Happy New Year all!

 Hope you have a good one. More posts in the New Year!

Happy Xmas, all on C@W !

 ... and when CU gets back we'll try for a pub session, like we did from time to time in those pre covid days.  I owe a couple of folks a couple of beers.

Compo coming in the New Year.  And we'll take a look back at last January's, too.  (A few red faces, methinks.)

ND

Covid in China: inflexion point?

What's going on in China?  Nobody really knows.  One thing's for (almost) certain - you lift the covid restrictions on urban populations that have been locked down like wot they have for two years, with omega (and maybe other variants) in the breeze - and it's going to go through them like a dose of salts.

There are several aspects of major interest - Western self interest - of which here are a couple.

(1) Economic: the lid has only been kept on the seething global energy cauldron (what lid !? - I hear you say.  Oh yes, gas prices could have gone higher still) because the Chinese economy has been well and truly on hold whilst in lockdown.  With a property crash, and declining retail sales.  And that hasn't just "suppressed" (relative term) worldwide energy prices: it's the same for all the major raw materials.  You think you've seen price spikes?  Well, if the lifting of lockdown works out positively for China in GDP terms, you ain't seen nothing.

I know some large gas players who are making a massive bet on this.  Personally, whilst fully acknowledging what could happen, I'm not at all sure it will.  Sickness on a vast scale may not be so easily consistent with revitalising that monster economy. 

(2) Political:  what did it take for Xi to backtrack on a lockdown policy that had his name all over it in bold logograms?  With serious protest already building - and then the TV-watching public noticing that The Whole Of The Rest Of The Entire World (as represented in World Cup spectators) were mingling closely and happily with not a mask in sight.

Well, presumably the CPC still reckons it can command the information space, and will convert the screeching U-turn into a personal triumph.  Of sorts.  But maybe not.  Maybe everyone can now see he's for turning when the right combination of factors applies.  And maybe his U-turn has really awkward consequences ...

Hmm.  China-watching in '23 is going to be interesting.  And those gas prices.

ND 

Strikes: Government will stick - it has nowhere to go

The winter strikers have, inadvertently, made the Government's strategy for it.  There are so many strikes, all essentially pleading with ministers to intervene with the big public chequebook; and the government simply can't do that.

This problem (for the unions) presumably stems from (a) zero inter-union coordination: this ain't the Revolution; and (b) the relatively new phenomenon of 1-day strikes.  

Time was when strikes (of the non wildcat variety) were indefinite, all-out affairs that had to be planned months in advance, with a big fighting fund laid up to be able to foot the bill for Strike Pay.  In those days, unions couldn't do much else than coordinate these things, at least to some degree, in the manner of record labels of the same era who would keep "loosely in touch" to avoid big albums being launched competitively in the same window.  They needed mutual aid, not least on the picket lines, from people still drawing a wage.  One major front at a time.

How fragmented everything is these days.

Except, of course, the Government, which is (relatively) monolithic and, after years of nonsenses, quite well versed in messaging: yes we know it's shitty, but we all have to WFH / tighten belts / look after each other / etc etc, and just get on with things as best we can.  Blitz Spirit Lite (again).  The total inertia of Kier "shoo-in" Starmer, while he waits for everything to fall in his lap at the next GE, is quite helpful in this regard too.  Makes everything seem like some kind of unavoidable natural disaster.

So it looks like that's what it'll be: a piecemeal mess with minimal government movement, despite endless careful, ultra-reasonable-sounding union counter-messaging on the lines "all that needs to happen is the government to step in with a bit of compromise: we don't really mean 19%"**.  Which is gonna continue to fall on deaf ears: because where on earth does that lead the government?  They just ain't gonna pay out 10% to everyone on the active payroll - even if, perversely, they have done just that for the pension / social security roster.

ND

___________

** There's another emollient union line being peddled of late: It's not really about wages, it's about conditions - just scrap those provocative "reforms" & that'll do the trick ...

Europeans Don't Understand Markets, Part 37

Not a new theme around here, but the examples keep rolling in.  Now it's the protracted attempt to enforce a "European gas price cap".  Even the ECB knows this one is crazy: and for once, the Germans (the usual butt of my scorn on this issue) are more-or-less on the side of the angels.

