Gathering Intelligence: Desert Storm (part 2)

Iraqi artillery position: too neat for its own good

30 years ago, Desert Storm was raging.  There had been a fairly lengthy build-up period since George Bush Snr declared for unconditional eviction of Saddam from Kuwait, and it had been a period of frenetic and growing activity on a vast scale.  The Iraqi army was big, battle-hardened and on home territory.  The ostensibly impressive coalition Bush had assembled was diverse and for the most part playing away from home.  

There were other problems, too.  It wasn't just an away fixture, it was the desert: and desert warfare is a specialised business.  The sand is a challenging medium; and the relative lack of readily discernible topographic features across very large areas made aerial reconnaisance more difficult, too.  Then there was the heat, which was really giving us the hurry-up during our "winter" of preparations 1990-91.  The prospect of fairly intolerable temperatures once winter was over was troubling for the great preponderance of US, UK and French forces: and staggering amounts of bottled water were procured.

However, there were some very important pluses.  The aforesaid US / UK / French** forces (and a handful of other 'western' allies) all operated under NATO doctrine, meaning that a swathe of practical operational and inter-operability challenges had long-ingrained solutions.  AirLand Battle as a doctrine was a well-practised reality - albeit never yet tested in action.  

And, above all (quite literally) was the near-certainty of air superiority - the quickest and easiest component to deploy, given the many existing airfield facilties enjoyed by the USA and the UK in the Gulf and Eastern Med^^, plus of course US aircraft carriers.  It was early air deployment that also started fixing some of the initial problems around shortage of good intelligence.  Stand-off air recce was able to be mounted quickly; and ultimately a superb new asset was deployed - the E-8A J-STARS, the capabilities of which we will come to later in this account.  For now, suffice to say that the daily sorties were bringing back 2 TB of high-quality data of considerable value.

In my earlier series of posts on Desert Shield and how I came to be involved, I noted that we'd been gratified to find some of our lamentable initial ignorance on Iraq's army was fixed by the convenient fact of Iraq's adherence to Soviet doctrines in many respects (where they hadn't innovated), as well as using Soviet equipment.  Us old Russia hands were pretty good on all that, of course: we'd been working on little else for a long time.   

In fact sometimes it was even easier than we first realised.  The Iraqis were fairly slavish adherents to those precepts, an example being the Russian principle of deploying artillery in threes: three guns to a platoon, three platoons to a battery, three batteries to a batallion, etc - all in neat triangles.  The thing is, in northern Europe, these triangles would be loosely and flexibly deployed, for reasons of terrain and concealment.  In the open desert, the Iraqis went for neat equilateral triangles ... you spot one, and you know exactly where to look for the rest (see pic above).  Kinda handy for finding and plotting them!

It all helped: 2 TB per sortie was a helluva lot of stuff to go through - and computerised imagery analysis was in its infancy.  Also, we were looking for more important things than anti-tank batteries - things that were better hidden, where the lone and level sands stretch far away ...  (to be continued)     

ND

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** French / NATO?  Oh yes: even through the long years of  De Gaulle's stand-offish policy, the French military quietly made sure to keep fully up-to-date with NATO STANAGS

^^ Turkey wasn't as *helpful* as it might have been 

WallsStreetBets - Suckers gambit!

 What a week, sorry for my lack of posting, have in a tiny way been getting involved and making enough money for a couple of decent takeaways. 

Getting involved in what you ask?

Well, in the most 2021 story yet, Trumpism came to the US markets and just like in politics, make a big splash before getting punched. Maybe he story is not quite finished, but this week has seen the top and blow-off. 

What happened? Well, a canny bunch of retail investors saw that in the US to stocks #GME, #AMC, were being shorted over 100% (hedge funds selling shares, buying them, then selling them again to create double short positions). The retail group started going long, 'to fight the hedgies' A meme developed, thousands of retail investors (now led on by very easy access to the market from phone apps like Reddit), joined in and the Hedge funds were in trouble. The price was rocketing by 100's of percent and they were short. So they had to buy too and the share exploded up over 500% and more. 

Of course, the hedgies then started complain to the regulator, but also the trading apps were in trouble, they did not have the cash collateral to clear their trades (takes 3 days for the 'instant' retail deposits to clear for them). So they limited buying, this, together with hedge funds clearing their shorts at a big loss, meant the buying pressure started falling and so down to earth came #GME.

Then yesterday one of the 'leaders' - WallStreetbets - a nicely anonymous twitter handle to go with the current zeitgeist, started pushing a little known crypto currency- Dogecoin. This promptly went up 800% but has also fallen back already. 

Rampers and irrational booms are not unusual, the dotcom bubble many will remember and also, strangely, the frenzied period in 2009 are the market bottom of the Great Recession. Now lots of people are sat at home, with unused disposable income and gameified trading apps - it is a recipe for fun and the huxters to let rip. Of course if also exposes the Hedge Funds et al who are at the same game, but to me, that is hardly new information. However, for some millennials, that idea they are not investing but trying to take down hedge funds has a moral appeal - very smart move by the huxters, it has worked a treat. 

I guess they have a few more pump and dumps in them and it will be over...

Mystic Meg Does Bitcoin

Never mind C@W's annual predictions-fest:  call for Mystic Meg, who knows all about Bitcoin and can put us right via, errr, interplanetary motion ...

Note: this dynamic young lady describes herself** as an entrepreneur, and I suspect she's read that bit where the man who got richest during the California goldrush was the one who sold shovels ...

Me, I'd say that ordinarily a graph like Bitcoin's is a screaming short.  But what do I know?  (*returns to seance*)

ND

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**She's also a "current philosophy graduate student".  I think I like this woman.  

When will it end?

The UK media remain keen to depress us all with gory details of how 100,000 people have died of Covid. To me the number is flawed, the real number should be excess deaths and not this easily disputable number. but it makes it easier for the loony 'Boris the Butcher' headcases to argue for lockdown forever etc. 

On that note, the excellent progress in vaccination should mean that light is at the end of the tunnel, just when we are at the worst point of the pandemic yet. 

It looks like all (ish) over 80's will have been vaccinated with an initial does by the end of January or early February. This will continue to bring case number down (which have fallen even faster than they rose, not that pundits seem to want to comment on that) even further. 

The tricky decision will then be when to release lockdown. there are many knowns, the state of the economy, the lack of education, the lack of cancer and other treatments - these are not minor considerations. 

The known unknowns are also hard - how effective is a one dose approach? will the younger population still suffer and end up with many deaths and hospitalisations if restrictions are reduced a lot? How long do the vaccine's give protection for? Will a new variant arise that nix's the whole strategy?

it is quite a balance, the Government do not want another lockdown after this. As such they will push it for as long as they think they can manage given the parlous economic circumstances, to buy the most time for the vaccine programme to work. 

With that view, I think the idea schools will be back at end of February to be unlikely, but not impossible given the rapid vaccination rate and relative fall in numbers cases currently. With vaccine success, the end of March is a more likely time for Tier 3/4 in most of the Country.

