Sunday Business Round up - 22 July - Sheikhs, Shakes and Interest

It is that time again, 10 of the best stories in the UK Sunday Business pages;

Qatari's to buy Sainsbury's - Easily the biggest story of the week. This is the way we will get all our oil money back, by letting the OPEC countries by our PLC's!

Insurance merger news - Secondly on the M&A front, a merger between Resolution and Friends Provident. What a story for Clive Cowdrey of Resolution.

Thameslink 2000 go-ahead? - Read the detail though, i think we have heard this before, and now it is only half the scheme.

Credit market affects Man U - All the issues causing the credit crunch have affected the ability of Man U to re-finance. Diddums.

...and Private Equity fundraising - boots will be harder to grow with the higher debt payments.

...but they still want Landrover and Jaguar - PE co's really the only game in town to buy the brands.

Strikes at Royal Mail - Union man Hutton has changed his tone these days?!

Metronet analysis - Taxpayers to fund bill for Gordon vs Ken war.

Trade protectionism over cheap Bra's - the EU fails to live up to its free market mantra.

Story of the week - higher interest rates on the way, because the economy is growing too fast, money supply is out of control and even the Governor of the Bank of England is telling the Government the inflation CPI figure is wrong. Very poor macroeconomic handling at the moment; sadly distracted by Government spin about other things...

Saving the 'Honours' debacle

After the quite stunning decision of the police to not prosecute Lord Levy or Ruth Turner after the Cash for Honours investigation, it is time to look to the future.

I wrote a long time ago that a conviction would be a pyrrhic victory in any case. The Politicians would use this as an excuse to push forward with state funded parties and thus reduce even further the democratic process in the United Kingdom.

With the this ending, perhaps now there should be less calling for state funding; after all if there has been no corruption then the system must be working.

However, I saw on the BBC earlier the ludicrous figure of Lord Steel suggesting that there was now definitely a need more state funding.

Instead though, I sugget a period of reflection followed by serious consideration of the future of the House of Lords. Personally, I would like to see an eleceted house to balance the power of the Commons and the Cabinet.

Afer all that has passed, this is has been a good catalyst for a needed change in the way we are governed.

Malco the Clown

“No-one wants the lights to be going out in 20 years time. I’m not saying they will. They won’t.”

Of course you're not, Minister, perish the thought. Can't think why you're mentioning it at all, really. This clown (the one in the middle) is Malcolm Wicks, starting his second stint as Energy Minister, by popular demand. Fills you full of confidence, no ?

As well as nucs, the topic Mr Wicks finds particularly exciting is carbon capture and storage, “one of those happy areas where the ethical and the environmental, the commercial and the profitable, come together ". . . He refused to be drawn on details of how much support the government would offer, but concluded .. “you can’t do it on the cheap”.

Oh – that sort of profitable !

Yes, Minister, and that’s exactly what BP and their friends think, too . . .

ND

Have you seen this Badger?

I have not, since badger (Alistair Darling) became Chancellor barely a peep has been heard. This is not what we have come to expect after 10 years of Gordon Brown at No 11 Downing Street. Yet actually there are some huge economic issues needing action;
- Taxes need to rise to keep up with rampant government spending*
- The 3 year Comprehensive Spending Review needs to be finished and spun to the public.
- The £ is at a 20 year high to the dollar
- Inflation is still not under control by the bank of England.

In effect, the ship for state is not sailing blissfully through the economic waters. And yet Badger has nothing to say. His Master is busy trashing all the previous policies that were so painfully constructed, like Super-Casino's and drug legislation; No time for the minutiae of treasury policy, not now. Only one minor announcement was to support his master's Housing spin blitz and was to suggest rigging the mortgage market as a way of trying to help the public. At least you can see the old Labour and the old Brownite over-intricate manipulation tendencies in the him from this behaviour.

It is as if Broon left the department on auto-pilot.

*oops, he has said they will raise local business taxes, he sneaked this out with some puff about it being for Cross-Rail fantasy project.

