Pre Question Time. The 'Death tax' returns.

THREE

David Dimbleby is joined in Bath by Chris Huhne, {Greener then Robin Hood's tights. The speedy minister is known as Dr Lucky. And he is lucky. If fate hadn't been so kind, he'd now be leading the Liberals . Liz Kendall, 2010 new broom Labour MP. Shadow min for old people. Another one of the many grammar school head girls in the Labour party. Daniel Hannan,outspoken MEP and journo, super-euro sceptic. Had a massive shock when Iceland, his model country for the anti-EU, voted to join the EU in 2009.
Justin King Sainsbury's chairman and someone who knows his onions. Done a good job,
and Jimmy Wales.{the wikipedia guy! I didn't know. I thought he was one of Princess Anne's children}

looking at the lineup makes me feel confident enough to go early
1. The old folks charter. Home care breaches Human Rights. So says axe grinding human rights commission.
2. Maddie's mum, Alan Partridge and floppy lay into the press. Its a very strange inquiry. I have zero sympathy for the press but it does seem a tad, prejudged? freedom of the press/ internet.
3. Egypt. We were told Twitter had saved the Arab world without bloodshed. So what's going on?
4. Is Chris Huhne's new 'take out a loan now, while you can't afford it, and you'll save more overall than you've borrowed because of the increased electricity costs of green energy policies by 2020,' the stupidest idea since someone said "I've 10,000 tons of gold taking up valuable vault space that I want gone by Sunday and I don't care how much I get for it."
5. New hire and fire rules. Is this the most Dickensian government since Thatcher?

Government Borrowing on track

It is a small story really in today's world of a collapsing Spain joining u-bend bound Italy, Greece and Portugal. But yesterday the Government did announce that despite the economic downturn this year, it is still on track to meet its deficit reduction targets for 2011/12.

Which is quite some achievement, and in fact has only happened because £4 billion of extra taxes have been unexpectedly collected (pity those taxpayers). However, as always, the really interesting bit is the lack of actual, er, cuts. Indeed the usual suspects of Health, Education and Social Care are being restricted to just 1% growth on last year  - but the overall spending is still going up. The rate of increase is being reduced and taxes are coming in to help change the balance, but we are still some way off seeing any actual reductions.

I suppose we should be grateful for small mercies and with inflation at 5% real-terms cuts are being made, if not nominal. We are though a long-way off actual cuts though - who would have thought it if you just watched the BBC and read the papers?

The really good news though is that timing is everything. As the Eurozone collapses with shambolic new apolitical Governments all the rage, UK Gilts are currently trading ever more cheaply as investors flee an area where there is no fiscal or monetary certainty for one that has a plan and is following it through.

Here is something you won't see me write very often; well done George Osborne.

Equity Trading Mea Culpa, Part 11

This year for trading equities started so well - too well as I should have know. My portfolio was up 20% by February and as my hand hovered over selling to take profits, my greed got the better of me.

A painful lesson has since been learnt, greed is not good.

Unfortunately a couple my main holdings dived so quickly that selling out was not even really possible. So now at 50% down on the year, my portfolio continues to flatline and gone are the day so gleefully updating the blog! Instead, it is with a deep sigh that I try and make the best of things.

Clearly the Euro-area break-up (which I foretold, to make matters worse, not even taking my own advice, moronic as even my wife reminds me) is going to be with us for a good few months yet and may well precipitate an even bigger fall in equities.

On the other hand, constant money printing by the Bank of England also will help to temper any falls and make equities a good long-term bet. Certainly UK Gilts cannot go up in price anymore. But whilst the markets rage, there is little to do.

In amongst some disastrous holdings, CAZA, AST, which are both 80% down on the year and unlikely to revive within 12 months, there are some good bets still, particularly at these prices:

EMED - A new Spanish Government means that surely within a few months permission to start mining at Rio Tinto will be given. With the price at 7p and operating profits for year one expected to be worth that 3p per share, there is a long way to go for this one. Long time readers though will note I could have written this 3 years ago more or less...hope springs eternal.

GKP - Actually flat on the year, finding billions of barrels of precious oil every few months makes this a monster bet. Lots of complex politics in Iraq holds it back, but with Exxon moving into Kurdistan a break in the political deadlock maybe approaching - with that this is another share that could easily double from its current price.

XEL - Xcite Energy, sigh, what a rubbish year after a good start. Still though next year will see it start producing 20,000 barrels of oil a day in the North Sea and a become a solid safe company. The highs of 425p per share are a long way off. But at 118p today there is huge upside with a 6 or 12 month view.

At least everyone is losing, even Anthony Bolton.

Coalition fails Housing Econ 101

In an unscheduled break from the unremitting coverage of the euro area pre-Xmas break up, a change of focus for today.

I have a bad cough anyway (2 weeks and counting...), but this was made much worse this morning when I read about the latest wheeze of the Government to push a 'growth strategy.'

Why on earth would we subsidise people's house buying? The single biggest driver of costs in our economy is housing. If we could drop our house prices 30%, rents would be cheaper, mortgages would be cheaper - in fact employers would be able to pay people considerably less to have the same standard of living. Even mobility would improve as people from the North could actually come and live in London and the South East.

Lower house prices are the best route to improving our international competitiveness. Now, normally no one is in favour of this because lower house prices will also destroy a huge chunk of people's savings and all our mortgage banks too. Long-term though, this is a no-brainer.

