many tantrums later, there we have it.  Even the collapse of Enron along the way didn't halt the remorseless spread of energy market opening - gas, power, coal, carbon, wood pellets, ... (Incidentally, the Chinese have seen all this and want the efficiency gains it brings: they now plan to break the entrenched regional electricity monopolies in their country, too - but let's not hold our breath on this one.)   

*  *  *  *  *

Having been active in both gas and electricity for the whole of the epic transition to competitive markets (which, incidentally, has very successfully shaken vast amounts of wasted capital out of the system), I confidently assumed we were on a one-way trip to global market opening, and that it would see out my career.  Little Ed Miliband's silly idea of throwing a price-cap into the works was, surely, a passing stupidity.  And although the old, unreconstructed CEGB types (and their friends in the unions) were still there in the shadows dreaming of nationalisation and monopolistic glories, well they could safely be ignored.  Hey, it'd be against the Lisbon Treaty!

Well.  What did I know?  Roll on 2017 and a 'Conservative' PM is limbering up for a price cap, and our Marxists-in-waiting plan to exploit Brexit by nationalising everything in sight, most specifically including gas and electricity - moves, we are told, which would be popular! 

We haven't got time for the Marxists here.  Let's just say on the price cap:  hey, remember the university fees cap?  How £9,000 p.a. was to be top whack which only a handful of the very most exalted establishments would be able to charge?  And how there'd be a great and imaginative diversity of different, cheaper uni-packages on offer below that level?  

And what happened?  Yup: the maximum becomes the universal.  There is no competition on price whatsoever.

The rot is truly setting in.  We'll no doubt be returning to the rest of the coughing and spluttering from the Manchester podium over the coming days: but this particular piece of nonsense will serve as a neat exemplar of the tremendous shifting in the terms of political discourse that has only just started.  It comes to something when I start pining for the Lisbon Treaty ...


Wednesday 4 October 2017

More rain in Manchester it seems

Poor Theresa May, now defined as a female personification of Gordon Brown, even down to the policies.

During her speech today the set she was speaking in front of fell to pieces, a nerdy protestor handed her a P45 and she had a cough and cold so she could barely speak.

Truly, this is Brownian motion of the fist order!

To make matters worse, he big non-Brexit ideas were both neither capitalist nor conservative. She wants more council house building - why? Because this has been such a success? Why not just relax planning laws? Why not set an overall target and offer incentives to get there? Why no mention of the plan to reduce immigration and therefore bring future balance to supply and demand in housing?

I can't even begin with the craziness of capping energy prices and will wait for Nick Drew of this parish to respond fully in due course; in short, first the Government rig the markets to reduce supply of energy to increase prices for consumers and now they want to rig the prices companies can charge. This can only lead to dis-investment and corporate collapses in the medium term.

On a human level I am left having some sympathy for Mrs May; a terrible hand of cards is unplayable and you lose the game whatever you do, she had the worst hand of cards given to a Prime Minister in my lifetime so no wonder she is struggling, it is a Kobyashi Maru scenario.

However, there is a greater need for the Country to get on with Brexit and then seek new leadership or else PM Corbyn it will be at the next election.

Tuesday 3 October 2017

After the show, the rain in Manchester

After last weeks really quite hysterical Labour conference we come to the Conservative conference this week. This should be he main event, not only the Government of the day setting out its agenda, but also this in an age of two party politics, with the Lib Dems now vanquished beyond the point of return.

Unfortunately the first two days of conference have bought us events and tripe.

Events in the sad and bizarre news from America when gun deaths now lead to increases of gun sales and tripe in the performance of Phillip Hammond.

The Government is really struggling to get a real agenda together ex-Brexit. Hammond's speech of all that was wrong with the 1970's was not a patch on BQ's here - he could have at least cribbed some good lines.

Instead we got a litany of how bad things used to be, with no vision of how they will get better. A half-hearted effort on help to buy which continues to ignore the supply side issues in the housing market.

And then Amber Rudd today, announcing stricter controls on sales of acid (which in a odd way, supports the US National Rifle Association, in that bad people will find ways to do harm with whatever they can find?) and banning the viewing terrorist websites. This I find highly questionable as from Labour conference the Tories should all hang and they are pure baby-eating evil - surely when Labour get into power with such a law then viewing Conservative home will be worth 15 years in jail. These laws always get abused the wrong-way round, the focus will be on the odd-lone extremist right-wingers and Nazi terrorism, should there be such a thing, whilst complicated Arabic stuff gets left well alone for fears of racism.

So overall, what a poor show. But nothing else can be expected I guess until May fixes the Brexit deal and then disappears to find the Whisky and revolver.