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Tuesday, March 30, 2010

Europe and the US Head Lower. Asia Booms.

2010 is witnessing a divide in the world's economy. Asia not including Japan is witnessing a 'M & A' boom, while the 'west' is experiencing a slump. The sovereign debts situation is putting off would be investors and business builders in Europe and the USA. But countries throughout Asia are finding the current times very favourable to attracting investment money.

This will be the trouble for Europe and the USA in pulling out of the current recession. Confidence has been gradually worn away by the extent of indebtedness to the point where deal-makers are leaving and looking elsewhere in the globe for future growth.

The FT today writes -

There were $89.4bn worth of deals in the Asia-Pacific region, excluding Japan, during the first three months of the year – an increase of almost 93 per cent from the same period a year earlier.

However, European M&A activity weakened for the fifth consecutive quarter as sovereign debt worries deterred corporate acquisitions. The value of deals in Europe fell 5.7 per cent during the period, the slowest start to the year for the region since 1998. The US was quieter. In spite of a series of big healthcare deals, US activity dropped 25.6 per cent to $148bn in the quarter.


They used to say 'Head West, young man.' Today, make that 'East'.

Sunday, March 28, 2010

'Fighting Bull' Hits The Spot But Leaves Many Questions Unanswered


PICTURE - captioned 'getting our message across'.

Nigel Farage's autobiography, Fighting Bull (nice double entendre) just released, gives a good insight into where his passionate speaking comes from - and that, not surprisingly is his passionate way of seeing the world. From the moment his parents divorced while he was still at a very early age, he developed a a powerful rebellious and argumentative side to his character, a rich seam of emotion on which he has been able to draw throughout his political career.

I'm not quite sure I understand how consuming such large quantities of alcohol assists nearly every venture he attempts in life, but let's not quibble. He's a bloody good speaker, and a highly effective politician, and is one of the few who talks straight to people. We need more of those, especially those willing to stand square on and tell the EU that they are not acceptable in Britain.

To any dedicated eurosceptic, this book is inspirational, and keeps you on the edge of your seat, in the sense of not quite comfortable. Farage lives life close to the edge, and his journey includes many car crashes (literally as well as metaphorically). If he hadn't found a political career to channel his energies, you feel that in any other walk of life, he would have been too rough a diamond. But in politics, his edginess, combined with an instinctive rather than academic intelligence, becomes an asset.

In internal party conflict, he keeps himself in check, while directing all fire outwards onto the enemy. The internal UKIP story is a continual battle of egos, and Farage has managed to survive them all, though not entirely unscathed.

Some notable characters are missing from the script, which is most curious. There is clearly an ongoing rift between Midlands and The South. Since the Midlands took control of the Party by forcing a break-in of the Regent Street office some years ago, the South was ever since left stranded from control of the Party.

My own opinion about Tebbit's view that MI6 had penetrated UKIP's head office, is to agree with Tebbit. Dealing with the people there at the time was all a bit cloak and dagger, with strange instructions as to how to get the information I needed to organise national distribution of leaflets and posters, and afterwards to deny that I had it, and not to let on who had helped me.

If MI6 were involved, their role was to help the Party break out, not to hold it back.

UKIP was seen and is still seen as a way to hold back the Conservatives, by the BBC, the EU and even by Irish nationalists - who to my knowledge tried to place money with UKIP - I know this as they tried briefly but purposefully to use me as the contact point after the 2001 General Election while I was on holiday in Italy. I was sufficiently alarmed by this stage that I decided to resign and return to the Conservatives to back IDS.

I felt at the time, that IDS had been elected to the leadership partly on the back of UKIP's growing threat to Conservative support. Owen Paterson, IDS' Campaign Manager, was certainly aware of the threat from UKIP and spoke to me about it in no uncertain terms. But the progress of UKIP, although getting there now, has been glacial due to all the rifts, which are still unresolved ten years later.

I don't think anyone will ever work out who was pulling what strings, finally within UKIP. But whatever the failings and question marks over UKIP as a Party, Farage himself is a star, with much to offer. I hope he defeats Bercow and gets to Westminster, where a UKIP badge will be of far less importance than what he has to say.

UKIP as a Party will be compromised until control by the shadowy key figure not mentioned by Farage in this book at all, who effectively runs everything that moves within UKIP, is ended. He has nothing to do with MI6, and a lot to do with keeping control of the appointment of all those in key positions in the Party, suppression of any competition, and a lot of cosy financial arrangements sufficient to alarm Marta Andreasen, the Party Treasurer into resignation last year. UKIP has fallen into the hands of unprincipled people, and it is something Farage prefers not to mention.

The pity is that this ensures a progression of nonentities. As with Gordon Brown, the Party cannot progress and is limited to the promotion only of people with less talent who cannot become a threat. The Kilroy Silk story in the book suggests that Kilroy was made good use of, but was incapable of teamwork. Let's see what happens to Lord Monckton, another great talent. Maybe he can finally sort out the rifts that hold UKIP back. Pearson doesn't look likely to do much.

PICTURE - Here is Farage standing next to my 2001 poster, which was sent all over Britain pre-General Election, on this occasion posted up on the wall outside the EU Commission's London Office, (where I had placed it).

It's nice to see it again after so many years, but in Farage's book, I get no credit for its authorship and printing, which I naturally enough feel is an oversight on Nigel's part. Am I always to be one of the Party's unmentionables? He had called and asked me to write and produce publicity material after all, which I thoroughly enjoyed doing, and would not have done without his instructions. Am I being unreasonable in feeling a bit miffed at not being credited by him now all these years later?

Such is life! Millions saw the poster on TV and on thousands of walls throughout the land. The campaign cost me £50,000, and no reimbursement was ever offered. Sykes turned up two weeks before the 2001 election offering megabucks, but he was far too late. I saw that there was nothing being planned for the 2001 election, and, prompted by Farage decided to fill the gap months earlier and in time. The shadowy figures felt very threatened by all this, and allegations were levelled against me that I was a Conservative plant, or worse!!!

I'll have a word with Iain Dale, the publisher, about my lack of a mention in the book. He's normally a stickler for Hattips etc...

Buy the book, is my advice. Fighting Bull published by 'Biteback'. Farage is still a key figure and if he wins Buckingham, could be hugely influential on future events. In the last section, Farage indicates why he thinks John Bercow deserves to be thrown out. As you would expect, there are no pulled punches...

Friday, March 26, 2010

Euripides? Eumenides? Greek Euro Comedy Rolls On.


The day's face-saving EU get-together promising a bail-out for Greece will last at least until the party's over. Maybe another day or two, before reality seeps back into the frame once more. Greece will not be bailed. EU will try to save face. Life will stumble on. Even the journalists have given up taking it seriously -

FT's Joshua Chaffin.

There is joy and harmony in euro world today. After looking over the precipice, European leaders decided to pull back and agree a rescue package for Greece. At a press breakfast this morning, José Manuel Barroso, European Commission president, was positively buoyant. Europe, he said, could have gone either way in the face of the latest crisis. In the end, it decided to leap forward towards greater integration and cooperation. In rock and roll terms, the whole thing had the feel of a band, whose bickering members — after threatening to embark on ill-conceived solo projects — finally calm down, come to their senses and determine to go on tour again.

-But don’t you guys hate each other? the media asks.
-No, no. We love each other. But this time we’re going to do things differently. There will be new rules about wives and girlfriends on the bus. Oh - and drugs. Vince has agreed to go cold turkey - at least during shows.


That about sums it up. It's all theatre now, tragedy, comedy in equal measure but no deus ex machina in sight.

John Nadler KITCO.com explains -

Well, after weeks of wrangling and a near-derailment at the very last minute, we have an agreement on Greece…kinda/sorta. Last night’s cobbling together of a rescue package for Greece by the EU not ameliorates its short-term financial position but has resulted in the lifting of at least some the immediate selling pressures being felt by the euro. The long-awaited assistance “package” contains a mix of loans from certain EU nations as well as assistance by the IMF. Makes one wonder; what took so long?

However, experts opine that it is totally premature to conclude that the Greek and/or Eurozone turmoil is now fully over. Nothing in the package implies that Greece is going to get off easy in attempting to solve its financing woes. The loans contained in the plan are priced at current (rather high) interest rates.

UK Government Breaks Faith With Its People

For years the world has known that Britain is unique is its determination to keep tabs on its citizens. No other country in the world has permitted its Police to place CCTV cameras over every street to observe its citizens behaviour.

That use of technology to cramp freedoms could be justified to some extent from the extra safety it offers people on the country's streets from criminal attack, although a more effective deterrent to criminals would be the possibility of more severe punishment than they currently expect to receive with gaols full to bursting, and the CPS unwilling even to bring prosecutions.