If the lockdownders win, then end of April will be the worst case. Spring sees the virus struggle to transmit so easily anyway for a few months and cases will remain low whilst they carry on with a wider vaccination programme.

The worst case news is a variant develops that is vaccine resistant currently, such that it causes a 6-8 week delay in the current plan and end up with restrictions for a lot longer. I can't see Wimbledon or any sports having fans until the autumn and I am very glad I don't own a nightclub right now. 

The Hard Dollar Cost of War

 Here's a striking graphic:

Let's assume the bottom bar is accurate enough to make the point (even +/-50% is enough).  What follows from this?  My thoughts run as follows:

• Avoid war!  How many monarchs screwed up their chances by being altogether too keen on fighting?  You need to be really good at it - Julius Caesar, William of Normandy - to make it pay.  It's said that Thomas Cromwell's entire foreign policy was trying to stop Henry VIII going to war.  "Trading is better than fighting", as I was brought up to believe by my father (who saw WW2 from the sharp end).
• (Just how wealthy is the USA?!   'Nuff said.)
  
• What about the Keynsian effects?  A great deal of that money has been recycled through the US industrial-military complex (possibly even driving some tech advances).  True: but a lot of it must also be counted pure, unadulterated waste: there are more efficient ways!  Leading to ...
  
• What else could the USA have done with the money?  Or put another way: what could Biden do if he called an early stop to those outlays?** 
  
• "There is a great deal of ruin in a nation" ...
  

ND

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** There's an interesting story here.  When the Ayatollah came to power in Iran, initially he headed off to Qom and didn't do much at all of substance; and people were beginning to wonder if he was just going to return to being a seminarian cleric.  What he actually did in the early months was instructive: he immediately stopped the Shah's huge expenditures on armaments, and redirected the money at the rather nervous population, who quickly concluded, hey, this isn't so bad.  He thereby literally bought himself breathing-space to plot an altogether more comprehensive takeover of most aspects of Iranian life, which he proceded to do.  (To be fair, invasion by Saddam the following year helped consolidate his position too: and he may have regretted some of those cancelled arms shipments.)

Weekend Post: in which the Terminator plainly explains the limits of self-rationality

After my posts which generated a big debate (I am not going to say quality) a couple of weeks back, I came across this excellent piece below which is a tweet reply by Arnold Schwarzenegger. I enjoy the way he spells out the limits to post-modern rationalism and how one can moderate one's own behaviour to avoid self- radicalising. I know occasionally it falls down, sometimes nearly all the experts are wrong, but this is almost always when politics are the driver and one side is pushing a angle, it does not invalidate the process. 

"I always say you should know your strengths and listen to the experts,. If you want to learn about building biceps, listen to me, because I've spent my life studying how to get the perfect peak and I have been called the greatest bodybuilder of all time. We all have different specialities.  

Dr. Fauci and all of the virologists and epidemiologists and doctors have studied diseases and vaccines for their entire lives, so I listen to them and I urge you to do the same. None of us are going to learn more than them by watching a few hours of videos. It’s simple: if your house is on fire, you don’t go on YouTube, you call the damn fire department. If you have a heart attack, you don’t check your Facebook group, you call an ambulance. If 9 doctors tell you you have cancer and need to treat it or you will die, and 1 doctor says the cancer will disappear, you should always side with the 9. In this case, virtually all of the real experts around the world are telling us the vaccine is safe and some people on Facebook are saying it isn’t.

In general, I think if the circle of people you trust gets smaller and smaller and you find yourself more and more isolated, it should be a warning sign that you’re going down a rabbit hole of misinformation. Some people say it is weak to listen to experts. That’s bogus. It takes strength to admit you don’t know everything. Weakness is thinking you don’t need expert advice and only listening to sources that confirm what you want to believe."

"Zero Carbon Housing": Heat Pumps For All?

As everybody knows, the easiest target for decarbonisation has been the electricity generation sector.  But that leaves some seriously intractable problems - energy-intensive industry, transport, food/agriculture/land-use, and space heating - which in aggregate are significantly bigger consumers of fossil fuels, and also (with the exception of some industries) much less centralised, i.e. interventionist measures are much more difficult.  Only the supply-side of transportation (oil companies now, electric utilities in the distant future) is *easily* dealt with, in the sense of nobbling a handful of large players that governments know how to transact with.  

One of the difficult areas - some would say the most difficult - is space heating in residential properties, in a country like the UK where gas is by far the predominant fuel.  Electrification?  Consider this: peak winter energy demand for space heating that is currently fuelled by gas, is a multiple of peak electricity demand for all purposes.  So: although the grid starts with a bit of headroom arising from overall energy consumption having been falling slowly for many years now, basically the grid and the generating fleet would need to be more than doubled in capacity, in almost every facet, in order simply to electrify home heating.  That leaves electrification of transport still to be catered for.  (With a bit of management, that might just sneak in with the grid upsizing required for heating, if all the vehicles could be charged in the small hours.)

Politicians having been banging on about legislating towards decarbonising homes for several years now.  One of Sadiq "Showman" Khan's more fatuous actions was to "regulate" that all London newbuild houses would be zero carbon from, errr, 2019.  But then, seeing there wouldn't be any new housebuilding, he changed his mind.

HMG is at it now:

Heat pumps will become the principal low-carbon heating technology in new homes, the government has said. The Ministry for Housing, Communities and Local Government has responded to feedback to a consultation it conducted just over a year ago into its proposals for a Future Homes Standard that will govern new residential development from 2025. The response confirms the government’s commitment in the Treasury’s 2019 Spring Spending Statement to ban the installation of fossil fuel heating, such as natural gas boilers, in new-build homes by the middle of this decade. (UtilityWeek)

Grammarians, pedants and skeptics amongst you will have identified the weasels there: principal technology might mean "majority of installations" (51%?) or even "biggest single technology" (alongside gas and old-style electric and district heating etc etc).

Note also that heat pumps are only "low" carbon - because of course they use electricity from the mains!   Given that homes presumably includes urban flats, we must also assume it's to be air-source pumps as well as ground-source - a very questionable proposition.  And then there's the finance.  The RHI was meant to incentivise ground-source heat pumps as much as biomass, but in this it failed dismally.  We're talking serious cost here: and that's before anyone even mentioned retrofit.

If they really mean it, new house building will slow to a crawl (just as 2,000,000 Hong Kongers turn up ...).  Still, "ban" is ban.  Ask Sadiq, eh?

ND

Biden & those multiple Trump sanctions: what now?

The wokerati seem to have invested a lot in Biden, and maybe with good reason as regards domestic policy; but is he going to turn out to be a Hillary-style hawk abroad?

Of particular interest to me is whatever is going to be the successor to Trump's fairly determined policy on blocking Nord Stream 2, the substantial Russian / Gazprom gas pipeline project designed strategically to outflank comprehensively their own former Ukrainian export route.  Germany of course is the intended landfall, and Germany has long stuck doggedly to its own wholly self-interested Russia policy, in the face of widespread unease and often downright condemnation elsewhere.  And yet Germany is exceptionally keen to cozy up to Biden, hoping he'll be both friendly and not overly concerned to make them step up to the plate as regards NATO contributions.

