Monday 31 July 2023

Culture War Cameo

Here's an entertaining extract from a recent Graun piece by Robin Moira White, "a discrimination barrister at Old Square Chambers, London, and joint author of A Practical Guide to Transgender Law": 

Trans people and their allies now know they will be better off under Starmer, Dodds and Cooper than Sunak, Badenoch and Braverman.

Now, what characterises the folks she doesn't like?  And the ones she prefers?  Oh my word, what might be the point she's making there ..?  


Monday 24 July 2023

Putin turns on a prominent milblogger

Russian 'milblogging' is an interesting phenomenon of the Special Military Operation.  Almost all milboggers are fervent nationalists, and some are self-evidently very well informed.  Nationalism doesn't always prevent them from being critical of their own side and, since most of them have high regard for the ordinary Russian soldier, their criticism is mostly aimed at the General Staff and points north, all the way up to Putin himself in some cases, encoded or en clair.  Given the epic military and geopolitical failings of Putin's Plan and its utterly crass execution (see this blog passim), they've had plenty to complain about.

Behind the glass wall, facing the cameras
And none more so than Igor Girkin, a.k.a. Strelkov, an individual of illuminating historical perspectives, genuine military knowledge and indeed military accomplishments in many spheres of combat.  A genuine do-er as well as thinker (he even enlisted as a private soldier and went to the front during autumn 2022: no joke, at the age of 51.)  Now, we know whom we're talking of here: the man convicted in absentia of being responsible for the downing of the Malaysian airliner; who headed Russia's proxy forces in the Donbass, etc etc etc.  On his own admission, in some of these conflicts he has ordered prisoners be shot out of hand.  He is, in short, a single-minded & ruthless operator with blood on his hands, as well as a fervent Russian nationalist.

But that doesn't detract from his knowledge and insight.  As a judgement from a distance, I'd also assess that he's entirely straight (within his own frame of reference) and sea-green incorruptible.  And brave with it.  Insofar as one can tell.  He has frequently given airings to views that oppose his own, and admitted mistakes.  (He also has the tremendous Russian facility for heavy-duty sarcasm: I have to believe many of his American readers would have a lot of difficulty in making out some of what he writes.)   And now he's been locked up.

Why now?  Good question, since Putin has put up with his trenchant critique for well over a year.  Well, characters like this are always difficult to deal with.  Strelkov was initially surprised by the invasion, and on the very first day presciently offered the observation that the attempted coup de main against Kyiv itself via the heli-landing at Hostomel was risky.  However, he immediately suppressed his doubts in public and, in his nationalism, loyally tracked events online in as supportive a mode as he could muster.  That lasted for about a month, after which he could no longer contain his disgust at how badly the invasion was being, and has subsequently been, conducted.  And in ever greater and compellingly accurate technical detail - the criticisms not of an armchair general** but as one who could have done better himself, even with the inadequate forces Putin threw into the fray.  

In his nationalism, Strelkov has long been deeply suspicious of Wagner, and had no time for what he called its "Verdun" strategy at Bakhmut.  But it was Prigozhin's Moscow-bound flying column that tipped him over the edge:  Wagner deliberately spilled Russian blood on its way north and that, for Strelkov, was the limit.  Unrestrained rants against Prigozhin followed.  Now obviously, Putin and Prig have come to a tense and complex modus vivendi; and it would seem that non-stop carping from sniper Strelkov is no longer acceptable.

The irony, of course, is that if they'd followed his sound military prescriptions from around mid March 2022, they'd be in a lot better shape than they are now.

I shall miss Strelkov's bracing analyses.  



** We had some amusing BTL contributions mocking my own rather distant armchair commentary, but the authors might like to go back and check: I got to Strelkov's conclusion - it wasn't difficult - quicker than he did, at least in public. 

Saturday 22 July 2023

The politics of (green) compulsion

If, as seems likely, the Tories held Uxbridge as a reaction to Sadiq Khan's ULEZ extension, well, we ain't seen nothing yet.

The UK has reduced its CO2 emissions by more than any other country** since 1990 - but this was achieved by (a) going for the low-hanging fruit (i.e. phasing out coal) and (b) de-industrialisation.  Although this hasn't been remotely cost-free, the costs have been loaded onto electricity bills and, frankly, haven't really been noticed.  But that phase of the game is rapidly coming to a close: very little low-hanging fruit remains down decarbonisation way.

The cost of such potential still to be exploited in the power generation sector is rising rapidly

Aside from incremental efficiencies that arise naturally from technical evolution, we've barely started on home heating, transportation, agriculture and much of heavy industry.  And decarboning those will be very costly indeed.

And then there's Behaviour.  Less travel.  Less meat.  Less creature comfort.  The greens, from Swampy and Greta to John Selwyn Bummer (© Jasper Carrot) have all been pressing government to start 'changing behaviours' - that's our behaviours - and while they'd rather that to be via 'leadership' and 'persuasion', there's little doubt that ultimately they mean compulsion.

