R.I.P. 'Bob'

An old Army comrade, we'll call him Bob X, has died. Unflappable, popular, a great regimental officer and ten years my senior, he showed me the ropes when I was a subaltern. Such services can only be remembered with thanks.

As well as teaching me a lot about what every young officer should know, he also inadvertently taught me something more philosophical about life and my fellow humans: a bit of tolerance for human foibles.

He was always known as "the late Bob X", a soubriquet which of course the dear chap now merits in full, but which formerly required explanation. Bob was always late. Now in any walk of life this can be an issue, but in the Army it rapidly becomes a disciplinary matter. When important parades were in the offing he needed to be taken in hand by his brother officers and frogmarched to his duties. And one day I discovered the reason.

He was in charge of a small, remote detachment on an extended front, and I was his 2IC. We had 'gone tactical', meaning that we would be lying low in our position and self-sufficient for 24 hours or more, cooking our compo rations on our little hexi-stoves and generally fending for ourselves.

Around dusk, a signal was sent to all units: Stand-to in 5 minutes.

Right, said Bob - just time to have supper: mess-tins out, everyone.

And at once, everything became clear: he had no intuitive concept of the passage of time. Which just goes to show. How many foibles of other people - how many of our own - are explained by some hard-to-guess weakness of that sort ?

Anyway, for the first time in my life I challenged an order. We took supper after we'd stood down.

And now he is somewhere that no-one is keeping time. R.I.P., Bob. The deep, sweet sleep of the just.

ND

Spy ring revealed

Spy Ring Exposed

Members of the former Liberal Democratic Party admit to being Tories.

The suspects arrested in Torbay now admit to being right wingers. Party activists have been deeply shocked to discover that MPs they have known for years as left leaning, large state, eurocrats, were actually right wingers in deep cover.

"I just can't believe it," said Jess Boden,35, a former intern for Danny Alexander. "He seemed just like the rest of us. He used roll-on, unscented deodorant and unthinkingly condemned bottled water. He worked with trees and campaigned for the Nairn swimming pool to remain open for the Highlanders. Now I find out he's actually been orchestrating 25% cuts across the public sector."

The suspects have all been leading middle class, metropolitan,liberal lives in leafy suburbs like Twickenham and Cheam, attending fêtes, making sun dried tomato bread and recycling, back when it was merely fashionable, not compulsory.

Jeremy Espadrille,24, a researcher for Vince Cable, claimed that Cable had had access to the highest levels of data on the UK economy.
"Cable was very well in with the media and was the economic, talking head of choice when the BBC needed a centre left opinion. I was completely taken in. I even helped him with the artwork for the VAT tax bombshell poster. Now I read that he has insisted a VAT rise is necessary. Its quite unbelievable. To think I went to his organic, meat-free barbecue just days ago. I am so stunned."

"But when you think back - Well, the decision to cease negotiating with Labour and 'I agree with Nick' by Cameron. And our policies for an immigration amnesty and that silly mansion tax. I mean, when you think about it, they were just mad, even for us. Obviously Tory planted plans designed to poison voters."

It seems that the top tier of the Liberal democrats were infiltrated by Tory sleepers trained in classic political craft such as "Brushing off" interviewers, resistance to questioning and placing coded messages in the Guardian.
Femme fatale Sarah Teather has attracted the most media interest with her stunning squirrel cheeks and Facebook pictures of her using ethically sourced make-up. But she is considered just a very minor,almost insignificant, peripheral figure.

Esmé Solctice, 18, a media and sustainable resources student at Brighton's Harry Potter university said "I voted Liberal Democrat to keep the Tories out of power and strengthen the nation's ties with Europe, but all along they were working for the enemy."
Asked if she would vote for the Liberal Democrats in future she replied "I just can't conceive what they were doing. I bet David Laws isn't even really gay. I won't be fooled again. Next time I'll vote UKIP."

Goldsmith's Advice to Blair: The Attorney-General's Song

Grauniad, 30 June 2010: "Tony Blair was warned ... that an invasion of Iraq would be illegal the day before he privately assured President George Bush he would support US-led military action, documents released today by the Chilcot inquiry reveal... Lord Goldsmith, then the attorney general, repeatedly warned the prime minister of the potential consequences of invading Iraq without fresh UN authority – much to Blair's irritation.

