Trading Update - Back Into Silver

Well, the bottom for silver was $33 as foreseen, but for various reasons I let it pass, and only got back in at the end of last week, at a little under $36. I'd be surprised if there isn't at least 10% to be had before the summer doldrums - purely MHO of course, and these are crazy 'conspiracy' markets.

Gold, needless to say, has soldiered on almost oblivious to the May massacre. Ditto oil: Brent has stayed resolutely in 3 figures throughout the carnage, and is now back on the steady rising trend that began at $70 less than a year ago (from under $40 at the end of 2008, lest it be forgot).

So - QE3 ? or even permanent rolling QE. It won't just be the FTSE that will see the 'benefit' ...

ND

IMF verdict saves FTSE, screws UK

I get most upset these days when looking at my trading portfolio, still 33% down on the year, sigh. However, yesterday's statement by the IMF on the UK Plan B did cheer me up. Not that only does it suggest growing interest in an already quite successful pop group, but also that Mr Market is to be inflated in a way that will not allow the balloon to pop.

This is because more quantitative easing is suggested as the answer to any slowdown in UK growth. Heaven forbid the market or price of assets may fall to reflect the new situation. Instead money is to be printed to 'keep the economy going.' From the reaction of the Government, they seem to be in agreement with the IMF.

So Plan B seems to me to be an idea where we will trade-off current fiscal austerity with by paying for it with future monetary austerity. We may get a nice balanced budget but end up with £400 billion of Quantitative Easing.

The problem with this is how do you sell off all of these Government bonds, even over time. Issuance will have to be so high that demand will be full and yields will have to rise substantially to make it attractive. Oh, dear, that means high interest rates for a long time.

Let's hope that the recovery is long and strong or else what the reality maybe is sclerotic growth in the UK for a decade or more.

At least the FTSE, pumped with QE money, will be able to hold its own or break new highs...

TUC 'Livelihoods' report; A lesson in ignorance and ideological nihilism

When I saw the TUC had done a report on changes in incomes over the last 30 years, I thought it would make in interesting read. Some of the obvious themes such as the switch to a more services based economy have no doubt changed the world of work substantially over this time.

However, sad to report, the whole thing is a pure political diatribe against capitalism and the current Government. No real insight is given apart from the usual hand-wringing about the loss of manufacturing jobs in the North. The solution offered is a return to the pre-1979 world of big unions and the promotion of no for profit organisations (umm..the Coalition are very keen on mutuals and they seem to ignore this). Thre pre-Thatcherite UK is seen as a bastion, not the broken country that had ended up cap in hand at the IMF.

Anyway, the problems are real, but with no true attempt to analyse the causes, but only the effects, the report becomes pretty useless in trying to tell us anything useful about what we should do. A typical piece of the report that covers the latest economic trend says that all services jobs created in the 2000's boom were wiped out in the recession. What is totally missed is that almost all of these jobs were filled by immigrants or foreign workers.

The presence in the last 20 years of increasing amounts of foreign workers has indeed put huge pressure on the lowest paid in society. You don't need many skills to work on a farm or drive a forklift truck or be a baker. You certainly don;t need to be able to even speak English.

On the other hand, jobs that have proved fruitful are those that required a high level of skills (although I note Doctors are top and there are lots of foreign doctors too) and indeed, in the case of the Law, a knowledge of purely English systems. A key set of issues are therefore, education and immigration - neither really mentioned in the report.

There is though a nice long section on the transformation of the 1980's - looked at back to front. All these state owned business that were costing the taxpayer a fortune - they were privatised, floated with benefits to the Government and then became profitable. In the eyes of the TUC this is all wrong as it led to job cuts, sigh, as if supporting failing companies is a way forward (note the NHS is going to face this same crunch in the next decade) for the Government's budget.

There is one section that is good, albeit short, in the rise in indebtedness, the report does not really try to address why this is, perhaps thinking it is obviously to do with falling wages; when the reality here is that excessive lending and poor regulation have led many of the UK population up a debt cul-de-sace. Amazing for such strong Capitalist bashers to have missed one of the points they could win on!

Anyway, it is a shame a report such as this cannot be better written or balanced, the facts at its heart are most likely correct - but the interpretation and use of it for political means renders it a futile exercise.

