Tag Archives: Mervyn King

Central Banks – The FOUR big lies.

The first lie you’ll hear this year from central bankers is that they  intend to stop minting cash to buy government debt. Moreover (and more blatantly), they will announce their intention to start selling back to the market government bonds they’ve already bought. That’s impossible at this stage of the crisis… but a lie the markets need to be told nonetheless.

The second lie is that these asset purchases will be small and limited in scope. But from day one, the size and scope (ie, the type of debt they’re buying) has ballooned. Actions that seemed unimaginable just a few years ago are now the norm. Market players have been hypnotised into thinking this is all very normal.

The third lie is that there’s a considered time scale to all of this. In fact, it was a release from the Fed that suggested the reversal is coming sooner than many think that sent the precious metals into a spin just after Christmas. Of course there is no exit strategy and no timeline here. These guys are making up policy on the hoof. And to my mind it’s only going one way – and that is more of the same and for as long as they can get away with it.

The fourth lie they’ll tell is that they’re fighting deflation. But if that were really true, how can they also say that QE will be reversed? That would surely be to welcome deflation down the line.

No, these guys are pursuing inflationary policies and they use the four lies to send the markets the wrong way.

They have to! I mean, if the inflation indicators – gold, silver and oil – took off, then the game would be up. Their precious bonds would get crushed under their own weight of debt.

So what happens is that whenever the inflation indicators turn up, the banks come up with some rhetoric to pull them down. And if the paper markets take a turn for the worse, they throw in some easing to pull them up.

This is what’s causing the big market swings.


(with thanks to Moneyweek)

Mark Carney, the Governor-elect of the Bank of England is the perfect hire for this Government.

Over the last two years, it has become increasingly evident that Chancellor George Osborne and Business Secretary Vince Cable have no policy at all in respect of banking.

The Conservatives have known all along what they want and need from our banking system, whereas Vince Cable has been reduced to delivering the odd grumpy sound-bite.

It’s been nothing more than window dressing.

Because of the symbiotic relationship between politicians, retired politicians and banks, they had to hire someone who would  more-or-less preserve the status quo but who was also a major international player.

Mr Carney, a Goldman Sachs-trained Investment Banker is the exceptional candidate for the role……..as long as he delivers what Chancellor Gideon expects and doesn’t overdo the Bank of England’s “independence” bit.

We can forget Banking Reform (remember “firewalls”, “good banks”, “bad banks”, “Splitting the banks”, “Too big to fail banks” and all the other buzz phrases from the last four years?)

Forget them all.

Mark Carney is the current Governor of the Bank of Canada and as such, responsible for the Canadian Banking system which is considered to be the safest in the world. However, the Canadian Banking system is dominated by five main banks and most importantly, these banks are not just retail banks but they are Holding Companies which also control  activities such as  credit cards, brokerage, mutual funds, insurance etc.

That is probably the model which appeals to our Chancellor and the government –  and, most importantly, which will require the minimum amount of “tweaking” of the British banking system.

The Coalition government had absolutely NO INTENTION of ever reorganising our banking system and is now able to say: “Let’s wait until the new Governor is in place.”

Meanwhile, because ALL regulation will eventually land in the Bank of England’s lap, we should expect the FSA to atrophy and die – as it has been doing since inception and anyway, Lord Turner stands absolutely no chance against this guy – with the added “frisson” of Turner having also applied for the BoE Governor  job.

Here’s the Chancellor’s slightly overdone sales pitch:

“Mr Carney is unique amongst the potential candidates, in combining long experience of Central Banking, huge international credibility in economics, deep expertise in financial regulation and a first-hand experience of private-sector financial institutions.”

He wasn’t the exceptional candidate. He was the only candidate.

Might as well make it £200 billion, Merv .

“WTF ???!”

Below is the statement issued yesterday by the Bank of England’s Monetary Policy Committee. It defies comment because it runs out of facts after Line 2 of the first paragraph.

Paragraph 2 is no more that the usual retrospective “No shit, Sherlock” statement which has become the Bank of England’s trademark.

Within the statement, I have highlighted the words which give a clear indication of the overall  wishy-washy tone which Mervyn King and the Monetary Policy Committee have made their own.

The £75 billion which is being pumped into the system is more-or-less an arbitrary figure and  purely cosmetic  – because it was deemed time for someone to take action.

Why Quantitative Easing? Because this is the only item remaining in the monetary toolbox.

Politicians and Central Bankers are out of ideas. This latest initiative is the Bank of England’s own version of Pin the Tail on the Donkey.

An increasing number of individuals who understand the mechanics of the global economic system agree that we are rapidly approaching a time when governments should simply guarantee bank customers’ deposits and allow certain banks to finally fail and introduce a more direct form of QE to stimulate production and encourage consumers to consume.

Attempts to stimulate an economy by filtering cash into moribund banks merely pushes the recovery horizon further into the distance.


MPC STATEMENT 6TH OCTOBER 2011:

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £75 billion to a total of £275 billion.

The pace of global expansion has slackened, especially in the United Kingdom’s main export markets. Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery.

In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated. The squeeze on households’ real incomes and the fiscal consolidation are likely to continue to weigh on domestic spending, while the strains in bank funding markets may also inhibit the availability of credit to consumers and businesses. While the stimulatory monetary stance and the present level of sterling should help to support demand, the weaker outlook for, and the increased downside risks to, output growth mean that the margin of slack in the economy is likely to be greater and more persistent than previously expected.

CPI inflation rose to 4.5% in August. The present elevated rate of inflation primarily reflects the increase in the standard rate of VAT in January and the impact of higher energy and import prices. Inflation is likely to rise to above 5% in the next month or so, boosted by already announced increases in utility prices. But measures of domestically generated inflation remain contained and inflation is likely to fall back sharply next year as the influence of the factors temporarily raising inflation diminishes and downward pressure from unemployment and spare capacity persists.

The deterioration in the outlook has made it more likely that inflation will undershoot the 2% target in the medium term. In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the Committee judged that it was necessary to inject further monetary stimulus into the economy. The Committee therefore voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £75 billion to a total of £275 billion. The Committee also voted to maintain Bank Rate at 0.5%. The Committee expects the announced programme of asset purchases to take four months to complete. The scale of the programme will be kept under review.


THIS is yesterday’s  letter from the Governor of the Bank of England to the Chancellor of the Exchequer. Perhaps the letter-writing ceremony, together with ribbons on MPs’ coathooks into which they can hang their swords, ought to be consigned to the poubelle of history!

This statement about the British: ” Crap food but such LOVELY manners” should be rewritten: “Crap economic policy but such LOVELY letters and statements”

Double Agent Kim Philby had the distinction of being tasked by MI6 to catch himself.

 

The Governor of the Bank of England, Mervyn King  appears to have managed the same trick.

His Quantitative Easing programme has created too much cash in the markets. That cash has been used by the speculators to zero-in on commodities.

Consequently, commodities have risen in price to ridiculous levels.

Governments appear to believe that it is mostly demand which is fuelling the commodity price rises – it is not – it is rampant speculation by City screen monkeys.

The rise in commodity prices has fuelled inflation which Mervyn King and his Monetary Policy Committee are supposed to control through the increasingly blunt and redundant instrument of the Bank Base Rate.

Create inflation and then be paid to control it. Nice work – if you can get it.

(Meanwhile in the USA, Ben Bernanke and the Federal Reserve continue the economic equivalent of pouring more petrol on a rapidly dying fire)

Euphoria on Planet Bank!

Yesterday, the Governor of the Bank of England suggested  that the banks have slowly returned to their bad habits – but why should that have happened?

Just over two years ago, senior bankers were standing around in draughty Treasury corridors willing to sacrifice anything for Government help in order to avoid  the prospect of a banking meltdown.

Yet now, all seems well on Planet Bank.

J K Galbraith said  “the financial memory is brief”. The fact that even now, those living in broken economies are piling into the stock markets and making speculative investments reinforces  his view.

Investors fall into only two groups. Firstly, we have those who believe that markets will rise for ever – at least for as long as they are investing. Secondly, we have the more experienced group which thinks that it can ride the “ups” and climb out just before prices begin to dip. What they don’t seem to realise is that they are all  as vulnerable as each other.

By rights, stock markets should have crashed by now. All that has held them at reasonably healthy levels is the abstract money that has been generated by central banks. No doubt the central banks imagine that they are doing their governments a favour but once again, they appear to have forgotten one immutable fact: investment euphoria (which on this occasion, they have helped to create) is always followed by a crash.

The trials and tribulations of 2008 have largely been long- forgotten. Speculators, traders and fund managers are riding the tiger once again with no obvious plan to dismount. They have returned to that state of  false-euphoria which may well be generating “winnings” today  but tomorrow will inevitably herald the collapse.

Those who really do manage to avoid the fall will do so more by luck than by judgement.

Regrettably, those who are making money and experiencing all that goes with it believe that they deserve their new-found riches. Their bosses tell them that they deserve their rewards – as if  it is they who are creating the wealth. That belief spawns another very dangerous banker “syndrome”:

It is a super-assurance which carries an ominous presumption of invincibility. (Other sufferers are some hospial consultants and many politicians)

It is that belief – that blinkered uber-vanity which grips them  in an ever-faster spinning vortex of blind euphoria.

When economist Roger Babson forecast the Crash of 1929, he was vilified because he was encroaching on the speculative madness which had gripped a nation.  He had said that there would be a 60 to 80 point drop in the Dow and that many would lose their jobs and money and that there would be a depression. At the time, everyone was investing. The majority borrowed the money to invest because they believed that they could not lose.

Fast-forward to 1986 ; the time of leveraged buy-outs, merger and acquisition mania and  Gekko-style corporate raids. Once again, euphoria came to rule the world. That year, J K Galbraith himself was asked by the New York Times to write a piece on this “new” phenomenon. He recognised the investment euphoria symptoms and predicted a stock market crash. The New York Times declined to publish but The Atlantic printed Galbraith’s article in early 1987.

Black Monday was on October 19th 1987.

Currently, we are in the midst of yet  another one of those speculative episodes but this time it is mired in the economic fallout created by bailed-out bank debt. Plus we have that added “Chaos Theory” element provided by disruptions in the Middle East, various sovereign debt crises, commodity inflation and propped-up currencies…and yet…The Investment Euphoria is alive, smiling and in extremely good health.

Some may say that the investment banking fraternity has lost touch with harsh economic reality. The economy is outside their bubble.

The world’s indices are highish but still don’t seem to be in quite the right place. Speculators appear to be making money as stock markets  rise and fall daily like a tart’s knickers.

There are some outsiders who have a sense of foreboding because bankers’ and politicians’ policies appear to be doing no more than postponing an inescapable economic destiny.