Goldsmith changed his view shortly before the invasion on 20 March 2003"


When I was a lad I made it big
As fixer-in-chief in an Attorney's wig
I cleaned up scandals and I swept up sleaze
And I pandered to the wishes of the Big Big Cheese
(He pandered to the wishes of the Big Big Cheese)
I pandered to the wishes of the Power in the Land
And now I’m sitting here with his balls in my hand

As Attorney General I made such a mark
That he asked me to change my advice on Iraq
I quickly saw the error of my ways
And gave him what he wanted without delay
(He changed his advice without delay)
I told him he could do whatever he planned
So now I’m sitting here with his balls in my hand

Now lackeys all, whoever you may be,
If you want to rise to the top of the tree,
If your conscience isn't fettered by scruple or qualm,
Be guided by this rule and you’ll meet no harm.
(He is guided by this rule and he’s met no harm)
Keep your own head down during Custer’s Last Stand
And you may come away with his balls in your hand

ND

7 month training update

Name                              Symbol   Last price Purchase price H1 2010



Minerva plc                   MNR         106               24                   15%


EMED Mining Public  EMED       8.25              10                  -15%


Caledon Resources Plc CDN         28                58                  -50%


Xtract Energy Plc        XTR           1.3               2.6                  -50%


Ascent Resources Plc AST          3.5               6.3                  -40%


Ithaca Energy Inc.        IAE          125               47                    45%
 Gulf Keystone              GKP          66                93                   -15%


Kopane Diamonds      KDD         12             13.25                 -15%


Dana Petroleum           DNX        1429          1420                     1%


FORTE ENERGY        FTE            7              10.25                 -38%
 Kenmare Resources  KMR          13             10                       30%


Sterling Energy plc   SEY            134           155                    -14%


XCITE ENERGY        XEL             69             48                      45%


Heritage HOIL Sold 570                   15%


Chariot CHAR Sold 70                   100%


Pan Pacific PPA Sold     .8                 5%


Churchill Mining CHL Sold 100    -15%


African Eagle AFE Sold 4.5            10%


Petra Diamonds PDL Sold 83          30%


Invista Real Estate IERE Sold 28     10%



This is my complete trading record for 2010 thus far. And pretty grim reading it makes too. At one point in April I was 30% up on the year and sitting pretty. Today I am exactly a 0%.
Also I have sold some winners, like CHAR, which doubled from where I sold, whilst topping up XTR, AST and GKP as they have fallen.
But, I remain long as a whole, many of these shares are set for huge news soon:
EMED - permitting news due Q3 2010 - if all goes well these could be 50p next year
MNR - Walbrook letting news will take these back to 130
CDN - massively oversold due to merger collapse, will recover (dog though, not putting more in)
XTR - oversold on a dry drill, better news due Q3 will see a strong recovery
AST - Collapsed on a dry drill - more in the works, so a good drilling programme could see this at 10p
IAE - Off its highs, a big long-term play for me, can see it over £3 in 2011/12
GKP - Iraqi government news will double the share price, good drills will quadruple it
KDD - news on takeover due, price 18p
DNX - recent buy, takeover at £18
FTE - news due re uranium drilling, very unhappy, which I had sold it, might recover towards 10p
KMR - massively undervalued, can see 20p here even in a bear market
SEY - Q3 drilling - shit or bust kudistan oil play
XEL - Like IAE, long term North Sea bet, delay on drilling timescales means time for top up.
 
if you wonder how I get to 0% - MNR and IAE are my biggest holding, closely followed by EMED and GKP. very sharp sliding scale down from there to XEL, AST, XTR and small holdings thereafter.
 
AND I AM NOW OFF FOR 3 WEEKS - POSTING WILL BE LIGHT FROM CU

Question Time..

David Dimbleby is joined in Ipswich by Iain Duncan Smith {Secretary of State for Work and Pensions and part rehabilitated failed Tory leader}, Alan Johnson {Labour MP and former Home Secretary and not wanting the Labour leadership,} Simon Heffer {right wing, DT anti EU, journalist,} Prof Mary Beard, anti-USA Professor of Classics at Cambridge, Times critic} and Dame Camila Batmanghelidjh. {I had no idea either ..director of Kids Company charity concerned with child's welfare.}

Rules: just think of questions that the audience will ask the BBC's Question time panel.

