I've been listening to the news on Bloomberg and Sky News again which is never a good thing to do on a Friday. The pro-Euro brigade and indeed our own media are suggesting that DaveCam has isolated UK from Europe. Well, I've got good news for the millions of kids who will grow up on the great isle. Yesterday I took a ferry from Dover to Calais in quite rough seas and I can confirm that the distance between UK and Europe is getting greater. There is indeed coastal erosion.
At last DaveCam has shown some leadership and listened to those with greater understanding of the great Euro experiment. Apologies to those who hate the word GREAT as indeed I do too. Our cousins across the Atlantic Ocean seem to be more concerned about US banking losses in our 'City' right now. What a bunch of late developers! Weren't they the people who woke up to the progress of fascism in the last war around 2 years after us? Weren't they the nation who bankrolled the IRA? or am I missing something here?
For record I don't want a SPECIAL RELATIONSHIP with America or anyone in Europe either so the isolation that these morons speak of is a good thing. The club that Angela & Sarko have created has the look of a few other clubs that I don't really want to join too. I take the view that Europe is NOW isolated from us NOT the other way round. If for instance the french kids don't like this new isolated island they can give up their cushy jobs and get back on the Euro Star. Personally I cannot any longer tolerate this nonsense about OUR failure to support the Euro experiment (for record we've been net contributors). It's a toxic experiment that never got out of the laboratory. Fortunately DaveCam's Eton chemistry lessons were attended whereas I suspect Clegg went walk about for the Chem lessons at Westminster. Who knows? & frankly who cares?
The EURO is a d e a d z o n e.
I know.....I live in France. Lovely countryside just a great shame about all the paperwork and extraordinary prejudice shown to anyone foreign.,
It's GREAT to be part of the COMMONWEALTH OF NATIONS again. Now we can all get back to trading with anyone who wants to do honest business over the course of a proper working week.
StopPress***
For record not much happened in the exchange today. European bond yields went up & down and now everyone is trying to work out who will buy their next tranche of bonds. Don't bother emailing me the details Angela or Sarko as I regret I don't invest in laborious franchises.
Message to Bloomberg...get real! & stop being so typically late American.
Friday 9 December 2011
Tuesday 22 November 2011
"MOST businesses are doing well..." -Bloomberg
During the working day I have Bloomberg TV on most of the time in the background. I pick up alot of themes and newsflow from the station and occasionally flick across to BBC, SkyNews, CNBC and even Russia Today where a certain Max Keiser livens up the debates of the day.
Today Max commented on the regulatory scandal at MF Global claiming that it could get bigger than the Lehman's debacle. Who knows? But the disappearance of client assets on a grand scale just confirms my view that government guarantees, bailouts, FSCS assistance, professional indemnities and all other types of guarantees are pretty worthless and useless at the end of the day. Just tell the pensioners at Equitable Life that the regulatory system designed to protect them is working. I doubt anyone with any sense of proportion could possibly agree that there has been some equitable fair play here. Max and his colleague, Stacey Herbert then went on to comment on Virgin Money's acquisition of the 'good' part of Northern Rock from the Treasury. Virgin paid £747m ( a jumbo jet amount Mr Branson!) for the 'good bank' leaving the tax payer holding the 'bad bank' equating to around £21billion (of indebtedness). Interestingly the acquisition sum was approx.a shortfall of £653m against what the taxpayer effectively paid for Northern Rock. Most financial commentators have concluded that loan books for non-derivative based businesses have appreciated since the depths of the credit crunch so there's a curious question mark as to how Mr Branson achieved what on the face of it is a privileged discount purchase. Politically it contradicts what Labour & the ConLib coalition have previously said about taxpayers retrieving their investments in these banks. It seems that the phrase "Too Big To Fail" has been replaced by "Too Easy To Buy".This trend of high profile people acquiring businesses at attractive levels is not, however, confined to UK. In USA Warren Buffett has achieved similar purchases and has indicated a desire to acquire more businesses. Presumably like Mr Branson there will be deals struck at the highest level and certain squid like bankers will support these deals but what is concerning I think with the VirginMoney/Northern Rock deal is the total lack of financial SUITABILITY here. The FSA seem to have ignored their own rules here for ("fat") FEES by the looks of it. I haven't heard that there have been bus loads of bankers lining up for this 'good' bank customer base and yet an airline operator apparently is somehow more than suitable. What a deal for the man from Holland Park!
I'm surprised that Max Keiser didn't say to his colleague, Stacey Herbert...."The lady doth protest too much, methinks". What a missed opportunity Max!
The regular impressive earnings numbers coming out of US big business combined with dividend payouts and the phrase "cash generative" lends support to the lie that ALL businesses are ..."doing well" which seems to be the thinking behind most market reflections on Bloomberg. It's easier for Producers and Editors to project the feelgood factor than project reality. These stations and newspapers rely on advertising revenues from the very businesses that are ..."doing well" presumably at the expense of consumers everywhere. Now this does explain to a degree why there are people protesting everywhere.
As we all know there are millions of people operating SME's/small partnerships and self-employed fighting to stay alive. "Most businesses" in the smaller arena are actually struggling. The AIM index suggests that those listed have had their share prices decline -76% since the all time high achieved in Feb 1999. Since the pre-credit crunch high on 30th April 2006 AIM stocks declined -46% and since the high this year on 1st February the AIM index has declined -30%. None of these statistics imply either that there is a healthy exchange nor indeed a healthy economy especially for smaller businesses. The same trend is apparent in all western economies which again explains why people are protesting.
Could this be the real reason why VirginMoney has been given the green light on Northern Rock I wonder? Come on Mr Branson put some spice into the UK SME's although I have a horrible feeling that a sale of VirginMoney could be just around the corner. Or even a float for VirginMoney although after Mr Branson's last attempt at a City float in the '80s he may decline the invitation.
"Small firms' £6bn bill for red tape" was just one headline in the DM last week. Plenty of external consultants are soaking this up as a result of new legislation. This is great for small bands of consultants but very bad for the investment community, especially shareholders. The article goes on to say...."Research by the Forum of Private Business FPB reveals that almost a third of the £16.8bn annual red tape (so the headline was only a partial truth in itself) bill borne by small and medium-sized enterprises consists of consultants fees.....Red tape, compliance costs, incl steep consultancy fees, are hindering job creation and, by extension, economic growth. Unlike larger companies, small firms often have to pay for external consultants."
Welcome to the real world Forum for Private Business. You are eligible to join ENTERPRISE BRITAIN!
******Stop Press******
I've just heard that $1.2bn of client assets have gone walk about...so much for good compliance! When are people going to realise that all this COMPLIANCE/REGULATION is part of the problem?
Today Max commented on the regulatory scandal at MF Global claiming that it could get bigger than the Lehman's debacle. Who knows? But the disappearance of client assets on a grand scale just confirms my view that government guarantees, bailouts, FSCS assistance, professional indemnities and all other types of guarantees are pretty worthless and useless at the end of the day. Just tell the pensioners at Equitable Life that the regulatory system designed to protect them is working. I doubt anyone with any sense of proportion could possibly agree that there has been some equitable fair play here. Max and his colleague, Stacey Herbert then went on to comment on Virgin Money's acquisition of the 'good' part of Northern Rock from the Treasury. Virgin paid £747m ( a jumbo jet amount Mr Branson!) for the 'good bank' leaving the tax payer holding the 'bad bank' equating to around £21billion (of indebtedness). Interestingly the acquisition sum was approx.a shortfall of £653m against what the taxpayer effectively paid for Northern Rock. Most financial commentators have concluded that loan books for non-derivative based businesses have appreciated since the depths of the credit crunch so there's a curious question mark as to how Mr Branson achieved what on the face of it is a privileged discount purchase. Politically it contradicts what Labour & the ConLib coalition have previously said about taxpayers retrieving their investments in these banks. It seems that the phrase "Too Big To Fail" has been replaced by "Too Easy To Buy".This trend of high profile people acquiring businesses at attractive levels is not, however, confined to UK. In USA Warren Buffett has achieved similar purchases and has indicated a desire to acquire more businesses. Presumably like Mr Branson there will be deals struck at the highest level and certain squid like bankers will support these deals but what is concerning I think with the VirginMoney/Northern Rock deal is the total lack of financial SUITABILITY here. The FSA seem to have ignored their own rules here for ("fat") FEES by the looks of it. I haven't heard that there have been bus loads of bankers lining up for this 'good' bank customer base and yet an airline operator apparently is somehow more than suitable. What a deal for the man from Holland Park!
I'm surprised that Max Keiser didn't say to his colleague, Stacey Herbert...."The lady doth protest too much, methinks". What a missed opportunity Max!
The regular impressive earnings numbers coming out of US big business combined with dividend payouts and the phrase "cash generative" lends support to the lie that ALL businesses are ..."doing well" which seems to be the thinking behind most market reflections on Bloomberg. It's easier for Producers and Editors to project the feelgood factor than project reality. These stations and newspapers rely on advertising revenues from the very businesses that are ..."doing well" presumably at the expense of consumers everywhere. Now this does explain to a degree why there are people protesting everywhere.
As we all know there are millions of people operating SME's/small partnerships and self-employed fighting to stay alive. "Most businesses" in the smaller arena are actually struggling. The AIM index suggests that those listed have had their share prices decline -76% since the all time high achieved in Feb 1999. Since the pre-credit crunch high on 30th April 2006 AIM stocks declined -46% and since the high this year on 1st February the AIM index has declined -30%. None of these statistics imply either that there is a healthy exchange nor indeed a healthy economy especially for smaller businesses. The same trend is apparent in all western economies which again explains why people are protesting.
Could this be the real reason why VirginMoney has been given the green light on Northern Rock I wonder? Come on Mr Branson put some spice into the UK SME's although I have a horrible feeling that a sale of VirginMoney could be just around the corner. Or even a float for VirginMoney although after Mr Branson's last attempt at a City float in the '80s he may decline the invitation.
"Small firms' £6bn bill for red tape" was just one headline in the DM last week. Plenty of external consultants are soaking this up as a result of new legislation. This is great for small bands of consultants but very bad for the investment community, especially shareholders. The article goes on to say...."Research by the Forum of Private Business FPB reveals that almost a third of the £16.8bn annual red tape (so the headline was only a partial truth in itself) bill borne by small and medium-sized enterprises consists of consultants fees.....Red tape, compliance costs, incl steep consultancy fees, are hindering job creation and, by extension, economic growth. Unlike larger companies, small firms often have to pay for external consultants."
Welcome to the real world Forum for Private Business. You are eligible to join ENTERPRISE BRITAIN!
******Stop Press******
I've just heard that $1.2bn of client assets have gone walk about...so much for good compliance! When are people going to realise that all this COMPLIANCE/REGULATION is part of the problem?
Wednesday 16 November 2011
At what point are we at in the "GFC"?
I read William Rees-Mogg's article in the Daily Mail entitled "We are stuck on a wheel of misfortune" dated 4th September 2011 over the weekend. Like many newspapers, magazines, tip sheets and research in my office and household they tend to mount up at an alarming rate this time of year and I half watch TV programs like the 'Antiques Roadshow' whilst syphoning off the majority of unnecessary print copy for eventual utilisation by my sturdy Clearview woodburner. This article was one of the few that have been retained.