On the one hand the Coalition says it is in favour of building more houses, another good way of helping to reduce prices - somewhat impacted by the huge immigration levels that push demand - but still sensible.

But really, how can they do these two things at once without seeing the inherent economic contradiction:

Subsidise mortgages = allow people to buy property they can't afford with slim equity

Build more housing = reduce prices, therefore trapping in negative equity anyone who only had slim equity to start with...

Dear oh, dear, this is really Lib Dem ability level of thinking. I have not even got around to mentioning the super low interest rate environment that has helped prevent a crash in house prices during the recession, which will instead now happen when interest rates normalise in the next few years. Long-term, there is certainly little likelihood of house prices rising from here.

So, Farwell (for now) Martin Johnson

Oh dear, it really didn't work out at all. If ever proof were needed that generalship and strategy are entirely different from leadership and execution, here it is.

No-one expects a manager to be able to cover all the bases himself, and Heaven knows the RFU can afford as big a coaching team as it needs. So he's no tactician ? Hire one. Doesn't know back play ? Get a specialist. etc etc.

But ... he does have to be able either (a) to select players, and then frame the strategy to suit the chosen team, or (b) devise a strategy, and select accordingly. And in particular he needs to be able to pick a captain - he of all people should know that.

Instead (to take just one example) England has a tremendous pool of back-row talent, and no coherent back row: compare and contrast with the one that was driving Johnson's arse forward all those years. Oh, and no captain. Whatever Moody's undisputed talents and bravery - leading from the front, fine, but - being permanently face-down in the mud after yet another over-the-top solo charge doesn't really do the job.

Whatever Clive Woodward imagines, the 2003 World Cup belongs exclusively to Johnson; and no-one can take that away from him. He's still a thoughtful and deeply knowledgeable sportsman. The very best of luck for whatever's next.

ND

weekend rest

While we wait to see if the Euro is still here come Monday, a caption comp.

"Think about it. Take your time. Silvio and George chose wrong."

"Its not a Panzerschreck. Its a Lugerbefingern. And its loaded."

"No Tobin Tax? So !!!...You're name is also going on ze list!"

"Ann Widdecombe? Yes, I know her stylist well. Why do you ask?"

Can the Euro make Christmas?

I had written that headline a few weeks ago, I am pretty sure I would have ended up with no readers in short order. Today though, there is some (not much) plausibility to it.

As always lets review the day's news:

1. Spain and Italy bonds under 7% only due to ECB bond buying
2. ECB Finance chief points out that Germany has 82% Debt to GDP ration and is not safe
3. Reports that Japanese investors are liquidating Euro assets
4. Rumours in the City that Germany is preparing to exit the Euro
5. Realisation that Germany's funding commitments total nearly e500 billion and could sink the Country.
6. Cameron and Merkel meeting so that he can tell her the Financial Tobin tax is off.


So, another typical day in the Eurozone with each point being worthy of a crisis and yet this is just today's news. With no real plan the EFSF forgotten about already and continuing riots in the the new Authoritarian states of Italy and Spain, the clock ticks closer to midnight.

The worst issue is that the failure to grasp the nettle and move to a two speed euro or a managed set of defaults is going to make the end of the crisis even worse. Yesterday a senior Fund Manager at a major US institution remarked to me: 'It's all over and this is going to make 2008 look like a picnic.'

Oddly, the more people tell me that the more I think something will turn up - the general view is often wrong - but what that might be I can't see.

Question Time : Its the Tories, isn't it? edition

FOUR!

David Dimbleby is joined in Aberystwyth by Grant Shapps, Chris Bryant, Elin Jones, Will Hutton and Sir Simon Jenkins.

BQ's birthday today. Not staying in for a Welsh one when the restaurant beckons. Might be back in time for scores.
BQ says
1. Think of the children. Youth unemployment highest since 1994! {I'm class of '82. These youngsters don't even know what unemployment is.}
2. Are the English racist against Sepp Blatter?
3. Winter fuel payments. Is it right for rich pensioners to give their allowance to poor pensioners?
Isn't that the big soc in action?
4. Work Experience interns. Has Hazel Blears finally had a good idea?
5. Smoking in cars causes more deaths to infants than Malaria. Possibly. Lets ban it anyway!

Leaderboard as of
18/11/11

Botogol - 35

BQ - 32
Budgie - 31

Measured - 30.5
Nick Drew - 30.5
Appointmetotheboard - 30
Dick the Prick -29.5
Philipa - 28½

Hatfield Girl - 28.5
Mark Wadsworth - 28.5
Timbo614 - 28
Sebastian Weetabix - 28

Hopper - 26½
Miss CD - 26
Hovis - 26
Miss S-J -25
Malcolm Tucker - 23½
GSD - 22.5

CU - 22
Jan - 16.5
Andrew - 15½
Sean -9.5

Woman on a raft - 8
Electro-Kevin - 4
Anon {1} -3½
Alex - 1½

Northern Wreckage

Announced this morning is the sale of Northern Rock to Virgin Money for £747 million, with a potential for some more funds to come to push the deal over the £1 billion mark.

No doubt this will be spun as some achievement, getting a bank back to to the Private Sector. Of course, there is a slight issue here. There are two Northern Rock's, this profitable retail bit and the loss-making money sucking turd which is Northern Rock Asset Management.