The idea is this.  Almost all the economic ills of Europe are the fault of high wholesale gas prices.  (Never mind that this ain't true: French electricity prices are even higher, caused by the chronic state of their ailing nuclear fleet.)  So: if we simply legislate to cap wholesale gas prices ... all our troubles are over - right?

Most of the wrangling is over what the magic number should be.  Too high, and "it has no effect".  Too low, and, errr, well hang on, what does "too low" mean?  We want it to be low!

This fighting over exact numbers is an entirely fatuous fracas because the whole idea is structurally bonkers, whatever the level of the "price cap".  How is it supposed to work?  Unlike its predecessor, the "electricity price cap" (which was in effect to be paid for by governments, via a cash subsidy whenever prices actually rose above the cap - like the UK's present "energy price guarantee"), this one is an outright ban on gas dealings above the capped level.  Dealing, that is, on the leading exchange platforms handling spot trade at the main European gas trading hub, the Dutch TTF.  On an automated basis, no deals would be accepted at prices above the cap.

So, errr, no gas for Europe then, if the TTF price goes too high?   That's the German worry; but actually, nope - trade would simply migrate to other forums: bilateral dealing or, whisper it softly, platforms not coming under the EC's jurisdiction (London, NY and Chicago come to mind).  Any problems with that?  Well, there's the question of clearing and credit support: but bear in mind that in the days of yore, almost all gas trades were bilateral - and there are viable (if clunky) means of instituting bilateral credit support.  They'll just need to dust off those old ISDA Master Swaps.

In their deep ignorance, Euro-politicians work themselves into fine frenzies over this stuff - and burn a great deal of precious midnight oil.  Presumably they're all on double-time, free meals and 5* hotels when they work after 4pm or something.  And when it goes predictably tits-up, they all look around in wonderment and call for an enquiry.  What is the point of these people?  

ND 

Bankman-Fried & FTX: an entertaining indictment

Well, the criminal indictment per se is actually rather dry.  As ever in the USA, the first several charges are for Wire Fraud, that handy all-purpose offence that makes things Federal.   Then just plain Fraud, and Money Laundering, and Conspiracy etc etc.

The appealingly racy wording of the Civil Complaint livens things up considerably, and makes it clear what is alleged to have been going on. 

Unbeknownst to investors and to FTX’s trading customers, Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire ... Customers around the world believed his lies, and sent billions of dollars to FTX, believing their assets were secure on the FTX trading platform. But from the start, Bankman-Fried improperly diverted customer assets to his privately-held crypto hedge fund, Alameda, and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations ... While he spent lavishly on office space and condominiums in The Bahamas, and sank billions of dollars of customer funds into speculative venture investments, Bankman-Fried’s house of cards began to crumble... Even in November 2022, faced with billions of dollars in customer withdrawal demands that FTX could not fulfill, Bankman-Fried misled investors from whom he needed money to plug a multi-billion-dollar hole. His brazen, multi-year scheme finally came to an end when FTX, Alameda, and their tangled web of affiliated entities filed for bankruptcy on November 11, 2022.

Massive frauds; lies; lavish spending; crumbling house of cards; plugging multi-billion-dollar holes; brazen schemes; tangled webs - I like this writing style.  And there's more: the Complaint wants an order to be issued upon SB-F "to disgorge his ill-gotten gains".  That's while the prosecutors try to get him banged up, of course.

As I've often said, provided you're not a senior banker of the 2008-9 cohort enjoying some kind of 'Obama indemnity', the Americans know how to throw the book at business wrongdoers.  Strange thing is, though:  there never seems to be much to stop these massive ponzi schemes getting started, does there?

ND  

At last, nuclear fusion! With one bound, we are free!

When my eldest was at school he was set on to write a story about being marooned on a desert island.  His tale read well for a couple of pages but it ended abruptly:  "And then they were saved."  I had the unkind feeling he was going to get docked a couple of marks for narrative failings.

With this unfairly critical eye of mine, I now read in the Grauniad that a

Breakthrough in nuclear fusion could mean ‘near-limitless energy’ 

Oh dear.  Are we back into the lands of "electricity-too-cheap-to-meter" and "do-we-believe-this" again?  I kind-of assume we'll be there on fusion by, maybe, 2050 ...   

I say "we", but I'll be dead and gone.  Unless, that is, the same lab has also come up with the Elixir of Life.   Well why not?  Elon Musk surely isn't too busy to turn his attention to that one?  

