Sunday 31 December 2017

2017 Predictions Review

1. Will trump start a hot war?    NO
2. Islamic state defeated and Raqqa to fall?   YES
3. Article 50 passed and UK set for Brexit?   YES
4. Le Pen elected in France?   NO
5. FTSE to end 2017 over 7100?  YES

With over 30 entries last year there was an Anonymous winner, so can’t count that. Lucilky contributor Bill Quango got them all right.

Trump looks less warlike and more useless with every passing day.

Islamic state is in ruins and hopefully a fading force, but time will tell.

Brexit turned out to mean Brexit after all.

France went wimpy with Macron.

The FTSE is doing just fine, as expected by all who don’t drink the remain kool aid.

Friday 22 December 2017

The Christmas Post

Happy Xmas one and all.

It has certainly been a strange year and to be frank 2018 looks already like it is just going to get weirder.

We will have a proper review next week and some predictions for 2018 at New Year's.

In the meantime, have a good time all with family and friends.

Thursday 21 December 2017

Damian Green - Done Up Like A Kipper

The newpapers don't know quite what to say about Damian Green.  I suspect a couple of things are going through editorial minds.  

(a) They probably assume there's a very technical basis on which May probably does have to let him go - an ill-judged lack of candour in an overall context of post-Weinstein and anti-Tory sentiment.  Does anyone really know the content of his hard drive (if I may use that expression)?  Oh yes: a bitter ex-copper who behaved outrageously back in 2008 and is unreformed to this day - hopefully with some serious trouble of his own to face in due course.  Still, ministerial code is ministerial code.

(b) They probably know Green personally (as do I - I've known him for 40 years).  It is of course possible to misjudge someone, but ...  They've also quite possibly encountered the young lady in the story (as have I), given her penchant for self-promotion; and maybe they are able to form a view.

Yes, for an event of this magnitude it's all rather quiet on the editorial front.

Still, when a government is down, it's down.  Probably gets worse before it gets better.  One of May's few world-class virtues is her ability to stand up straight and get on with it.  A virtue indeed when half the game is to keep afloat for another 4 years and let various storms blow themselves out.  I just hope that in her hour(s) of weakness she doesn't (as some assert) slip back to calling on Nicholas Timothy - a man whom, like George Osborne, we never want to see or hear from again.  Ever.


Wednesday 20 December 2017

Despite progress, Northern Ireland will still lead to a hard brexit

Not that this is such a terrible thing, but it remains the conclusion of the latest EU proclamations.

Via the excruciating Kamal Ahmed, here is the latest BBC breathless interview to end Brexit with Pierre Moscovici.

"How can you have no border - no hard border - and not have at the same time internal markets and custom unions?" Mr Moscovici asked.

"Because goods can come through that non-border - there would be a non-border between a part of the UK and Ireland, which is a part of the EU, so you see, that would be very complex.

"It's hard to imagine that there is no hard border, and at the same time, no internal market and no customs union, there would be a contradiction there."

So the issue here is taking last week's euro fudge at face value. Clearly, there was no real answer on Northern Ireland and both sides agreed on regulatory alignment as a meaningless phrase designed to allow for the money to be put on the table. The EU still see the UK as some kind of local region which it is indulging.

But in the end, this may yet kill the deal. If the EU decide their rules must be followed for the Good Friday agreement et al to stand, then they are in effect demanding the unification of Ireland and splitting it up politically and economically. The DUP will not vote for this and neither will many Tory MP's.

So, really, the fudge is not sweet enough. Of course, going on history, the EU will find another way around this at the last minute. But with remainers really getting excited on a potential second referendum then 2018 is going to be far from plain sailing.

Tuesday 19 December 2017

Abandon Hope Now!

As omens and metaphors go, it's hard to beat this one:  HMS Queen Elizabeth is shipping water at 200 litres per hour!

Bloody typical.  A crass decision by Gordon Brown to hobble the nation's defences in order to curry favour in his own constituency - curried pork-barrel, no less - leaves us with a legacy of two entirely useless floating targets monstrosities that, due to the budgetary constraints caused by their own extravagant cost cannot be either (a) equipped with the aircraft they are designed for or (b) set up in carrier-groups of adequate capability to make them viable.

I say 'floating' but even this may be getting ahead of myself because the first one has sprung a serious* leak.  Already.