But that intrusion on peoples' liberty, the use of CCTV, is at least out in the public domain. If you want to go somewhere private, you still can.

But the E-Care State Spying System is an altogether different animal. This takes state supervision of behaviour from out on the streets right into the home, and into the doctor's surgery, the most private places in a person's life. The cameras on the streets recreate an honest image of people's movements, but the E-Care recording of our home lives, our foibles, inadequacies, indeed our very humanity is far more sinister.

All the information being recorded will be placed on file by government employees, working within a strict world-view which is acceptable to government. This will inevitably be political in nature. They will be working to targets. IF each state employee does not find families which require state intervention, then how will they justify their existence? If one District Nurse in league with Social Workers and Police is breaking up ten families a year, and getting bonuses on the strength of it, then her colleagues will become envious and seek to break up more families in turn.

If anyone thinks this is scaremongering, they should bear in mind that central government pays target bonuses each year to local authorities based on them hitting the necessary targets for children being removed from their families, and so far 25,000 a year are being so removed.

There will no doubt be some cases where that is right, but the numbers removed by the state, and the large sums of money being earned by Lawyers, Consultants and Children's Homes have created an unstoppable industry, estimated at a value of £20 billion a year, according to one source, with Children's Home places alone costing £7000 a week.

These children are removed from their families in secret in Family Courts where reporting is not allowed. Any parents who try to publicise the seizure of their children by the State are met with threats and ultimately imprisoned. Two hundred are so imprisoned each year.

Where can this industry be stopped? How can its pearls of propaganda such as 'helping vulnerble children' be challenged. And even more than that, how can any citizen of this country trust a government which instructs its employees to collect private information on its citizens from all sources to a central database, where their lives, not as they truly are, but as reported by state employees, loyal to a political creed of 'government knows best', can be monitored.

The fact is that we all know another truth. Government doesn't know best. It makes endless messes of nearly everything single thing it ever does. Its role should be reduced, not extended. The excision of the role of central government from our lives, and from targeting the removal of our children, is urgently required before this apparatus of totalitarian paedophilia, paedophilia now a sexual orientation protected from discrimination equally with homosexuality by the Lisbon Treaty, is successfully put in place. Paedophiles who attack children are no longer automatically jailed.

Brian Gerrish in the video above (and nine others in sequence) has assembled truly shocking evidence of what is happening to British families and children at the hands of their own Government. The E-Care State Spying System will merely accelerate and enlarge the scale of this unending nightmare.

It Gets Worse -

Daily Express

Europol has also been absorbed into the EU superstructure, so it will be centrally funded, sweeping away a key check on its independence.
Campaigners last night expressed concern over the vague list of “serious crimes” which the agency can help investigate, which include racism and xenophobia, environmental crime and corruption. Among personal details that can be gathered and stored are “behavioural data” including “lifestyle and routine; movements; places frequented”, tax position and profiles of DNA and voice.
Where relevant, Europol will also be able to keep data on a person’s “political opinions, religious or philosophical beliefs or trade union membership and data concerning health or sex life”.
Sean Gabb, director of the Libertarian Alliance, warned that it threatened our right to free speech.
“It doesn’t surprise me that Europol has been handed these rather frightening powers,” he said. “We now live in a pan-European state so it was to be expected that it would have a federal police force with powers over us.
“There is a real danger that opposition to EU policies could make an individual liable to arrest.
“For example, if Brussels adopts a hard-line stance on climate change, it’s conceivable that someone who broadcasts their scepticism of climate change may be accused of committing an environmental crime because they have undermined the EU’s efforts to save mankind.”


Full Article - here.

And The Daily mail -

The Children's Index is to be launched in England and Wales in 2008. It is already being 'trialled' by 12 local authorities at a cost of £241million.
Ministers say that to protect children from harm, and identify potential criminal offenders, the State must gather and scrutinise everything known about Britain's 12million children and their families.

Information held in separate local databases - GP records, nursery reports, children's exam results and answers to new tests supposed to indicate anti-social tendencies - will be intertwined on one Big Brother system, tracking Britons from birth to adulthood.

From next year, schools must also submit a 'spine' of more than 40 items of information on a child, from address and parents' marital status to ethnicity and eligibility for free school meals.

A parent's depression, divorce or addiction problems will be "flagged" as warning signs: two will be enough to trigger an investigation.
This acutely sensitive information will be available, Schools Minister Lord Adonis admits, to an estimated 300,000 to 400,000 State employees.
Doctors, teachers, nursery, youth and social workers, police,



Read more: here.

There's no denying by Ministers, that a state-run paedophile's address book is being created. Don't dare get depressed. Don't get divorced. Don't get hooked on anti-depressants or your child could be raped as a direct result, housed in the state-run paedophile gulag, with no parental visits allowed.

They used terrorism as their first excuse, but this hasn't been enough. Now they try to use child abiuse as their excuse. The truth is they want access to our children, and control over their minds and their bodies. They are determined to get it at whatever cost.

Democracy is dead. 'Long live' paedophile totalitarianism, Blair's Brave New Hell On Earth. Big Brother becomes Big Business, just like Blair likes it. Cameron has got to turn this round.



Let's hear Gordon Brown explaining why British families are no longer allowed to bring up their own children without continual detailed espionage carried out against them by state employees. This topic is being seized on by Nigel Farage.
'The battle is on,' he says.

David Cameron should get after it too.

HOW THE STATE COVERS UP ITS PAEDOPHILE NETWORKS -

See The Holly Greig story.

Extract -

.....Anne Greig reported this immediately to the local police station in Aberdeen. During the course of that summer, Hollie, who has Down`s Syndrome, began to provide more names of abusers. It transpired that Denis Mackie had been sharing his daughter with a ring of sexual abusers, which included a serving police officer with the Grampian force, Terry Major and an Aberdeen sheriff, Graeme Buchanan.

Medical and other evidence supported Hollie`s account and Grampian Police accepted the truth of Hollie`s statement. Nonetheless, no action was taken by Grampian Police against the perpetrators.


And how frequently does this story repeat? The brave victims who speak out are never supported with proper assistance, or even given a hearing. All of the state's paedophile crimes are suppressed and hidden from view.

The internet has created a vast worldwide demand for peadophile pictures and videos, and children are needed to feed this multi-billion dollar industry. As Tony Blair could tell you, money talks. The state are the last people who should be trusted with our children.

Thursday, March 25, 2010

Farage - 'Battle Joined' Against E-Care Secret Spying System


Everyone seems to have their own little story about how badly the State has been functioning of late, whether that be the NHS, the Police, Schools, the HSE or thousands more. The citizen has become not the object of state service and benefits, but in the eyes of the State, we have indeed now become the enemy.

So much so that they see themselves as justified in logging our every move into a central database, where all our most private affairs are to be made available to agents of the state. AS usual no one makes a better description of the structures and frameworks being set up to manage state spying on its citizenry, than the state and its agents, themselves.

The Conservative Blog was most interested to receive comments from all round the UK at the foot of our recent post Britain Is A Police Sate, but the one that has caught attention from everyone is the trial run being made in Scotland of the E-Care system.

This will act a central database being fed by Police, Doctors, Teachers, District Nurses and also Private Agents acting on behalf of the state, even neighbours and workmates making allegations against each other. This is in essence a totalitarian state in the creation, where democracy is no more, and the State can demolish all resistance, E-Care indeed.

The details being collected about our private lives include family pets' names, how household income is being used, any mental problems of relatives, family members or associates, any tendency to drink and a whole plethora of information once thought exclusively as private.

We emailed a group of politicians who we thought might not yet know that E-Care is already operational in Scotland.

We received an instant reply from Nigel Farage MEP. 'The battle is most certainly on,' he declared.

Here are the links he will need to get up to speed on this unhappy scheme - Britain Is A Police State Mark 2. The same post appears here on The Tap below, where I usually write posts first, and Yasin copies them across from The Tap to The Conservative Blog, where there are ten times the number of readers. The comments made there today under this post are the most interesting with knowledgeable commenters providing a number of good links.

The NHS combined with all arms of government is being dedicated to political and cultural control of the population. This is not Britain. This is a nightmare, where government is assuming the role of God, enthusiastically intervening in personal and private matters, which are not their business. This is not a bridge too far. It's the whole road too far. Where are the kilted warriors ready to drive out this Frankish menace from our shores?

Is Farage Britain's only remaining voice?