Conveniently the nearly £8.2 billion of loans from the BOE still outstanding to Northern Wreck are to the Asset Management business. This business, although paying down the BOE loans, is still making losses of £250 million a year.

We don't have enough info really to decide whether this Asset Mgt Company will ever release enough assets at profit to repay the loans and its own winding up costs - let alone make a judgement on the true cost of support in terms of our Gilts rates which were so impacted by £30 billion of loans and £70 billion of guarantees. No doubt all of this will be hidden from Public View given the terrible nature of the decision not to let the business go under in 2008.

One question remains, why are none of the executives of the business in court. Their wreckless plan has cost the taxpayer billions of pounds - which equates to thousands for each taxpayer. I rarely agree with the trots of Occupy London - but where is the trial? Applegarth got a £63k a month pay-off instead.

Mr Drew Takes a Haircut

Being a big believer in diversification, and having no great faith in the FTSE, four years ago I invested one of those structured products: Protected Capital and Growth, meaning a guaranteed minimum 21% return - or more, if the FTSE over-performs - and my original investment is secure. Note how I didn't use inverted commas there, trusting soul that I am. You know what's coming.

So. Today Legal and General write to me. It starts innocently enough.

"We'd like to let you know ... oh? that's kind ... about an important change we've made to your investment ... and how it will affect what you get back when your plan ends ... but isn't that, err, 'secure', to use your word ? ... Your investment works by investing in a fund, which in turn invests in a number of financial institutions ... go on, I am beginning to get the picture ... These provide the return of your original investment plus growth potential."

OK, so by now I am guessing that the next bit will effectively read: "Or not, as the case may be." Right?

"The institutions invested in were: A, B, C, D, E, F, and ... wait for it ... Irish Life & Permanent plc."

Bastards !

"As you can see, one of the institutions was Irish Life & Permanent... Irish financial institutions are less likely to be able to pay back what they owe. We've sold this investment earlier than intended and received less than the original value ..."

16% less, in fact, resulting in a net haircut of 2.63%. AND it is not covered by the Financial Services Compo Scheme, it seems, because Legal & General itself has not failed to meet its obligations. Or so they tell me.

And this, I suspect, is increasingly what we will all be confronting as the postman makes his daily deliveries.

Still, good old A, B, C, D, E & F; and praise the Lord for diversification, eh? Until the next letter hits the mat...

ND

Youth unemployment goes through the million mark

Plenty of hand-wringing in the media will ensure on this news. The Government will get blamed and implored as usual that 'something-must-be-done.' Whatever it does, it will be interesting to see how little in published articles the few homes truths are ignored:

1. Education - We have created a huge amount of graduate over-supply. 73 Graduates applying for every job currently. The solution is less university places and less waste which the Government is actually doing, but it gets brickbats for this rather than praise. As for school education, a generation and more has been betrayed by low standards.

2. Immigration - These low attainment levels mean that people can come here from 3rd world countries and plausibly be better workers than our own people. A terrible state of affairs. One thing to try is to reduce immigration but this has proved challenging. Another would be to encourage people to take jobs and learn skills through reducing benefits - but this is not very palatable to hand-wringing types.

3. Age bias - the Government will do something to encourage young people into jobs, but in reality it is older people who need money to look after the young. Why should older workers by penalised? Is it really harder to get a new job at 19 than at 57? Addressing the lack of job demand and over-supply of labour through an age-based rationing system is grossly unfair.

4. Job Creation - UK Corporates are sitting on huge cash piles whilst they watch the Euro-maelstrom. meanwhile the Government is slowly cutting a few non-jobs away. To get more job we need more private sector investment which won't happen this side of the Olympics. To at least try and make it happen we could reduce taxes, but that will require a leap of faith in making further cuts to the Public Sector. Hand-wringing types will be frothing if they have read this far.

All in all, its a hard problem to which  at least there are some clear answers, but because the answers are tough and divisive and not cute and cuddly there will be inaction. My estimate is youth unemployment will stay over a million for at last 2 years, possibly more as the population is continually boosted with young immigrants.

'Allo 'Allo !

Someone's leedle tank seems to be on our lawn.


And she seems to be wearing the uniform ...

Quote of the Day: Godwin's Law Edition

News from the CDU's annual rally. Err, congress. Not 'rally' at all.

'Germany’s economic strength gives her leverage that policy makers who built the euro didn’t have. “[Merkel] can have much more of a German stamp on this political union than 20 years ago,” Brzeski said'.

Great choice of words Mr Brzeski, the whole of Europe is greatly comforted.

The Euro disease gets hit by Wideboy tactics

Blimey, even by their own poor standards, the Eurocrats have been at work today, undoing every positive with a negative. As a result, Italian yields have not moved and the markets are heading south again. Bravo indeed.

The main culprit today is on Jens Weidmann, President of the Bundesbank. Herr Weidmann has seen it fit to declare that the ECB is not the lender of last resort for the Euro. Which begs the question, who is?

Unfortunately for the Euro-member countries that is not a question that should be regularly asked aloud. Rather in the mind of constantly asking ones neighbour as to whereabouts of his spouse for whom you know has eloped with someone else.

With no lender of last resort the world's 2nd largest currency has ever decreasing credibility. All this on the day when Super Mario was appointed in Italy to save the Country from the hands of its politicians.

