The Capitalists are working

Question Time

Don't know who's on Question Time . Web page has nothing. Must be someone pulling out. Show comes from Sheffield so will be anti-Dem heavy.
Anyway tonight's questions will be about..

A] Tuition fees and Liberal lies. Is this the end of the Lib Dems?
B] Prisoner's voting rights
C] Obama's woes and should he stop spending [unlikely]
D] French sailors sleeping in English bunks
E] Cargo bombs and terror laws
Put your guesses into the comments.

FTSE6000 in 2010

That is one new prediction from me on the markets for this year. My original prediction was we would end up at 5750 or so, but with the successful acceptance of more QE in by the US Federal Reserve the markets are only headed one way.

The Hedge funds and their computer algorithms who generate 60% of the US market trades and 30% of the FTSE ones know this, the institutional investors know this too. We could see and extended Santa Rally.

In the long-term this debt is going to get monetised and the US dollar is going to get de-rated from being the World's currency within a few years, if not next year at this rate. In the meantime the mercantilist Countries like China are going to take a hot bath of rapid inflation . 2011 will be a crazier year than 2010 that is for sure.

So, Farewell Viktor Chernomyrdin

Letter from Germany - It isn’t just in Germany that I’ve found myself for lengthy stretches of business: in the mid ’90s it was Russia for nearly a year, when premier Viktor Chernomyrdin, who died yesterday, was in his pomp. A sort of a cross between John Prescott and Gerald Ford, his centre of gravity (if that's the right word) was the mighty Gazprom – formerly the old Communist Ministry of Gas - and he never quite made it at the top of Yeltsin-era politics. .

After Gazprom became a joint stock company, if you took all the listed shareholdings they added up to 99%, and it was often rumoured that Viktor disposed of the balance. That's quite a wedge. In 1995, trying to forge his own political power base, he formed a short-lived party called Наш дом Россия – Nash Dom, our house, Russia. In Russian, the possessive pronoun is very possessive indeed, and ‘ours’ means ‘come hell or high water’.

At that time Gazprom’s logo was a stylized gas flame in the shape of an isosceles triangle, and the roof of its big tower in Moscow the same. Curiously, Nash Dom’s logo was also such a triangle – formed from a corner of the Russian flag: and in his poster-portraits, Viktor would sit at a desk with his steepled hands forming a triangle too … the symbolism was not subtle, and the party was generally referred to as Nash Dom, Gazprom - which sounds nicely in Russian, as the correct emphasis is on the –prom.

In true Prescott style, Viktor was known for his mangled prose, Sam Goldwyn-type half-intended jokes and homespun wisdom. "We wanted better, but it turned out like always" – that was one of his. An archetypal Russian sentiment – from the land where the reaction to hard times and still harder times is the shrugged, fatalistic “it’s normal”. And Chernomyrdin was in many ways a typical big Russian bloke.

Farewell, then, Виктор Степанович. You did your best, in crazy times.

ND

More Humble Pie, Mr President?

Can the coalition learn anything from the USA mid-terms? Probably not. The situations are different and the proposed solutions are different. President Obama is following the Gordon Brown method of fighting a recession by cutting rates and forcing growth into the economy, 1934 style. The Fed is going to buy its way out of the recession no matter what it costs. Just today..

The Fed says it will buy $600 billion of long-term government bonds by the middle of 2011 to further drive down rates on mortgages and other debt. This will be in addition to an expected $250 billion to $300 billion in purchases over the same period from reinvesting proceeds from its mortgage portfolio.

$900 billion more on top of the $1.7 trillion already spent. What are Republicans, who campaigned mostly successfully against an increase in spending, going to make of that? The USA has some different economic problems to the UK. Unemployment is high {9.2%} while inflation is low {1.14 av}. Interest rates are 0.25%. It does seem though, that like the UK, the USA is going to let their currency get weaker. There, as here, they will get a shock when the price rises finally come through. Retailers in the UK have been keeping prices down, taking margin cuts to do so. But the VAT rise and the cotton price {up 90% since 2009} and grain price {up 47%} is going to make that unlikely to continue. UK consumers, after Christmas, are going to be faced with some real price hikes.