Investment bankers, fund managers and speculators count their profits and bonuses as  speculative euphoria grips them.  The downside is that whereas past amateur investors would pile into the equity markets out of greed, the modern version has taken to buying equities out of necessity.

The returns that private investors can obtain from the retail banks are so low that inflation is now eroding their money. One of the few places available to them nowadays which can produce a reasonable return is the Stock Exchange.

So how will the end-game pan-out?

That depends on the will of Central Banks such as the American Fed and the UK’s Bank of England. Their current status has deteriorated to that of the mildly interested but totally impotent but anxious observer. That suits the banks. They’re filling their pockets before the shutters come crashing down – and who can blame them?

Meanwhile, the central banks should prevent retail banks from investing OUR money in anything vaguely risky – i.e. allow only a very small percentage to be invested in equities.

If  legislation decreed that Retail Banks should invest say 90% of their (our) money in Fixed interest or Gilts and a maximum of 10% in Equities, we could breathe a collective sigh of relief.

So what if the banks are pulling-in returns of 10%+ on their investments? We don’t care – all that we need is a return that beats inflation. Currently, the banks cannot even manage that – inspite of the super-human skills that they claim of their investment experts. (You know, the experts who are SO good that they have to be bribed to remain in place though the medium of the 7-figure bonus but can only leave the bank saver with a net-return of less that 1% p.a. on their savings)

Banking itself  should be  a very simple process.

The Retail Bank is a box into which we put money and the bank pays us a small return for the privilege. If we need a loan, and the bank believes that we ‘ll be able to pay it back, it lends us the money and we pay the bank a small return for the privilege.

But it doesn’t quite happen like that.

Instead, we have a monster which pays us a negligible amount for the use of our money and should we need the bank’s help, we are ripped-off with eye-watering repayments and outrageous interest rates. Plus, the banking “industry” is the only commercial activity which can sell you something (a loan) and then at any time in the future, increase the price.

Can you imagine buying a bunch of bananas from a greengrocer who then contacts you to say ” Have you finished those bananas yet? No?  Well, the price has just gone up on the uneaten ones. In fact, we’re going to charge you more for the ones you’ve already eaten.”

The other self-pertetuated myth is that banks “create wealth”. They do not create wealth – they simply redistribute it.

However, the function of an Investment Bank – the one which does play with equities, is to help industry and commerce to create wealth. The Investment Bank is supposed to do that by raising money. Instead, it has evolved (some say “mutated”) into an organisation whose raison d’etre has become profit creation – for itself and its shareholders.

Bankers and politicians are confusing external wealth-creation (for others) with profit creation (for themselves).

Think about it. The banks don’t actually make anything -they merely redistribute it. Imagine an economy which consisted of nothing but banks  – it would not work because no-one would be producing anything.

Banks cannot function without a steady money supply which is generated outside the banking system.

Mervyn King is right – until there is a major re-think of the banking system and it returns to carrying out those simple functions which augment an economy rather than leech funds away from it – we’re heading for another major fall.

Forget all that dramatic nonsense about “breaking up” the banks – it’s a straightforward accounting exercise with a “firewall” between the Investment and the Retail Bank.

What the banks need is a fundamental rethink of their function as well as another major reminder of their own fallibility.

I have a feeling that the lesson will manifest itself sooner than many “experts” believe.

Drain the swamp first.

Investment Banking

The British economy is not is very good condition and we know that the unemployment trend is still upwards. Retailers are continuing to shut down and the manufacturing sector is still in a comparatively unhealthy state. Does it not therefore seem strange that one sector of the economy – the one that doesn’t actually MAKE anything is posting profits in BILLIONS?

It is said that if one sector of the economy is delivering improbable margins, then something is wrong.

The annual rate of inflation here in the United Kingdom is 4% and in spite of what Mervyn King, the Governor of the Bank of England is hoping, it is set to rise. He is about to write to the Chancellor of the Exchequer and tell him that the sudden inflation rise is a mere “blip”.  The blip will continue until the big manufacturing economies such as China  and India awake from their torpor and once more start to run their production machinery at full speed. That is when the price of commodities – everything from soya beans and wood to copper and oil will  increase in price because there will be a higher demand. 

The collateral damage will be our  inflation rate because as demand for goods increases, so will prices of raw materials, followed by the cost of the goods in the shop; the goods we buy. That is also why the Bank of England’s tinkering with interest rates in order to control inflation has always been  such a nonsense.

Let’s have a close layman’s look at Barclays declared £11.6 billion profit for last year. The figures are an approximation but will not be too far out.

It is generally accepted that these days, a bank generates most of its profit from its Investment Banking activities and as Barclays Retail Bank will soon be declaring write-offs of £9 billions-worth of bad debts, we’ll concentrate only on the profit derived from Barclay Capital’s dealing.

If we assume that the £11 billion profit represents  a 20% margin on the stocks and shares purchased, that means that in order to have achieved a profit of £11 billion, they will have had traded assets worth about $55 billion.

We may be forgiven for thinking that £55 billion is a lot for them to have invested in business and commerce but in reality,  they may already have sold that volume in order to realise their profits.

However, if their profits are simply “paper” profits and not hard cash, they will still be holding onto those investments  which can now decrease in value just as easily (and quickly) as they may rise. Hence the new craze for deferred bonuses.

The £11 billion profit shown on their accounts as profit is just a “snapshot” of the company taken on a particular day.

There is another scenario which is a little more worrying  – and this does not just apply to Barclays but to any bank and this is why just over a year ago, so many of them were shown to be organisations of the “all furs and no knickers” variety. Banks often borrow money in order to buy stocks and shares, hence euphemisms such as “gearing” and “leverage”. They both mean “borrowing money”.

That is why all banks ought to be obliged to disclose their Gearing Ratio so that we know how much of their invested cash is their own. If a bank is highly-geared and therefore has to service a large debt, it will be very vulnerable to sudden market downturns.  That is what happened in 2008/2009 – their foundations were either too soft or non-existent.  (The Gearing ratio is a straight comparison between a bank’s  activities funded with borrowed money and those funded with their own cash).

When Mervyn King uses phrases such as ” the banks are rebuilding their balance sheets”, it is because many of them were holding too many “assets” which they had bought with borrowed money plus many of those assets became liabilities which many banks hid.  They are now required to have enough of their own money and assets  before they either lend or borrow. “Quantitative Easing” was designed to accelerate the process. Did it work?  The jury is still out.

Mervyn, the Chancellor and the Prime Minister are watching the banks “rebuilding “ on the assumption that prior to the reconstruction, they fully drained the swamp.

Some of us still have our doubts.

Barclays rip-off?

 

London’s  Institute of Directors (IoD) has completed  a survey in order to see for themselves how the claim by the banking industry that it is lending freely, stacks up in the real world.  The Chancellor and Prime Minister have both asked the bankers to do us all a great favour and please lend money to commerce. The bankers all tell us that they are lending. So who is right?

The IoD’s figures tell us that as recently as 2001, 45% of its members financed their businesses through bank loans. Today, the figure is  28% and falling. There must therefore be a gap in the market  – so where are businesses going for this shortfall? Who is lending them badly-needed money? How are they keeping their businesses afloat – especially as all those recently surveyed are under the impression that 60% of them are being turned down by the banks?

Business and commerce must be going somewhere  in order to survive and to plug this fiscal vacuum. The sad  and surprising fact is that many businesses are relying on credit cards for unsecured finance. That is doubly worrying when you realise that, in spite of the bank rate being at an all-time low, the interest rates on credit cards are at a 12-year high!

So the banks are lending! Unfortunately, much of the lending is either on credit cards or at eye-watering bank interest rates! The zero-percent card-transfer deals which many businessman are taking advantage of will not be around for ever. Consequently, there are many businesses already time-stamped with pretty firm “sell-by” dates . The light at the end of the tunnel is the oncoming banking express tearing down the line for its money – and its heading straight for you, Mr Businessman!

There have been innumerable reported instances of sole-traders or company directors going to their banks with  business plans, projections, cashflows, forecasts and  order books; being grilled  and then told “we’ll get back to you.”  Many hear nothing and  those who do hear something are made to wait weeks or sometimes months for a decision.  Very often, the conditions attached to any proposed lending are so onerous  (rip-off interest rates, penalties, conditions, personal guarantees, charges on private property etc) that a back-street money lender or even a credit card presents an attractive alternative.

Whatever happened to bankers competing for our business?

We have now reached the stage in our so-called “economy” when the banks have ceased to be the service industry which used to feed funds to commerce. Banks  are now designed to leech money out of the econ0my like a parasitic growth which has embedded itself so deeply as to make itself inoperable because its removal would kill the already-dying patient.  Meanwhile, all that the patient can do is suffer while the parasite sucks the life out of it.

The present government has been reduced to the role of sympathetic but impotent bedside spectator holding a bag of grapes which it mistakenly feeds not to the patient but to the parasite.

Where is the Bank of England? What plans does it have to boot the system into some sort of useful activity? What are its initiatives to put the brakes on the excesses of this continuing banking obscenity?

Well, we are happy to report that Mervyn Kng, the Governor of the BoE has…..“expressed concern”.  He has said that  the economic recovery “could be jeopardised if businesses are starved of funds”. No flies on Mervyn then. With such astuteness, he seems to be  punching way above his pay grade.

The next bit of Mervyn’s pronouncement carries no irony or wit – Mervyn  is not renowned for his “stand-up” skills. He says that “struggling banks are rebuilding their balance sheets.” Do we have any idea how long this construction project is likely to take? Does it have anything to do with bank bonuses or profits measured in billions? What exactly is “rebuilding balance sheets”?

The banks will tell you that we are confusing the Retail Banking arm (the one that you see on the High Street and which should be lending money to small businesses) and the Investment Banking  arm  ( the one which is plundering Stock Markets for profit and the one where most huge bonuses are paid). Yes, we are a bit befuddled, so here’s an idea: Use the Investment Bank to subsidise the Retail Bank and instead of declaring poo-inducing profits, the Investment Bank can help the poor Retail Bank to “rebuild” its balance sheet. Is that too simple? Or is it easier to plead Retail Bank poverty (and an inability to lend at reasonable rates) but at the same time continue to generate those largely illusory Investment Bank profits?

We are all used to the Chancellor’s, the Prime Minister’s and most of all, Mervyn King’s mealy-mouthed reactions, so let us put it into plain English. If the banking system continues this unchecked rape of the economy, there will be no economic recovery.

It is in this context that we herald the dawn of the banking industry’s profit reporting season by congratulating Barclays Bank on its  excellent  annual pre-tax profit of  £11.6 billion.

