Harriet Harman: Got Talent, Destined for Greatness

Harriet Harman wins an ovation for her famous Janet Street-Porter impression. She beats Hazel Blears' "chipmunk" hands down, and the Labour leadership is hers, by acclamation.

ND

Is Manufacturing the answer: Debate

Read this link here first. It is even at a skim a very good report by PWC on the manufacturing sector in the UK over the last 30 years.

It makes some key points such as:

The sector has grown substantially, doubling in size since Thatcher came to power, just not as fast growth as the services sector.

Under the Thatcher Government (it does not say this, but look at the graphs) and Major Government manufacturing increased hugely; by comparison it has been weak under the Callaghan and Blair/Brown Government.

All countries, even Germany and Japan have suffered similar relative falls in employment in manufacturing, due to both globalisation and productivity improvements.

So, should a new future UK Government have an industrial policy? Is the future of job creation to go back to having a larger manufacturing base?

My view to start the ball rolling, is that Government's are poor at picking winners and should use tax breaks rather than state interference for most areas of manufacturing. Also service sector growth and employment rates are better globally, so re-orientating the economy back towards manufacturing will lower the growth potential of the economy. Manufacturing has a key role in the UK and should be seen as a key sector, but not a special one....

Bank Holiday political definitions

A bank holiday word game.
Some definitions to tax you. Or more accurately to further tax you.

Mandacious - To build bridges with thorns
Cooprinol - A wooden performance
DisSATSsified - A ministers reception at a parents evening
Vazectomy - To be snipped from a ministerial post for being too sleazy even for Labour.
AfterByrner - A spokesperson rushed out to protect the leader. Hot air is reheated at incredible speed to produce a powerful, but short lived sound bite.
Purnography - To have a very dirty home.
Prickles - The sensation of being under prepared for a difficult, inevitable question.
McBridle - An applicator for pouring poison into ears.

We are sure you can do better, in the comments.

PUZZLE

Quelque-chose pour le weekend: find the following words in this NewLabour grid !


Integrity
Growth
Moral compass
Prudence
Courage
Golden rule
Vision
Conscience





You can't find them ? Try harder ! Answers on the No.10 Downing Street website !

ND

Is Peter Mandelson begining to wish he'd stayed away?

Iain Dale thinks that Mandelson has run out of optimism. Well, it would be hard to blame him.
If you are the Speer in the final days of the Brown Reich. Knowing the realities. Knowing just how big the real debt is, how fragile the economy is, how little the tax receipts will add up to in quarter 2.

No matter how skilled he may be, his leader is not facing realities.
Why pick a fight with the Gurkhas? Why try and bounce through expenses when you know that the opposition has been setting this trap for you for months. When Brown himself abstained over the issue, but now pretends the whole thing was his idea. The government has run out of credibility.
No wonder if Mr Mandelson has begun to feel a bit like this.

Fiat to buy and run Chrslyer

Really, the way out of the Chrysler fiasco in the US has come to this.

First Daimler walked away when they realised that Chrysler makes no vehicles that are of any good quality or wanted in the market. Then the Private Equity players stepped in and now they have been burnt too (they are called Cerebus, you would have expected this with this name - see picture).

Now the US Government has stepped in to save this company. it's finance firm is shot, it makes awful vehicles and lots of the now not to popular SUV's.

In a last throw of the dice the US Government is offering to try and partially bail the bondholers (paying one third of the value of their bonds) and merging the company with Fiat. Fiat thinks its small underpowered cars like the Punto are a great story for the US market. Plus it can introduce the Alfa brand back into the US. This is pure genius, I can't see any downside myself.

Start of a New Downward Phase ? The Stress Tests Are In

The outworkings of the US banking stress tests are nigh, and they don't sound like good news at all. Another huge round of recapitalisation seems to be looming.