Often looks to me as though he's been trying a few of the early experimental potions on himself ...

ND

Next Year's Trip To The Moon - do we believe this?

When my kids were growing up I suggested to them that sometimes, when something quite surprising is asserted, it's a good idea to pause & say ... do we believe this?

I know it's awfully unfestive to be so skeptical: but when I see multi-media coverage of Rhiannon Adam's story that she's going to the moon next year, courtesy of Elon Musk and, errr, Japanese billionaire Yusaku Maezawa who'd like her to have a ticket ... well, I feel we may be deep into do-we-believe-this? territory. 

Mission chiefs said Ms Adam, from Ireland, will be the first openly queer woman to go to space ... She added: “I spend a lot of my life working with a lot of remote communities and it felt like a natural thing to do, to apply to go to space and explore the most remote community ever, which would be us in space.”

I'd so like to be proven wrong on this.  Call me a cynic, but I can't help feeling the lady will get another call in a few months.  Hi Rhiannon?  It's Yusaka!  No no, it's not about your space-flight training, that'll be a bit nearer the day.  No, not the medical check-up either - you don't need one!  No, what I wanted to do was help you get started on your crowdfunding.  What's that?  Yes, you know, crowdfunding!  It's easy!  Listen, you're bound to know any number of suckers.  Well, I mean, surely you have a lot of, errr, like-minded friends ..?

Perhaps in our 2023 Predictions compo we should include a binary yes/no item on this one.

ND

The wisdom of crowds ... and mobs?

For a while now I have been of the view that some on the 'left' (which I take to embrace the more radical 'greens') are gingerly feeling their way towards trying to legitimise violence in favour of their causes.  They are a bit nervous about this, of course, not least because they are all nice middle- and upper-middle class people who personally rather shrink from violence, much as some of them drool over those rougher types like the Sinn Fein leadership and radical Islamists who couldn't give a monkeys. 

A couple of days ago, this curious piece appeared in the Grauniad, by one Stephen Reicher, professor of psychology at the University of St Andrews:  

China’s Covid policy didn’t have to end in riot and protest. This is why it did

It concludes with this odd remark. 

China’s protests show us that, far from being mindless, crowds and collective protest are highly sophisticated and give us insight into the underlying society. Particularly from those who do not normally have voice, “riots are the voice of the unheard”

Now we can certainly agree that some Chinese protestors are quite creative in how they articulate anti-government sentiments via things like holding blank sheets of paper, or inventing instantly evocative pop-up memes and shibboleths that temporarily evade the sluggish but overpowering CPC censors.  Can be sophisticated enough, for sure.

But "crowds ... far from being mindless ... are highly sophisticated" ?  Well, we've probably all enjoyed being part of a good-humoured crowd at a sporting fixture.  But it's not very comfortable to look into the "mind" of many a crowd outside the soccer stadium afterwards, still less that of many a mob.  We don't even need to cite lynch mobs.  Earlier in the article, Prof Reicher wants us to reject David Cameron's view of the 2011 "riots" as being mere criminality.  Well, matey, the opportunistic looting sprees of the day after Tottenham most certainly were just that, much as some lefties hoped they heralded the Revolution.

I really wonder where this dalliance with violence is going.  Wherever it is, I very much doubt it will be to the long-term political gratification of the radical left-green - even if personally they get their rocks off on it as a nasty form of catharsis and juvenile spite.

ND

Eddie Jones: it was indeed time to go.

Sport's a tough business, and nobody has the right to stay at the top forever.  Despite his many achievements, with England and elsewhere, it was clearly time for Eddie Jones to go.  The autumn test series was indeed a test, and he failed.

Jones worked wonders with the disorganised and demoralised 2015 side (even if one suspects almost any new broom would have dusted them down).  The immediate Grand Slam, followed by an epic tour of Australia - I have never watched a defensive effort like England's in the Second Test - suggested he was doing more than just making a handful of much-needed changes.   His choice of captain, the 'mongrel' Dylan Hartley, seemed inspired.

So where did it go wrong, for such a thoughtful and successful coach?  