No..All the coalition can really learn is something we said back in July about Barack Obama
Its the economy. Its about the economy, and its also about the economy.
Everything else will just have to wait. President Obama decided to do a lot of other things too. In just about every newspaper its reported the president was punished for not sorting the economy. There were also major concerns from voters about the horrific level of debt that the country was undertaking. That should be something that is more of a concern for Labour, who are not so worried about borrowing to buy jobs.

So Coalition.. Don't fight battles you don't need to or ideological wars that will distract you from fixing the mess. Watch the debt and talk up any economic successes at all times. And don't over promise.
No one will thank you for semi-fixing university funding, voting rights for prisoners or scrapping stupid police pledges to 'protect us from fear,' if there aren't new jobs and better prospects by 2013. As we have said before, the Big Society is for a second, more prosperous term.
Coalition can, quite rightly, blame Labour for the mess they inherited. But they also have to do something about it.

Lloyds go for another foreign mananger

Lloyds Bank have today, football style, poached an up and coming foreign manager for their new CEO position.

Antonio Horta-Osorio is currently CEO of 5th placed Santander in the UK. This is a smart business, built in the midst of the credit crunch buying up broken banks and assets at value prices. All very smart. Allied with Santander's commitment to 0% customer service they are able to offer good headline rates and win further market share.

Lloyds' current management team are known as the Citi Mafia and are a collection of heavyweight US managers working for Eric Daniels. Apart from the disastrous HBOS deal which was politically dumped on them, they have done very well for Lloyds - but no one was able to step up and impress the Board enough to grab Eric's chair.

Lloyds, similar to many UK Premier League Football clubs, have eschewed the choice of an English manager, with Helen Weir overlooked despite her solid track record. Sadly, these days have a UK passport is a hindrance to getting on in many places (Barclays went American, HSBC has stuck British though as the Man Utd of Banking).

James Phillpot's CIPD numbers are 'Nonsense'

MIchael Fallon had some good fun today at the expense of a particularly useless poiticking institute. The CIPD exists to serve the needs of the Human Resources industry, given a huge chunk of what HR do is hire and fire people it was not doubt in its own interests to stoke the fires of action that keep its members employed.

Their Chief Economist quoted widely today with a number of 1.6 million private and public sector jobs to go has not as far as I can see published his report. All we have a is digital press release on the website with a very old picture of him attached to it.

So none of the crazy claims, such as the VAT cut costing 200,000 jobs can be scrutinised. I note he has form too for being very anti-Tory in his blog.

But the best comment of all is that we need an economy growing at over 2.5% per year to generate more than 300,000 jobs - which if we do, then the net job losses are nothing and we have reduced the public sector by a huge chunk and added creative value to the real economy. Even this is wrong, so far this year we have added 241,000 jobs in the UK to August 2010, that on 1.5% growth, so 2.5% would be something nearer 400,000 jobs not 300,000. 2% growth would still be 300,000 jobs.

Poor Mr Philpott, desperate for the numbers to hit his stated target of 2.95 million unemployed by 2012 - somehow his sorry attempts to make the world run to his viewpoints are doomed to failure. I wonder if the dole queue calls for economists who get the basics so wrong?

And horry afor my local MP, Michael Fallon for standing up to this garbaled nonsence.

The Strange case of GKP, part 2

So exactly a year ago (how time speeds by) I wrote a short article on Gulf Keystone Petroleum, a bizarre small oil stock that was full of a strange mix of shady investors and lots of oil.

It was always a high risk, but interesting investment. A year on and there have been enough twists and turns that it is worthy of an update.

Firstly, the shady investors, ETAMIC were, umm, paid off earlier this year with a big share placing. This was painful at the time as shareholders saw the stock fall, but in the medium term it has proved a big boost. To rid the company of its association with an unknown entity could only be a good thing.

Next the company, having found lots of oil last year, needed to prove it up and start to sell some. Just today it has announced that virtually all its drilling is finding oil in Kurdistan. For a small oil company this is unheard of - other companies like Sterling Energy drilling nearby have not been so lucky.

Also since a second placing in the Company just a few weeks ago there has been more institutional investor involvement which has stopped the shareprice acting like Desire oil and going up or down 10% to 20% per day. A much less heart stopping investment. Even the skeptical press like FT Alphaville (who are always rightly skeptical of small company success stories as most plummet back to Earth) have come around to not quite dissing the company so much.

