Challenge to Cameron part 2

Brown has made what the MSM are calling a good fist of his new cabinet. I don't agree, Darling the new Chancellor has part-nationalised the railways which has proven even more expensive than privatisation. Jacqui Smith is untried in a difficult time, David Milliband is a pro-EU and inexperienced politician who will cravenly bow to Sarkozy et al. That leaves Balls as a wild-eyed loon, exposed so badly whenever he is faced with the press.

Up against this haggardly crew the Tories quickly need to get their act together. Iain has some suggestions as do we all. I made mine some months ago, Osbourne is just not up to Shadow Chancellor, he makes no hits on the government when it is current economic policy that is one of he government's weak spots. He needs a rest in a different portfolio.

Only Hague has the intellect and gravitas to really get to Darling and raise the Tories. The reshuffle is crucial as Brown may go for a snap election if the polls stay this way for a few more months.

Does DC have the courage to remove his mate?

We will find out soon enough.

UPDATE: With the terrorist attacks the Tory re-shuffle, rightly, will not be making the news on Monday. Maybe they should delay it?

The New Chancellor enters No11 Downing Street

What kind of world can we expect this colossus to build for us?

Prime Minister Brown; A Man of Change?

Our new Prime Minister, who took over from Tony Blair today, has announced his new sparkling idea:

"Change"

I like that fact he is saying this, it shows his continuation of Blair policy and that he is anti-conservative; He believes his feifdom is not currently on a stable footing and needs change.

But who has been in charge for the last 10 years to cause all these problems?

And of the changes he personally has made, what of their success, below are a few highlights of Brown's tenure as Chancellor which may give a clue as to what happens next:

Bank of England - Brown famously made the Bank of England independent. This was a good change for the country as it stopped politicians playing politics with the interest rate. Also it keeps us out of the Euro effectively by demonstrating independently how different our economy is and what interest rates it requires for optimum efficiency. Brown today though has said he will open up the process of appointments, another change that is a good thing. Nice that he did not leave this to his new Chancellor; so no sign of him being overbearing then.

Government Spending - At first Brown was very cautious, following the Conservative spending plans that left the country sitting pretty in 2001. After the second Labour victory the taps were turned on and now we are heavily in the red on public spending, which continues to be well in excess of the tax base. There is no real sign of this altering. This is very a much a change for the worse, whether we want more people on the public pay roll or not, the country's finances are in poor shape to face the coming crash. No serious economist or company sees anything but a bust within the next two years; how will the government cope with the falling tax receipts and increased needs of those soon to be on benefits? Not easily, this is definitely a change for the worse and Brown should never be associated with the word prudence.

Minimum Wage- Introduced in a fanfare, what has this really done? I think the jury is still out. Yes the lowest paid get some benefit, but many of these jobs now go to on the black market to unregistered immigrants. IN economic theory, of which Brown is allegedly so steeped, there is no case for this at all. A change for changes sake.

Tax Rises and Tax Credits - A big change, putting a much higher part of the population in receipt of government payments. But also very costly and poorly administered, to the tune of several billion pounds. Brown hails them as having been targeted at the poorest, but then he has increased the starting thresholds for tax. There has been a lot of change here and a lot of tinkering. Much complexity has been added to the tax code, to the joy of tax accountants. Taxes have gone up, but higher percentage of people now rely on the state for some form of income. This has been a change for the worse. Being cynical, this is a very clear strategy of increasing Labour voting share of the vote by encouraging reliance on state benefits.

Big Business - Brown has cosied up to big business. He loves the captains of industry. This is a big change for the Labour party and a disastrous policy. For by doing it he has allowed the big companies to sow up their markets with new regulations that prevent new entrants. Regulation has grown aplenty and small business start-ups, the long-term lifeblood of the economy are falling away. Big business and small business are more often than not enemies. Brown does not like small business; after all, small business, small donations to the Party.

Treasury Power - Brown, through his deal with Blair, made the Treasury a huge part of the government, interfering everywhere. What has this achieved? I would argue very little, it has not stopped reckless spending and has instead hurt some needy resources. Where is the money for flood defences today? This is a change for the worse; no government should be run by entirely by the beancounters in the same way as no company does well if the accountants try to do everything. It requires a broader set of talents. Perhaps now he is in No10 Brown will 'change' this!