E.Coli: German Hobby Farmers @ Work

First, the obvious point: UK farming methods aren't exactly a model of disease-free pastoral practice, are they ?

But this E.coli outbreak looks like just what you'd expect from the bizarre German hobby-farming industry.

Every large town is tightly ringed with miniscule farms operated out of the backs of the last ring of houses before you reach the countryside proper. Typically horticulture, looking like over-sized allotments, they are all equipped with tiny tractors gaily spraying ordure everywhere, and go by the local appellation of 'cabbage village' (Kohl Dorf). One imagines they are all operating some EC farming subsidy scam.

One also imagines that any type of serious inspection of their practices is out of the question. Walking past (with nose-peg firmly in place) the layman can only observe that some of these farmlets are ramshackle in the extreme. When reports started coming of a "clear trail of evidence" leading to one such establishment, we may all-too readily guess what the trail looked like ...

Later this month I shall commence another of my lengthy business expeditions to Germany. I only ever eat cooked veg.

ND

Pic © Nick Drew 2011

The FTSE might make it?

All year there have only been 3 real issues dominating the markets. Can the Euro hold? Can the West restore growth without QE? Will commodities turn out to be a bubble?

Here we are 6 months in and some results are out:

1 - Greece has been bought off for another year. The can is kicked down the road. No one believes this is going to work , in the same way that no one believes Germany is going to close its Nuclear Power Stations. It does however, take the edge off the market for another few months

2 - Growth in the UK and US is falling away and now the focus is going to be on US QE3 - the markets need it to hang on to their 2009/10 gains.

3 - Commodities are bubble tastic, however with all the QE money sloshing around, the challenge of treasuries given US debt and volatile markets - the speculation is not over.

So there we are, I think we will know in a month or two if there is going to be more US QE - it will be defining for the markets, if the punch bowl is taken away, the party will be over.

Question Time Quiz

David Dimbleby is joined in Wrexham, north Wales by
Stephen Dorrell MP, {used to be the Tory baby of the house. Stood for leadership after John Major and had even less success. Long term MP without distinction. Man after BQ's heart.}
Alan Johnson MP,{former health sec. Everyone likes him, but as chancellor he was floundering a long way out of his depth.}
Elfyn Llwyd MP,{ permanent member of the Welsh Question Time panel. Now making his 40oth appearance.}
Sir Simon Jenkins {Guardian writer. Some involvement with trains. Standing in for a Lib Dem, who don't seem to have any representation in Wales anymore.}
and Julia Hartley-Brewer.{journo, broadcaster and after dinner speaker.}

Its a Welsher one so expect the unexpected.

This week guesses come from CityUnslicker

1 - Jobs/Cuts/Economic malaise - its all teh tories fault
2 - Should a welshman be the mayor of london
3 - Twitter - more of the same as this is still topical, Giggs is welsh after all
4 - Full devolution for Wales - should it follow the Scottish SNP route etc.

Leaderboard Update

Measured - 12
GSD - 8.5

Miss S-J - 8
Mark Wadsworth -8
Botogol -8
Bill Quango MP -8

Appointmetotheboard - 7.5

Nick Drew -7.5

Dick the Prick -7
Malcolm Tucker -6.5
Hatfield Girl -6.5

Miss CD -5.5
Timbo614 - 5.5 {extra ½ for the tip added here}
Budgie -3
Philipa -2.5
Amy -2.5
Blue Eyes -2.5

Lilith - 2.5

Andrew - 2

City Unslicker -2

Inflation is here to stay in the UK; is it time to find an alternative solution?

Andrew Lilico- writing yesterday - is very critical of the Bank of England. Along with many Austrian economists he sees the failure of the Government to stop inflation as a betrayal of our Country. Of course, this is true on one level, the current government and any future ones are reduced to impoverishing the population as they can't bring themselves to shrink the Government nor ween the population off unaffordable social benefits.

