Hattersley Speaks

From the foot of a Guardian op-ed page, the tub of lard has spoken.

"Today I feel an optimism about the Labour party that I have not since the leader was John Smith... Almost everything Brown did last week - what he said and how he said it - suggests that common sense is on the way in and celebrity politics on the way out… The continuing commitment to long-held principles gives a politician bottom".

It cheers me up no end to read that this paragon of political integrity has placed his lardy seal of approval on McBroon. It is of course the very Roy Hattersley that in the same place on December 9, 2002 wrote:

"There was never the slightest chance that [Gordon Brown] would support top-up fees for universities"

And whose agency blurb runs:

“With his dry Yorkshire humour Roy entertains both after-dinner and conference audiences thoughout the world”

Roy, you have disappointments aplenty in store. We are certainly entertained. But keep your bottom to yourself.

ND

Shadow Cabinet re-shuffle reaction

Well it seems that David Cameron does not listen to me, as he kept Osbourne in a job despite my plea.

I am in esteemed company as he also ignored Iain Dale and Praguetory too. Iain points out that Hague did not want to be moved in any case, rather selfish it seems to me. You can't really be in politics for the money in this day and age.

He has been clever though in his appointment of Dame Pauline Neville-Jones who has been very impressive whenever I have seen her.

Boris Johnson whilst Peter As for the rest, well promoting Gove was inevitable, I am sad to see no place for media friendly Ainsworth's survival in frontline politics in this country is amazing. Surely he has a better calling a a wine taster in Bordeaux? Philip Hammond needs to really help Osbourne get a grip on economic policy; I have my doubts about whether this can happen.

The overall look though is one that is quite good, if you look at a lot of the Labour opposite numbers like Harriet Harman and Ruth Kelly.

If Brown stays until 2009 they will all have plenty of time to turn things around. Anyone would get a boost in the polls with the current security situation.

Sunday Business Round up - 1 July 07

Life must go on as normal to defeat the terrorists says our brave new Prime Minister; as such please find the weekly round up of interesting MSM business stories below:

Cost of smoking to business - Rank group thinks so with its Bingo halls. it will be interesting to see how this works out, but I don't think this change was made with anyone in government caring about the effects on specific businesses.

Crazy story, is is April fool's? - Tim Webb thinks that we can save the planet by re-inventing the CAP for OPEC.

A good Guardian take on the challenges facing Darling - basically we are for the cliff face if house prices collapse.

...and lo it came to pass - according to this Times article.

Interest rates to go up again- but where will they stop. My bet is at 6% because by that time a real shock will hit the system, as suggested here.

BAE mess - this story will run and run, but now the government are going to have to blame the staff to get themselves off the hook from the US Investigation. Outlook, very bleak.

Jones is Minister - At least we have a real business voice in government, albeit not at the cabinet table.

Two contrasting pictures of Private Equity - this it the lefty view that AA-SAGA is a disaster.

...and this the the real picture - from the Times, telling how both companies have grown substantially are management improvements.

OFT gets tough with travel sector - for misleading advertising of prices. I don't see the need for hand-wringing here really, do we not all know what Ryanair are like?

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.

Sunday Papers round-up - Business

The usual round-up of the 10 most interesting business stories in the UK broadsheets this weekend. Quite a momentous week in the end, interesting to see the stock market fall despite rates being held. The next few weeks will show what is to come for the beginning of Brown's reign:

BAE Scandal - This just won't go away as the lefties are firmly on to it. Whether there is any wrongdoing or not, we shall see; it would be a non-story without the ridiculousness of the once ' ethical' foreign policy.

Sports direct saga - This continues, with Mike Ashley effectively sticking two fingers up at the city. The clever city bankers and investment managers are certain to get their hands burned here; Ashley will be set to buy the company back from them for half the price he sold it to them for next year. The city say he is mis-behaving; yet they stand to lose, so it is the investors who should change tactics if they want to avoid a haircut.

Workaholism test - Do you work to hard? I try not too, but must be borderline. If you add in blogging then where does that leave you?