Pensions - What is there to say that has not been said? Brown ruined our pension system, robbing the middle class and causing companies to shut final salary pension schemes. In another 10 -15 years he will be even more reviled for this as it ruins the country financially. There are some remedies, such as raising the retirement age even more; but all this has been done in the name of short-termist politics. Is it clever to have moved to short-term solutions and bequeath long-term problems? I can't see this is a positive change.

Overall, what do you think of all his effort at change? I know I am scared of the terror to come with this record....

Cross posting

CU can also be seen moonlighting on James's Blog today.

Blogpower awards

These are to be held in Second Life on Sunday July 1st.

Sadly I cannot attend due to other commitments but Mutley has agreed to pick up my £1 million cheque (thanks James!) that I won for coming 3rd in the style and design awards. If I did turn up DK would no doubt throw a cyber wineglass over me in any event!

But so go, it should be a ball. Remember to dress appropriately though. Details are here.

Stock Exchange Merry-Go Round

I blogged before about what I though should happen with the LSE. I thought it would be better to accept a merger with the NASDAQ. As it turned out its shareholders decided to keep it independent (for now). The share price has held up quite well too, but the NASDAQ has a 30% stake that if it sold would hammer the current price and destroy shareholder value.

Now the LSE has a new strategy, expansion. It has decided to buy the Borsa Italiana, this is a good move by the LSE into Europe. Remaining purely in the UK is not an option, AIM is not quite going the great guns that it was and the main market is bein affected by the coninuous PE buyouts (although of course there are IPO's by PE companies to counter this). European expansion is the obvious answer and this is a good deal.

However, is it really a viable long-term strategy? I think not. The LSE is about to have a real challenge from Project Turquoise, a new bank strategy designed to under cut the LSE. They selected a systems provider today, OMX. This will hurt the LSE cash cow business of share trading.

In addition the NYSE has Euronext and is also on the expansion track, as is NASDAQ. I don't see that the LSE has enough clout (finances) in the long-term to remain independent. It would do better to go for a big US merger and try to be a 50/50 partner. With this model the company could compete much better with the emerging new market Stock Exchanges. In addition the cost savings from a merger would deliver better profits an dividends to the shareholders.

In international capital markets no one really cares about national flags, just money and profits, the UK business press who suck up to the LSE do so because it provides them with so much copy for their papers, alot of it free; their journalists if less affected by this symbiosis about the prospects for Clara Furse's organisation.

Sunday Papers Round-up

Eight stories that caught my eye this week, while Mr Slicker takes a short break

The Observer kindly relays to us a press-release that claims Britain's creative industries are “as vital to the economy as the financial services sector”. Yeah, right: we all like a creative TV commercial. Oh, and “it warns that its growth could slow without 'targeted public investment'”. Now there’s a thing. The film industry does always quite like a sub.

Next, it reports that sovereign funds – established by countries awash with oil money etc - are “set to rule the markets: they're bigger than hedge funds and more secretive than private equity”. Indeed they are! And if you hated private equity … actually, these guys are a different kettle of fish altogether.

But they do have some similar preoccupations. Take Saudi Prince Al-Waleed – “the Saudi Arabian Warren Buffett” – who has reportedly scaled back plans to float his Kingdom Holdings vehicle.

Exclusive to all newspapers (yes, including the Sunday Telegraph), this tale of bid and re-bid for ICI, another supposed jewel in the UK’s crown with a long track-record of, erm complacency. Read the briefings and counter-briefings – all the fun of the fair!

The Inde informs us that Canadian nuclear company AECL “will pledge to employ over 10,000 UK workers if it wins the contract to build a new generation of nuclear reactors”. Well. Not many of them will be engineers, will they? – we’ve discussed this before.

And in another energy story, we learn that the unequal struggle is over and BP has ceded control of its Siberian gas field to Gazprom, which “will pay between $700m and $900m”. But let’s not fool ourselves that a cheque is about to be written: Gazprom doesn’t do cash. It will be some sort of ‘asset swap’ …

Well, at least someone is paying attention to goings-on in Russia: the Sunday Times tells us that DSG (Dixons) is dropping a $2bn plan to expand in that part of the world, and quotes their Mr Clare as saying: “We will continue to watch with interest … Russia remains an interesting and exciting market.” Ain’t that the truth!

Finally, we note that shareholders in Metronet are in talks over what they call “an unusual pledge” to its banks. In other words, they are up the proverbial, sans paddle. See where these McBroonite financing deals get you?