Britain Is A Police State - Mark 2


The State is planning a country wide computer system which will access all computer records held on all individuals to a central register. There has been no public discussion on this. If for example you visit your doctor with an illness which you would prefer was private and known only to you and your doctor. Sorry, that would not be possible.

Then you visit a pharmacy and buy condoms along with your prescription. That too would be known to the police computer, your school if you at school, your employer if a state entity, and maybe through agency to your employer if private and other social connections, if they pay to find out all about you.

If you visit a counsellor to help overcome distress of some kind, that too would be logged.

I was sent the link which describes the system being installed at great cost across the nation, so that our every action and whereabouts is know to Big Brother. It was given by a commenter under 'Britain Is A Police State' on www.theconservativeblog.com.

Here is
the Big Brother link, which outlines how the state suppression system is being implemented in Scotland. Independence will ring pretty hollow with all this going on. And again there is the focus on children. The pdf presentation even says this is being done 'for Scotland's children'.

No extract (as it's a pdf), but see how many people are putting information about you into this information superstructure from the graphics. Everyone basically. No wonder why they want ID Cards, so that your central computer ID number can be keyed into every transaction you make, even as you buy groceries.

The total lack of awareness that civil liberties are being smashed to pieces is truly terrifying. Of course the people selling the system are earning billions. What do they care?

Tea Party topic? I think so.

Essentially the 'health' bureaucracy network that runs the NHS is being extended outwards to capture all information that society possesses from all sources. So that government becomes a single central unit of information handling about its citizens, enabling decisions to be taken on behalf of citizens, and so they can be easily controlled. Anyone who kicks up against the system can expect trouble, I imagine.

If we ever needed a Conservative government to smash state power before it cripples all human life in Britain and reduce us all to a terrified and suppressed state, here is that moment. David Cameron's philosophy is based on preventing Orwell's 1984 from happening, he once claimed. It looks like he'll have his work cut out. Labour have already gone a long way down the road of constructing the informational architecture of state suppression.

REPLY TO EMAIL FROM NIGEL FARAGE ON THIS TOPIC -

Dear Mr Curteis - many thanks for circulating this! The battle is most certainly on - Yours sincerely, Nigel Farage

www.ukip.org www.ukipmeps-org

Wednesday, March 24, 2010

Darling's Fishy Budget


Darling's figures are suspect.

He said in his budget speech, 'spending is broadly in line with our forecasts'.

Spending

He forecast spending of £680 billion last year for this, but spending was reported as down by £60 billion in December, based on accounting adjustments in the Treasury December Spending Outturn Report, which were never explained. Spending according to his original forecast is massively down, and not as he now claims, in line with forecasts.

Revenues

He claims that revenues have improved in January, February and March. Yet it was reported in January that revenues were down by £9 billion.

The FT wrote at the time - In spite of racking up a deficit in the first month of the year for the first time since records began in 1993, the Treasury is growing increasingly confident that its forecasts for government borrowing will prove sound.

Public sector net borrowing stood at £4.3bn last month – a dismal figure as January is normally the strongest month for revenues and has delivered a surplus averaging £9bn a year for the past decade.


It seems Darling is living in a parallel universe, where everything financial is doing well. The truth is otherwise.

There seems no connection between what he is saying today, and what we know to have happened previously, and what is happening now.

No wonder Osborne is saying there needs to be an audit of the national accounts.

This is fantasy finance.

What were those 'accounting adjustments' in the Treasury Outturn Report in December 2009? £185 billion of spending reductions not explained yet. Very tricky stuff, Mr Darling.

Cameron

There's no point in trying to find out what the true figures are behind Darling's claims . Even the situation as admitted by Darling is dire enough for a fair political shredding. The fact is, though, that Britain's borrowing for general expenditure in 2009/2010 is around £60 billion higher than Darling is suggesting.

Cameron again - talks of an 'independent office of budget responsibility' - and in his speech he exposes lies about the Treasury forecast growth rate from Darling, and effectively makes an accusation that Darling is presenting a dishonest budget.

Cameron calls the false growth forecast 'rubbish' which is the kindest Parliamentary word that could be used for lying. Darling distorted the Treasury's forecasts to make the situation seem better. This is the DNA of Darling's budget.

It is odd though, to not hear or read someone exposing Darling's bigger lie that he has cut the borrowing requirement. He has not. The biggest lies are the ones that get believed. Maybe he's done a deal with Goldman Sachs as did Greece. Somewhere something is missing in this story.

Ah!

IDS - 'there is £30 billion missing from this budget'.

Monday, March 22, 2010

Former Barclays Chief Exec Wants Euro Split Into Two

When first reading Martin Taylor's article in the FT on the Euro's troubles, you might be forgiven for imagining he was writing a spoof. He writes that there should be a Northern Euro - to be known as the Neuro - and Southern Euro - called the Pseudo or Sudo.

Clearly taking inspiration from the psychiatric profession, and no doubt seeing the need for a way of alleviating insanity within the eurozone before the crisis spins out of control, he explains -

The least damaging solution now might be a north/south split of the currency. Imagine a “neuro” and a “sudo” (pseudo in Greece). For every €100 you would receive 50 neuros and 50 sudos. Countries would from then on opt to use one or the other. Existing obligations – including the national debts of all current eurozone members – would thus have a hard and soft component. Readers can amuse themselves by guessing which currencies some of the more ambiguous countries might choose.

By the end of his nicely-written and amusing piece, you realise that this cure for Euro-schizophrenia is intended to be taken seriously. Full article here. Recommended.

Britain Is A Police State


I stayed with my mother for two months with my son on returning from overseas, and registered with local GP (a regulatory requirement for joining a small play group). All fine until The District Nurse telephoned and said she wanted to visit the house. My mother hates DNs calling as she had cared for my father for fifteen years and found the attitude of the DNs arrogant, apart from the fact they never did anything of any use. They spend the whole time writing notes, then go, she said.

I told the DN that we would see her at the surgery, but this was said to be not OK as she has to fill in records on computer including how the child is cared for at home.

Since then we have moved on to another location. You would think that would be the end of the matter. The DN is now telephoning my mother saying she needs to know our exact whereabouts so they can pass over her (nonexistent) file to the next health area. She has called at least six times apparently. We are not willing to give our address over the phone to someone we don’t know, and whose records are accessible to any number of people.

You would think the DN’s time might be better spent on helping sick people rather than pestering well people who don’t require any assistance, thank you. But of course, the NHS is not concerned with health as I know from experience. They just want you out of the Surgery if at all possible, and try ‘there’s nothing wrong with you’ or ‘you’re depressed’. Only if you’re suffering from a targeted condition do you get helped.

The DN is the start point for the national children’s database, which also collects reports from teachers in secret. It doesn’t seem right that the State can demand entry to your home to write a description of your home life to be used by who knows who or when without most people realising this is happening.

I cannot wait to get back overseas. Britain is a Police State, and Nurses and Teachers have become part of the sinister apparatus. Just try saying to the District Nurse that you don’t require a home visit, and see what happens.

Read The Times on child database prying into peoples' private lives.

Here are some of the things the State now logs about its citizens without their knowledge -

Details logged on the register include “family routines”, evidence of a “disorgan-ised/chaotic lifestyle” and “any serious difficulties in the parents’ relationship”, according to government guidance.

Other information that will be collated includes signs of mental illness or alcohol misuse by relatives, quality of accommodation and “ways in which the family’s income is used”.



PICTURE - Nerys Hughes in The District Nurse



Watch Child Stealing By The State - Brian Gerrish

Sunday, March 21, 2010

Insolvency Approaches For 50 Countries


Britain's last recession took place in 1991/1992. But the one in 1980/1981 was far more severe. Interestingly there were very similar debates going on then as to what the right policy response should be. At one point 364 economists wrote a letter to The Times, which said that raising taxes in a recession would cause a depression.

Mrs Thatcher, fortunately was being adviced by Sir Alan Walters, an economist who was extremely unpopular with many politicians and other academics, as he always had the habit of being right.

From a description of his career, I found this -

In the early 1980s he helped to persuade Thatcher to push through the tough 1981 budget, which turned conventional wisdom on its head by raising taxes sharply despite the fact that the economy was in a deep recession. Many in the Treasury objected, as did 364 British economists who signed a celebrated letter predicting that the budget would condemn the economy to a prolonged depression.

The 364 economists were discredited when the budget led the way to the long economic upturn of the 1980s. Walters’s critics had missed the reason to raise taxes - to allow interest rates to be cut sharply. Interest rates are a key driver of UK economic performance because of the huge amount of debt - including mortgage borrowings for houses - dependent on short-term interest rates.


