Energy crisis continues - where is the clamour?

If anything, I am amazed at how little the energy crisis is hitting home. Gas prices are 200% up and this means that we will shortly be paying well over 100% increases on our domestic bills. So much for keeping a lid on inflation, this alone will drive inflation to over 2% per annum without any other factors. 

It still seems to be just a business news page issue, the petrol shortage, although energy for transport is seen as something different. To be blamed on Brexit or the pandemic as per your choice. 

The energy crisis has none of these factors. The Government is 100% squarely to blame over the last 10 years. Cutting gas and oil stations too quickly, not replacing nuclear and then over-relying on Wind and Solar when they are not fit for core supply with the current lack of battery capacity. This is before we get to Nick's post of the lack of gas storage. The whole of Europe is suffering the same issues. 

How these costs work themselves out will be both interesting and horrifying. Costs and prices will go up as input costs are hugely increased - no both wages and energy. Countries, cough America, with domestic supply will have a huge advantage for the next few months. China is struggling, rationing power all over the place where it can. 

Why the media and opposition can't see what a hole the Government is in over this and one which for which there are simply no short term answers.

Crisis!

It is boring writing that these days.


But still, just today we have:


- Priti Patel resigning for a failure to understand the difference between work, fundraising and holidays.


- The EU making the usual threatening noises, now purely focused on saying the UK is not offering enough money. Really, these are a nasty bunch to negotiate with and we are well shot of them in due course.


- A railway strike over literally nothing at all. No real safety issues, no staff issues and only really a silly attempt to get more pay.


- More 'scandal' over the supposed sexual mores of politicians over the past 30 years.


It is amazing how quickly a Country can fall into a such a mess when leadership is so weak. However, there is no time for a change of PM at the moment.




It is hard to know what to do, perhaps a massive re-shuffle is on order after the budget? There seem to be a few people to promote and the current cabinet are not cutting it so best maybe to go for a big change. I guess the 'sex' scandal is making it hard to know who to pick at the moment....

Grexit looms into view

RBS puts Grexit at 20% risk after today.

I think in reality this is much higher now. The offer from the IMF/EU is simply not what Syriza can stand in Parliament or get passed. As such a bill will either fail or lead to new elections.

How can Greece organise elections and still make around €3.2 billion of payments by the middle of July is beyond me.
I really hope Syriza go for it and have elections, then campaign to leave the Euro as a last chance to convince the EU to take their democratic (if not fiscal) claims seriously.

With each passing day it appears that the classic Euro-fudge is off the menu - the Germans just won't wear it and the IMF has an eye on other debtors globally and can't be seen to let an EU country escape its grasp due to special pleading.

Developing and Interesting.

Those immigrants pooring onto the Greek Islands are making a lot less progress than they think they are!

Mr Higgs & his Boson: A Wonderful Irony

In the very month, nay the very week, when the beginning of the end of western economic civilisation as we know it kicks off, what does that very same western civilisation do ? It delivers the bloody Higgs Boson !

As we prepare to hand over the world to assorted heathens and fundamentalists, we bequeath them man's highest achievement in understanding the universe. Not that they'll show us any gratitude.

The answer is 42. Thank you and good night.

ND

The Attritional Politics of Austerity

No Plan B, then. General Osborne has concluded that his fundamental positioning cannot be improved upon at this stage in the proceedings (von Moltke rules), and so his banner remains firmly planted atop Hill AAA. Everything else is just tweaking, not to say fiddling. It's not wrong to tweak intelligently, and to keep as many of the troops as busy as possible, particularly as there is a bit of a lull before the main engagement. But that's all it is, and improvements to our situation will be tactical at best - a little redeployment of resources here, some extra trench-digging there.

So grinding austerity it is, with inflation to boot.

We've had austerity before: the Depression, the late '40s and early '50s: but the British were more self-disciplined then, and battle-hardened. Literally. If we demonstrably weather the onslaught about to hit the eurozone then perhaps everyone will glumly accept austerity as the price to pay for a strategy of defending the AAA.

In base political currency it is fortunate for the Coalition that both Ed M and Ed B are unconvincing and unattractive splutterers. In time, Labour will find a more compelling voice - but maybe not for years: when you've lost credibility, it's gone (ask Hague, or IDS, or Howard). Huhne will probably soon be wandering loose on the battlefield, one way or another; but otherwise the LibDems have dug in alongside the Tories: Marine Ashdown was steady in the ranks yesterday, and young Captain Alexander knows his duty. So perhaps it isn't a party-political issue so much as a government dealing directly with its unhappy people.

Cameron needs to find a way of speaking to this, a 'narrative' in the jargon of the day. Lots of C@W regulars seem to despise Cameron. I'd say there's no-one better in the Commons for this right now, so let's just get on with the slogging-match.

ND

I Will Lift Up Mine Eyes ...

One should periodically pause for a bit of philosophical reflection. Here's a short essay that should set us all thinking. How many of our basic and unstated assumptions might fail in the years ahead? Broken Britain doesn't get close - this is the broken world.

"not some post-apocalyptic nightmare, but simply a place where two founding empirical assumptions of traditional political philosophy – especially in the Rawlsian liberal tradition – no longer apply"

In true 21st Century fashion, the essay is a trailer. I may have to get this guy's book.

For Christmas. That'll do the festive trick.

ND

Manic Monday - 3 years and counting

3 years ago this Monday, the first in October, RBS and HBOS collapsed, the Government was left with literally a few minutes to decide what to do and whether to let the cash machines get switched off or not.

We now know 3 years later that they chose one form of sanity, but on a day when there were not good decisions to be made, it has also come at a huge cost.