I have a strong suspicion they won't be getting any change out of any UK politicians of any party (except just maybe a few Green Party hopefuls) this side of the next GE.  In this context, Khan is right out there on his own - and being rapidly disowned by Starmer, naturally enough.  Miliband has been well and truly sat on, so really it's only Ed "Drax" Davey we still need to hear from on the subject.



** France, of course, would claim to have had a lower-CO2 starting-point, thanks to its nukes

Friday 14 July 2023

Smack of Firm Government?

Seven months ago I wrote that in his problems with public sector pay on many fronts, Sunak had been immeasurably helped by the sheer number of concurrent disputes, and the extreme claims being made in some of them.  There was 'obviously' no scope for him to concede them all, so he would find it easier to resist[1] them en bloc.

And thus, it seems, things have transpired.  How many PMs have even been able to stand at the lectern and say, no more talking, that's yer lot  -  and plausibly get away with it?  But, plus or minus the junior doctors, he might have done.

Even more remarkably, he even chucked in a culture-war twist: the award is to be partially funded 'by "significantly" increasing charges for migrants coming to the UK when they apply for visas and the levy they pay to access the NHS'.  To my amazement this has been very little commented upon (yet), and we may guess any belated squeals will not be originating officially from the Opposition front bench[2]. 

Is this the fabled Smack of Firm Government?  It has some of the trappings.  And in Starmer's current mode of saying 'no' (to the considerable dismay of the Left & the greenies) to everything that anyone suggests deserves a call on his largesse when putatively in power, presumably he's essentially going to take this development lying down - though it is always possible to script a hostile soundbite in response to anything.

So how does it all play?  Does it basically strengthen Sunak's standing with voters?   Or will it be a cause of sullen resentment?  A lot will depend on "whether it works", i.e. whatever inflation does next.  In any event, Starmer's stern stance makes resentment a lot harder to parlay into votes for Labour, so maybe it's the smaller parties that pick up the resenters.  Which, of course, may be a decent second-best for the Tories at the next GE.



(a) the predicted cries of anguish haven't been long in coming - from "charities, unions and politicians".  "Borderline racist", they cry.  But not Labour politicians, naturally (see above).

(b) see strikethrough below and dearieme's comment 


[1] Of course, BTL here Kev has pointed out the remarkable inflation-busting 'award' already made (passively, under the triple-lock) to pensioners, possibly to be repeated next time too.  But, hey, priorities / politics / votes.

[2] I find it hard to believe we've heard the last of this.  Not least, because the Tories are likely to big it up in order to provoke a leftie response. 


Tuesday 11 July 2023

Erdogan: the Transactional Turk

Erdogan has really excelled himself this time, the major obvious casualty of his machinations being Putin and his ever more flimsy stature & general political dignity.  Drones, Sweden, Azov, ... what is the full nature of the Turkish "trade package"?  Does he have it in writing (from Biden / Ukraine / NATO / EU)?  Or is he just positioning himself for a Cunning Plan he has in mind?

(1) Transactional politics has upsides - and downsides

As I've written before, in some political spheres - foreign policy generally being one of them - the 'lines of logistics' can be incredibly short: unlike most domestic policy-making, it can be stroke-of-a-pen stuff instead of months & years of hard, practical grind, with all the attendant implementational friction & risks of material long-term projects.  (Thus, to take one of a million examples, Lenin took Russia out of WW1 in a morning.)  Some politicians, indeed some human beings in general, heavily lean this way: there's no situation they won't try to deal their way out of (negative) or into (positive). 'Transactionality' is one facet of this type of approach: Sadiq Khan is perhaps the most prominent UK exponent right now.   

The upsides are clear.  A stroke of the pen requires far less blood-and-treasure to resolve a dispute than 'going to war' or its analogues, & gets quicker results, too.

The downsides are there, too.  Obviously, transactionalism appeals not least to politicians of the bone-idle tendency.  Ditto, the heavily-overlapping subset of politicians who have no principles or red lines whatever.

And what can be done at the stoke of a pen can be undone just as fast.  Sometimes, "with one bound he was free" clever-cleverness doesn't cut it: a fundamental solution is needed, the hard yards can't be dodged**.  To give a foreign-policy example:  what could be more convenient for NATO backsliders like Germany than a neat, stroke-of-a-pen "resolution" on Ukraine that would mean they didn't need to restore defence spending to prudent levels?  Very neat, yeah.

(2) Downside for Erdogan?  Oh yes there is

I'll give you at least one.  Turkey is essentially 100% dependent on Russia for gas (as well as a lot of oil).  It gets very cold there in winter.

Less obviously, since the economic recession Erdogan foisted on his country Turkey has been having the utmost difficulty in taking all the gas they've contractually committed to.  They owe Gazprom a bunch of money.  Thus far, it's been forgiven ... That's on top of a cold winter in Turkey.

Transactions, transactions.