Looking back in 2010, you could say that if Britain's need for low interest rates was the key to restoring growth in 1981, how much more can that be true today? With borrowing estimated at 400% of GDP across all sectors, low interest rates will be essential, and rising interest rates destructive on a scale never seen before.

As Walters would no doubt have said, Brown and Darling are becoming a grave threat to the stability of this country. If they keep spending more and don't raise taxes, to the point that lenders demand higher rates of interest, we will be in very serious difficulty, unseen for generations. The problem is that so many countries are effectively becoming insolvent all at the same time. Money will become harder to borrow. The IMF will be overwhelmed. The real price of Gordon Brown's Folly could be very high.

By playing another lot of ridiculous Budget games, as the moment of crisis approaches, Brown is ensuring that Britain could not be in a worse position to withstand the coming crash. The only good thing he did was keep us out of the Euro. At least for that we should be ever grateful.

Ireland and Greece are only the first to be in difficulties

An Irish family have moved in next door, and Naomi, the wife, has been describing the terrible mess currently going on in Ireland. They sold their house in Dublin before the property crash hit, and decided to move to England as they didn't want to live with such a large mortgage any longer. An ordinary Dublin family house had risen to well above 1 million Euros. People had started taking out two generation mortgages lasting 60 years.

Naomi and Liam bought a nice house here for £300,000, and now have no mortgage at all. She knows how lucky she is, but she tells me that the economic happenings in Ireland are terrifying. Her brother, a public sector worker, has had an 18% pay cut, including his pension contributions. People cannot pay their mortgage instalments and thousands of houses are being repossessed, crashing the prices ever lower, making negative equity almost universal.

Have they halved in price? I asked. 'Way more than that' was the answer.

'There are no jobs to be found, and people are terrified of what might happen next,' she said.

I told her that in Greece it is worse. State employees haven't been paid since January, which is why they are rioting on the streets.

At least, she says, so far the workers in Ireland have been paid.

If people in Britain knew how serious government insolvency would be, especially for public sector workers, they would be thinking of their own survival and be backing Osborne and Cameron. Can you imagine what would happen if there was no money to pay the wages?

But of course the real horrors of Ireland and Greece are being kept out of the world's media. People in Britain have no idea of what might be coming next. They are still thinking of nice holidays abroad and a new car. The signs of stress are beginning, though. Local government cuts have started. Petrol prices are being jacked up, even though crude oil is only £50 a barrel. It was £70 a barrel last time petrol was this expensive.

As lenders dry up, the world is running out of cash. Britain will undoubtedly be high on the list of countries in severe difficulties. The days of seemingly easy money are gone. Survival is now the key.

Saturday, March 20, 2010

Liars Are Not Creditworthy

The story on the nation's finances in January was pretty stark. There was a huge cash requirement as both revenues were badly down by £9 billion, and spending was up £4 billion on previous year. Darling had, if you recall, set as his budget target for this year very similar figures to the actual figures from the previous year. Politically this was no doubt based on the calculation that the recession which had already run for over a year was bound to be ending in this financial year, and that the finances would be bound to improve during the year.

It was assumed that interest rates near to zero combined with £200 billion of quantitative easing would inevitably end the recession and enable the government to claim an improving economic situation in this year's budget. January 2010 was the month that shocked observers with its clear evidence that revenues were still tumbling bringing the shortfall in the year to date up to close to £40 billion. Spending is the dark cloud in this.

As written previously Darling reduced his spending figure in December 2009 by £60 billion on his target. Excellent news. Spending was massively down from the projected £680 billion to £620 billion. The only problem is that he has given no indication as to which of his spending programmes had been cut, or by how much. The famous unexplained 'accounting adjustments' is all we are allowed to see.

All of the £100 odd billion put into British banks such as RBS, Lloyds and the Rock is off balance sheet, and yet it is still possible that the debts secured on property prices at the peak of the boom will never be paid off. There is much assumption in the supposed optimism that the banks will end up becoming solvent once more. The prices will indeed recover, but there are likely to be first further reductions in values, and then maybe twenty years before property reclaims the levels it was at in the early Noughties. The British taxpayer may have bought an asset in the longterm, but that will be the very longterm. Meantime we are very vulnerable to rises in interest rates across the globe.

No one knows how big the non-performing loans of the banks really are. I have seen estimates in the trillions.

By estimates published, even without this little minor trouble, Britain is in total currently borrowing 400% of GDP between government, corporate and private sectors. There are also the longer term unfunded state pension laibilities, and PFI payments which have to be funded for a generation at 8% per annum, which between them add over another 100% of GDP.

And yet somehow Darling, like a conjuror has discovered that his receipts in February are so good that, out of the blue, he considers that his borrowing is now so low, that he can start offering tax cuts and election sweeteners.

If cynicism was ever the correct response to the output of politicians, here is surely the historical apex of political deceit. In the midst of a very real and dangerous financial crisis, it is nothing less than criminal to be breaking faith with false information. Darling is claiming a receipts bonanza in February sufficient to make up for the near £40 billion decline in his revenues to January, and that he has cut spending by £60 billion. Neither is likely, and as he gives no details, one is forced to regard both these claims with a modicum of suspicion.

Financiers can cope with almost any setback and situation, if the borrower is always truthful. Liars on the other hand are not bankable. Their creditworthiness is nil. This is the essence of impossibility. Britain has to borrow trillions of pounds, but as our government are not be trusted, no one will want to be a lender to us once the world chooses to notice how much we have lied to them.

Osborne must bring in a new era of financial truthfulness. However bad the situation, everyone knows that only the people who admit to the themselves they have a problem, will ever deal with it. That was the trouble with Lehman Bros and is now the problem with Greece. There were just too many lies. Equally Brown and Darling, in denial of the real situation, are risking bringing down a fearful credit crisis onto Britain. That will happen once the world chooses that it is time to notice what to any objective observer, is already obvious - a severe mess of unparalelled proportions getting worse by the day.

The Times examines Goedon Brown's problem with honesty HERE.

Thursday, March 18, 2010

Brown And Darling Take Us For Fools


Darling’s claim of coming in under his borrowing target is spurious.

His revenues will be around £50 billion down on his budget target from last year - £450 billion, not $498 billion. Only if his spending has fallen by £60 billion from his target of £680 billion could he now claim to be under his targeted borrowing figure.

And don’t you just love him. In December, government spending outturn was reported as being exactly that, except the reduced figures were achieved without saying which spending it was that had been cut.

There were simply unexplained ‘accounting adjustments’. Surely any item of £60 billion in the national accounts is worthy of an explanatory note, at minimum.

Spending down by 10% is a likely tale. In January alone spending was ahead of forecast by a sizeable figure.

This is no different to Labour’s polling figures. They decide what figure they want and work backwards. Rigging polling is the normal fare of politics. Rigging the national accounts by £60 billion is not.

It seems highly likely that people with a mentality that permits them to lie about every single thing they say, even money, and who have been rigging byelections like Glenrothes, will inevitably be involved in rigging seats in the general election.

Banana Republic indeed is what we are. Darling and Brown should not be trusted a day longer handling the nation's treasure. It was the lies that sunk Lehman BRothers. It is the lies that are sinking Greece. No one trusts any of the figures, and it will be the same problem in the UK. When the IMF turn up and tries to sort out Brown's mess, they won't have a clue as to the real picture. Lying in politics is bad enough. Lying about money in the middle of a major global financial crisis is treason. The risks to the economy are too great.

Here is the evidence of Labour's nefarious financial fiddling, The December 2009 Treasury Spending Outturn Report. Spin down to table 1 - the size of the unexplained 'accounting adjustments' amount to 12% of GDP!! Why doesn't Osborne or Cameron request a note of explanation from Brown at PMQs as to what these unexplained 'accounting adjustments' consist of - all £185 billion of them.

FROM GUIDO COMMENTS - Khmer Marron. April 19th.

This interesting list appeared on Guido.

£76bn To purchase shares in RBS and Lloyds Banking Group

£200bn Indemnify Bank of England against losses incurred in providing over £200bn of liquidity support

£250bn Guarantee wholesale borrowing by banks to strengthen liquidity in the banking system

£40bn Provide loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme

£280bn Agree in principle to provide insurance for selection of bank assets

£671bn Total Government spending in the financial year 2009-2010


The projected GBP671bn spending was reported as down to GBP620bn by the budget in 2010. That was no doubt to hide the fact that revenues were down by GBP50 billion on projected level. Spending would more likely have been higher in reality than the figure projected in the 2009 budget which was based on the recovery starting in Q3.