For all the the plentiful problems with the Euro a new one must be chalked up; communication. If senior representatives of the nations within it cannot but help undermine each other's attempts at fixing any problems during a major crisis then indeed the 'project' is doomed.

Silvio: the Opera

Time for a cultural outing, so we're off to the opera again ! This time, it's the tragi-comic Silvio, with a well-loved cast of characters. You remember the plot ...

* * * * *
Fabulously rich Silvio is sulking in the Palazzo Fribi when he hears a commotion. It is Toni and Cheri, two perennial seekers after wealth, who have come to Fribi once again in the hope that he will have a little something for them. Standing under his window, they sing the plaintive duet Deh vieni, non tardar (get yourself down here, don’t hang about !)

Silvio throws open the window, his face as black as thunder, and he calls down angrily: Follie! Follie! Sempre libera (You’re both mad ! Always after a freebie !). Cheri is non-plussed: you know we’ve always liked a bung, she says.

You lika bunga ? replies Silvio, and his demeanour changes at once. He invites them in, and sings a wistful aria: Caro nome che il mio cor (you’ve named something dear to my heart).

Once inside, Silvio plies them with wine, and once again listens to Toni’s well-rehearsed apology for his wife’s grasping nature: she was brought up a humble scouser, and consequently is rather keen on personal advancement – Toni sings La donna é mobile (she’s a terrible social climber).

Seeing Cheri getting increasingly tipsy, Silvio is emboldened and, turning to the audience, delivers the sly refrain: Dio! mi potevi scagliar! (Egad, I can have this scally!) When Toni steps outside to take a phonecall, the crafty Silvio leads her to a bedroom, and invites her to slip into something more comfortable, singing Eccomi in lieta vesta (come, put on this light chemise).

Toni returns to the salon and finds Cheri and Silvio gone. Guessing what has happened, he cries out: Io l'ho perduta! (yo ! the slapper has lost it this time!) - and rushes off in search of them.

To be continued ...

ND

MF Global: What Counts As Safe Anymore ?

A short while ago I wrote, can't recall where, that I'd assumed back in '08-09 the financial system itself might collapse - credit cards not accepted, wire-transfers not possible, funds frozen etc etc; but that apart from one Sunday evening when apparently the ATMs were nearly turned off, for most people this actually never really happened.

So - can we afford to be sanguine this time around ? Once again, I'm assuming not - and as Exhibit A we have the ghastly case of MF Global.

Hopefully not too many C@W readers have been personally affected by this; but some folks have been seriously harmed. Read this and gulp. When segregated client funds start going walkabout, the end is nigh. What - or who - is next ?

It's the reason (in my personal opinion) why sticking to physical is best if one wants PMs as a hedge against the worst. Even then, unless its under the mattress ...

ND

Euro-Meltdown: Hands on the Levers of Power

We've suggested that only the grown-ups get to play when the chips are down: and also that the big players have big levers to hand - Which They Will Use. Careful if you're in the way when it happens.

Well, the euro-chips are down all right. Who are the grown-ups now? The Germans are in no doubt: its themselves, them and a few of their trusties. That was the thrust of the Bagehot piece last week, and here's an interesting article from the Speccy consistent with that view. Many of us will doubtless have had lectures over the years from German acquaintances along the same lines: you Anglo-Saxons (oh the irony) and your irresponsible, short-termist market games - someone needs to be planning for the future !

Then again, perhaps they are kidding themselves. Is it inevitably to be the real Big Boys to sort out the mess ? Evans-Pritchard thinks it is.

And does Britain get heard in all this ? I'm afraid that to my ear the noises from the Westminster play-pen sound just a bit plaintive.

ND

Question Time comp: Pagliacci edition

David Dimbleby is joined in Newcastle upon Tyne by Michael Moore,{Lib Dem and someone who normally makes a bold statement, only to have it completely overturned the following day. He tries hard though.} Rachel Reeves,{Labour Mp: Ex banker but long time labour supporter makes her stick to party line, even when she knows its rubbish. Hopefully more than just a mouth on a stick tonight.} Nadine Dorries, {Batswoman, as she is known in the tea room. Plenty to say. Entertaining if nothing else. Professor Colin Blakemore {erm..?? {wik-wiki..} genius doctor,neuroscientist and total hate figure for animal rights protesters. Badly upset Tony Blair when he complained he wasn'tt allowed on the honours list for not being PC enough. I think I'll like him, and Stephen Pollard,{editor of the Jewish chronicle?}

[What is going on Dimbleby? This looks like a set up.. Well, you have all been warned.]
BQ goes with the early Q's

- Poppymania - Stand up to Fifa
- Berlusconi - - Can't wait to read the memoirs. HG can you get an English language copy of Angelo Rawnsli's "The end of the bunga-bunga party"?
- May or May not be telling the truth on immigration
- Healthcare .. Opening up privatisation by the front door
- Alzheimer's its alright to divorce says priest. What does the Rabbi say?

Looks like 5 more shows to go, including this one. So..in Tracey Island voice-over mode -FIVE!

