Energy Policy Goes Mainstream!

Guardian cartoon: detail.  (c) Steve Bell

It is not every day of the week that an energy topic becomes the subject of a major cartoonist's big OpEd piece  -  but today the great Steve Bell runs with Hinkley Point!

Yes, his Hinkley Point white elephant, lumbering and puffing as it is under George Osborne as jockey, nevertheless represents a "dead cert to win Grand National" as it powers ahead of the more worthy nags in the well-bent race.  Yes indeed, the fix is in.

But not to everyone's satisfaction evidently, as EDF's finance director Thomas Piquemal resigns in disgust at the stupidity of it all.  The EDF unions are pretty unhappy about it, too - they know EDF will need to sell down and slim down if it is to raise the dosh for its share of the Somerset monster, at the same time as completing the EPRs it's already started, rescuing Areva, and extending + decommissioning its vast French fleet.  Bon courage with all that, mes braves.

The French and UK governments would like it to be known that this doesn't change anything.  Indeed, they allow their whisperers to intimate that M.Piquemal was a hindrance they are glad to be shot of.  The City will be the judge of that.

The statement from Dave's mouthpiece - "President Hollande said himself on Thursday afternoon that it has the full support of the French Government" - was a bit loaded, I thought.  But Hollande is an ideal candidate for the opprobrium that may be about to follow, as and when reality bites home.

But, actually, it may never do so.  You really can suspend the law of gravity - for so long as you are willing to throw money at it.  Given the start-up date has already slipped 8 (that's eight) years - now 2025 and counting - Hinkley's electricity output doesn't feature directly in anyone's thinking.  So the primary ongoing costs of this endless farting-around are lawyers' fees and reputational damage.  Eventually, I suppose, the Chinese will get pretty pissed off at being associated with this shower, at which point any attraction of Hinkley for 'Genius' Osborne evaporates.

ND

US Politics betting post

I have been lucky the last few days to meet some very senior and influential Republican party types on their various visits to the UK.


So lucky that I have been promised a dinner with Mr Trump on my next visit to the USA! (I reminded myself there are 2 kinds of luck)


On the other hand, much of what they say is known in the media more widely, but there was one interesting titbit which I have acted on.


Apparently, as well as wishing Trump to succeed over Cruz who the party bosses think is even more dangerous, they also are quietly confident that a brokered convention will be the outcome of the Primary votes.


This means that no candidate has the backing necessary to gain the Republican nomination.


In this case, the plan is to scrap all the current candidates, on the basis that none has passed muster and to appoint instead a new candidate who is more centrist and likely to beat HRC in the General Election in November.


This candidate has already been chosen and his name is Paul Ryan.


On paddy Power you can currently get him at 33-1 to be the Republican Nominee (and 66-1 for the Presidency for the very brave!) Well, it was worth £10 of my money as the chances of this scenario must be better than those odds.


CU

Oil hit s $40 - rally monkey arrives

We all know markets go up and down.


Commodity markets too are overdue a bit of a rally given the run of disasters since the middle of last year.


But now there are some interesting changes, with oil back to $40 and looking set for a few more days of gains, a lot of the pressure is easing on the markets which as we know have been very dicey.


Interestingly too, with less pressure on oil prices, some of the sovereign issues will ease a little which in turn means they will stop liquidating all their market positions; lending more stability to the markets overall.


Of course, the real economy has clearly slowed down a touch in the last few months, but where are the indicators showing a big plunge?


All this puzzles me, if economics was good at prediction (which it isn't), low commodity prices should be a good thing. But in 2015, they are apparently a bad thing.


The world remains an inexplicable place.

Weekend Reading: IT, Productivity and Values

Just recently, FT Alphaville has carried some excellent essays by our old friend Izzy Kaminska.  (Back in the old days, she used to link to us ... *sighs*).    Here's one for the weekend: after starting out on cybercrime she gets to the vexed issue of whether IT actually drives productivity, or just redistributes wealth around the place.  It (or even IT) may be all about the metrics: how is 'productivity' measured (and valued)?  That question can be posed two different ways.

-  If we understand (and value) productivity in the usual economic ways, then in the light of that value-paradigm & its metrics - what's the answer on productivity?  
-  Or, flipping that on its head, does it (IT) point us to valuing things in different ways to how the economists traditionally do?

"The technologists instead claimed the economists were too set in their ways to recognise the real truth: the world was experiencing the dawn of a ‘new economy’ in which ideas were becoming more highly valued than material resources."

Well: maybe, on a good day ... but then again, I am sure we have all seen examples of IT projects chewing up productivity however defined, along with material resources, 'ideas', reputations, careers, sleep ...  and on a grand scale, too.    Anyhow, read on!

ND

Victims of $36 Oil, Home & Abroad

PMQs is an opportunity for MPs to get into their local papers; so fair play to Andy McDonald (Lab, Middlesbrough) for bemoaning the demise of 'Five Quarter Energy', a company from his part of the world, whose goal he said "was the extraction of gas from coal deep under the North sea ... totally decarbonised"(!)  To be fair, Cameron was poorly briefed and thought the question was about Carbon Capture & Storage, and he replied with a defence of the government's righteous decision to pull the plug on CCS.  So McDonald was pissed off with the answer he got.

An easy mistake to make, though, because Five Quarter had been thrashing around all over the place trying to find something vaguely to do with gas-on-Teesside.  They've taken down their website now, leaving just a "last-one-to-leave-please-turn-off-the-lights" notice: but in the past two years they have claimed to be working on:

• underground coal gasification
• a 1,000 MW gas-fired power plant (sic) 
• an 'LNG decarbonisation plant' (whatever that is)
• ... and CCS (hence the PM's confusion)

In short, they had no real idea what they wanted to do (except that it would be "totally decarbonised"), which is no way to raise money.  But, according to McDonald, "the Government failed to provide a supporting statement to secure foreign direct investment".  
 
Sorry Andy: even gullible foreign investors aren't taken in by pitches as scatter-gun as Five Quarter's.  Price of oil = $36.  Say no more.

Actually, right now there is no end of direct foreign investment prospecting going on in the UK.  I can report that wherever there is a remotely plausible UK energy infrastructure project or asset in prospect, teams of Chinese and Korean would-be investors are crawling all over it.  Whoever has been out selling the UK in the far east - Osborne, I suppose - has done a decent job.  At the very least, a bunch of airlines, hotels, taxi drivers and *ahem* consultants are doing very nicely from it.  Whether these orientals end up actually investing ... well, the jury is out.  I see the French have just deferred their decision on Hinkley again - another project with Chinese interests. 