Then there's China ... and Iran ... was there a single global hotspot at which Trump wasn't throwing America's considerable sanction-clout around?  However much bravado the three target-countries muster, they do all suffer under sanctions to a greater (Iran) or lesser (China) extent.  If you've ever done any business where a sanctions-related issue arises, you'll know how paranoid mainstream western companies are about "transgressing" unilateral US diktats.  And of course most other western nations have broadly similar top-level policy goals as the USA in these matters anyway, even if no intention (or ability) to pursue them with as much (or any) vigour.

What will be the successor-policies under the new US regime?  Hillary Clinton's reputation in many quarters is that of an outright warmonger, so being a Democrat isn't per se much of an indication.  And then there are the Biden family's, ahem, *wider interests* ...

ND

'Desert Storm' - Kuwait, January 1991: the backdrop

The politics of the Middle East is something we don't tend to stray into around C@W, there are too many obvious beartraps (not to mention lurid conspiracy theorists).  However, salient headlines on the high-level situation at the time when Saddam made his ill-fated 1990 move on Kuwait can readily be assembled - see also my previous series of posts.  (BTW, I'm not aiming for my doctorate on late 20th C geopolitics here ...)

• Iran and Iraq had been hard at it for the best part of the preceding decade.  Early successes for Saddam had not been capitalised upon, leading to bloody stalemate - but also resulting in a very large, battle-hardened Iraqi army that at the tactical level was well led, and could even make some claims to strategic competence - below the political level, that is.  (The earlier posts covered aspects of this in some detail, if you're interested.)
  
• Western feelings about this were generally "it's a pity they both can't lose"^^.  For the most part, however (and certainly from the US perspective) the attitude towards post-Shah Iran was so negative, there was a tendency sometimes to view Saddam as something close to "an SoB, but our SoB" - and there had clearly been some maladroit (to put it mildly) high level contacts with his regime along those lines.  Many commentators suggested Saddam even believed he'd been given the green light on Kuwait.
  
• Middle Eastern oil loomed larger in 1990-net-importer America's thinking than - thanks to its recent shale-based exporter status - it does today.  Kuwait mattered; and Saudi mattered a lot.  And Israel ... well, let's just say that if Saddam felt his illusory "free pass" extended one inch further than Kuwait's borders he was truly, barking mad.  Oh, and the UK had (and still has) a very significant strategic presence in the area, too.
  
• China counted for rather little on the world stage in those days (Tiananmen Square was 1989); and the Soviet Union, which (formally speaking) still had more than a year to run at the time of the invasion, was already an utterly busted flush, the Berlin Wall having fallen also in 1989.  But Russia was a very interested spectator, with a ringside seat. 
  
• Saddam had gone a little way towards emollient PR following his invasion, but it was to absolutely no avail**: Bush reacted strongly and quickly, and the battle-lines were drawn very early in the piece.
• Mrs Thatcher was first on board, naturally; and the coalition assembled by Bush Senior (making military and/or financial contributions) was large and impressive.   

Incidentally MrsT was, in domestic political terms, in a real mess at the time (Poll Tax & generally declining authority), which became steadily worse as the weeks from the invasion went on; and concluded badly for her long before the end of 1990.  She desperately wanted to reprise the 1982 Falklands triumph++ and begged Tory MPs to let her stay on until the job in Kuwait was finished ...  

No such luck, she was well gone before the fighting started - on 17th January 1991.   

To be continued.  Perversely, it may take me longer to recount the tale than the actual fighting lasted ...

ND

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^^ attributed to Kissinger, but surely some American isolationist must have said it about Germany & Russia before the USA came into WW2?

** to be fair, it's entirely possible Jeremy Corbyn bought it

 ++ she'd been hankering after a re-run ever since: subject of another History Corner story I may feel able to recount one day...

UK shrinks 2.6% in November - apparently great news

Many economists, like Andrew Sentance for example, are declaring it a relative success that the UK economy did not shrink more during the 2nd Lockdown. 

Determined to see a silver lining to every cloud, they were expecting far worse and think this sets the UK up for a big re-bound in the near future. 

For me, some of the logic is poor, the second lockdown was not like the first, shops and schools were open and people were fed up with the restrictions when virus infections 'felt' low. If you fast forward to today, it is a lot more like the first lockdown. 

Also, with the lockdown here set to last until vaccine escape (if achievable) we have a whole Q1 of negative growth to deal with. 

The UK economy is going to be a lot smaller by the time the pandemic is over / under control. Yes there will be a big period of catch up with 10% growth for a couple of quarters, but lots of the damage is permanent along with a much higher debt to GDP ratio.

A few positives though, the share market and Sterling are already trading very low as compared to historical norms - there maybe upside in both for a while yet.

To me the big unknown for the year remains inflation - can QE keep inflation in its box forever? Maybe 2021 is when we find out. 

Desert Storm: 30 Years On

Today marks the 30th anniversary of the conclusion of Op Desert Shield in Kuwait / Saudi / Iraq (etc) and the start of Desert Storm.

I haven't forgotten that I said I'd write about the fighting phase, too.  Am a bit tied up at the moment, but it's on the list ... watch this space.

ND

Seeing the future in the markets?

At the time of writing the FTSE100 is off around 2% on the day, a small blip but still well up in the beginning of the year.

Most years, after a Santa rally to get their bonus' in, fund managers re-allocate their funds in January to safer plays adn let the market drift whilst thier benchamrks for the year are set. 

All very old school. 

This year is interesting, there is a huge race on in the UK to vaccinate as many people as possible before Covid takes too higher toll - on people mainly but also on the economy, a lot of which remains closed.

To me, the FTSE at 6700 odd seems like a very positive readout given the economic damage wrought by Covid. The market investors must seem to think the vaccine race will be won in short order and some normality begin to return. Then again, they can soon turn down, but it is an interesting indicator to watch - more insightful than Twitter...

Bitcoin gold rush

Being 2021, everything has to be that bit bigger than 2020. Even the price of bitcoin, which last week hit new highs and although it has come off from $40,000 per coin to $38,000 per coin, it is still a huge ramp up. 

The real action is not in bitcoin, but the variety of other dodgy tokens that have been created in the crypto-world which are sometimes going up (and soon down) thousands of percent a week. 

It really is the wild west, but bitcoin has been around for over 10 years now so we are used to it. 

Why the ramp up then?

I can think of a few reasons, the biggest clear one is the huge use of the Federal Reserve balance sheet to create more money to aid the pandemic relief. This money has to go somewhere and it flows into assets. We see shares go higher, property, anything that is not cash. historically this would mean large levels of inflation, but with the economy destroying money very quickly on main street, official inflation remains low.

Bitcoin and brethren have become assets, as hedge as much as say Gold (also riding high, at near historic highs). Bitcoin itself is becoming ever hard to 'mine' so in a way it is increasing its own value - what a genius creation it has proved to be for creating its own success. 

I think too, the whole QAnon type crowd who are very anti-reality have also flocked to something they see as anti-institutional. 

