Friday, 30 April 2010

Last leaders' debate

To Brum, to watch our glorious Leaders at Birmingham University offer their wares for our consideration. Also available on BBC1.

All-in-all it was a turgid affair; the main entertainment to be had was trying to predict which diversity-balanced politically-correct person the BBC had picked to ask the next question. From memory it went something like this: first was an Indian, then an older black man, then an older black woman, then an older white man, then an older white woman, then a younger white man, then a younger white woman and so on until every possible 'community' had been exhausted.

The leaders themselves were largely boring. They've all mastered the art of memorising the questioner's name and using it back in the answer; they all stare with utter sincerity straight down the camera at every opportunity - although the director foxed them from time to time by going to a side short and making them look a bit silly.

"Dave" Cameron had the only joke when he said that under Labour there had been nine energy ministers and two of them were the same person. No-one laughed though, that was verboten. He also landed the only real punch when he mentioned joining the euro to Nick Clegg; Cleggy showed a moment of real fear but quickly recovered.

Cleggy has developed a debating trick which he used to good effect. When "Dave" and Gordon are slagging each other off he looks straight into camera and shrugs as if to say they're just naughty boys. Gordon tried that line in the first debate but he delivered it with such a self-conscious grimace that you could see him thinking: that worked better in the mirror this morning!

However Cleggy overplayed his new trick and it was getting wearing towards the end. The others got him on the ropes about the Lib Dem's proposals to give an amnesty to illegal immigrants - 600,000 would be allowed to remain in UK, and for some unexplained reason they'd each get to choose one other relative to bring in. Thanks, that's another 1.2 million mouths to feed. Unfortunately "Dave" won't say what his immigration cap will be, and although he won't admit it, he cannot deny that the Conservatives would not be able to control immigration from the EU; and with 100 million Turks knocking on the door that's not an immaterial consideration, so he couldn't quite land a killer blow on Clegg.

Cleggy got a bit confused at one point and kept going on about "vice chancellors". I think be meant shadow chancellors. I mean they were talking economy not education!

The "young woman" asked when she and her chartered accountant husband would be able to afford a house for their growing family. All three leaders fobbed her off with shared equity schemes and the like, although to be fair Cleggy did come out with the only sensible suggestion all night: convert the empty blocks of flats which the country has been littered with in the last decade into family homes. Presumably this would involve substantial building work, if not sending in the bulldozers in some cases, but it must be better than having those herds of gently grazing white elephants cluttering up the countryside.

And that was that. Since no follower of this blog is likely to vote for any of them it was all quite irrelevant really.

Wednesday, 28 April 2010

Greece sneezes, who catches the cold?

So as the dust settles from yesterday's S&P downgrade of Greek sovereign debt to junk bond status we can begin to ask: what does the future hold?

Well first we need the other two shoes to drop. S&P has downgraded, but Fitch and Moody have yet to do the deed. Technically Greece can still call themselves investment-worthy while any one rating agency gives a BBB+ grade, or equivalent. But once all the agencies have pulled the rug then Greece has no chance of selling bonds to fund her deficit (realistically she's already got no chance.) But when the last agency calls there will be many funds legally unable to continue holding Hellenic debt and forced selling will flood the market.

Greece has today forbidden short-selling on her stock exchange. That is to protect her banks who are major holders of Greek debt. It won't stop shorting of stocks on other exchanges.

The IMF is in Athens, although the Chairman Dominique Strauss-Kahn (an ambitious French wanna-be politician looking to make his mark here) has gone to Germany to twist Angela Merkel's arm about getting the Germans to hand over some cash - say 40-50bn euros.

The German public generally think giving any money to prodigal Greeks is a bad idea. The Greek public sector has some "interesting" innovations such the 14-month year. Most salaried employees get 12 pay cheques a year. In some European countries they get 13, an extra one for Christmas. In Greece they're up to 14 paydays a year; Christmas and a Summer bonus as well. This kind of thing doesn't play well in Germany with their Teutonic seriousness. They tend to think Greece has ways to raise the cash it needs: selling islands for example; hardworking German taxpayers should not be expected to foot the bill.