I like Rees-Mogg's articles and read his biblical hardback "The Daily Reckoning" when it was first published a few years ago. In it he said.......
"Business life tends to have a rhythm. One of the reasons older investors tend to have an intuitive advantage over their younger colleagues is that their experience of past cycles in markets offsets the greater technological understanding of younger investors." Rees-Mogg and his co-author, Jim Davidson go on to say.....
"It is also important that people should understand that in business 'the trees do not grow to the sky' -meaning things cannot continue past their natural boundaries - a favourite maxim of Winston Churchill, which he applied to war rather than to business".
The "GFC" incidentally is now being described by many pundits as a WAR. In fact I've even heard it referred to as WW3.
The Daily Reckoning author, Bill Bonner (another colleague of Rees-Mogg's) today in his daily reckoning suggests that there's a major conspiracy afoot. In essence (my view) is that what we are experiencing is an economic war between those who believe in proper 'freedom of markets' and those who believe that politicians and architects of the "GFC" can resolve and solve the complexity of the problems. Bill Bonner says....
"Most have had no exposure to monetary history or what money really is. The new “Moses” generation will have to re-learn the lessons of monetary history before the world can enter a new era of sound money and stable economic growth." Alf Field then goes on to say....
"The modern generation will have to face some brutal truths as the world deals with the ongoing global financial crisis. The following are the brutal truths that apply to the USA and the world:
THE BRUTAL TRUTHS
1.The slate needs to be wiped clean and a new sound monetary system introduced.
2.That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives.
3.To eliminate these problems by default and deflation will cause a banking collapse and untold economic pain, leading to riots and political change.
4.Politicians are appointed for relatively short terms and opt for the easy solutions.
5.While politicians continue to have the ability to create new money at will, they will do so in order to prevent a melt down on their watch.
6.Consequently the odds point to governments wiping the slate clean by generating enough new money to eventually destroy their currencies.
7.The new international monetary system is likely to involve precious metals. It will have to be money that people trust and that governments cannot create at will.
This has happened many times before, dating back nearly 900 years to the first paper money introduced in China. History is full of attempts to use paper or fiat money, all of which ended in the destruction of that money. The last century saw virtually every South American country “wipe the slate clean” and begin again with a new money. Some did it several times. The Romans faced a similar financial crisis and resorted to reducing the silver content of the Denarius, eventually by about 95%, before people refused to accept the Roman coins."
----------------
If anyone has read some of my earlier blogs there appears to be a pattern emerging here.
More on Gold & the "GFC" later!
ps "GFC" = Global Financial Crisis in case anyone was wondering
I like Rees-Mogg's articles and read his biblical hardback "The Daily Reckoning" when it was first published a few years ago. In it he said.......
"Business life tends to have a rhythm. One of the reasons older investors tend to have an intuitive advantage over their younger colleagues is that their experience of past cycles in markets offsets the greater technological understanding of younger investors." Rees-Mogg and his co-author, Jim Davidson go on to say.....
"It is also important that people should understand that in business 'the trees do not grow to the sky' -meaning things cannot continue past their natural boundaries - a favourite maxim of Winston Churchill, which he applied to war rather than to business".
The "GFC" incidentally is now being described by many pundits as a WAR. In fact I've even heard it referred to as WW3.
The Daily Reckoning author, Bill Bonner (another colleague of Rees-Mogg's) today in his daily reckoning suggests that there's a major conspiracy afoot. In essence (my view) is that what we are experiencing is an economic war between those who believe in proper 'freedom of markets' and those who believe that politicians and architects of the "GFC" can resolve and solve the complexity of the problems. Bill Bonner says....
- Europe faces its “toughest hour since WWII”, says Angela Merkel. What does she propose? More centralisation. Centralization got Europe into this mess – harmonising interest rates so that the Greeks and Italians could borrow more. And now, more centralization, she believes, will get it out.
- Europe is taking no chances. This debt problem is a slugger. What to do about it?
- Who knows more about debt problems than anyone else? The people who cause them, of course. So, under great pressure from the centralised European authorities Greece got rid of its Papandreou, after the man had the gall to suggest letting democracy work. He wanted the people to vote on further austerity measures. It replaced him with Papademos… a guy who won’t make the mistake of deferring to the masses. After all, he was vice-president of the European Central Bank for years. And he taught at the Kennedy School of Government at Harvard.
- Meanwhile, Italy too has been forced to get rid of its popular, but difficult to control, elected leader – Silvio Berlusconi. It has put in a company man. Yes, a company man. What company? Goldman Sachs, of course. The new fellow, Mario Monti is an ex-Goldman guy. And so is the new fellow at the European Central Bank, Mario Draghi. Monti was also an EU commissioner. Draghi ran the Bank of Italy as the nation built up one of the world’s biggest piles of debt. Then, when Italy’s cost of borrowing shot over 7%, in came Monti and Draghi.
- It is almost as if they planned it that way. Who’s the biggest seller of debt on the planet? We don’t know… but Goldman Sachs has to be up in the rankings somewhere. You’ll recall it was Goldman that helped Greece structure its debt so that it could abide by the letter of its treaty engagements with Europe but totally thumb its nose at the spirit of it.
- And now the debt has blown up… and the Goldman boys are on the job, managing the mess they were so instrumental in creating.
"Most have had no exposure to monetary history or what money really is. The new “Moses” generation will have to re-learn the lessons of monetary history before the world can enter a new era of sound money and stable economic growth." Alf Field then goes on to say....
"The modern generation will have to face some brutal truths as the world deals with the ongoing global financial crisis. The following are the brutal truths that apply to the USA and the world:
THE BRUTAL TRUTHS
1.The slate needs to be wiped clean and a new sound monetary system introduced.
2.That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives.
3.To eliminate these problems by default and deflation will cause a banking collapse and untold economic pain, leading to riots and political change.
4.Politicians are appointed for relatively short terms and opt for the easy solutions.
5.While politicians continue to have the ability to create new money at will, they will do so in order to prevent a melt down on their watch.
6.Consequently the odds point to governments wiping the slate clean by generating enough new money to eventually destroy their currencies.
7.The new international monetary system is likely to involve precious metals. It will have to be money that people trust and that governments cannot create at will.
This has happened many times before, dating back nearly 900 years to the first paper money introduced in China. History is full of attempts to use paper or fiat money, all of which ended in the destruction of that money. The last century saw virtually every South American country “wipe the slate clean” and begin again with a new money. Some did it several times. The Romans faced a similar financial crisis and resorted to reducing the silver content of the Denarius, eventually by about 95%, before people refused to accept the Roman coins."
----------------
If anyone has read some of my earlier blogs there appears to be a pattern emerging here.
More on Gold & the "GFC" later!
ps "GFC" = Global Financial Crisis in case anyone was wondering
Saturday 12 November 2011
"Euro Zone Mode 2" or as I prefer, "It's time to sit down with our folk from the Commonwealth & have a cuppa'" !
The headline that has just dropped into my INBOX reads;-
France is drawing up plans to create a breakaway organisation of Eurozone countries with its own treaty, parliament and headquarters – a move that could significantly undermine the existing European Union. The proposal would see a formal "union within a union" created, but would lead to a significant deterioration in Britain's influence in Europe. David Cameron is drawing up urgent plans to stop Britain being "railroaded" into agreeing to decisions taken by the new Eurozone bloc. France and Germany are understood to want to strengthen the union between Eurozone countries with new taxes and legal measures to stop nations borrowing and spending too much in future, says The Telegraph.
My immediate knee jerk reaction to a friendly client this morning was as follows;-
***so France create the EU, can't get their way & now want to create another Union, they really are rather spineless***
----------------------------
Another friend has Skyped me as follows;-
"Resume of what's happening in one of the nations favourite British TV programmes read in the TV Times just now:" Masood is disgusted to find Yusef in Zainab's house." Do I really live in England or have I somehow mysteriously been transported half way across the world?"
----------------------------
It has struck me that both these communications/opinions are indeed related in some way. Last night on Newsnight Ms Kirsty Wark talked of technocrats taking over Europe. As you all know I've decided to speak up and call this the "rise of fascism" because what we're all experiencing is in fact a legalised driven mode of fascism throughout Europe and various hybrid politically motivated organisations are spreading like wild fire by use of cell phones,social network sites, etc and of course there's plenty of constricting new legislation and absurd regulation to go with it. The ordinary citizens are fed up with rhetoric and decisions that they see no material benefit from. Of course if you're a civil servant or operate within our controlled media you'll more likely applaud it (note Peter Oborne is a rare lone voice out there amongst the swathe of you tell them what I say journalists and newscasters). You even have to get permission to revolt these days. Well I'm revolting (no laughing matter)!
If indeed the little hungarian who runs France gets his way then maybe (maybe NOT) the UK will get left behind. Personally I take the view that our loss(es) from the EU whether we're one leg in one leg out shake it all about or firmly OUT makes very little difference to the slowdown that we're about to witness. Losses today may translate to new opportunities tomorrow. One thing is certain though is this....if France does suggest or even just get a miniscule the way down this new road then our beloved leader, yet another bloody Scotsman (note my grand-mother was scottish, a MacArthur in fact) must and I emphasis must allow the British people (whoever, whatever, whereever we are) a chance to VOTE either Yes or No to the existing EU that already most of us don't want and especially to a NEW EU that our friends 'Les Grenouilles' now suggest. Living in France has turned me into an anti-EU fanatic although I must confess I have much admiration for my neighbours as they suggest they do too to 'Les Roast Boeuf''.
So let's get back to my friends comments regarding the asian soap on UK television shall we? Actually I have no problem with allowing asians a national voice on British television but the point I think my friend was making is that there is too much voice and assistance given to the British ex-commonwealth community living on our shores. In fact just as an observation the number of english PS Oxbridge types has diminished dramatically to be often replaced by either British with commonwealth roots or those more akin to the Big Brother house. You can call me an alarmist, even a racist, but I cannot believe that I'm the only one who has spotted that the 'opportunity' that DaveCamClegg, Brown & Blair so proudly boast of seems to have turned on its head. Take the best TV news, 'Channel4News' fronted by Jon Snow (he of the absurd tie!) who is without doubt the No.1 newscaster (of the old school) remaining I think, well he is surrounded by a team of asian newscasters (their names escape me) who are really excellent BUT surely there are a few Oxbridge WASP types that could do these jobs equally well (?), n'est pas? I'm expecting an avalanche of complaints on this but hehhhhh it's just an observation and for record I have many west indian, asian and arab friends and clients BUT I don't expect them to be broadcasting their version of world events en masse whilst I'm supping a cuppa.
I'd like to hear what the 'lost generation' think! This phrase may be new to some of you but this is my generation who were brought up on Cliff Michelmore, The Sky At Night, the Beatles, Twiggy, the race to the moon, flower-power, bell bottom jeans and of course the 'mini-skirt'. Being so frustrated in the '70s with Unions causing strikes, the lack of anyone to fight (many of us agreed with McCartney's ditty "Give Ireland Back to the Irish" so didn't enlist), seeing our parents getting wiped out by really high taxation (98% I recollect) what did we do? Well, I'll tell you what we did. We got sucked in to Ted Heath's European Common Market Referendum and almost immediately regretted it so we dressed up as punks or New Wave anti-establishment warchilds. The funny thing is I'm still one of those anti-establishment figures who absolutely hates being told what to do and what I cannot do. I wonder why! Could it be because our forebears fought 2 world wars and constantly opposed hypocrisy from across the channel (except from the Dutch of course ehhh Dirk; for transparency my other grand-mother was a Dutch aristo) to allow the people on the shores of UK to live in harmony between each other. The price of freedom was indeed high as some of the recently released stories coming out from WW2 explain.