Slicker’s back next week – ND

No taxation without …?

The announcement this week that the police will only respond to banking and credit-card fraud reports made to them by the banks themselves – i.e. they will not respond to reports made by the victims – can be viewed in all manner of pragmatic lights. But it is in truth a profound, and deeply unsettling development.

Pragmatics first.

● this only regularises current practice: Inspector Knacker hasn’t been interested in crimes of this sort reported by you or me for several years now;

● it's a kind of outsourcing to the people who have the greatest incentive to act: the banks themselves. And they are mostly inside jobs, so it’s inevitably down to the banks to nail the crimes;

● banks readily (all too readily) compensate the victims in full, so who cares, what’s the damage?

● best of all, for the government, crime figures are slashed at a stroke.

But there is a difference, when this is formalised. Banks all too often have every incentive for just firing the miscreant and keeping everything quiet. Paying up is easy - & we know who ends up footing the bill: bank customers every time. So, effectively decriminalising bank fraud in this way opens the doors to a tax on us all, levied (almost risk-free) by organised crime.

We didn't vote for this tax.

We have crossed an important threshold.

ND

Even Events travel in three's...

I will leave others to dissect Gordon Brown's rather odd attempt to attack the Lib Dems. Maybe tomorrow he will ask Graham Brady.

From my posts earlier in the week though it is interesting to note the collapse of the latest World Trade talks. This is a bad thing as discussed and is even more annoying as the US/EU are continually sabotaging the talks in favour of their farmers. These farmers, with the advent of biofuels, simply don't need subsidy; A sad taste of pork barrel politics.

Secondly in the news today, the Royal Mail is going to have a strike, as I have noted before, the management of the Royal mail leaves a lot to be desired. This is not to say the Unions who are resisting all change are right, but the management has been extremely poor in its communications to the workers. And as a government funded body why does it not surprise me to find comments from the government as they have its dirty work done by others?

The First EU Tax - Car Emmisions?

With all the talk of red lines and resistance this week, I thought it may be of interest to you to understand where my hunch is that the EU will move first on tax harmonistaion.

The choice of a Green tax is quite obvious. The adoption of the climate change agenda is a great advance for statist undemocratic EU and will now enable it to use moral pressure to insist on member states following its guidelines.

To this end the EU has been keenly building its array of Environmental legislation. The key part of this for me is here. These are the criteria that specify frankly unrealistic reductions in light vehicle emissions starting in 2008.

The Labour Government was very enthusiastic about this and Gordon Brown adopted all of these changes in the last budget.

Already the leasing industry and wider motoring industry is preparing for the change, which massively effect the market, particularly if you have a polluting second hand vehicle to sell next year.

Why I think this will be the first EU tax is the sheer impracticality of the laws. There will not be a way to actually make this happen, so instead there will be a 'harmonisation' of taxes across the EU states on light vehicle emission. This will all be disseminated in the context of the global 'war on climate.' Also, the EU has clearly been building to this, see this link where the picture is borrowed from and the guidelines on registration. The last paragraph is a usual denial of the blindingly obvious.

That is my guess, harmonisation by the back door through regulation and using the environment as cover.

No taxation without representaion?

Brown Meme

I have been tagged by Tony Sharp with this Brown Meme; so here we go. I have seen loads of these elsewhere so forgive me if my answers are no original:

2 things Gordon Brown should be proud of:
His age, given the average life expectancy of his Scottish brethren
His country, Scotland (get the hint, GB?)


2 Things he should apologise for:
His suits, FFS
His shoes, what was wrong with Ken Clarke's Hush Puppies?


2 Things he should do immediately when he becomes PM:
Go and see the Queen to dissolve parliament to try and win a real mandate
Pack his bags

2 things he should do while he is PM:
Have a referendum on our EU membership
Make it a joint one to decide if we wish to become a republic and reform our constitution suitably

I pass this meme to Mutley; he can make a dogs breakfast of it. And Ed too, why not.

Left Hand, Right Hand (Part 94)

To Stavanger, centre of the Norwegian oil & gas industry, where I fall in with a drinking-party of oil engineers swapping names.

Remember old Bart? Yes, he’s still retired.
And Henk? Yes, he’s still retired, too.