Finally, there is still a big piece of intrgue in that Iraq has failed to produce a stable Government. Without that there is still lots of risk in GKP not having full control of its own destiny. This accounts for its still not unrealistic valuations.

Personally, I think the future is bright but short for GKP, as soon as the Government of Iraq ratifies its contracts the company will be taken out - I thought this would be pre-Xmas 2010 but this seems optimistic now; That will make CEO Mr Kozel smile beyond his wildest dream. It is an interesting share story, one that happens only once in a while.

Eigensinn macht Spaß, as they say

Letter from Germany. A public holiday here today, & time for reflection...

The German lawyers I negotiate with bemoan the paucity of their own language when it comes to capturing commercial ideas: all substantive discussion is in English, and all preliminary drafting – even when the ultimate document will be in German. They have fewer words, less nuance, fewer concepts even. A strong claim, but that’s what they say.

Of course German has a handful of terms that find no one-word translation into English – schadenfreude being the one most frequently cited. That at least can be readily rendered accurately enough in a very few English words, or even deployed in English as an import. But here’s a far more profound, nigh-on untranslatable word, the depths of which genuinely deserve consideration: Eigensinn / eigensinnig.

Generally translated as stubbornness, opinionated, pig-headedness, wayward, wilful obstinacy, headstrong, it comes across as having essentially negative connotations (check your own German dictionary) – which is in itself an important observation.

Because, properly considered, it freights so much more than this, including an entire positive side to the same coin: originality, self-confidence, perseverance, integrity born of personal conviction, unshakeable private determination contra mundum.

The dichotomy has its origins in divergent religious doctrines, of course: whether it is the place of the individual to have any views on significant matters other than those taught by clerical authority. To a Capitalist@Work in 2010, it is interesting that the negative translations prevail completely (and, by the way, in conformist Germany the negative connotation for the most part prevails as well). It shows how superficial is our regard for genuine independence of mind.

Think of the fates of the various whistle-blowers at banks over recent years. “I label you Not A Team Player” intones one of Dilbert’s evil characters at the slightest sign of independent thought. “Never say anything unless you're sure everyone feels exactly the same way you do” is Homer Simpson’s highest principle.

And of course it’s true: don’t ever be the lone voice of dissidence in an American company (trust me on this one). ‘Headstrong’ sounds, a priori, as though it should be a term of approbation. But it ain't.

Eigensinn macht Spaß, wrote Herman Hesse (a bit headstrong himself): Eigensinn is fun. Or perhaps, makes mischief. Indeed it does. But we need the headstrong independence, the stubborn integrity: and all too often, in banking, politics and elsewhere, we don’t get it.

ND

John Reid's incurable Communist tendencies.

Arghh. Just as the Airline Industry had taken a stand against the over zealous policing of security at airports, we get this news of ink cartridge bombs being smuggled on cargo planes.

Nothing to do with passengers, but nanny-State fans the BBC have managed to dig up (literally I imagine) John Reid. Ex rubbish Home Secretary and all round Communist authoritarian. Amazingly he says that these terrible events show that we must never relax are guard or get on a plane without a full body cavity search.

Al Qaeda truly are winning when we have such muppets reacting to their every move in this Country.

Where was the September/October market crash?

Here we are, October is done as a trading month. Through September and October the FTSE and US markets have continued a rally. it has weakened alot this month but nonetheless the momentum is still upwards. All the dips are getting bought out.

Yet most market commentators were predicting a big sell-off; I feared one given I am 100% long on investments. Next week perhaps with Obama taking a pasting we may see the beginnings of a sell-off - or maybe not?

The UK markets have even got past the will-she won't-she Bank of England decision of Quantitative Easing. In the US they are waiting to see how much more money Bernanke is going to print. To my mind this it the real backstop of the markets at the moment - the realisation more money printing and so future inflation is in on the horizon.

Question time again.

Question time rolls around again. Bit harder this week, only a few firm news stories and its from Glasgow, which usually means a very different show.