So what kind of vision do we as a nation really have? It's pretty confused because our own identity is pretty confused. I have a British Passport, my family are Cornish, I was brought up in the South-East and I live in the EU. My partner was born an Armenian, was brought up in Yerevan, went to Moscow University (where she achieved the rank of Lieutenant in the Russian Army as a translator for when we invaded), has a Russian Passport and is British and lives in EU (I think!). Yup, she has a British Passport too (heck, she'll shoot me for this but I can take it, I'm British, hang on so is she). CONFUSED? And this is the point, none of us really know who we are at the moment. The french believe in Egalite, Fraternite & Liberte and yet are shackled by their bureaucracy. My local farmers ALL hate the EU, Parisians, any foreigner, all claim to be ex-resistance fighters BUT all to a man love the european handouts as they can drive around in brand spanking new 4WD tractors (this is no exaggeration) and wait for it don't really see themselves as being great french patriots because their real roots are different. Many still speak the local patois rather like our cousins over the border in Somerset then.
I prefer to think of myself as a Cornishman and fly the 'Cornish Ensign' whenever I can. It's an unofficial black/white cross cornish flag with a Union Flag in the top left corner. Occasionally I fly the Malawi flag (although they've just changed it again), the french tricolor (to stop the regulars practicising their guillotines), the dutch orange flag which looks more like a tablecloth, the Russian War flag, the Russian flag (to keep the peace), and I have a whole load of others too that I fly on special occasions because I like to remind myself that I'm not really european or British. How can I be British? The inside cover informs me that I as the bearer can "pass freely without let or hindrance and to afford the bearer such assistance and protection as may be necessary". Sorry, but I'm not getting the hang of this DaveCam. Have you tried getting in or out of the UK recently? It's time for a Cornish passport and a fishing vessel I think.
On to more serious subjects though. So as we all know we British, that's Fred, Eric, Tatiana, Sophie, Mohammad and Shane etc etc do really need to decide what we want and pretty damn soon I think. So over to you DaveCam. Please can we have 2 referendums? The first should be a straight GREEN or RED card for the European Union and the second should be phrased differently along the lines of "DO YOU AGREE WITH THE CONCEPT OF BRITISH?" YES or NO.
For record the (former British) Commonwealth is more powerful than the European Union. There are more countries involved, a much bigger population, more diversity, more natural resources, they usually speak our language, sell us tea, play cricket and the only downside that I can see is that they don't let WASP english and cornish in. There's no need to dwell on the EU but there are several things in common that I can think of. These are in short; bureaucrats are mass-producing at an alarming rate and the Germans seem to be at the helm. Who said that? Off with his head.
I'm going for a cuppa!
STOP PRESS....The EU have decided that the (British) Commonwealth no longer exists. They've decided to call it THE EUROPEAN COMMONWEALTH & Albania have just signed up. I'm hoping that Holland will be allowed to join as the UK or whatever it's called these days does need dutch expertise on dykes, flood control, erosion, unpronounciation and their in-depth knowledge of class C drug abuse.
Don't tell him your name Pike!
The keetle is back on.
One lump or two comrade!
Suggestion for DaveCam.......Let's just refer to our ourselves as THE COMMONWEALTH shall we (in fact most people are unaware that is now The Commonwealth of Nations NOT the British Commonwealth)....we can then cut out the word British from everything. I notice that the leading seafarers charity that used to be called the BRITISH SAILORS SOCIETY and then the BRITISH & INTERNATIONAL SAILORS SOCIETY is now known just as THE SAILOR'S SOCIETY....true! Actually with Mozambique (a former Portuguese colony) and Rwanda achieving membership of the Commonwealth a name change to just a UK & COMMONWEALTH PASSPORT seems even more than appropriate.
NOTE...for record THE COMMONWEALTH OF NATIONS is a far bigger trading partner than the European Union. Perhaps we should remind our politicians of this by insisting on a Referendum on the EU whilst at the same time re-examining the status of citizenship in UK. I am sure that I'm not the only one who would prefer a United Kingdom & Commonwealth Passport.
France is drawing up plans to create a breakaway organisation of Eurozone countries with its own treaty, parliament and headquarters – a move that could significantly undermine the existing European Union. The proposal would see a formal "union within a union" created, but would lead to a significant deterioration in Britain's influence in Europe. David Cameron is drawing up urgent plans to stop Britain being "railroaded" into agreeing to decisions taken by the new Eurozone bloc. France and Germany are understood to want to strengthen the union between Eurozone countries with new taxes and legal measures to stop nations borrowing and spending too much in future, says The Telegraph.
My immediate knee jerk reaction to a friendly client this morning was as follows;-
***so France create the EU, can't get their way & now want to create another Union, they really are rather spineless***
----------------------------
Another friend has Skyped me as follows;-
"Resume of what's happening in one of the nations favourite British TV programmes read in the TV Times just now:" Masood is disgusted to find Yusef in Zainab's house." Do I really live in England or have I somehow mysteriously been transported half way across the world?"
----------------------------
It has struck me that both these communications/opinions are indeed related in some way. Last night on Newsnight Ms Kirsty Wark talked of technocrats taking over Europe. As you all know I've decided to speak up and call this the "rise of fascism" because what we're all experiencing is in fact a legalised driven mode of fascism throughout Europe and various hybrid politically motivated organisations are spreading like wild fire by use of cell phones,social network sites, etc and of course there's plenty of constricting new legislation and absurd regulation to go with it. The ordinary citizens are fed up with rhetoric and decisions that they see no material benefit from. Of course if you're a civil servant or operate within our controlled media you'll more likely applaud it (note Peter Oborne is a rare lone voice out there amongst the swathe of you tell them what I say journalists and newscasters). You even have to get permission to revolt these days. Well I'm revolting (no laughing matter)!
If indeed the little hungarian who runs France gets his way then maybe (maybe NOT) the UK will get left behind. Personally I take the view that our loss(es) from the EU whether we're one leg in one leg out shake it all about or firmly OUT makes very little difference to the slowdown that we're about to witness. Losses today may translate to new opportunities tomorrow. One thing is certain though is this....if France does suggest or even just get a miniscule the way down this new road then our beloved leader, yet another bloody Scotsman (note my grand-mother was scottish, a MacArthur in fact) must and I emphasis must allow the British people (whoever, whatever, whereever we are) a chance to VOTE either Yes or No to the existing EU that already most of us don't want and especially to a NEW EU that our friends 'Les Grenouilles' now suggest. Living in France has turned me into an anti-EU fanatic although I must confess I have much admiration for my neighbours as they suggest they do too to 'Les Roast Boeuf''.
So let's get back to my friends comments regarding the asian soap on UK television shall we? Actually I have no problem with allowing asians a national voice on British television but the point I think my friend was making is that there is too much voice and assistance given to the British ex-commonwealth community living on our shores. In fact just as an observation the number of english PS Oxbridge types has diminished dramatically to be often replaced by either British with commonwealth roots or those more akin to the Big Brother house. You can call me an alarmist, even a racist, but I cannot believe that I'm the only one who has spotted that the 'opportunity' that DaveCamClegg, Brown & Blair so proudly boast of seems to have turned on its head. Take the best TV news, 'Channel4News' fronted by Jon Snow (he of the absurd tie!) who is without doubt the No.1 newscaster (of the old school) remaining I think, well he is surrounded by a team of asian newscasters (their names escape me) who are really excellent BUT surely there are a few Oxbridge WASP types that could do these jobs equally well (?), n'est pas? I'm expecting an avalanche of complaints on this but hehhhhh it's just an observation and for record I have many west indian, asian and arab friends and clients BUT I don't expect them to be broadcasting their version of world events en masse whilst I'm supping a cuppa.
I'd like to hear what the 'lost generation' think! This phrase may be new to some of you but this is my generation who were brought up on Cliff Michelmore, The Sky At Night, the Beatles, Twiggy, the race to the moon, flower-power, bell bottom jeans and of course the 'mini-skirt'. Being so frustrated in the '70s with Unions causing strikes, the lack of anyone to fight (many of us agreed with McCartney's ditty "Give Ireland Back to the Irish" so didn't enlist), seeing our parents getting wiped out by really high taxation (98% I recollect) what did we do? Well, I'll tell you what we did. We got sucked in to Ted Heath's European Common Market Referendum and almost immediately regretted it so we dressed up as punks or New Wave anti-establishment warchilds. The funny thing is I'm still one of those anti-establishment figures who absolutely hates being told what to do and what I cannot do. I wonder why! Could it be because our forebears fought 2 world wars and constantly opposed hypocrisy from across the channel (except from the Dutch of course ehhh Dirk; for transparency my other grand-mother was a Dutch aristo) to allow the people on the shores of UK to live in harmony between each other. The price of freedom was indeed high as some of the recently released stories coming out from WW2 explain.
So what kind of vision do we as a nation really have? It's pretty confused because our own identity is pretty confused. I have a British Passport, my family are Cornish, I was brought up in the South-East and I live in the EU. My partner was born an Armenian, was brought up in Yerevan, went to Moscow University (where she achieved the rank of Lieutenant in the Russian Army as a translator for when we invaded), has a Russian Passport and is British and lives in EU (I think!). Yup, she has a British Passport too (heck, she'll shoot me for this but I can take it, I'm British, hang on so is she). CONFUSED? And this is the point, none of us really know who we are at the moment. The french believe in Egalite, Fraternite & Liberte and yet are shackled by their bureaucracy. My local farmers ALL hate the EU, Parisians, any foreigner, all claim to be ex-resistance fighters BUT all to a man love the european handouts as they can drive around in brand spanking new 4WD tractors (this is no exaggeration) and wait for it don't really see themselves as being great french patriots because their real roots are different. Many still speak the local patois rather like our cousins over the border in Somerset then.
I prefer to think of myself as a Cornishman and fly the 'Cornish Ensign' whenever I can. It's an unofficial black/white cross cornish flag with a Union Flag in the top left corner. Occasionally I fly the Malawi flag (although they've just changed it again), the french tricolor (to stop the regulars practicising their guillotines), the dutch orange flag which looks more like a tablecloth, the Russian War flag, the Russian flag (to keep the peace), and I have a whole load of others too that I fly on special occasions because I like to remind myself that I'm not really european or British. How can I be British? The inside cover informs me that I as the bearer can "pass freely without let or hindrance and to afford the bearer such assistance and protection as may be necessary". Sorry, but I'm not getting the hang of this DaveCam. Have you tried getting in or out of the UK recently? It's time for a Cornish passport and a fishing vessel I think.