So, let's just spell out the full metaphorical beauty of this situation:
  • very bad, very expensive decision
  • taken by a self-interested politician for shoddy reasons
  • with long-lasting and baleful strategic consequences
  • butt of mockery around the world
  • not even executed properly
  • everyone tries to be supportive, pretends to be proud, but ...
  • set to be a source of embarrassment, not to mention damage, for years to come
Remind you of anything?  The cartoonists will not be far behind.


* OK, not serious - thanks, Raedwald

Monday 18 December 2017

Not much of a Santa rally

Amongst the many things which Brexit is allegedly responsible for, one of the more real ones is the affect on sentiment. With so many remoaners In the Media and the City, not to mention the Government, positive sentiment is really lacking.

This can be seen in the very poor performance of the FTSE100 this year. At a likely growth of around 6-7% for the year it trails it usual comparators. The Trump inspired Dow is up nearly 20%, same for the Far East exchanges. Even the EU exchanges are up nearly 10%, even sclerotic France.

This is driven by a number of factors, the slowing UK economy which will have around 2% growth, not bad but slower than most of the G20. Of course, according to the Remoaners, we should have had a cataclysmic collapse by not but funnily enough has not come to pass.

But this negative sentiment has real world impacts, the Bank of England is slow to raise interest rates due to its remoaning fears, trailing the Fed and the ECB - as such, returns remain lower in the UK. FDI has also dropped a little  due to poor sentiment (which it always would in real-terms after a big devaluation) which has probably reduced growth. Even reduced immigration (also partly sentiment induced) reduces growth, less people coming to the UK reduces the overall output as we measure GDP and so adds to a slowing GDP picture (although, as we can also see, it really helps Government finances, already recovering more rapidly than expected and with little comment as to the obvious cause).

Sadly, this picture is unlikely to change, with remoaners in full voice for a second referendum to end Brexit. 2018 will be a tough time politically and this will continue to feed into poor sentiment. At some point a relentlessly poor sentiment can in fact lead to a recession as business confidence collapses - luckily as a trading nation the external environment will keep us out of there for sometime yet as companies do well overall, despite politicians trying their best to talk them down.

Friday 15 December 2017

From One Euro-Explosion to Another

Distracting as the Parliamentary antics may be, in the outside world something rather tangible took place this week:  a major (and fatal) gas explosion at Baumgarten, one of the biggest hubs in Europe sitting astride a very large quantity of Russian gas-flow into southern and eastern Europe, notably Italy.

Early headlines were dramatic:  "Italy declares state of emergency" and indeed "Gas shortage PANIC".  Fair enough: no-one wants to be without gas in a cold December.  Gas prices blipped upwards, unsurprisingly, and Europe wondered briefly if we were all going to freeze.

But only briefly.  European gas networks are far more interconnnected today than even five years ago and, importantly, market mechanisms have replaced the old system of government diktat that used to prevail over gas supply in countries like France and Italy until quite recently.  When it comes to efficient allocation of scarce resources the combination of interconnection plus responsive market pricing is every bit as potent in practice as free-market theory would suggest.  (That Europe now relies on this approach is, incidentally, a major triumph for the UK over years of patient work in the EC ...)  That Baumgarten has already dropped from the headlines is even more of an achievement when you know there are several other logistical problems in the wider European gas system right now - and a cold snap to boot.

It's also being reported that Baumgarten has already put many of the pieces back together again.  Not wishing to downplay the fatality (nor the impressive photos of cars whose bumpers have melted), but natural gas fires are generally among the least problematic because (a) in this post-Piper-Alpha world, gas units have non-return valves everywhere, cutting off the supply of fuel to the fire very quickly; and (b) methane is so light, the short-lived fireball goes straight up into the air.  Steel doesn't melt quite so easily. 

Hereabouts we used to debate with our old friend Sackerson the thorny issue of self-sufficiency vs reliance on markets.  At one end of a spectrum it can sometimes feel pretty uncomfortable being dependent on a simple price signal to redirect international supplies your way when you're in trouble locally.  At the other end, we know where 100% self-sufficiency leads: grotesque inefficiency - because 100% is never enough, is it?  The monopolists always demand they be allowed to go for 200% or more - just to be sure.  'Security of supply': the last refuge of the statist scoundrel.