Prize. - Tickets to see England at the World Cup final {2080}

Q1. 1.5 million jobs to be axed, says Treasury and Hattie.
Q2. Cuts to police numbers, is this a good idea?
Q3. Is Jamie Oliver really to blame for obesity
Q4. Afghanistan stay put as long as it takes strategy, and pointless wars.
Q5. Human rights for soldiers.
Q6 ... BBC pensions cuts {Only joking.It will be England wimping out of the WC}

Cut Early, Cut Right: The Stage Is Set

Osborne's Budget met the Machiavelli test pretty well: he's started on the nasty stuff at the earliest opportunity - though it would have been better still if the even-more-painful Spending Review could have been expedited.

It's less clear whether he has measured up to the Moltke test. On the one hand he took the opportunity (rightly or wrongly) to change his positioning vis-a-vis VAT; on the other, there is no sign he is modifying to any material extent the less-than-ideal ring-fence around the NHS. Will October be too late to execute this much-needed maneouvre ? Probably not, even if there are some face-saving presentational niceties to be observed. For example, some local authority services could be transferred into the NHS budget to effect the desired result.

Small-scale tactics aside, the strategic benefit of being brutally up-front with the machiavellian medicine is immediately apparent. Grown-up expectations are pretty universally aligned with reality just now: so Teresa May can can tell ACPO that 'big, tough cuts' are coming down the pike for the police, and they take it on the chin - constructively, even. The BBC can announce 'dramatic' pension and salary reductions without everyone downing tools. Estimates of 000,000's of job losses, freely discussed, serve to reinforce realism in the public consciousness.

Of course, Bob Crow is limbering into action, issuing his 'call to arms'. There will be no stopping the Trots and assorted ne'er-do-wells from chanting and marching and smashing high-street windows. Bring it on, comrades, the sooner to get your spartacist spasms out of the way.

If the Spending Review is destined to take months, let it spend the time wisely to ensure the hits land on the right things. Perhaps Daily Mail anecdotes aren't reliable to the standards required in a courtroom: but there is no doubt whatever that the public purse is routinely and monstrously abused - see Harriet's 'Peace Pods' as slated at PMQs yesterday. Every politician, national and local, should be putting acute, personalised pressure on senior public-sector management to offer up the right cuts, not the dumb-insolent, bleeding-heart headline-grabbers that are Sir Humphrey's traditional tactical resort.

No summer hols for Alexander. Price of fame, Danny, price of fame.

ND

Ocado

We had a think about Ocado a few weeks back, wondering what they were up to with the new warehouse, and why would anyone risk an investment. Money Week had a good piece asking much the same questions as we did and in the comments someone mentioned driving times. That's the law see. Prevents fresh food deliveries beyond a certain point. Royal Mail moved all of its delivery times up by a few hours when 50mph maximum speeds came in.

{Well that was the excuse for 1st class post meaning before 4pm}..but we digress

Since then the online grocer Ocado recently signed a 10-year agreement with the supermarket Waitrose, boosting its chances of a £1bn flotation. Ocado's existing contract with Waitrose was due to expire in 2013, but the agreement extended the supply relationship until 2020. The new agreement will also enable Waitrose to grow its own home shopping service without restriction from July 2011 within the M25.

But £1 billion! For a company that delivers for other supermarkets and hasn't made a profit in a decade.. Seems an awful lot.
A £1 billion valuation would see the company trade at 40 times ebitda, compared with Tesco and Sainsburys, which trade on seven and eight times respectively. The founders think this is more like the next Ebay or Amazon, with huge , huge profits to come. And Ocado sent an email to customers informing them they can buy shares IF they have spent at least £300 by July 24th. I do hope customers realise that Ocado delivers for Waitrose. It isn't Waitrose. The John Lewis pension groups investments are expected to be sold at flotation.