Still, $36 puts the mockers on many an energy project.  Today I heard an argument (from a sage and senior energy executive) that was new on me: the prospect of war in the Middle East speaks to an even lower oil price.  Now traditional reasoning was that war would mean the price went up - disrupted supplies, etc.  But yer man was arguing that wars cost money, so Saudi and Iran would need to keep pumping out ever more of the black gold.

I take this as just a way of articulating the fashionable, deeply bearish sentiment.  Still - even lower than £36 ...

ND

Super Tuesday. All about nothing.

Super Tuesday. All about nothing.
 
The race isn't even on yet.

To win in the US the candidate needs to have 270 electoral college seats, won from different values for different states.

The key states that any would be President must win are;

California - 55
New York - 29
Texas - 38
Florida - 29

Obama won Florida both times, though by a whisker in 2012.
New York is democrat. Obama very comfortable wins both times.
California was the same - Easy Democrat wins by a 2/3 majority.
Texas is Trump territory. Both recent elections went Republican.

of the big 4 states, on a likelihood basis, 
 Billary has 84 seats to The Donald's 38, with 29 in the balance. If Hilary takes Florida then its probably all over for Trump.

March 15 is Primary day for Florida. If Trump can win big, over his Republican rivals, that might be an indicator of his popularity in the sunshine state.

Virginia, worth 13 votes, has been Democrat the last 2 elections. Trump won, but not comfortably. Rubio picked up an almost equal number of delegates. That doesn't look good. Or rather, doesn't look good enough to stop another Democratic hold.

Where is Trump going to make gains from the Democrats?  He didn't manage to win the primary for Alaska, even. Which is a state in the Republican heartland. 
No doubt the experts will be telling us just this information once the candidates are secure and the race actually begins.

But for now, for me, Trump doesn't look like picking up any significant states that will make the outcome any different to 2008 or 2012. 
And the 'events, dear boy,' issues. Potentially removing Hilary.
Probably would not harm the Democrats all that much, as long as they don't pick 'The Colonel'.
HRC isn't really very popular with ordinary voters. Someone else might be able to do better.

Trump vs HRC - dystopia

So, as bad as things are in the UK where we have a ruling party fast going off the rails as the economy slows, the EU fails and the opposition provides no counter-punch, the US it seems is worse.

There, in deciding who should be Presidential candidates for November in the electoral college process, Hilary Clinton and Donald Trump have emerged as strong favourites.

Hilary, the wife of a former President, bankrolled by JP Morgan and Goldman Sachs. Trump, a US chancer who inherited billions but has a charmless approach to telling home truths; they make quite a pair to choose from.

Which means, in reality, that Trump has next to no chance of winning; given the Republican's lost last time with a more centrist candidate, the odds of the swing states like Ohio going for Trump.

So HRC will be the next President of the USA, bar some crazy events which could always happen as we know. She will be an awful President, certainly as bad as Obama which is quite a low.

I thought UK politics was messed up, but when Samantha Cameron is standing for PM against Alan Suagr in 2025, I know we will have sunk to the level of the USA

Government Hits Panic Button

The government has, predictably, panicked over the possibility of the lights going out in the next couple of winters.  The story is evidently a bit recondite for many - indeed, at the time of writing only the Daily Mail (sic) has picked it up amongst the learned ranks of the MSM - but DECC is rushing through a "Consultation on further reforms to the Capacity Market".  The rather technical details don't need to concern us here but, take it from me, that's the Big Red Panic Button alright. 

Early comments are that Drax will be a big beneficiary, and indeed their share price has ticked up more than 5% this morning.  An early return for their scaremongering blackmailing lobbying.

Like we've always said, chances of the lights going out are slim because - when the lights go out, the government goes out.   Mark you, the way the EU thing is rumbling at the moment, they may be going out anyway ...

ND

PS:  oh and, well done, the Daily Mail! 

UPDATE:  so - is this the pro-CCGT measure I predicted here in January?  Could be.  A bit too soon to say definitively, some detailed analysis required. 

Top of the UK property market cycle finally reached

Even the Financial Times has caught onto the fact that the London property market has hit a peak.

There are huge amounts, over 56,000 of £1 million+ flats being completed by the end of next year and yet sales for last year for this kind of apartment were 3,600.

Any fule can see this huge mismatch is going to cause a crash of sorts.

I can't quite decide how crashy it will be and whether it will also extend majorly into commercial property.

On the one hand, huge over-supply at this level should be enough to casue problems. Hedge funds has big short positions in luxury housebuilders which tells us what they think as to the future market direction.

On the other hand, the fall in the value of the Pound of late will act as a rally, given most of the properties are paid for overseas, this will balance some of the impact as it did in 2008-10 when the market fell less than 20% overall and was fully receoved within 2 years. Also though this time there are huge lumps of property (Battersea Power Station is the epitome) where 10% down local currency deposits were used to raise funds and show the property was sellable off plan. These 'investors' (what do you call people in Jakarta who turn up with bags of cash to a hotel event to buy London property?) are not going to complete on their purchases and will try to sell them on - this phenomonen will cause a big ripple in the market as London discovers that many of its 'sold' properties are no such thing in reality.

Of course, at the bottom of the market for the real people who live in London as opposed to overseas investors, demand is huge; the wave of demand is only increasing but it has to be for properties £500,000 and less, even half, of that for the rental sector to make sense. This puts a firm underpinning to the market that will stop a real rout.

So it is still a mixed picture unless you ust paid £5,000 a square foot for a speculative opportunity in Mayfair...

Eddie Jones' England

Settling in for another weekend of Six Nations rugby as the tournament rumbles on its satisfactory way.

I write as an Englishman, of course.  Ireland and Wales contrived an early draw which is hardly helpful to either cause: the Welsh and French must slug it out at 8pm on a cold winter's Friday night (what's that all about?); and the others will contest the wooden spoon.

That Eddie Jones, what a card.  Maro Itoje?  Nah, mate, he'll be great one day but it's too early just now.  Then, a couple of weeks later - I told him he had to work on a few things; he's done that, and now he's ready.  Elliot Daly?  Nah, mate ... then, a couple of weeks later ...  Good enough for me: Daly should have played in the RWC and he can't get into the starting line soon enough SFAIAC.