The Greek train will hit the buffers on the 19th May when they need 8bn euros to roll-over some existing debt. If they haven't been bailed out by then they default and debt will be "restructured", ie, lenders will get paid a percentage of what they are owed. And of course, public sector workers risk not being paid at all and will undoubtedly strike.

One solution for Greece is to exit the euro. But that would be so complicated to implement, and such an indictment of the whole EMU project that it's difficult to imagine it actually happening.

So we must ask: if Greece does fail to pay her debts, who's holding the baby? The Economist has a little chart...

France is in the hole for €50bn, Germany for less. Here in the UK we have €8bn to worry about - not massive, but not negligible either. The big surprise is Switzerland on up to €44bn - ouch!

However, we're getting ahead of ourselves. It's too soon to start applying the haircuts.

Foreign Office insults Pope

The Pope is due to make a state visit to the UK in September this year. Naturally the Foreign Office set up a Papal Visit Team to plan and organise the event. But bizarrely an FO memo was then circulated suggesting that, among other things, the Pope:
  • Launch a range of condoms

  • Bless a civil partnership

  • Apologise for something (the FO isn't concerned what, anything!)

  • Attend a debate on abortion

  • Do forward rolls with children to promote healthy living

  • Use sustainable incense

  • Judge a beauty contest

  • Spend his entire 4-day visit in silence in support of battered wives.

The memo goes on and on. There are about 100 suggestions, most of them wildly inappropriate.

This caused some media bemusement, an official apology was sent to the Vatican, which was accepted with good grace, although privately senior Vatican figures said the Pope was deeply offended.

The rest of us could only boggle at the stupidity of the Foreign Office. A civil servant was "moved to other duties", which seems a very minor sanction for insulting a foreign head of state and jeopardising a state visit.

But now some clarity is emerging. The FO Papal Visit Team was led by this man...

Anjoum Noorani: Insulting diplomat

Yes, the FO put a muslim in charge of the Papal Visit Team! And this British diplomat of Pakistani origin took advantage of his position to express his contempt for the pontiff.

It is quite unacceptable to have the United Kingdom represented to the world by such a person. Although this blog does not support the wholesale repatriation of lawful immigrants it is clear that some jobs are too sensitive to be given to anyone other than a native Brit.

FO memo
Papal visit site

Tuesday, 27 April 2010

Greece downgraded to junk bond status

A few minutes ago S&P downgraded Greece to BB+ from BBB-. That looks like a minor step down but it's actually a move from "investment grade" to "junk". The Greek government has admitted they've stopped trying to borrow on the bond markets - the yields the lenders are asking are prohibitive. They can't go to the ECB anymore, their bonds aren't acceptable.

So all that's left is the IMF. An IMF team is in Athens at the moment but no deal terms have been made public. In practice the German Chancellor is calling the shots. Greece wants 40bn euros and that would come from Germany mainly.

Even if Greece stops borrowing now they still have to rollover their existing debt. There's a 9bn euro bond due to be redeemed on the 19th of May. If they haven't the cash by then it's all over - they're bankrupt.


Monday, 26 April 2010

BNP Party Election Broadcast

The real BNP party election broadcast can be seen tonight, on...

BBC1, at 6.55p, and
ITV1, at 10.30pm

You may love it, you may hate it, but either way I'm pretty certain the marmite will be gone.

Thursday, 22 April 2010


The BNP have now pulled the video featuring a jar of Marmite, claiming a "joker" inserted the image and there was never going to be Marmite in the real General Election broadcast.

Marmite makers Unilever have been advertising Marmite by making ads featuring a Hate Party party political broadcast clearly aping a BNP broadcast from last year. I can't help but feel the "joker" was sanctioned from the top and will never be "discovered", not least because the altered video was up on the BNP website for over 12 hours.

Unilever say that are issuing a court injunction but it's all too late. The vid is gone.


Online general election poll

BNP supporters may like to visit this website to indicate how they intend to vote...