So is this the new M&S. The middle classes retail shares of choice? The deal of the decade?
Ocado has made great strides this year but I'm not sure in the budget conscious times about to arrive that this will continue. Remember Nick Clegg in summer 2008, as the recession started to bite, said that his family were "gravitating away from Ocado towards Sainsbury's, just on price. I have to say, the difference is pretty big".
I see Mrs Q has spent only about £100 on Ocado this year. She now goes direct to the store when she is in the town. Combining trips to the supermarket with something else.

Can't say I'm overly tempted to ask her to ramp up another £200 to get those shares.

Labour know the value of everything and the price of nothing

Newsnight last night and an hilarious interview with Ed Balls. The Government are going to cut back the regional development agencies that spend so much for so little. In these recessionary times surely these are very close to the top of the list of things not needed.

In case anyone is in doubt, people don't (or rather shouldn't) start and grow businesses because of regional grants. A better way to help would be to reduce the costs of employment and the business rates. With less outgoings business will stand a better chance if turnover is a struggle.

Still, all of this is well beyond the denial bubble of Labour. Still strong in their mantra, as Guido pointed out yesterday of David Milliband, that cuts are wrong, spending is right and the state is the only thing keeping us together.

It could not be more wrong, the state is what has delivered unto us huge debts. Personal debts are our own fault, national debts is someone else's burden inflicted upon us. A real retrenchment is here but Labour see only a utopia where the money is endless for its client state voters and there is no cost. They see value, but not the price. It proves once and for all that the delusion was not just Gordon Brown, but the whole Labour party.

Life after Debt? Part1.

News comes out today from RBS about the real nature of debt problems facing Europe's banks. The FTSE is falling on the back of this as I write, off 2% and below 5000. I did not expect such a big re-tracement this year from the high's of 5800's. Still, I remain somewhat bullish for the rest of the year after this dip is played out; I maintain UK QE will return if the economic figures get poorer.

What is of more concern is that:

a) it is quite surreal for RBS to be pushing this when UK banks are acting in pure schadenfreude mode because they have already gone bust.

b) Having said that, European banks do have a lot of debt that they can't shift. This means no new lending and reduced profitability/increasing losses.

Europe is turning Japanese. The real story in Japan is that quantitative easing has not fixed their economy, it has not generated the inflation needed to wipe out wealth and debt. All Japan has had is 20 years of recession. There has been no life after debt.

Europe is heading the same way. For there to be life after debt we need catharsis, that means banks going under, crazy loans being defaulted upon and not put into 'extend and pretend.' That way is the the Japanese experience.

At least in the UK we have a Government determined to create a life after debt, more austere perhaps, but a life at least.

Is The City losing it?

Two stories from over the weekend may not make for great reading in the Investment Banks and London Stock Exchange today.

Firstly there is DP World pulling its long running idea of a secondary listing in London (which in many ways would be a re-list of P&O, the business DP World bought a few years ago).

Then there is news that Fitness First, the globally expansive gym business, is going to look to list in Asia rather than London - a loss of another £1 billion pound float.

There is a trend not to list in London emerging, but in fact with these two it is not the case. Dubai World is really struggling under its debts and stricken financial position. It clearly can't even get its accounts in order to try and push a float.

Fitness First is a loss-making Private Equity owned vehicle whose owners are desperate to get some return for their investment. In the Far East perhaps they hope to find some less discerning investors who believe their hype about EBITDA growth instead of looking at the bottom line. A classic case of Tourism IPO.

In fact, with BP getting shredded in the US, it is quite likely that New York will see another decline in foreign companies wanting to list there as well. Clearly the threat will be from Hong Kong and Singappore in the future, but it is not all downside for The City yet.

Capello - Even Further Out Of Joint

Something for the Weekend

Never been a Trot: but this sums up America for me.

"It has never been easy for us Trotskyists to face, but it was America, dear, golden, childish America, that joined the narrative of personal ambition to the myth of a common consciousness, making a hymn, oh yes, to the future, the spirit, and the rolling land. It was all about hope"

From The Life and Opinions of Maf the Dog, and of his friend Marilyn Monroe by Andrew O'Hagan

ND

Obama's Treatment of BP: Where's The Rule of Law?

As BP's sun sinks slowly in the West, arch conspiracy-merchant Karl Denninger reckons that the $20 bn bought some kind of limitation on its liabilities. But unless that is true in a very strong legal sense, it looks a lot more like Obama is just making it up as he goes along: a new doctrine of liability for consequential losses.