For now, I don't yet see the big crash. The issue of a huge ramp and market crash, a la Tesla, is only a matter to time, but it feels to me there is a little further to go yet until there are no more buyers. 

Weekend post - To Trump or not to Trump?

After a week in which he pushed for an insurrection and got the YMCA storming the Capitol, President Trump has now said he won't attend the inauguration of Joe Biden. Quelle Surprise. 

So the question for debate in the comments:

1 - Should be be impeached?

2 - Will he be impeached?

The new season of Earth:2021 is certainly shaping up to match the ghoulish horror of the 2020 season.

Trump shows how deep the rabbit hole has become

Trump vs Democrats 

Remain vs Leave

Covid19 vs Anti-vaxers

Liberals vs identity politics

The Fed vs the markets...

The advent of social media has truly de-stabilised the world now. Trump seems to have convinced himself the normal election was stolen from him. The fact that every investigation has come up empty passes him by. 

In the UK, Remainers were full of how our Country would fail literally on the day of Brexit, with no food or medicines coming in. Brexit is not without its downsides, but non of this was ever true and yet still it gets repeated ad nauseam. 

On the vaccine, utterly unsubstantiated tripe about the vaccine is shared widely, putting people off having it. Does no one recall the MMR scandal and how unscientific nonsense was published linking it to autism? So many kids then exposed to diseases that were supposed to be near eradicated. 

But the internet is powerful, it allows groups who previously would have been 2 people in a pub to gather in larger virtual numbers and in the US just now in real numbers to push their crazed agenda. The whole element of Fake News is such a dark element in our society. Anyone can reinforce their beliefs by finding more outlandish information on QAnon or the Canary - whichever side they are on, there is plenty of content to keep them off-track. 

I have a whattsapp with a CEO of a very large company. All he does is send conspiracy nonsense about the virus not being real and the great reset. An intelligent guy, lost in the rabbit hole of the web. 

What Trump shows is this now goes right through society in the West, right to the top where the person literally in charge of the US can claim 'THE MAN' is against him - he is the man for goodness sake. It is an insanity. 

What I have not figured out is how we get out of this conundrum as a society. Social media won't be put back in its box, How do we figure out a way through it? I think perhaps it is time to make Social Media companies register as publishers. They have to be responsible for content like a newspaper or any other offline media. We need to do something or else the craziness in the Capitol will be the nearer the beginning and not the end. 

Not enough vaccine is not the same as lack of effort

 All I read around at the moment is how incompetent the Government are, interestingly, this applies pretty much to all Countries bar New Zealand and China - where the Government is amazing and beneficent of course. 

In the UK, bored of the new lockdown and desperate to get out of things, pundits everywhere are asking why the Government has not asked.....taxi drivers, the army, pharmacists, vets, GP's, delivery drivers, schools, sports facilities...to help with the vaccine roll-out. 

It is as if the only limiting factor is willpower - the real issue is lack of vaccine availability and the sign-off to use it once tested. With the way production is going, we will be lucky to get to more than 1 million doses a week in the next month and thereafter it might ramp up. It is not just production, but of course AstraZeneca has sold the vaccine all around the world, the UK only gets a portion of what is produced. 

Still, it says a lot about how low the level is of the the commentators on the virus are at the moment, of course Keir Starmer is king of this battle, demanding 2 million a week vaccinated just because he wants to set Boris a target to fail at. 

With the quality of insight offered across the UK currently, no wonder we are in a mess....and we are keeping kids off school too, not helping improve the long-term prospects of this improving either. 

2021 Predictions - maybe the hardest one in 14 years

We started this little tradition 14 years ago now, gulp, how time flies. 

As I said last week, back in 2006-9 myself and the readership often got 4/5 or better for predictions, it continued at a good rate until the last couple of years when the winner, like last year, often only got 1/5. The world has become more unpredictable or perhaps the authors and readers more stupid....

But now we have 2021, with a global pandemic and runaway stock market fuelled by frankly mental levels of money printing - all the whilst having Russia and China waiting in the wings and a geriatric in charge of America. 

So, good luck, we will need it for both the game and as the kids say, IRL. 

Here goes

1) FTSE close on 31/12/21

2) Share price of Tesla on 31/12/21 (this stock, the focus of the irrational market, will be the bell-weather for a market crash too this year...or not...)

3) When will the Tier system end in the UK (assumes this year...optimism central I am)

4) Who will be US President at the end of the Year

5) What price will Bitcoin be in US Dollars?

A nice rounded global focus there, bit more on the markets this year. As always there are bonus points (to a maximum of one) for guessing some major geo-political event too in your response. 

Good luck all...

Resign now, Boris

Auberon Waugh once wrote of Rupert Murdoch:  for crushing the print unions, Murdoch deserves a dukedom.  For everything else - one of the less pleasant circles of Hell.

Two dukedoms, then, for Boris: one for crushing Corbyn, the other for seeing through (after a fashion) the Trade & Cooperation Ageement.

Then go. 

Oh - and a Happy New Year!

ND

Define Capitalism! - holiday homework for C@W

I've recently come across a book called The Ethics of Capitalism (Daniel Halliday and John Thrasher, OUP 2020).  Unsurprisingly, it starts by groping for a definition.

... Treating the relationship between markets and freedom as all or nothing tends to be a mistake of both the “purest” defenders and opponents of capitalism. It is better, then, to think of capitalism as a certain approach to harnessing and promoting markets, in part with the help of government and civil society, not a deference to markets as such... Market forces and markets are ubiquitous, and yet the existence and promotion of markets alone are not the “essence” of capitalism. What, then, is? ... In many respects, no two capitalist societies are entirely alike, so there is limited value in generating an exhaustive, philosophically precise definition of capitalism.  

... We need to make sure that any definition of capitalism, however flexible, at least captures most existing societies that are seen as more or less capitalist.  One crude way to do this is to use a proxy measure like the Economic Freedom of the World Index, which is produced annually by the Fraser Institute.  Their methodology measures size of government, legal system and security of property rights, sound money, freedom to trade internationally, and regulation.   

... A country’s economic freedom score is highly correlated with its per capita income.  Countries that are unfree, like Venezuela, have very low per capita incomes, while countries that are very free, like Hong Kong or Canada, have very high per capita incomes.  The ranking on the list also correlates well with where people around the world are trying to enter as immigrants and from where they are trying to escape. This gives us one way of arriving at an approximate and preliminary definition of capitalism. Although we will expand on this somewhat, we should think of capitalist societies as those that rank highly on most of the measures that the Economic Freedom of the World Index highlights.  In particular, capitalist societies will have: 

A. Strong legal protections for private property 

B. Wide dispersion of private property across their population 

C. Extensive international trade 

D. Consumer sovereignty (including competition in the provision of goods and services) 

E. Diversity of employment contracts 

Existing capitalist countries will have these features to greater or lesser degrees, but without at least meeting these (admittedly broad) conditions, it is unlikely that we would consider the society in question capitalist.

And that's as far as they go in their build-up.  Even if it's a useful background discussion (and there's plenty more of interesting stuff in the book), as regards essaying a definition of capitalism this is a pathetic cop-out.    