Everyone else, move along, nothing to see here!

Wednesday, 21 April 2010

BNP election broadcast 2010

You can watch a preview of the BNP's election broadcast here..

My only question: what's with the Marmite?

2 milligrams is the magic number

So the new CAA rules are: you can fly if the ash concentration is less than 0.002g (2 milligrams) per cubic metre of air.

Fortunately the ash cloud above the UK only has a concentration of 0.001gm-3 so that's alright, all UK airports are now open.

There's some suggestion of higher density "dark blobs". They'll just have to fly around those.

Panic over.

The only question remaining is: did we need to stop flying at all?


Four phase recession

Our current economic malaise (technically we're not in recession at the moment) will have four phases.

Phase I affected the financial sector and caused the demise of many household-name banks. There was a credit crunch which denied working capital to businesses causing...

Phase II in which the private sector of the economy suffered due to a lack of capital. We're still in this phase. However after the general election we will have...

Phase III in which the public sector is trimmed by a new government which cannot countenance continuing to spend £160bn-ish more than it receives in tax every year. Many public projects will be moth-balled and many public sector workers will lose their jobs. This will cause...

Phase IV in which the private sector firms which were supplying into public sector projects and selling their goods and services to public sector workers find their markets have shrunk or vanished.

And after that, well, we might actually come out of recession for real.

Inflation numbers: Are the MPC all asleep?

So yesterday we had March's inflation numbers...

The UK inflation rate rose sharply to 3.4% in March from 3% the month before, official figures have shown. The rise in the Consumer Prices Index (CPI) inflation rate was greater than analysts had expected. Retail Prices Index (RPI) inflation, which includes housing costs, also rose sharply to 4.4% in March from 3.7%. (Link)
CPI 3.4%! That's rather bad, to put it mildly.

Here's how it happened. The MPC has kept interest rates too low for too long. As a result sterling has lost 25% of its value against other world currencies over the last three years including the US dollar, and is still falling. Thus oil has become very expensive for us and this cost feeds through into everything: petrol is £1.20 a litre, as you would expect, but the transport cost of food has pushed up grocery prices as well. In fact most goods have a transport cost.

Now a low sterling could be good for the UK economy. It could make our exports cheaper for foreigners and maybe even flip our balance of payments into the black. But only if we don't have inflation! If we have inflation our exports get cheaper due to a low sterling but then the gain is lost due to them getting more expensive due to inflation. So, pain but no gain!

The BoE's MPC seems to be convinced the real problem is deflation. A year ago they were issuing statements that they didn't expect CPI inflation to go above 2% until 2012 - and now it's 3.4%!

Do we actually pay these people?

Monday, 19 April 2010

Greece on the brink

So, the IMF have arrived in Athens, and so has a giant volcanic ash cloud. Talks haven't started yet, either with the IMF or the ash cloud, but the Greeks' real problem is that tourism is the main earner and as Northern Europe is not flying at the moment that's going to kill the business. The Spanish and Italians could fly - but why would they?

The markets have just realised this and today the yield on a 10-year Greek government bond has jumped to 7.67%, compared with about 3% for a German bond.

Not good. If the IMF talks fail that volcano had better stop erupting soon or Greece will have some kind of meltdown.


Tomorrow's weather forecast

Have a look at at the Met Office Volcanic Ash Advisory Centre's prediction for tomorrow. You should probably click the image to enlarge...

It's quite interesting. There is a big jagged-shaped ash cloud at 20,000ft covering the UK, Middle Europe but not the Iberian peninsula or Italy, nor Scandinavia, and reaching well into Russian in the East and just touching Canada in the West. Then you have a higher cloud at 35,000ft independently floating up to the Arctic circle and a smaller high cloud sitting over Denmark.

Iceland itself is hardly affected at all. The nearest international airport to the UK which is actually functioning is Madrid, so I were at this morning's COBRA meeting I think I'd be suggesting that all stranded UK citizens be flown to Madrid, taken by rail or coach to Santander in the Bay of Biscay and then by sea across to Portsmouth.