This is hardly surprising. With the suspension of marking-to-market the banks were given an easy time and have been hiding behind a dense smokescreen for many months. Obviously, firms that went for so long without modelling (or at least, without disclosing) their exposure to systemic risks were not going to be in a hurry to volunteer such analyses.

But now they've been forced to do it, and even under the relatively benign 'stress' that's been applied, they are revealed as badly under-capitalised. Benign stress ? Well, all the US authorities have required is input assumptions for a base-case of:

a 2.0% GDP decline in 2009 and a 2.1% GDP gain in 2010, unemployment reaching 8.4% in 2009 and 8.8% in 2010, and house prices falling 14% in 2009 and 4% in 2010

and a “severe-but-plausible” case:

a 3.3% GDP decline in 2009 and 0.5% GDP gain in 2010, unemployment at 8.9% in 2009 and 10.3% in 2010 and house prices down 22% in 2009 and 7% in 2010

Sorry, that's not severe; and the base-case isn't a stress test at all, it's the expected case. As we wrote here 18 months ago, one of the problems of stress-testing

"... is paucity of imagination: the worst we can envisage is what has happened before. When oil was last at $10 (1998!), very few companies were stress-testing for $80. When Enron was the pre-eminent market-maker for every wholesale energy player, few were considering its sudden melt-down: who is modeling the collapse of a really big bank now?"

That was 11 months before the Lehman collapse (and 9 months before $147 oil !) You've to try a lot harder than an 0.5% GDP gain, for pity's sake, to provide a genuinely illuminating extreme.

In the first instance, it seems, the banks will appeal the results: just as in the UK (recall our comment on the hints in Turner's Review), banks in the US apparently negotiate their capital adequacy. Then, they'll be out trying to raise vast sums of additional capital. And all against what can only be described as sanguine stress-testing.

There can be many a lull in the storm, many a bear rally in the downward trend. We've just been having one. It may be coming to an end.

ND

Government Waste; Swine Flu leaflets

Really, a few people get the usual dose of flu and it comes to this? The WHO have form for calling for the end of the world; kind of helps their funding to keep everyone panicking.

At the moment we have a small bout of flu except in Mexico. The result is a panic by our government to order flu masks from the US (mark up 150% from last weeks price, go civil service buyers, go) and to issue a leaflet to everyone in the country. After all, there must be many people who have no access to the Internet, TV, Radio, NHS Direct or GP's.

Even the markets, jittery at the moment, have given up and companies like British Airways are rising strongly again.

The country is bankrupt and this is a completely wasteful measure. It does however fulfill the traditional political criteria; something must be done, this is something...therefore the government will look good an in control.

Sadly, I would bet many in Government are secretly willing the Flu to become serious so that they get a bounce in the polls again.

Poland 4 Brownland 0

It is quite something when the Prime Minister of the 6th largest economy in the world can be humiliated in front of the world's press by the Polish Prime Minister:

"I want to emphasise that banking sector supervision, abiding by the rules and not living excessively on credit are the surest ways of avoiding crisis."

"I should not be speaking as a reviewer of an economic policy of any country. All I can say is that the Polish government, at a time of financial crisis, behaved with full responsibility in terms of public funds and the level of budgetary deficit."

"After a few months, you could see that our economic financial policy has been accepted and understood, both at home and abroad."

"The assumption that we adopted as the method to fight against the financial crisis is not to multiply expenditures but rather to increase responsibility for public funds."

Then again, when you had immoral and inept financial management for a period of 9 years, I guess it is to be expected.

Harman red tape madness

Not content with saddling the British Economy with an total lemon of a budget, the best brains in the Labour Government are determined to go further. Now we have a new equal pay bill.

This comes in a session where it has been noted that the Government has almost no new work to do, but they can make up time for this.

There are many studies showing that , a) Women's pay is getting better every year and b) some gaps are structural due to maternity and women's choices in employment.

Now, at this time of economic woe, when all our companies are struggling just to keep going, we get a new load of useless socialist worker nonsense.

