Monday 30 September 2019

Can the British Economy Take It?

CU wrote something characteristically interesting (and characteristically spelled ...) the other day in a BTL comment:
it is a miracel [sic] the economy has broadly gone on under this weight of uncertainty
And gone on rather well, in the (global) circumstances.  Which leads me to ponder on two potentially conflicting points.  First, the optimistic angle:  "There's a great deal of ruin in a nation", as Adam Smith had it, meaning that an established economy can bear quite a lot of apparently destructive nonsense before it is, actually, ruined.  (We've had BTL commenters here noting that Life Goes On even in Ukraine and Syria.) 

In similar vein it has sometimes been noted how little difference politicians, for all their bluster, actually make on the economy: so maybe a zombie government-parliament can play its silly games without too much impact.  Retrospective analyses frequently pin big economic trends on global factors, often creeping up on the supposedly knowledgeable players who are supposed to be in command of such things, taking politicians and economists alike by surprise.  When things go well - as they usually do, see Economic Growth for centuries now - some folks (not least, errr, capitalists) tend to attribute this to the workings of markets and free trade.  

On the other hand ... well, we could look at Venezuela.  Politicians can have an impact.  Perhaps more appositely (until Corbyn gets his hands on the levers), the great JK Galbraith was wont to say that economics and policy-making in the UK are more complex than elsewhere because Britain is, first and formost, a trading nation, ever since it first muscled onto the world stage at the tail end of the Tudor dynasty.  (Some would say a pirate nation, of course.)   There are more moving parts in our economy, many of them exposed to the outside.  This contrasts with, say, the French or traditional US economies, more heavily based on agriculture and other internal resources, and more self-sufficient accordingly.

Of course, others have their problems too - one thinks of the great exporters, Germany and China.  So if there's Trading Trouble afoot, we may not be alone.

Still, it can't be denied we've added an extra twist to our own local story.  And if things do take a downturn, whether caused by Brexit/uncertainty, or made worse by it, or just because of global conditions, there's one other important thing to bear in mind.  Whatever in detail the British Settlement has been, that has kept the show on the road for all these years without the polar-opposite, seemingly irreconcilable positions coming into stark conflict, one aspect must surely have been this: that a large and 'broadly unproductive section of society' (I am choosing my words carefully here) has accepted its lot without taking to the streets, just so long as it keeps being paid to watch daytime telly.

If the City can't keep laying the golden eggs, and that financial transfer to the rest of the nation can't be afforded in future; well, then ...


Thursday 26 September 2019

Should Boris quit?

On the one hand...

- He has been found to have acted unlawfully in advising the Queen, in normal circumstances definitely a resigning issue.
- He has a majority of -43 and so does not lead a working Government.
- He has been asked to go to Brussels to ask for an extension, which he will refuse to do, further breaking the law potentially.
- His performance yesterday was over the mark, as rude as the opposition were being, he just played into their hands with his over the top rhetoric.

On the other hand...

- He took advice from the Attorney General that what he was doing was legal, really the AG should resign not the PM. There is no evidence he willingly misled the Queen, but was following protocol that the Supreme Court has retrospectively changed.
- Parliament has refused to hold a vote of no confidence, therefore he has the confidence of the House to continue as Prime Minister.
- As long as he is in No 10 he has some power to try and resist the Remain coup, out of No 10 we may find revoke or a long extension (say 2 years) being agreed by whatever Quisling they put into place as PM.

Quite a hard one to call, I think after yesterday he should quit as it stands a good chance of forcing an election which we desperately need.

Tuesday 24 September 2019

I was only away a week..

Sorry for the lack of posts on my part this past week or two and now I am back in Blighty at last...boy what a mess you have made.

The legal ruling from the Supreme court today is simply stupendous. That it is unanimous is the most interesting part. After all, they have declared the Prime Minister has acted unlawfully in an area where there is no law. The court could easily have ruled that this matter was a matter for politicians. Indeed, in the not too distant past this is exactly what would have happened.