Leaderboard as of
11/11/11

Botogol - 32

Budgie - 31

BQ - 30

Nick Drew - 29
Timbo614 - 28
Sebastian Weetabix - 28
Appointmetotheboard - 27½
Measured - 27.5
Philipa - 26½

Dick the Prick -26
Hatfield Girl - 26
Mark Wadsworth - 26
Hopper - 25½
Miss S-J -24
Miss CD - 23½
Hovis - 23.5
GSD - 22.5
Malcolm Tucker - 22½
CU - 22
Jan - 16.5
Andrew - 14½
Sean -9.5

Woman on a raft - 8
Electro-Kevin - 4
Anon {1} -3½
Alex - 1½

Gas: An Interesting Development

Ofgem, it seems, is instructed to report on whether "further action is needed to ensure that medium- to long-term gas supplies for consumers remain secure".

Given the signal success of the free market in supplying our gas since we became a net importer in 2004, this sets alarm-bells ringing in Capitalism Towers - but a positive outcome might also result.

First alarm: is this part of a campaign of denigration? Gas - sounds nice but it's running out, and comes from nasty places like Russia.

Cui bono ? The nuke and renewables lobbies who would have us turn our backs on the only proven positive way to reduce CO2 emissions in a country like the UK, namely by replacing coal-burning with gas burning. (The other way - recession - is pretty effective but not terribly constructive.)

Second alarm (paranoid ? me ?): is "further action needed to ensure ..." code for more subsidies? It usually is: and from the same DTel article:

"Separately, the regulator said yesterday that it plans to strengthen the incentive system for suppliers to deliver adequate gas supplies if a gas shortage occurs."

Cui bono ? We've fingered Centrica - regular little bung-hunters of late - hoping for newly-minted subsidies to gas companies last year: and they are not the only gas company in town.

But on the positive side ... it is going to be hard for Ofgem to ignore the potential of shale gas. This, of course, goes a lot further than 4,000 holes in Blackpool, Lancashire: because even if we are slow off the mark, others in a whole range of countries will be fracking with a will, and the quantities are market-moving wherever they come from. We know this because US shale production has already moved the markets - theirs, and ours.

Cui bono ? All of us !

So - roll on May, when Ofgem must report. Perhaps by then we'll have a new ... there I go, wishful thinking again.

ND

Silvio goes, Italy bond yields hits 7%, students riot

I would have lost my bet over just a few hours difference!

Silvio Berlusconi has finally given up the ghost in Italy and still the markets are pushing up Italian debt costs. 7% is well beyond the means of the Government to fund long-term. In the UK you would be currently looking at another £40 billion a year in debt servicing costs - imagine the pain of those cuts.

However, I am really looking forward to the riot today - something fun to watch out of the window!

Economic Growth: Stick It To The Greens

It's never really been in question with the mainstream parties: but now the drive for economic growth has moved decisively centre-stage.

Who is it, then, that opposes economic growth ? Ans: the Greens. And, I'm willing to hazard, a fair number of the great unwashed assembled outside St Pauls. These, from the Green Party's website:

"money drives growth, which drives consumption, which uses oil, which damages the planet"

"Other political parties strive for ‘economic growth’, which may sound impressive, but ... in a world of finite resources, it cannot make sense to depend on economic growth. Only the Green Party seeks an economic system which recognises the limits of the natural systems of the planet"

And this from Occupy LSX:

"Why do we rely on a global economic system based on infinite growth ... leading humanity and the environment to destruction [?]"

OK, we all understand the arguments: but we need to remind everyone just who's on which side of this fence. Can we perhaps get Miliballs to preach the usual vehement Pro-Growth sermon to the representatives of the 99% on the steps of St Pauls ?

And of course the Greens would rather like to keep their heresy quiet just now, and Caroline Lucas is careful to advocate "growth-in-the-green-economy" whenever she's on Newsnight.

There are rather a lot of battles to be fought just now. But perhaps, when time permits (and if it doesn't look too much like bullying poor Dr Lucas), opportunities might be found to drive a decent-sized wedge between her and the St Pauls brigades on the one hand and, well, everyone else on the other. That's - the whole of mainstream of western politics.

Footnote: Dr Lucas' absence from the encouragingly measured Parliamentary debate on shale gas was noted by her fellow members of the E & CC Committee ... low-profile time, is it ?

ND

QE2 vs QE1 compare and contrast

Last time we had QE is managed to put a good 13.1% on the FTSE within a month, after this the FTSE jumped up by the same amount again, topping out at well over 40% up in the end. This time around the FTSE has put on  8% - so as people have been saying perhaps you do not get the same effect second time around.

Having said that, when you consider the storm-force headwinds that QE2 has sailed into with the eurozone crisis - as opposed to 2009 when the recession was bottoming out - it is still quite impressive.

It is easy to say the markets are toppy now and heading down from here, but perhaps looking at the QE impact from last time would lead to a conclusion that the markets have some way up to go yet?

BBC On Energy Policy: Worm Turning ?

Well, first the supertanker shows signs of turning, and now it's the BBC worm. Just finished watching Panorama, which dubs Crapper Huhne's madness the Great Energy Gamble, as well it might.

As far as any such programme can, they spelled it out: it's the gamble that gas prices keep rising as fast as those of oil & coal. Because if they don't - and there's a good case to think they won't - then however pro CO2 abatement you may be, it is necessary to admit we'll be paying more than we need for electricity. In the long run, much more.

They skewered Huhne and he repeated his sophistic nonsense one more time for the camera. But reason is beginning to prevail. And if the BBC is moving onside, perhaps the outright U-turn isn't so far away.