David Dimbleby is joined in Glasgow
by
Nicola Sturgeon, deputy first minister, deputy SNP, effective fox in the box.
Ed Davey,Lib Dem Mp for the Bentalls Centre and postie minister.
Chris Bryant,Labour Welsh Mp, 'ethnic cleansing' foolishness, Kay Burley slayer and all round oddball.
Hugh Hendry ,hedgie, most evil capitalist in society and blunter than Gordon Brown's memoirs writing pencil.
and Simon Schama, Labour supporter, historyman, clever, but not nearly as much fun as the Tory David Starkers .

Guess which questions will be asked and add them into the comments.
BQ say: No more

1] Housing benefits cap and social cleansing
2]EU fees, up yours Delores
3] should Scottish students pay fees
4] Police can no longer question suspects without a lawyer {cadder}
5] Postal services bill, PO want a 10 year lock into royal mail. HMG says erm..really?..don't think so.

Special this week is to try and spot the activist. Last week I'm pretty convinced the first questioner was a green, but can't be sure, so he's let off , but the last questioner, Tristan Learoyd, is a labour party activist.. says so here at the Redcar Constituency Labour party site.

C@W looking will be looking out for more sneaky politicos in the audience tonight ..

Falling UK houseprices are essential for the economy

For the decade of 1997 to 2007, buying a house was a surefire way to get rich. Lots of people did it, older people had already bought in and saw bubble profits. The only losers were younger people without the wherewithal to join in and the poor who did not have the funds either.

However, for the last 2.5 years the story has changed. No one is now treating their house like a cash machine and Phil Spencer and his crew no longer sully the airwaves (his firm appropriately went bust last year).

People not using their houses like cash machines means there is less consumer spending in the economy. Also less activity in the market means the housebuilders are not doing so much construction, sparing up capacity in that sector. Then of course there are the poor volumes for those highly cherished estate agents.

Furthermore people are paying back their mortgages, this is profitable for the banks, but leads to an contraction of money supply, as money paid back is not replaced;  the banks are using this money to offset losses, not to re-lend on property where they are massively over-exposed.

So it would seem falling prices are not a good thing. This is what you can read across a range of economic commentators.

However, all of the above should be the normal state of affairs. Trying to have policies which move us back to igniting a property bubble would be insane as there was huge waste of valuable capital and easy profits for people do nothing; non productive speculation is not a long-term basis for a large economy like the UK. At least the City Speculation skims the world markets and not other UK citizens (they register as collateral damage only).

Already we have negative real interest rates, if we have these and still house prices fall it suggests they have a lot further to go. Managing this decline so that it does not distort the economy too much is crucial but falling prices are in many ways essential to a healthy economic recovery - it will show the economy re-balancing to a more stable state.

The takeaway here for me is that it means interest rates are going to stay low for a long time; if only to preent a housing crash that will occur if they are moved up swiftly. There will be a strong correlation with falling house prices and low interest rates (until rampant inflation gets our of control, but that is a story for another post).

£400 pw in London gets you..plenty

This nice semi in desirable Camberwell.

Or this under £400 gets you this lovely townhouse in Denmark Hill.

Or How about Battersea - a nice 4 bed there for £390 a week.

You can even have a 5 bed near seven sisters for £400 per week.

I really am confused by this nonsense I am seeing on the BBC News at Ten about how tens of thousands of people are to be made homeless in London. I am 35, have 3 kids and a good job, I have never paid £1600 a month to rent or on a mortgage; even in good locations in London, never mind ex-council housing there are plenty of places.

OK, maybe if you have 9 kids a four bedroom won't do, but then why should taxpayers house 9 children families in swanky London addresses. I really can't see how Labour are think they are onto a winner here....

British Airways; Bastion of Common Sense and Slayers of Political Idiocy

Really pleased to see Martin Broughton (scourge of some Americans) come out today to rail against the excessive security checks we have to go through at airports. As a regular traveller, it is obvious that these have become far to onerous. In addition, the lack of profiling is a disgraceful give way to political correctness.

Having watched mothers clearly going on their hols with their brood having to throw away baby milk and open sealed packets of baby food to taste - something is clearly awry.

The key message too is that the US have their own demands (not made for domestic travellers, interesting as 9/11 targeted domestic flights because that was where security was low), then the EU and then the UK. Also more powerful scanners have been brought in - so in effect security has got tighter and tighter.