What's the optimum?  You don't always have a choice.  Belgium, for example, has no indigenous gas resources, but they want to stay warm, like the rest of us.  So they are 100% reliant on imports, plus a bit of local gas storage. We couldn't all do that: but the power of free trade, suitably regulated (e.g. to stop the French government intervening in situations like Baumgarten and blocking all exports, as used to be their wont), is not to be underestimated.  They'll be OK in Italy, too.


Thursday 14 December 2017

Tories for Corbyn!

It is all very well making Parliament have a vote on the final Brexit deal. I still don't get what difference it will make:

1) It passes and so the House has had its say but to all practical intents and purposes it meant nothing.

2) They vote it down, but then what? A currency crisis for sure and a new political crisis. Either the UK crashes out without a deal if we are very close to March 2019 or a new Government is needed for a new negotiation.

The Tories, by dint of voting against their own bill, can't then try to form a new minority Government. So either the Labour Party take over with a silly minority or in some kind of Grand Coalition (mmm, how likely is that!).

Or we have an election, where justly the Tories would be routed for making such a mess of things since 2015.

And that means the most Left Wing Government ever being elected - along with a Brexit in Name Only. Truly the worst outcome imaginable. Yuck!

Tuesday 12 December 2017

Bitcoin bubble - will it be anothe Long-Term Capital Management

Many moons ago, indeed decades now, there was a hedge fund that managed to leverage itself up so much that it caused a massive loss in Wall Street and even led to the resignation of the  Chairman of UBS.

So, is this time different?

Bitcoin is a classic tulip-bubble mania. There is a limited supply, there is some kind of magic involved, retail investors are sucked in and there is plenty of liquidity in the market to push the currency on.

Of course, historically most of the bitcoins have been used by mafia and corrupt governments as a means of washing illegal gains. But these players have had ample opportunity this year to clear out, at a massive profit too!

So now the base is increasingly retail investors and some more risky financial broker-dealers who smell trading profits.

With the CME now allowing shorting of Bitcoin for the first time, there may well be hedge funds who come into the market now to take a bet on the collapse.

The danger though is that bitcoin is now worth some $270 billion and this changes rapidly daily. Ina major crash there is a lot of money to be destroyed. LTCM only burned through around $4 billion in 1998!

Over the course of this week the meteoric rise of bitcoin does seem to have stopped with the CME entry to the market and it is now stable at around $17000 per bitcoin.

One key element that may help stop a big impact if there were to be a run on bitcoin is that most holders would be sitting on paper losses only - in that most coin were created or traded at much lower values, thus the losses are not real in the sense of investment money going south.

But a 50% crash in the price (which is nothing when it has gone up 1700% this year) would be a big hit - I wonder where the bodies would be because there would definitely be some big hits with $130 billion of losses to share around

Sunday 10 December 2017

Peanuts. The Brexit deal.

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Anna Soubry

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Amber Rudd
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Leo Varadkar
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Nigel Farage
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Keir Starmer
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Theresa May and Arlene Foster
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Jeremy Corbyn
David Davis

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The European Union

Saturday 9 December 2017

Theresa Breaks The News 

Theresa May returns to her flat at Number 10. After a hard day settling the Brexit negotiations she is keen to discuss her triumph with her husband Philip.
 As she enters her apartment her husband looks up from his newspaper crossword and greets her cheerily. 

"Hello dear. Did you have a good day at the office? anything exciting happen or just the usual daily drudge. The dull, grey suit, shuffle?"

Theresa looks crossly at her spouse. "Oh Philip, really! I've been at the brexit summit. The EU talks! "

"Really? He looks mildly puzzled. "There was no mention of any brexity, dealey, summity euro thingy on any news today. I've had the wireless on this afternoon. There was a play for today on 4. About a slum Tory landlord expelling Eastern Europeans from his buy-to-let. And they all perished at Grenfell. ...Or was that yesterday? Or the day before..Come to think of was everyday this week. Or a version of that theme...Did you catch any of it, dear?"

"What ..No mention?" Philip thinks she looks completely bewildered. Even more so than usual.
"But..I had...A press conference..and ..made a speech.."

"Did you?" he lifts up his paper again to peer at the clues.."Was it live...the main event..not just a Euronouncement. No one covers those anymore. Not even the Huffpuff bother.."

"No! It was the proper thing. With the EU negotiators. We stood on the steps and everything..I just can'"

Philip drops his paper to the sofa and hops up to hug her.