 

 

What economy?

 

 

 

 

Mervyn King and friend

This week, Mervyn King, the Governor of the Bank of England made a very muted, cautious and quite frankly, borderline-pessimistic statement on the state of the economy – and he was right. There is a long way to go.

The banking system is still on life-support, courtesy of the Treasury and the Bank of England. At some time in the not-too-distant future, a decision will have to be made whether to continue with the treatment or whether to switch off the Quantitative Easing  machine which is keeping the banks alive.

Once that happens, the credit system may gasp at first but theoretically, it should be able to breathe unaided. It is only a matter of time and timing but so far, no-one seems to be willing to make the difficult decision. The final decision is difficult. We can all see the currently paltry bank lending volumes – and that is WITH Treasury and BoE support. Imagine  what might happen when support is withdrawn. Initially, there would  be a severe slowdown in lending, which at current lending rates does not bode well.

What is really making Mervyn King twitch though, is not the lack of banking activity but the rapidly accelerating UK Budget Deficit – the amount of money that the Government owes. King is very aware that there are only two main instruments which the Government can apply in order to repay the money that it has borrowed. The first is to increase its income, i.e an increase in Tax revenue.

The Government’s other alternative is to cut costs – fewer individuals employed in the Public Sector. Regrettably, that would inevitably result is a fewer public services and a lowering of standards.

The reason why the Government has not implemented either alternative is because it is playing a “wait and see”  game, in the hope of an economic upturn arriving sooner rather than later.

Yes, “hope”.

One of the great tenets of capitalism is that the consumer is empowered to spend.  Goods produced and services provided have to be bought – otherwise the economy grinds to a shuddering halt. Currently , there is little appetite for the profligate spending which  we all enjoyed  on the back of the twin temptations of a rapidly inflating housing market (The Remortgage Years), married to credit by the bucketload.

The 2009  pre-Christmas season will provide another distortion to the figures and disguise the fact that many of us currently prefer to save, rather than spend.  Economic uncertainty creates savers whilst an over-supply of credit creates over-spenders.

Currently, the economy NEEDS spenders but the paradox is that because of uncertainty, the banks will not lend us the spending money and because of our own uncertainty, we want to hold onto what little money we have. Meanwhile, the Government  crosses its fingers as it sits between a rock and a hard place. Hence the occasional dollops of “good” news which are thrown out by the Treasury spin-machine and the occasional politicians’ statements. They are all variations on the theme ” Confidence seems to be returning”.   Is it?

The Stock Exchange is another fine example of “Confidence returning”.  Currently, there is an over-supply of money to the banks. They are either lending the money to Fund Managers who are buying shares or the banks themselves are buying shares. The Stock Market is a self- amplifying system which means that the more money that is thrown at it, the better it responds and consequently, there is an increase in the value of shares.  That gives the false impression of an economy  that’s regaining consciousness. However, if you look carefully , you will notice that the volume of shares traded is comparatively low and that much of the activity is in two main sectors – Banks and Miners. That is hardly representative of the UK economy, especially  as most of the mining is offshore. The Stock Market Illusion.

The Treasury-Bank-Producer-Consumer-Economy is  a vicious circle of interdependence which is controlled by the money-supply –  which is soon set to dry-up . At the point when the Treasury stops handing Monopoly money to the banks, the economy will HAVE to self-support – or to be more accurate, it MIGHT self-support.

That is why the word “hopefully” is used so often by commentators, bankers, economists and politicians and why two sets of economists are producing two sets of interpretations based on the same economic data.

All commentators are saying ” The worst COULD be over.” 

Here’s a new twist: The worst is NOT over.

 

Dementia sufferers and Drugs

Surprisingly this is not about our economy and its guardians but about a recent survey of Dementia sufferers.

Its seems that many Dementia sufferers are ending their days  being  controlled and pushed into a near-vegetative state through wrongly-prescribed Anti-psychotic drugs. Consequently life is much easier for their carers because the carers are now looking after what is effectively an inanimate object.

Over 180.000 sufferers are being given these drugs. The report which  highlighted the scandal recommends that two-thirds(!) of these patients should be taken-off the medication.

Hopefully, that will decrease the number of strokes and deaths and let us hope that the GPs who are prescribing  inappropriate drugs can explain their diagnoses.

Until today, we thought that Harold Shipman had been working alone.

 

Conservative Party Conference week.

  •  
    •  
      • Boris Johnson once again has showed his leadership credentials by being approachable, witty and engaging. He does make the rest of them look a little bit pedestrian. In spite of his shambolic image, you can sense a rod of steel running through both his speech and personality. One to watch for the future. Imagine   a TV debate between Boris and Gordon Brown. It will never happen – but what a prospect.

 

  • Boris Johnson and friend

 

  • George Osborne’s department lined up like a row of fairground ducks was quite diverting. George Osborne is gradually shaking-off his Tim Nice-but-Dim image.

 

  • It’s very brave of David Cameron to allow Ken Clarke a voice – bearing in mind his strong Euro-sceptic stance. The Conservative Euro-sceptics should not attempt to embarrass David Cameron at Conference. They all seem to think that the next election is already won.

 

  • Custom dictates that when any Party is in the middle of its Conference, the other Parties keep quiet and do not make any pronouncements. So, Alistair Darling’s crudely populist announcement of cutting the incomes  of GPs and other high earners leaves us in no doubt that the Election campaign is now in full swing.

 

  • Retirement at 66? Purleeeze George – you can do better than that! Many will still retire at 65 and most of those who have not retired will be out of work – unless there is a local B&Q. The ACTUAL money saved will be negligible and it was hardly worth the leak.

 

  • It appears that as far as cutting Public Expenditure, the main Parties are now engaged in what can only be described as a peeing contest.

 

  • It was good to see that old duffer Kenneth Brown. So there is life after death!

 

  • The Editor of the Sun did not have to buy a single drink in the Conference bar last night. Hardly surprising but the Sun’s move to withdraw support from the Labour Party caused some disappointment among Conservatives. About as much disappointment as finding out that Gary Glitter can’t babysit tonight.

 

  • On a completely separate subject, the annual yakfest that is the 11th Pride of Britain Awards took place last night. One is never sure why only some kids with cancer attend the show, why only the kids whose parents managed to inform the media of how their brave 2year-old “dialled 999 whilst motherwas having a seizure in the bath” receive bravery awards and why Gordon Brown has to make a “surprise” appearance. We all like proper heroes but nowadays it seems that we have developed a real “need” to worship – as long as it involves lots of celebrities. If Michael Caine is made to feel any more ” ‘umble” I shall throw up. Having said all that, I’ve never managed to watch the show. This year there is a teacher whose Maths lessons contain RAP (one presumes that the “C” is silent). Then there’s the lady who stood between a small child and a Rottweiler. The best one is an ex-heroin addict with 176 convictions who now helps “young people to change their lives”.. As long as Simon Cowell, Tess Daly and Davina are there plus a room-full of tear-wracked luvvies we can rest assured that all’s well. Now where can I buy a Rottweiler? I’ve just noticed something and it is the final piece of jigsaw in a theory that I have been working on for some time. Here goes. I believe that Christopher Biggins is God. Why? because God is everywhere.

 

  • Safety campaigners are saying that if the Conservatives axe speed cameras, the accident-rate will increase. Here’s a compromise – and it will be comparatively cheap to implement. How about a sign that says “SPEED CAMERA IN 50 YARDS” on either side of every single speed camera in the country.  Not a good idea, I hear you say. Why not? Oh I see. What you really want is speeding motorists that produce a revenue and not necessarily slow motorists who do not.

 

  • Sir James Dyson managed to look like a prat when his autocue failed. A Dyson Vacuous.

 

  • Liked the announcement today that the Conservatives will begin a process of ridding us of Government forms and red tape. THAT’S the sort of thing we like to hear.

 

  • Conservatism SHOULD be the politics of giving everyone in Britain the ability, opportunity and tools to look after themselves and their families – without the smothering State intervention that is the hallmark of Socialism – even when it is wearing the thin veneer of New Labour. That should ALWAYS be, of course, coupled to the State taking care of its weakest citizens. Call it benevolent Conservatism if you like. Simple.  THAT is  the message that David Cameron and his rejuvenated Parliamentary Party should be promulgating. Needless posturing and name-calling should have no place in the modern Conservative political toolbox. David Cameron should look straight down a camera lens and explain what modern Conservatism is. Unsurprisingly, there are those who have never heard exactly what modern Conservatism represents because their views and opinions are still being distorted  and influenced by New Labour spin.

 

  • George Osborne is looking very promising.

 

  • So why DOES Jordan look as if she’s wearing a gumshield? Is in “hommage” to her cross-dressing new beau and professional thug Alex (Max – you’re running out of crap copy!) or has she been “done”. I think that we all know the answer to that one.

 

  • David Cameron has been photographed with a glass of champagne. Big deal! I shall simply repeat a previous report: The biggest consumption of champagne at  Conference time is by Labour. That was told to me by a former Chief Barman at the Grand Hotel in Brighton. Hypocrites.

 

  • Today, all the Socialist rags are laying-into  George Osborne who has introduced a bit of realism into our understanding of the economy. One suspects that once the Conservatives are in power and manage to have a good look at the books, they will see that things are far worse than has so far been admitted by ther present incumbents.

 

  • We are still living in cloud-cuckoo land as far as the economy is concerned. The FTSE is UP. House prices are UP, Gold is UP, Tesco shares are UP. In fact – everything is UP. Sounds great doesn’t it? So why aren’t we all feeling more positive. The fact is that the FTSE is up because  money is being invested on the Stock Exchange as a result of bank savings rates being so derisory plus, much of the money currently being invested is foreign so it could leave us at any time. The money that is being invested by British banks is not all real money. Some of it is the stuff that has been printed by the Bank of England and handed to the banking system. Mr Quantitative Easing strikes again. Gold has been creeping up for months. It is normally viewed as a “hedge” – somewhere to run when equities and commodities are down in price. That is not the case at present.  Something that has gradually been creeping into our collective peripheral vision is the slow-collapse of the dollar. There are strong rumours that very soon, oil will no longer be traded in dollars – there is foreign plotting afoot! Once the dollar really does go into freefall, share and commodity prices will tumble very quickly. The British economy has much to fear because the factors that it has traditionally relied-upon to buttress the economy have all but gone. The City of London USED to be the world’s financial centre. That is no longer the case. WE used to MAKE things and export them. Nowadays, that is down to about 17% of the country’s total economic output. Finally, the British economy and Governmemt are “over-borrowed” with little realistic prospect of repaying much of what was borrowed. If George Osborne had been in possession of ALL the facts, I don’t believe that he would have wished to even beigin his speech yesterday. He did very well and reminded us that we need to take a more collective and inclusive approach to heal the economy.