I don't want to see any more attacks, especially as I am a regular traveller, but clearly bureaucracy has had its normal field day in expanding beyond the necessary; So I applaud Broughton for standing up and saying the Emperor has no clothes.

Remember too that it was Willie Walsh last year who was so strident in saying the Ash Cloud was not as dangerous as the Governments would have us believe. Bravely he flew through it and although was ignored and castigated, until  he was proven right. Willie Walsh, now a Government adviser, is also quoted today as a keen proponent of growth and not worrying about socialist propaganda about a new recession.

We should celebrate having a company where the management are not frightened of the truth and are willing to challenge the vast Government machine consensus.

I'm not biased but...

On the BBC's radio 5 program this morning was Stephen Haseler, professor of government at the London metropolitan university.

He was asked for his views on the economy and said " All the evidence from around the world is we are about to enter another recession and the much trumpeted recovery is petering out." Asked if he supported the spending reviews cuts he said. .. "No. Not any cuts really. The coalition government..has a fundamental flaw in their argument. They are not going to get the private sector to grow. They say that cuts to the public sector will allow the private sector to grow. this won't happen. The recession is global, we won't be able to export out of it and the banks won't lend to support it. .. Its just not going to happen."

Interesting so far. It is all a bit dependent on private sector growth, and that could be being stifled by Vat rise, PS cuts, lack of confidence etc. He may be right. So what does the good professor propose as a solution?

"The only way to grow the economy and get more tax receipts through the treasury is to expand the public sector. Just keep borrowing and keep spending..spending on anything. When you grow the economy your tax receipts increases and therefore your deficit decreases. The coalition plans mean a deficit increase program. It completely ignores all the lessons of previous recessions. The public sector grows you out of trouble."

Then he was asked to put some ideas to labour .. "New Labour are still in this mindset of free market liberalism that has led us into this mess. You must keep printing money until the economy is running well again. that's how it was dealt with in the 1930's."

Hmmm.. two small issues.
1} He has avoided any mention of the world war, inflation, no strong Asian economies or what public spending on uncompetitive industries did to this country.
2} The 1980 recession to deal with inflation cut spending, which, eventually, led to massive growth.. too much and eventual overheating..but ..still worked, after a fashion.

The profs wiki is that of a full blown left wing academic. GLC, Stood for a Labour seat, Founder SDP member, European Republic supporter and so on.

Why do they insist on having these people on? Stephen Haseler has a long list of published titles, the reviews of which are clear. A very clever man who has a very entrenched view that gets in the way of objectivity. A Social Democratic view of a 100% committed European Unionist. He gave these same views at the Lib Dem conference, on a platform with blogger Guido Fawkes. Was it just his forthcoming book that got him on the show?

We here could all collectively come up with a theory that fits the opposite narrative. We could say if the public sector was cut 70% then there would be little government spending and no debt at all... All employment benefit could be insured or limited to 300 days. Schools could be faith or private, and as there are few taxes, everyone would have money to pay. And charities sort out those that can't . Home defence only army, Police on a volunteer basis .. Abandon the EU immediately, and Nato.
Would this nonsense get any airtime? Its not that far removed from the spend until you're out of debt approach advocated by the eminent professor. Yet we aren't likely to get an invite to spout it on the breakfast show any time soon.

I'm not criticising the prof for his beliefs. He is qualified to hold them. He is a regular guest all over the media because he holds those views. And the USA may still yet decide to try them out and then we'll see if he's right.

But the whole thing smelt of 'lets have another no to Tory cuts' story....Squeeze another one in before the anticipated poor GDP figures come out.
Even Nick Robinson mentioned this theme on the 10 o'clock news. 'Labour and parts of the media are driving this 'cuts strategy will lead to a double -dip' message.'

Yes, Nick. Parts of the media indeed...

Once You Have Paid The Danegeld ...

… you will never get rid of the pillaging hordes.

This subsidy business is getting right out of hand. In the beginning, various players in the nuclear lobby decided the best way to promote their uneconomic monstrosities in the 21st Century, when state electricity monopolies are no longer on offer and the s-word is out of fashion, was to ask for a ‘floor price’ to be set on carbon credits under the EU emissions trading scheme. What particular floor price ? Earlier this year they were suggesting EUR 35 / tonne (vs current price of around EUR 15).