Bond Market shenanigans - this article is important, because it acknowledges the spread of some serious underlying risks to the markets as a whole. On the other hand it is very badly written and it loses me; it needs more English and less Jargon.

Postal strike madness - Adam Crozier is a serial company menace. Look at the mess he left behind at the FA. Now he is wrecking the post office too; cutting pay without negotiation is always going to cause a strike.

Joke story of the week - Osborne hires Thornton - this will change the world, George Osborne has hired a small league accounting firm to look at ways to reduce red tape...go get 'em Tiger!

Hips fiasco - The disastrous government policy lays in even more tatters. Surely this utter mess requires a resignation?

EU ministers back hope over reality - or in this case Galileo, a typical EU vanity project that unsurprisingly has few backers or a credible business plan.

Watch out Chelsea - Wigan owner sells JJB and could not make Wigan a serious player in the premiership.



KEEP VOTING HERE - Most under-rated blogger, don't you think?

NHS in Surplus! Now There's A Thing

Home again to read of another little classic of the NuLab modus operandi - the NHS is in surplus and Patsy Hewitt will not have to resign after all. The church bells are ringing. Since the day she offered to fall on her sword if the deficit had continued, the nation had been trembling to learn of her fate: talk in pubs and clubs was of little else. Now we can all breathe easy again.

Actually, of course, the moment she put her neck on the block we knew the fix was in - just as when Blair staked everything on getting asylum-seeker numbers down.

As they say in the army: if the sun rises in the east, the Sergeant Major will be in foul mood.

ND

Cityunslicker elsewhere

I am humbled to have been asked to be the Ghost Chancellor at the Ghostcabinet.

I have done my maiden post there on a favourite old topic of mine the Inflation problem that the UK economy has developed.

Let me know what you think.

Tin hats all round?

Well the ECB has raised rates to 4% today, as Euro inflation hit 2% (tell this to the Spanish!).

Morgan Stanley warned today that all its key indicators for a share price crash were flashing red.

The Bank of England is widely expected to hold rates tomorrow as the UK fantasy inflation number of 3% has fallen back to 2.8%. In reality we really still have inflation at nearer 5% once you include the cost of housing and taxes.

My hunch is that they may well stick a .25% increase on the base rates tomorrow, just to be sure of slaying inflation. I also think if they do this it may well be one of the triggers for the collapse that
Morgan Stanley is predicting.

It is always so hard, if not impossible, to predict a crash or decline, thanks to herd behaviour and the irrationality of the markets. However, everything is now in place really and so it will happen. Don't know when, but it will.

Welcome to your world, Gordon Brown!

Vote for ME - this time its personal...

UPDATE: Nominations are now over and I am pleased by the support that you have shown thus far. Now the important bit, back to the provinces and prepare for government, I mean, time to vote to complete the rout.

Also my secretary today was discussing the problem of Russia and its nuclear arsenal and alleged terrosit tendencies, a country in which James Higham now resides. Basically they need a good lesson in Democracy to help them back on the righteous path.

(She was more worried though that she may get infected with 'Pollenium' via email; I told her a nice dose of anti-histamines will see her right).

But with the deomcratic record of Russia and James as host, maybe he will win every category with 110% of the vote. Only you can stop him....



either email jameshigham@hotmail.com or here

Econo-pie chat

Mutley has challenged me to write about something more exciting to keep up his interest and to save me from any more of his 'guest' posts.

However I only have one story...

One day i waled past a nice looking pub with this sign outside.

"Pint, Pie and a friendly word -only £5." As Newmania often says, I am always keen on a good deal.

So in I went, sat at the bar, ordered a pint and waited for a nice hot pie. The pie duly arrived, but without so much as word.

I enquired of the strapping miss behind the bar that I should have my friendly word too for my money.

She leaned over the bar and whispered:

"Don't eat the pie."

Sunday Business Round-Up

Back to CU's summary of highlights in the world of business and economics:

Warning of further rate rises - my prediction stands that they will top out at 6%. Ouch!

Ryaniar affected by campaigning - perhaps they attack dog method of defence is starting to work against them?

Post Office plans for strikes - no great surprise here, the road will be bumpy due to the disastrous government policy.