And I like the gracious way Jones is allowing the hapless and hopeless Robshaw a dignified passage to the bed nearest the door.  He still has to fix Farrell's petulance though.  Another gratuitous display last time out: it can't go on.

Jones' arrival seems to gave galvanised everyone, notably including James Haskell (and his agent / ghostwriter) who has gone into overdrive on the mouthing-off-for-the-journos front.  We've had issues with the puffed-up, pumped-up Mr H before, and he's still a big oaf: but he's done his time, worked his passage, obtained a sense of humour and - within his obvious limitations - playing better than ever.  The RWC fiasco wasn't down to him.

But back to Jones: it's great to see someone with such a crystal-clear view on what needs to be done.  "We're only under pressure when we don't know what to do" (which is true in almost every sphere of life) - he's thought it all out and lets them know exactly what to do.  Speaking of which, Jonny Wilkinson is equally clear-sighted in his match-day punditry for ITV, with instantaneous, incisive (and utterly authoritative) diagnoses + practical prescriptions.  He'll make a great coach, too, if he's minded to give it a go. 

ND

Enough EU, Please! That Kesha Nonsense

OK well there's gotta be life away from the referendum ...

Here's something completely different, indeed positively philosophical, that made me laugh out loud.  There's an issue rumbling away amongst the feminists and the luvvies concerning whether a lady called Kesha - apparently a famous singer - is entitled to walk away from a recording contract she's been under for, errrr, more than 10 years with a chap called Dr Luke.  He's allegedly been molesting her for, errrr, 10 years.  Now at last she'd like to Leave. (A bit like the referendum then? - Ed)

Anyhow, she's been to court.  Not, as you might imagine, the criminal court, but in a civil action.  She's been rebuffed, to general outrage.

Citing lack of medical evidence such as hospital records to corroborate the assault allegations, [judge Shirley] Kornreich said: “I don’t understand why I have to take an extraordinary measure of granting an injunction” ... Kesha reportedly sobbed as the verdict was announced ... Dozens of Kesha fans gathered outside the New York City courthouse in support of the #FreeKesha movement and outrage spread over social media.

And all over the Brit awards too, it seems.

So far, so what?  But here's the thing.  Writing in the Grauniad Jennifer Gerson Uffalussy, 'one of the founding editors of Jezebel.com and the founding fashion editor at RalphLauren.co', says: "What bolder attack could there be on women’s freedom?" The judge was telling Kesha "that her words and thoughts and own understanding of truth on her terms weren’t enough".

Well.  We all have our own understandings of truth on our own terms.  But that is never enough: how could it be?   As single beings seeking to conduct our lives in a social context we are not, each of us, solo arbiters of 'truth': we must accept our own potential fallibility of reasoning and judgement, and allow that the concurrence of others is required in matters of fact - at least whenever other people are involved in any way.  In cases of dispute - which is exactly when all this philosphical stuff matters - the seasoned reasoners of the legal system are available to give their neutral judgement on the matter.  (Though less likely, they can be wrong, too; and we have appeals systems etc to minimise and mitigate this second-order problem.)

So, Ms Uffalussy, it is precisely the job of the judge to rule on whether Kesha's (and anyone else's) 'own understanding of truth on her terms' is good enough, in cases brought before her.  Maybe Kesha's understanding is good, maybe it ain't.  That's being a mere mortal for you, here on Planet Rule-of-Law.

ND

Day one of the Euro Ref; huge cannons of Remain looking too strong

So Day One of the first full Referendum campaign in review:

- Cameron slams Boris in the Commons, able to deploy all his troops and skills from the front bench

- The Pound crashes as traders see a quick buck to be made, literally and this is universally portrayed as the markets considered reaction to Brexit

- No 10 musters thirty six FTSE bosses to write in the Times in support of their low wage Polish and Romanian staff (not sure they put it quite like this but anyway...)

One day, three huge blows. I note the BBC too is way offside for Remain.

As much as I wish it, I can't see Leave having a hope at the moment; the regiments behind Remain are awesome in comparison to Leave.

However, there are still events, a large migrant crisis in the Spring/Summer may swing things but for now I would expect the polls to move back to 60/40 Remain.

Early Dividends from Boris Bolting

This isn't a brexit blog but one can hardly forbear just now.  IMHO there is a very early dividend from Bolting Boris: the threat of a Close(r) Run Thing will force Cameron to do even more in the next four months.  This will include holding the line against the inevitable nibbles, backtracks and 'clarifications' the Brussels elite will be plotting; it may even offer possibilities of getting a few more crumbs from their arrogant High Table.  But that's all just noise.

The real dividend will be that Letwin's Sovereignty Bill will be made as substantial as possible, short of actual UDI.  Given the EU's "concessions" aren't worth the paper they're written on (or indeed not written at all), this may be the only thing of substance we'll get out of the whole charade.  So it wants to be a good'un.  Notwithstanding Letwin is a clown, it can't be beyond the wit of man to deliver a pretty juicy Act under this heading, maybe enough to sway plenty of folks.

Game on.

ND

Boris : next prime Minister, but one ?

Regulars know we like our weekend History corner.

A look at some British history from the 2030s.

Despite his claim that;
 'My colleague Mr Rees-Mogg is correct. The gruel is so thin, I can even read the unwritten, secret, conditions through it.."
 Boris Johnson and the leavers were defeated at the UK referendum. The UK voted much as expected, 45 -55 in favour of Remain. 
Boris Johnson was forced onto the backbenches where his once great influence in the Tory party declined.

 He continued his objection to EU membership, but it was a message few wanted to hear. Johnson spent the following 'wilderness' years inviting ambitious young journalists, economic gurus, junior party members,business types and academics to his Chartwell home. They enjoyed his fine wine and fine company. Even though many believed his was a lone voice from a bygone, Imperial, age.
 
If the public recalled him at all they thought him never destined to hold high political office again. A maverick naysayer on the wrong side of history..

However, during what became known as the Czech migrant crisis, in which Prime Minister Osborne, who had succeeded Cameron after the UK referendum, flew to Munich and agreed to a 'cessation' of the Dublin Agreements to prevent a central European split-off from the EU, a backlash began to grow. 