However, this is today and today he Supreme Court has made a big land grab to become the ultimate arbiter in the Country, above the Queen. In many ways, though it will be a while before people twig it, this is the end of the Monarchy entirely. No longer does the Queen serve a constitutional role at all, her advisers have not power nor authority. Yes, we have long known that Parliament is supreme, but now with the Courts too above the legislature why have a head of state other than the Prime Minister? The Court is exercising the powers of the Monarchy from now on. Why waste money on the Monarchy anymore.

For Boris, well the law is the law and he tried a reckless gamble and this has not paid off. Although unexpected, he has shot the bolt here. Really, he should resign as PM, go to the Queen and suggest there is no Government that can be formed. The only person in Parliament who could potentially lead a Government must be John Bercow, oh what a joyous moment that would be. If Boris clings on now it will be a terrible look, he should lead the Tories to the opposition benches and get his election that way. A Bercow rainbow Government will add about 1% to the Tory polling every day it sits.

Brexit Derangement Syndrome, phew, it sure is a nasty disease.

Monday 23 September 2019


In the otherwise deadly serious BTL comments over the weekend, roym asked for ... a World Cup preview!

Fair enough, we have indeed distracted ourselves with the RWC each time it's come around during the epoch of this blog.  Sorry not to have got in ahead of the opening fixtures this weekend - but with Wales just finishing up against Georgia, between us we can probably lay down some markers.  I'll start, with the Home sides.

England - look to be on course.  For those who recall the great days of 2003, England categorically did not cover themselves in glory during the Pool stage that time around: in fact, there were some worrying signs, particularly in the shape of J.Wilkinson who (frankly) started to go to pieces a bit.  It wasn't until the rainy semi-final against France that it become evident the old boys who were so invincible in the 2002-03 season still retained enough muscle-memory and nous to see the job through.

Jones knows what he is doing - with a very favourable sequence of early games to play with.  So: Pool Stage shortcomings?  Pfff. 

Scotland - that's not just a shortcoming, that's dire.

Ireland -  I liked the comment in the Irish press, after England shellacked them a few weeks ago.  England look like an international Rugby team preparing for a WC:  Ireland look like a stag party after a week on the lash.  Obviously, the Irish were going to get better after that.  But they don't look like a side who can carry their superb form of 2016-18 forward for one last, mighty hurrah.

Wales  -  kicking on from a brilliant couple of domestic seasons; but are only one bad injury away from being scuppered.  Sorry to be negative about it, but there it is.  Nor will they be happy to have let Georgia over the line. 

Well you know where my loyalties lie.  Over to you all for the BTL followup ...



Thursday 19 September 2019

WTF is the Supreme Court Thinking About?

We're probably all good barrack-room lawyers around here (though no actual lawyers have ever made themselves known as such in BTL comments).  So there can easily be fine points of law we're missing.

But - WTF are the Supreme Court exercising themselves over?

Seems to unqualified me that they are being asked to opine on whether the government's perfectly legal action in advising HMQ to prorogue Parliament, was taken for ulterior motives, i.e. other than that stated (= need to limber up for a Queen's Speech for the forthcoming legislative session).  

So - is the argument that a politican not acting in (someone's assessment of) Good Faith is thereby unable to act in ways that are legal?

As regards the assessment bit, it's fair to say that judges and juries frequently take a view on motivation: some charges that are laid before a court positively require that they do.  So it's OK (I think) for them to consider what Boris' motivation was.

But: are we to allow that "politicians speaking with forked tongues" is a disqualifying factor on the actions they take?  And if so, just how often are the courts going to be invited to intervene?

Take a simple example.  We all know that when Corbyn ostensibly refuses to believe evidence that it was the Russians who let fly with Novichok in Salisbury, it's because he's a lying leftist shit who takes money from RT.  Suppose he was in power, and took this attitude to be a reason to intervene and prevent the security forces from pursuing their inquiries?   Does Gina Miller rush to court to obtain a ruling that his action wasn't in good faith?  

For that matter, what about 90% of the oeuvre of Tony Blair?

Seems to me we have always known politicians speak with forked tongue, and that it's their actions per se that should be the focus of practical attention, not the "window on men's souls" the court is being invited to attempt to open up.  We have other ways to reckon up with them if we conclude they are inveterate liars.