Friday, 16 April 2010

Fried calamari

Goldman Sachs, sometimes known as Government Sachs, or Goldmine Sachs, and sometimes A Giant Vampire Squid sticking its Blood-Funnel in every deal, and generally considered the one untouchable investment bank, has just been bitten by the SEC...

Goldman Sachs has been accused of fraud in a civil suit filed by US financial watchdog, the Securities and Exchange Commission (SEC).

It alleges that the bank marketed a complex sub-prime mortgage package but did not reveal that a major hedge fund had bet against the securities.

Goldman's shares fell more than 10% on the news of the accusations against the firm and one of its vice presidents.

The SEC said that investors had lost about $1bn (£650m) in the rogue product - known as Abacus. (Link)
It remains to be seen whether this one has legs, but a multi-billion dollar fine could be on the cards!

Icelandic volcano closes UK airspace

The story so far: a volcano in Iceland with an unpronounceable name (Eyjafjallajoekull, although strictly-speaking that's the name of the glacier the volcano is under) erupted on Wednesday and the ash cloud has been blown south-east and is now hovering over the UK, Scandinavia and a fair part of Western Europe. Through-out yesterday UK airports were being closed, starting in the north, and by afternoon all commercial airports in the country were at a stand-still (apart from some very small helicopter and light aircraft services.)

The ash cloud is about 30,000ft up but starting to come down. There have been reports of a light dusting in parts of Scotland. Commercial flights won't resume until Saturday (tomorrow) at the earliest. Of course, it is theoretically possible for the eruption to last several years, but no-one is really considering that eventuality at the moment.

So let's consider it.

How do you go anywhere with all the airports closed? Well, Paris is a couple of hours from London by train and the Parisian airports are still flying, although not to the UK, Sweden, Norway, Denmark or Iceland itself, but they could get you to Australia or the USA if you wanted.

Once all the out-of-place passengers have made their way home our main problem with a lack of commercial aviation is that most of our fresh fruit and vegetables are flown in; and of course our airmail post travels that way. The lack of domestic flights will be a nuisance, but you can drive from anywhere to anywhere in the UK in about 12 hours.

The long term net effect on the UK economy could well be positive. It would be a sort of compulsory deglobalisation. Local foods would take over - out-of-season produce would simply be unavailable. Britons would spend their holiday money here rather than on the Med or in Florida. Our balance of payments, which has been negative since the 1980s, would flip into the black. Obviously the City would continue to export financial instruments, insurance policies and the like, with the greatest of ease.

The only problem is: it might well all be over by the weekend.


Greeks have gone to the IMF

So Greece has today gone cap-in-hand to the IMF, just like the UK back in 1976 when Harold Wilson did the walk of shame. The UK was forced to devalue sterling although Wilsom claimed, "The pound in your pocket will not be affected." Wilson borrowed £2.3bn; the Greeks want €45bn. Of course Wilson lied, the pound in your pocket lost nearly 20% of its buying power and was very much affected. The Greek PM George Papandreou can quite honestly tell his people that the euros in their pockets will not be affected.

Greek sovereign debt was recently downgraded to BBB-, which is the rung above "junk bond". The government has been financing its day-to-day operations by selling bonds at a 7.1% yield (compared with 4% in the UK, 3% in Germany) and also using the ECB special liquidity scheme. It has taken some arm-twisting to persuade the ECB to accept bonds rated as low as BBB-.

Anyway that's all over. The Greeks have thrown in the towel and said, just give us the money. An IMF team will visit Athens next week to tell Papandreou how far over the barrel he's got to bend. Papandreou will then publicly blame the IMF for any hardship experienced by the Greek people. That's the unwritten purpose of the IMF - to take the blame.

The IMF will tell the Greeks to sack public sector workers; lower salaries; postpone retirements and maybe they'll even get creative and order the sale of some of those idyllic Greek islands.