The main accusation though is that the Bank of England is not helping by ignoring inflation which we import - this in turn offsets any gains we may make in exports. However, long-term, perhaps we need to make some adjustments. Look at the graphs below, global population is expanding rapidly and resources are being consumed ever faster - faster than we can produce them at current prices. Of course, in food terms Malthus and his ilk have been proved wrong too many times. But you can't grow Oil, Rare Earth Minerals or Uranium. Technology will help mankind to survive, but in the next 20-30 years the Earth will experience the peak human population boom. This will mean prices for everything increase as more people compete for limited production. Again, capitalist market economics will ensure we will find enough ways to extract resources, but the real price will have to rise to get them to market - so implying significant real terms inflation.

It is not the end of the world, but it does mean that inflation is with us for a long time to come (ignoring any small deflationary dips caused by recessions along the way) - if this is the case, what should our macro-economic policy be? There is certainly a danger with fiat currencies of the wealth of nations being decimated in short order by poor policy decisions. Arguing for a pure anti-inflationary stance as the starting point of domestic policy can't be the right place to start from for the long-term.

Question Time for the busy

BB obligingly have an early panel list.
David Dimbleby is joined in Wrexham, north Wales by Stephen Dorrell MP, Alan Johnson MP, Elfyn Llwyd MP, Sir Simon Jenkins and Julia Hartley-Brewer.

Its a Welsher one so expect the unexpected.

The C@W Real Economy Index: The End ?

For the past three years we have been tracking the year-on-year decline in advertising space (by page area) in local trade directories and, yes, it's that time of year again !

The results are in: and the Thomson local for Croydon has declined by ... a further 29.2% ! This makes for a cumulative 62% decline over 3 years - causing Thomsons to take the dramatic step of reducing the format to hand-book size this time, instead of just thinning it down as before.

It's pretty clear, of course, that most printed media are going the way of the dinosaur (see all newspapers) so there may not be too much to be read into it. Indeed, this may well be the last time we bother to count the column-inches on behalf of our loyal readership (Kev and Doris Bonkers).

The end of an era. All things must pass, eh ?

ND

Capitulation

Capitulation is the point at which a bear market has a massive sell-off - at that point, with no more sellers left, the buyers take over and an upward trend resumes. However, this is only after heavy losses as been sustained.

Sadly, after 3 years of fantastic returns, the curse has struck my trading portfolio this year - with a nice dose of hubris too. I heavily invested in Xcite energy after the de-risking of a successful drill, only to see the market hugely mark down its potential - from 360 down to 167 - over 50%. A big reaction, too much, but AIM has it problems at the moment with liquidity. EMED too has fallen over 50% from year highs as news flow has been too slow for the market to accept there is real progress. CAZA's failure with a big exploratory drill has seen it 66% off its year highs. Even GKP, which has put out strings of good news, is some 25% lower that its high.

Overall 33% down of the year thus far, at the depths of last year, when my portfolio ended 115% up again, the loss was only 20% - this year I will be glad to get into profit at all. it is quite possible, with EMED likely to double or more and a recovery of some sort in XEL likely to see me near break-even. In reality, I am 50% down from year highs, which is considerably more in cash terms than I earn in my day job - a little sobering to say the least. (Lesson [painfully] Learnt - take profits and de-risk ahead of key news statements on event driven stocks)

Coming up later in the year, a possible GKP takeover after their oil contract row is settled and a make of break drill for XTR in the North Sea.

Energy Policy: Reductio Ad Absurdum

For some while now I have been hoping that a solution to our crazy energy politics will be forthcoming from a blinding application of reductio ad absurdum. Before, that is, the lights actually go out, which would be a reductio all right, though anything but blinding.

Logically speaking the absurdum should have been evident for some while, by attending to the 'run-rate' of investment required to achieve the demented 'green' plans we are 'legally' committed to. (Mercifully this commitment relates only to UK law, and we are still a sovereign nation ... I think.) When I first started banging on about this (5 years ago) the run-rate was as follows: we needed to invest in new electricity infra- structure with sustained annual expenditures around 50% higher than we had ever managed before. When I last did the sums, about a year ago, the run-rate was that we needed to be spending at double the historical highest (every year for a long time ahead).

Now just as with limited-overs cricket, you can always do the arithmetic and derive a run-rate. But when you need to score a boundary off every ball, you know the game is up. And when not even sixes will do the trick and you need to contemplate overthrows on every ball ...