And who knows, in  due course maybe that's what the court will find.

Meantime: what do other amateur lawyers think?


Wednesday 18 September 2019

Climate Crisis: What Crisis?

While we wait for the Supreme Court to have its day in the sun, there's another big issue to air: the soi-disant Climate Crisis, which is supposed to trump all others.  How's that going?  I have a trivial observation to offer, and a rather more interesting conjecture to try on you.

The easy bit first:  it's pretty obvious that despite L'il Greta's best efforts (she's 16, incidentally, not eight) very few politicians on the planet prioritise the Climate at #1.  In Europe?  Nope, that'd be Brexit and a host of other stuff as the Drunckerd gives way to the German woman.  The USA?  Election - for many months to come.  Middle East?  Duh ...   And so it goes on. 

My conjecture is this.  Actually, 2019 has indeed been something of a turning-point.  Credit may be partly due to Greta and Extinction Rebellion et al (it sort of feels a bit that way in the UK, anyhow); but even more so due to some mega actual climate events this year**, I'd say a very high proportion of people are now pretty much on board with the idea that, yep, Climate Change / Global Warming is real, tangible-ish, and moderately likely to get more extreme in the coming years.  More completely on board than they were last year, for example.  Everyone had heard the word several years back: but now it's like, well, yeah, of course.  

Some greenies no doubt think that's marvellous, and now they can swing into action with their loony anti-industrial, anti-growth, anti-civilisation plans.  McDonnell of course thinks it's his cue, his smokescreen to reationalise everything under a new red-green regime of labourist micro-dirigisme.

But I suspect the whole thing has over-reached itself, overshot.  It seems to me it's now in the sphere of people looking round for the sensible solutions - the whole world of Adaptation being top of the list.  A lot of greenies really hate this, because it suggests nothing can be done to stop It; so nothing needs to be done to stop It - just build higher sea walls, use more sunblock, and invest in better water industry infrastructure.  But anti-growth?  - nah, mate.  Growth is where the money comes from, innit?

And, whisper it softly, I'd say the time will be coming soon where geo-engineering solutions will start to be discussed seriously.  They'll really really hate that.

Anyone get the same feeling about all this?


** I realise many people would ascribe this also to the relentless proselytising by the BBC etc: and I don't disagree - it's just that they've been doing that for years, and 2019 seems to be their 'breakthrough' year

UPDATE:  well here's a headline apparently undermining my thesis.  On closer inspection, though, it's a lobbying confection, and in that context (loaded questions etc) even contains the seeds of its own contradiction, at least as far as the UK is concerned. Let's see what nonsense unfolds on Friday

Monday 16 September 2019

Saudi: Feels Like a Classic Scenario

Did We Say 'Gas and Power Prices Up' ?  Oh yes we did.

But it looks as though we ain't seen nothing yet.  Live by the drone, die by the drone: and bombing Saudi oil facilities, whether by Yeminis or Iranian proxies, is the stuff of classic scenarios for it All Kicking Off.

Several major economies on the brink of recession ... China widely felt to be a lot less robust than they'd be keen to have you know ... Europe thoroughly distracted ... Hong Kong in turmoil ... wars and rumours of wars ...

Yes, a classic scenario.  Hold onto your hats. 

Oil price:  instant reaction

Friday 13 September 2019

What is the City doing whilst the the politiciams blunder?

I have been amazed this week as the sheer level of stupidity shown by some commentators on the left. Bad enough that they have long flung around phrases like 'Disaster Capitalism' - which can mean anything but overall just is a slang way of saying capitlists = bad people.

But in recent days they have cottoned on to the concept that hedge funds might short positions that will be at risk in a hard Brexit. Obvious things like shorting the Pound or backing the FTSE to fall. This is not evil and it is not willing a hard brexit - it is gambling their hunch will pay off in that scenario. Plus of course, another fund or investor is on the other side of the trade betting the exact opposite. Both won't be right and one will win and one will lose - there is literally no political element to this. So the Angela Eagle level conspiracy is jus the most baseless and ignorant nonsense possible.....and the remainers say the leavers are the uneducated and stupid ones.

