Friday, 31 October 2014

Scottish Labour are falling apart

It's Titanic time for Labour in Scotland. Their leader Johann Lamont resigned last week claiming the London Labour HQ was treating Scotland like a branch office - which they are of course; they are one twentieth the size of Labour in England - did they expect to be equal partners?

And today the deputy leader in Scotland, Anas Sarwar, has just resigned as well.

Take a look at this Ipsos-MORI opinion poll to see why....

Voting intentions in Scotland
Labour are predicted to lose 37 Westminster seats in Scotland leaving them with only one consistency north of the border. The SNP meanwhile will romp from 6 seats to 54.

It looks like the SNP will deny Labour a majority at the next general election just as UKIP deny the Tories an outright win.

There needs to be a lot of political deal-making in the next six months!

Wednesday, 29 October 2014

Gold: what's happening to the price

Here is a chart of the gold price over the last five years...

The chart shows the spot price of 1 troy ounce in pounds sterling. As you can see the price peaked recently-ish in September 2011 at £1,150 but today an oz will cost you a mere £760 - a nasty loss of a third for anyone who bought at peak. (Obviously you cannot buy at spot price; expect to be paying £50 over, but that's the reference price.)

And yet all the signs are that the world is experiencing massive gold demand. The Chinese as a nation and as individuals are trying to convert their dollar piles into gold before the USA's 16 trillion dollar national debt collapses their currency; the Indians buy gold by instinct, and in the UK there are no end of businesses touting for your old scrap gold.

Back in 2013 the German government got worried about their gold reserves which are mainly held abroad, in London and New York, to make them easier to trade. They initially requested a physical audit of the gold and when that was refused they demanded the gold be delivered back to them in Frankfurt. The Americans said, yes you can have your gold back, but it will take seven years!

Both the Americans and Germans presented this delay as an inevitable consequence of attempting to move 3,300 (approx) tonnes of precious metal. It must be flown across the Atlantic - nobody will insure a ship, and the insurers insist on only one tonne per flight. So naturally it's going to take a while. (At today's price one tonne of gold is worth around twenty-five million pounds.)

But, suspicious minds have wondered if this delay isn't really longer than it needs to be. There is money to be made leasing out gold to people who want to be able to show a big gold pile and maybe the Americans need the delay to get the gold back from whomever they leased it to. (The big problem with gold as an investment is that it returns no yield. The urge to lease it out is strong.)

The leasing market is so active one gets to wondering: how much gold "out there" is actually smoke and mirrors. Leased gold is routinely re-smelted and reformed into different bar sizes and designs and then smelted back on return. No-one can really be sure how much true physical gold exists. If someone demands to see "their" gold in a depository this can be arranged - it wasn't there yesterday, it won't be there tomorrow, but today you can see it. (Hint: touch it, is it still warm?)

Unless of course you want to see 3,300 tonnes - about 2% of all the world's gold - in which case that is too difficult to arrange.

Naturally if the Americans were having trouble scraping together enough gold to give the Germans their gold back neither the Americans nor the Germans would whisper a word of this publicly. If bruited abroad everyone would want their gold back. There would be a buying frenzy which guaranteed the Germans didn't get their metal back. No, far better to keep everything quiet, don't rock the boat, let the Americans return it slowly but surely. Nearly 3,000 tonnes of new gold is mined every year - as it becomes available it can be bought up and given to the Germans.

A gold shortage should be a self-correcting problem that time will solve. Wait long enough and everyone can have their gold back.

The important thing is to keep everyone calm during the wait. This means the gold price must not be allowed to run wild. If it spikes up people will get antsy about where their gold is, or worse, try to sell it and need it back so they can deliver it to the new owner. A significant fall could also trigger selling.

There is a long history of the gold price being manipulated. Back in the 1960s there was a secret agreement known as the London Gold Pool. This was an agreement between the Central Banks of various Western governments, including the USA and UK, to keep gold between a lower and upper bound. The Americans were particularly concerned to keep gold steady as they were committed to redeem foreign-held dollars in gold (although they had long before dropped the domestic gold standard.)  So the participating Central Banks watched the gold price and when it fell below the agreed lower bound they purchased gold to raise it, and when it soared above the upper bound they sold from their reserves to bring it back down.

Needless to say, the small number of people who actually knew about this agreement could make fortunes. They could see the price break its bounds and know with certainty that major buying or selling was about to occur and forward trade on that knowledge.

As history relates, by the 1970s the CBs completely lost control of gold and the USA was obliged to break all links between gold and the dollar in 1973, which resulted in aggrieved Arabs, who were holding big dollar reserves, pushing the oil price sky-high and causing the major economic slumps of the late 1970s. Gold was $36 per oz in 1970 and over $600 per oz in 1980; a 16x jump, the investment of the decade if you were holding.

What we don't know, is if there is some secret agreement in force at the moment. But the way the gold price is defying the laws of supply and demand makes it look like there is. It looks like the old firm is holding the price down to keep everything on a steady keel, basically trying to keep a lid on the price until production brings the "physical" supply in line with the "paper" supply.

If they fail, it could be spectacular.

Readers in the UK may be interested to know that there is no VAT on the sale of pure gold; and certain coins - Sovereigns and Britannias - because they are notionally legal tender, are also exempt from Capital Gains Tax. Just saying.