All done and dusted? No, not quite. There's a fly in the ointment. Where's the bailout money going to come from? Well, Germany actually. German Chancellor Angela Merkel was flipping mad when she realised she'd be forking out billions of euros to support a bunch of feckless Greeks living the high life. Germany will need to have a special budget to find the cash, but eventually she knuckled under and agreed.

Unfortunately a German law professor has decided that the bailout is illegal under the Maastricht Treaty and is taking out a court injunction to stop it happening. The courts in Germany do have the power to bind the government in this manner so the injunction is by no means certain to fail. And even if it does fail it will sway public opinion, and, oh dear, Germany has regional elections on May the 9th. The Greeks should hold off counting their free money for the moment.


Wednesday, 14 April 2010

Telegraph call to exile all BNP supporters to the Hebrides

A witless idiot at the Telegraph thinks all BNP supporters should be exiled to an island in the Outer Hebrides.

Behold Michael Deacon...

Deacon: Needs a shave

He wrote...
I have something in common with hard-core BNP supporters: we both long for a section of society to leave Britain. They wish that immigrants weren't here; I wish that hard-core BNP supporters weren't here. It sounds unlikely, on the face of it, that the two positions can be reconciled.

I think, however, that I have a solution. Off the British coast are more than 1,000 islands, a good many of which are uninhabited. To give two examples, Hirta, to the west of the Outer Hebrides, is 670 hectares (nearly twice the size of Hyde Park); meanwhile Samson, among the Isles of Scilly, is a perfectly serviceable 38 hectares (52 times the size of the pitch at Wembley Stadium). My question is: why not donate all these uninhabited islands to the BNP so it can set up its own independent nations there? (Link)

Given than several million people are expected to vote for the BNP in the forthcoming general election 670 hectares doesn't really seem sufficient. However any of the mentioned islands could accommodate one Michael Deacon which would achieve the same effect.

As for us BNP supporters, we already have a nice, adequately-sized island, 9th biggest island in the world I believe, to live on. However it won't remain nice or adequately-sized if we continue to allow mass immigration.

Tuesday, 13 April 2010

The great ISA conspiracy

Now is the time of year we all (should) move our ISAs. You know, those Individual Savings Accounts which are tax-free both on the interest they earn and any capital gain you might be so lucky to achieve. On the 6th of April the new tax year started and everyone gets to put another £5100 into their cash ISA, and the same again into an equity ISA. The banks are advertising like mad for your business.

But, look behind the hype and all is not what it seems. Take Santander, they advertise 3.2% guaranteed! That's a healthy return in these low interest times. Unfortunately in the small print they reduce the rate to 2.75% for existing ISA savings; it's only "new" money that gets the 3.2%. Same at Barclays, they have a dancing cash-puppet on TV to lure in your savings, but again, new money gets a decent return but if you want to transfer in an existing ISA from another bank it's 0.1% - and 0.1% is a bank's way of saying f**k off!

What's the deal here, why won't they pay top rate on all your savings? This blog has made some enquiries and it appears that branch-level staff really don't know why there is a difference in rates depending on where the money comes from.

The real reason must be that they don't really want to compete with each other. It would seem that there's a bit of behind-the-scenes inter-bank colluding going on here. If the banks all offered their top rate to all comers then all the savings would naturally gravitate to the highest offering, which would force up the rates the banks have to pay. Also there is an administrative cost to banks when an ISA is moved. It doesn't profit the industry as a whole to have accounts being churned once a year. Presumably they have agreed between themselves that they won't compete with each other, but concentrate on attracting new money into the banking system as a whole. Hence all the TV advertising backed by such poor offerings.

It's debatable whether this is even legal.

However it will be a "Gentlemen's agreement" - nothing written down, just a tacit understanding not to rock the boat.

Santander, now a High Street presence in the UK, possibly because it's foreign, a Spanish bank, is slightly out of step with the others with its 3.2% offering. The British banks are loathe to go above 2.75%. (Hmm... we've been here before, haven't we? Foreign bank; offers unusually high interest rate - that didn't end well last time!)

And Santander are well and truly rocking the boat back home in Spain. They've started a price war for deposits by offering 4%. The little Spanish "thrifts" called cajas cannot compete and it looks like mass bankruptcy is on the cards.