Additionally, after ND added in his tuppence yesterday on the Energy market, I thought I would add in a summary of anecdata taken from many of my recent meetings in the City and West End.

The property market is in a bind, the resi market is vey weak at the top end and has been since the stamp duty rises of 2015. Many units in central London are coming to market with very few buyers, but also not yet the huge drops in price that would stimulate real demand - the issue being the cost of building was likely above the now demanded sale price - so profit warnings ahead for these developers. Luckily for the UK economy, most of those parted with their money for these developments are wealthy foreign wealth funds or high net worth families who eventually can and will take the losses. However, as with all markets, construction has dropped off in response so now with much reduced supply pipeline as compared to recent years it is likely that the market will start to move up again in the next few months and years - Brexit or not.

In the commercial market, there is a good reminder that Brexit is not everything. A wave of money rushed our of Hong Kong as problems there meant capital fled to traditional safe haves - even French Chateau's have been selling. There are a plethora of fund launches into fine wines and art - things that Asian investors are often very keen on, despite the risks. Money flows are also helped by Sterling weakness as assets are cheap. however, commercial markets are very toppy price wise and a sharp drop is expected- perhaps the Sterling fall means in reality this has already hit, but us domestics don't see it!

With cheap assets comes deals, so lawyers and bankers are busy. Cheap interest rates mean firms can refinance and high levels of foreign investment means lawyers and investment bankers have deals to do. There are not may quiet offices in the City with people panicking over Brexit. They just want it done one way or other (revoke very popular as ever). one area of worry is that Luxembourg will eat the market share of European funds work as London and the Crown dependencies struggle with uncertatinty.

So, against the usual talking down of everything thanks to our universally useless political class, the economy seems OK. Which is why is it not surprising to see high employment and wage growth against this background. What is different I outside of services, where manufacturing has had to stockpile and hoard resources due to the uncertainty and construction is weak, as per above. Overall I think IF we can either Brexit or not and reduce the uncertainty we may even pull off avoiding a recession for another year or two yet, driven by the continued funnel of Foreign Direct Investment into the economy.

Thursday 12 September 2019

Back in the Real World, part 247: Big Energy News

In amongst the constitutional carnage, I just thought we should register a couple of big goings-on in the energy world.

1.  Price-rises ahoy

The wholesale markets in gas and power have responded instantly (particularly in the forwards) to three big European news items of the last two days:
  • Admission by EDF they have discovered welding problems and other issues in the reactors of "several" of their French nukes.  My spies tell me it's 20 out of their total 58 in France.  If they have to fix this in short order - and the French nuclear regulator is surprisingly independent and stern - the price of electricity for the whole of Europe will rise steeply
  • Europe's original and biggest (by far) gas field of the modern era, Groningen in the Netherlands, is having its output severly reduced with premature closure altogether in 2022.  This is because of the increasingly damaging earthquakes being caused by the gigantic scale of operations there over 50 years.  Groningen is a true monster, even by global standards, and the bedrock of north European gas supply for half a century.  Impact on price is pretty obvious ...
  • On top of these two physical problems, a man-made issue: Poland has won a court case limiting Gazprom's access to an important gas pipeline, which in turn will limit their ability to utilise their Nord Stream 2 system which is designed to outflank their previous dependancy on Ukraine as an export route.  A bit involved, I know - but that, too, is causing prices to rise!   

2.  GE the new Enron?

GE is going under.  That's what someone thinks. “GE’s $38bn in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds.” 

Oooh-errrr ...


Tuesday 10 September 2019

So, Farewell Mr Speaker ...

With apologies to Victor Hugo, Herbert Kretzmer and the entire case of Les Mis ...

Speaker of the House, preening little prick,
Has us almost hankering for Gorbals Mick
Cocky little Berc, nasty piece of work,
Turns a shade of purple as he goes berserk 
Shouting out his 'Order! Order!'
Making us endure his spouse
God knows how we’ve lasted, suffering this bastard in the House!