Another fine mess you got me into, Gordon:

So it comes to pass that Ken of this parish has managed to get his own way in the end. The official Labour Mayor of London has triumphed over the Labour Government.

Ken never wanted the PFI deal for the underground network. in his defence he threw millions, hundreds of millions (Other People's Money of course, taxpayers OPM) actually in the way of Gordon Brown's Treasury team. Oh what joy this brought to the poor families of the lawyers and consultants of London.

Now thought Metronet is certain to enter administration. From which it will not likely recover as its backers have had enough and are giving the keys back; A sad end for their shareholders too.

So who has one out of this PFI mess? Repairs have been completed in London, but are behind what was a heroic schedule. More money will be spent on a new group to take-over and now TFL will inherit more control over the network.

This may be a welcome development to many, but the cost to administer this mess is well over £1 billion.

Also key questions remain unanswered, Iain points out how much Mr Brown has to explain of his role. Why does PFI seem to do such a bad job at delivering services?

It seems to me that socialists are incapable of making rational choices and instead seek to complicate and regulate to such an extent that creativity is driven from any process. Profit too is so hated that they try to eradicate any potential. In doing this an unsustainable administrative burden is created, on purpose by the likes of Ken.

Many of the Conservative outright privatisations worked, look at BT and British Airways for example. Even the much derided water companies are doing a better job than the state managed too. Yet the railways were a disaster, even worse than British Rail, that have cost taxpayers more money (£20 billion and counting for Railtrack and its descendants) and this latest tube fiasco adds to that.

Would the railways be better is state hands? Or is it just terrible execution of the privatisation plan as Wat Tyler says?

My gut feeling tells me it is the latter. An example in today's Telegraph speaks volumes. Metronet was required to repaint Lancaster gate grey 3 times by TFL; socialist sabotage by the Newt King.

Busy at work

...normal service to be resumed shortly.

Sunday Business Round Up - 15 July

Ten of the business stories in the UK Sunday papers that caught my eye:

Brown looking to Insurance - For another tax raid, destroying the pensions industry has not sated his appetite.

Aldermaston US sale- my hunch is that this, our only producer of nuclear weapons, will get sold to Carlyle.

Barlcays all clear to buy ABN - RBS seems to be holed beneath the water after the anti-competitive Dutch behaviour.

Network Rail Criticised - All that taxpayer money and still no efficiency...

Record Oil Prices - This will hit inflation, rates will still have to hit 6%, despite the obvious slowdown in the real world.

The Wall of Money - How our economy will be affected by a wall of money coming from abroad.

New tax for housebuilders - Broon returns to form, higher taxes are not going to encourage supply.

Postal Strikes - The Royal mail, staff and management, continues to dig its own grave.

Lots of Profit Warnings - But according to official stats we are growing at 3%p.a. and everything is set fair in the UK garden of happiness. Someone is wrong here, but who?

Branson to compete with Second Life- of interest too all Blogpowerers' I am sure.

Gentle post for a Saturday; TM Lewin.

I went shopping today at lunchtime yesterday, something I rarely do. Equipped with a suitable discount voucher I bought a couple of shirts at TM Lewin;Cheaper and better quality than M&S.

Amazingly, these were on sale and I still got a discount. Apparently I have bought £65 shirts for only £22.50, quite some deal.

But Lewin's is one of those stores where there is always a sale. In fact my challenge is to find a sinlge person who has ever paid full price for a shirt there. Truly this retailer deserves to be in with Allied Carpets in the premier world of having permanent discount sales strategy.

I wonder how TM Lewin manages this within the confines of the trading standards act. Perhaps they have a small outpost in a regional airport or farming village where they neve have a sale?

The beginning of the end for the Euroe, part one of many

The Dollar/Pound exchange rate is set well above the 2:1 ratio now. A great time for a holiday to the USA where even tourist rates are approaching $2 to the £. This is likely to stay that way for some time. In fact if anything the macroeconomic situation suggests the pound could go to $2.05 or higher. Interest rates in the US are probably staying where they are and ours could be going up; this implies a strengthening pound.