Tuesday, 14 October 2014

Interesting paper by Prof Robert Weissman

You're probably not Black, nor Jewish, but this paper on Black-Jewish relations will still make interesting reading.

Friday, 10 October 2014

Vory Tory and let Labour in

The Clacton by-election was the forgone conclusion of UKIP wiping the floor with everyone else, getting almost three times as many votes as the next runner up - the Conservatives.

Heywood and Middleton was somewhat more interesting. The results in full...
             By-election    2010 Gen elect  
    Labour   11,633   41%   18,499  40%
    UKIP     11,016   36%    1,215   3%
    Con       3,496   12%   12,528  27%
    Lib Dem   1,457    5%   10,474  23%
    Green       870    3%   - none -
Now the turnout was only 36% - half that of the 2010 general election - and informed opinion has it that low turn outs affect Labour most, Tories less so, and UKIP hardly at all.

If only those Tory voters  had gone over to UKIP they would have taken the constituency.

The conclusions are really just what we already knew:

The Lib Dems have been wiped out. They betrayed their supporters by putting the Tories into office. Come the next general election they will be lucky to have 10 MPs.

The Conservatives are hemorrhaging support to UKIP. They MUST do a deal with Farrage to have any chance of staying in government after 2015.

UKIP are rampant at the moment, but come 2015 Labour may be the big winners, by the back door of UKIP and the Tories not having done a deal.

Monday, 6 October 2014

Nick Griffin expelled from BNP - the mists clear a little

You would need to be a master Kremlinologist to figure out what is going on at BNP HQ these days.

A couple of months back Nick Griffin appears to have decided to stand down as leader (officially “Chairman”) and appoint Adam Walker as a new pro-tem leader pending elections next year. Griffin was granted the hitherto unknown title of “Honorary President” and remained a member of the Executive Council – the main decision making body for the Party. At least, that is what the public, and indeed grassroots membership, were told.

It is now apparent that Griffin was “pushed” – he did not jump. It seems that at an Executive Council meeting he faced a no confidence vote and decided to accept the inevitable and resign. He appointed Adam Walker as his deputy and then immediately quit; thus making Walker de facto leader until new leadership elections next year.

The underlying problem here is that the BNP is not an incorporated body. In a sense it does not exist. It is such a loose association of individuals that is cannot sue anyone, nor can it be sued. It cannot even enter into a contract, and struggles to open a bank account.

There have been two major legal disputes in recent years. A court action to stop a stolen Party membership list from being published, and an action started by the CEHR requiring the Party to be opened up to non-native members. As the BNP does not really exist both these actions have had Nick Griffin as a personal litigant, and props to the man, he has not shied away from the fight.

However it has left him with substantial legal fees and he has been declared bankrupt. Clearly if the Party could have sued or been sued Griffin would never have suffered this personal tragedy. But on the flip side, if the Party could be sued it would long ago have been put out of business. So the BNP exists in an amorphous state: its functions are carried out by private individuals in their private capacity, often signing contracts in their own names and using their own credit cards, and also by a number of limited liability companies associated with the Party.

Mr Griffin’s person bankruptcy does not put the Party in the clear though. As Chairman he was entitled to a cover of liability for his debts. This means the trustee in bankruptcy, the “official receiver” if you will, can demand that the BNP pay off Griffin’s debts. However long ago Nick Griffin realised this could happen and voluntarily waived his right to have his debts covered thus taking the fall entirely personally should the worst happen – which it now has. The future of the Party is going to rely quite heavily on how legally watertight this waiver is.

The transition to new leadership has not been smooth. The website almost immediately stopped being updated and diktats went out from HQ which upset long-running custom and practice and aggravated members and the paid staff.

In essence Griffin was sacked as leader because other senior members did not like him running the show as a one-man-band, but when they tried to run it they failed quite badly. The current result is that offices are closing, volunteers are withdrawing and the bills are not being paid.

Nick Griffin, in his new “role” as Honorary President, tried to do something about this. He banged a few heads together (metaphorically) and put together a report telling the Executive Council what was wrong and how to fix it. For his troubles a “Conduct Committee” was convened and it dully drummed him out of the Party. He is no longer a member of the Party he effectively founded (at least in its current configuration) and has led for the past fifteen years. This looks like extreme sour grapes to the public and was a very bad idea. Dirty linen should not be washed so overtly. The public will not vote for a party riven by internal feuds.

Expelling him may also have been intended to stop him re-standing for the leadership in the elections next year.

The future of the BNP is now looking quite parlous. Mr Griffin has a substantial personal following at the grassroots level and that may well melt away. What will be left will be a small number of super-activists using Party funds to pay themselves handsome salaries, but no boots on the ground. This may content the activists in question but is no recipe for electoral success.

As for Nick Griffin – his bankruptcy will take a year to discharge (best possible case) and after that, who knows? After the BNP becomes moribund he may seek to restart it; or he might start a different party, or maybe even try to join UKIP. (UKIP have rules about former BNP members, but being expelled may get Griffin a pass on this.)

One thing is certain; we have not heard the last of Mr Griffin. But this blog may not remain “BNP supporting” in the future. We will have to see if the new leadership shapes up.