Perhaps when Santander have finished having fun in the sun they should consider a price war over here in the UK. That would be nice! I mean, I wouldn't actually entrust my savings to them, but I'd like to see the deposit rates forced up generally.

Monday, 12 April 2010

Price of petrol soaring

Anyone who has visited a petrol station recently will have noticed that fuel is the most expensive it has even been - at least over a sustained period of time. A litre of unleaded currently costs around £1.20 in the South-East of England, and quite a bit more in rural areas.

And yet oil is not the most expensive it has ever been. Today a barrel of crude would set you back $85, back in April 2008 oil reached $120 a barrel and yet the pump-price of litre barely touched one pound. What's that all about?

It's simply explained. Back in April 2008 you could buy $2 for £1 but today you'd only get $1.50 for your pound, and oil is priced in US dollars. (The government has also put a couple more pence on the fuel duty since 2008.)

So if oil goes back to $120 a barrel then it's easy enough to calculate the pump price you will be paying: £1.70 per litre!

And that's assuming the pound holds its value vis-a-vis the US dollar. But the relative value of currencies is a function of 1) confidence in the national economy, and 2) interest rates. The UK base rate seems locked at 0.5%. Just last week the Bank of England voted to keep it unchanged yet again. The Americans on the other hand seem likely to be raising interest rates in the near future.

The pound has been as low as parity with the dollar. So imagine a conjunction of the peak oil price and the trough sterling value: £1 worth $1 and oil costing £120 a barrel. Your petrol price at the pump is then £2.60 a litre! Oh, and there's no real guarantee that oil won't break through $120 and head on all the way up to $200 a barrel - some commentators are expecting that to happen this year because the global economic slow-down of the last three years has suppressed demand and masked out the effects of an acute world oil shortage. Once the world's economy gets back into gear it will start demanding more oil.

At £2.60 for a litre of petrol many people would make a loss just by commuting to work.

Thursday, 8 April 2010

Island of Guam in danger of capsizing

This video is provided for amusement value only...

Wednesday, 7 April 2010

General Election 2010 - Timetable

So Gordon Brown visited the Queen at Buck House yesterday, 6th April, and asked her to dissolve parliament. She helicoptered in from Windsor Castle and agreed to do this. Prorogation is tomorrow, 8th April. This is the end of parliamentary business. Until then we are in the wash-up period during which the government will try to stampede some last few laws onto the statute books. The most significant of these is the Equality Bill which is largely a stick to beat the BNP with. Most likely this will fall under the wheels of the general election and fail to reach the law books.

Parliament is dissolved on Monday 12th April. After that there are no MPs - although ministers continue to be ministers because they are appointed by the queen, notionally. All MPs will find their Westminster security passes stop working, they are no-longer allowed into the palace and if they leave any paperwork in their offices it will be taken outside and burned. If they try to call themselves Members of Parliament, or use official notepaper or envelopes, they would be breaking the law. All (former) MPs' websites must be updated to indicate that they are not currently MPs. (I'll bet most won't bother though!)

At the BBC the main casualty has been Over the Rainbow, another search-for-a-star programme featuring "The Lord" Andrew Lloyd Webber looking for a woman to play Dorothy in a forthcoming West-End production of The Wizard of Oz. The General Election has preempted the studio that it would have been shot in and the production has been outsourced with vicious impact on the studios' budget and some consequential redundancies. Some enterprising TV exec needs to find a way to make politics pay like a song-and-dance show.

The leaders of the three largest parties will debate under conditions of the strictest formality on the 15th, 22nd and 29th of April, hosted by ITV, Sky and the BBC respectively.

The last day to register to vote or to put yourself up as a candidate in the general election is Tuesday 20th of April, and then voting happens on Thursday May 6th. Parliament re-opens on May 18th when they will elect a Speaker and start the swearing in. The queen will perform the "state opening" a few days after that and then business can resume.

Parliament's timetable
Dissolution briefing
BBC timetable