Markets 'Celebrate' The Casino's Final Weeks

Stock markets rallied yesterday and reached new highs in the current one year old rally, based on moderate rises in commodities like oil, gold and copper. Financial stocks too took a lift from the Fed's promise to keep interest rates down at 0.25%. The whole of the world's main stockmarkets are now being held up on a saline drip of effectively free money, being supplied in unlimited quantity to organisations that keep bidding up asset prices.

They have to do this, as if these asset markets were to fall, their previous positions would turn from profit to loss, and the true picture of how little substance there is in current stock market levels would become apparent. This is an entirely new phenomenon. It used to be confidence and hope that drove stock prices upwards, but in this current debt-fuelled topsy turvy world, it is now raw fear that drives up prices instead. They have to keep buying, or face reality. And the government and the Fed, fearful of the consequences of limiting the flow, are for now, keeping the taps open.

While the Fed and other Central Banks do so, they also realise that this game of feeding another asset price bubble cannot go on forever. Other branches of government, including the European and the American financial regulators are talking sincerely of finally closing the door on the casino with limitless chips on loan, by demanding higher capital down-payments and making rules that unless a player has real world interests in the markets they wish to trade, they cannot buy and sell futures and other derivative FPs within them.

This will overnight take power away from the hedge funds and give it back to industrialists, growers and miners. The real world will finally be put back in control of the internet-based financial casino, that is currently controlling the world, and which has run away with itself.

When this happens, the commodity markets will be, for a while, shredded, and share prices will be tipped into a downwave. If this doesn't happen, however, the world will later on face the meltdown of its economic system, as the bubble will be beyond all control.

Even now, the dangers of bringing the bubble back down to earth are great, and potentially very serious, if for example China and America don't form a more cooperative relationship. But if the world allows another bubble to grow as the only response we have to the current financial mess we are all in, the consequences will be the collapse of the world's trading systems. Lehman Brothers times 100.

Meanwhile, knowing this truth, fear drives prices on up in asset markets, just as in time it will inevitably drive them down again - maybe a lot faster. But from a basis of reality, not internet-driven financial fantasy, we can at last get back to normality. The shake-out, however, will be like Greece times 100. There seems no way to avoid it.

Britain's position in all this is pitiful. If we had carried on as we were in 1997-1999, with spending under control, we would be well placed. But after thirteen years of Gordon Brown we face a disastrous period. The casino in London will be closed. Government will be cut in half. Onerous regulations that stop people from doing anything to help themselves will be removed, and life will eventually get back to normal. But it will take years of struggle.

If Brown wins the election, heaven help us. Zimbabwe will seem like a paradise compared to the ruin we will face.

Wednesday, March 17, 2010

Deflation Threatens World, Not Inflation

Normally when the Financial Times prints a leader, it is explicitly banned from being copied. Today's piece from Martin Wolf, the Economics Editor, finishes with a different message - 'you may share'. Why the opening up to the blogosphere from this subscription only newspaper? Is it because the message is becoming so important, or is it merely a new marketing strategy? Or both.

Wolf points out that China and Germany, the world's top surplus countries, are both refusing to loosen demand and encourage imports into their own countries, while at the same time, demanding that deficit nations pare down their debts, and 'act responsibly'. They fail to see that their own actions are making this outcome impossible.

Wolf puts it like this -

Surplus countries insist on continuing just as before. But they refuse to accept that their reliance on export surpluses must rebound upon themselves, once their customers go broke. Indeed, that is just what is happening.

Meanwhile, countries that ran huge external deficits in the past can cut the massive fiscal deficits that result from post-bubble deleveraging by their private sectors only via a big surge in their net exports. If surplus countries fail to offset that shift, through expansion in aggregate demand, the world is inevitably caught in a “beggar-my-neighbour” battle: everybody seeks desperately to foist excess supplies on to their trading partners.

That was a big part of the catastrophe of the 1930s, too.

In this battle, the surplus countries are most unlikely to win. A disruption of the eurozone would be very bad for German manufacturing. A US resort to protectionism would be very bad for China. Those whom the gods wish to destroy, they first make mad. It is not too late to look for co-operative solutions. Both sides have to seek to adjust. Forget all the self-righteous moralising. Try some plain common sense, instead.

martin.wolf@ft.com
More columns at www.ft.com/martinwolf
.Copyright The Financial Times Limited 2010. You may share
.

'You may share' is code for - make sure as many people read this as possible. Deflation is being exported to the world. You don't often see Wolf or the FT writing with such strong language. This is the start of activism. I am sure we will be reading a lot more of the same in the months and years ahead. Wolf has called the future in the strongest possible terms. But is anyone listening?

Here is 'subscription only' link to the FT. It might work.
Wolf's article.

Far be it from me to dispute the opinions of Britain's leading economic commentator, but I doubt the eurozone collapsing would worry purchasers of German goods unduly. Many are manufactured in Eastern European countries these days where wages are lower. The collapse of the Euro would enable all these currencies to fall, making European manufactures more competitive. It would help Europe to recover if the currencies fell, bar the D Mark of course.

Tuesday, March 16, 2010

Petrol At £5.50 A Gallon. Why?


click on charts


When you look at the oil price in US$ over three years, you wonder why it might be necessary to be raising the fuel price in Britain yet again. Crude oil is $80 when a year and a half ago it was hitting $140.



Then people say that it's not the oil price which is the problem but the fall in Sterling. The second chart is the price of Sterling in US$ over the same period. If you take April in 2007, the price of oil is Sterling was £37.50p a barrel. In April 2008, it was £62.50p a barrel, topping in June at £70 a barrel, when all petrol prices rose through the roof.

The prices on the forecourt are being lifted back to the same levels as then this week, yet crude oil prices are now only £50 a barrel, 20 to 30% lower than they were in 2008.

One is forced to the conclusion that the petrol price has little to do with the price of crude oil, little to do with the value of sterling, and all to do with the government's need for cash.

Sunday, March 14, 2010

Brown And Clegg Play On The Beach



I remember when the tsunami struck Thailand in 2004, a young girl of twelve had been listening carefully to her geography teacher, who had explained how tsunamis happen. When the sea retreated from the beach, she warned her mother what was to happen next and they and their friends all survived having enough time to get out of the way. Most others had no idea and thought it quite fun to observe fish stranded on the beach as the sea got sucked outwards from the shore.

The current attitude of Gordon Brown and Nick Clegg remind me exactly of those poor people playing on the beach as a fast-approaching wave would soon make their deaths inevitable. In total ignorance they were lost. Brown and Clegg, though, are not totally ignorant about the effects of debt. While markets are relaxed, people will go on lending at a nice low rate. But if politicians borrow too much, and if they show that they are not behaving responsibly, the change in the markets will be fast, brutal and lethal just like the tsunami.

It will not be a tsunami of water though on this occasion, but one of fear.

Only George Osborne seems to realise that the situation is potentially exceedingly dangerous, and that confidence in Britain and other countries in an equal mess could collapse. Markets move in waves, just like the sea. Waves of hope and waves of fear. The world has not seen a large wave of fear for a very long time. Clegg and Brown are behaving in exactly the way which will bring one crashing over this country. No one can know when it will come, but make no mistake. When it happens, it will be entirely the fault of politicians who bid against each other to borrow until the confidence of markets collapse.

You might have thought better of Vince Cable. But he too shows no realisation of the terrible fate that he is gambling with. Even a 12 year old girl who had listened well to an economics lesson could warn him. Debt can dry up entirely if confidence is collapsed. The signs of such a tsunami are already present, and have already rocked the world once in 2008. Why they are so sure it will not happen again when there is so much deception in government accounts around the world, defeats me.

It's time to get off the beach is my advice. Osborne is the only one who seems to realise that this a dangerous game, which Brown, Darling, Clegg and Cable are playing.

MY COMMENT ON IAIN DALE - If politicians duck out of taking responsibility for debts, markets inform them soon enough.

This pre-election bidding war is like a game of underwater hockey, taking place while a tsunami approaches.

These socialist fools will be blown away. The British people, who have clearly not yet learned the lessons of debt, will soon be learning them well enough.

Clegg can cluck all he likes. The coming shock will take generations to forget. Clegg will be forgotten within a week.


FT - Clegg's speech report. Labour were “in denial” over the need for cuts, while the Tories were running a “political version of a protection racket” in stoking fears of financial calamity in the wake of a Tory defeat, he added.



THE CONSEQUENCES OF STATE INSOLVENCY -

OT - just a wee anecdote on Greece, my best friend’s hubby is Greek and, due to him being terminally ill, she’s been talking to the family in Athens quite a bit these last few days. Apparently the ones that work in the public sector, mostly health, haven’t been paid since early January. No wonder they are out on the streets.

by Kristin March 15th, 2010 at 3:13 am
Political Betting comments.