Y'see, I am optimistic - sometimes !

ND

It's a knockout; Italy vs Greece

Well, we can't complain that Monday's are boring anymore in Europe. Italy's bond spreads are headed up at a remarkable rate today.

What level do they have to reach to force Berlusconi to resign? I think 7% but can anyone show me a decent price on this? He has to reach a vote on the 9th November so I guess he may hang on to this on the other hand

Meanwhile, Greece is also looking for a new Prime Minister to do the decent thing and roll over for Merkel and Sarkozy. All without the people having their say. In the long-term, the politco's are going to really regret the way things are working currently. With little legitimacy for events that are more economically damaging than wars, they are not going to avoid massive social unrest. All those calling for politicians to do their jobs are underestimating the gravity of the situation. Also, unlike in say WWII, the people have been lied to for a long-time and so are neither amenable nor acquiescent to the decisions being made of 'their' behalf.

Nice start to another exciting week...

Miliband backs the protesters

Ed Miliband has clearly read that Obama has backed the occupy Wall Street cause in the US. So in aping his actions he has backed those in London.

Miliband says this is a battle of 99% against the 1%. Where is the justification for all this rhetoric. This is a battle between the want everything for frees and the realists. I met some of the Finsbury square protesters the other day.

Well meaning socialists as you would expect, but none had a job or had ever run anything bigger than a one man band magazine. None appeared to have current jobs which suggests benefits show they finance their stay. People like this, with no experience of the realities of trying to run complex systems like businesses or economies are not adding anything to the debate of trying to improve the world.

Worse, Ed Miliband's Labour party have made the current situation much worsen with their awful overspending during their time in power to buy their votes.

What a ridiculous position to take to back these people when you yourself were key to causing the problems faced by the country. He has little going for him as a man, but he certainly has a lot of chutzpah!

When The Grown-Ups Take Charge

Many of us in these parts are pretty hostile towards Euro-federalism, and it’s easy enough to have a chuckle at the apoplectic reaction to Papandreaou’s referendum. Seeking democratic endorsement for fundamental economic interventions, perish the thought, ha-ha ! These Euro-democrats, they don’t like it up ’em, eh ?

Maybe, just maybe, it was a calculated Machievellian move. But it looks like, and certainly counts as, an entirely childish act, in circumstances where only grown-ups are welcome. And this particular Boy George has shown himself to his Euro-peers to be delinquent. Juvenile.

Look at the haggard faces of the main players, look at their negative body language. Hear them lost for words. See their mortification at the disapproval of China and the USA. At times like these, the only contributions wanted are those intended constructively, by the lights of the crisis itself. Anything else is to miss the gravity of the point.

The Mediterranean debt crisis is the equivalent of war: we might as well all be facing an invasion from the planet Zog. In real war, of course, the position is clearer: the generals, the War Cabinets (no children appointed there) take the powers they need and their actions require no further legitimacy (until, of course, they lose and victors’ justice prevails). Those that by temperament would be minded, or even likely, to raise issues of due process, of morality or balance or consultation or constitutional propriety or any number of happy peacetime considerations - of anything that falls short of iron resolve, immediate purpose and utter expediency – will never make it into those counsels.

[“Open fire on that building.” “But Sir, there may be some of our own men, taken prisoner, inside!” “Fortunes of War. Carry on.”]

There are almost as few constraints in evidence in the boardroom when a full-blown commercial crisis is in progress – and certainly none welcomed, in the person of weak-willed HR directors or meddling non-execs. [“What about the accounting treatment ?” “We’ll take a view.” “Fiduciary responsibility ?” “Let the lawyers tidy that up tomorrow.” “The Risk Committee ?” “They’ll do as they’re told.” “The unions? the works council ?” “Stuff ’em. Get with the programme ! (& get rid of this man ...)”]

And in democratic politics, replete as it is with oppositions, awkward squads, disaffected back-benchers, ambitious and unscrupulous Disraeli-opportunists, parliamentary rules freaks and newspapers with copies to sell and agendas of their own ? Ah yes, it all gets a bit more difficult. But the same basic rules apply: adults to the front, children to the play-pen; Whips out, cards marked, threats made – we know the score. Oh yes, everyone knows the score – except, it seems, Papandreaou (and the eternal smirking schoolboy Berlusconi).

And is this an endorsement of expediency ? Hardly – we know that ghastly mistakes are made when counsel is no longer sought, when ‘yes’ is the only correct response – don’t we, Sir Fred ? For many years Churchill was the juvenile – until he took charge of the war room.

But, seriously. This is serious.

And in these circumstances, they stop at nothing.

Nothing.

And where does this leave Cameron, Hague and our own Boy George ? We should all read this, from the Economist. And ponder.

ND

No one said you can't have a coffee.

From the earlier comments. We were discussing the anti-capitalist protest.

The line 'aren't protesters even allowed to have a coffee now?' was used on QT yesterday, to excuse the protesters their Starbucks and bottled water and wifi and laptops and phones and pop up tents and general privileges. It was successfully used on HIGNFY to destroy Louise Mencsh. A bit unfairly too.

The point is not whether a protester should be allowed a drink of coffee.