Waiting for treaty change

 The situation in Europe had become critical. The 'club Med' countries found themselves unable to cope with crisis. They passed their migrants up into Central Europe, where those nations refused them entry, despite an obligation to do so. The suspension of the Dublin Agreement was supposed to help alleviate the problems in Greece and Italy. And permit the passage of people through to Germany, Sweden, France and Belgium. But it also immediately enabled 2200 migrants from Sangate and 3480 from 'Jungle Ouest' to legally enter the UK and seek asylum.

Similar to the  SNP style backlash the public were angered at this turn of events and were furious at having been seriously misled over the previous renegotiation.
Slowly through the newspapers and media reports, Britons were informed that any citizen from anywhere in the world, who entered the EU borders, could apply for asylum, and so residential  status, within the UK.

Dover Harbour

The Summer Swarms, of Libyan and Syrian migrant boat people, was exacerbated by the Russian occupation of all the Ukraine, and the civil war in Zimbabwe following the fall of Mugabe.
And humiliatingly  parts of the UK's special handbrake deal were vetoed by the European parliament.
People in the UK  felt betrayed. Even though they voted for exactly what they got.

The Tory party, already split, was in no position to withstand these events. The long period of 'austerity' had left the UK vulnerable to the new economic shocks of the China Recession.
Prime Minister Osborne insisted that he could deal with the Europeans. He formed an alliance with the Hollande coalition of France, in an attempt to restrict the continuing expansion plans of Merkel's Germany. The Germans had called for so many new immigrants, 10's of millions, that the increasingly erratic German Chancellor was demanding Lebensraum, living space, for all their new arrivals.

Chancellor Merkel address her party members.

In the united kingdom The Corbyn opposition was divided. personally Corbyn was in favour of out, with the UK forming new ties to communist countries. But his labour party members were largely supporters of the EU. Many wanted even closer ties to Europe.

However political show trials and purges had reduced the effectiveness of Labour's top political people. Many of them were exiled. Many disappeared from politics altogether and were never seen again. The Corbyn 'people's migration' labour party that could and should have swept to power, were totally ineffective and completely unable to capitalise on Tory problems.

Having narrowly survived the Munich crisis, the government belatedly realised that appeasement would never work on the European Union. The demands would never end. The power grabbing and desire for total control would never cease.
Whatever promises were made, could be overturned on a whim. Torn up. Or the public made 'to vote again' until the 'correct decision' was reached.

Appeasement policy

It was now that the German Chancellor, Frau Merkel,demanded a 'special measures bill' to stem people movements from the Middle East. The parties of the extreme left and far right had been growing larger and violent clashes were occurring throughout Europe. the 'old politics' seemed powerless and had trouble even maintaining law and order.

Despite UK and even some French opposition, the member states voted 17 to 11 to grant Merkel special 'German dictatorial' EU wide powers 'for two years'.

To prevent the flow of immigrants, now running at 3 million a year, she granted Turkey 'immediate EU membership'.

And so the EU began to war with itself.

In the UK the public turned to the one voice from the sidelines. The one who had kept warning of the dangers to the UK of EU membership. Boris Johnson was recalled to cabinet.
He gave a speech that day .. 

 "We..We need to prepare for the coming exit. A House divided against itself..Will need more than... A high lift tower ...and ...industrial scaffolding..Let us travel to sunlit uplands..and get ourselves out before the whole, rickety Euro mess, crashes down behind us.. "
At an emergency session, Prime Minister Osborne was heckled and defriended on facebook inside the House of commons, by his own MPs.
There were some memorable speeches made. 

"Speak for Britain, George!" was cried out by the soon to become Chancellor, Michael Gove.

And Douglas Carswell echoed a famous Lady Thatcher speech when he said  

" More regulation? More taxation? More Immigration? No! No! No!"

But the most memorable was from Peter Bone MP.
"You have stood babbling at the podium for far too long to do any good, you blithering idiot..For God's sake go!..Onto social media and resign!"

42 Tory MPs voted against the government's new EU re-re-renegotiation, and 36 abstained. It was a shocking defeat that made even the austere former chancellor realise his time was at an end.

Osborne hoped to appoint Sajid Javid as replacement. But even as he met in his offices for a discussion with Boris and Sajid, he could hear the crowds chanting from College Green all the way across Westminster bridge .

"Boris.. Bor---ris! Boorr-rrriss" 

Johnson accepted the role of Prime Minister. On that same, fateful day the lead spearheads of German Financiers occupied Corinth and Athens.

  The French government, made up of its usual impossible coalition of misfits, was buckling , it's centre almost entirely gone. General LePen, on the extreme right flank was trying to organise a 'Free French' movement to continue the fight for an independent France.
But the socialist remnants on the Hollande coalition of the left were already considering surrender. Ten years of economic stagnation and deep unemployment  had taken its toll. The Hollande government fled the usual summer Paris riots and convened in Vichy. Where they set about negotiating a 'sixth République' under the rule of Germany.

As the new UK Prime Minister remarked "Stockholm syndrome doesn't just apply to Sweden."

At this moment, 'the darkest since the Armada..darkest since Sarajevo .. the darkest since one was caught on a zip wire.", Boris Johnson became Prime Minister of the United Kingdom.

Prime Minister Johnson visits Toyota car workers in Derbyshire

"Never before in the field of inter-nation transfer taxation has so much been squandered by so many bureaucrats, for so few uses.

I have nothing to offer but a floppy fringe. Some witty anecdotes. oodles of charm and a sense that if anyone can make this nation great again, , it is possibly ..erm..probably..erm..er.. me. 

 Let us stand fast. Let us stand ready. Let us be outside of the shackles of the perverted regulations of this sinister monolithic bureaucracy. Let us join in trade agreements with the new world, in the hopes that it can rescue the old."

"We shall fight them on the stock markets.We shall fight them on the import tariffs. We shall fight them in the supermarkets and in the retail parks.
 We shall fight them in the call centres and in the light engineering works. In the NHS wards and on the now clean beaches, {actually chaps, that bit of law was probably the only good thing the EU ever did for us, eh ?} ..anyway ..where was I ..ah , yes..And we shall never surrender!"

The Agonies of Big Boris and Little Gove

There was an incident during the 1997 general election that sticks with me and forever will.  Recall that Labour were always going to win, nothing on earth could have stopped them.  And yet, as often happens, there was some silly 'wobble' in their campaign, so that Blair's nerve and judgement temporarily deserted him.  What to do?  Never fear, Alastair and Mandy knew exactly what to do.