HSBC helps trustafarians - one idea to help Nick Drew's offspring...

Director's feeling the heat from shareholders - No pity for them with their multi-million payoffs and share options, I say. Changing manager is not always the answer though, just look at football for comparisons.

Green gold rush continues - the float of this green electricity generator could well be a winner.

US moves to limit BA - for a country open to trade, the protectionism around US airlines is staggering. Also worth a look, a review of Willie Walsh's time in charge.

Article of the week: An article in The Times on David Webb, a real insight into the rise of China Business and some of the real issues it has brought with it.

2 notes - the independent website seems to be down so I have not had a chance to review this. Secondly, a big story not to make the papers is the failure of RBS's UK commercial bank system, don't bother trying to use their cash machines today!

Pensions - A sad fact of the week

Aon Consulting have been in the press this week as they have released some new data on pension deficits. A few years ago corporations in the UK were panicking as changes in accounting rules meant that their pensions schemes were collectively over £100 billion in debt.

They met this challenge by massive reductions in pension entitlements to their staff. Hardly anyone under 35 has a final salary scheme anymore. Instead they are lucky to have a money purchase scheme that will 'pay' out typically less than 1/3rd of a final salary scheme.

This is the background to the information that Aon have published. The deficits have been whittled away and the corporate schemes are now nearly in credit. This has been spun as good news when it is nothing of the kind. The reasons the schemes are in credit is that they have reduced their obligations, probably by a figure not unadjacent to £100 billion, to their own staff.

So to summarise, whatever you read about this in the papers this weekend, the opposite is probably the truth.

Electricity is the New Gold

Just back from a short outing to Poland to discover the Treasury has sold a large part of its stake in nuclear generator British Energy (actually that’s a rather simplified version of events), in an operation only a bit less ham-fisted than McBroon’s notorious 1999 sale of gold reserves.

Indeed, only a bit less ham-fisted than McBroon’s original BE rescue back in 2002. Part of this package was forcing BE to forward-sell a hefty slice of its future electricity generation to Centrica at the rock-bottom prices that helped bring about BE’s demise in the first place.

Now, as any fule kno, the worst time to lock-in is at the bottom of the market – and it didn’t take a genius to figure that 2002 was going to be the bottom: power stations were being mothballed at a rate of knots and BE (with the lowest variable cost of all) was insolvent. The only way was up – and a windfall for the lucky buyer.

Of course, in this instance the beneficiary was another UK company. But ultimately the taxpayer underwrote this gratuitous largesse. Gold, pensions, electricity – all hail, oh economic genius, and welcome to No.10!

ND

Buzz off Blair

The newspaper coverage today of Blair in Africa is enough to make the blood boil. Why should this man be ferried round the world at taxpayers expense so he can be serenaded and feted?

The way we have developed our democratic system over the centuries is supposed to mitigate against this. Lose and election and you are out the next morning. Lose a leadership challenge and you are out the next day .

It is typical of New Labour that in their constitutional vandalism they have even manged to effect change in this area.

Meanwhile, back in the real world interest rates are set to rise, energy prices are rising again and the housing market may finally be beginning to slow.

But who cares, soon Tony will return and it will be handkerchiefs all round...

Big Brother is back

Even less reason to watch the TV; more time for blogging.

Happy Days.

Business & Politics on the American Left

Whilst travelling I thought a little reading with the enemy was in order and only took abroad tomes written by unreconstructed lefites. A couple were truly poo but one that I actually enjoyed was Noam Chomsky's Failed States.

Noam is of course, near mad. A world class master of seeing evil in good and vice versa. Capable of Tony Benn catastrophic misjudgements.

He shares some things in common too with Gordon Brown; such as his epic struggle against common sense.

Nonetheless he does write well and also makes good efforts to quote from sources, dubious so some are. Overall his attitude to US and UK imperialism is consistent and blind. Hezbollah and Fatah are the good guys, Ahmedinnerjacket a true man. Hugo Chavez does no wrong. Instead all the enemies are to be found at home and his world is a conspiracy of evil.