The current Prime Minister is struggling against the wave of anti-cuts media and lobbying. Yet the truth is the cuts are more likely to have to be extended rather than reduced as the earning capacity of the UK falls and world growth falters.

More bad news is in the FTSE too, down another mere 2.5% at time of writing. Just like 3 years ago, there is panic in the markets, this time over the Sovereign Debt Crisis that the Financial crisis bequeathed to us. The focus on the default of Greece is irrational, in that a small country failing on a few billion in loans is chicken feed. The real question is how is the Euro going to survive and will the cost be a lost decade or two?

I wonder where we will be 3 years hence on an October Monday?

Wars and Rumours of Wars

One of the most unnerving aspects of the apocalyptic conditions we must all and in our own ways somehow survive, is the inevitable tendency of the Big Players to pull every lever they have, act without warning, and generally lash out in all directions. They are, after all, trying to save their skins - and they still have some big levers within reach.

I point to just a handful of momentous recent actions, (and in my unseemly haste must leave readers to google the details for themselves - apologies, we normally offer a better service I know).

1. Chavez recalling his gold bullion from London

2. The IEA countries dumping their crude oil reserves

4. Switzerland holding a gun to its own head and daring the FX markets to do their worst (which unsentimentally they will)

3. The establishment by the Chinese of their new Pan Asia Gold Exchange, which seems to me the biggest signpost of all: they have in mind the Doom of the Dollar - and the means to bring it about.

When the elephants dance, ants and the humble punter can easily be crushed. The only upside as these developments explode around us is that sometimes they take a while to play out. But what do they mean ? I expect we all have our favourite theories and conspiracies.

In any event, the sands are shifting, the plates are moving, old certainties have limited shelf-lives, and instincts that have served well may no longer be enough.

How Marx would have enjoyed living today.

ND

Letter from Croydon

My father can tell you stories of when Croydon burned in the Blitz: as a Boy Scout he was a fire-watcher on the top of the tall tower at Mayday Hospital. He was in the army by the time of the V-rocket attacks: Croydon took more doodlebug hits than any other borough.

We've taken some hits last night, and the smell of smoke was still pervasive in the sunlit streets at 09:00 this morning - because two of the fires were still burning.

Reeves Corner, the venerable furniture store now famous beyond South London, was an entire block of ramshackle Victorian buildings filled with cheap sofas - a clever target for the arsonist, very clever ...

The fire in Broad Green that is still being fought (photo - sorry abt the quality) is possibly more significant. Croydon is an unbelievably 'diverse' place, probably because the Home Office immigration centre is here to which all incomers must report. You can see fake passports traded openly on the streets of Thornton Heath (or Fort 'Neaf as we call it). However, no one ethnic group really dominates anywhere, which makes the whole of north Croydon a complex web of inter-ethnic stand-offs.

One of the strengths of the place is that most of the property is in private hands, the Council having long since eschewed public ownership of social housing (I may have had something to do with that ...). Private landlords, however dodgy (and let's face it ...) do at least have a very real stake in their investments; and the Asian landlords who own a large proportion of the terraced houses are quite well organised.

Which brings us to the fires in Broad Green (the pic shows only one of several, the Telegraph has more), which is one of the few areas with a very clear ethnic character: it is Tamil. For years they have been mounting nightly vigilante patrols, and they don't mind telling you which racial group they have taken up their cudgels against: the group that makes intoxicated nocturnal forays out of the mean pubs and clubs of adjacent West Croydon. These particular blazes may turn out to be more than just a by-product of random looting: just a guess.

Croydon attracts all manner of derision, but we sort of felt - hoped - we had the dynamics of this difficult place more or less in a rough-and-ready balance. We'll find out how right - or wrong - we were.

ND

pix © Nick Drew 2011

Wonder What This Betokens ...

They've been piling into bonds all right.

Oo-err. Watch out when everyone gets back from hols ...

ND


h-t Rico

GOLDMANS SAVED...and the world too.

Not often we beat the BBC and UK media to a story...


This is THE news of the week, year, maybe even decade. A solution to the credit crisis by long-term management of debt by the US Federal Reserve and others.

Basically, all crappy debt to be given to a pot, small sums paid off over the years =

smaller banks, but no liquidity crisis.

Dow up 617 points, expect a FTSE rally tomorrow.

BUT, the key part. Hank is ex Goldman Sachs. Goldmans will stay independent, unlike Bear Stearns, Merrill Lynch, Lehman Brothers and maybe even Morgan Stanley.

What a coincidence, eh?!

(CU is in NYC, see you next week)

HSBC Goldmans pair-up

There are many rumours out there today and they are interesting, but like speculating on Fabio Capello's team selection.

However if HSBC, serial failure at Investment banking, serial winner of global retail banking, takes over Goldman's it will be stunning.

Like Aston Villa thrashing Real Madrid. Quite an achievement.

With all the bad news re HBOS etc, there would actually be a good counter story.

Barclay's buying Lehmans, HSBC getting Goldman, LLoyds getting HBOS - half the UK banks becoming even bigger global behemoths - at the expense of the Yanks?

Who would have thought it - even if Financial Services has had its day in the Sun, it would be quite an achievement.

AIG in Conservatorship

Phew, this is the news alright. AIG is not a US Government backed vehicle, it is a large private company, also it is owned in many US states. The US Federal Government has little legal precedent for suggesting it nationalise the group in return for $100 billion.

On the other hand, they would not do such a thing if they did not think such a thing was utterly needed. Clearly the health of the global financial system is at risk. The fight is now against a Depression, not a recession, led potentially by a real meltdown in financial services worldwide.

Gulp.

This is serious now, the Fed is acting like it did in 1930 and 1931 - let's hope it all works out better this time.

No point owning shares in risky/any US financial stocks now though, with shareholders likely to be wiped out....