Now this we expect in Russia and third-world countries. Even the big boys - Shell and, yes, the mighty Exxon that considers itself above the fray - have found themselves whacked with retrospective ‘environmental regulations’ in Russia after they’ve made the upfront investment. (Curiously, the remedy turns out to be that Gazprom relieves them of a controlling stake in the venture.)

Then again, most investors never really expect to rely on the rule of law in such places. But for a capitalist, rule of law is even more important than universal suffrage. And where, if not in the Anglo-Saxon jurisdictions, can we expect to find due process ?

No-one should argue we’d do just the same in the UK. As has rightly been pointed out, not least by the IEA, the Piper-Alpha disaster in the North Sea (prop. Occidental of the USA) resulted, not in an anti-US outcry but in a very mature response: prompt government adoption of the recommendations of the Cullen Enquiry, which elevated offshore safety onto a new plane, in the UK and worldwide.

Mr Obama – stuff happens ! It is as incongruous for a democratically-elected leader in a law-governed country to react as he did, as it would be for a priest to renounce his faith because something bad happens in the world.

Stuff happens and – guess what ? - it will happen again.

ND

Political World Cup

Political World Cup

Harman- {Nigeria.}
Just keep attacking even when seriously outclassed. Punched and dived until red carded . Fails to qualify.

Cameron -{ England.}
Limps along not pleasing many. Everyone hopes he has a lot more to offer and the crowd believes he will come good, even though there is precious little sign of it. Through to the next round if only because of soft opposition.

Clegg. – {South Africa.}
Seriously outclassed at this level but everyone wants the Rainbow nation to do well. Fails to get out the group.

Miliband, Ed– {Greece.}
– Keep defending the old positions at all costs and make everything as dull as possible. Tries to sneak through to the next round as the others fail to notice he is even playing. Strategy fails and doesn't get through.

Osborne – {Uruguay} Much better than anyone expected despite the relative inexperience. Good enough to get to the next round.

Abbott – {Cameroon.}
What are they even doing there? Only got to be there in the first place because of ‘regional’ qualifying groups. Fails badly.

Balls – {France.}
Despite a great legacy really struggled and almost failed to qualify for the tournament at all. Had to cheat to get in.
Attacked the wrong targets, got confused. Fell out with everyone including himself. Did not manage to beat anyone and despite being tipped to be a major force finished bottom of the group and went home early.

Miliband, Dave. -{ Italy.}

Looks the part and is always talked of as a main contender yet somehow fails to convince. Predictable and lacklustre displays yet enough talent and support to get through to the final stages regardless.

Brown – {Scotland.}
No one has seen a peep of him since the competition began.

Vince Cable - {Argentina}

Potential world beater but prone to unbelievably silly tactics and nonsensical statements. Supporters think manager is a genius and possibly even a saint. Critics suspect he may be mad. Easily through to the next round.

Need teams for - Andy Burnham, Phil Hammond, Danny Alexander, Alistair Darling, John Prescott, Theresa May or any others you care to add.

BP: The First Trillion dollar estimates

I said yesterday some crazed US courts will start saying BP's costs for the Oil crisis will be a trillion. Little did I expect to be proved right in 24 hours. However, this link is the most bearish you could possibly see. The fun begins and also BP has come out to say today it is not 'planning' for bankruptcy.


No wonder BP's share price continues to sink. It's really sad for everyone affected, I hope they can plug the well soon.

Question time

David Dimbleby is joined in London by Vince Cable {lib /con business secretary and saint} , Ed Balls {shadow anti-immigration spokesperson and labour leadership hopeful} , Caroline Lucas{is the entire green party} Brent Hoberman {former lastbubble.crash and current Tory new enterprise council member} and Peter Hitchens {marmite mail on Sunday journo, politically slightly to the right of Heydrich.}

Should be good!
Winner gets two to tickets to Wimbledon. Centre Court.

BQ say very budget heavy episode
1} VAT rise and Balls' total rejection of it.
2} Pension age
3} Public sector pay freeze
4} Child benefit cut
5} General Petraeus takes command
6} John Terry should be reinstated as captain.

BP Update: All downside risk

The BP share price is down to £3.30 today, another new low. This is the level that two weeks ago I thought would be a a good buy in point.