It is a similar story for the Euro too, as shown in the graph below (thanks X-rates.com!):

The Euro, based on Germany's growth and flight from the Dollar, is also strengthening against the Dollar and other major currencies.

An over-valued currency almost always presages the end of a boom and in the same way a weak currency often presages a time of expansion. Anatole Kaletsky put this well in the Times today.

My take on this though is that the major economies of the world are engaged in mercantilist policies as regards their currencies. America's huge external debt means it is happy to devalue this to reduce any internal effects. China is pegging the Yuan to the Dollar to hold up its exports and Japan is still in a nice export growth phase after its very weak period for the Yen.

The result of all this that the countries of Europe are having to put up with currency changes that have no relevance to their economic situation. For us it means that our exports will suffer again and all the associated industries, as well as Tourism. For the Euro area it is much worse, Spain is already in a near-slump and yet its currency is very strong. Italy too is teetering with excessive debt as always; which is now going up in value very quickly. Even France is unhappy at the effects of the high currency on its economy. The Euro was never a single currency area and it seems the economies have not converged with globalisation. So now a single policy across Europe is showing the cracks in the System.

Unless there is a huge macroeconomic change these internal pressures are only going to get worse. A bumpy ride for Europe.

A question for the readership, would the collapse of the Euro be the factor that unwound the wider European 'EU' project?

Constitutional Brown.

Our new capable leader, Mr Brown has been very active in the meedia to make it clear he will be a different kind of guy from Mr Blair; The differences between Dr Jekyl and Mr Hyde are of a similar nature I believe.

Housing, his topic for today I will deal with later. His other big idea though is constitutional reform. A government with non-Labour ministers, a bigger role for Parliament, a smaller role for the Monarchy.

All well and good but what of the big issues:

- A huge chunk of our laws come from the EU, where the MEP's are mainly UKIP and Conservative.
- Northern Ireland is ruled by a DUP/Sein Feinn coalition
- Scotland has a minority nationalist government
- Wales has a Labour government, reliant on Welsh nationalists
- England has a Labour government, but more Tory MP's and many more Tory votes at the last election.

So really, all goes well except what is the point of his Labour Government. Not in a majority anywhere, except a House of Lords filled with 'dodgy' peers of ex-Labour donors and MP's.

Brown says nothing about this. The elephants in the room are ignored. instead rumours abound of a move to an Alternative Vote system that could keep Labour in power.

The spin never stops; but if this is 'grand strategy' the British people will see through it in short order.

There certainly does need to be a Constitutional Settlement; but the Labour tribe are not the party to offer it to us.

Here come the Russians . . . Gazprom update

For all those gentle readers who quake at the thought of being dependent on gas from the kindly Gazprom, three entertaining recent news items:

1. "In the near future there will be a deal to further increase the customer base on the British market. Anyone who will be in London for the Wimbledon tennis tournament will know about it." Alexander Medvedev told reporters at an economic forum in St Petersburg last month. And the deal is . . . (drumroll) . . . no not Centrica at all, it’s, ahem, Natural Gas Shipping Services, a small, Cheshire-based gas-distribution business. So although the Wimbledon crowds were much impressed, the Takeover Panel can go back to sleep.

Keep up at the back, we’ve said this before: Gazprom doesn’t pay cash for anything much more expensive than a bus ticket: much too shrewd for that - it’s “asset swaps” all the way. Which probably won’t cut much ice with Centrica’s cash-only shareholders.

2. On the other hand, the Russian Parliament has authorised Gazprom staff to carry firearms ! What isn’t mentioned is that this merely ratifies custom and practice. How do you think they deliver the gas bills to distant, warlord-controlled parts of the empire ? (like Cheshire - eh, Hitch ?)