What credibility now does Harriet Harman have for Labour leader...certainly not as a leader of New Labour.

The Government is without shame, where is its vaunted regulation reduction department to combat this tripe? A silence across Whitehall.

Gordon Brown, supposedly in his own mind a champion of business, lets this go by as his power is so diminished within No10.

The saying is that you get the Government you deserve; the UK is a sad and pathetic PC country heading for meltdown on this evidence.

Its not what you know, but how much you owe

JJB has secured a company voluntary agreement (CVA) with its landlords. The 11th hour deal effectively removes JJB from the top of our list of most likely not to see 2010, and gives it a valuable lifeline.

JJB is able to walk away from its dud, crippling leases and still owed final rents on the 140 shops it has shut, and move to a monthly, rather than quarterly rent agreement. Enormous help in a cash strapped market and something Brown & co should have been 'encouraging' landlords to deal with a long time ago. JJB can use its existing turnover to pay the rents, instead of having to borrow in advance at ultra high rates.
The story shows how the collapse of Woolworth, much like Lehman Brothers in the financial world, changed the rules. In February, a CVA to rescue to U.K. high-street shoe chains Barratts Shoes and Priceless Shoes failed after landlord voted against it because they didn't want to accept lower rents.Now landlords do not want another large chain to go down, and are willing , within reason , to offer help. JJB owes around £60 million. Landlords would have seen little of that if the company fell into administration, so a deal has been struck, not without considerable loss to themselves. But CVA's, a very rare form of pre administration, that really should become more popular. The "pre-pack" administration is a terrible deal for creditors, and an easy way for a companies owners to buy the stores and stock back cheaply,dumping problem staff, suppliers and liabilities and without any onerous leases.

Struggling JJB saw its shares rise 26 per cent - up 4¾p to 23p - after taking steps to avoid bankruptcy, but it is certainly not safe yet. We do not know if it has happened in this case but there is often a reciprocal renegotiation of leases, allowing the landlord to terminate a shop lease, with minimum notice, if a better client comes along. Not a problem in the current climate, but JJB could lose its best sites when the recovery comes. It also loses its bargaining power in shopping centres and high streets and will unlikely to gain any A+ units unless they have been unlet for a very long time.

Still, good news for the 12,000 odd staff of JJB, who retain their jobs for now at least. Prehaps they should consider a transfer to their rival JD Sports who saw their profits rise 9% in 2008 and trading in the new year has started well. The sports and leisure outfit said pre-tax, post-exceptional profit had risen to £38.2m, from £35m.

Trading the Budget 2009: Update

See this post from last week. I havebeen a bit slow to update as I have been travelling since Thursday afternoon (when I closed all my positions). Somehow the sun of the continent seems better than that of England, certainly there is not the air of despair that I sense on landing at Gatwick. Perhaps not having such incompetents in charge helps the atmosphere.

Anyhow, trading the budget, despite making the right calls the pesky markets did not react as planned, funny that. i guess that is why we are not all millionaires:

PDG - This car company benefited from the scrappage scheme. A full week before I bought it no doubt! I was in at 16.75 and out at 15.75 - so a 6% loss. Just as well I did not leave this until Friday, it ended the week at 14.50

LBUL - Long on gold to fight the fiscal collapse of the Government, in at 33 and out at 35.8. Would have been better if I had stayed in, it ended the week at nearer 37. -(8% up)

XUKS - Short the FTSE in a week of dire news, surely a gimme? Initially, this rocketed and I should have closed the position earlier, ended up only 1% above break even as the index started rallying for some unknownable reason later in the week.

PFC - The idea was that PFC would gain from the oil tax giveaway. Did not really work out, as the share bounced around in the week, I closed at 585 which was just under 1% up on the week.

Overall my conclusion is that after G20 and The Budget, trading the news is a good idea. I am quite up, more so after the G20 but not so much after the budget. Only one call has lost out and that was on a dodgy car dealer so I should not perhaps be so surprised.