Eventually they get to this: 

...“pure” capitalism [is] the economic arrangement in which power is de-centralised, property is widespread and employment options are diverse.

Feeble.  I've occasionally shared a few definitional ideas of my own here in the past.  What do dedicated C@W readers say?   We want a definition in no more than a couple of sentences, even if you need to add an explanatory paragraph or two. 

ND

2020 - Prediction results

 So here are what our post on predictions at the end of 2019 said:

"For the first time in 13 years of this competition I have reviewed the answers and no one was even close. My cat could have done better.

I guess this anecdotally suggests that 2019 was the most crazy year yet - even weirder than the 2010 and 2009 years of the financial crash.

Only gridbot predicted an election but it produced a hard brexit and a hung parliament. Nick Drew did well to suggest there would be a centrist party but it did not even survive the year out to qualify for the final.

My own predictions of May to survive and the remainders to win was fortunately 100% wrong.

Maybe 2020 will see the beginning of a return to normality and some more predictable events unfolding. Or perhaps the zeitgeist of the end of the decade will continue with unknown terrors to come."

Uncanny, perhaps, but the later efforts at prediction for 2020 were also some way off the rather over-interesting events that took place this year. Suffice to say no one was close on the FTSE prediction, nobody cares about tax rates or energy usage levels, the pandemic having seen of both quite easily. 

Our dearly departed friend, Raedwald, at least predicted that Keir Starmer would become leader. Anonymous predicted I would not improve my use of spell check, but thanks to Google chrome that  was found untrue. 

So a win for Raedwald posthumously which feels fitting. 

I will be thinking hard for relevant questions for 2020, this year proving a little more challenging than normal. I think after Brexit and Covid, we deserve a more normal year next year, but perhaps that is itself wishful thinking!

Unreconstructed Remainers: The Last Outing

There are those Remainers like Grayson Perry who after 2016 acquired a modicum of reflective humility about how little they probably represent those whom they once thought they spoke for. 

But there are plenty who did not.  The Graun, which these days rarely opens its CiF pieces for BTL comments (which itself speak volumes) has today seen fit to open the floodgates under a Brexit piece.  And what a deluge it is; some 2,000 gobbets of turgid Remainerist bile, deposited in a mere three hours on a Christmas Sunday morning.

The Comment piece that sits grandly above it is from none other than Will Hutton, the man who destroyed that once estimable institution the Industrial Society, a story for another day.  Funnily enough, while predicting we'll be back to the EU on our knees within the decade, even Hutton is obliged to acknowledge a list of detailed achievements the UK made in last week's trade agreement.  No such qualifying remarks in the bilge below, which as a body of unrestrained online echo-chamber emotion could serve as a data-source for a psycho-sociological thesis on the low intellectual content of metropolitan *progressive* thought.

What's perhaps most striking is the sheer raging impotence of it, what with Starmer whipping in for a supportive vote in Parliament.  That'll be the next major belly-laugh on offer in this bleak Covid midwinter.

Although many of these people will still be fuming in their smart progressive sitting rooms and their rancid progressive bedsits for years to come, I can't see there being many more outburst-outings quite like this one.

ND  

Gregg Wallace at Xmas - Inside the Brexit Factory

GW     I’m ‘ere in the Westminster sosssidge processing plant.  You always wonnied ter see ‘aa “Brussels Sosssidges” were made, dincha?  Whotcha mean, ‘no, Gregg’?  Course ya did!  Stop retching!

I’m ‘ere watching the piles of raw materials arriving at the gates from Brussels.  Blimey, look at that lot!   Let’s talk to delivery-boy David Frost – Dave, hi, I’m Gregg.  Wotcha got there then, mate?  

DF     Well Gregg, it’s two thousand pages of typical Brussels output, and as you can see, in this form it’s pretty inedible.  Particularly the fisheries bits.  

GW     To’ally in-die-gestible, I’d say, mate.  And, phwoar, it stinks!  Crikey - must need a load of processing before it gets to the punters – wot ‘appens nah? 

DF     Well, we’ve already done a bit of softening up so that customers have a fair idea of what they’ll be getting.  But now we need to put it into what we call ‘pre-digestion’. 

GW (to camera)   And that’s because the average ‘ew-man just couldn’t stomach this stuff unprocessed – too dense and, frankly, just plain unpalatabool: doesn’t look much like what they are expectin’ at all!

... So, it’s twenty seconds after this stuff came in the gates, and nah I’m over at the ‘press’ department, where the raw ingredients are prepared before they are suitable for servin' to the public.  Hi, Allegra Stratton, I’m Gregg: wot ‘happens in your great big ‘press’ machine then, eh? 

AS     So, what we do here Gregg is, yesterday we warmed up the press so now it’s ready to receive the juicy bits we’re going to feed in. 

GW     Yeah, I can see why you’re bein’ a bit selective!  You wouldn’t want summer this stuff getting into the press, wouldya?!  That Irish bit, for example, that'd be really 'ard to swallow.  Can I ‘av a go wiv your machine? 

AS     Yes of course.  We’ve separated out the juicy bits over here, so if you just tip them into this end – that’s it.  Now the ‘press’ doesn’t have much time to process this stuff so, look, just a few seconds later all those bits you fed in come straight out again in all these different outlets, almost exactly the same as they went in!  Except now they have an air of authority, it’s what we call ‘independent credibility’. 

GW     In-dee-pendent wot?  You pulling my plonker, girl? 

AS (blushes)   Oh ... they told me that’s what you like, Gregg and ... well, we’re very grateful for the publicity ...

GW     Yeah awright girl, afterwards, yeah? ...  so, ‘aa many of these press processes do you do in a yee-er? 

AS     Well, we do lots all the time, but we always rush through a specially big batch just before Christmas.   Also, sometimes at 8pm on a Bank Holiday Friday evening, that’s another time when we often do big batches.   That’s when pre-digestion really helps the process along. 

GW     And what about the stuffing?  And what happens to the other 1,998 pages, eh?  That’s a load of indigestible ingredients! 

AS     So, we find that if it’s fed through immediately after, it seems to slip down nicely: as far as the average customer’s concerned, it’s the juicy bits on top that they like.  And everyone’s going to get a proper bit of stuffing ... but your viewers don’t really want to see what they’re eating, do they? 

GW    So nah, I’m wiv the public relations manager.  Hi Boris, I’m Gregg.  ‘Aa d’you get punters to swallow this lot then, eh? 

BJ    Well Gregg, lovely to meet you, just been on the ‘phone with our good friends in Brussels, together we’ve put together a ginormous package that everyone will love, in time for Christmas too!  Got to dash now; you’ve got to, er, finish up with Allegra - and I’ve got some Christmas stuffing to do, too ...

 

Produced for the BBC by ND / C@W productions 2020

Optimism from the bottom of the sherry glass

I should really save this for next week, but I can't resist being a little Happy on a Christmas Eve.