3. And to cap it all, this week it is announced that western oil companies will be allowed to participate in the gargantuan Shtokman project after all ! Now there’s a thing. And there was us believing Gazprom when they said they were going to do it all on their own, and not develop it as LNG after all. Suggestion: the “lucky winners” – Chevron, Total and Statoil – might want to have a little word with BP and Shell about their experiences first, though.

Back home again to our own long-running story of commercial gamesmanship in the energy sector . . . here and here we’ve commented on BP’s little games over the bung they’d like, to encourage them to play ball with NuLab on carbon-capture. And now we learn that they and their friends would like £ 1 billion sub from HMG to get them to join the game.

Cynic ? me ? no, no, I believe them implicitly.

ND

Tony Blair's mission to nowhere

Hi High Toniness, fresh from completing what will turn out to be a seedy list of peerages to end his scarred reign as PM, is off to the Middle East.

I commented at Istanbultory and Ellee's place, that I thought this was a charade and he was meant to fail; hence his appointment. Some people disagreed with me and I wanted to make a further couple of points on the matter.

Firstly, I am racially Jewish and feel a great sense of warmth to Israel, a place I have visited several times, along with Egypt and Jordan. I am no Middle East expert, but did study for a masters degree in international relations.

My heart is torn by the current Isreali position, backed by George Bush, of unilateralism. This policy resulted in the failure of the war in Lebanon and the more successful resistance to the second intifada.

However, the policy is undoubtedly expansionist. Today, Peace Now, an Israeli anti-war group, released their study of the latest Israeli plans for the West Bank. To me these seem nothing short of outrageous. The plan is for hundreds of thousands of settlers in the West Bank. Not only that but they assume control of the key water resources and centres of economic activity.

I can't see how these gains will be acceptable to a Palestinian Government. However, Israel must be gleeful at the break with Hamas and Fatah that has divided their enemy. Hamas is a vicious terrorist organisation and Fatah a despotic and unpopular party. Neither would agree with Israel or has the power to do so.

Into this situation flies Mr Blair, with little chance of success. His record in fighting a war against Iraq also ruins his credibility with key external Arabic influencers such as Saudi, Syria and also Iran (which after all is the state sponsor to the Hezbollah terrorists).

From all this a pattern is clear. Not one that I think will lead to a peace deal in Northern Ireland style terms. Instead the Israeli hawks survey the political divides and wreckage around them and are contemplating the permanent expansion of their highly armed state. This leaves no viable state for the Palestinians without which I can see no long-term Middle East peace settlement. The US effectively is backing this policy in lieu of a credible alternative.

Sunday Business Round Up - 8 July

Better late than never...

Prada are up for sale, this is bound to get reported as it means the MSM papers can put pictures of pretty girls in the business section.....Land Rover and Jaguar look set for a re-run of Rover in 200, sad but true this...have interest rates been put up to far? I think not, with galloping commodity prices across the world.

A great story on flood defence disclosure; the insurers getting tough with government due to under-funding. The Government could also be on the ropes as the pension funds follow up on the BAE scandal. The Government is also apparently on the move to build more houses in Southern England. Will all the speculators who bought green belt land finally get to cash in? Finally on this theme, all the publicity around 'non-doms' has made many people look into this more seriously. An excellent case of the law f unintended consequences.

Will the markets crash? The Guardian thinks so looking at the data. meanwhile across the pond the US is still jittery about massive Chinese imports and the currency issues around the Dollar.

Article of the week goes to Dan Roberts in the Telegraph, with excellent reflections on the emergence of the i-phone has shown up the European illness of state ownership stifling innovation.

Business and Politics; Tax

So the HMRC, fresh from claiming it should be able to rob you directly, has now been trumped by the even better news that 'only' a million tax claims are wrong.

Yet this is a 95% hit rate. this is something I am not sure about. How many people don't complain because they are scared of getting an investigation. Having had the once over from the revenue in past years, I know how harrowing the experience can be. Most of the issues that come up are to do with coding, this could well be a minor matter; all the more reason not to phone the revenue.