What they mean is, not that Bart & Henk haven’t yet fallen off the perch, but that they’ve resisted blandishments to return to the industry. Underlying this is a formidable world shortage of engineers, particularly in the energy sector. Which means, inter alia, that if McBroon is hoping for the nuclear industry to bail him out with a half-dozen new power stations, he’ll need to reckon on UK plc buying its way to the head of the queue. Anything large requiring new technology ain’t gonna be cheap. Oh yes, and Gordo is selling our British Energy shares, as we highlighted here.

On the subject of which … as we reported here, BP has embarked on a cheeky campaign for a bigger sub to build a carbon-capture facility for a power plant in Scotland. It’s still at it, briefing away to the Observer this weekend. Don’t you love that little comment in brackets – “there is still time to rescue the project if civil servants act quickly enough” – now I wonder who fed McKie that little gem?

ND

David Cameron Speech in Tooting

DC made a long speech today to outline his approach to new government. I was looked for a transcript to find the economic views. Here they are:



Here is my reaction:

?

Sunday Business Review - 17/6/07

10 of the most interesting stories from today's news. I would expect things to start calming down for the summer. The uber-rich executives often take a month off in July/August and hire an archipelago in the Caribbean; deals still get done, but the pace slows down alot to accommodate the 'season.'

Private Equity Backlash - As I suggested earlier in the week, the pressure is on the PE industry, with even heavyweight KKR having difficulties trying to float.

Jon Moulton agrees - Good article on the above from someone who knows.

I am always Wrong - Markets at a 7 year high...what goes up..

T5 slating starts - It was only a matter of time before what reached this phase. The Terminal 5 project has gone so well, the press had to turn, these are the first assaults...

Fallen giant rises? - ICI staves off a bid for now. Might well be affected by the Caribbean facot

Return of the Dome - A puff piece to suggest the Dome will finally become profitable; err..it was given away for nothing and is still on polluted land. if someone gave me a £750 million investment for free then I am sure I could do something with it....

Wounded Jaguar - Lots of press about this topic this week. As much as Private Equity has something to answer for, I bet only they can save the group. But I think John Towers clones will be back with fantasy promises a la Rover.

Sainsbury's still a target - This time of a Qatari company. Sitting on valuable assets in the UK corporate environment at the moment is a sure way to boost your companies share price.

Pushing the market - a new clever idea to make money and boost liquidity in the AIM market.

Darling times - Government backed report says country is very competitive. I can't see the report was likely to report otherwise given its paymaster...

Poverty, Politics & Economics: the new PPE

Iain Duncan Smith, hitherto a tragi-comic figure in Tory politics with a dubious record on loyalty to his leadership, is redeeming himself by good works. His Social Justice Commission’s report last year highlighted a number of uncomfortable truths about the consequences, and some of the causes, of the breakdown in family life, with the statistics to go with it. Plus blood-curdling tales of genuinely feral children (– to hell with Blair’s metaphorical usage about the media -) living in squats with no family beyond the street-gang, a new phenomenon in Britain.

Effectively, he is becoming the Conservative Party’s Frank Field (this is intended as a sincere compliment), who himself last week observed:

“In 2006, a lone parent with two children under 11, working 16 hours a week on the minimum wage, gained a total net income of £487 a week, largely due to tax credits. In order to attain the same weekly income, an equivalent two parent household needed to work 116 hours a week - an extraordinary 100 hours more than the single parent."

IDS is a man with a mission, investigating and proselytizing vigorously in urban areas that many Conservatives shun. This week he was lending support to laudable Tory efforts to make headway in New Addington, one of the hardest areas (in more ways than one) for Conservatives in God’s Borough of Croydon.

The balding one’s recommendations are due next month and it will be interesting to see whether Cameron can rise to the rather urgent challenge. We know McBroon cannot or will not – and we live with the baleful consequences of his decade of failure.

ND

out plotting

with Mr. Drew last night. More later....

Private Equity; no bark and no bite?

The oddest and most unexpected story of the week deserves a few paragraphs. Peter Linthwaite here has resigned today as head of the British Venture Capital Association. This is after he and his staff put on what the media have termed an atrocious performance in parliament earlier in the week.

This is surprising for a number of reasons, firstly, you would expect the Masters of the Universe to have a good spokesperson and they clearly think they don't That their new choice is the head of the CBI (which as a representative of manufacturing amongst other things, you would not expect to be a natural ally) who is also quite new in the role is bizarre.