It is worth pointing out to State Sector workers hoping to be paid, they will have more chance of the pay cheque arriving if they vote Conservative. If Brown wins again, the same fate will happen to Britain as Greece. The IMF will be called, but with so many state insolvencies all happening at once, will the IMF be able to cope? The reality of Britain's finances is far worse than has yet leaked out in the media, as I have been blogging for months. When markets choose to notice this fact, that will be the moment of maximum danger. If Cameron is in Downing Street, our chances of surviving the coming crisis will be greatly enhanced.

IN FIGURES - the sum total of Britain's public, private and corporate debt is 400% of GDP. If interest rates are kept low, these sums can be afforded. But if interest rates were to rise significantly, the load of paying it would crack the country Greek-style. It is essential that Britain has leadership which inspires confidence, brings wasteful spending back under control and rebalances the economy for growth, based on business innovation, not on pork-barrel. This is a job for Osborne and the Conservatives.

Cameron Is Wrong About Heathrow


The Conservatives are basing all their thinking around Heathrow carrying on as London's primary airport into the distant future. More rail links are being planned to the Midlands and the North, and the site of the rail terminal is under dispute. The terminal should be Heathrow but there's no space left.

In this debate I am with Boris Johnson Mayor of London, who sees that Heathrow is not a good location. Night flights are impossible. As day breaks, the skies over London fill up with aircraft landing after transcontinental journeys, bringing noise, pollution and traffic over, into and through Central and West London.

The only sensible plan is to start from scratch. Hong Kong faced a similar problem to London, with its Kaitak airport being too close to populations, with aircraft flying over the city, and moved its airport out to reclaimed land much further out, connected by fast modern and comfortable train links. The city centre station is now a baggage checking in location so passengers can deposit their bags at the station and return later in the day to go for their flights. It's proved a great solution.

Boris can see that getting the airport relocated out to the Thames Estuary would bring enormous benefits, space, comfort, distance from populations, and the chance to start from scratch. Train links would be phenomenal with Crossrail and the fast links to northern cities being built all at the same time.

Osborne and Cameron don't agree, saying the cost would be prohibitive.

Heathrow could be developed as a residential, leisure, commercial centre of enormous value, offsetting the costs of building the new London infrastructure. Air quality would improve. Noise levels reduce. Traffic levels could surge, costs fall and space could greatly ease the stress of travel. The economy might grow faster on the strength of it, helping to push our debts down.

It's time that Boris' imagination was allowed to inform Conservative transport policy, and the impossibility of growing Heathrow endlessly, let go off. The future requires a fresh start. The sooner we realise the potential, the better. Boris is right. Cameron and Osborne should allow more thinking time on this one.

Evening Standard.

The Times discusses Boris' 'Island' Airport, to be built on reclaimed land once people can see the inevitability of the idea. Heathrow is called a 'planning error of the 1960s'.

3rd March 2010. Guardian commentisfree. Adam Bienkov:

The man appointed to lead Boris Johnson's beleaguered Island Airport scheme has pulled out of a key meeting with the London Assembly. Civil engineer Doug Oakervee had for several months been booked for questioning by members of the Environment Committee. However, Doug's employers Laing O'Rourke wrote to the committee's chair last week stating that "this is no longer the position."

Later, Adam - a Top London blogger, by the way - wonders why Boris thinks London Development Agency money should be spent on the development of Kent. Nit-picker! Pettifogger! Now read on.


UPDATE -

Third Runway Planning Suffers Setback.

Friday, March 12, 2010

Cameron Relaunched By BBC As Boy Wonder


Has anyone else noticed, how Cameron is being given soft media all of a sudden? He's being made to look Presidential all over the BBC as if there never was a promise of a referendum on the Lisbon Treaty, or a hint of a withdrawal from the EPP. What's happening?

Brown must be beside himself. Sarkozy has been walking around with Cameron showing Gordon Brown that things are changing, and that Cameron too is being given the soft soap treatment, that Brown thought was his alone to enjoy.

Is this reality dawning at last? Will the rigged You Gov daily polls be stopped now as no one is being fooled by them, as the betting shows? The media are, in any case, merely advertising the extent to which they have completely lost it, by endlessly carrying polls that indicate Labour victory, when every man and his dog has clearly had enough of Labour in power after thirteen long years, with the financial taps left on at full flood. It's time to dry out.

It's as if they now have realised that Cameron's going to happen, so they might as well try to corrupt him with soft media a la Blair, and see if he can be seduced by showing him how very nice it is to be protected by a well-oiled propaganda machine, and elevated up to the level of the European elites.

If the eurozone is to be saved, Sarkozy and the BBC know that it will need British money as part of the solution. They cannot afford to allow Brown and Darling to remain at the helm forever. There is nothing left in the cupboard as it is. After five more years with them in charge, Britain would become a wasteland requiring IMF intervention on an annual basis, making Greece seem like a financial paradise.

It feels like there's something in the wind this week. Markets in the US are running out of steam. Gold is sagging from its highs. Money is talking loudly that there will be a second leg to this recession. And if the Euro is to stand a chance of survival, Cameron and Osborne will be needed to hold some of the confidence from collapsing. Is that why the world has suddenly changed its mind? Cameron, spiv, superficial and shallow, is this week being presented as Boy Wonder, the face of hoped for responsibility and solidity.

You know what I think.

They're after something.



ALSO - maybe they prefer Cameron with a big majority where he can ignore troublesome eurosceptics, so they are now giving him the media he needs to get a landslide. They learned from the John Major era what happens with a Conservative government with a small majority.

Cameron will do well to act the good boy for now. And Ukippers can get ready to seethe as the BBC and the EU smooth Cameron's way to power. I am sure he is well aware it's a poisoned chalice. He'll only take a sip.

Sarkozy's former lover still wants him. But it's 'I am sorry, Gordon. I av a someone new in ma lahf'



UPDATE - another reason they need Cameron - the EMF will need a new Treaty. Lisbon was thought to be the last but it isn't. Cameron could be crucial for either offering or not offering a referendum on the EMF Treaty in Britain. If he prevents a referendum, the Ukip element inside the Conservative Parliamentary Party might rise up and try to throw Cameron out as leader. The whole progress of the European project is again falling back onto Cameron, in the same way that Lisbon would have done, if it hadn't been signed.

See Open Europe -

The German Finance Minister Wolfgang Schäuble, backed by his Chancellor, Angela Merkel, has called for the creation of a 'European Monetary Fund' (EMF), modelled on the Washington-based International Monetary Fund. It would be used to provide assistance to stricken eurozone countries and would be reinforced by stronger EU 'economic governance' that could impose tough conditions on countries with excessive borrowings.

Schäuble wrote in the FT that eurozone members could be "granted emergency liquidity aid from a 'European monetary fund' to reduce the risk of defaults. Strict conditions and a prohibitive price tag must be attached so that aid is only drawn in the case of emergencies that present a threat to the financial stability of the whole euro area." He added that "Should a eurozone member ultimately find itself unable to consolidate its budgets or restore its competitiveness, this country should, as a last resort, exit the monetary union while being able to remain a member of the EU." (FT: Schäuble, 12 March)

France has given its backing to the proposed EMF as a "medium term priority" but the plan has already received opposition from Germany's representative on the European Central Bank's Executive Board Jürgen Stark and from German Bundesbank President Axel Weber, who described it as "not helpful". (IHT, 9 March)

With discussions at an early stage, important questions remain unanswered, including whether the creation of an EMF would require a change to the EU treaties and whether it would include all 27 member states or just the eurozone. French officials have said there is an "open debate" on both issues. (FT, 8 March)

However, Angela Merkel has said that "without treaty changes we can't form such a fund" - a view endorsed by Commission President Jose Manuel Barroso, since an EMF would appear to violate the current "no bailout" rule in the EU treaties. (EUobserver, 9 March; Irish Times, 10 March)


The EMF Treaty is said to be agreed to by Merkel as necessary, and yet she insists a Treaty is required to authorise it, and both her coalition partners are against one being put forward. Could it be that Merkel, apparently refusing to meet Cameron due to his quitting the EPP, is secretly hoping that he will be the way the EMF gets sidelined, so she does not have to openly have a confrontation with Sarkozy and have the Treaty blocked in the German courts? Stranger things have happened.

With the Euromuppets seeing how crucial Cameron is becoming to the next stage in the Euro crisis, it is no surprise to see him being courted by Sarkozy, and given a bit of BBC schmooze. Brown has sold out all he can, and has no more to offer. The EU is getting ready to let him go, and start the game afresh.