Tax collections always are, I notice how outrageous the BBC ads are trying to get us to pay that tax.

We all have to pay taxes and the system needs to be fair, but it seems to me that overall the HMRC is far too threatening. The HMRC was significantly changed by David Varney who has now gone on to advise Broon elsewhere. I hope the new leadership decides to change the way enforcement is enacted. After all, with Broon in charge, they are soon going to have even more work to do.

UK Interest rates up again; but US hold?

Well the expected rise has happened today. From the reaction of the bank it seems likely that 6% will be hit, as I predicted and many poo-pooed (Law of averages is catching up with me, I have to be right sometimes...)

But will it stop at 6%; I am not so sure now. The price of oil is rising fast again and the stock markets never caught their cold. Prices of key raw materials like copper are going up sharply too.

But the main factor as ever remains the money supply, which is simply not being restricted, banks are creating money through debt issuance, as is the government through the high PSBR. More money in circulation means higher inflation and there is no escaping it (yes I am a monetarist).
See Fabian Tassano for an excellent pair of graphs on the difficult US position re money supply too.

This is true for the US too, yet the Fed is holding rates as their housing markets slumps in a way that is much harder to 'achieve' in the UK.

Unfortunately, all is set for a huge overshoot, with rates going up further than needed and a recession to follow that will be deeper than 'necessary.' It can be avoided with a sharp reduction in money supply and careful interest rate management, but hard hats required is the likely scenario.

If I knew when this should happen I would be off spending my millions, that is the big trick, the pattern is clear but the timing is opaque.

The business of football

Football is all the rage for rich overseas magnates at the moment; buying their moment of international glory by paying for new players and generally abusing the game as they wish.

People were afraid of the US investors, like those at Manchester United and Liverpool; but actually more sinister are the ones who are clearly using the game to help get them a sort of 'celebrity immunity.' For this see Roman Abramovich, lucky recipient of much Yeltsin largess and Thaksin Sinawatra, wanted in his homeland for human rights abuses.

Will owning club here keep them safe? You bet it will.

Meanwhile Leeds United, run by more bent businessmen than you would expect to see in Slade Prison, continues to be hounded by its past. Currently super-dodgy chairman Ken Bates is playing eyeball to eyeball with the HMRC to try and get out of £35 million of debt. His mysterious backers, allegedly linked to him via close associates, have arranged a stitch up.

This is now being challenged after demands by MP's and Bates' new threat is to liquidate the club entirely, even though there are seemingly other bidders interested.

There are so many people on each side here I suggest a football match to sort it out between them. Maybe they could all save themselves enriching the lawyers and accountants even further...

As a last word, football is so dodgy even an original east end geezer like Alan Sugar decided to get out. And yet as time goes by, the whole game seems to get more corrupt. Not that it appears to affect the game on the pitch, mind. I wonder where it will all end up?

This isThe Big One

Here’s one to watch – very carefully. The FT reports Jean-Pierre Jouyet, France's Europe minister is hinting that France will

. . . push for exceptions to competition policy in discussions with its European partners… the government could seek concessions on energy for example, given its position as Europe's biggest nuclear power generator. "The risk and the benefits of nuclear energy are based in France," said Mr Jouyet. "Through nuclear power we show a certain solidarity [with European aims]. There is a certain asymmetry that must be taken into account." France would argue for a competition policy that did not weaken the big European operator EDF-GdF "because tomorrow we'll have to compete with the Russians".

OK, here’s what this means: it’s real simple. (1) France has the biggest nuclear power sector in Europe, by a mile. Hence, (2) it also has the biggest decommissioning bill.

And (3) they’d like us to pay it for them.

Just watch. You heard it here first.

ND

Hattersley Speaks

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

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

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

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

And whose agency blurb runs:

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

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

ND

Shadow Cabinet re-shuffle reaction

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

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

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

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

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

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

Sunday Business Round up - 1 July 07

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

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

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

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

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

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

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

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

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

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

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