Bullying the staff, quite beyond the pale
Running up expenses on a monstrous scale
Quick to take affront, pompous little runt
Napoleonic complex and a lifelong chump
Always had his list of favourites –
Neutrality is up the creek
Sycophancy’s best so - grovel if you want to speak!

Cut a little slack, cut a little dash
Can’t control his missus when she’s on the lash
Cunning little brain, thinks he knows a bit
“Champion of Parliament” and lifelong shit
“Keeper of the constitution”-
Trying now to make us laugh?
Worst of all the Speakers, that’ll be his epitaph!


Monday 9 September 2019

Prorogation - the art of doing nothin'

So the winding road of Brexit continues. One thing strikes me is Donald Tusk saying when May asked for an extension last time, please don't waste this time - he knew, of course he knew, we all did.

But anyway, the news that Boris has had enough of the Remain Parliament and wants it gone today is understandable, after all they have certainly had enough of him (yet oddly don't want an election).

The weirder side effect is it makes is very unlikely, unless Boris get his way today with a vote for an election, that we can have an election before the end of November. In turn, with cold winter and darkness, I even wonder whether an election in 2019 will happen. Perhaps the Remain parliament will just be content to let Boris sit there, unable to do anything without their bidding now that they control the Speakership too.

So Boris, to the dismay of the EU, will have to do nothing. Now in business, doing nothing can often be the sensible choice. If there is no way ahead or the timing of markets is not quite right, the best policy is not to do anything. Customer unhappy but we can't improve the service? best keep quiet for as long as possible until they moan? Over-charging for services or product but customer happy to pay - best just leave it? Key internal project needs delivering but everyone is busy on revenue generation (if only..), again maybe another time...

In general, consciously doing nothing can be a very considered and sensible strategy. Even in the case of Brexit, the EU have more or less done this. Allowed the UK to define irreconcilable red lines, throw in a backstop hand grande and wait. Wait for 3 years in fact without doing anything except a bit of whistling.

And to date, they are winning with this strategy of not really doing a lot. So, will Boris' version also work - the landscape may change and he maybe banking on a French Non - which will all but guarantee the Remain Parliament votes through May's deal at the end of October.

Sunday 8 September 2019

The rise of the Populists.

There was once a right wing party that did rather well in the polls. Coming from nowhere, they managed to do very well in a series of local elections. So well, that the usual labor-conservative parties took real fright at this new upstart's influence. And both began pursuing an agenda to contain the new populist party. Rather than on tackling the causes of that populism.

The leader of this new right of centre party was a very charismatic leader. Good speaker. Good showman. He had taken over as leader from a very ineffective bunch who had been peddling their various grievances for years. Immigration. Foreign influences. Bankers. Bureaucrats. 
 The new guy turfed the old dullards out and went on a rabble rousing tour of the country. Drumming up support with just a few, simple messages. 

The nation had been through a massive financial crash. Some had lost much. Many had lost some. And austerity had been dragging on and on. Cuts to all manner of public services had made everyone poorer than they had been. And prospects were not looking good. 

The existing political parties were balanced against each other. A hard left communist party had taken hold on the left. Against a more central, one-nation, liberal-social-democratic-middle-grounders, on the other. The moderate left was losing to the far left. The moderate right, moved too far to the soggy-middle, and allowed a large area on its right flank for another party to develop.

No one side could gain a comprehensive majority large enough to enact any even vaguely controversial legislation.  Any that was tried was challenged through the courts by special interest groups and rich financiers. 

Protests were everywhere. All the time. About anything at all. Newspapers and media took sides and banged their supporters drums loudly. The European community looked on in bafflement, despair, and with more than a little fear. They had populists of their own to contend with. 
 When the leader of the country asked the Europeans for help and assistance, amending some binding laws, to see off the Our Country First group, they met with little sympathy and even less assistance.

 Inevitably, the centre grouping fell from power in yet another election that was as inconclusive as any that had gone on before. The far left made a lot of progress at some expense of the far right. The middle grouping had even less support than before. 