In the space of December we havd or will have had;

1) Pfizer vaccine approval

2) Moderna vaccine approval

3) AstaZeneca on the cusp (28th Dec allegedly, but we will see I think there maybe a delay)

4) A Free Trade Deal with the EU/UK

What a month, after surely the worst year in living memory (was any particular year in the 1970's really worse? certainly not the 1960's or since then) it is a big bang to end on. 

Yes, the vaccine will take 4-5 months to roll out and against an ever-evolving virus this will be a race that will have twists and turns yet. But the worst is here now and improvements will permanent rather than the tides we have seen this year. 

The brexit deal is even better. The benefits of Brexit, such as no more payments to French fisherman and Greek mafia masquerading as farmers, we have banked and also the decline in immigration to more sustainable levels. With trade deals to be done we are away from the worst of Brussels with only limited downside in the long-term. Better yet, our politicians are newly accountable, much that they will come to regret that in time!

Predicting the FTSE from here for next year will be a challenge, but that is for next week. 

Merry Xmas one and all!

"Affordable" as a theological concept: the Energy White Paper

As part of the usual service to t'readership I tend to offer a pre-digestion of big government reports like the Energy White Paper, published last week as part of a raft of important documents**.  This one, however, defies easy summary, except to say that the clue is in the name: Powering our Net Zero Future.  A big turn-off for some, no doubt: but that's where we're headed anyway, and I find it interesting to see how they go about discussing some of the challenges.

Actually, of course, they don't anywhere quite say this is going to be bloody difficult, if not actually impossible.  But for those able to read between the lines, there are hints enough in the veritable smogasbord (cliché ! - Ed) of interesting issues set out.  There's some intelligent work going on across a very broad front, most of which seems (on this evidence) to be fairly clear-sighted as to the difficulties involved.  

So dive in if you are interested; but I want to pick up on one overarching aspect.  The government claims to be most concerned that the costs of Net Zero to be borne by Red Wall voters the ordinary energy consumer are "affordable", a word that appears 19 times.  Sounds like an appropriate concern, right?  Well we may be glad they have it in mind, but I'm sorry to say, it's almost meaningless.

1. Electricity and gas (particularly the former; and also petrol / diesel etc) have such enormous utility value to consumers, we can - and are ultimately willing to - "afford" almost anything.  One of the clearest demonstrations is that literally no consumers - not households, not even industry - were militating against the old monopoly regimes for gas and electricity on the grounds of the prices they charged being too high.  Those monopolies were ended on wholly ideological grounds - albeit that the ideologues confidently and correctly predicted huge consequential price reductions.  Another is the amount of Duty heaped upon motor fuels.  Governments know they can stick almost anything on the price of such mass-consumed essentials, and we'll pay.  (Relatively easy to collect, too.)
   
2. Greens (and outriders such as the CCC) advance a quite different argument: "we can't afford not to" - meaning, the cost of not lowering our CO2 emissions would exceed the bill for doing so.  Some of them seem to mean this literally, i.e. to be understood in cash terms.  Others of them know that can't possibly be proved (even if it has the structure of a logical case) and mean it in some metaphysical sense, as if cost-incurring UK actions in 2021 will certainly cause the rest of the world to act so as to ... (etc).  Or perhaps in a weaker sense: if the UK doesn't take the lead in incurring such costs in 2021, it will let the rest of the world off the hook, and then ... (etc).  Who knows - it's theological stuff.
3. Lots of people of all stripes really like to believe another line of reasoning: it's "affordable" because it's an investment in another industrial revolution that will generate a surplus of wealth.  Again, this has the structure of a logical thesis.  But it's an absolute act of faith in the "WW2 US Economy" model.
4. Keynsianism, the weaker version of #3: we can "afford" to have men dig holes and fill them up again ... (as suggested here, in the context of energy, many times since at least 2014 and probably before)
   

Anyhow, the government has *affordability* on its agenda: and in practical terms we may hope this means they will - as the White Paper avers - ensure that contracts are awarded as competitvely as possible, a continuity / extension of the extremely successful CfD auctions of recent years; and hold Ofgem to their mission of beating up on the natural monopolies and suppliers.  Sadly, one can easily find some cases where the WP indicates they'll just be doling out largesse to chosen "(pick-the-)winners" - rarely a good idea.  Then again, these are mostly R&D-type efforts, one of the few areas where government intervention can sometimes genuinely pay dividends (for someone).

The really egregious stuff comes in the vexed area of nuclear power, which must demonstrate "clear value for money" (= "affordable", obviously), and that the industry can prove it is able to "reduce costs & deliver on time and budget".  Given all of recent history in the matter, will EDF be put off by these strictures?  Don't make me laugh - we already know the evidence-free, jesuitical arguments they will deploy on this one, when the time comes. 

ND

 ____________

** one of them details their modelling methodology which, they claim, generates 700,000 separate scenarios for 2050.  Call me lazy but I ain't reviewing that one ...

Tiers for Fears

 The Government is scared, why now and not a week ago I don't really get. The only way to make sense of it is that the scientific advice the Government has been getting is of poor quality. The way the Government has destroyed itself to follow advice, does not look like politics leading to me. Far from it, the Government is being led by the nose by the scientific advice and is being ruined by it. 

Meanwhile, with a wrecked Christmas anyway it is right to ask why this was not planned for. It would have been a much better call to stop travel and close shops a week or two ago in the face of rising cases. 

Moreover, the suddenness of the move has spooked other Countries, now isolating themselves from the UK. At least we won't notice a no-deal Brexit now!

What a mess and what a disastrous set of guidance from SAGE in my view. Now they are advising total lockdown in the South East for a couple of months, London was in Tier 2 last week. When this mess is over, and it will be with the good news that 500,000 people already have been vaccinated, the whole approach needs to be looked at. 

As much as Keir Starmer witters on about what he would have done several weeks ago with the benefit of today's knowledge, I think any Government would have been side-swiped by the weakness of the officialdom in the Government Scientific advisory space. A good way to tell this is that a big song and dance was made about getting rid of Dominic Cummings and pals, but we are in more of a mess now than ever on the communication side with the new people just as flummoxed as the past ones!

Weekend Reading: the Sublime and the Hilarious

Here are two excellent reads for the weekend.

The first is a stonker: an essay entitled How Race Politics Liberated the Elites - if society is taken to be inherently oppressive, the notion of a common good disappears.    

Some extracts: 

... The decision-making class has discovered that it enjoys the mandate of heaven, and with this comes certain permissions; certain exemptions from democratic scruple. The permission structure is built around grievance politics. Very simply: if the nation is fundamentally racist, sexist and homophobic, I owe it nothing. More than that, conscience demands that I repudiate it.

... for the white bourgeoisie ... America’s illegitimacy transcends any particular historical facts about slavery and segregation. Indeed it transcends America, as one can surmise by the ease with which American grievance politics has been exported throughout the Western world. In this we sometimes see the use of American historical references that have been weirdly transposed, as when a house once lived in by Rosa Parks was relocated from Detroit to Berlin...  Under the empire of Christendom, the market for material relics from the Passion of Christ was similarly global; they left the holy land and ended up in various seats of earthly power.  Most recently, the transatlantic festival of George Floyd attests to the fact that it isn’t simply America that stands accused...