Despite this, his analysis of the Israel/Palestinian conflict is worth a read as it does show another side to conflict that does not come across in the media; even if I don't agree with him , it is instructive.

The best bit is in his analysis of domestic priorities; healthcare and most other services are left in the hands of the state. Why you ask? Because the private sector creates damaging bureaucracy and middle-management that wastes resources.

Back from beyond

Thanks to Mr. Drew for keeping this place ship-shape during my absence. I trust you have all enjoyed his postings. I thought they were so good that Mr Drew will be posting here more frequently in the future.

As for me, well I have had a pleasant trip away and am now back in the UK again. As usual, I could not help myself whilst abroad from speaking to all and sundry about the political and economic make up of the country. I managed a few conversations with taxi drivers, a lunch with some hotel owners and a dinner with a banker to gather my information.


The beautiful country that is Mauritius, a former UK colony until 1968, has had a pleasant history until hitting the buffers more recently. They have a stable democratic government but turned 2 years ago to Labour to see if they could improve the country.

What has gone wrong? Well firstly the WTO rulings on sugar, just like Caribbean Islands that I have blogged about before, have hit Mauritius hard. 45% of their exports are sugar and the price has collapsed, this has ruined small farmers and families who have had to sell up to more mechanised conglomerates, thereby increasing the unemployment rate to over 10%.

Secondly, the foresight of the government in the 80's led to the growth of a large textiles industry, but sadly this has been crippled in recent years as wages grew and owners decided to move off to India and China. interestingly the tax breaks that were given to allow the development of the industry were removed and this seems to have been a key cause of the owners upping sticks.

This leaves just the tourist industry as the main source of growth, with many fine hotels springing up over the country. Many graduates work in this sector, even though they are just waiters and cooks. Quite a waste really and still relatively low paid even by local standards.

Despite all the hardship, of which there is alot, there is no civil unrest and the people are a pleasantly laid back bunch. The island now though is experiencing some quite large net emigration each year.

One thing that stuck out to me was the linguistic abilities of all the people. Everyone speaks English and French which are jointly the national languages and a good proportion speak Hindi too as 60% of the population is of Indian origin. Despite this no one seems to have thought that call centres would be a good business here, especially as they are in a timezone only 3 hours ahead of Europe and similar to India....

Sunday Papers Roundup

As usual from me, an energy-oriented roundup. But we'll start in a different sector:

UK housing market hits tipping point, says the Observer. I think we’ve heard this before - but they’ll keep saying it and eventually it will be true

Battle for biofuels drives world food prices higher: a classic case of the Law of Unintended Consequences (from the point of view of the environmentalists, of course – not the farming lobby …)

Labour is still fission for answers on energy: this, from the Sunday Telegraph, is the best write-up of the Energy White Paper I’ve seen. Doesn’t make for optimistic reading. And the pun's pretty bad, too.

Ten executives face long arm of US justice: now here’s another candidate for my list of clever things Cameron could promise that don’t cost much but would go down very well – some symmetry in our extradition arrangements with the USA, please.

Bids, deals and trading drives UK's wealth: the Sunday Times reports that output of the financial sector expanded by 4.7 per cent in the first quarter while manufacturing fell 0.3 per cent.

The Government has moved its goalposts on CO2 emissions targets, says the Independent on Sunday. Yes indeed: several times ! and I'm sure McBroon will continue this fine Blairite tradition.

PS: don’t bother to read the Inde piece today on Gazprom’s activities in the UK: I know several readers of this blog are concerned about Russia’s move on our energy markets, but this article is riddled with factual inaccuracy and is not the place to learn anything at all.

Next weekend – the Slicker will be back and normal service will be resumed!

BBC Business Coverage "Failing Impartiality Test"

You wouldn't have guessed this.

A panel commissioned by the BBC Trust to look into the Beeb's coverage of business issues "has seen a number of individual lapses and identified some trends which lead to repeated breaches of the BBC’s standards". For example:

• an interview with Bill Gates was "sycophantic in tone"
• interviews with Stuart Rose, CEO of M&S, were "too uncritical"

The question arises, where is the financial reporting to be found that isn't too uncritical? Fleet Street's finest are hardly famous for it. You'll wait a long time for a scandal to be broken in any mainstream paper - honourable mention to the occasional piece The Economist. Otherwise, we wait for Slicker's column (no relation)(so far as I know) in Private Eye.