On to more serious subjects though. So as we all know we British, that's Fred, Eric, Tatiana, Sophie, Mohammad and Shane etc etc do really need to decide what we want and pretty damn soon I think. So over to you DaveCam. Please can we have 2 referendums? The first should be a straight GREEN or RED card for the European Union and the second should be phrased differently along the lines of "DO YOU AGREE WITH THE CONCEPT OF BRITISH?" YES or NO.
For record the (former British) Commonwealth is more powerful than the European Union. There are more countries involved, a much bigger population, more diversity, more natural resources, they usually speak our language, sell us tea, play cricket and the only downside that I can see is that they don't let WASP english and cornish in. There's no need to dwell on the EU but there are several things in common that I can think of. These are in short; bureaucrats are mass-producing at an alarming rate and the Germans seem to be at the helm. Who said that? Off with his head.
I'm going for a cuppa!
STOP PRESS....The EU have decided that the (British) Commonwealth no longer exists. They've decided to call it THE EUROPEAN COMMONWEALTH & Albania have just signed up. I'm hoping that Holland will be allowed to join as the UK or whatever it's called these days does need dutch expertise on dykes, flood control, erosion, unpronounciation and their in-depth knowledge of class C drug abuse.
Don't tell him your name Pike!
The keetle is back on.
One lump or two comrade!
Suggestion for DaveCam.......Let's just refer to our ourselves as THE COMMONWEALTH shall we (in fact most people are unaware that is now The Commonwealth of Nations NOT the British Commonwealth)....we can then cut out the word British from everything. I notice that the leading seafarers charity that used to be called the BRITISH SAILORS SOCIETY and then the BRITISH & INTERNATIONAL SAILORS SOCIETY is now known just as THE SAILOR'S SOCIETY....true! Actually with Mozambique (a former Portuguese colony) and Rwanda achieving membership of the Commonwealth a name change to just a UK & COMMONWEALTH PASSPORT seems even more than appropriate.
NOTE...for record THE COMMONWEALTH OF NATIONS is a far bigger trading partner than the European Union. Perhaps we should remind our politicians of this by insisting on a Referendum on the EU whilst at the same time re-examining the status of citizenship in UK. I am sure that I'm not the only one who would prefer a United Kingdom & Commonwealth Passport.
Friday 11 November 2011
Sixty-Second Time Lucky!!!! Yes, 62nd
As Silvio Berlusconi manages to find a way to make an honourable exit as the 61st Italian PM since 1948 all eyes are on Italy today and over this coming weekend.
It's been clear throughout my lifetime that Italy of all nations in the western developed world has been extremely inconsistent with their definitions of what 'austerity' really means. It must be very difficult for any politician in Italy to manage anything as there is a constant fear of antagonism directed from the mafia which (very) effectively controls the highly profitable Italian 'black' market. Although things have undoubtedly improved in recent years it's pretty clear that huge swathes of bureaucracy (see France to show us all how it's done) and infrastructure anomalies persist.
The Italy bond yields are astounding markets but I suspect that there are bigger shocks to come for all concerned. The extraordinary market reaction to the 6-7 1/2% + yields this week just show that no-one out there (including just about everyone in capital markets these days) is living in the 'real world'. As a young man in 1978 I left Chartered Bank (where I worked on Fixed Deposits looking after mainly arab accounts; Al-Khalifa & such like) and joined the largest firm of money brokers in the world, MW Marshall & Co where I undertook 6 months training as an Inter-Bank dealer which I hated every minute of. It was interesting times back then though in London as my following job proved (but I'll come back to that later). My lasting memory of my daily drudge of picking up calls to other bank dealers was that each day at around 2.30-3.00pm the market would inevitably undergo a strange panic as overnight, 1 week, 1 month, 3m, 6m, year, 5 year interest rates would get squeezed. In those days the Bank of England insisted that ALL banks located in London should balance their loan books (unlike today where most are open-ended). Just like any casino there was always one or two banks scrambling to borrow at any cost. For months on end it would not be unusual to see overnight rates reach 20-35%....yes 35%. So let's look at Italy today. The risks are there for ALL to see. The immediate problems concern around Euros30-100 billion depending on who one believes but it's common knowledge that in 2012 there is the matter of the renewal of Euros300billion+. Debt as a % of GDP is around 120% and interestingly personal debt (households) is ONLY 40% versus a Eurozone average of 75% which suggests that cash is constantly changes hands 'on the black'.
So why should market excited at 6-7 1/2% bond yields? Looking at Greece for a minute the same thing happened. When the wheels finally fell off bond yield went into the stratosphere and the end result has been the appointment of a new PM with a name that sounds alarmingly like an Indian snack and a former Haitian President (anyone for a Papademos?). What's more alarming though is that Papademos is a former Vice-President of ECB. Oh dear, and the eurocrats think that markets will be impressed by this (?) do they? I don't think so but I do wish him well. There is bound to be a few amusing cartoons hereon which should put a smile back on our faces though.
My instinct tells me that Italy bond yields could reach 10%+ within days and then the party will really begin. Whoever takes over from Berlusconi should be reminded though that it's not everyone who has the chance and opportunity to make it SIXTY-SECOND TIME LUCKY (!!) IN 63 YEARS.......
Anyone for a pizza?
It's been clear throughout my lifetime that Italy of all nations in the western developed world has been extremely inconsistent with their definitions of what 'austerity' really means. It must be very difficult for any politician in Italy to manage anything as there is a constant fear of antagonism directed from the mafia which (very) effectively controls the highly profitable Italian 'black' market. Although things have undoubtedly improved in recent years it's pretty clear that huge swathes of bureaucracy (see France to show us all how it's done) and infrastructure anomalies persist.
The Italy bond yields are astounding markets but I suspect that there are bigger shocks to come for all concerned. The extraordinary market reaction to the 6-7 1/2% + yields this week just show that no-one out there (including just about everyone in capital markets these days) is living in the 'real world'. As a young man in 1978 I left Chartered Bank (where I worked on Fixed Deposits looking after mainly arab accounts; Al-Khalifa & such like) and joined the largest firm of money brokers in the world, MW Marshall & Co where I undertook 6 months training as an Inter-Bank dealer which I hated every minute of. It was interesting times back then though in London as my following job proved (but I'll come back to that later). My lasting memory of my daily drudge of picking up calls to other bank dealers was that each day at around 2.30-3.00pm the market would inevitably undergo a strange panic as overnight, 1 week, 1 month, 3m, 6m, year, 5 year interest rates would get squeezed. In those days the Bank of England insisted that ALL banks located in London should balance their loan books (unlike today where most are open-ended). Just like any casino there was always one or two banks scrambling to borrow at any cost. For months on end it would not be unusual to see overnight rates reach 20-35%....yes 35%. So let's look at Italy today. The risks are there for ALL to see. The immediate problems concern around Euros30-100 billion depending on who one believes but it's common knowledge that in 2012 there is the matter of the renewal of Euros300billion+. Debt as a % of GDP is around 120% and interestingly personal debt (households) is ONLY 40% versus a Eurozone average of 75% which suggests that cash is constantly changes hands 'on the black'.
So why should market excited at 6-7 1/2% bond yields? Looking at Greece for a minute the same thing happened. When the wheels finally fell off bond yield went into the stratosphere and the end result has been the appointment of a new PM with a name that sounds alarmingly like an Indian snack and a former Haitian President (anyone for a Papademos?). What's more alarming though is that Papademos is a former Vice-President of ECB. Oh dear, and the eurocrats think that markets will be impressed by this (?) do they? I don't think so but I do wish him well. There is bound to be a few amusing cartoons hereon which should put a smile back on our faces though.
My instinct tells me that Italy bond yields could reach 10%+ within days and then the party will really begin. Whoever takes over from Berlusconi should be reminded though that it's not everyone who has the chance and opportunity to make it SIXTY-SECOND TIME LUCKY (!!) IN 63 YEARS.......
Anyone for a pizza?
Thursday 10 November 2011
Headlines Galore BUT....where is the substance?
I watched french television last night and as usual on most french channels there was alot of debate and little substance. On one side there was a chap with clear leftish tendencies talking about the threat of free capital markets, presumably of the opinion like many in Europe, that markets should be controlled and to balance out the debate there was another chap with exactly the same futile centre left wishy washy drivel. What astounds me every time that I watch a political/economic/social debate on french television is how they all seem to be singing from the same hymn sheet. They clearly think that 'capital' grows on trees and that industry can operate efficiently on a 3 1/2 day week which is precisely how France is run.
In my area there is around 30% unemployment and one would expect that there are many desperate people in the vicinity knocking on doors for any type of work. Well, in 7 years not one single 'artisan' has knocked at the door of my derelict farm. Each year though the local metal man (their equivalent of the rag & bone man; I call him 'Steptoe' which falls on deaf ears) turns up to take away mountains of metal (old farm machinery dating back to when International used to sell horse drawn ploughs to the french pre-Grand Guerre) for free and frankly I do welcome just a glimmer of free enterprise at work. I don't begrudge anybody who is prepared to clear the metal mound, load it up, drive it away and get amply rewarded in an ever increasing metals market thanks to the chinese.
In the last few hours I've been looking at my London Stock Exchange trading screen called Proquote (it's internet driven just like this blog) and recently have been rather alarmed by the Dow Jones Newswire headings regarding the EuroZone difficulties. In a nutshell there are many headlines but nothing behind them.
Read on......
These regular scoops on Dow Jones, Bloomberg, BBC, et al are designed to relieve markets, instill some degree of confidence in traders and investors but the LACK OF REAL SUBSTANCE here just makes markets think that there are headless chickens out there and NO real solutions to the contracting economies, lack of job creation and end game to more than adequate stimulae. Just who do these Europeans think they are kidding with this rhetoric? Who are these 'markets' that the euro elite think they can brush off? Well, I have news for you Angela and Nicolas (presumably you were in the room when she said these things), the markets that you choose to treat with disdain are YOUR electorate, your people.
More chaos to come I think.
Next headline...Euro Zone hires Max Clifford!
In my area there is around 30% unemployment and one would expect that there are many desperate people in the vicinity knocking on doors for any type of work. Well, in 7 years not one single 'artisan' has knocked at the door of my derelict farm. Each year though the local metal man (their equivalent of the rag & bone man; I call him 'Steptoe' which falls on deaf ears) turns up to take away mountains of metal (old farm machinery dating back to when International used to sell horse drawn ploughs to the french pre-Grand Guerre) for free and frankly I do welcome just a glimmer of free enterprise at work. I don't begrudge anybody who is prepared to clear the metal mound, load it up, drive it away and get amply rewarded in an ever increasing metals market thanks to the chinese.
In the last few hours I've been looking at my London Stock Exchange trading screen called Proquote (it's internet driven just like this blog) and recently have been rather alarmed by the Dow Jones Newswire headings regarding the EuroZone difficulties. In a nutshell there are many headlines but nothing behind them.
Read on......
- 13:14pm Merkel: "Euro Zone (note the seperation of the word) Solidarity Must Be Combined With Sound Budget Measures" - Isn't that just terrific news? Have I been living in a dream world since 1975 or did I miss something? Have we not already had countless SOUND BUDGET MEASURES since 1975? Reading the full release Merkel goes on to say...."Italy is on its way to earning back credibility". Mmmmmm.
- 13:14pm Merkel: "Confident Italy To Clarify Government Situation Soon." Since 1948 when Italy established a parliament it has had some 61 different governments in 63 years. Not a bad record for stability and allowing for "Sound Budget Measures" then!