Back when the Coalition took power, seemingly in favour of the floor price as an unobtrusive way of ripping off electricity consumers (that’s, errr, everyone, a.k.a. a TAX), the nuclear lobby let it be understood that actually, they probably needed, ho-hum, let’s make it a round EUR 50.

Now, it seems, Huhne is being lobbied by the usual suspects for “between EUR 80 and EUR 90” – or an equivalent amount in a more complicated package they have in mind to disguise the bung they want even more thoroughly (because it will mean 25% on your bill).

Which is no surprise really, is it ? In May, we wrote:

"of course, €50 would only be the start. When, after a couple of years, the government notices that no new nukes have been started, and that the preposterous targets for new wind farms are not being met, they will solemnly be told by the subsidy-wallahs that the floor is not high enough."

Except we were out by … a couple of years: it only took the sharks a couple of months.

Why ? Because they smell blood, or rather, sweat – that of a Government scared that the lights will be going out and, they detect, showing every sign of being willing to throw someone else’s money at it.

And so does every other mother’s son in the industry. We know about the wind farm wallahs of old, but get this one from yesterday: Centrica wants someone to dream up a new subsidy to bribe them to build more gas storage facilities. Because, don’t you know, they’ve heard the government is really rather keen that we should have some more – and they sure as hell ain’t going to part with their own money when they hear everyone else just sticks their hands out. (“Sources described the economic climate as ‘extremely challenging’”.)

When do we suppose this is going to end ?

ND

October Trading Update

First day back from hols so need to be a bit quick today. So here is a post for those interested in my trading for the year to date. The last six weeks has been very active, disasters with SEY and HAIK were unpleasant; Luckily with HAIK and SEY the investments were only £2.5k each so the big hits were not so bad.

On the plus side, XEL has more or less doubled in a month and is now 200% up on the year, GKP has continued its strong run from 68p (my last top up was at 73p)  to now 155p - so over 100% in the last 8 weeks. Of the other major holdings, EMED has gone nowhere, Minerva similarly and I have sold down a bit there too, IAE has recovered from 100 to 130 odd.

Of some long term pain providers, both Ascent and Xtract have perked up hugely, meanwhile KDD has merged with FDI so I now own a larger diamond producer, not that the performance is anything to get excited about.

In terms of new buys, I have topped up XEL and IAE and bought AEY which is another North Sea explorer, quite a long horizon for that one into end of next year to see real gains, but looks good with a new partner to develop its key field. Also I have bought back into HOIL, I sold much earlier in the year, but the shareprice is languishing and there is lots of good news to come out of Iraq before the year end and it has already performed well in a just a few weeks.

On the downside, missed big moves in both Futura and Nautical, but you can't win em all. Overall up just a tad under 50% for the year, which would hit my conservative aims. However, Mr market is well over bought so I expect a retrace for November before a Santa rally.

Back to reality or fantasy?

After a not very relaxing but quite enjoyable holiday, I am back. I managed due to poor connection to not even look at a computer screen for a week and the blackberry barely worked either, which has proved therapeutic for my RSI. So quite a lot to catch up on back in Blighty. Can't say much has happened that I did not expect (portfolio of shares seems to have done pretty well though!).

Having been away though, I am not sure I can stand years of this to come. Basically, the departments, quango's BBC and leftist media are going to sulk in a collective binge of whining that their idiotic policies are being rolled back.

It makes the mountain the Government has to climb so much more challenging, due to  New Labour so effectively leaving its placemen behind (this is another pathetic whinge from the head of common purpose no less). Also because the public sector is to be shrunk by a relatively modest amount it seems the actual departments themselves feel free to join in the scrum.

Meanwhile no doubt, the real world will march on, hopefully with more sanity than the past 13 years allowed for and with some hope that the mountain, thought steep, can be conquered.

Where there's muck there's military brass

A historical post .

skip it if you hate the whole 'lessons from history' thing..


Within about 5 days of the German's May offensive in 1940 the battle for France was effectively over. No one knew that at the time. The French army was the largest in the world. The French and British armour was numerically superior, and the best French tanks qualitatively superior to the panzers. 14,000 artillery pieces, parity in the air on numbers if not capability, the forces of Belgium, UK, Holland and France combined to about 3.5 million men under arms.