 

  • Yesterday I said that I would probably throw -up if Michael Caine was once-again “umbled” at the Pride of Britiain Awards. Apologies to Michael as it was Joanna Lumley’s turn to be “humbled and overcome”. Please make it stop.

 

  • So Boris and Dave are ex-Bullingdon boys and used to piss it up, throw bread rolls about, get toffed-up  and pose for silly photos. Go to any Comprehensive School on Prom Night (American import, I’m afraid) and watch scores of youngsters, toffed-up, arriving in ridiculous stretch limos and being encouraged to be extremely silly. So where’s the difference between our Grease wannabees and the Bullingdon Boys. Apparently, it’s only OK to dress like a posh prat and behave outrageously if you’re NOT a posh prat. It seems that those aspirational working classes are being herded by the Labour media back towards a concept which one hoped had been left behind – The Politics of Envy.

 

  • There was a great photograph of the Pride of Britain winners outside No 10 Downing Street. Sarah Brown looked very vivacious – so why did Gordon Brown look as if someone had inserted a six-inch ruler between his cheeks? Oh I see. Smile, eh? Wow.

 

  • Are we, as a nation, losing our sense of humour? We all remember Boris Johnson insulting Liverpool, Portsmouth and rather bizarrely – Papua New Guinea. He acknowledged all that in the introduction to his speech at Conference this week. Whatever you think of Boris, you have to admit that he carries a very mischievous sense of humour. That reminds me of a pilot who was censured by his bosses for the following Tannoy announcement: “Ladies and gentlemen, we are about to fly over Liverpool. Would you please ensure that you have placed your hands over your wallets.”

 

  • This woman’s husband, Andrew George was taken ill but has now been discharged and is being comforted by his family: 

  • She used to work at Little Ted’s Nursery and is a pervert. Although her husband does have our sympathy, one cannot help but think that at some stage during the marriage, he would have benefited from a visit to Specsavers.

 

  • The Conservatives have announced that they will deal with binge-drinking and teenage violence through the medium of taxation. Surprisingly, this is the first Conservative initiative that I disagree with. Remember that some drugs are far more expensive than alcohol, yet, money is still found for them. The alcohol genie is so far out of the bottle that there are no initiatives that will ever change the Brits’ uneasy relationship with alcohol. Social Engineering through taxation does not work. Let’s face it, Brits drink to get drunk – and then they drink some more. A few more pence on booze will make no difference whatsoever. Practical tip: The increased tax will be on cider and strong lager so do what kids do already, buy normal lager and tip cheap vodka into it. Now what?

 

  • Could it be true? Avram Grant is returning to Portsmouth as Director of Football? That should cheer the place up. Here is a photo of Avram practicing his Gordon Brown smile.

 

  • Sharon Shoesmith has  launched judicial review proceedings against Haringey Council, Ofsted and the Children’s Secretary Ed Balls. She was in charge of Haringey Social Services during the Baby P murder. One of the great British traditions is that if there is a screw-up on your watch then you fall on your sword. Ms SHOESMITH DID HERSELF NO FAVOURS during her few TV appearances when the Baby P affair was at its peak. She seemed aloof, smug, unrepentant and unapologetic. ” I was following orders” is the usual excuse. Hers was “We followed all procedures”. That neither exonerated her, nor did it go down well with the public.  Had she cried, begged forgiveness and made some sort of admission, the public would have been a little more sympathetic. As it was, Ed Balls did exactly the right thing in instructing Haringey to sack her without compensation.

 

  • Labour bleating noises have been heard again today. General Sir Francis Richard Dannatt, GCB, CBE, MC is our most distinguished soldier and tomorrow (Thursday) he will be officially announced as a Conservative Life Peer who will be advising the Conservatives on defence. General Dannatt was our highest-ranking  soldier and Chief of General Staff. He was going to be promoted to Chief of Defence Staff , which means that he would have become head of all of our armed forces – not just the Army. However, Gordon Brown personally blocked the promotion and General Dannatt was instead given the consolation prize of Constable of the Tower of London. Traditionally the Chief of Defence Staff is principal military adviser to the British Government. Gordon Brown was miffed because of General Dannatt’s “repeated calls for better pay and conditions for servicemen”. So General Dannatt’s sins? Speaking his mind, not being a Brown “yes man” and caring about his soldiers’ safety and welfare. Gordon Brown really has no idea whatsoever – probably because he was dealing with a proper  leader. It’s patently obvious that Brown does not recognise the species. He should learn that leadership is much more than Benito Mussolini-type posturing with overworked, overtired, adjective-free, moribund speeches.

 

  • Obama wins the Nobel Peace Prize. Quite right too. Climate, Democracy, Nuclear Disarmament – in fact, everything that he has touched so far. It looks as if Zimbabwe’s Morgan Chanderai was the runner-up. There is already talk  and discussion of whether Barack Obama deserves the Nobel Peace Prize with only nine months in office. The fact is that the Nobel committee can see that in spite of the fact that Obama’s actual achievements so far  are comparatively modest – he is by far the most influential individual on the planet as far as the short and medium term futures of the Earth are concerned. The progress that he has made in the last nine months is nothing short of remarkable.

 

  • It appears that today is probably the last posting day for Christmas. If you  want to send cards abroad, you’re too late. Christmas parcels should have been posted by March 31st. Why didn’t Crozier stick to football. This is yet another case of a Business Model triumphing over the Customer. Perhaps Royal Mail should be renamed Royal Lemming.

Friday October 2nd 2009

  • Ethiopia has suddenly become the focus for all anthropologists. An ancient  skeleton was found in 1992 and it has taken 17 years for the research team to rebuild it. Why all the excitement? The skeleton belongs to an in-between species of humanoid about 4.4 million years old. It has been designated Ardipithecus Ramidus. It is not “the missing link” but by extrapolation, it appears that it is probably about 9 million years since the division between apes and humans. So where was John Prescott this week?
  • The East of England Minister Barbara Follett is to stand-down from Parliament. She is (was) Minister for Culture, Creative Industries and Tourism. Her reasons for leaving? Yes, it’s the old chestnut: “For family reasons – to spend more time with my family”. Heard her name before? She’s the MP who claimed £500 to repair a Chinese rug ( don’t we all?) and she also claimed £25,000 “for security reasons”. She has since repaid all of the money. So how could she afford to sign such a large cheque? Her husband is millionaire pulp fiction writer, Ken Follett. Barbara and Ken epitomise the “champagne socialist” and are chums of Tony and Cherie Blair.
  • Jobs for the boys. Former Northern Rock boss, Adam Applegarth is now an advisor to Apollo Management. They are an American Equity firm. Adam is advising them on the purchase of bad loans, including parts of Northern Rock bank, the former Building Society he brought to its knees. Perhaps a touch ironic but perfectly legal. He will earn about 200,000 per year which is a lot more than the thousands of people who lost their jobs at Northern Rock. It’s all very worrying.
  • Today, Ireland will vote in favour of the Treaty of Lisbon. It’s their second attempt. The Irish economy is currently in such an appalling state that they appear to have little choice. However, if they do not support the Treaty, then it’s curtains for the Treaty.
  • The International Monetary Fund (IMF) is predicting that the British economy will grow by 0.9% next year. That’s about four times the current politicians’ prediction. House prices have returned to their pre-crunch 2008 levels, the FTSE 100 index is UP. As one of the few people who predicted nationalisation of the banks, I am still not sure whether to put the Bolly on ice just yet.
  • Vanessa George, Colin Blanchard and Angela Allen. They are the three baby-abusing perverts who are spread all over the newspapers today. Angela Allen is the one from Little Ted’s Day Nursery in Plymouth. She photographed herself sexually abusing babies as young as 12 months. Whichever prison they end up in, they are guaranteed some very close attention from other inmates. The burglars, drug dealers, fraudsters etc look almost honourable professionals next to these degenerates. I do hope that the other prisoners are not too gentle with them.

Thursday October 1st 2009

  • A survey has just been published of the world’s top  Broadband Countries – taking into account speed etc. The United Kingdom is languishing in 25th place. The top country? South Korea. Is this another indicator of the rise of the East and the slow eclipse of the West?. 

  • The Daily Mirror has adjusted its reportage of the Tories today – presumably in response to the Sun’s decision to back the Tories. It’s going to be a right mess leading up to the election. The gloves are off

  • BAE systems is about to be prosecuted for dishing out hundreds of millions in bribes. You may recall that when Tony Blair was in charge , there was a bit of a bribery scandal  involving Saudi Arabia, but as they say – all charges were dropped. There is one thing that both our Government and Judicial System would do well to remember and that is that greasing the cogs of commerce through the medium of bribery is normal in many countries – especially hot ones. Many years ago, I sold a yacht for a $1million to an Arab Prince and we shook hands on the deal and arranged to complete the paperwork the following day. That night , my phone rang. It was the Prince’s “Private secretary and advisor”. This is what he said: “Although the Prince is a very rich man, alas he is not a generous man. You will also understand that he always seeks my counsel and almost always heeds my advice. I have yet to advise him as to whether he should complete this purchase – but I am sure that we can come to some sort of arrangement.”  I was outraged! I told him that I did not make a practice of dishing out bribes and that I would report our conversation to the Prince. I never saw the Prince again. Some time later I realised that the Prince had probably been sitting next to his Secretary when he had made the call and it was probably his way of getting a few thousand off the price. I also recall another yacht-owning Middle Eastern client. Whenever we presented him with an invoice, I would ask the staff to make sure that it was itemised and added-up wrongly, but in his favour. Usually by either £50 or £100. Before handing over a wad of cash, he would add-up the bill himself, realise that it was incorrect , say ” Yes, that appears to be in order”  and pay. He was happy and I was happy but more importantly, honour had been satisfied, he had won a little victory and he always came back to us because he enjoyed our little game. We should NOT always be so po-faced about the way that other nationals  do business. It may not be pretty but it works.
  • Is it really the end of the Labour Party Conference? Thank You, God. Harriett Harman is not too chuffed about the Sun’s decision to support the Tories. She said: “Let’s face it, the nearest their political analysis gets to women’s rights is Page 3’s news in briefs.”  It’s only a matter of time before Harriet gets the call from Hugh Hefner.
  • At the Labour Conference yesterday, the jurassic Tony Woodley, leader of UNITE, was cheered when he tore up a copy of the Sun. One presumes that he had looked at the pictures first. He said: “I suggest the rest of the country should do exactly the same thing”. Labour should persuade more progressives such as Tony Woodley to give voice to their views – that way they’re absolutely GUARANTEED to lose not only the next election but several after that. During Tony Blair’s tenure these Brylcreemed 50s throwbacks used to be kept in a darkened room or padded box until after Conference. A dignified silence without even a platform-mention of the Sun would have been far more powerful.