EURO TROUBLE - from Irwin Stelzer in WSJ

Before waxing ecstatic over Greece's ability to flog some bonds, remember this: Greece is a sideshow. Spain is the main event.

Its economy, the euro zone's fourth largest, is five times the size of Greece's, and almost twice the size of those of other financially struggling countries — Greece, Ireland and Portugal — combined.

So it matters that Spain's socialist prime minister, José Luis Rodríguez Zapatero, seems to be an admirer of Charles Dickens's Mr. Micawber. Ask him what he plans to do about his country's 11.4% fiscal deficit, and he first promises to extend his country's retirement age, and then says he won't. He promises a public-sector wage freeze, but his Finance Minister, Elena Salgado, says he really doesn't mean it. But somehow he will cut the deficit to 3% by 2013. "We have a plan," says Spain's deputy prime minister, Maria Teresa Fernandez de la Vega. To most observers, that plan seems to be Mr. Micawber's: "something will turn up."


Spain has a huge unfunded budget deficit, with no political solution in sight. If Sarko thinks all this can be saved, he had better get a move on... His dreams of an EMF are the all that stands between Euro-hope and the collapse of the eurozone. Cameron might not need to do too much to check the EU. It might be about to check itself with its economic problems looming. Funding will be needed by so many countries all at once within the next year. Deflation will break the EU, not referendums.

Markets Turning

This is meant to be a political blog, but sometimes money has more to say than words. Today, when the dollar fell against nearly all currencies, commodity prices fell. This is the first time that has happened. If the dollar fell, previously commodities kicked up. Gold, for example, is sitting like a wounded bird, perched nervously on $1100 after thinking new highs were beckoning only a week ago.

The moment the dollar rise kicks back in, commodities look like being blown away.

Interest rate rises are now the talk on the street. Deflation, not inflation, is awakening, as demand for cash accelerates.

Somehow I think this will be the story of 2010. In a few days stock markets will follow commodities downwards. The dollar and the yen will rise.

UPDATE - a friend called and says he's selling his shares after reading this. I told him that it's his money and it's up to him what he does with it. Some things will always be going up. One currency falls. Another rises. Equities down. Treasuries up and so on. It's just that the current rapid rises in shares and commodities, fuelled by hedge funds on borrowed money might be taking a breather. And of course, I could be wrong. But there is a differentg look and feel than there was. That's all. Things were always changing. Why should the current period only be one way traffic?

Thursday, March 11, 2010

Sarkozy Sizes up Cameron


sarkozy and cameron in 2008
As the EU sets off in the direction of banning American hedge funds and private equity companies from having access to European markets, triggering instant hostility from around the financial world, and as the poor little things can't bare to admit the Eurozone mess needs IMF help to sort it out, and they proudly announce their intention to create a highly unlikely-to-work EMF, they now have to contend with a new problem. The unpalatable fact is that, in the UK, David Cameron is looking likely to win the next election, despite the daily polls pourring out of You Gov and others saying otherwise.

Sarkozy has avoided Cameron like an infectious disease for two long years, and is now planning to launch a charm offensive to bring him on board with the EU corruption system. Sarkozy's greatest triumph has been conning Gordon Brown into trusting him with financial regulation over the City Of London, which is already looking like a disaster in the making. He needs to secure his gains, and try to persuade Cameron it is not worth his political wile to challenge the status quo.

Merkel, being female, is not willing to forgive Cameron his past transgressions in impugning her authority, when he pulled the Conservatives out of the EPP very much against her advice and requests not to do so. Cameron in Merkel's eyes, is still a very naughty boy, who needs bringing to heel the Germanic way, more of the cold shoulder.

The French, though, are offering Cameron a way to come in from the EU cold, and join the happy club. Hague is writing and speaking along the lines that the COnservatives don't want their first months in power taken up with an EU confrontation, and no doubt Sarkozy will be, in his charming way, threatening exactly that if Cameron doesn't cooperate. He will offer Cameron a chance to come quietly, or he will be pretty quickly assured of trouble coming his way from the European elites.

Meanwhile the lunacy of the financial regulation being proposed by the EU, spurred on by the humiliation of the PIGS' making fools of the Germans and their precious Euro (thoroughly disliked by over 70% in Germany), will proceed to relegate Europe to the economic hinterland. Cameron simply cannot afford to get roped into a financial rescue of the Eurozone as under Article 122 of the Lisbon Treaty, or into part-funding an EMF. And he cannot afford to allow the French to banish American hedge funds and private equity firms from operating out of London.

A direct confrontation is inevitable.

But for now pre-election, Cameron will inevitably make a few of the right noises to Sarkozy avoiding any unnecessary heat, driving UKIPPERS into a frenzy, as he reassures Sarkozy. But the sides are starting to weigh each other up. That alone is the sign of the troubles to come.

FT -

On a visit to London on Friday Mr Sarkozy will meet Mr Cameron for the first time since June 2008 in an effort to lay the groundwork for a working relationship with the Tory leader should he become prime minister.

That it is their first meeting in nearly two years says a lot about the ill-feeling in the Elysée palace towards Mr Cameron – in contrast to the largely friendly and constructive relationship Mr Sarkozy has struck up with Mr Brown.

Mr Sarkozy took Mr Cameron’s decision to withdraw the Conservatives from the European People’s party grouping in the European Parliament as a snub and a rejection of the pragmatic brand of centre-right politics the French leader represents. Pierre Lellouche, France’s Europe minister, revealed French displeasure when he slammed the Tories’ move as “autistic”.

Angela Merkel, Germany’s centre-right chancellor, is probably less inclined to patch things up with the Tory leader.

Her relations with Mr Cameron have been distinctly chilly since the Conservative MEPs withdrew from the EPP group. Ms Merkel made a big personal effort to persuade the Conservatives to stay in her political “family” in Europe, and took it as a personal affront when they refused to do so. There is very little sign of accommodation yet.

“The chancellor’s attitude is that if David Cameron becomes prime minister, he must calm down his attitude to Europe,” according to a close adviser to the chancellor.

“Merkel will treat Cameron like any other fellow prime minister,” said Elmar Brok, a senior Christian Democrat in the European parliament, “no worse than she would treat a socialist. It will not be the same as if they were in the same political family.”

While the Elysée palace agrees that the Conservatives have cast themselves into the wilderness, Mr Sarkozy’s officials and senior party colleagues are keen to establish a dialogue with Mr Cameron’s team to find out where they stand on various issues – particularly on financial regulation, defence and the EU – and to explore the potential for co-operation.

A speech by Mr Cameron late last year in which he abandoned a promised referendum on the Lisbon treaty and relegated as a priority his demand for a repatriation of powers from the EU has helped ease, although not erase, French fears that Mr Cameron is a Eurosceptic ideologue bent on picking a fight with the EU.

“It is clear that a referendum could have opened a difficult phase in our relationship, but David Cameron has dealt with that,” said Hervé Mariton, one of the few UMP deputies openly to support the Conservatives.

While Mr Sarkozy has until now kept Mr Cameron at arm’s length, Xavier Bertrand, the secretary general of the UMP party and a close ally of the president, has met the Tory leader in recent months, while Jean-François Copé, leader of the UMP deputies, has also established links.

Liam Fox, the Conservatives’ defence spokesman, has held several meetings with Mr Sarkozy’s diplomatic advisers and military officials to discuss defence issues.

“There is undeniably a willingness to rebuild links with the Tories,” said Jean-Dominique Giuliani, director of the Robert Schumann Foundation, which is close to the Elysée. “The abandonment of a referendum has not gone unanswered.”


See the letter sent by Geithner to Barnier, the new EU Financial Commissioner, who is blocking American finance out of Europe. There's trouble coming.

And that's going to be between Germany and France, the EU and the US and just about everyone as far as I can see. More Here.

But not while Gordon and Nicholas are so totally in love. When it comes to Brown-Sarkozy, relations are a little bit too cosy.

The Day Cameron Changed

Many opponents of Cameron refer to him either as a spiv, or shallow, or superficial. Even those on his own side sometimes say they are not quite sure who he is or what he stands for. But in one instant at PMQs, a moment came when Cameron no longer displayed a groomed cool exterior, acting out the role of the unflappable Conservative Party leader. He really let rip.

The subject was Iraq, and Brown's continual playing politics with soldiers' lives. This was no act. Real anger was on full display as had not been in the House Of Commons for years.

The Blair era of spin had glided over all with grins, laughs and quips. There were no quips this time. Brown was coloured in. And from hereon, Cameron will no longer be seen as a lightweight, either by his own side, or by opponents. There is fire in that belly after all.