We are, by any reckoning, nearly there - with or without the Green Investment Bank and its puny £3 billion to spend.

The symptoms are all around. Germany is going to scrap all its existing nukes ahead of their time (and Alex Salmond has completely flipped). France has banned drilling for shale gas. The NIMBY anti-onshore-wind movement is really getting up a head of steam, particularly in Wales. Last year, global emissions rose to record levels as inefficient developing-world manufacturing displaces efficient western output. Try today's Grauniad for a measure of green angst (this Monbiot article and the hundreds of comments), and a characteristically lurid Rowson cartoon.

Yes, Honest George Monbiot says it well.

"We don't like nuclear power. We don't like onshore wind. We won't like the costs of the other technologies. We reject all the means by which electricity is generated. Yet no one is volunteering to stop using it."

When Crapper Huhne finally gets the boot, could this not be the moment finally to confront reality ?

ND

Father Ed {Part 3}

Father ED.
Part 3

Father Ed answered brightly “Hello? Maggie Island parochial house. Father Ed Milly speaking. ...” but suddenly his face turned from a smile to fear.
“Ahh! Bishop Brendan,” he trembled, “how nice to hear from you..”

...

“MIIIILLLLIIIIIYYYY!” Roared Bishop Brendon, the head of the Transcendence Universal Communion. “What’s this I hear about you abandoning spending commitments?” he screamed down the phone at the hapless Father Ed Milly.

“Oh..hullo Bishop. Well..erm..I was..well..that is ..I wasn’t abandoning profligacy..I was ..just erm, ..

“Milliy," Do you know why we ordained you ?”

“Erm..because I was the best man for the job?”

Back in his opulent union office Bishop Brendan sighed and leaned back into his golden chair. A unison steward refilled his champagne glass. As he sipped the Cristal he said, “No Milly. Myself and the Episcopacy of associated public sector clergy decided you were the best man for the job... because we thought you’d be as malleable as your rubber face. Now I want you to get out and say “No! No to cuts!" And then promise a payrise of 18% to all Labour supporters ... erm..I mean..valuable frontline workers.”

“But Bren'... the voters..They aren’t sure that outrageous spending is the answer to debt. They..they..think a more balanced approach..”

“Milly,” hissed Bishop Brendon slowly, “Two things. Firstly, I demand that you get out there and start a campaign of lavish fiscal commitments in key marginals . I want posters put up showing broken incubators overlaid with a picture of laughing Tory bankers and weeping ethnic nurses. I want billboards promising a new regional development hub for every village. A sure start centre for every hamlet. And I want them all up tomorrow. 10 x 10."

“Yes Bishop.”

"And secondly..If you ever call me Bren' again I'll remove your adenoids with a toasting fork and use them for communion wafers, understand?"

"Yes Bishop."

“Good..And I want a slogan, Milly. A catchy slogan that people will remember and will be able to be recited by all the drones in your shadow pulpit without sounding as false as an MP’s expense claim. Oh..And that last one... If your new slogan isn’t a huge improvement you’ll find my Tory-Led boot up your arse! Don’t make me leave my nice post at the Transcendence Universal Communion to have to pay you a visit. Or I’ll be performing laying on of hands... Around your throat. Is that clear?” and he rang off without waiting for his answer.

...

“Have another glass of milk Ed.” The young acolyte, Father Kevin McGuire, was trying to comfort his mentor Father Ed Milly.

“He’s much better now, thank you Father, " said Mrs Eagles, the housekeeper, “He’s got his knees apart a bit now and he’s managed to take his hands away from covering his genitals. "

“He had an awful fright, Mrs Eagles. It was Bishop Bren' on the phone.”

Ed Milly let out a little whimper of fright and crossed himself.

Mrs Eagles leaned over to whisper in McGuire’s ear.

“Bishop Brendon you mean?”

“Oh for sure it was. Bren' bawled at Father Ed for a good long while. It was like the old Wacky Races show with the General on the phone..” and Father McGuire did his laughing Mutley impression. “Father Ed went completely white. It was like the time he told the Bishop he was thinking of performing civil partnerships. Bren’ fell on him like a fire extinguisher at a demo. Left him crying like a Clegg.”