Churchill became leader on the day the German's invaded. Ever the battler, he promised much support to the French. Lord Gort was in command of the British forces. Once the German's had punched a hole through the French at Sedan he was tasked with assisting the French in making a joint counter attack to snap off the German advance and win the war.

But Lord Gort was worried. He had had little contact with the French high command, the Dutch had surrendered and the Belgium's, securing his flank, were shaky. Churchill had already promised reinforcements for the French and promised to mount the counterattack. He went into a customary, rage barely suppressing his belief that field Marshall Gort might be a coward. { Bit unlikely as 'Tiger' Gort was a holder of the MC, DSO and of the VC }. Gort was insistent and began making his plans to pull the army out of the line, retreat towards Dunkirk, and establish a collapsing perimeter to defend against the panzers while the army awaited rescue..

Considering the first world war, where Gort was decorated, had lasted 4 years without a really significant breakthrough how could anyone to even begin to think that the battle was lost after a fortnight? but it was. And Gort was right.
Churchill sent General Pownall {that's Pownall looking at the map} to stop Gort being so 'windy' and put some 'backbone' into him. Instead of planning his atack, Gort showed his plans for a retreat to the channel ports. When Pownall reported back that the situation was seriously grave and fully supported Gort, Winston backed down. Lord Gort, who had not been a good commander of the BEF so far, saved them at the end. Without his decision to tell Churchill to stuff it, and to effectively commit treason by refusing to carry out orders, the British army saved by the Royal Navy from Dunkirk, would have been lost to the prison camps.

At the same time Churchill was promising fighter planes to France. German local air superiority was allowing them to win the battle. Air Marshall Dowding, head of all the fighter planes refused.
He wrote a very famous letter to Churchill spelling it out, and demanding that not one more fighter plane be committed to France. Churchill went ballistic again. he had flown to France himself and had promised his wavering allies more squadrons.
If France fell then the French Navy could fall into German hands and that would be a disaster. The french aerodromes would be home to German bombers, suddenly well within range of England and bypassing the UK's North sea facing defences. Fascist Spain might pitch in on the axis side. Italy almost certainly would, adding the modern Italian navy to the Axis and shutting the Mediterranean, adding thousand's of miles to the trade routes to India and Australia and the oil from Borneo. All the resources of France would fall to Germany and its considerable colonies around the world too..And the Americans, taking a bath on all the arms it had sent to France, might not be so keen to send anymore weapons to Europe unless it was cash up front.

Churchill was right to lay out the strategic and political consequences to both his commanders. And they were both right to tell him he was wrong. And they both stood by their comments and basically stated if he wanted another opinion he would need to get another Field or Air Marshall. Both knew Churchill could just remove them. Both had ambitious rivals just waiting to take over their commands.
However Churchill backed down to each. The army was rescued and there were just enough planes and pilots to defeat the air armada of the Luftwaffe in 1940. After the crisis both Dowding and Gort were removed to backwaters and never held field command again. This was not wholly spite. They were old men in a young mans war. But it showed how risky it was to cross a PM.

So, when a PM asked the army to undertake an invasion of Afghanistan in 2001, did any senior officer object? When the same PM asked them to undertake another, larger war, in Iraq, while the first war was still going on did any senior commander stand up and offer a warning?
Surely the nation shouldn't just start a new battle, especially another one in which the army again was to bear the brunt?
When aircraft carriers were dangled in front of the Admirals, 'free' of the budget, to be funded by overspend for mostly political reasons, did any of them ask what might happen when 'the giver 'government was gone, and 'the taker' government came along. Did they think that chopping the fleet would be necessary? Where are the stories of a Dowding or a Gort?

General sir Richard Dannatt did not say much on question time, hence the post. I had hoped he would have said a little more on the defence review. A bit of insight into what went on during the last ten years. How come we ended up canceling the Nimrods. And the Ark Royal. And why we didn't have enough helicopters and do we have enough now? Unlikely as half seem to have been axed.

I wonder if he or his most senior colleagues had been a little more forceful during the decade of war, whether the conflict would have been resolved sooner? Or did the memory of what happened to the most senior commanders in 1940 give them pause.
Gort was made Head of the Home Guard and Dowding envoy for aircraft production in the USA .