** Also, the Clever Stroke often leaves a very nasty taste in the mouth:  in the Claudius novels, Graves writes of how on a particular campaign, Claudius engineered a lightning victory by having his men take the enemy camp at night by crawling up silently through the undergrowth, with total success.  The 'victorious' Roman troops hated it:  they wanted a proper conventional scrap in the morning.  Their triumph-by-subterfuge "smelled of the candle".  

Tuesday 4 July 2023

Thames Water: catastrophic downside

Asset-stripping is hardly new: but the first really big company to be terminally hollowed out by modern financial engineering was Enron (1987-2001).  The reason why it happened there, was completely the opposite of what's taken place at Thames Water.  Enron was chronically under-capitalised for conducting the business it was (very successfully) engaged in: giga-scale market-making in the energy sector, with attendant innovation and creativity that has been much missed in the sector since 2002 (sic) but never truly replicated.   Nostalgic laments aside, what Enron absolutely needed for its business model to be workable was to maintain investment grade credit status, because long-term dealmaking was its forte, and nobody[1] will do long term deals with a shaky counterparty.  

Why was maintaining credit status a problem?  Because (a) as an inevitable structural problem, cashflow lagged profit (which can be the death of literally any business, however sound);  (b) it couldn't borrow any more, which deprived it of the traditional solution to that issue; and (c) - the real killer - it was committed to perpetual expansion, it being traded on Wall Street as a growth stock[2].

This conundrum became fully apparent (to Enron itself: the rest of the world just gawped and invested) as early as 1993, when the financial engineering started.  For a few years there was ample opportunity to do some clever but wholly prudent stuff, resulting in a balance sheet that was a marvel of precise and efficient design.  However, by the end of the '90s what could be achieved by such elegant means was pretty much exhausted, and they started resorting to some deeply imprudent expedients, designed by Enron people who really knew what they were doing - and abetted by banks who should have known better - and could therefore build it very big and very bad.  (It didn't help that one of the main architects of all this was actually on the take in the literally criminal sense.)

*  *  *  *  *

Enough of history: it suffices that some potentially very dangerous financial technology had been designed and employed, able to be abused in completely different circumstances.  Enter highly capitalised Thames Water, with physical assets and guaranteed revenue streams galore; the most fertile ground imaginable for financial engineering - and ideal circumstances for gouging out all the cash and remitting it as dividend.  And so, it seems, they have.

How dangerous is this?  One might say: who remembers Enron now?  Didn't the lights stay on, and the waters close over?  Hopefully, optimistically, that's right: HMG has quietly resolved several seemingly vast corporate problems in the past, British Energy 2003 being perhaps the best example ("Nuclear Generator In Financial Meltdown" - never a comfortable headline).  With TW there appears to have been a bit of advance warning: and maybe with the recent 'rescue' of Bulb, some sensible generic thinking has already been done in government.  Maybe.  And Thames Water is squarely based on real assets.

But on the pessimistic side:

  • how likely is sensible generic thinking, in advance, within HMG?
  • Bulb's business model was trivial compared with Thames Water
  • with British Energy, when it went under its product hadn't been forward-sold to any degree, but could be (and was[3]), for an instant and constructive boost to its finances
  • the economy was in a much better state in 2003 to be standing behind any loose ends
  • some types of financial engineering are pretty toxic 

Which brings us to the elephant in the room: TW has suckered in a range of serious international financial players.  OK - so, caveat emptor and leave them holding the keys?  That may be possible in strictly legal / contractual terms: and HMG probably has reserve powers to direct the continued operation of the assets.  But here's the thing: like any financial player, those big Canadian pension funds and Far East investors really, really hate being left holding the keys.  In those circumstances, they have literally no idea what to do next: we know this, because it's happened many times around the world. 

So what happens now.  In coalface terms, there are asset-oriented specialists like Macquarie and Cargill who know all about restructuring and bailout.  They'd make fortunes from the gig: but they know what to do.  Is that how HMG will play it?  It won't look good.

More widely however, what does this do for the future attractiveness of UK plc for inward investment?  We've long been the envy of the world for how easily we've attracted cheap foreign dosh, and a large part of the economy is now based on it.  Kick away TW, and what do all these people do with their next chunk of money?  Equally great and easily-executed opportunities elsewhere don't grow on trees - but there are plenty enough, not least with government-backed Net Zero projects sweeping the globe.

In short, the worst-case scenario is, in sequence: (a) a serious investment strike by otherwise UK-directed money; (b) downgrading of UK plc's credit rating, with all its inflationary and currency implications; (c) drying-up of deal flow for the City.

This could be Very Ugly Indeed.  All the more reason why HMG will step in smartly.  But what if TW is just the tip of the iceberg?  Where's, *ahem* Gordon Brown when we need him to Save The World?


[1] Nobody with any brains, that is - though amazingly, some companies still do.

[2] Everyone in Enron was substantially paid in company paper - so the idea of letting the share price slip was anathema.

[3] Sold to a rapacious Centrica, as recounted here before.  They then got carried away and foolishly bought 20% of the nuclear portfolio when EDF bought the rest.  Has been doing them quite nicely just recently though, of course.