...

“I’m fine now, thank you Kevin. It was just ..that Bishop Brendan.. he can be very mean. But what are we going to do? I’ve promised the congregation a different path. A new beginning. Labour: The Next Resurrection. Rising from the dead after being crucified in the elections and buried under a boulder of incompetence. Its my ‘big plan.’ But all the old Bishops want is “Tax and spend! Tax and spend.”

“Tax! Spend! Save the world! Obama beach!” cried Father Jock from his chair.

“Oh you’re still awake Father?... I thought that book on ‘The Crash’ would have made you nod off. It did for everyone else. Well, Father Jock, have you any ideas? “

The old priest stirred. He sat up. His milky eye blazed..

“Pie”

“Come again?”

“Pie!” Fathers Maguire and Milly looked at each other puzzled.

“Pie! Pie! PIE!..Pie!” he said shaking his arms up and down like in a chant.

“I think he’s turned into Eric Pickles,” said McGuire.

They ignored Father Jock’s mumblings and went up to bed.

“Lets sleep on it. Both of us have a really good long think, OK?” said Milly sleepily. But all Ed heard was snores from the other bed.

...

“How about...This for a relaunch slogan. “Macroeconomic Endogenous Growth Theory in Equality Britain’s Umbrella Diversification Community Inclusion?”

“You forgot partnership. And its not as easy as 'Big Society' is on the tongue. Although it does make about as much sense.”

“Its no good Kevin,” said Milly. “Its just gibberish. Only an activist would read past the first line...What have you got?”

Father Kevin McGuire passed over a sheet of paper to Ed Milly. He smiled broadly.

Father Ed took the paper. He stared at it. He turned it over. He looked at Father Kevin.

“Its blank,” he said. “Its a blank piece of paper.”

“I know,” beamed Father Kevin. “It’s great isn’t it?”

“But...but..Its blank!”

“Yeah. I spent all night thinking, And finally I thought of this,” chirped Kevin cheerfully. “I didn’t imagine It would be this good. Wow!”

“I don’t understand. This is your idea. It isn’t anything..its nothing!”

“Aww come on now, Ed. Its not nothing..its anything. You get people to write on it what they want to have. And then you tell them that's what they've got.”

“But Kevin. That’s a really, really..stupid idea. I mean if I said to a lawyer in Sheffield what do you want they’d say childcare and tax breaks. But to a union shop steward in a factory, they’d say higher wages and...Oh my Lord, its brilliant!..Its brilliant Kevin. You’re a genius!”

“Well..I’m no John Prescott, but its a winner. I got the idea when I looked in the bathroom mirror and saw a great big blank puppy face staring back at me. Who couldn’t love that?”

“But what about the slogan.. something that would allow us to sort of say we’re not spending like Cherie Blair at a property auction, whilst convincing Bren’ that we are blowing wads like the best double deficit days of Father Jock.”

“Tax! Tax! Spend..Pie..pie..pie!” yelled out Father Jock.

“He’s doing the Pie thing again, Ed. I think he’s intoxicated.”

“Well he’s certainly toxic anyways. Wait a minute Kevin,..that’s not pie he’s saying” realised Father Ed."Its ....FI.........P-F-I..of course! Off balance sheet debt creation. Completely hidden from view. We can run up billions and billions and still claim we haven’t spent a penny. Public Investment in the Economy. PIE. That's our slogan.

"Help yourself to another slice of PIE."

We’re saved! Mrs Eagles, put on the kettle! New Labour is back!”

click links

Now available on Tory-Blu Ray.
Father Ed Part 1 -
Father Ed Pt 2

Father Ed {part 2}

Father Ed
Part 2.

...Just then the housekeeper Mrs Eagles arrived with a big plate of commitments....

......

“Would you like a bit of a spending now Father?” she asked
“No, Mrs. Eagle." replied Father Ed Miliy, "We’re not having any more spending commitments just now. We’re all full of spending our way out of debt for the moment.”
“Are you sure Father?" she enquired. "Old Father Jock used to love a good splurge. Morning, noon and night he'd be a spending. Do you know he used to get up at 4am, just to get a few extra billion spent before breakfast? Will you not just have a little bit of extra benefits to single mothers?”
“No, I’m quite all right thank you.”
“How about a lovely big IT project?.. The last NHS one was only £15 billion.Here’s one for schools. It’s got plenty of jam on it for our favoured contractors.”
“Mrs Eagle. No. I’m fine”

“Ahh, Father Ed..come on now. What about a bank? A nice juicy bank bailout?..Go on.