Also, my reading of a the exact questions (in the Telegraph here) of the meeting reveals a lot of media spinning here. The group did not say VC's partners were abusing the tax system. This is a spin on a reply they made. Now in the white heat of the meeting, perhaps this slight hesitance is unacceptable. What it says more to me is the way the tide is against the VC's. The media are happy to take the politicians side on this one.

I am no fan of the VC splurge as is occurring at the moment. Whilst there are many successes, the financial methods employed leave the companies in a worse state for the long term, even though they make better short-term profits. Laden with debt, I wonder how some of the companies will be able to pay keep the pension funds full, creditors at bay and shareholders happy as the interest rates go up and the credit market is squeezed. Actually, if you look at PFI and other measures Brown has done the same with our economy, not surprising when Sir Ronald Cohen is one of his chief advisers; a PE turncoat!

However, the government has spotted a victim and intends to eat it. Broon wants a sacrificial victim for the Unions and the VC houses will be it. Destroying the taper tax regime will also wreck what is left of our enterprise culture; more risk and less reward is not something to encourage wannabe business people.

Blogging awards

So here are the results; This fantastic site came only 3rd in one category - Layout and style. Being beaten by Honeysmack, who does erotica basically is ok; sex sells so this proves a valuable business insight. As for the Devil's Kitchen coming second, well he has one or two more readers than this blog so fair's fair. Thanks for your votes!

As for the other categories there are some fine winners, James Higham, Sicily Scene, Bryan Appleyard, Mr Eugenides and Bel among others.

I would have come third in a couple of other categories too but for the Fascists..ah well, that's life.

Tony Blair - it was the meedia what done it

This man, such a figure of fun for the past few weeks, topped even his own high standards.

According to his speech, the media are making it hard to run the country and there needs to be a change. As I have said before, there is some small merit in this point. However, pot kettle black, it was Blair who came up with the idea of spin and central government control of all media output.

Now the press has reacted to New Labour spinning, they don't like it up 'em; how ridiculous for Blair of all people to try to make this point. We may as well listen to the snake's advice on apple consumption...

For all this though, I think that any future government, by changing the terms of interaction with the media will slowly effect the way in which the media reports political stories. Either Brown or Cameron will do this.

I don't want two more weeks of this man in government. Next week he is going to try to sign us up to some nmad new European state he hopes to be president of one day.

World Trade talks; stalled again

World trade talks must be the single most complex negotiation on Earth (apart from evening passes out from mrs slicker). At these almost continuous talks every country has a veto and no agreement can be reached without unanimity. With hundred's of countries participating, all with different needs and issues, it is really amazing that deals ever get done.

In the past few years, the current Doha round has stalled. Strangely, the successful WTO institution that was developed to police world trade and has done so quite fairly, seems to have inhibited talks. Perhaps the US and others are more wary that they cannot ignore past agreements

The reason I wanted to highlight the talks is that the media in general make a pigs ear of the reporting; either by taking a partisan nationalist interest line, spewing idiotic leftist propaganda or focusing on the effects on very tiny and specific parts of the economy.

At this time the negotiations are stalled for 3 big reasons, farm subsidies in Europe and America, lack of copyright in developing nations for 3rd world product and opening developing markets to the burgeoning service and industrial industries of the West.

Of these, the West's total reluctance to reduce farm subsidies - even in these hysterical times of bio-fuels etc, is simply disgraceful. The world is effectively held to ransom by a few US states and the 4% of Europeans who work in the farm sector. The US is actually worse than Europe in this area which may come as a surprise, so their new Trade Representative needs to have some sharp words with GWB - all the US states that benefit are Republican ones though so don't hold your breath.

China, Brazil and India do have work to do though as well, all of them have high tariffs to 'protect' industries from the west. As any good economist will tell you, this is just nonsense and of course their markets would benefit from more competition.

Illegal copyright is a harder one though as it will actually be quite hard to enforce and therefore countries will not want to give hostages to fortune.

This latest round of talks is important though, with a buoyant world economy more tariff reductions will help the to reduce the effects of the next recession. With further delay and a downturn in the world economy, the countries of the world will inevitably slide further towards protectionism.

Finally, reducing first world agricultural subsidies will be a huge boon to some of the world's poorest states; so any anti-globalisation protests against these talks will show the stupidity of those protesting.