So Shameless Tony was placed in front of the cameras, drew himself up to full height, gripped the podium tightly, steeled himself for the mawkish moment, thrust out a defiant lower lip - oh my friends, this is so serious - and with trembling voice made the great announcement.  The Tories are planning ... dramatic pause ... to scrap the state pension!

And thus must David Cameron now gird himself for four long months, play-acting and lying through his teeth.  A tough gig, he will think but hey, someone has to do it.  That's democratic politics.  Not for the faint-hearted, the overly-scrupulous, the intellectually fastidious.  Eton, Oxford and the world of PR have readied me for this disgusting duty and I have the stamina, the gall, and the turn of phrase to pull it off.   And the firm handshake.  A certain look in the eye and an easy smile.  You have to be trusted by the people that you lie to ... in the words of the song.

Too tough a gig for little Gove, though - that thoughtful runt of the high tory command.  He knows the disgraceful falsity of Project Fear, the ignoble sophistry of Le Grand Charade.  He just can't bring himself to go through with it.  Never really cut out for serious politics, were you Michael?  Back to writing Times leaders for you - unless Rupert has already been bought off ...

OK then Boris, so how about you?  Eton, Oxford, and even more intellectual prowess than Gove, he sees it all and - intellectually - despises it roundly for the aischros it is.  On a good day.  On a bad day, he sees only personal gain (and doesn't Odysseus show us, there can be arete in expediency?) 

Michael White thinks he knows.  The Boris whose policy on cake is both to have it and eat it will prevail, he thinks.  Only hours from the Decision now, so I'm sticking my neck out recklessly here, but I fancy Boris will go with Gove.  How does he want to go down in history?  Surely it's the Churchillian romantic-lost-cause option.  He's young enough for one of those.  And you can still write grand books if you've stuck to your guns: nobody really has much regard for the craven, calculating trimmer.

Anyhow, we'll know soon enough.

ND

UPDATE:  kerrrching

Weekend Reading: The End of Cash

By way of a distraction from referendum misery - another conspiracy!  This time, they want to take away our banknotes, as well as our freedoms, our pensions, our national identity, our pride  ...

Yes, it's that chipper marxist Paul Mason again.  Plenty to chew on here.  He does go around thinking about interesting things, doesn't he? 

ND

Le Grand Charade

Come on Prime Minister Cameron, sleep is for wimps. Those Pesky Poles can be defeated and the French will always surrender like monkeys after all.....

So at what time today will a super-dooper last minute deal be snatched from the jaws of hell?

Will it be 11.30am?

Will it be 2pm - after lunch?

Will it be 5pm - before a cabinet meeting?


Or, what are the odds on an impasse instead and Cameron suddenly deciding out is best having been given nothing at all by our so called European partners - I would say that is still at over 50-1.


CU

Red Carpet for the Russians? Actually, No.

An interesting groundswell is taking place in the wicked EU, where (on a good day), having high regard for the basics of life like heat and power they are remarkably unsentimental about the green nonsense.

Thus we find a rolling-out of the mighty gas-based energy strategy (see here, and here) that is likely to find favour - broadly speaking - with some of our readers, I do believe.  Of course, it carefully pays lip-service to the Paris COP21 green-crap stuff; and burning gas is better than lignite (actually, lighting sheep-farts is better than lignite); but nobody seriously imagines that was uppermost in their minds at the time.

As has readily been divined by the green blob, haha.

The plans were immediately attacked by green campaigners, who contrasted the continued role of fossil fuels with commitments to cut carbon dioxide made by the EU at the Paris climate summit two months ago ... "It’s like the Paris agreement never happened, and the commission is stuck on gas, dishing out a costly proposal that will keep Europe hooked on energy imports. Only if Europe focuses on renewables and energy efficiency will Europe meet its climate targets and reduce dependence on foreign supplies."  Claude Turmes, energy spokesman for the Green MEP grouping in the European parliament, called the strategy "rolling out the red carpet for Gazprom"

Excuse me?  Mr Turmes should follow developments a little more closely.  In point of fact, the rhetoric surrounding this whole policy-thrust is strikingly and explicitly anti-Russian, with some of the language being bandied at committee meetings in Brussels being distinctly undiplomatic.  In this aspect the eastern european countries that really are dependent on Russian gas have set the agenda in no uncertain terms.  One of the phrases being used is 'mandatory solidarity', which at a minimum means everyone sharing the available gas if Russia turns off the taps.  That's more than a slogan - it appears concretely in the latest EC proposals.

We first encountered this when we spotted the disingenuous Mandy musing how nice it would be if 'someone' negotiated all the gas buying for the whole of Europe.  Germany won't much like that, nor Italy - because they have sweetheart Gazprom deals of their own.  So it'll be interesting to see how these Poland-driven proposals fare in the long run.  

Which brings us to the baleful aspect of all this: the putative "European Energy Union" we fingered right from the start and under the auspices of which all this is rumbling forward.   Just as with the gas strategy, all Energy Union documents pay lip-service to everything (green crap for the green blob, nuclear for the French, 'security' for the Poles et al) - including markets for the Brits and readers of C@W generally.  Hence, the gas strategy:

"contributes to internal energy market legislation by prioritising market-based measures"

Yeah, right.  Actually, as with the whole Energy Union thing it is as dirigiste as all hell (and Hell is particularly dirigiste).   Not, however, without precedent:  for those like myself with dinosaur memories, the IEA cut its teeth allocating by fiat all the free world's oil supplies** back in 1973-74 during the Arab oil embargo.  Without this, the Dutch in particular would have been in serious trouble.  It was, however, strictly a 'wartime' measure and was reduced in scope to a rather light regime of mandated oil stocks thereafter. 

I have a strong premonition the Energy Union is an out-and-out policy-grab by Brussels, desirous of emulating the CAP.  Anyhow, for the time being let's sit back and watch the Germans and the greens fight it out with the eastern countries over the gas strategy.  Could be fun.

ND
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** All conducted on an Exxon computer in Florham Park, New Jersey, for anyone interested ...

Hinkley recedes as 4 reactors have life extended

EDF's share price is far below what is was, even in 2008

See here.

Now the Guardian have a bit of form as the distributor of Greenpeace press releases when it comes to energy policy, but the state of EDF itself is a sight to behold.

Last week for example, EDF were told by President Hollande to spend €100 billion on French nuclear projects, that is 5x their current market value.

The Hinkley C project will add another cost equivalent to their entire market value to the slate.