There appears to be a circle of mutual support between political correctness, technocratic administration, and the bloated educational machinery. Because smartness (as indicated by educational credentials) confers title to rule in a technocratic regime, the ruling class adopts a distinctly cognitivist view: virtue does not consist of anything you do or don’t do, it consists of having the correct opinions. This is attractive, as one may then exempt oneself from the high-minded policies one inflicts upon everyone else. ...You can de-legitimise the police out of a professed concern for black people, and the explosion of murder will be confined to black parts of the city you never see, and journalists are not interested in. In this way, you can be magnanimous while avoiding the moral pollution and that comes from noticing reality...

The second is less demanding, and you may have seen promoted elsewhere; but I'm puffing it, too.  It's a Beeb investigation into Indian propaganda methods against Pakistan, replete with an astonishing array of nicely crafted fake NGOs, newspaper websites and other ingenious subterfuge.  Well, what else did we imagine?  OK, but it's still pretty funny illuminating.

Settle down by your fireside ...

ND 

Timing is everything

How ironic, after all these years we finally get a legal approval for the 3rd runway at Heathrow. Not for not to rehearse in depth the oddness of our planning system that allows NIMBY's to hold up major national infrastructure.

Instead to marvel at what must now be the ruins of the economic case put forward by the BAA and the airlines about how necessary this is for capacity. As I have said before, we won't be worrying about capacity as the airlines are closing rapidly and the price of slots at Heathrow, I understand, is collapsing. Heathrow currently is not even the busiest airport in Europe at the moment, having fallen behind Charles de Gaulle and Schipol. 

So of course, let's go an build a 3rd runway now. Maybe by the time it is actually done air travel will have recovered, I have a hunch though that climate change puritanism is also going to have a bigger and bigger impact in future years, now that Finance Directors have discovered how cheap zoom is. 

Net zero carbon in the North Sea

Older readers who can remember the 1970's (I just about can't, so making the most of this to annoy Mr. Drew) would be forgivne for laughing until their sides split at the idea of the region becoming a net-zero carbon emmissions zone. The whole sea was swathed in a fleet of oil and gas rigs sucking up liquid cash for around 20 good years for the UK. 

Now though the Government has decided to help the area become a net zero area, with huge further investments in offshore wind. This comes of course with a reduction in oil extraction. It has long been the case that the oil Major's have been selling down their assets - aware that many have become liabilities with a cash payment upfront rather than long term  assets. The decommissioning costs a huge for offshore infrastructure. 

The Government is being bold, but given there are only 10 points in its white paper it is also being very thin. Additionally, the National Infrastructure whie paper is almost more important than the overall energy white paper - without the capacity in the Grid to cope with the vagueries of wind and solar power, there can't really be a big charge toward net zero except with Nuclear power, which is only foreseen as a supporting element from here on. 

Shame the fields in the North Sea could not last a bit longer, the Government could really have done with the cash now too. 

2021 and Beyond

Enough Covid already!  - let's get back to the day job.  

It's very hard to read the Brexit negotiations right now, being on the ordinary punters' side of the dense and acrid battlefield smokescreens emitted by the spin operations of both sides.  Several of the 'liberal' meejah seem to have concluded over the weekend that of course a deal is about to be done.  For weeks, the Telegraph has been heaving with industry lobbyists stressing that No Deal is suicidal, with lurid images of anarchy at the ports, famine across the nation, and the Royal Navy sinking French trawlers. Feeding into this, the EC smokescreen includes a revealing "compromise proposal":  we'll give you 6 months' relief on your anarchy & famine, in return for perpetual lockstep on regulations and state aid.  (The classic EC tactic - always offer a strictly time-limited concession, after which it'll be 100% what they want - recall the "emergency handbrake" they offered Cameron.  Thanks, but no banana.)  The Boris smokescreen, by contrast, is along the lines of Belloc: 

The stocks are sold; the Press is squared: The Middle Class is quite prepared ...

(Oh, and nobody seems much to care, or even notice, that the Irish question has been quietly *solved*.) 

So – what do we envisage as our fate in post-Brexit 2021?  You don’t need an unusual degree of imagination to conjure up dire and all-too-plausible scenarios: but it seems to me there are some big overarching positives out there. 

• As noted before, the UK is genuinely very flexible in the teeth of big change (but no, let’s not rehearse the previous post), particularly vs the EC 
• HMG is willing to prime the pump quite dramatically 
• Adding those two together: any prospect of a period of (relative) stability is likely to encourage a burst of pent-up investment 
  
• Though I realise the EC’s speciality is always delaying and never letting go, when the Brexit thing is behind us we have a government with a very workable majority, and a Civil Service busting (as they were in January) to get stuck into a sustained period of coherent policy-making and delivery

It'll be whatever Boris wants, really, and if it’s a massive Keynsian splurge on the Red Wall, as seems to be the plan**, that’ll suit the bill nicely from Whitehall’s POV.  People who say he doesn't know what he wants are only partly correct: his Mayoral stint shows that in default of anything more inspired, he's happy enough to go for build build build.  

A bit early for the annual Detailed Predictions compo: but - what do we all expect next year?

 ND

__________

**See today's Energy White Paper, for example, of which more anon

Covid & British Regulators: Makes You Proud ...

Seriously: this is one of our great competitive strengths.

 

2020 has not been a year of pride for this Brit.  Although it started well with the Greenwich Speech, on the scale of what matters I can't think of anything from Boris Johnson's government that has subsequently been greatly to his credit**, and an awful lot that is utterly disgraceful.  (Card-carrying Tory writing here.)

This is, until the lightning-fast regulatory approval and delivery of Covid vaccine, outstripping the rest of the Western world by, what - weeks?  months?  And how much slower still would they have been if we hadn't set the pace?

This is pragmatic regulation at its very best; and we may hope that it, and we as a nation, will be rewarded.  I have frequently lauded Ofgem, the regulator in my own specialist sphere, for its speed, flexibility, practice of consulting properly, willingness to experiment - and to admit shortcomings, and to reiterate swiftly, intelligently and without stupid pride of authorship.  

In absolute terms, when you are faced with what seems like a slow response from Ofgem, it's certainly possible to be frustrated.  That is, until you talk to anyone working in energy in the EU, where the regulators are slothful, inflexible, uncommunicative, stolid, obtuse and unresponsive.  I've lost count of the number of times I've heard continentals say, in open sessions, "they do this already in the UK", or "the British are so much better at this". 

It's pretty obvious that in the brave new Covid / "Zero Carbon" world, national flexibility is at a massive premium.  The vaccine approval, and a pretty impressive roll-out process, are deeply hopeful signs we are going to make new-found Brexit freedoms tell to our advantage - and in parallel, are going to make the obtuse, Civil-Code-bound federasts squirm.

That's my crumb of comfort at the end of a bleak 2020, and I'm sticking to it.  (For now.)