- 13:15pm Merkel: "Italy Will Put Through Planned Austerity Measures Soon" Good that the germans know more about the plans than the Italians then!
- 13:16pm Merkel: "Germany's 'One Goal' Is To Stabilize (american spelling note) Current Euro Zone" This is rather alarming. Last week Merkel said the goal was to stabize (!) Greece, this week it's Italy and next week it could be anyone in EU. That makes more than 1 goal Angela!
- 13:16pm Merkel: "Working For A 'Better,More Consolidated' Greece" Just how consolidated can existing membership of the EU be Mrs Merkel? Anyway surely it's up to the new Greek PM to decide the level of further consolidation but I have a feeling that the greek people & FREE capital markets may decide whether 'Better, More Consolidated' measures in Greece, Italy and elsewhere are allowed to happen.
These regular scoops on Dow Jones, Bloomberg, BBC, et al are designed to relieve markets, instill some degree of confidence in traders and investors but the LACK OF REAL SUBSTANCE here just makes markets think that there are headless chickens out there and NO real solutions to the contracting economies, lack of job creation and end game to more than adequate stimulae. Just who do these Europeans think they are kidding with this rhetoric? Who are these 'markets' that the euro elite think they can brush off? Well, I have news for you Angela and Nicolas (presumably you were in the room when she said these things), the markets that you choose to treat with disdain are YOUR electorate, your people.
More chaos to come I think.
Next headline...Euro Zone hires Max Clifford!
Clowns to the left of me, jokers to the right. Here I am, stuck in the middle with you.
For some reason I found myself humming this old song from "Stealers Wheel" this morning after I read that there are discussions going on behind closed doors between Germany & France about creating a NEW EUROPE, a new EuroZone, one that will aid them both, possibly a two tier EuroZone. I must confess I am somewhat alarmed by this as for the last 35+ years we've all seen the rise of the political elite across Europe, the appalling wasteland that these people seem to have created and the absurd evolving doctrines that they seem to represent.
These Europeans speak of democracy and yet there is a European Parliament in place (led by undemocratically elected men such as Van Rompuy) where these sort of issues should be debated. They speak of transparency and fair play but like one of our previous PM's (who is now Chairman of Surrey CCC) it would appear that they don't know how to hold a 'cricket bat'. They're just friendly Germans and French who want to sit down to discuss the most important issues of the day. But before doing so I think it's important to remind ourselves just what has happened here.
From a UK standpoint we were promised transparency, freedom of trade, fair trade, equal say (despite the one leg in one leg out scenario that the EU/Euro scenario has created for us), self-determination, a common employment zone and a host of other things. Our own policy in parallel has been to enhance an already transparent market place by encouraging overseas businesses to do business with us and in many cases use the UK financial markets strengths to raise capital through the London Stock Exchange either through the Full List (the americans call it the main board) or on the Alternative Investment Market (known as AIM although at times it's pretty aimless). Over the years our takeover laws (M&A, mergers and acquisitions) have remained transparent (apologies for the repetition but this is the single word that the EU supposedly stands for) and countless european businesses have snapped away at our commerce. In the past it was Lord Weinstock's GEC (the first company to put £1bn CASH on its balance sheet) that was absorbed into Siemens, then there was a merger between Wiggins Teape Appleton creating Arjo Wiggins, Blue Circle into Lafarge thus creating the world's largest cement business, countless utilities takeovers with instigators such as EDF absorbing more utilities, Santander exploiting the weaknesses in Abbey National, Bradford and dear Mr Bingley alongside Alliance & Leicester, etc etc; I have touched upon a few examples of how the Europeans have quite fairly exploited our FREE market. Many other foreigners have enjoyed our patronage and the recent job losses at Cadbury's have dealt a heavy blow to cross-atlantic M&A relations but......and this is the big BUT, I cannot ever recollect one single successful takeover inside EU by a UK business. Admittedly there are goliaths like HSBC that are found in many european cities but M&A deals (?) , well there are none that I can think of, any that can roll off the top of my head.
I may be blinkered but wasn't it the attraction of FREE TRADE in the 1975 Referendum on the Common Market, that enticed us all to vote YES. I've sat and waited for these european opportunities these past 35+ years and although the pro-EU lobby constantly remind us that Europe is our largest trading partner I keep thinking that pre-Common Market massive trade was still being done across the Channel but with 27 individual nations. I suppose it would rather be like asking the Chinese to name their biggest trading partner other than USA & Europe; one wouldn't expect them to respond that the new zone known as the Emerging Markets is their newest largest trading partner, or would you? In truth the concept of a FREE labour zone is also false. Countless professional qualifications are NOT recognised across borders and there are plenty of examples of downright draconian patronising european protectionism regarding the flow of labour and it's all one way. Even hundreds of thousands of french youth have taken full advantage of the umbilical cord that they call the Trans Marche link to take advantage of our free market economy and fairer employment laws.
It's certainly something to think about over the coming days as we can only imagine the scintillating conversations taking place BEHIND CLOSED DOORS somewhere in Europe.
My mind has now moved to that opening sequence in that great english movie THE ITALIAN JOB with Sir Michael 'blow the ****dy doors off' Caine when the Italian mafia rolled a Jaguar E-Type and an Aston off the cliff......life hasn't changed much has it?
-----------------------------------
ps...(oops, just remembered that British Airways and Iberia have merged quite recently, how long will that last?)
-----------------------------------
To show that Enterprise Britain supports true transparency here is the VOIP conversation that has just taken place...
[11:44:18 AM] Dirk van Dijl: Takeovers which have been disasters for foreign investors: Rover (twice), LDV, Land Rover, Jaguar, well lets say any car company, British Leyland, BAA, virtually any utilitiy, BMI
[11:45:16 AM] Richard Hoblyn: that's not the point I'm making, at least they happened
[11:45:30 AM] Dirk van Dijl: I agree there has not been any succesful takeover in the EU by UK business and this includes RBS, BP, Marks and Spencer. There has been some succesful expansion by the transport operators on both sides of the channel
[11:46:08 AM] Richard Hoblyn: oh yes RBS took over that dutch mob, ABN-AMRO, good ol' dutchies
[11:46:12 AM] Dirk van Dijl: they did and the foreigners were stitched up like kippers - BAA must be the stitchup of the century, but heh ho, they are spanish so who cares
[11:46:24 AM] Richard Hoblyn: marvellous
[11:47:00 AM] Richard Hoblyn: the blog is bound to get a few fired up incl. you Dirk (rofl)
[11:47:22 AM] Dirk van Dijl: Nearly killed them - RBS that is. Of course the Dutch being real bastards, stitched up RBS and the Belgians and came out smelling like a rose on a pile of **** (censored)
[11:47:28 AM] Dirk van Dijl: I love the blog!!!!!!!!!!!!!!
[11:47:58 AM] Richard Hoblyn: hope you put a suitably dutch comment on the bottom (of the blog that is)
[11:48:40 AM] Dirk van Dijl: I will!
These Europeans speak of democracy and yet there is a European Parliament in place (led by undemocratically elected men such as Van Rompuy) where these sort of issues should be debated. They speak of transparency and fair play but like one of our previous PM's (who is now Chairman of Surrey CCC) it would appear that they don't know how to hold a 'cricket bat'. They're just friendly Germans and French who want to sit down to discuss the most important issues of the day. But before doing so I think it's important to remind ourselves just what has happened here.
From a UK standpoint we were promised transparency, freedom of trade, fair trade, equal say (despite the one leg in one leg out scenario that the EU/Euro scenario has created for us), self-determination, a common employment zone and a host of other things. Our own policy in parallel has been to enhance an already transparent market place by encouraging overseas businesses to do business with us and in many cases use the UK financial markets strengths to raise capital through the London Stock Exchange either through the Full List (the americans call it the main board) or on the Alternative Investment Market (known as AIM although at times it's pretty aimless). Over the years our takeover laws (M&A, mergers and acquisitions) have remained transparent (apologies for the repetition but this is the single word that the EU supposedly stands for) and countless european businesses have snapped away at our commerce. In the past it was Lord Weinstock's GEC (the first company to put £1bn CASH on its balance sheet) that was absorbed into Siemens, then there was a merger between Wiggins Teape Appleton creating Arjo Wiggins, Blue Circle into Lafarge thus creating the world's largest cement business, countless utilities takeovers with instigators such as EDF absorbing more utilities, Santander exploiting the weaknesses in Abbey National, Bradford and dear Mr Bingley alongside Alliance & Leicester, etc etc; I have touched upon a few examples of how the Europeans have quite fairly exploited our FREE market. Many other foreigners have enjoyed our patronage and the recent job losses at Cadbury's have dealt a heavy blow to cross-atlantic M&A relations but......and this is the big BUT, I cannot ever recollect one single successful takeover inside EU by a UK business. Admittedly there are goliaths like HSBC that are found in many european cities but M&A deals (?) , well there are none that I can think of, any that can roll off the top of my head.
I may be blinkered but wasn't it the attraction of FREE TRADE in the 1975 Referendum on the Common Market, that enticed us all to vote YES. I've sat and waited for these european opportunities these past 35+ years and although the pro-EU lobby constantly remind us that Europe is our largest trading partner I keep thinking that pre-Common Market massive trade was still being done across the Channel but with 27 individual nations. I suppose it would rather be like asking the Chinese to name their biggest trading partner other than USA & Europe; one wouldn't expect them to respond that the new zone known as the Emerging Markets is their newest largest trading partner, or would you? In truth the concept of a FREE labour zone is also false. Countless professional qualifications are NOT recognised across borders and there are plenty of examples of downright draconian patronising european protectionism regarding the flow of labour and it's all one way. Even hundreds of thousands of french youth have taken full advantage of the umbilical cord that they call the Trans Marche link to take advantage of our free market economy and fairer employment laws.
It's certainly something to think about over the coming days as we can only imagine the scintillating conversations taking place BEHIND CLOSED DOORS somewhere in Europe.
My mind has now moved to that opening sequence in that great english movie THE ITALIAN JOB with Sir Michael 'blow the ****dy doors off' Caine when the Italian mafia rolled a Jaguar E-Type and an Aston off the cliff......life hasn't changed much has it?
-----------------------------------
ps...(oops, just remembered that British Airways and Iberia have merged quite recently, how long will that last?)
-----------------------------------
To show that Enterprise Britain supports true transparency here is the VOIP conversation that has just taken place...
[11:44:18 AM] Dirk van Dijl: Takeovers which have been disasters for foreign investors: Rover (twice), LDV, Land Rover, Jaguar, well lets say any car company, British Leyland, BAA, virtually any utilitiy, BMI
[11:45:16 AM] Richard Hoblyn: that's not the point I'm making, at least they happened
[11:45:30 AM] Dirk van Dijl: I agree there has not been any succesful takeover in the EU by UK business and this includes RBS, BP, Marks and Spencer. There has been some succesful expansion by the transport operators on both sides of the channel
[11:46:08 AM] Richard Hoblyn: oh yes RBS took over that dutch mob, ABN-AMRO, good ol' dutchies
[11:46:12 AM] Dirk van Dijl: they did and the foreigners were stitched up like kippers - BAA must be the stitchup of the century, but heh ho, they are spanish so who cares
[11:46:24 AM] Richard Hoblyn: marvellous
[11:47:00 AM] Richard Hoblyn: the blog is bound to get a few fired up incl. you Dirk (rofl)
[11:47:22 AM] Dirk van Dijl: Nearly killed them - RBS that is. Of course the Dutch being real bastards, stitched up RBS and the Belgians and came out smelling like a rose on a pile of **** (censored)
[11:47:28 AM] Dirk van Dijl: I love the blog!!!!!!!!!!!!!!