"Only teasing, old fruit. I saw it all on Sky Snooze. And jolly good it all was, too. You especially."

"Oh, thank goodness. Oh Philip, don't prank me so." 
But she is too relieved to be angry with him for his joke. It would be just like the media to have made a huge splash about the early week disasters and then put the hard won agreements on the back page or the final segment before the weather.

"Sorry dear..Just my, I'll fetch you a drink..The press office summary is on the coffee table. They seem ..pleased...ish."

Mrs May picks up the press releases and nods approvingly. They WERE good. Success this. Not failure that. Less expensive than Trident had been crossed out to less expensive than HS2. Which was a good thing. Though best not to mention either.
Still. Very good news. very satisfying indeed.

Philip handed her a sherry and sat back down on the sofa.
"The media said you had a pretty good deal today. Even the newspapers said you did a good job."

"Well, it's about time the UKIP-Brexit red tops gave me a little credit for bringing about our leaving the EU."

"Oh, I didn't mean them, old stick. I meant the Remainer media. BBC very supportive. For a change. Guardian loved it, too. Full editorial and feature pages. Lapping it all their whingey-wailey, doom averted way."

"Oh." She said. And sat down onto her favourite chair. "Well...All publicity is  good publicity, isn't it?"

"Indeed it is, old sport. A triumph! Speaking of which, and not trying to steal your thunder in any way, but..I did have a bit of a triumph in the negotiations department myself, today," said Philip. Waggling his eyebrows over the top of his glasses and looking particularly pleased with himself.

"Really?" Asked Tess. Wondering what he could have done that would be the equivalent to leaving the European union whilst not snapping off the two extreme, irreconcilable, wings of her disconsolate party.

"Yes, indeed I did. " Philip leans forward and winks conspiratorially at her. 
"I went to that new Lidl, off the Horseferry road. And while there I saw a sign "THREE, Mörök Háború for the price of one! How about that, eh?" And he nods and smiles.

"What? What on..I mean..what is ..Murdock Harbour..?"

"Mörök Háború," he corrects.  "It's Hungarian brand Toilet-Duck. But as good as our SC Johnson stuff here. And I got three, for the price of one.! Good , eh?" he exclaims in jubilation. 

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Theresa regards him with incomprehension. 
What is he talking about? Toilet Duck? TOILET DUCK? 
Impatiently she asks

 "How is three bottles of Mangy Toilet Duck relevant to...what I" And she slips off a shoe and rubs her sore heel. And rolls her fingers over the bunion that that some photographer had stepped on.

"Well, old skirt, in and of itself, not so much. Three for one is a good, if not outstanding deal. But the clever part was, I noticed there was no Ce mark on the bottles."

Theresa looks even more confused. She is tired after a very long day, and an even longer, stressful week. And in no mood for riddles. "Ce mark?" she manages to ask.

"Yes. You know. The approved for sale in the European union, registration symbol. Well, these bottles didn't have it! Hah! So I point this out to the deputy assistant supervisor. And she gave me TWO more, free bottles. So there. What do you think of that?" And he sits back comfortably, evidently pleased with his feat.

Theresa is getting annoyed. Is he doing this because she is a woman? Deliberately belittling her achievements just because she doesn't know who Westhampton Rangers beat in the 1976 World Club?"

"Philip, " she says through thinning lips, and over the rim of the deep gulp she takes of her Sherry. "I hardly think that matches the tightrope diplomacy I have been indulging in..At all.."

"Oh, no Quite..Quite..No.." says Philip raising his hands, palms open to placate her.
"I just meant that essence. We both got good deals today. You got some agreements and paid a huge sum for some future possible something..While I got, Five Toilet Duck equivalent, but only paid the price for one. So..i'm just saying. We are both winners today, aren't we?"

Theresa stands up, eyes flashing in true annoyance. 

"Philip. I have been transacting with European leaders! I have finally, on deadline day, or just after anyways, got a deal that is acceptable to all..."

"Yes..Yes..Dear..Acceptable. Oh, I so agree. I'm not knocking, really I am not. I'm just pointing out there is acceptable. And there is five for the price of one. Both great deals. No question. I am simply just suggesting one may be a little bit of a better deal than the other? "

"Oh for heaven's sake!" she curses and heads angrily off to the bathroom. 
Phil shrugs and picks up his newspaper to resume his crossword. Its a toughie.
He can still hear her indignant words through the door.