A sizeable number of Conservatives supported moving more to the right. Embracing some of the populists aims. At the same time there was a limited resurgence of Liberal parties. 
 Both far left and far right support was declining. People were becoming tired of constant protest and disruption,. Strikes and pickets and marches. The language of politics had become one of intolerance and aggression.

The weak centre party limped on, and for a time no one was really in charge. 

Parliament allowed a very dangerous precedent, by overruling convention and procedure, and issuing their own, enourmously powerful, unchangeable, undemocratic, decrees. 
 This gave a huge and unrepresentative amount of power, to just a very few key individuals.

 Eventually the leading industrialists, bankers and business leaders said they just wanted certainty. They had long been trying to keep the bad for business far right or far left out. Now they just wanted an end to it all. Their inability to make decisions, due to the volatile politics, was having real, and severe, economic impacts. They put aside differences and demanded some stability. From wherever it might come.

In a by-election, the populist party put on a massive show. It was an area they expected to do well. But recently they had been losing vote share. Falling quite rapidly in the polls, to the new, more right of centre, minority government. 
They were determined to throw everything into the effort in an attempt to show they were still a major player. Still a significant force, and actually rising in popularity.

They spent so much money, that their treasurer was beside himself. Almost suffering a breakdown with still weeks to go before voting. 
 The party was bankrupt, twice over. And yet it was still holding large arena events and had aircraft flying banners overhead. Full on rallies of enthusiastic supporters and lots of paid for media coverage. The treasurer and many senior party figures were seriously worried that this stunt, rather than propelling them into mainstream politics, would mean their extinction. They had gone from high percentage of votes to almost none, many times before.  

In the event, the party did only a bit better than they had done previously. It took skillful use of the media and a selective interpretation of the results to give the impression that they had done much better, than they actually had. This didn't help the nerves of the parties financial people.
 The leader tried to reassure them all would be well again. The election was very near. The gamble on the biggest prize of all, was only weeks away. 

They were unconvinced.

So in the end Hitler simply told all his team to keep spending. Not to let up. The illusion of wealth, strength and support was just as powerful as actual strength, wealth and support.

He told them the obvious truth of Do Or Die politics. Explained the one chance strategy in the simplest of terms.

"Keep spending. Spend even more! Because if we lose, then it won't matter. And if we win, then it won't matter."

* Hitler had an enourmous fight with his missus right before the 1932 election. Eva Braun attempted suicide. His dealings with women had led to suicides of his niece and would of Unity Mitford. The old dog had a women problem.

*The German Conservatives tried to deal with Gregor Strasser, a Nazi. He was to have taken over from Hitler. Strasser was a sort of Gove figure. He could be in either, or all camps, simultaneously.
Strasser  said of Johnson, Hitler, "He is a congenital liar."
He wrote of Hitler's chief strategist and spinner, Goebbels, as being a clubfoot. "And I tell the worst of them all. This is Satan in human form." 

*Strasser was killed during the purge of 1934. Shot by the SA and left to bleed to death in a cell.

* The Nazis lost votes in November 1932, overall. 34 seats lost. The violence had become endemic. But the politicians were convinced that the Nazis had that much popular support that they must be included in any government. They hoped they could be controlled. In 1933 the Nazis gained a huge new number of seats. 192. But still a long way short of a majority. It was Corbyn type of win. And probably their high water mark, if events hadn't taken them further.
The 1933 elections were the last multi-party election in Germany. There would not be one again for 57 years.

*Why did you morph from Farage to Johnson in this narrative? I was going for a cabaret end scene vibe.

* Am I saying Johnson/Farage have Nazi/Facist, tendencies and methods? NO. 

*Was the rise of the Nazis hugely accelerated and assisted by the infighting. Disunity. Weakness. Despair, uncompromising positions, and ineffectiveness of the existing politicians and structures of 1930s Germany? YES.

And the most dangerous long term development for Germany was the government giving emergency powers to itself, long before Hitler took over. These powers allowed the parliament to bypass itself. Rule by decree.

 Does Bercow realise, a hostile to the EU, Speaker, can just as easily bend the rules to deliver what a pro-EU parliament does not want?