What is the next political/financial event that I should look at?

The Triumph of King Coal: a Neat Handbrake Turn by Ed Miliband

This week's statement on the future permitting of coal-fired power-plants is good, worldly-wise strategy: the type we appprove of hereabouts.

Firstly, as we've been saying for a long while, high-tech coal has a major role to play. Second, the lead-time for implementing so much of the Carbon Capture concept, 'CCS' (which is only medium-tech, but requires a huge amount of infrastructure) is considerable. Third, our needs for new generating capacity are more urgent than that protracted timetable can allow.

So the strategy needs to be stepwise, and that's what Miliband (Ed) has announced, allowing the industry to get on with it. In particular, he's set a very low barrier for what 'CCS-ready' means:

"The Government will only consider applications if they:
- Confirm sufficient space available to retrofit CCS
- Identify a suitable potential offshore area to store carbon dioxide
- Map a feasible potential transport route from the power station to the storage area and
- Do not have foreseeable barriers to retrofitting CCS.
Together, these criteria will prove a power station is ‘carbon capture ready’."

To put it mildly, these criteria need not be *ahem* very difficult to satisfy. So (provided electricity prices are high enough - and they probably will be) the power companies will crack on with developing new coal plant, which is exactly what they really like to do; and the future can look after itself. If CCS demonstrators work out OK - and the government of the day sees fit to line their pockets with silver - the companies will retro-fit CCS. If either of these two criteria never come to pass, we'll still have the new capacity.

The realpolitik of all this is driving poor Mr Monbiot to distraction, but there it is, George old son. In amongst the wreckage of Brown's hapless, hopeless government Miliband has cleverly squared an awkward circle. He's even spinning it as a victory for the green lobby !

Yes, Miliband (Ed) may indeed be the man to watch for in 2010.

ND

Bill Quango MP expenses revealed in the Daily Mail

Daily Mail

"The publication of MP's expenses is causing some embarrassment.
Whilst MP's may claim that all of these expenses are above board and necessary for carrying out the work of a backbench MP or a Multi-Quango holder and for the effective running a constituency office, some expenses seem to defy explanation.

We asked William Quango , the MP for Surreysex East, to explain some of the more unusual items he had claimed on his expense. we were met with the usual litany of "Above board - within the rules - approved by the parliamentary standards committee - It's complicated - Is standard practice - necessary for security reasons - similar levels of expenses to a leading banker or a pop star - Necessary for reasons of travel - Is normal practice in government -not requiring a receipt for MP's"

However a closer scrutiny left a few items demanding clarification
Here are just a few off the list

• Remmington electric razor foil £12.95
  
• Brazilian leg wax £18.45
  
• Quicksilver swimming trunks £59.99
  
• Cockerel and Hen Topiary £1,200
  
• Car air-freshener {pine} £0.32
• Bazuka Wartner £10.99
• Jack Nicklaus 5 iron £185.00
• Horse box £12,955
• Picnic basket £233.00
• Chinese meal for 12. Mr Tang's £455.00
• 12v air horn/klaxon for boat £18.99
• Valentine bouquet {Mrs Q} £12.99
• Valentine bouquets and lingerie {Miss X} £556.99
• Snickers £0.49
• Timotei fragrant fresh £3.47
  
• Swimming pool £28,760
• Granny flat for parents £245,000
  

Mr Quango was unable to comment further on expense claims, or his poor attendance record at debates but he did confirm that he would definitely be attending the MP expenses debate in the commons next Thursday.

By Daily Mail Reporter

Bleats,spends and leaves. Key budget terms

It can be difficult to understand some of the technical terms in yesterday's historic budget.
Here is a quick glossary for those unfamiliar with some of the economic terms.