"I've been working on this for twelve months. Back and forth. Back and forth. With the most intransigent men in the world. And that's just our Brexit team. And you say its just the same as getting four bottles.."

"Five bottles," he corrects her, to himself. Tapping his pencil on his lip.

"...four bottles of lavatory cleaner is the equivalent of world-stage statecraft..."

"..not equivalent.." He continues to say to himself.."Five bottles. And better than.."

"...Statecraft that takes month and months of patient, painful talks. Which results in give and take on both side.."

"Ahh..both sides," he thinks. "On our side.. and on our other side.."

"..With all warring parties finally brought into alignment! And you! ..You even have the nerve to suggest that this delicate finesse was in any way of the same magnitude of a deal as buying household cleaning products from a supermarket?!"

.." Not the same, old horse" says Phil, loudly enough for her to hear.. "Not the same in any way.."

And then lowers his voice so only he can hear himself say,
"The deal that I struck, was better than the EU one. Five bottles. And I only paid 20% of the RRP."
 He fills in, then rubs out a failed clue..
"Blast F in Phosphate...."

"PHILIP !" he hears a now very, very angry yell from the toilet.
"PHILIP!" Bawls out Mrs May. "This Hungarian... acid stripper supposedly got the agreement of the century on, has gone and taken the lacquer off the bowl !"

"Hmmm" .. thinks Philip May. 
" It's still a better deal."

Friday 8 December 2017

Euro Fudge Brexit Bake-Off results

In the first round of the Brexit bake-off Euro challenge, the contestants were set a keen challenge.

They had to bake an enormous Euro Fudge brownie, first by developing the recipe but then, in a standard test designed to increase ratings, they were only allowed to turn the oven on with 15 minutes to go - thereby guaranteeing an exciting end to this first half of the series - but of course, we have no final winner as yet

In testing conditions, the main contestants worked hard:

- Keen Irish labourer, Leo "Vrad" McPaddy, tested his pink French fancy recipe late in the day with near disastrous results. But all came good, with the icing applied just in the nick of time to cover what was in reality an empty shell of fudge.

- The Belgian chocolatier, Mr Willy Junker, struggled with his whisky flavoured fudge, insisting on keeping his recipe unchanged despite complaints from many tasters that it was unpalatable. Eventually the final product, with only minor modifications, appears have sold well.

- UK stalwart, Theresa Maybecake, struggled in getting her recipe at all, it either all hard or all soft fudde. In a major panic towards the end of the show, having had her had fudge spilled by Vrad, she loaded up with soft fudge - and in doing so, has won great acclaim to take into the second half of the series.

Stay tuned fudge fans, there is plenty more on the way!

Thursday 7 December 2017

'Green' means nothing to Modern Man

Readers will know I sometimes pause to take pictures out of the window during my travels, at goings-on that catch my eye.  Yesterday's photo opportunity was in a new Dutch business park that wishes to be known as a paragon of ultra-green practices.  Out of the window I espy this git, whose task seems to be to use a leaf-clearing blower to remove a large quantity of sand off a flat roof.  He appears to be trying to blow it, thoughtfully, onto the ground / vehicles below.

Whatever he thinks he's doing, he's useless at it.  Every time he corrals some of the sand with his blower, he waves the thing somewhere else and the first bit of sand is disturbed again.  Back and forth he goes, making no significant headway.  Either he has no idea how to use his 'tool', or it's the wrong method.

After 20 minutes of this nonsense, operative #2 appears with ... a broom!  He gets to work, evidently making excellent and steady progress - their relative achievements can be clearly seen in the picture below.  He shovels the sand that he's methodically mounding up into a wheelbarrow, instead of idly over the edge.  They stop to have an argument.  Broom-man prevails, and they finish up in no time, with almost all the sand in his barrow, available for recycling.

My observation is that Modern Man has a strange sort of stupid pride that says - using a broom is beneath me: I must be given a power-tool !  Funnily enough, I'm also willing to bet it's more effort waving that chunk of a leaf-blower around for an hour than it is spending 15 minutes with a broom.  But, obviously, it's somehow demeaning.  So capital equipment must be furnished, and electricity consumed.

It goes without saying, Modern Man's Stupid Pride has consequences a lot less *green* than broom-man's approach.  A plague on oafish Modern Man - and the lame management that panders to him.