  • Financial Analysts seem to be confusing the state of the FTSE 100 with the British Economy. The fact is that many of the billions invested in the Stock Exchange consists of foreign money. That’s where many of the profits are going – abroad. Instead of flying to Monaco to play the tables at the Casino, many foreigner “investors” are winning lots in the Casino that is the London Stock Exchange.

  • The FTSE 100 has experienced its biggest quarterly rise in 25 years. Once again, this  is being hailed as some sort of success. It simply means that lots of bets have been placed. The punters will be taking their profits soon. Then the Government can once again blame the bankers. Let’s hope that they don’t break the bank again.

  • Politicians are always saying that it is the Pension Funds and Insurance Companies  own most of the assets traded on the Stock Exchange. In fact, between them, they only own about 25%

  • Today the national minimum wage rises by 7p an hour to £5.80 and for 18 to 21-year-olds, the minimum wage increases by 6p to £4.83 per hour. This is also the day when the government legislation on “tips” has changed. From today it illegal for bars, restaurants and hotels to use tips or service charges to make up a minimum salary. That is all very well but in the grand scheme of things, it is a comparatively trivial matter and possibly not a terribly cost-efficient move by the Government. Especially as the Government has already conceded that the changes governing tips will lead to an estimated £60m in extra costs to ensure the legislation is implemented properly. The new code will also lead to higher National Insurance payments. This is an inflationarymove because bars , restaurants etc will simply “up” their prices to maintain their margins. The British Hospitality Association (BHA) estimates the new rules could lead to an additional £130m in costs and up to  5,000 job losses. There are those of course who feel that a tip should be a customer’s expression of appreciation for good service and should not be used by an employer to bring wages up to the minimum. Mind you, both the Federation of Small Businesses and UNITE are both in favour of the changes. The only people who will be really affected are the tippers and the tipees. The customer tippers will experience increased prices and the waiter tippees may suffer up to an estimated 5000 job losses. There is a saying: ” If it ain’t broken – don’t fix it.” Needless to say, one of the few groups who will not be affected is Politicians. You may have heard that when they eat out or stay in hotels – it tends to be on expenses. 

  •  

Friday September 25th 2009

Friday September 25th 2009

  • The mole who leaked the MPs’ expenses information to the Daily Telegraph has revealed what motivated him to do so – apart that is, from the £110,000 fee that he was paid. It now appears that his primary motivation was not money but the fact that serving soldiers were “moonlighting” at the House of Commons. They were working in the Security department and protecting the Civil Servants who were dealing with confidential matters – one of which was Members’ expenses. Apparently, it wasn’t long before the soldiers realised the extent and extravagance of MPs’ expenses and so glimpsed the comparative opulence and excesses of the politicians’ lifestyles.  The very people who represented them and who had sent them abroad to be shot at. The sums of money involved in the claims that they either saw or were told about were further amplified by the fact that the soldiers were doing this extra work in order to buy decent boots and body protectors and other items which would make their soldiering duties easier and safer. It is currently very easy for us to feel very emotional  when they hear stories such as this – but we should proceed with extreme caution because it now seems that the mole is trying to justify his actions in leaking the information. He appears to be telling us that he now feels vindicated because of the “poor” soldiers and because MPs have to-date returned over £500,000 in mis-claimed expenses. Planes bearing dead blown-to-bits soldiers, processions through Wootton Bassett and full-page photographs of a recently mutilated soldier paying his last respects to his blown-up dead buddy certainly do tug at the heart-strings. Great propaganda andimmaculatetimingbyourmole. Now the facts: The mole received £110,000 pounds from a right-wing paper. Currently each soldier receives Osprey lightweight body armour and£3500 – worth of state-of-the-art equipment – including boots and shoes. The mole’s motives for leaking the information would not be in question had he not accepted such a large amount of money – which one presumes has been donated to the Army Benevolent Fund. I am not a great supporter either of this Government or of the pointless shenanigans in Afghanistan but sometimes there are over-sugared pills which are just too difficult to swallow.

  • One question remains: Why were security men  -serving soldiers or not- allowed to either view or be given  confidential information.

  • China , India and Brazil are to play a more prominent part in G20 and will also have more IMF votes. Currently, China wields 3.7% of IMF votes compared with France’s 4.9%, although the Chinese economy is now 50% larger than that of France and  in spite of the fact that China has over 20 Provinces which each has a population greater than that of France. This looks very much like the dawn of the Eastern or New economies and the inevitable sunset for the once all-powerful West. Regrettably, not only is it a question of size and manufacturing power but the West is currently “in hock” to China. Chinese and Indian savers enabled all of us to be borrowers. Now economists are saying that the East has to create the same free-spending and borrowing consumer society that we have enjoyed for so many years: just look where WE are now! Are we really so well-placed as to be dispensing economic advice?

  • Another New Labour piece of legislation which has been languishing in the long grass for a while is the changing or possibly the removal of the Statutory Retirement Age. It is a shame that there are ex-teachers, ex-managers, ex-engineers who happen to be over 65 and who are now either shelf-stacking, working at B&Q or watching Countdown. What a waste. The Government says that the matter will be dealt-with in 2010, in other words, by the Tories. Meanwhile, at least 300 over 65s are taking ex-employers to Tribunals and yet again, lawyers have become involved. That is New Labour’s one big success – through their intransigence and incompetence, they have produced the best-ever Lawyer Job-Creation Scheme. The Brits have always been obsessed with 65 being their time to stop work, relax, take long holidays etc. Unfortunately in many cases it’s retire, sit around for a bit, die.  We are changing as a nation and it is not purely because of the recession or plundered company pension schemes that people wish to carry-on working. Our “retirement mentality” has gradually been disappearing and people genuinely WANT to work for as long as they can. OK, there are very physical jobs where at age 65, you’re clapped-out. For instance, building, mining or farming. You can punish your body to such an extent that by the time you are 50, you start looking forward to the day when you can stop. However, nowadays many of us are engaged in non-physical work which means that we SHOULD be as fit at 65 as we were at 45. Policies should not be driven by a Government with one eye on unemployment statistics because as usual, public opinion is against them. It’s now time for the Statutory Retirement Age to be abolished.

  • Iran is the world’s fourth-biggest oil producer. No wonder they need to make such a vast investment in nuclear energy. You never know! Or, could it be that the Mullahs want to produce nuclear warheads in order obliterate Israel and/or the USA. That’s not possible because the Koran says that Muslims want us all to be their chums. Here are three quotes directly from the Koran (or Quran if you know your Peking from your Beijing). Here goes: “O you who believe! do not take the Jews and the Christians for friends; they are friends of each other; and whoever amongst you takes them for a friend, then surely he is one of them; surely Allah does not guide the unjust people.” (5.51)  or :“So when you meet in battle those who disbelieve, then smite the necks until when you have overcome them, then make (them) prisoners, and afterwards either set them free as a favor or let them ransom (themselves) until the war terminates.” (47.4)  or “The punishment of those who wage war against Allah and His apostle and strive to make mischief in the land is only this, that they should be murdered or crucified or their hands and their feet should be cut off on opposite sides or they should be imprisoned; this shall be as a disgrace for them in this world, and in the hereafter they shall have a grievous chastisement” (5.33) As I said – nothing to worry about. They’re just misunderstood. Talk of fundametalist Muslims being a bunch of fanatical murdering misogynist psychos is very naughty. They want to love us – as we love them. It says so in the Quran. Let them build their nuclear power stations bombs. It’s for our own good. Just think about all that cheap electricity.

Nearly forgot: “O Prophet! urge the believers to war; if there are twenty patient ones of you they shall overcome two hundred, and if there are a hundred of you they shall overcome a thousand of those who disbelieve, because they are a people who do not understand.” (8.65)

  • The often misunderstood and misinterpreted thing which suggests that when a  Muslim blows himself up for the cause , he will be rewarded in Paradise with 40 virgins to shag (presumably) -is wrong. Martyrs in Islam are classified as people who die for their religion whereas people who blow themselves up for women are dying for their own lusts. It’s Hell for them. Presumably you need to die with a hard-on. Not impossible – many men do, apparently.

These are Iran’s main Nuclear sites:

Thursday September 24th 2009

  • The Government has criticised the Football Association for not reforming itself. It has also asked the F.A to spend more time and resources on ethnics and women as well as telling them that they should provide better leadership. Perhaps when the F.A has completed its restructuring it can then give H.M Government a few tips. Talk about Pot-Kettle.

  • A recent U.S survey shows that many Americans think that Tony Blair is the British Prime Minister. Someone ought to tell them who the real UK Prime Minister is. Darth Mandelson.

  • Mandelson has been quoted as saying that Gordon Brown ought to “lighten up”  a bit. Not THAT smile again PLEASE!!!!  NOOOO!!!

  • What is it about meetings beginning with a “G”? Why is our expectation level do low? Is it because we know that the post-meeting statement has already been written? Is it because all previous meetings were such a monumental waste a waste of resources, time and money? Anyway – who DOES write that n-page statement which announces the next meeting in 6 months? Gordon Brown’s LAST such meeting.

  • Is it true that Obama snubbed Gordon Brown? Obama has had one-on-one meetings withotherleaders. Why not with our own Prime Minister? Is it because of the Megrahi affair or could it be because of the increasingly prominent sell-by date on Gordon Brown’s forehead?

  • Banks are currently reducing their assets and hoarding cash because of liquidity requirements. Put in simple terms, that means that the magic conjured-up money – the so-called Quantitative Easing is making it in through the banks’ back doors but the front doors remain only slightly ajar. READ REST OF ARTICLE

  • In 1998, the Saville Inquiry began its investigations into the shooting of 29 Civil Rights protesters by soldiers of the 1st Battalion of the British  Parachute Regiment. Five protesters were shot in the back and two injured protesters were run down by Army vehicles. Fourteen people died. This was the Bloody Sunday Massacre which took place on 30th January 1972 in Derry. The original Widgery Tribunal concluded that the  soldiers actions could be best described as “bordering on the reckless” . Unsurprisingly, the Widgery report was widely regarded as a whitewash. Hence the Saville Inquiry. Now we hear that the Saville Inquiry will report in March 2010!!! Apparently, there’s a printing issue that needs to be resolved. Once again , this 11-year inquiry brings into focus two great British institutions – queueing and inquiries. Not to mention a steady income for a whole “shark” of lawyers.