At the same time the French Government is worried about their debt and wants the company to reign in its spending commitments - this is capitalism, French Socialist style.

All in all, with this as the main builder it is so hard to see a way through to the new nuclear plant ever being built in the UK.

So today we find the government magically issuing extensions to 4 of our current plants. This will help keep the lights on as the phrase goes.

Now we just need a dash for gas to actually, finally, have a sensible energy policy forced upon us.

So we wait in hope.

UK Leads in Race to the Bottom?

It's often said that countries are pursuing self-defeating beggar-thy-neighbour policies as regards currency: an unseemly race of competitive devaluation.   Hard to remember - though I just about do - that for Harold 'pound-in-your-pocket' Wilson it spelled disgrace; and that for his Chancellor (Callaghan), well, he Had To Go.

I was always rather impressed by the quiet, unemotional way in which Brown/Darling allowed Sterling to fall steadily and indeed rather dramatically from $2.0 in July '08 to $1.4 by March '09 in the wake of the giga-crisis: we used to run a sidebar graphic recording this, month on month.  It might have been the cleverest thing they did. 

Anyhow, to read the headlines just recently you might have imagined it was the Japanese who were most concerned to devalue.  But in the race to the bottom, taking the last three months it's sterling in the the lead!  Again, all rather quiet and unemotional - it just isn't political news anymore.  Helps that oil has fallen even faster, of course ...

We're down against the Yuan, too, over this period, though not by much: and the dollar has pushed down a bit lately.  Watch out below.  

ND

Renting isn't all bad

Some friends of mine have just declared bankruptcy. She started their online only business eight years ago. As it grew he quit his job and joined her. Working from home they had a successful business. Successful enough to pay two salaries and all the costs of their home, cars, bills etc.
Until recently.Where an expansion plan overstretched them. The resulting losses and disappointments and personal illness caused the pair to decide to just pack it in.

And this is where the rental society gain.

They have no house to repossess. They only have, with the business, their stock assets and some small personal funds. A business running homeowner of their size would likely have personal guarantees to the bank, secured on their property.

I saw the couple yesterday and they said they are moving in two weeks time. I was stunned. Two weeks? Just move? In two weeks? But, of course they can. 
They have nothing to sell. They are in no chain. All they need is to find a new home, give notice, and move.

And they have no heavy equipment to move. No fridge. No freezer. No TV.  which also means that unlike the homeowner,they have never bought any of these items. Never had to replace them. 
No home insurance either.
They have never had to have a discussion about weather to put on a loft extension or a conservatory, to fit in their expanding family. And all the horrendous cost and dislocation that that causes.  They just move down the road. They have never had that worrying feeling as one's spouse begins to stare at walls and then leave magazines around the house. Glossy pages featuring tiny pots of paints that cost more than tankers of oil. 
Or worse. That conversation that begins with "the kitchen drawer is stuck again." Goes onto "I saw Jennifer yesterday..Her new kitchen has a boiling tap and a built in igloo" and and ends up with a remortgage.
This particular couple had one child when I first met them. They now have five. And have moved house six times during the time I have moved none.

Interest rates are of supreme indifference to them. Back in the pre-crash days the interest rate announcement had the biggest effect on disposable income of homeowners. Its only very recently that it hasn't moved for any length of time.

They have not had repair,replacement or restoration bills for exterior and interior works. No new gate or fence panels. No new shed. Never owned a lawnmower. all the myriad of small costs involved with owning anything, from a replacement shower head to a whole new bathroom, pass them by.

They have never had to engage solicitors, at considerable expense, to organise the transfer of them from place A to place B in accordance with the law. Nor the local authorities for the same. Never had a young person telling them that their fee for advertising and marketing their existing home for them would be between 1% and 4% of its value, Some £8,000 average for the UK.
And they have never had to pay the chancellor 5% of the asking price of their most valuable asset, that is also their pension, just because they wanted to relocate.

So,when we read about kids being unable to get on the property ladder, that may have some upsides for them too.

Talking your way into a recession...BS alert

"Are we talking ourselves into a recession? John Botham thinks it's possible. He tells Today that although markets are volatile and lower oil and commodity prices are a cause for concern, other parts of the UK economy are doing very well. The danger, he says, is that consumers might put off a purchase because of the volatility in stock markets or that banks, becoming fearful as their share price takes a beating, stop lending. He doesn’t believe we are repeating 2008 again." BBC

Always a warning sign for me this, only true idiots can think it is possible that recessions are entirely induced by the collective state of mind of the markets and human population the world over.

On the other hand, people making these kind of statements were rife in early 2008. I recall clearly day after day hearing vested interests - from bankers to recruitment consultants, saying all was fine and we should be happily spending and changing jobs etc.

Of course, none of this is true; but at the same time this is not 2008. As much as the Banks are having a nice little run on them in share price terms they are not as exposed as they were in 2008 to crazy derivatives or sub-prime mortgages. Also the low commodity prices have upsides as well as downsides, in 2008 commodity prices were at all time highs and managed to start both the Great Recession and then the Arab Spring in due course.

Yet, business cycle wise, we are due a slow down in the next year or two and the world is full of intractable geopolitical issues. So a mild slow down could happen although it feels unlikely in the UK services based economy.

Generating Electricity by Fantasy-Power

Towards the end of last year, as part of the Green Crap Purge George Osborne Amber Rudd withdrew the £1 billion pot allocated for encouraging the development of Carbon Capture & Storage, one of the great moonbeams-from-cucumbers schemes of our time.

Now it so happens that all scenarios for achieving the UK's official daydream of Full Decarbonisation by 2050 depended upon a chain of reasoning as follows:  "most heating needs to be electric", followed by "most transportation needs to be electric", followed by "there must be lots of genuinely CO2-neutral** biomass power generation";  then - because as eny fule kno we will needs a heap of gas-fired power plants, and maybe even some coal plants to generate those quite staggering quantities of elelctricity "there needs to be lots of CCS": and all finally, triumphantly anchored by "the residual CO2 from non-electric transportation - you know, aircraft and such - needs to be offset by biomass-PLUS-CCS",  which is of course CO2-negative! ('net negative emissions' in the jargon).

Thus, our 'decarbonised' energy future was being built on some inescapable logic plus the manifestation, well before 2050, of the unicorn of CCS.  Economically viable CCS, to boot.

So, the government having cruelly withheld the billion, they can be blamed for the disintegration of the entire chain!  And they will be, from now until 2050, I should imagine.