[11:47:58 AM] Richard Hoblyn: hope you put a suitably dutch comment on the bottom (of the blog that is)
[11:48:40 AM] Dirk van Dijl: I will!
Sunday 6 November 2011
Big Bang, Big Mistake - RDR Bigger Mistake
Terry Smith is someone who has benefited enormously through the period known as Big Bang 1985-87 and has profited enormously since that evolutionary period so I was somewhat surprised to hear that he has changed his mind after 25 years about the ramifications of Big Bang. Of course this all seems very commendable although just a little wee bit hypocritical of Mr. Smith. I've not met him, have no intention of doing so just yet but wish him every (even more!) success with Fundsmith which was launched a while back to take advantage of the opportunities opening up as a result of RDR (more on that later!).
Reading the article and the Radio 4 interview on TerrySmithBlog.com it would appear that Mr Smith (like the majority in the City these days) thinks that the City today is more professional than pre-1985-87. I'm afraid I disagree totally. Despite the long lunches in the good ol' days (& just for record the number of City restaurants have grown enormously and it's even more difficult these days to get in to some of them at the various sittings) and the old school tie brigade it's fair to say that deals were done on handshakes and were rarely broken. Partners took 100% UNLIMITED liability and business took preference over regulation. In fact clients were regarded with paramount importance. Today the client is last. First it's the self-ego's and rewards of the many swathes of people on trading desks, followed by the interests of the companies and the clients are simply seen as just profit-centres. The conspiracy to ignore investing for people and institutions thus providing support for industry is ably assisted by compliance departments who basically work for the Directors of these organisations. It's rather like watching a senior cow hand keeping his cows in check. There's little regard for common sense, intelligence and education but a hell of alot of regard for Degrees from second rate universities, inane Continued Professional Development which could include the reading of a few newspapers and attending a few training courses on how to learn about f/x, derivatives, etf's, cpd's and even "what are stocks & shares?" It's become a pickled universe full of pickled people who haven't the foggiest idea about what their roles are. Many of them think that they are big achievers too. The frightening thing is that many of the modern brigade are 3-12 years out of these universities and manage many billions. Many have little understanding of how the world works and what makes life tick. You're probably thinking by now that I'm a sad narrow-minded individual who has seen his best years slip by and is envious of many around him. Actually you'd (probably) be quite wrong. I pride myself in open-mindedness but am continually bemused by how the financial services industry has forgotten its raison d'etre and I'm convinced that it is 'regulation regulation regulation' that has done the damage. In the good ol' days broking offices were full of (maybe sleepy & slozzled around lunchtime) enchanting partners, mildly eccentric wizzards of the John Keynes vintage, east end dealer types who had often as not been given a leg up because the Senior Partner and the firm had maintained a relationship with the young jackal's school, middle aged secretaries and the occasional stockinged girl from the East End who's daily topic was her visit to the pie-mash shop. The Partners were usually military types, army navy and merchant marine (rarely airforce), commonwealth office types, land-owners, ex-academics and were ruthlessly examined by those in the partnership. Occasionally a firm failed because of a rogue trader or partner but this was a rare experience. Usually the partnership rallied round, met the liability (sometimes to the market and other times to a client) and behind closed doors decided to deal with the miscreant accordingly. Early retirement or a painful rebate to the partnership would entail. Since Big Bang the great game has changed for the worse. The numbers are bigger as Terry Smith has explained but the losses have got greater. What does NOT appear to be happening though is that miscreants are challenged and I suspect that has alot to do with the fact that there are so many things going wrong in the modern financial universe. Take complaints as an example. Pre-Big Bang any complaint was handled immediately, the client put right and the loss taken accordingly. Today financial firms are encouraged and instructed by the regulator to handle it more professionally and more openly. What this actually means is that it can now take up to 8-10 weeks for complaints to get finalised. In my view this is unprofessional but according to FSA and compliance the complaints process needs to be conducted like this. There is no account taken of 'reputational risk' so the client gets thought of last. So much for the new doctrine "Treating Customers ( I prefer Clients) Fairly" which is frankly an utter joke. Unhappy clients equals no business in my 'real' world where I still take 100% UNLIMITED liability. But of course I have to comply, just like Mr Smith.
I don't expect Mr Smith to agree with me about the lack of true professionalism in today's City but to members of the public spare a thought for the wise old Members who voted against the radical changes that led to the opportunities that Mr Smith so effectively profited from. They were mainly of the officer classes, knew how to lead, knew how to manage, knew when to cut their lossses, knew the map of the world inside out, knew and respected industrialists and entrepreneurs alike, understood when politicians and economists got it wrong, took losses on the chin, never complained, never made u-turns on matters of importance (note Mr Smith), honoured their commitment & debts, treated their staff with utmost respect......this is the City pre-Big Bang, it was a better place and far more professional than today's politicians, regulators, City grandees than would many have us believe.It's a shame that the vote was carried marginally through on the old market floor on that eventful day as things could have been so much better in my judgment. Just think what might have happened if brokerages had been left alone in the technology world with a soft touch regulator. So many of the old partnerships could well have survived and prospered but for the regulatory regime that has accelerated since Big Bang. And there's no sign of it slowing down either.......
More on RDR later.
ps I am LONG of Tullett Prebon Ordinary Shares for clients as I believe Mr Smith's inter-dealer broker is an excellent investment in these interesting times. For record I don't have to applaud the traders language and style to be a fan of the firm.
Reading the article and the Radio 4 interview on TerrySmithBlog.com it would appear that Mr Smith (like the majority in the City these days) thinks that the City today is more professional than pre-1985-87. I'm afraid I disagree totally. Despite the long lunches in the good ol' days (& just for record the number of City restaurants have grown enormously and it's even more difficult these days to get in to some of them at the various sittings) and the old school tie brigade it's fair to say that deals were done on handshakes and were rarely broken. Partners took 100% UNLIMITED liability and business took preference over regulation. In fact clients were regarded with paramount importance. Today the client is last. First it's the self-ego's and rewards of the many swathes of people on trading desks, followed by the interests of the companies and the clients are simply seen as just profit-centres. The conspiracy to ignore investing for people and institutions thus providing support for industry is ably assisted by compliance departments who basically work for the Directors of these organisations. It's rather like watching a senior cow hand keeping his cows in check. There's little regard for common sense, intelligence and education but a hell of alot of regard for Degrees from second rate universities, inane Continued Professional Development which could include the reading of a few newspapers and attending a few training courses on how to learn about f/x, derivatives, etf's, cpd's and even "what are stocks & shares?" It's become a pickled universe full of pickled people who haven't the foggiest idea about what their roles are. Many of them think that they are big achievers too. The frightening thing is that many of the modern brigade are 3-12 years out of these universities and manage many billions. Many have little understanding of how the world works and what makes life tick. You're probably thinking by now that I'm a sad narrow-minded individual who has seen his best years slip by and is envious of many around him. Actually you'd (probably) be quite wrong. I pride myself in open-mindedness but am continually bemused by how the financial services industry has forgotten its raison d'etre and I'm convinced that it is 'regulation regulation regulation' that has done the damage. In the good ol' days broking offices were full of (maybe sleepy & slozzled around lunchtime) enchanting partners, mildly eccentric wizzards of the John Keynes vintage, east end dealer types who had often as not been given a leg up because the Senior Partner and the firm had maintained a relationship with the young jackal's school, middle aged secretaries and the occasional stockinged girl from the East End who's daily topic was her visit to the pie-mash shop. The Partners were usually military types, army navy and merchant marine (rarely airforce), commonwealth office types, land-owners, ex-academics and were ruthlessly examined by those in the partnership. Occasionally a firm failed because of a rogue trader or partner but this was a rare experience. Usually the partnership rallied round, met the liability (sometimes to the market and other times to a client) and behind closed doors decided to deal with the miscreant accordingly. Early retirement or a painful rebate to the partnership would entail. Since Big Bang the great game has changed for the worse. The numbers are bigger as Terry Smith has explained but the losses have got greater. What does NOT appear to be happening though is that miscreants are challenged and I suspect that has alot to do with the fact that there are so many things going wrong in the modern financial universe. Take complaints as an example. Pre-Big Bang any complaint was handled immediately, the client put right and the loss taken accordingly. Today financial firms are encouraged and instructed by the regulator to handle it more professionally and more openly. What this actually means is that it can now take up to 8-10 weeks for complaints to get finalised. In my view this is unprofessional but according to FSA and compliance the complaints process needs to be conducted like this. There is no account taken of 'reputational risk' so the client gets thought of last. So much for the new doctrine "Treating Customers ( I prefer Clients) Fairly" which is frankly an utter joke. Unhappy clients equals no business in my 'real' world where I still take 100% UNLIMITED liability. But of course I have to comply, just like Mr Smith.
I don't expect Mr Smith to agree with me about the lack of true professionalism in today's City but to members of the public spare a thought for the wise old Members who voted against the radical changes that led to the opportunities that Mr Smith so effectively profited from. They were mainly of the officer classes, knew how to lead, knew how to manage, knew when to cut their lossses, knew the map of the world inside out, knew and respected industrialists and entrepreneurs alike, understood when politicians and economists got it wrong, took losses on the chin, never complained, never made u-turns on matters of importance (note Mr Smith), honoured their commitment & debts, treated their staff with utmost respect......this is the City pre-Big Bang, it was a better place and far more professional than today's politicians, regulators, City grandees than would many have us believe.It's a shame that the vote was carried marginally through on the old market floor on that eventful day as things could have been so much better in my judgment. Just think what might have happened if brokerages had been left alone in the technology world with a soft touch regulator. So many of the old partnerships could well have survived and prospered but for the regulatory regime that has accelerated since Big Bang. And there's no sign of it slowing down either.......
More on RDR later.
ps I am LONG of Tullett Prebon Ordinary Shares for clients as I believe Mr Smith's inter-dealer broker is an excellent investment in these interesting times. For record I don't have to applaud the traders language and style to be a fan of the firm.
Tuesday 1 November 2011
Oh Wow Oh Wow Oh Wow
The last words of Apple founder Steve Jobs were "Oh wow. Oh wow. Oh wow", it has been reported.
There has been much speculation amongst the Armenian community that Steve Jobs spoke his last words in the ancient Armenian language.
It would now appear that the Apple founder now spoke succinctly in a Jack Kerouac style evoking the famous quotes from "On the Road". I'm not sure he ever read "On the Road" but I suspect that he may have seen the stars just as Sal Paradise and Dean Moriarty had done in the classic beatnik novel of the early '60s.
Oh Wow Oh Wow Oh Wow........indeed.
There has been much speculation amongst the Armenian community that Steve Jobs spoke his last words in the ancient Armenian language.