  • The anniversary of Lehman Brothers going down the toilet has passed anditisnowayearsincethesolidsreallyhitthe air-conditioning big time. For those who do not really understand finance – and who really does these days, here’s the deal. Politicians and bankers knew for at leat 18 months before the collapse that there was not enough cash in the system andthatmost, if not ALL banks were now standing on foundations of sand. It was only when Lehman had to admit that there was no real money – only paper ” instruments” which could be worth cash , that it was realised that the real currency that the banks had been  dealing-in was bullshit and promises. Politicians are now beginning to strike heroic poses as they tell us how they saved the banking system and that they only-just managed to avert a financial Armageddon. The real fact is that they knew what was happening all along and lived in the HOPE that somehow (they did not know how), the financial system would self-adjust or self-regulate itself back to stability . It didn’t and the solution that is being applied today is exactly the same as that which caused the collapse. Imaginary money. Eighteen months ago, bankers and politicians were HOPING that the system would sort itself out and that is EXACTLY what they are hoping for today. What is really needed is a total restructuring of the banking system but there isn’t the global political will to make that first all-important move.

  • There’s a (denied) rumour that Gordon Brown is going blind. Obviously we all hope that he is not. In spite of the fact that he has all the leadership qualities of damp Kleenex, he is a decent man. The rumour that he is blind has obviously been started by someone who is confusing his eyesight with his policies and management style.

You calling me a banker?

“Move over, Darling. Please!”

Banks are currently reducing their assets and hoarding cash because of liquidity requirements. Put in simple terms, that means that the magic conjured-up money – the so-called Quantitative Easing is making it in through the banks’ back doors but the front doors remain only slightly ajar.

No amount of media-blackmail or Government arm-twisting is going to persuade the banks to start lending to commerce or to the private sector  in reasonable volumes or at reasonable rates. The banks are lending but at nowhere near the volumes needed by the economy. When they do lend, they apply wall-to-wall fees and a starting interest rate of the order of 6% over Base Rate. So, if you factor-in their fees, the actual percentage rate is ridiculously high compared to what little the BANKS are paying for the money and compared to the average company’s profit margin.

Very often finance is over-complicated. For instance, if you are a manufacturer and you have a bank overdraft on which you are paying 10% per year, you need a pretty hefty profit margin in order to make any profit after you have paid your bank charges. Simple.

Currently, margins are so tight that the banks may as well be in a different economy and on another planet because the sums just do not add up. The banks are doing their own thing, apparently with absolutely no reference to what is happening in commerce – especially where interest rates and current commercial margins are concerned.

There are those who seem to think that the current Bank of England Money Sale (Quantitative Easing) is not working. “We can’t tell yet” is a current often-recited bankers’ Mantra. The double uncertainties of whether QE is working and more importantly, whether  the UK will ever be able to repay its currently vast borrowings without further damaging the economy has caused the pound sterling to fall in value. It has begun its short journey South and will be closely followed by the dollar.

Mervyn King, the Governor of the Bank of England wants to add another £25 billion to the Quantitative Easing pot. He is currently in a minority of ONE. The dissent reminds us once again that Economics is largely a matter of opinion, guesswork and misjudgement.

The Chancellor, Alistair Darling still has an occasional bleat about bankers’ bonuses. That is all purely cosmetic. Bankers’ bonuses are trivial in comparison to the current needs of manufacturing and commerce.  In fact, the whole subject of bankers’ bonuses is taking-up a very disproportionate  amount of not-only our media space but also of the Chancellor’s and the Prime Minister’s collective energies. It is a red-herring. This morning, Alistair Darling has again been banging-on about “clawback” and banks holding onto bonuses for three years. It’s all ill-conceived rubbish.

The fact is that the Government has absolutely NO RIGHT to tell any privately-owned company what it should be paying any of its employees. That is up to the owners of the company – the shareholders. However, where the Government is a major shareholder in a company, e.g. RBS, only then is it at liberty to impose its views.

The banking issues will not be solved until there is a dislocation between High Street Banking and Investment Banking.

This morning’s hare-brained scheme was to ask companies  to declare their TOP 20 earners’ incomes. That should work-well for many Hedge Funds! Some only  have 5-10 employees. We’ll know what their secretaries and cleaners are earning which should be useful!!

The Banker Bonus issue is a red herring which the Treasury is using more and more to distract us from the fact that they  not-only made a mess of managing the economy prior to September 2008 but  it now looks increasingly likely that the “cure” that has been applied through the medium of Quantitative Easing only has a 50-50 chance of working.

The real worry, however is that Quantitative Easing was the last throw of the dice – and don’t be fooled by the near-miraculous “recovery” of the Stock Markets. Those Investment Bankers are now gambling with pretend QE money. The end-game will be fascinating.

Wednesday September 23rd 2009

  • Apparently, there is a small but statistically significant rise in patient deaths when junior doctors start work in August. Perhaps the same survey should be done with slightly different parameters: Before pubs open and after closing time.

  • A friend sent me a cartoon yesterday which, for the first time, explained the constant Midde East conflict . Jewish man  looking up at the sky saying, “Now, let me get this straight God. The Arabs get the oil and you want us to cut the end off our what….?” 

  • This snippet explains better than anything the anonymous nature of the Liberals’ leader. Nick Clegg will be delivering the Leader’s rabble-rousing Conference for the THIRD time!! He will attempt to come cross as a TOUGH leader. Doesn’t compute, does it? He always looks as if he’s just taken a “NICE” pill.

  • Justin-lee Collins has said what many are thinking: Bruce Forsyth should have stopped TV presenting three or four years ago. There’s a touch of the Emperor’s New Clothes about the whole thing. So much so that no-one appears willing to say ” Brucie, you are now coming across as an old twat. Piss off”. Instead the poor old bugger is being patronised, allowed to be unfunny (obviously from the tumbleweed school of humour) and worst of all, he’s being referred-to as “sprightly”.An adjective every man dreads because it is THE word which signifies the beginning of the end. It is NOT a compliment. It means that you are past-it and when you attempt to tap dance avec embarrassing Sammy Davis Jr-esque gurning, you look like a swinging cadaver with a ferret up a wet trouser leg.

  • I have just discovered that Chas & Dave have split up.     p.s. I am writing this on Beachy Head.

  • Kristna Rihanoff whose Strictly Come Dancing partner is Joe Calzaghe celebrated her birthday yesterday. Rumour has it that Joe and Kristina have grown very close. I  wonder whether he had any difficuty in wrapping her present?

  • More meaningless military “sincero-talk”today. Acting Sergeant Michael Lockett was blown up by a roadside bomb in Helmand Province.  “There’s now a gap in our ranks that will be so very difficult to fill”  and  “Sgt Lockett’s raw bravery and seflessness cost hm his life but undoubtedly saved that of one of his soldiers.”  are just two more examples from the Army Book of Fine Words. Meaningless twaddle. Sgt Locketthas left behindastrickengirlfriend and three children aged eight, seven and five. “We take solace in the fact that he died doing a job he was born to do” was more puke-inducing bollocks – this time from his father.  Stop this pseudo-heroic crap and bring ALL of our young soldiers back here to the United Kingdom, where they belong. The Taliban certainly do not see these young soldiers as heroes  –  more like fairground ducks.

  • When will the Vatican be called to account over the tens of thousands of children that have been abused by pervert priests? The Catholic Church has been accused at the United Nations Human Rights Council of a systematic and long-standing cover-up. The Vatican is in breach of its obligations under the United Nations Convention on the Rights of the Child. Handing out MILLIONS in compensation is really not the way forward. It’s customary to pay for sex up-front , not ten, twenty or thirty years after the event. Let us hope that one day there will be a time when the Vatican can close its child-abuse fund and get on with the business of religion.

  • Nothing about Gordon Brown today because he hasn’t said anything new or original. Situation normal. 

Tuesday September 22nd 2009

  • Did you see Darth Mandelson being questioned on the subject of bankers’ bonuses last night? As Business Secretary, he has the power to stop the bankers in their tracks. But he cannot and he would not answer any bonus-related questions.

  • General Stanley McChrystal, the top US commander in Afghanistan has warned that the war there could be lost unless there is an increase in troops within a year. He is asking for an additional 30,000 troops.  This is truly developing into another Vietnam. Currently, there are 100,000 troops in Afghanistan, 62,000 of whom are American. Time to talk.

  • The United Kingdom is needlessly wasting resources by sending too many average and some downright thick students to University. In fact, there are too many Universities. Hence the current funding crisis. The solution is so simple that even an Education Minister ought to be able to work it out.

  • The worldwide recession and the resulting drop in consumer demand has had a profound effect on industrial production. That has had an unexpectedly welcome effect on greenhouse gas emission – it has fallen by over 40%. Perhaps the Global Warming Mullahs will take this opportunity to shut up.

  • Anish Kapoor, the 1991 Turner Prize winner has a solo exhibtion the Royal Academy. This event is unusual because Anish lacks the traditional qualification for such a exhibition. He isn’t dead. If you enjoy abstract sculpture and/or you like spouting pretentious arty bollocks, then this exhibition is for you. Here’s a nosegay from Anish himself: “That sense of the poem being put together as word objects relates to sculpture in a very fundamental way. Sculpture also has this ability to be what it isn’t. It’s kind of about the illusory and the real.”Quite.  Anish is very keen on vaginas so do look out for the odd wobbly red letterbox shape.

  • The media seem surprised that construction companies and builders have been ripping-off Local Authorities and other organisations which are spending other peoples’ money. It’s been going on for years. This is from April 2008 – CLICK HERE– and it includes a scene from the Coconut Club, which you will be hearing more and more about over the next few weeks.

  • This week is Climate Week – a crucial  week in the quest for a global climate deal. World leaders are meeting at the UN in New York and a G20 summit in Pittsburgh. Meetings such as this have been going on for a few years now so let us hope that the current series of meetings produces something that has been sadly missing from previous encounters. Action. In December the Copenhagen environmental conference will hopefully be the real turning point and turn meetings into agreements into action.

  • Global Warming: Predictions are made using computer models and although the general consensus is that Global Warming is occurring, there are scientists (the so-called “deniers”) who have alternative models which suggest that the Earth will cool before its becomes hotter. Regrettably, the religious-like aspects of Global Warming, treat scientists who deny Global Warming as heretics who are often lampooned andmarginalisedby both the scientific and political communities.  The latest of these is a   Professor Mojib Latif, from the Leibniz Institute of Marine Sciences at Kiel,  who has suggested that the long-term warming trend could be masked – perhaps for as long as 10 or 20 years – by a temporary cooling caused by natural fluctuations in currents and temperatures called the NorthAtlanticOscillation. It all seems to depend on which set of data is plugged into which computer model.  However, it is the politicians who are the true believers who only appear to read data which supports their dogma.