When do we get to register that CCS is a non-existent deus ex machina for *solving* an insoluble problem?  That it is an ontologially-challenged concept?  That it is a pure fantasy? 

ND

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**as opposed to burning mature trees a la Drax, which is anything but CO2-neutral as the greenies are slowly coming to realise.  Sorry, Drax

Are the bank about to collapse 2008 stylee?

In short, no.

I feel compelled to write this again as the media is full of dark thoughts about the banks and the world as a whole.

I personally blame the constant storms in the real weather as having a zen like influence on the traders of the world markets.

In the UK for example, Barclays, Lloyds and RBS have more or less closed their investment banking groups.

The remainder have Tier One equity of 10%+. They have been lending little real money except on mortgages and credit cards; of this, little has been securitised, let alone put into CDO's.

The current issue really is that with all the secy stuff gone, the Banks are making no money and the regulators continue to find new crimes for which they get fined. I have little sympathy with the Banks or their shareholders on this.

But we are a long way off 2008. What wold be more troubling at this time would be a huge run on Government bonds, as that is where the real debt expansion has been. However, the threat of QE means that even the top hedge funds of the world are unlikely to try and fight that war in the West.

Instead we have a profit problem - itself predictable in world of a zombie economy and commodity induced deflation.

On the plus side, it means banks look cheap at the moment and he medium term benefits of oil prices are yet to work themselves out (i.e. a boost to the consumer economy) - so the economic future is brighter than it appears right now potentially.

CU

Welcome to the jungle

Downing Street is warning that migrant encampments like the Calais Jungle could spring up in Kent and other parts of the south-east if the UK votes to leave the European Union.

Brighton and Hove migrant camp. Set up in 2021 after the huge numbers of people fleeing the EU caused severe problems for the UK.

Imagine that. Thousands of refugees camping out on the south coast. Huddling in tents. Hoping for some fuel to heat themselves during the harsh bitter British winter. The migrants, who chose to flee from the war-torn, dangerous, faction ridden France now have to live in tents on ..