ND

_____________ 

** The defence spending & foreign aid announcements? - Ed 

Corporate Software Madness, Part 94

A periodic discussion point around C@W is the hash that apparently capable companies (and governments...) make of software procurement and installation.  The amounts of $$$ that unscrupulous and rapacious consultancies - "system integrators" - make from these suckers is quite astonishing; and  frequently with crap end-results to boot.  They advise their clients to spend far too much; they pocket the lion's share (often leaving the software vendor grovelling in the dirt); and their implementation skills & project management are deficient.  Yet still it goes on - year after year.

So I snorted loudy, but was not unduly amazed, upon reading this announcement - possibly the biggest triumph of optimism over experience I've ever seen:

E.ON enlists software company SAP to digitalise its power grid and customer service in a 2-year project, the heads of the two companies, Johannes Teyssen (E.ON) and Christian Klein (SAP) said in an interview. In total, E.ON is investing several hundred million euros in the digitalisation of its network and sales division and a “high double-digit million euro amount” in the cooperation with SAP, Teyssen said...

A story.  Many years ago I worked for an energy company that knew what it was doing.  When gas trading started in the UK we knew, from our US experience, exactly what was needed for deal-capture and processing which, in the early days of trading (with modest deal-flow) was not a massive software requirement.  We turned loose two of our own employees who were versed in MS Access, and they designed and delivered a wholly workable system in 6 weeks flat.  Cost?  Bugger-all, seeing that Access was conveniently on everyone's PC already, licensed as part of the Office suite.  Just two guys' time, and a round of training for front, middle and back office staff.

Shortly thereafter I was invited to expensive lunch by a competitor.  As always, the reason only came up at coffee.  We are outgrowing our gas trading spreadsheets, he said, and we know we need some proper software.  Our 'Big 4' consultantcy has advised us to budget £6m - does that sound about right?

I let him carry on in his state of blissful stupidity.  Reprehensible, I know.  Well, it was their money - and a nice lunch.  Their project took nearly a year.  You may safely bet the consultancy spent the full budget for them.

Now, about E.ON's high double-digit million euro amount.  "... in cooperation ..." ?!  €99m buys one f*** of a lot of "cooperation" in my book.  All so wearily familiar.  Still, I suppose they'll claim it as a necessary outlay to the German network regulator.  Add it to the Energiewende bill - it's small beer in that context. 

*   *   *   *   *

Footnote:   Further to my recent note on Centrica trying to flog off its LNG portfolio:  "Centrica resumes talks on potential sale of North Sea oil and gas venture Spirit Energy (Bloomberg).  The company is in discussions with 'a number of parties' regarding a sale of its controlling stake in Spirit Energy.  The stake could be worth $1.8-1.9bn."  Maybe that LNG sale isn't going so well.

ND

Deal or No Deal

Here we are again, another round of latre night, over the weekend, Pret-eating, high stress negotiations. You would have thought we had become quite skilled at these given they have been a constant stream for nearly 4 years now. 

But from what I can see, no, no progress has been made. The whole point of negotiaitons is to, err, negotiate. if you just turn up with a list of red lines which can't be crossed, then not much will ever be achieved. 

The original concept is that you have some giveaways, some core red lines and somethings you will only give up in order to close a deal and also if the other side gives something back. That way you get a good deal. 

With the EU, they seem to have very firm lines, this is ahuge drawback of having to agree them with 27 in the first place, it makes them a very inflexible negotiator which is a big risk to ever dealing with the EU. I think the EU makes them seem it is powerful, but in fact it just shows the whole thing for the ponderous animal that it is. 

For the UK side, a no deal is disastrous and represents and outcome only the most crazed anti-EU people ever wanted. Even Farage and his pals all thought we would get a deal of some sort. If it comes to leaving the EU with no deal it is a huge failure of UK statecraft. Why is there no back up plan for a Norway or Swiss light, or even an Australian type deal? The UK has staked its economic future on an all-or-nothing free trade deal with the EU. Frankly, it has been a terrible strategy for a while, whislt it played well in a 2019 election, it has been a waste of another year to pursue this single strategy. 

Of course, if it works then many will say what a great plan and team we have, however, to be less than 50/50 the day before the deadline is not good at all. 

Germany: another burst of suicidal energy policy

As the whole world knows (but Greens prefer to ignore) Germany's Energiewende policy has been monstrously expensive but of very poor efficacy as regards its ostensible aim (CO2 reduction) - as few bangs for the buck as it's possible to imagine.  By any ranking, the top two countries in Europe on CO2** are the UK and Denmark.  Most commentators have said: the Germans will think twice before their next round of energy policy-making.

But no.  They've just conducted an auction for subsidies to decommission, prematurely, 5 GW of coal-burning power stations in 2021 - and in a second round, a further 10 GW to close in 2022.  They are claiming it as a great success, naturlich - but it's actually a madhouse: the "winning" first-round bids have been from relatively modern & efficient black coal plants (the newest being of 2015 vintage), leaving open the stinking abominations that are their lignite plants.

Additionally, Germany has no Capacity Market, meaning no explicit price signals for the looming, everybody-knows-this German electricity capacity crunch.

In the round, the "design" of their system is utter nonsense.  I have long said the Germans don't understand markets; and they ain't doing anything to contradict that.  

ND

_______

** I well realise some of you say this is a competition you'd rather not enter

Starmer: A Prediction

And so it rumbles on.  Everyone in Starmer vs Corbyn has doubled down, and there's no pretence that it's anything other than high-stakes posturing for positioning.  (One of Corbyn's outriders has kindly made the point explicit now.) 

I don't detect anyone on the Left in Labour (with the possible exception of Paul Mason who, somewhat bizarrely, believes Starmer is his creation) who hasn't now essentially given up on their Leader.  For some, they'd barely ever given him a scintilla of benefit of the doubt; either itching for a pretext to go to war, or fully expecting something would lead to it anyway.  There were plenty more trying hard to believe Starmer's "continuity-corbyn" 10-point plan was genuine; but they must always have suspected and feared it was not. 

All these People's Fronters and Popular Fronters hate each other so cordially, they'll be reaching for whatever weapons come to hand.  Starmer's crew are obviously tooled up with Party apparatus, which can appear to be overwhelming firepower.  But this is asymmetric warfare: B-52s vs the Viet Cong, who can disappear down tunnels and snipe lethally when targets of opportunity present themselves.

Here's the prediction.  Thus far, the Corbynite ranks have shown a fair amount of discipline (e.g. during the ill-fated 'negotiated corbo-climbdown' phase).  Some groupuscule on the Left will eventually decide to go nuclear.  What have they got?  Starmer's DPP / CPS past has been trawled over already, and maybe there's more to come; but I'd say there's something else.

Starmer is about to dragoon his MPs to vote for the Brexit deal, a prospect which many of them just hate.  He was Shadow Brexit Secretary.  He consorted with Barnier.  There will be something from those liaisons that will be deeply to his discredit.

It'll come out.

ND

UPDATE: this, from Paul Mason lui-même.  His creation is giving him concern.  

HERE's MORE:  https://twitter.com/siennamarla/status/1336664555406192644 and https://twitter.com/RaynerSkyNews/status/1336782648677707778