  • Helen Goddard , music teacher has been jailed for 15-months as the result of a lesbian affair with a 15-year-old pupil. How modern. Not nice – but definitely “of the age”.

  • Rumour has it that Louis Walsh, the Irish spud  and pop manager from the X-factor is going under the knife in order to improve his looks. There must be a long queue of knife-sharpening volunteers. Surprising that he hasn’t yet benefited from sitting so close to that pair of  BotoxedBookends – Simon Cowell and Danni Minogue – by osmosis.

  • Sir Bobby Robson’s Memorial service must have been an ordeal for Paul Gascoigne. There was only one photo of Gazza that the snappers wanted – and they got it.

  • This is the sort of medical research that we like:  If you have alcohol in your bloodstream, you are far less likely to die from a head injury, says Dr Ali Salim from Los Angeles. The findings are based on a 5-year study of 38,000 people. You can’t be too careful. Cheers.

  • Nothing in the Press about Jordan today. Max Clifford must be on a long weekend break.

  • Attorney-General Baroness Scotland is still facing an uncertain future. Gordon Brown, her boss is being his usual decisive self. This is what he said this morning: “We will have to find out what has actually happened and I will have to wait for that report this morning and she will want to answer the questions that are put to her. We will have to make decisions.”  Brown obviously has not been watching the news or reading his Daily Worker. The fact is that Baroness Scotland employed someone who did not have authorisation to work in the United Kingdom. In fact, her papers expired five years ago. As usual, the long grass is quivering in anticipation.

Monday September 21st 2009

  • It now appears that Womens World  800m champion Caster Semenya was tested ages ago and there has been concern over her sex for months. The issue did not suddenly materialise at the last Word Championships. The whole thing has been handed so badly that there is every likelihood of IAAF resignations.

  • Baroness Scotland will probably resign this week. If every politician who made a mistake resigned, Westminster would be empty by now.

  • It looks as if Megrahi is going to be the first criminal to be retried on the Internet. We’re still awating an intervention from God and the miracle recovery. There has been one previous miraculous recovery by a convicted criminal. Ernest Saunders (1980s Guinness Scandal) was freed by a judge because he was suffering from Alzheimer’s. So far, Ernest Saunders in the first  and only recorded case of a total recovery from Alzheimer’s. The recovery took place soon after he was released from jail. Speaking of miraculous recoveries – Ronnie “released on compassionate grounds” Biggs has been seen out and about on his mobility scooter. Megrahi or Biggs? I’m off to Ladbrokes to make a small investment.

  • The Liberals are having their occasional rush of blood and putting themselves forward as a party of government. Remember David Steel in 1981? “Go back to your constituencies and prepare for government.”  Forget it boys and girls. There’s Vince Cable and Norman Baker and after that it all becomes a bit anonymous. Nick who?

  • The Liberals want to tax home owners whose properyis worth in excess of a million. They will be the only Party whose policies will be derailed by a property crash andonthatbasisalone, this policy has the depth and solidity of  a closing-time back-of-a-beermat “I really lovvve you”  concept. They’re not sponsored by the Royal Institution of Chartered Surveyors, are they? This new policy is the Liberals’ biggest-ever lurch to the left. The sort of thing that New Labour would have done when they were Proper Labour.

  • The elephant in the room – the one that no-one is talking about is still there. I am of course referring to the economy.

  • Several big companies, including a couple of large builders as well as the Royal Bank of Scotland will be coming to market very soon to raise many billions. Watch those share prices.  Here we go again.

  • Have you noticed how Kerry Katona’s nose is looking more and more like Danniella Westbrook’s last nose-but-one?

  • The Education bods are gettinng a bit twitchy at Ed Balls’ suggestions of swingeing cuts in Education. It is the designer-suited BMW-driving “advisers” at County Hall who should think twice before renewing their gym membership or booking that holiday in Tuscany. CLICK HERE

  • I did not see Alesha Dixon’s debut on Strictly Whatsit but it sounds as if she had a list of pre-prepared crap written down, dispensed it quite randomly and personalised it by adding bad grammar.

  • Rules are being published this week which will exempt family and friends from being prosecuted after assisting in a suicide.  It is purely coincidental that these rules are being rushed through just before Gordon Brown’s conference speech.

  • Manchester City manger Mark Hughes is complaining that too much time was added on at the endofyesterday’sderbygame with Mancheser United.  Michael Owen scored Man Utd’s winning goal in he 97th minute. Hughes forgets that his team had the identical extra time in which to score.

Monday September 7th 2009-Friday September 18th 2009

Friday September 18th 2009 

  • There has been some concern that Romell Broom may have suffered mental anguish when two Ohio State officials failed to find a vein in order to deliver a fatal injection. According to Broom’s lawyer, Broom had suffered both “mental and physical injuries” and apparently became distressed and appeared to cry. Broom was convicted of raping and then killing a 14 year-old girl.
  • We’re too fat, we drink too much alcohol, we’re unfit, we ingest female hormones in our meat  and weedkillers from our vegetables and we’re too stressed. Paradoxically, our life expectancy is increasing.
  • Alistair Darling is engaged in a series of meetings in order to decide where spending cuts can be made. If you’re expecting decisions within the next few months – stop being so silly. Although professional pundits do now have the opportunity to make pointless predictions.

  • Andy Burnham is suggesting yet more NHS changes. The God of Change strikes again! This month’s idea is that we will all be able to choose our GP. I would like one that’s qualified, understands human anatomy and is sober.

  • Baroness Scotland should know that in a Court of Law, ignorance is no defence. Mind you, the Baroness is the Attorney General. Hopefully, hiring someone called Loloahi Tapui(clue!) with out-of-date papers was just an oversight and as such, does not generate a witch-hunt. Oh yes – there’s an enquiry. There’s always a feckin’ enquiry.

  • Suddenly, Jordan doesn’t want to talk about “the rape”. It seems that her PR people are running out of interesting stories. The only remaining possbilities are either  ” I was abused as a child” or “I was abducted by aliens”.

  • Bit of a “to-do” about  unofficial sperm donors. Apparently, ladies can contact a sperm donor  on-line, arrange a meeting and either be handed a container-full of the stuff or on occasion have it delivered direct through the medium of sex. Hence the phrase : “”Bottled or draught?”  Sounds like an excellent service as well as an interesting career move, although it could mess-up the old CV, especially if the CV is printed on a sheet of Kleenex. Just realised that if this type of work is a career, the phrase “hand job” begins to make sense.

  • How would the management at Student Loans UK feel if they were told that because of administrative incompetence, their September salaries will be paid at the end of October. They would probably be quite upset. Next question: How do young kids with the incredible stress associated with leaving home feel-when they’re told by Student Loans UK that their University grants will be paid “about” four weeks late? Why is the beginning of the academic year ALWAYS a surprise? For the record and to help Student Loans UK: The next academic year will be starting in October 2010. Hopefully, that’s enough notice.

  • Scientists at Newcastle University have produced human sperm in the laboratory. Didn’t know that there was a shortage. Just take a chipping hammer to any Confessional carpet.

  • Gordon Brown said today “Cooperation between nations at the G20 summit will be crucial to ensure global economic recovery”  That is probably the twentieth version of the same sentence . It is a truism and it’s boring. Here’s another sentence which I hope Gordon finds as interesting as his own deep thoughts: ” The sun is in the sky”

  • Here is a quote from this evening’s No 10 bulletin: “The Prime Minister is launching a brand new podcast series this week talking directly to you about the big issues of the day. The podcasts, which will be available on our iTunes channel andonYouTube, will be recorded at Downing Street or around the world when the Prime Minister is travelling.”  Wow! That Gordon Brown is so “street”  -using that Interwebthingytoconnectwith the YouTube dudes. Way to go, MC Gordo! Soon,  he’ll be buying a pair of those really cool Levi Strauss blue denim casual trousers with the turn-ups, copper rivets and the little red label. Sound! Should go well with the black brogues.

  • Remember what I told you about the American dollar going into freefall. Soon. Continue reading Monday September 7th 2009-Friday September 18th 2009

LIBORATION!

Under Mervyn King, the Bank of England has become an irrelevance.

There is no longer any correlation between Base Rate and what happens to real borrowing rates. The banks are out of control and more-or-less doing what they damn-well please – in spite of taxpayers’ handouts.
 ” Come and get it.”

Today, Mervyn King and his band of funsters at the Bank of England are attending  their irrelevant monthly monetary policy committee. Why “irrelevant”? Because it is the British Bankers Association (known collectively as “the Wunch”) that decides consumer interest rates.

Any change in the Bank Base Rate is irrelevant  because it is the LIBOR and not the Bank Base Rate which affects the consumer.

LIBOR is the London Inter Bank Offered rate and is the rate at which the Banks lend money to each other. The rate is set by the British Bankers Association. It is a rate which is controlled by the banks and can be changed at any time. Once again, they are stitching-up the Chancellor, the Government and us.

The current 3-month $ LIBOR rate is below 3% and the Bank Base Rate is 3% and soon to fall again. Why are many mortgages still at over 7%? What difference will these official rates make to  the Credit Card holders who are being charged over 20% per annum?

Not so long ago, Alistair Darling said he hoped that moneylenders (the banks) would ‘continue to take their responsibilities towards customers seriously’.

While Alistair is “hoping”, the  fat-cat banker is lighting up another Monte Cristo as the houseboy counts the bonus. The banker is not thinking how he can help Mr “In the Poo” Borrower or Mr “Is that the Samaritans?” Small Businessman. He has far more important things on his mind.

Those share options are not looking as attractive as they did a few months ago. Perhaps he should wait before cashing them. After all , once the government has sorted-out the mess, the share price should rise quite nicely……….

Mervyn’s Tea Party

sixmonkeys.jpg 

Monetary Policy Committee

David Blanchflower sits on the pointless Bank of England Monetary Policy Committee.

The MPC is supposed to be acting and thinking  independently but it always seems that whatever they say has been sanitised so as not to upset the neighbours.

David Blanchflower says that in his opinion,  two million people will be out of work by the end of the year.

That’s more like it! We need some realism. We need truth and not the platitudinous crap that  Merv and his chums keep dishing out.

Blanchflower goes on to say that the MPC seems misguided in sitting there and worrying about inflation when the whole economy is in imminent danger of collapse.

He also says, quite rightly that the BoE’s forecast of “broadly flat” economic growth has a great deal of wishful thinking attached to it.

He also thinks that there will be a fall in property prices in excess of 30%. Bravo! Tell it how it is and how it is going to be!

The very worst that could happen at the next MPC meeting is that Mervyn might splash soup on his silk tie but otherwise, whatever they decide will be irrelevant.