{picture: How did the budget go down with the newspapers Gordon?}

INVEST= SPEND
GREEN = TAX
JOBS CREATION = JOB RETENTION
POUND = 1/2 A EURO
BILLION = TRILLION
FUTURE GROWTH = FUTURE DEBT
CUTS TO PUBLIC SECTOR = SLOWER RATE OF INCREASE TO PUBLIC SECTOR
GLOBAL = NOT OUR FAULT
RISE IN EXPORTS = FALL IN THE VALUE OF STERLING
NEGATIVE GROWTH = WARTIME DEBT
PRUDENT = RECKLESS
OPTIMISTIC = FANTASIST
ECOLOGICAL = SUBSIDY
RESTORE = DESTROY
BORROWING = SPENDING
FUEL DUTY = NEED TO POKE INFLATION A BIT
TOBACCO DUTY = MUST REALLY GET THIS INFLATION STARTED
SPIRITS DUTY = MUST INFLATE AWAY DEBT.
50% TAX ON THE HIGHEST EARNERS = 50% TAX ON TORIES
INDEPENDENTLY ASSESSED = GORDON PICKED THE FIGURES
AFFORDABLE = UNAFFORDABLE

I COMMEND THIS BUDGET TO THE HOUSE = IF YOU WILL EXCUSE ME, I HAVE TO TELEPHONE THE IMF.

There Will Be No V-shaped Recovery

"Hard to find a single economist who believes that the economy would grow by 1.25% in 2010, let alone grow by 3%-plus for the three years after that. Yet, without that turbocharged performance, there is not the remotest possibility of the budget deficit being halved by 2013-14" (Larry Elliott, Grauniad)

In HSBC’s February annual report, the Chairman stated that this is ‘the first just-in-time recession’, meaning that just-in-time industrial structures (and thought-processes) allow firms to cut production overnight. And in the autumn that’s exactly what they did, as we discussed in November. But could it bounce back just as quickly ? Yvette Cooper was wittering on Newsnight that the fabled V-shaped recovery was exactly what we can expect.

But I reckon she’s wrong: and (not being an economist) here’s my illustration from everyday life. Today I took the motor in for its annual service. Doors open at 07:30 and for each of the previous 20-odd years I’ve been doing this, there’s a queue already formed by 07:15, by all those commuters who want to drop the car off before work.

Today, there was no-one else there at all. Would you like a coffee, sir, and no trouble over having a replacement car.

Which (since they haven’t all lost their jobs) means that people are deferring routine car maintenance. Which means, over time, their cars won’t be as reliable as in the past. And factories are the same.

When the just-in-time ‘on’ switch is thrown, the carefully-crafted just-in-time logistics chain won’t work as we’d become accustomed to, resulting in delays, inefficiencies and the need for more working capital.

Add that to Ruth Lea’s concise list of reasons why she doesn’t believe in Darling’s V either. It just ain't gonna happen.

ND

Boom-Bust-Boom ! Juss Like That ...

I overheard Gordon telling the Army Chief of Staff he wanted attacks on the Taliban. I butted in and suggested 45p in the pound.

When I was getting ready for my Budget broadcast, the spin-doctors told me I needed to prepare my pitch. I couldn't find any pitch, so I used creosote.

I went to the doctor the other day, I said “with all the excitement of the Budget I can't sleep'' he said “Try lying on the edge of your bed, you'll soon drop off”

Peter Mandelson told me he was forming a group of choirboys. I said, “Are you having me on?” He said, “Well I'll give you an audition, but I'm not promising you anything.”

So I said to Gordon, “What on earth shall I tell them the economy is going to do in 2010 and 2011?” And he said . . . . .

Budget 2009 Reaction: Spin and more Spin

There are many, many reasons to be disappointed with the current Government. That they manage to cram all of them into a single budget is phenomenal.

50% top tax rate for £150k plus earners - really, this raises a pittance. Pure politics to play with the Tories.

'Investment' - in sundry green initiatives, an industrial policy, non-jobs for those who can't get real ones. All very costly, all will have no impact.