1. Seems to me he's a tactician and not a strategist.  He plans carefully and successfully for particular games - for Australia, the semi final over New Zealand in 2003; for Japan, the extraordinary victory over South Africa; and for England the exceptional win over NZ in the 2019 semi final - a game he must have been working on from the moment the pools were announced several years before.  And then ... it was absolutely clear he had no equivalent gameplan for the final - a contingency just as foreseeable.  In fact, just like 2003 when Woodward's England beat him in the final.  (Clive Woodward: now there's a strategist.)
2. Stubbornly 'keeping faith' with the wrong players, admirable though 'loyalty' may be.  Two examples (out of several I could list):  Farrell and Tuilagi.  I don't care what "warrior" attributes he possesses, Farrell is a liability at international level - directly and predictably responsible for England going out in the Pool stage in 2015.  He shouldn't have been in the squad, let alone the post-Hartley captain.  And Tuilagi's physical frailty (sounds like a crazy thing to say, but rugby aficionados will know what I mean) makes his formidable performances of ten years ago an irrelevance.

If England can get Borthwick to step in - and I presume this is primarily a matter of money - the squad is strong enough to mount a turnaround in time for the RWC.  And he's just the man to do it.  Thanks, Eddie, and farewell.

ND

Wealth tax proposals: target 'those other guys'

 Gotta laugh at this earnest Grauniad article: 

One of us is a millionaire, the other a care worker. The cruel divide between rich and poor disgusts us both ...  Britain’s cost of living crisis is disastrous for one of us and will barely touch the other. The best answer is a wealth tax

The two ladies in question are Julia Davies and Winsome Hill.  In case you are wondering, it's Julia that is a member of "Patriotic Millionaires" (sic), and Ms Hill who is the care worker.  Entertainingly but somehow inevitably, the article includes the words "the two of us have never met" !   No, really? -  you surprise me.  "... but we both felt the inequality in this country couldn’t continue ... and decided to write this piece together."

So what have they, errr, spontaneously agreed as a solution for inequality?  Even though they've never met. 

Let’s start with taxing the seriously wealthy – people with wealth of more than £10m. A wealth tax of just 1% or 2% on their stocks of wealth over £10m ...    [my emphasis]

I think we know what this means.  It means - I'm just guessing here - that Ms Davies' "stock of wealth" is somewhere in the band £1m to £5m.  Because that's the very definition of people who think that "seriously wealthy" means north of 10.  Left on her own with the pen, Ms Hill might, I suspect, have written "people with wealth over £1m" - or even £500k, given that the average UK house price is £256k and the median personal pension pot is only in the tens of thousands (though the data is hard to summarise simply).  But that wouldn't do, Ms Davies - would it?   No no no!

Yup, it's human nature to reckon that "serious wealthy" is always someone else.  You got a yacht?  Yeah, but he's got his own island.

ND

"Oil Price Cap" - what do they think it means?

The EU has been at it today, and the G7 will follow, we're told.  We can easily state what they think it means.  Shippers of oil will not qualify for "western insurance and maritime services" if they are buying Russian oil at more than $60/bbl.  

Well, some folks say the Russians can only get ~$50 for their oil on world markets anyway.  But aside from that: since nobody running Russian oil at, say, $65 will feel obliged to, errr, tell this to the authorities - dear me no, guv'nor: $59.95 and not a cent more, look at my paperwork! - the most they'll suffer is presumably that the cargo will only be insured for that lesser amount.  OK, so they'll screw Russia down another dollar for their pains, but no big deal.  Or the Chinese will insure them.   (Good luck making a contested claim on that policy, though.)

All this "capping wholesale prices" in liquid global markets is crazy.  The EU is at it again with gas prices, though that's even less meaningful - they will only be "capped" by governments stumping up the difference between actual import prices and whatever cap they come up with.  And the UK may end up getting subsidised EU electricity, as a delightful quirk of the rules, haha. 

Incidentally, several EU nations are beginning to get fed up with Germany using the power grids of neighbouring countries to keep itself in imported electricity, and are limbering up to take steps to stop them.  Most serious of all is public sentiment in Norway, which hitherto thought it would be great to sell even more of its cheap hydro power into Germany (and other countries, but mostly DE).  Well, the hydro producers and the Norwegian grid (which coins transmission fees) still think that: and the taxman, too.  But Norwegian consumers have noticed that the export of a load of electricity means the import of German power prices!  And on this particular export, they aren't trussed up by EU rules.  Watch this space.

ND