Its that coffee was, and is, a major global trading commodity. It is almost THE symbol of globalisation and commerce. Coffee was traded between 15th century Europe and North Africa as a major commodity in the spice caravans. The Venetians traded coffee to sell at outrageous prices to the Venetian elite. Introduced into England it was taxed by the gallon, so was brewed and then stored cold in barrels awaiting reheating. Sounds lovely!

By the time of the Great Fire of 1666 there were 80 coffee houses in London. They were similar to today's where people went to meet socially and read the pamphlets and get some work done, have a business meeting, use the place as an office,and exchange information. The Lloyd's coffee house in Lombard Street was a good example. Edward Lloyd's little coffee house was a meeting place for merchants and shipowners. It grew into the Lloyds of London insurance market. By 1675 there were 3,000 coffee houses in England.

Coffee is environmentally unfriendly, has directly led to the millions of deaths of the indigenous peoples of South and Central America, Caribbean and Asia. The revolution in Haiti was partly African slaves revolting against the terrible coffee harvesting conditions. Coffee was a major contributor to world slavery. Between 1511 and 1886 over 1 million slaves were imported from Africa to Cuba in order to work their crops. That's just Cuba. Imagine the numbers in Brazil? Coffee is still mostly grown in the developing world. Vietnam is the second largest world producer after Brazil. {That's a world second after using private market reforms. Under the state central planning they couldn't grow enough for their own needs.}

The coffee trade encourages inequality in wages throughout the globe. Coffee growers claim unfair payment for crops. Coffee shop workers are in the poorly paid hospitality/retail sector. And coffee profits are immense. It is a product, sold with up to 1000% mark up, that directly caused the 2-300% UK high street rent rises of the the mid 90's. Those rises collapsed other long standing businesses who couldn't pay the 'new' market rates.

Mobile phone shops were another contributor, but it started with Starbucks. Starbucks started with some coffee enthusiasts and some savings from friends. Its now a global empire. But it has been attacked along the way for its supposed poor wages and reducing benefits for its employees in hard times and its unfair payments to farmers and a whole host of other wails from the left. It was a popular anti-globilisation target before that pointless movement morphed into the current even more pointless occupy ones.

It was also a target for environmentalists, save the earth's water supplies, recycling movements, unions, unfair competition lobbies and just about everyone else too. Its a miracle they ever got to so many stores {17,000 odd} and 135,000 employers, and serve 5-10 million people every day.

So coffee today is still almost THE defining symbol of capitalism.

So, no. No-one objects to a thirsty protester having a break from singing folk songs and engaging with like minded believers deciding to pop over to Starbucks for a Doubleshot® Energy+Cinnamon Dolce Drink and a Blueberry Oat Bar.

Its just that if they do, they are rather enjoying and feeding probably everything they ever campaigned against, whilst they refresh under the very logo of capitalism..

{What really tickles is the latest from Wall Street.}

After the end of trading Thursday, Starbucks (ticker: SBUX) reported fiscal fourth-quarter earnings of $358.4 million, or 47 cents a share, up from 37 cents in the year-ago period. The quarter included a 10-cent gain related to real-estate sales and joint venture acquisitions. Revenue increased 6.8% to $3.03 billion. Analysts were predicting earnings of 36 cents a share on revenue of $2.95 billion. Investors were abuzz about the results, sending shares up 7.4% to an all-time high of $44.48 in morning trading.

Greece: Life Imitates Art

"We're not proud. We take any currency, including goats"
- Michael O'Leary, RyanAir, 3 November 2011, announcing flights to Greece

"I thought you said you'd need to give them all a goat, not a vote !"
- Angela Merkel, 2 November 2011, announcing flight from Greece


ND

Question Time - Dont make a Drachma out of a crisis edition

David Dimbleby is joined in Westminster Hall by the Theresa May, Ed Balls, Shirley Williams, Peter Hitchens and Benjamin Zephaniah

But never mind all that..

Breaking News ****that the prize for the holder of the world champion title of QUESTION TIME SUPREMO will be ********* A bottle of

Suntory Hibiki Japanese 17 Year Old Whisky.

A seventeen year-old Japanese blended whisky from Suntory.The nose is quite full. There are notes of honey and wax, resin and oak. There are notes of gentle smoke and cacao, hints of cooked fruit and a nutty note. The palate is sweet and rich. There are crisp notes of mixed peels, raisin and custard with a little zest and plenty of oak. The finish is long with notes of oak and cocoa and sherried peels.

And if you don't drink..then re gift it. Its Christmas! {soon..depending on Austerity}

Leaderboard as of
04/11/11

Botogol - 28½

BQ - 26
Budgie - 26

Timbo614 - 25
Nick Drew - 25
Sebastian Weetabix - 23½
Appointmetotheboard - 23½
Dick the Prick -23
Measured - 23
Philipa - 22½
Hatfield Girl - 22
Mark Wadsworth - 21.5
Miss CD - 21½
Hopper - 21½
Miss S-J -21
Hovis - 20.5
GSD - 20
Malcolm Tucker - 18½
CU - 17½
Andrew - 14½
Jan - 14

Woman on a raft - 8
Sean -6
Electro-Kevin - 4
Anon {1} -3½
Alex - 1½

*It was noted how EK suddenly got interested when booze was mentioned.

German Constitutional Court Ruling

Another urgently-convened meeting of the German Constitutional Court has been held to put words into the mouth of Merkel. It broke up twice in disarray, firstly when a motion was put that Idle's voluminous submission be debarred on the grounds of it being dialogue (albeit of high quality).