Hold on? Why would they be living in tents ? Would leaving the EU require the UK to set up brand new form of outdoor detention centre? A special Glastonbury for recent arrivals where they must wait before they are..? Are ..? What? 

~~~

The government made a ridiculous statement today, the opening shots of Project Fear.
Gangs of young ethnic men will be hanging around Herne Bay in crappy sports branded tracksuits looking quite menacing. That was the image HMG wanted people to have in their head.

The idea comes from the UK's arrangements with France and Belgium in which the UK border force carry out checks in those countries. This arrangement came out of the Sangatte camp that was plaguing France and Britain in the millennium years. there is a possibility, Mr Cameron suggested, that the French won't honour this arrangement and those camps will move to Kent instead, if the UK doesn't remain in the EU.

Which is a lie.
And a provable one. 

Firstly: As was widely and almost immediately reported, this arrangement is nothing to do with the EU. Britain pays some of the border costs. The idea was to stop Sangatte style camps appearing IF immigrants realised that they could not get across. Pro EU voices say that because the system isn't working the French may not carry on with it.

That's as maybe. but that has nothing to do with Britain's membership of the EU. Its a british/fench border issue that will need to be addressed whatever happens.

Secondly: If Britain was not an EU member then stronger, rather than weaker border controls would be in place. 

Thirdly: And most importantly, there would be NO camps.
The UK does not have a policy of sticking people in a field whilst it processes their asylum applications. If the French just let everyone through, and the UK accepted them all, it still would not put them in a camp in Deal or Lyme Regis. They would either be placed in detention centres or given accommodation as is the current system. 

The reason the camps exist at all, is that asylum seekers and migrants wish to come to the UK to claim asylum. They are not permitted under the current EU laws and must claim asylum in the first country they enter.  
That they don't is simply because they wish to get to the UK. So exist in a limbo status until they can clamber onto a truck or car or walk through the tunnel. Once they arrive in the UK the would have no need to camp out unless they were waiting to secretly clamber aboard a truck for France. Which, seeing as they have  just come from there , is unlikely. 

The idea that the Home Office would abandon its use of government funded housing or detention centres, and stick men and women and children in tents in fields is fantasy that only the most die hard Corbynista class warrior could invent.

We all know this. Especially the government who announced it. 

In many ways I do hope the government goes early on the referendum. As its only going to get ever more silly and ever more desperate the longer it goes on.

Cometh The Hour, Cometh Precisely Nobody

Presumably we are drifting towards some kind of Important Juncture in the EU referendum and yet - & pardon me if I've missed something - precisely nobody of Any Stature Whatsoever has declared for 'Leave'.

It comes to something when Michael Portillo's name is tentatively being floated.  The power of the Establishment's disapproval is a fearsome thing indeed.

Can anybody think of a precedent for a movement with no capital-L Leader?  I suppose there have been several incohate, more-or-less spontaneous uprisings that have subsequently spawned a real leadership, or (more often) been 'hijacked' by an opportuntistic leader-in-waiting.

If there is a derisory 'Leave' campaign and pitiful vote, the 'result' will be as meaningless as Gordon Brown's coronation.

ND

The Corbyn Carnival. What A Shower.

In the context of the febrile politics of the decade, the fate of the Corbyn experiment is, I think, of genuine interest.  As are all manner of contributory details - like who actually flocks to this implausible banner?  Will they get nasty?  Will a putative 'officer-class' of nihilistic, unemployed graduates whip the Momentum sheeple** into a proper extra-parliamentary political force as they'd really, really like to do?  (And in saying 'they' I am indeed asserting they exist.)  Will the unions eventually pull the plug?  Will it all go the way of 'Occupy' and a myriad other 'false red dawns' of the last five years?

All inputs to this inquiry are welcome.  It's actually intended seriously because these are serious times with weighty matters at stake, however farcical Corbyn's operation may be (operating as it does, I am reliably informed, on two men and a non-house-trained dog) right now.

Anyhow, getting to our first question yesterday the Inde named some names.  Clowns, mostly, and what a bunch. 

"There is a fantastic range of talented people who will perform or speak for Jeremy, including Charlotte Church, Michael Rosen, Brian Eno, Ken Loach, Billy Bragg, Mark Steel, Jeremy Hardy, Francesca Martinez, Mark Serwotka, Shappi Khorsandi, Arthur Smith, Patrick Monahan, Janey Godley and many more. Some big names have said they are happy to perform but they are booked up for the dates we have already planned. So there are even more surprises to come."

Can't wait.  Charlotte Church, eh?  Your guesses in the comments, please, as to which celebs will surprise us by joining the Corbyn Conga ...

ND

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**I particularly like this sample from the #iamMomentum thread on their website:

"I come from a coal mining family who, by the time Thatcher came in, had won half decent wages, better working conditions, for a life outside of work and decent, secure housing. Privatisation in some instances has eroded all this. In many industries the job you thought was secure, no longer even offers you the kind of guarantee that lets you be sure about how much money you will make that week...  For the first time in a long time, the Labour Party has a leadership who offer a real opposition to the Tories and is anti-austerity and anti-war policies..."

Oh, the scripting, the craft of it!  (and what a nice-looking lass she is, too).  How many hours in committee does it take to insert those nuanced words - in some instances ?  What are they carefully hedging there ??  Which privatisations do they actually applaud, or don't wish to offend?  Gah, these bloody unemployed graduates ...

Capitalism At Work, It Never Fails

So*, speaking to a builder mate of mine, he says the next big thing is golf courses opening their doors as landfill sites!  The cost of sending stuff to traditional landfill has been deliberately made prohibitive, plus penalties for councils that fail to 'recycle' to the policy-makers' desires.  So guess what?  Yup, capitalism - that great institution for spotting arbitrage opportunities and acting upon them - has identified a creative solution.

So who has lots of land that could make constructive use of mountains of, errr, stuff?  Why, golf courses!  They always enjoy a bit of new *ahem* landscaping.

Tipper trucks by the thousand, he says, are entering new destinations into their satnavs ...

ND 

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*As a student of life I have observed that nowadays in polite company every sentence should start with "so" if at all possible

Would the UK ever get a third referendum on EU membership ?

You run one time, you got yourself a set of chains....

Referendum 1975:  "Do you think the UK should stay in the European Community (Common Market)?" Britons voted "Yes" in most of the 68 administrative counties, regions and Northern Ireland. Only Shetland and the Western Isles voted against the EEC. Home Secretary Roy Jenkins said: "It puts the uncertainty behind us. It commits Britain to Europe; it commits us to playing an active, constructive and enthusiastic role in it." 

You run twice you got yourself two sets....

 Mr Cameron's proposed four year ban on in-work benefits for EU migrant workers could come into force immediately if the UK votes to remain in the Union. It would have to be agreed by other EU nations and it would be "graduated", with more money from tax credits paid to migrants the longer they remain in the UK. Demands to exempt Britain from the EU principle of "ever closer union" between member states would be written into a future treaty. There are also measures relating to protection for non-euro countries in the EU, a new way for member states to club together to block some new EU laws and on business regulations.

 You ain't gonna need no third set.... 'cause you gonna get your mind right. 

Open Thread: Cameron EU proposal

I really can't see this flying, but I am very biased. It is so rubbish I am amazed even Cameron can back it...

1 - No real EU Brake on migration - unless a big vote for it elsewhere in EU that won't happen.

2 - No real consensus on limiting Eurozone developments that would effect London.

3- Nothing else of major significane, bar more security measures around terrorists.

Is this really it?

yet Leave will still lose....

"We Need a Low-Carbon Aberdeen"

I well remember the oil-price slump of the late '80s.  Aberdeen - long a boom'n'bust kind of town - went seriously down the plughole.  A bunch of oil companies that had commissioned very shiny, nay gold-plated new offices (there and in the West End) when the oil price had been a whole lot higher, were bitterly regretting it.  Piper Alpha seemed like the final nail in the coffin.  A load of US expats and English engineers who'd convinced themselves Aberdeen was the place for them trudged home again.  The cold wind whistles cruelly around the empty docks, and drunken oil-industry types are periodically fished from its icy waters, usually too late.

It happened all over again in 1998-9.  Yes, that's boom'n'bust, even if memories are short and we are all doomed to suffer history repeating itself.

The Grauniad has a 'diagnosis' - and a 'solution':

"The danger is that the North Sea becomes the Dead Sea, with business not returning even though there is plenty of oil and gas still under the waves. Some of the government cash will be used to find ways to extract small reserves profitably, before platforms and pipelines are abandoned. The oil price collapse has thrown Aberdeen into turmoil, but its decline has long been in sight. Ministers should have made the North Sea’s twilight years productive but transitional. A lot will depend on tax rates, which are already being cut ... This inevitably sticks in the craw of environmentalists, who see ministers rushing to the aid of Big Oil while slashing support for wind and solar energy, as well as ending carbon capture and storage projects. Ultimately the future of Britain’s energy should be green, not black. We need to find a new Aberdeen where low-carbon technologies are celebrated – and financed properly."

Before adressing this predictable guff, let's call to mind a few other factors.

1.  What I have called the Phoenix Phenomenon, which was behind Aberdeen's revival post Piper Alpha - a new generation of technologies that utterly transformed the North Sea's apparently dire economics, and with it the industry's bleak prospects.  Read and remember.
 
2.  Decommissioning - an enormous, new-ish industry which can't evaporate with the oil price or relocate itself to Iran (unless the government changes the regulations and allows oil & gas companies to walk away without clearing up).  The UK is perfectly placed to maintain its world-leading position on this and, ironically, for every North Sea platform that is abandoned early, a North Sea decommissioning project is advanced!

3.  Sunk costs and other financial dynamics, well-known and less well-known.  This isn't an economics essay but suffice to say, the kind of naive 'understanding' brought to bear by the Grauniad and other ignorant leftist nincompoops is hopelessly underpowered for the job in hand (though they are idiots of the 'useful' kind when it comes to lobbying for bailouts etc).

4.  OK, yes alright, Offshore Windfarms.  Shouldn't be booming of course but they are, and they seem to be the government's favoured outlet for our Keynes-pounds.  With what must surely be the imminent cancellation of EDF's ridiculous Hinkley C, there may even be a few more £££ to spare from that abundant pot.

Oh, and "green, not black"?  For the hundredth time, say after me:  GDP trumps GHG.  And I think we'll find Nicola Sturgeon agrees with me on this one, as she joins HMG in short- term bail-out funding.

So: "finding a new Aberdeen"?  Why not "watch and see how a new Aberdeen grows on the site of the current one"?  Because neither Grauniad editorial writers nor picking-the-winners civil servants have a clue where to look.       

ND