But the news is no better, the flow of oil continues, mistakes are still being made. The US Government thinks even the relief wells may only have a 50% chance of success.

Until the newsflow is going to improve why buy this share, sentiment is going to take it down. if anything, I am considering a short position from here, looking at £3.00 for a close - a psychological level.

BP may not survive this crisis, too many US lawsuits to fight and if the oil keeps flowing into September then I expect the US Government will stat talking conservatorship again.

Who would have thought the UK's biggest company could end up in this state so quickly?

Inadequacies of the UK Budget

Well, having slept on the budget (not literally, Mrs Unslicker is always talking about 'boundaries'), some deep questions have occurred to me and, on review, many others today.

Firstly, Keynes is dead. The entire budget is a paean to monetarists. Which should be great, as I am one. Tim Worstall notes the nice big experiment should be worth reviewing too as it will prove who is right or wrong.  However, there is an worry for me that the deflationary effect of the fiscal cuts is going to push inflation lower (Blue Eyes was right on this yesterday in the comments), even with VAT rises and commodity price rises. As such, where is the money supply policy - where is more Quantitative Easing suggested? It will be needed if the economy starts to tip over again and money creation drops off.

Secondly, some of the measures of the economy, like the output gap, have little credulity. This is quite a shame, as rather a lot depends on them being accurate. The ever wise Chris Dillow has looked at this at more length as regards the structural deficit - which is another odd concept that is bandied about but in truth is like trying to nail jelly to a wall.

Finally, somewhat like the Labour Government, these cuts of 25% to public sector budgets won't be known until after the spending review. sadly this is before the pensions review that may have made a decent dent in this aim. Burning Our Money has a good point here, even the famous Geddes cuts of the 1920's barely made it to 25% and this caused the General Strike, the Jarrow March and led to Britain having its first ever labour Government - a disaster from which we have never recovered. So are these cuts really going to happen?

Of course maybe some of these issues will cancel each other out, the cuts won't come but then the spending may help to keep the economy out of recession. The output gap maybe smaller in which case the return to growth will be much quicker - time to be positive. A Keynsian budget would have the markets in crisis today - instead they continue there serene drop...

AAA Safe - All You Need To Know

There is a mass of detail to grapple with in Osborne's Budget - particularly in the area of welfare reform. Additionally, we will not know for some time how the remarkable 25% cuts will play out that he is lining up for the spending of 'non-ring-fenced departments' (= NHS, International Aid, and leniency for Education and Defence): more on that later.

But there's a bottom line to today's news: the reaction of T'Markets.

And the consensus is ... the AAA rating is safe.

In case anyone doesn't realise, that was the acid test. And how very corrosive it would have been to our prospects if he'd failed.

Even if there is ample scope to disagree with the details, on this alone there must be satisfaction. In the coming months and years, Labour will pooh-pooh the very possibility. Easily said, after the event.

ND


PS: enjoyed listening to the apres-Budget comments of Simon Hughes, who seems to be pretty much on-side. Credit to Clegg, he is whipping in the LibDems, and the Coalition looks strong - for the time being: but what more could we ask for ?.

Ah Well - As Predicted ...

Vitaï Lamenta

There’s a breathless hush, twas a close-fought fight

No.10 gained in a famous win.

A bumpy economy, money tight -

Bad; but at last our man is in.

And it’s not coalition that sticks in the throat

Or the selfish hope of avoiding pain

But History’s Hand on the tax-payer’s scrote -

'Pay up! pay up! and pay again!'

The exchequer’s books are sodden red,

Red with the ink of a bank that’s broke;

And Darling's out; New Labour dead;

And Mandelson gone in a puff of smoke.

The river of debt has wrecked the banks,

As Brown skulks off with blackened name

And the tax-payer hears, as Sterling tanks -

'Pay up! pay up! and pay again!'

These are the words that year by year,

Whenever a Chancellor’s plans are set,

Everyone who pays tax must hear,

And none that hears it can forget.

This they must all – yes, each man must

Bear through life like a ball and chain,

And cursing Brown for his boom and bust

'Pay up! pay up! and pay again!'

(... except that, errr, Sterling isn't tanking)

ND