As we have said many times before, they should be making things happen but sadly it looks as if the are simply wondering what happened.

See what Spygun wrote on 15th May 2008 

Mervyn’s little pump

tortoise_big.jpg

” Mervyn King”

Mervyn King and his band of funsters at the Bank of England are attending  their irrelevant monthly monetary policy “dither” committee again. Why “irrelevant”? Because it is the British Bankers Association ( known collectively as the Wunch”) that decides consumer interest rates. Any change in the Bank Base Rate is irrelevant  because the only direction that  the BBA will alter the rate in today’s climate is upwards.

The balloon of inflation has two pumps sticking in it.

The first is our own little pump which inflates and deflates the balloon through price and interest rate variations. This is the pump that Mervyn and his gang have a bit of control over when they are in the mood to get their hands dirty. (They spend three hours deciding whether or not to sit on the fence).

The bigger pump (by far) which has been growing over the last few years and has recently started inflating the balloon  at a great rate of knots is totally out of Mervyn’s (and the Government’s ) control. This is the massive steel stirrup pump of world commodity prices. Control of that pump is in the hands  of organisations such as OPEC, Governments such as Russia and the USA and individuals such as commodity traders and speculators.

Mervyn’s little plastic bike pump is fast becoming an irrelevance but I am sure that today after their game of bullshit tennis,  they will have a good lunch before Mervyn settles down at his battered old Remington and types “the letter” to Gordon Brown.

Dear Gordon,

Sorry mate but you know that 2% inflation nonsense that you used to bang on about? I think that it’s time to stick a “one” in front of the “two” because that’s where we really are.

The good news is that  the high figure does not apply to individuals who purchase a 42″ plasma TV every month.

Yours,

Merv

p.s. Sorry about the red ink. That’s all we use these days.

British economists are divided (?!) – depending whether they base their calculations on Keynesian Theory or the (currently favoured) back of a Marlborough packet.

In spite of the fact that they all rely on what is essentially the same computer model – half say that the rates should come down and the rest say that they should either stay at 5% or be increased.

Here’s a wake-up call boys:  It doesn’t matter.

When you have oil and commodity prices swinging by between 10% and 60%, a small 0.25% tinker with the BBR is not going to amount to anything at all.

It would be like John Prescott chipping an ice cube off the iceberg that sank the Titanic.  Or as it is known nowadays – New Labour.

Spygun  predicts zero action from Merv and the boys (and girls). Rates to remain at 5%.

Something is heading for the fan and it’s Brown!

tortoise_big.jpg

Mervyn King

The phrase “Boom Bust” will always be associated with the Tory years. It was the Socialists who embedded the link in our minds. That means that they need another phrase to explain the current  Boom-Bust cycle. Uprecedented Growth/Credit Crunch looks good.

Make no mistake, by the end of 2008, inflation will be at 10-12% per annum, house prices will have fallen even further and by the end of this year, unemployment will have reached (but not peaked at) two million and the FSA and bank-induced rigor mortis  will have all but finished-off the British financial services industry.

Within the last month, we have entered the “Bust” phase of the economic cycle – or “Credit Crunch”. (Sounds much friendlier – almost like a breakfast cereal.)

One good thing has come out of the whole sorry affair:  we have come to realise that the futile posturings of the Bank of England  are irrelevant and that the BoE is no longer a “shaper” of the economy. It is merely an observer.

During “Boom” years, having lots of meetings and tinkering with the Base Rate is a harmless enough pastime. However, come the “Bust” phase of the cycle, the old chestnuts ” We are in a Global Economy” , “Downward slope of the Economic Cycle” , “Sorry mate, we didn’t see that one coming” and “It was those fucking Americans and their securitised mortgages” are trotted out.

What bankers practise is not an exact science – that is why there are usually several opinions as to whether or not rates should be changed or who to blame for the latest screw-up. What they practise is best described as a combination of “bucket chemistry” and “guesstimation”.

The Bank of England has no more effect on  inflation than my wife  recycling plastic bottles has on global weather systems.

In the good old days when the BoE did as it was told, successive Chancellors would order a change in Base Rate in the full knowledge that  in the grand scheme of things, their machinations and fiddling would have absolutely no long-term effect on the economy. (Are you reading this, Norman Lamont?)

When government does finally intervene and shake up the financial system, they will have to do very BIG things such as nationalisation. The days of futile fiddling with interest rates are over.

Under Mervyn King, the BoE Monetary Policy Committee has become an irrelevance.

There is no longer any correlation between Base Rate and what happens to real borrowing rates. The banks are out of control and more-or-less doing what they damn-well please.

Everyone is reluctant to use the word “recession” which , just for the record, applies to a period when the economy experiences negative growth for two consecutive quarters. Or, to put it in plain English: when the economy shrinks for six months. The economy is now shrinking.

Some may say that certain “sectors”are not in recession while others are.

That’s like being slightly pregnant. Either you are pregnant or you’re not.

Sometimes it seems that even the economists and bankers don’t understand what is going on. Nowadays we live in a much more immediate and unstable age and therefore , the old economic principles are ceasing to apply. A single unpredicted event can have a major impact on either all , or on individual economies. More Chaos than Keynes.

The fact is that we can no longer manage Macro Economics through Micro Management. Interest rate tweaks, sugared by soothing political noises and underpinned by blind panic are having little effect .  For instance, The Americans have decimated their interest rates recently with  no particular effect on their economy although they “think” that they have had a slight effect on their inflation.

Bush staged a big dollar “giveaway”. Brown has now done the same. Both were decisions based in Politics rather than Economics. Perhaps the time has come to move Economics from the Politicians’ reach?

Looking on the bright side, in a few years, all this will be history. Mervyn will be gone, another Prime Minister’s hand will be up another Chancellor’s lower alimentary canal and in spite of the BoE’s and the Government’s ineffectual tinkering and rhetoric, those of us who survive will be enjoying another “Boom” but not before we have struggled through another recession/depression.

By 2013, the new Government will tell us that it was their policies and prudence that led us to the New Prosperity. The old Government had got it all wrong.

Economists and Bankers will tell us that they did not see any of this coming.  I am not a banker or economist but reckon that we are headed not just for a recession but a full-blown , very painful Depression – à la 1930s. The hazy and illusory days of plenty will be over.

Finally, I don’t think that enough has been made of Tony Blair’s excellent timing.

He ruled over us during a time of “virtual” plenty (it wasn’t real because it was funded by debt-ridden banks funding increasingly debt-ridden companies and individuals).In spite of Gordon Brown’s mithering, Blair held on until the rubber-band of economic growth was at maximum stretch. Finally, he handed it to Gordon………

The real worry is that at the time Gordon Brown was the Chancellor of the Exchequer and should have forseen certain things.

Not only did he not see what was flying through the air but even when it whistled past his ear, he did not notice that it was heading straight for the fan.

Slow Mervyn – The Traders’ Friend

tortoise_big.jpg  Mervyn King

Mervyn King’s Horlicks has just worn off  and he has  woken up to the fact that City bonuses are high. Breathtaking! He is so on the ball that he makes Ronaldo look like a one-legged tap-dancer.

Mervyn!!!  The outrageously high bonuses, boni or boners are not a new phenomenon. In fact Joseph Stiglitz, the Nobel Prize-winning economist said exactly what you’re saying about a month ago. Mind you, what with one thing and another, I suppose that you’ve only just caught up with your reading.

The primary reason for the outrageously high payments to the designer-labelled barrow-boy City slickers is the  over-simplified reward system.  The City rewards the “ups” but  does  not penalise the “downs”. That encourages risk-taking in a big way.  A trader can make a large bonus from the profit on a deal but when that deal or the share price subsequently falls, there are no sanctions.

Here is an idea from Spygun’s many years experience in Financial Services, illustrated by an example from the life assurance industry:

In the good old days when life was simple, every day was sunny and back doors were left unlocked, a life assurance salesman would be paid what was known as “indemnity commission” on any contracts that he sold. If the salesman sold a £100 per month policy to a client , he earned say £1000 in up-front commission.  Over the next twelve months, the  client paid his £100 per month and at the end of the year, the salesman’s commission had been paid for. However, if the policy lapsed in the meantime, the commission was “clawed back” on a pro-rata basis. That discouraged salesmen from selling policies to high-risk clients.

With the sorts of systems that all banks and financial services companies currently operate , it would be a comparatively simple matter to create a payment system which was more equitable and which took into account the often negative consequences of trading.

The Life Assurance companies employed people who earned millions in commission from unprofitable contracts and eventually, the Financial Services Act helped the industry to rewrite the rules , resulting in a far more sensible pay structure and a much less aggressive culture.

It is now time for those nice people at the Financial Services Authority to loosen their cardigans, bare their teeth and take control.

The argument of having to pay obscene bonuses in order to hire “the best” has been used before. “The best” used to mean the most aggressive and most ambitious salesmen.

We now have the opportunity to enter an era where “the best” means the best-qualified, the most knowledgeable and the most professional.

Merv the Pawnbroker?

One commentator has called it spot-on : the Bank of England is acting as a high-class pawnbroker.

Imagine that you are a few quid short and no-one will lend to you. What is your last resort? It is the pawnbroker. There you can swap a few non-negotiable items for a bit of cash to tide you over until a bit more money comes your way. The only down-side is that it is a very expensive way to borrow ( or it should be!!).

The Banks have very high gambling debts and they need some quick “no questions asked” ready cash . Where should they go? They cannot ask other banks because their credit rating is not that good.

The “independent” Bank of England is a soft touch so they go and see Honest Mervyn the Bankers’ Friend – he will bung them a few quid. All that they have to do is pawn some near-useless investments in return for some guaranteed cash and………wait for it….they can have up to three years to redeem the investments that they have pawned – or perhaps they won’t bother.  No doubt the Bank of England will grant them an extension when the time comes.

It would not be so bad if this only applied to one Bank. Rumour has it that most of them will need a slice of Merv’s generosity.

Will a gambler learn his lesson when he knows that he will be OK for as long as he has something to pawn?  What is there to stop the banks from repeating their mistakes? After all, they are now in the unique position of generating  lots of profit from their good investments  (us) but if they screw up again (and screw up they will), they have the Bank of England to bail them out. If that is the case – why do they need expensive Chief Executives?

Keep a special eye on Bradford and Bingley, Alliance and Leicester and a bank that I shall only refer to as Carlos Fandango and his mates. Very soon, they will be hoovering-up a bank or two and they will not be paying top dollar.

Finally, does the Bank of England consider the banks’ Standard and Poor’s and Moody’s ratings? Or is it all done with a “nod and a wink” from the Chancellor. “I know these blokes, Merv. They’re OK for a few quid.”