Go on, go on, go on, go on, go on, go on, go on, go on, go on, go on..”

“No Mrs Eagle...We don’t want any more unsustainable spending. Its making people sick. Sick of us. ”
“Ahh, that’s a shame Father,” conceded Mrs Eagles disappointedly. “I’ve a couple of Battleship contracts for key Scots Labour constituencies that are going off in the fridge? Are you sure you won’t have a bit of a blow out?”

Father Ed shook his head.

“ ...No? ...Ok-So, I’ll be taking Father Jock out for his walk then. We’re going past that new Maggie Island International Bank. He loves that.”

“I didn’t know Maggie Island had a new bank? ”

“Yes, in the down town financial district. It’s the ‘Rio-Novosibirsk-Mumbai- Xīnběi’ local bank. Father Jock is very taken with place.

“I love my BRICs” bellowed the old priest, waving his tartan kebbie.

“I’ll get some spray for his chair too,” she said wrinkling her nose at it. “It does pong quite a bit. Smells of feet. Or maybe its defeat. Anyway, it needs a good scrub. Come along Father,” and she wheeled the old priest away.

"Right Kevin. We've work to do. Touring Maggie Island telling everyone how lean and responsible we're going to be in the future. No more selling off the gold chalice & crucifix. No more trebling the loans on the poor box. We're going to let the islanders know we're very different people now. Even if we are in fact, the same clergy as before, just with different jobs. I'm going to arrange for some media coverage. Lets get this new message on the road."

...

A week later Father Ed and Father McGuire were sitting at their dining table. Father McGuire was making an Airfix model of the Battleship Potemkin, whilst Father Ed read the Sunday Parish magazines. He held up a headline.

“NO MORE MAD SPENDING” says top priest,’he said. "And look Kevin. There’s a picture of me wagging my finger at a plate of Euros. And look at this from the Daily Grail.

“FATHER ED’S DIET. ‘DON’T SQUEEZE MY MIDDLE.” And Kevin, here’s a picture of me talking to that fellah with the hover mower. How middle class is that?”

“Oh yes. Remember, Ed. You got into an argument with him when he said he was a Protestant? He said he wanted to trim his hedge and you said he was doing it too fast and too deep. And he said if you don’t clear off he’d kick you in the bollocks.”

“He did get a bit prickly. I only said that if he trimmed the hedge maybe only 97% of what he was planning, it would look great. But if he did the whole 100%, it would die. Erm. Kevin..You’ve got a plastic funnel stuck up your nose. Isn’t it great though Kevin? This is going to be a big success. I can feel myself being a contender for the Maggie Island Father of the Year.”

“Really Ed?”

“Yes, I think so Kevin.” And looking down modestly he added, ”I might also, be..you know..One day .. The Cardinal of Maggie Island.”

Father Jock suddenly awoke and let out a great laugh, pointed at Father Ed, laughed again even louder, belched..shouted something that sounded like ‘Feck’in wonk eejiit,’ farted and fell back to sleep in his chair.

“Well, anyway..” said Ed, somewhat deflated, “I didn’t mean now..maybe in a few years.” But then he clapped his hands in joy and brightened again. “ But for now Kevin, there’s nothing to do. Just feet up, have some tea, and watch a faith program on the BBC. One of those that tries to avoid any mention of religion at all. I think The Big Questions is coming from St Vince’s on Cable Island this week."

But as Father McGuire turned on the television and sat down happily to watch the telephone started ringing.
Father Ed answered brightly

“Hello? Maggie Island parochial house. Father Ed Milly speaking. ...” and suddenly his face turned from a smile to fear.
“Ahh! Bishop Brendan,” he trembled, “how nice to hear from you..”

...

tbc

click links

Now available on Tory-Blu Ray.
Father Ed Part 1 -