It would now appear that the Apple founder now spoke succinctly in a Jack Kerouac style evoking the famous quotes from "On the Road". I'm not sure he ever read "On the Road" but I suspect that he may have seen the stars just as Sal Paradise and Dean Moriarty had done in the classic beatnik novel of the early '60s.
Oh Wow Oh Wow Oh Wow........indeed.
Monday 31 October 2011
Pass the parcel or ZERO PRODUCTIVITY Mrs Thatcher!
With the Eurozone rocking in a storm of its own making I was struck by the very dominant lady (her name escaped me on the teleprint) from Ofgem this morning who proudly and firmly discussed the (pointless) fine of £2m that Ofgem made against NPower who are better known for sponsoring Test Matches (anyone for cricket?) in UK than much else. Apparently NPower had garnished this fine because NPower had failed to take customers complaints seriously and in fact NPower had also failed to handle them properly. What a heinous crime! The irony of a company such as NPower who sponsor Test Matches being penalised for failing to keep to the Rules of the Game were lost somewhat on the various TV channels who interviewed her I suspect. Mind you having googled them quickly I see that NPower also sponsor Soccer so I'm not surprised that any irony was mislaid.
Anyway what appears to be really lost here is any journalistic balance or insightfulness of what is happening in UK with all this regulation whether it is Ofgem, Oftel, FSA, ets etc is that the political elite seem to have concluded that the population (that's me and you) need to be protected at all. Many of our previous generations fought 2 world wars but today we seem to have Ofgem and such like fighting our battles. Do they really protect us? I don't think so. You see I don't need a government agency to protect my rights, fine the naughty culprit, take a nice little earn out at my expense and then.....to see the perpetrator of this heinous crime pass on the proceeds of Ofgem's fine to the very consumer (or/& shareholder) that it's designed to protect in the first place.
This road can only lead to one thing.....that is bankruptcy and an ever increasing Orwellian universe.
No thanks! I'd prefer to educate the customers, the clients, the shareholders to take their business elsewhere. That is called 'freedom', 'freedom of choice' and 'common sense'. By all means name and shame these goliaths but the fine is pointless because I (we?) pay for it and the administrators of these quangoes or whatever they're called get overpaid for ZERO PRODUCTIVITY Mrs Thatcher!
Anyway what appears to be really lost here is any journalistic balance or insightfulness of what is happening in UK with all this regulation whether it is Ofgem, Oftel, FSA, ets etc is that the political elite seem to have concluded that the population (that's me and you) need to be protected at all. Many of our previous generations fought 2 world wars but today we seem to have Ofgem and such like fighting our battles. Do they really protect us? I don't think so. You see I don't need a government agency to protect my rights, fine the naughty culprit, take a nice little earn out at my expense and then.....to see the perpetrator of this heinous crime pass on the proceeds of Ofgem's fine to the very consumer (or/& shareholder) that it's designed to protect in the first place.
This road can only lead to one thing.....that is bankruptcy and an ever increasing Orwellian universe.
No thanks! I'd prefer to educate the customers, the clients, the shareholders to take their business elsewhere. That is called 'freedom', 'freedom of choice' and 'common sense'. By all means name and shame these goliaths but the fine is pointless because I (we?) pay for it and the administrators of these quangoes or whatever they're called get overpaid for ZERO PRODUCTIVITY Mrs Thatcher!
I'm all right Jack!
An organisation known as "IDS" (Income Data Services) part of Reuters-Thomson has signalled a rather worrying affront on shareholders and customers across FTSE100 constituents. Admittedly many FTSE100 companies are international goliaths but the recent statistics surrounding Directors pay at these constituents is rather alarming.
According to "IDS" Directors pay (that is defined as a combination of salary, benefits and bonuses) averages out at £2.7 million per Director of every FTSE100 company. Crikey! But what is more alarming is that this ever-increasing trend has risen an astonishing +49% in the last year with CEO's at +43%; note FTSE was +3% to end-March 2011. This suggests that the roles of Non-Executive Directors and Remuneration Committees are being amply rewarded for monitoring CEO's and are now playing catch up or possibly to act as 'defenders of the faith', a kind of buffer zone between management and shareholders. It has long been suggested that Directors pay has been out of control but today things seem to be totally skewed. The argument used to be that the CEO of GlaxoSmithKline for example needed to be rewarded for the substantial profits that GSK made globally and indeed for many years this argument held but let's face it many companies today like GSK have gone (almost) ex-growth. The reward/remuneration game is totally out of synchronisation with the rewards that shareholders obtain although this is being shielded by the fact that equity yields exceed bond yields by a record basis points gap. It's time for UK institutions to put a stop to this absurd reward culture but I suspect that there's only a fat chance of this happening for the ever fattening cats at the top. The roof may well get slippery hereon though!
According to "IDS" Directors pay (that is defined as a combination of salary, benefits and bonuses) averages out at £2.7 million per Director of every FTSE100 company. Crikey! But what is more alarming is that this ever-increasing trend has risen an astonishing +49% in the last year with CEO's at +43%; note FTSE was +3% to end-March 2011. This suggests that the roles of Non-Executive Directors and Remuneration Committees are being amply rewarded for monitoring CEO's and are now playing catch up or possibly to act as 'defenders of the faith', a kind of buffer zone between management and shareholders. It has long been suggested that Directors pay has been out of control but today things seem to be totally skewed. The argument used to be that the CEO of GlaxoSmithKline for example needed to be rewarded for the substantial profits that GSK made globally and indeed for many years this argument held but let's face it many companies today like GSK have gone (almost) ex-growth. The reward/remuneration game is totally out of synchronisation with the rewards that shareholders obtain although this is being shielded by the fact that equity yields exceed bond yields by a record basis points gap. It's time for UK institutions to put a stop to this absurd reward culture but I suspect that there's only a fat chance of this happening for the ever fattening cats at the top. The roof may well get slippery hereon though!
Friday 28 October 2011
Tommy Flowers
Today is the 13th anniversary of the death of Tommy Flowers MBE.
Until I watched a documentary on Bletchley Park the other night I had never heard of him nor his colleague Bill Tutte (a mathematical genius by all accounts) who helped to decrypt the Nazis secret communication (rather like a Telex) device known as 'Tunny' (Lorenz on-line teleprinter cipher) which was more important to the senior ranks of the Nazi regime than the notorious Enigma machine which everyone including Hollywood seems to know about. The Officials Secrets Act had hidden the genius of these two men for over half a century.
With the recent death of Steve Jobs and the Apple Mac and Apple being heavily discussed by the world media I think it's important to record that it would now appear that the son of a bricklayer born in Poplar, who became a mechanical engineer at Royal Arsenal, Woolwich then moving to the Post Office should be accredited as the INVENTOR of the first real computer during the Second World War.
The Collossus as it was named evolved from the success of decoding the Enigma machine. In February 1943 Tommy Flowers proposed an electronic decoding system, a complex machine using over 1,800 valves (vacuum tubes) -note previously the biggest decoder had only used 150 valves- funded just like Jobs from his own resources, this Collossus was the most powerful electronic device of its day and later versions were used by British Intelligence during the Cold War right up until 1960.
How neither Tutte nor Flowers received any substantive acknowledgement from the British government during their lifetimes for their achievements is quite incomprehensible. A study by British Intelliegence at Bletchley had calculated that Collossus's ability to decrypt German communications could well have taken 2 years off the war and saved at least 10 million lives possibly much more.
Makes one think that a few Nobel Peace Prizes could well have gone to different recipients but for the Official Secrets Act.
Until I watched a documentary on Bletchley Park the other night I had never heard of him nor his colleague Bill Tutte (a mathematical genius by all accounts) who helped to decrypt the Nazis secret communication (rather like a Telex) device known as 'Tunny' (Lorenz on-line teleprinter cipher) which was more important to the senior ranks of the Nazi regime than the notorious Enigma machine which everyone including Hollywood seems to know about. The Officials Secrets Act had hidden the genius of these two men for over half a century.
With the recent death of Steve Jobs and the Apple Mac and Apple being heavily discussed by the world media I think it's important to record that it would now appear that the son of a bricklayer born in Poplar, who became a mechanical engineer at Royal Arsenal, Woolwich then moving to the Post Office should be accredited as the INVENTOR of the first real computer during the Second World War.
The Collossus as it was named evolved from the success of decoding the Enigma machine. In February 1943 Tommy Flowers proposed an electronic decoding system, a complex machine using over 1,800 valves (vacuum tubes) -note previously the biggest decoder had only used 150 valves- funded just like Jobs from his own resources, this Collossus was the most powerful electronic device of its day and later versions were used by British Intelligence during the Cold War right up until 1960.
How neither Tutte nor Flowers received any substantive acknowledgement from the British government during their lifetimes for their achievements is quite incomprehensible. A study by British Intelliegence at Bletchley had calculated that Collossus's ability to decrypt German communications could well have taken 2 years off the war and saved at least 10 million lives possibly much more.
Makes one think that a few Nobel Peace Prizes could well have gone to different recipients but for the Official Secrets Act.
Thursday 27 October 2011
Melt UP alert - the reality of the great Eurozone rescue package
I heard a new market term on CNBC this morning. My view is that the new "Melt UP" call may go down as a great damp market squib in very short time. Undoubtedly the institutions maintain significant cash positions whilst traders are having detrimental impacts on market moves these days but the euphoric rises that we're seeing in global equity markets appear to be ignoring reality. I heard another market commentator say that Equity Yields are the new Bond Yields; after all it's commendable but equity yields do average significant (repetition!) basis points improvements over anywhere in global fixed interest. In fact recent historic dividend growth has been commendable (repetition!) and investors are still clamouring for payouts BUT.......the threat of profits warnings and cuts hereon could be alarming AS.....western developed economies head towards (possible) negative growth territory. Contraction could indeed be the order of the day.
I've listened patiently to commentators on Bloomberg, CNBC, SkyNews & BBC this morning and NOT one single person has mentioned jobs. Only once have I heard any discussion regarding the big ? over GROWTH.
So let's quickly examine what Sarko, Merkel and the Barroso gang have come up with shall we? So the bailout fund, the EFSF, will be increased from Euros400bn to Euros1trillion. Well that's easy! The printing presses are being oiled again as I write then. Secondly, greek bond holders are being asked to take a voluntary 50% haircut (write off to bald people). Well that appears to be a good idea although most market observers were expecting 60-70% voluntary hair cut all round which at least would have kept the barbers shop busy but I suspect that the markets have yet to take on board fully the impact of this for french and german banks. Further knee-jerk shocks are anticipated hereon. Finally the Eurozone banks are being asked to raise their Tier 1 Capital Ratios to 9% (from 6%) which implies that they will have to raise around Euros106billion (presumably from the markets). In increasing order 13 German banks will need Euros5.2bn; 4 France banks will need Euros8.8bn (although this may increase significantly if there are greek and other euro write offs); 5 Italy banks will need Euros14.7bn; 5 Spain banks will need Euros26bn & this is the best part, 6 Greek banks need Euros30bn. This totals Euros84.7bn and there's no mention of Portugal, Eire and the fringe EU members who will require a great deal more than the balance of Euros21.3bn I think. There is no mention of the effects of zero to negative growth nor how to prevent contagion which is surely to happen.