£15 billion in public spending cuts - out of over £600 billion. That is like not buying chocolates with your families weekly shopping money; ooh, what a saving!

But worst is the really big lies, the whoppers that are going to mean MASSIVE spending cuts from next year and huge tax rises:

• Economy forecast to shrink 3.5% in 2009 - Um, at least 1/2% out on the downside

• Growth expected to pick up in 2010, expanding by 1.25%. - heroic, be surprised if we manage more than 1/2% in total

• Economy to grow by 3.5% annually from 2011 - Long term trend in 2.5%, so again, pathetic assumptions.

• Public borrowing to increase to £175bn this year - Gulp

• Borrowing levels to rise by £173bn, £140bn, £118bn and £97bn in years after - 4x gulps, plus all wrong as the growth predictions are way off, so these numbers will all expand hugely.

• Consumer price inflation to fall to 1% by end of year. - So QE won't work then, Alistair?

All the hard decisions have been ducked and left to the next Government which Darling knows won't be him. It is the most political budget ever, Labour have betrayed their own country.

I am flying out of the country on business tomorrow - is it worth coming back?

Alternative UK Budget 2009

Well CityUnslicker's really.

(Bill Quango is at home claiming the last of his expenses after yesterday's shock annoucnemnt)

- End public sector pension schemes from today onwards and announce that any new public sector worker will be on a defined contribution scheme like in the private sector.

- Move MP's to defined contribution pension scheme from beginning of next parliament.

- There are over 1000 quango's, promise to close at least 250 throughout the course of this budgetary year.

- Re-impose stamp duty and do not support the housing market. next year, when prices have stabilised will be the time to support this action.

- Increase VAT back to 17.5% as this policy clearly failed.

- Small rises in alocohol and tobacco taxes

- End child benefit for higher earning couples

- Do not encourage people to buy more cars

- Do not raid private sector pensions again when the 1997 raid destroyed the best system in the Western World.

- Don't raise any extra taxes on income, allow people to spend what they have.

- Do not encourage saving this year by raising isa thresholds more than the minimum. Announce a large increase for next year.

-Do not move tax bands with wage inflation, leave them the same, 'reward' those in work.

- Use the savings/tax rises to pay down potential borrowing and at least try and balance the books. Do not issue £200 billion of long-dated guilts that will saddle my toddler children with debt.

That is what I would do, I will not be surprised to see this as the diamtetric of what Darling proposes

Marks and Spendless a post from back in January about the merits of high vs low end retailers, predicted a further collapse in higher end retailers and difficulties for all except the discounters.

Not everyone agreed. There was a minor disagreement with Anon over who would perform best. Anon commented "How does any of that explain Waitrose's success? And although Tesco are yet to announce their figures they are rumoured to be "disappointing". Aldi and Lidl's growth is static in their established branches and their growth is purely fueled by their expansion. I expect we'll find that Morrisons appear to have succesfully overperformed at Christmas for the second year running."
Ending in my comment;
"But lets not get into a war over it. You put your money into M+S and John Lewis group, Debenhams and Next and I'll put mine into New Look, Primark, Poundland and Asda, and whoever has 2 out of 4 showing a profit by 3rd quarter can claim victory."

Well, I call Primark early. Like-for-like sales, which exclude new openings, increased 5% in the six months to 28 February. Half year profits up 10%. That's on top of the 20% they were up the year before. The margin has taken a hit, but they have finished a new distribution centre that will only make a slick organistation even slicker. Peacock's, another discount fashion retailer reported 8.3% up like-for-like sales earlier this month.
Contrast with Next Plc retail like for likes were down - 6.5% to March.

In a downturn, pick the discounters. They retain their existing customers and pull more from above. Primark's gain is Next's loss.
And need we mention Tesco again? Or have their PR people opened enough champagne for all the positive free publicity they have had today.

Ps the Marks and Spendless post is worth a look if for nothing else but the picture of the model in the M+S bridal lingerie. Grrrr.