The difference, I suppose, is that Fleet Street is cowed into sycophancy by dependency on advertising revenues: the Beeb should be above such considerations. If it can't rise to the occasion from this privileged position, what's the point of financial independence?

Blair's Shame: (no.94 in a long series)

I must crave the indulgence of Slicker and his finance-oriented readership, for straying so far from the business theme whilst temporarily at the wheel of this vehicle. However, I was mightily stung by a report on Channel 4 News tonight.

To summarise: the British Army, having employed the services of many Iraqi translators (and, let's face it, 'little helpers' of several kinds) since the invasion, is now preparing to let them twist in the wind. And they'll be the lucky ones. The threats and reprisals have started already.

Now this is by no means unprecedented: previous withdrawals in unseemly haste from Palestine, Aden and Cyprus resulted in horrible fates for those locals who had helped us there. But the British Army had learned its lesson and when, in the days of the much maligned John Major we prepared to withdraw from Hong Kong, we carefully looked out for the interests of our sometime helpers to ensure that the worst didn't befall them at the hands of the incoming regime.

So - the British Army knows better than this. We can only assume its current shameful stance is dictated by the Shameless ones who begat the sorry mess. Let them hang their heads

NuLab Energy Policy: Left Hand, Right Hand ... Win Some, Lose Some

Well would you believe it? On the very day that yet another Energy White Paper hits the DTI website, BP announces it won't be going ahead with its much-vaunted plan for a carbon-capture-and-storage (CCS) project for a coal-fired power station in Scotland.

The ostensible reason is that the government won't be deciding something-or-other (perhaps it hasn't made up its mind whether it likes the sound of clean-coal electricity?) until November. Not good enough, says BP. What a dreadful coincidence of timing: and there was us thinking that BP was wired into NuLab - Anji Hunter and all that.

Is it just that, as any fule kno, CCS is grotesquely uneconomic? Or do we detect a bit of the legendary BP brinkmanship here? McBroon has to be shown he can't take BP for granted?

What a happy honeymoon this is turning out to be for Wee Gordo. And what a good job John Browne already has his peerage, eh?

Hello, Boys ! - Turkey Ready to Join EU ?

One needs to think carefully before agreeing with the French, but when it comes to the vexed question of whether Turkey is ready to join the EU, they may have a point.

Today we read that Istanbul's urban planning department has banned billboard advertisements for bikinis, saying:

"The photographs were not up to EU standards and could cause car accidents"

Do they understand nothing? A bikini ad meeting EU standards is guaranteed to cause car accidents, and indeed a whole range of minor industrial and domestic mishaps. What will they think when they are forced to import French body-lotion posters?

Clearly, they have a cultural mountain to climb.

McEnron Economics

Here’s something linking business and politics. It’s a commonplace observation that McBroon is indulging in ‘Enron Economics’ on a large scale, what with PFI and all.

I know a bit about Enron (*coughs*). Au fond, Enron went bust for the oldest reason of all: it was growing rapidly and its profits ran way ahead of its cashflow. The usual ways to avoid being dragged under by this are (a) forgoing growth (yeah, right) and (b) borrowing.

But for Enron to borrow openly would have meant losing Investment Grade status – and with it, the ability to transact its most profitable deals. So it turned to ‘off-balance-sheet’ devices. Initially these were mostly quite clever (*coughs again*) and legitimate securitisations: but the appetite was insatiable and eventually it all collapsed in circumstances of criminal farce.

Turning to Wee Gordo’s use of Enron Economics, I have these questions for those who understand such things.

1. why would a sovereign nation with a developed economy and enormous borrowing capacity bother with such fun and games? (Is anyone fooled?)

2. how and when, exactly, is it all going to come unstuck?

Let’s see how far we can get with this knotty exam question before the Slicker himself returns and puts us right.

Do not attempt to write on both sides of the paper at once.