The moment Cameron showed his unairbrushed self, as described by Quentin Letts. .

Wednesday, March 10, 2010

Opportunity Knocks For British Manufacturing


Manufacturing has fallen in the UK from 20% of the economy twenty years ago to 13% today. Throughout this period the £ sterling has been through many swings, hitting a low in 1992 at $1.40 when we crashed out of the ERM, and surging after 2001 to over the $2 level in 2008, with growth fuelled by the credit boom.

Things are now heading the other way. Credit is tightening. Sterling is looking at finding lows against the dollar and the euro, which have not been not seen for a generation. Maybe we will even see parity with the dollar before long, and below par against the euro.

As our reliance of financial services reduces, our economy will be looking for ways to rebuild itself. And part of the way will be a recovery of our manufacturing industry, greatly helped by having a much lower currency.

Britain has never lacked technical ability. We have, though not always been successful at manufacturing as quality and reliability have let us down in the past. We were held back by class struggles and industrial conflicts so often in the past, when the requirement to compete internationally was not so intense and obvious as it is now. But as class warfare becomes a distant memory for older folk, and something not even thought of by younger Britons, the way seems clear to have a fresh start and enjoy a completely new approach to the making of products in Britain.

The businesses that make things will find they have a far easier time of it than they did in the last few decades as making things in Britain had become impossibly expensive, with our rising exchange rate, and uncooperative people. But now the opposite effect is happening. The £ is tumbling and customers are realising that what manufacturing is left, in many cases offers the most competitive and best quality and reliable supply. Those who've been to Asia to source their goods are finding that the cost savings are reducing, the delivery times are long and they don't want to buy the huge quantities they did with the recession cutting demand. They need more flexible suppliers, quicker to deliver, and more adaptable to changing trends. Britain can compete once more.

People bemoan the lack of skills we suffer from, but skills are far more easily learned than they used to be with things such as CNC, computer controlled tool-making machines the standard nowadays, and manufacturing designs brought online from the computer screen direct to the plant in many industries. Britons are good at computer skills and these are as much the key to manufacturing as years spent mastering lathe work, and other crafts, as in years gone by.

Manufacturers who have stood firm during the lean times in the last ten years will see a revival in their fortunes, as the financial services industry starts to take a back seat. Jobs will return to businesses that make things, and communities be held together once more by local employers expanding their output and recruiting young workers.

The only element that could make the party complete would be a reversal of the employment regulations that have made employers unwilling to employ, the restrictions imposed by Industrial Tribunals and the ability to select or de-select staff based on their ability, and suitability. Britain freed from EU regulation, outside the Euro with a lower currency could enjoy a bursting revival in manufacturing in the next ten years.

It will be Gordon Brown's second great gift to this country. He kept us out of the Euro. And now through his debts he's collapsed the currency. As they say, every cloud has a silver lining. Shame about the debts, mind. Maybe the Conservatives will provide a milder form of government without Brown's extremes. Paying for the debts will be hard-going, and bringing government spending under control, but the flipside will be the opportunity to rebuild manufacturing once more, and have a more balanced economy.

TODAY'S NEWS - British manufacturing reported a 0.9% decline this month against an expected 2% rise.

Tuesday, March 09, 2010

US Interest Rate Rise In Pipeline. Tin Hats On.


Image only. link below.
This piece of news comes not from any news channel. It is not to be found on FT or WSJ. It comes from a guest of a tiny precious metals website, called Kitco which recently added a daily TV report. The guest's name is George Gero of RBC Capital Markets, and he was being interviewed today as to why the gold price is falling, and not holding onto its recent gains.

His answer sounds like it comes from someone in the know, and it is extremely significant. He says the Fed has 'signalled the addition of money funds for overnight repos', which implies in his opinion a coming rise in interest rates. The fear of rising costs is what is hampering gold buying, in his opinion.

This information is not yet in the public arena, but is given in this tiny report made each day for gold buffs, as if it was well known.

Watch the Kitco TV report HERE.

If interest rates are now rising in the US (there was one rise last month of 0.25%), this will have a huge impact on markets which are mostly traded by hedge funds. Hedge Funds borrow to leverage their bets and send markets on dramatic moves. If that leverage is now going to cost them more, the current bubble which has sent the S & P 500 up 68% in under one year, the fastest rise in stock market history, will start to unravel, also the gold price and other asset markets dependent on hedge fund buying.

If rising US interest rates are coming in the next week or so, the financial knock-on effects will be felt globally. The British stock market will track any decline of the S & P, and the social mood across Europe, already rocky from the sovereign debt crisis unfolding in the PIGS, will ratchet up to a higher level of distress.

It is not often that such serious news is found on a small website for mostly private investors before it hits the main news networks. But here it is. Given how the world's markets depend on hedge funds, the effects of rising interest rates could be devastating to stock markets and the current optimism.

This would have knock-on effects on the British general election.

John Authers of the FT explains on video, also made today, how the hedge funds are driving markets higher through leverage - HERE.

Merkel Kicks Rescuing PIIGS Into The Long Grass


Sarkozy wants the PIGS to be bailed out. Merkel does not. Sarkozy cannnot achieve a bail-out without the strength of German finance in alliance with all other EU states. Both France and Germany are unwilling to countenance a bail-out for any PIGS from the IMF, as it would be tantamount to admitting that the Euro is not able to control its own members.

The Greek Prime MInister is running to meet Obama to see if he can pressure some kind of rescue as his country heads towards the inevitable crisis in its finances. If the Euro cannot help itself, maybe Obama can wield some influence.

But soon the false dawns will have to end, and someone face up to the situation. Nobody wants to or can bail out the Euro. It is said to be a great disaster in the making if it were to collapse. But is it really? The world has seen countries try to link their currencies many times throughout history, and seldom have the attempts succeeded for long. The Euro is no different. Only the ignoring of financial realities creates disasters. The Euro is meeting the realities of the false security it offers highly indebted nations. They have to withdraw.

But once out these countries can become quickly competitive once more. Their debts will rise in value in local currency, against the Euro as that gradually becomes the D-Mark once more in all but name. Interest rates though can fall on the Euros owed as the situation stabilises, and debt servicing costs should actually come down.

Outside the Euro, workers can find jobs more easily and businesses sell once more.

Merkel is not for changing her mind about bail-outs, and is carefully agreeing with Sarkozy that an EMF must be created to do the bailing out, which will take years to set up. She's heading for the long grass on this one.

The FT -

Radical plans for a European version of the International Monetary Fund to bail out crisis-hit countries would need a new treaty and the agreement of all European Union member states, Angela Merkel, Germany’s chancellor, has warned.

Throwing her weight behind the proposals from Wolfgang Schäuble, her finance minister, Ms Merkel admitted the European Union had lacked the tools to deal with the Greek debt crisis: “The sanctions we have were not good enough.”

EDITOR’S CHOICE
Editorial Comment: The burden of German thrift - Mar-08

Lex: Eurozone IMF: creeping integration - Mar-08


Sometimes creeping means not happening in time, and therefore means integration denied.

But she added that a full-scale negotiation of the EU’s 27 member states would be needed to set up a European Monetary Fund, which would be able to bail out eurozone members subject to strict budgetary conditions. “Without treaty change we cannot found such a fund,” Ms Merkel told foreign correspondents in Berlin on Monday.

Any new Europe-wide treaty risks being hugely divisive so soon after the lengthy and painful ratification of the Lisbon treaty, which was initially rejected by a referendum in Ireland and only came into effect in December.

Paris and Berlin were struggling to come up with a common line on the German initiative and the question of the need for treaty change has exposed differences between them.

French officials welcomed the proposal for an EMF in principle, but warned it would probably require an overhaul of existing treaties, for which there is no desire in Paris. They see it as a long-term project.

Ms Merkel insisted that it would be wrong to shy away from treaty change. “We want to be able to solve our problems in the future without the IMF,” the German chancellor said.

Any bail-out within the eurozone is banned by the Maastricht treaty, which was the reason why a treaty change was necessary, she said.


The show's over.

The FT gets it too - Munchau 15th March 2010.

I was confused when Wolfgang Schäuble, German finance minister, proposed a European Monetary Fund. I had not expected this. Was it an attempt to deflect attention from the fast-approaching bail-out of Greece, as one close observer suggested to me? It does not seem plausible. Or perhaps this marks a genuine change in the German position? Had I missed something?

When I read the whole proposal in detail, the fog lifted – or maybe my confusion just reached a higher level. I realised that the EMF is just a smokescreen. The real bullet in his proposal is that countries could leave the eurozone without leaving the European Union. This is not about helping countries in trouble. This is about helping them to get out.