Wednesday 6 December 2017

Coin flip Brexit to come?

So if May does not survive the week, of which there is an outside change I feel given her recent public appearances, then I think we come to a coin flip.

1) Hammond gets the gig as PM and takes us down the softest non-Brexit, Brexit imaginable. This is not such a terrible strategy, all those UKIP voters soon went back to Labour anyway when there was a General Election. Perhaps this may do the trick, winning lots of remainers onto your 35% base would be a good effort.

2) Gove gets the job and we go Hard Brexit with the DUP. This is, um, a higher risk strategy as it involves continuing the civil war in the Establishment and finding out how much of the remoaning is bluster and how much is true. As such, he will shine as a national hero forever or be condemned to the depths of a Gordon Brown.

What is clearer by the day, is that the middle road of May is harder to achieve, not just in Brussels, but in the Cabinet too.

Tuesday 5 December 2017

A Modest Vote of Thanks to the Irish

Yesterday was really rather special.  Before lunchtime,
  1. May - who seems to have taken personal charge** - had impressed the eurowallahs with her earnest, purposeful and thoroughly euro-like weaselling over how many angels can dance on the head of the pin labelled "alignment"++
  2. the RoI Irish thought they'd racheted the North ever closer to their clutches
  3. Sadiq Khan thought he'd found the perfect precedent for London to declare UDI
  4. the Scotty fish-woman thought she'd not only done likewise, she additionally reckoned she'd got a new argument about how Scotland could be independent without a hard border
(Note, incidentally, that J.Corbyn is entirely missing from the action, in any shape or form - more on him later).    

Enter the unsmiling DUP, who pulled out the rug from under the lot.  I reckon they've done everyone a favour, particularly (a) those lazily beguiled by the aptly-termed magic thinking, and (b) anyone who likes to see the smirks wiped off the faces of Sturgeon and Khan.

Of course, the first-level euro-response is: how can anyone be so unsophisticated as not to understand a good weasel-solution?!  But the second-level response is to recognise the situation all too clearly:  May having problems with a small and stroppy coalition partner, which is the basic currency of domestic politics up and down the continent (vide A.Merkel ...)

I have a feeling this is strategically beneficial; because the eurowallahs are inclined to be understanding and helpful to anyone who is willing to join the huddle for a good bit of euro-weaselling; and May now seems to have qualified.  Who can guess where this leads?  But if they no longer think of her as a hostile, distant stand-off, doing her business through the apparently - and I'm sorry to have to say this - doltish Davis, but as another beleaguered European leader in need of intelligent help from her peers (a.k.a solidarity which, as I've said before, we don't really understand in the true euro-way)...  Money?  No object: we've established that.  Rights of citizens?  Trivial.  No - it's all down to the structure of the trade deal: and everyone really wants this to be sensible.

Obviously there's another way to read the first few paragraphs above, namely that Hard Brexit, Hard Borders is now inevitable.  Fair enough.  But that's not my reading just now.

Which brings us finally to J.Corbyn, whose strategy is obviously to let the Tories dig themselves deep in their own excrement, then waltz in to power whenever the next election falls and run with whatever he finds.  His slogan, a Brexit for jobs, is totally non-commital.  The petty malice he intends can be achieved with or without Brexit.  It may still work that way, of course.   (McDonnell, I judge, really does want Brexit because his malice has much more comprehensive and far-reachingly structural aims, impossible within the EU.)  We've discussed a lot of this before (- and I've offered a more pessemistic scenario, too).

Now:  this rather depends on the eurowallahs giving May rock-all.  But if they now find her an acceptable interlocutor^^ - and they know full-well Corbyn's useless & McDonnell's dangerous - and contrive a sensible outcome, they can probably see a result that, pragmatically speaking, is a good deal closer to the status quo than anything they'll get with Corbyn-Labour in charge.

More twists and turns to come, for sure.  The Irish - both tribes - have moved this whole thing onto a different plane.  Quite a lot was banked yesterday and the phoney-war phase may now be over.

**  Ordinarily that's not a move one would recommend for a leader, but in this case it might have worked out for the better

++  Aspects of this are puzzling - although we are talking about Ireland, of course.  For example, from my own sphere: both North and Republic come under an all-Ireland 'SEM' - single electricity market - with a brilliantly pragmatic form of integrated governance / operational mechanism, across two grids and two currencies.  It works!  Do the DUP find this highly subversive?  Or do they, actually, quite enjoy reliable and (for a small island at the very end of the energy system) reasonably-priced electricity?