A second adjournment was called when rival supporters of the more pithy submissions of Budgie and Helga clashed rowdily in open session.

Finally, however, the Court was brought to order, and declared: (a) that Peter Whale is the winner; (b) his 12-month austerity programme is to commence with immediate effect; (c) upon successful completion in December 2012 he may nominate his bailout sum in either EUR (125 billion) or Deutschmark (12.50). In time for Weihnachten.

By order of the Court.

UK SHALE GAS BREAKING NEWS

Am hearing that he report onto the Shale Gas drilling by Caudrilla in Blackpool has concluded that the fraccing did cause the minor earthquakes. This will be a big setback for Shale Gas drilling in the UK as politicians will reach for nurse and decide this is a bad thing.

No one will care that the US fraccing happens all the time, or that one of my small shares, AST.L has just confirmed a commercial well in Slovenia after fraccing.

I hate it when the green, lets-all-live-in-caves-off-the-warmth-of-our-love-for-each-other brigade get a win.

Sigh. One can only hope that DECC have some brains and that instead it will only be this area that is reviewed.....

Carry On Merkel

Yes, our favourite comedy act is back on the road.

How we all laughed.

Now, your turn. Compo: what is the fun-loving Frau saying this time ? Answers in the comments, please.Prize - a genuine "Merkel" bailout + austerity package of your very own ! Worth over € 120 billion !!

(Must be over 18, have own parliamentary majority, no referendums or plebiscites, the decision of the German Constitutional Court is final, euro may go down as well as up)

ND

EUphoria-reversed; Can the Greeks pass Eco 101 whilst MerKozy do plan B?

Nil points to Cityunslicker. I was hopeful (its my dreadful share positions you know, always making me think things can't get worse when I know they always can) that last weeks Euro deal would hold until February. Most of the comments here said it would be lucky to hold two weeks - turns out they were wrong too, we did not even hit 5 trading days.

And the the cause of the cataclysm - an outbreak of common sense. The Greek Prime Minister is sick of seeing opinion polls saying that the populous are against the Austerity measures, but no much else. His Finance minister sums it up thus:

“I can no longer look at polls where the majority is against the agreement, the majority is against the program, but a majority is also in favor of staying in the euro,”

There is no choice on the list for this, either they follow the European austerity plan (a terrible idea which will leave the country in penury) or they default and leave the Euro (50% GDP loss, all pensions lost, but a clean slate to start - probably worse than the first option). Thus a referendum will be held to decide if they want to pass the austerity budget.

It is very proper that the Greeks of all people should put this to a vote, the huge lack of democracy in Europe Union is its single largest failing as an entity.

This is some ways (not for the markets, they seem braced for a heart attack) a great result. The Greek protesters will be forced into making a grown-up decision. The Socialists willing a Utopian paradise will instead have to choose between the terrible and the disastrous.

Finally, MerKozy can do what they should have done before, prepare the financial firewall to support Italy, Ireland and Spain and speak to Portugal about holding an referendum of their own about Euro membership/austerity. With that a real solution will be found that will allow Bond rates to normalise.

Otherwise, 2012 is going to make 2008 look like a picnic.

Another Front on the Euro-Fight

I have never considered myself anti European: I am pro free trade, open markets, and plain dealing. I am however against taxation without representation, socialism, and grand 'liberal' projects conducted duplicitously.

I am also strongly in favour of the Common Law, and hostile to the Code Napoleon, as any Englishman should be: Nelson and Wellington didn't take the field entirely for their own amusement. As any well-traveled businessman will tell you, that's how the world of international commerce sees things too: for choice, almost wherever you go, big contracts** are drawn up under Common Law precepts and made subject to the jurisdiction of the London or New York courts (or, in the energy biz, Harris County Texas for some oily matters). Naturally, this is as good for the English legal profession as is the financial dominance of the City for the UK economy in general - perhaps more so, since there is no downside whatever. Indeed, it probably helps keep the City where it is: Mr CU will be able to tell us more.

And ... here we go again. The duplicitous ones have decided they want to squeeze out the commercial law of universal choice, by promoting a doctrine of a single European contract law - civil code model, naturally.

Have a look at this Grauniad piece, and note particularly how it starts.

Mike Bisby runs a small online business from his home in Hull selling cat scratching posts … Bisby would like to expand to sell his wares in other EU countries. But he is prevented from doing so by a complicated legal regime … “the practical difficulties make it near impossible for small businesses like mine to sell abroad," Bisby said. The EU has long been keen to get rid of the obstacles facing the likes of kitforcats.com …

Aside from the fact that this is utter bollocks, how do we suppose the touching story of little Mr Bisby and his oh-so-adorable, worthy but hard-pressed little enterprise brought itself to the attention of the Guardian? Is his a cause célèbre in South Yorkshire ? has Lord 'Mouth of the Humbug' Prescott been lobbying for him in Brussels ? do they speak of little else in Strasbourg ?

Or has it been drummed up by a PR firm, fronting for one of those sugary, pernicious Euro-campaigns ?

I think we can guess. Man the ramparts, chaps, here they come again.

ND


** I am of course aware of the very large Russian gas sales contracts to European buyers that are famously not written under common law. Much good it does them !