Sunday Papers Roundup

Barclays seeks regulators' nod for ABN Amro bid: the takeover saga may be entering its closing stages.

As usual, though, the papers miss the real story. To clinch this deal, Barclays is offering to move its HQ to Holland, but my regulatory spies tell me that the Dutch will refuse to act as ‘banker of last resort’ for the whole group. So – will the Bank of England ? Over to you, McBroon.

Police hunt arms trail in Downing Street: they are looking for e-mails sent by and to Jonathan Powell, Tony Blair’s chief of staff, suspecting that BAe adviser Lord Powell, his brother, was lobbying Downing Street aides to have the investigation stopped.

As we asked last week, did Blair really think he’d killed this one?

Darling faces up to a nuclear tomorrow: although he was anti-nuclear 20 years ago, little Alistair “is now in favour of it as part of the mix”.

He’s also in favour of keeping in with nuc-backer McBroon. So it’s a very fortunate coincidence that he’s changed his mind. British Energy, which is starting to recruit for the anticipated bonanza, will be delighted.

Ministers will block Gazprom move on UK: "Whitehall officials have indicated that ministers have reserve powers that could block a takeover."

Another sign that McBroon is making the running: Blair had indicated Gazprom was welcome to buy whatever they fancied. Wee Gordo was always more skeptical ...

And just to emphasize the point: Russians ready to seize back BP's Siberian gas reserves.

Well, last year they shafted Shell, Exxon, Chevron, ConocoPhillips, Total, Marathon, Statoil and Norsk Hydro – so why not BP? John Browne was naïve in more ways than one.

An Honourable Leftie

Politics this morning, with at best a tenuous link to business.

This is David Winnick (Lab, Walsall N): not the kind of MP I would normally have much time for, and I rather imagine that most readers of Slicker’s blog would feel the same way. He is an unreconstructed leftist; and he had the temerity to sit for Croydon South for a short time (as the result of a small accident in 1966) and was thus my MP.

However, twice in one week he has conducted himself as a man of honour. Firstly, he declined to nominate McBroon, and will thus be able to wear proudly the Don’t Blame Me teeshirt in due course.

Secondly, he voted against David Maclean's shameful Freedom of Information (Amendment) Bill. His speech in the Commons yesterday was heartfelt and right on point.

By contrast, the current MP for what is effectively the same Croydon constituency Andrew Pelling (Con, Croydon Central), voted for this disgraceful Bill. I do not know why.

David Winnick, honourable old leftie, I salute you.

Schopenhauer on Blogging (4)

To round off the week . . .

"Few write as the architect builds, drawing up a plan beforehand and thinking it out down to the smallest details. Most write as they play dominoes: their sentences are linked together as dominoes are, one by one, in part deliberately, in part by chance."

Wonder who he had in mind?

Plus - quelque-chose pour le weekend

Go Tigers !

(That was me)

City Jargon Explained

Slicker, Newmania and all the ex-City types (Guido, Tuscan Tony, the Hitch et al), bandy around their esoteric financial jargon, frequently leaving mere mortals clutching at thin air. But help is at hand . . .

It is a little known fact that the Drew was once FSA-registered himself – in his *ahem* Enron days, when some of the more imaginative deals we did were without doubt financial derivatives. While the Slicker’s back is turned I am therefore able to give you this guide to what all those mysterious terms mean . . .

Contango - Mr Newmania dances a nice contango, but you need to buy him a couple of drinks first

Backwardation - After a few more drinks he also goes into backwardation

Hedge Fund - Cash put aside for hiring a gardener: no city type would ever stoop to gardening

Delta-Hedging - The creation of a neat triangular hedge or bush using fine clippers

Forward Curve - I’m sure we’ve all sneaked a look at Theo Spark’s NSFW from time to time

Butterfly Spread - See Theo Spark, ibid

Straddle - Makes you wonder what they get up to, doesn’t it ?

Vanilla Option - Vanilla’s OK - however, the really cool traders choose raspberry

Rainbow Option - I bought one of these once, it was physically settled on the more expensive of butane, propane or naphtha (haha, you didn’t think I knew what I was talking about, did you?)