^^ Guido was onto this boost to her fortunes immediately, quoting Juncker as saying: "She’s a tough negotiator, not an easy one".  Juncker also credited her with negotiating in good faith.  We get the positive message.

Monday 4 December 2017

Nuclear Spring?

This week promises to be quite interesting on the nukes front.  We are promised announcements (belated) on the government's Small Modular Reactor programme, and things have been looking up a bit on the Big Nukes front, too. 

We've looked at SMRs before.  The potential is certainly there, on paper - before the prospect is dashed by the NIMBY reaction, city by city, where they need to be installed in order to secure one of the primary benefits (= highly efficient district heating).  Still, Blair thought the British Public wouldn't stand for any type of nuclear revival back in 2005, and forbad any mention of it before the GE of that year.  Plenty of people, including hereabouts, bitterly resent the Hinkley deal - but mostly on economic grounds (and warm traditional feelings towards the French, of course).  It doesn't seem to be a vote-loser, though.  But that maybe because it is on a brownfield site in a remote Somerset field ...

Needless to say, the would-be developers just want public money to get started.  They'll probably get a bit, actually.

On that large-nuke front, the players who were making UK waves five years ago have more or less melted into the background (excepting EDF, of course) and, unsurprisingly, Centrica would like to be out altogether.  But the government seems to have found replacements for them - Chinese and Koreans - with revived interest in the Horizon and NuGen projects.  On paper (again) you could argue there is still 18 GW of capacity under consideration - that figure includes Hinkley, which is not actually being built yet, they are simply being rather flamboyant in their preliminary civil engineering (the photo they always show is just the concrete-mixing plant).

A week from now we may have a clearer picture.


Friday 1 December 2017

Corbyn; I still hate Bankers but I dont know why

What is it with people and fighting the last war?

BQ's excellent preceding post on the UK military highlights how hard it is for people to break away from their pre-conceptions. We need a big army or a big navy, whatever, we say what we want then often try to fit that into the story we want to tell.

So today Mr Jeremy Corbyn, a serious candidate to the be next UK Prime Minister, is engaging in his old game of the politics of envy. In this FT article, he is quick to blame bankers for all our ills and also to suggest we don't need them anymore. Worryingly, the bankers quoted decide to play up to this with some very unhelpful statements which do them no good at all.

But overall the Corbyn critique of banking is a decade or more out of date. Did the banks cause the great crash? Yes and no, certainly the total mismanagement of the UK banks such as HBOS and RBS was key - but so was the complicity of the UK government (including the useless Bank of England at the time) in allowing this to continue as long as huge tax revenues came in.

We all know what then happened, bust banks and a bust economy that has struggled for 10 years to recover and indeed even in 2017 we are not close to having a stable economy. The structural deficit remains and so does a large QE programme with near zero interest rates. There is nothing normal about the asset bubbles created due to this monetary experiment.

However, this time, in 2017, the Banks are no responsible. Regulations are much tighter, derivatives are more closely regulated. So anaemic is bank lending and their attention to their balance sheets that a whole new industry of non-bank lenders is thriving and fintech companies are being founded at 30 a day in London.

Bankers pay has collapsed, very few now earn the millions that were on offer 10 years ago - only top management really earn it. But Hedge Funds are crazy, 20 people businesses often with a chunk of them taking tens of millions home each year. There are hundreds of hedge funds in London. All the real profits are in these trading and asset stripping businesses, often created with family office money from the Middle East and elsewhere.

The continued inequality in the UK is not driven by the army of compliance managers at Barclays, nor was it ever, it is driven by the use of London as the financial centre of the world's rich families and estates. As much as this causes angst, why would we wish this away? There is nothing to replace it were it to be regulated away. All we would see is a sharp decrease in bankers, lawyers and accountancy jobs in London.

A real far sighted government, of which there is no sign, would instead be looking for ways to either spread this business across the UK (unlikely due to the nature of personal networks) - or better harness the taxes paid to kick-start the more normal economy outside of the South East.

Corbyn as a populist is in fact far more dangerous than Trump. He is stupid in his analysis as show here, stuck in an out-dated world view which cannot solve the issues he espouses so highly and has nothing to offer but the politics of identity and envy.