In short last night's feast was a Mad Hatters Tea Party with Barroso and Von Rompuy duelling for the position of the wizard.
Melt UP???? I think I'd rather BELT UP for the rocky ride to come.
I've listened patiently to commentators on Bloomberg, CNBC, SkyNews & BBC this morning and NOT one single person has mentioned jobs. Only once have I heard any discussion regarding the big ? over GROWTH.
So let's quickly examine what Sarko, Merkel and the Barroso gang have come up with shall we? So the bailout fund, the EFSF, will be increased from Euros400bn to Euros1trillion. Well that's easy! The printing presses are being oiled again as I write then. Secondly, greek bond holders are being asked to take a voluntary 50% haircut (write off to bald people). Well that appears to be a good idea although most market observers were expecting 60-70% voluntary hair cut all round which at least would have kept the barbers shop busy but I suspect that the markets have yet to take on board fully the impact of this for french and german banks. Further knee-jerk shocks are anticipated hereon. Finally the Eurozone banks are being asked to raise their Tier 1 Capital Ratios to 9% (from 6%) which implies that they will have to raise around Euros106billion (presumably from the markets). In increasing order 13 German banks will need Euros5.2bn; 4 France banks will need Euros8.8bn (although this may increase significantly if there are greek and other euro write offs); 5 Italy banks will need Euros14.7bn; 5 Spain banks will need Euros26bn & this is the best part, 6 Greek banks need Euros30bn. This totals Euros84.7bn and there's no mention of Portugal, Eire and the fringe EU members who will require a great deal more than the balance of Euros21.3bn I think. There is no mention of the effects of zero to negative growth nor how to prevent contagion which is surely to happen.
In short last night's feast was a Mad Hatters Tea Party with Barroso and Von Rompuy duelling for the position of the wizard.
Melt UP???? I think I'd rather BELT UP for the rocky ride to come.
Thursday 6 October 2011
Jobbing backwards
There's a phrase in broking that sums up most of our daily experiences in Capital Markets. It's "one should never JOB backwards".....it refers to the old days of Jobbers and Brokers on the Stock Exchange, London (as it used to be called) and suggests that no jobber should ever think about the lost opportunity; he should never ever JOB backwards.
So I should apologise to the late Steve Jobs's family for the pun but just once I'm going to JOB backwards and take a look at my father's dealing book of 1980 when Apple Inc floated at US$22 per share.
I was a young trainee broker back then. The green dealing book has just been pulled off the shelf and I'm dusting it off now. I recollect that this was the twilight period of technology investing and to my knowledge none of the UK institutions were really looking at what was to become Silicon Valley back then. Amongst private brokers in London there were perhaps a half a dozen individuals investing in this area at the time and generally speaking many financiers simply scorned the new computer age up to 30th December 1980 as it didn't register on their radar.
In the 2 weeks leading up to the Apple flotation my father's int'l dealing book reads;-
+400 Westinghouse
-600 Culbro
-1,400 Echlin
+1,400 Great Basin Petroleum
-600 Callon Petroleum
+1,000 Digicon
+16,000 Hitachi
-2,000 Petroleum Helicopters
+2,000 TIE Communications
+2,000 Statex Petroleum
+2,500 Sci-Tex
-2,500 Sci-Tex
(a few names are still around)
& then
+1,000 Apple Computers @ $36 on 30th December 1980
(issued at $22 I understand although the Red Herring IPO document is long perished)
I remember at the time thinking that the Apple float was a momentous moment for business. The Acorn, Sinclair and Amstrad pc's were to follow.
& then further entries can be found throughout 1981
+1,000 Apple Computers @ $33 1/4 6th January 1981
+200 Apple Computers @ $31 1/8 15th January 1981
+200 Apple Computers @ $29 1/8 6th February 1981
+500 Apple Computers @ $25 3/4 27th March 1981
+500 Apple Computers @ $31 1/4 27th May 1981
I'm not going to look any further but by my reckoning clients bought up to this point 3,400 AAPL shares costing $109,800 ignoring expenses which if held today would be worth in the region of $10 million although most of this gain would have been arrived at since 1997. As you can see from the prices paid it was touch and go for investors and insiders to see some daylight from the $22 issue price by March 1981. Apple continued to have a bumpy ride until Jobs return to the company in the late '90s.
(note to the government & FSA- I suspect that the clients who bought into the Apple opportunity at the time would have been a bit bemused about the current FSA suitability rules and may even have been scared off by the compliance experience)
I recollect that I traded Apple stock myself for clients in 1980's but not very successfully. The recent spectacular rises took years of innovation and insight and Jobs will be remembered for changing the face of our lives. From the personal computer to iTunes, to the iPad and to the iPhone4 GS.
RIP Steve.
ps I must ask my father if he met Jobs at the IPO launch.
So I should apologise to the late Steve Jobs's family for the pun but just once I'm going to JOB backwards and take a look at my father's dealing book of 1980 when Apple Inc floated at US$22 per share.
I was a young trainee broker back then. The green dealing book has just been pulled off the shelf and I'm dusting it off now. I recollect that this was the twilight period of technology investing and to my knowledge none of the UK institutions were really looking at what was to become Silicon Valley back then. Amongst private brokers in London there were perhaps a half a dozen individuals investing in this area at the time and generally speaking many financiers simply scorned the new computer age up to 30th December 1980 as it didn't register on their radar.
In the 2 weeks leading up to the Apple flotation my father's int'l dealing book reads;-
+400 Westinghouse
-600 Culbro
-1,400 Echlin
+1,400 Great Basin Petroleum
-600 Callon Petroleum
+1,000 Digicon
+16,000 Hitachi
-2,000 Petroleum Helicopters
+2,000 TIE Communications
+2,000 Statex Petroleum
+2,500 Sci-Tex
-2,500 Sci-Tex
(a few names are still around)
& then
+1,000 Apple Computers @ $36 on 30th December 1980
(issued at $22 I understand although the Red Herring IPO document is long perished)
I remember at the time thinking that the Apple float was a momentous moment for business. The Acorn, Sinclair and Amstrad pc's were to follow.
& then further entries can be found throughout 1981
+1,000 Apple Computers @ $33 1/4 6th January 1981
+200 Apple Computers @ $31 1/8 15th January 1981
+200 Apple Computers @ $29 1/8 6th February 1981
+500 Apple Computers @ $25 3/4 27th March 1981
+500 Apple Computers @ $31 1/4 27th May 1981
I'm not going to look any further but by my reckoning clients bought up to this point 3,400 AAPL shares costing $109,800 ignoring expenses which if held today would be worth in the region of $10 million although most of this gain would have been arrived at since 1997. As you can see from the prices paid it was touch and go for investors and insiders to see some daylight from the $22 issue price by March 1981. Apple continued to have a bumpy ride until Jobs return to the company in the late '90s.
(note to the government & FSA- I suspect that the clients who bought into the Apple opportunity at the time would have been a bit bemused about the current FSA suitability rules and may even have been scared off by the compliance experience)
I recollect that I traded Apple stock myself for clients in 1980's but not very successfully. The recent spectacular rises took years of innovation and insight and Jobs will be remembered for changing the face of our lives. From the personal computer to iTunes, to the iPad and to the iPhone4 GS.
RIP Steve.
ps I must ask my father if he met Jobs at the IPO launch.
As news filters through of the death of Steve Jobs aged 56 there will be millions of people unaware that it was the scientific and artistic vision of one man that has got tens (maybe 100's) of millions to the point where we're at today. Yesterday's launch of the new iPhone4 was quite timely. One word can describe Steve Jobs.......that is "GENIUS".
The Apple website says it all...I recommend everyone to click on http://www.apple.com/ to see how one man can take down an entire corporate website in defiance of corporate regulations et al. SEE RIGHT....it's the perfect tribute for a man who often wore no shoes and thought he wasn't cut out for management.
Steve Jobs died during a period when millions of people are beginning to question government, big business, regulation in a new movement that embraces CAPITALOCRACY........read on and consider this.
Would Steve Jobs be able to have achieved what he has done if he had started Apple Inc in 2011?
(a definition of Capitalocracy) note this can apply to the UK too or anywhere for that matter
What Is Capitalocracy
Capitalocracy is a term which hopefully will catch on, which accurately describes what our supposedly democratic republic has become.
The corporation functions in a similar manner to a democracy. Decisions are made and representatives are named by vote. The difference is that instead of each member of the organization receiving a single vote, each share in the corporation represents a vote.
This is fine in business. It makes perfect sense. A person owning 2% of a business has 2% of the decision-making power. The problem is that as a system of government, this would be a perversion of democracy.
Corporations, whose decisions are made in a democracy of capital, in which votes are bought and sold, are an important source of funding for our election system. Donations for the two major parties come largely from corporations and the wealthy, who are also the owners of communication media and control the think tanks and political action committees which lobby, advertise, theorize, and attempt, rather successfully, to frame and shape the public dialogue.
And while, in the end, the voters do make the final decision, assuming that our election system is trustworthy, no mainstream candidate is presented to them without first and foremost winning the support or at least approval of enough monetary power, mainly derived from the major holders of capital. And the decisions of who receives corporate donations and what issues and political organizations receive corporate funding for their promotion are made by representatives chosen in this system of corporate democracy, where votes are bought and sold. It’s kind of like a run-off election, but instead of voting once among a full list of candidates in the first round, and then voting for the top two candidates in the second round, the first round is decided for us by the holders of capital. As shareholders and, thus, partial decision-makers for corporations, the people choosing our candidates don’t even have to be U.S. citizens.
The decisions made in government are made taking two things in mind, the voters and the capital which funds campaigns and shapes the public dialogue. The part the voter plays in the process is shrinking, as many people are giving in, without even knowing it, to the ideas the money power is working hard to distribute. It’s a problem which will get worse and worse as the generations pass, as people will take the talking points written by a corporate-funded PAC to justify the rich getting richer as the wisdom of their fathers passed down to them.
Every citizen has a right to submit legislation to Congress for consideration, except the president. Why is it, then, that so many of our laws today are written by lobbyists and corporations? At best, the legislators are not doing their jobs. We have industries writing their own regulations, then complaining that they are regulated too much, and that they can regulate themselves without legislation.
Democracy is government of the people, by the people, and for the people, with each person having equal representation, one man, one vote. This is clearly not how things work in the U.S. The money power gets first pick of the candidates in every election, and presents their top choices to the people. Their voice is the loudest in the public dialogue. And they write many of the laws we live under.
This is a government of capital, by capital, and for capital. This is a capitalocracy.
We’re looking for creative ways to take the power back.
The Apple website says it all...I recommend everyone to click on http://www.apple.com/ to see how one man can take down an entire corporate website in defiance of corporate regulations et al. SEE RIGHT....it's the perfect tribute for a man who often wore no shoes and thought he wasn't cut out for management.
Steve Jobs died during a period when millions of people are beginning to question government, big business, regulation in a new movement that embraces CAPITALOCRACY........read on and consider this.
Would Steve Jobs be able to have achieved what he has done if he had started Apple Inc in 2011?
(a definition of Capitalocracy) note this can apply to the UK too or anywhere for that matter
What Is Capitalocracy
Capitalocracy is a term which hopefully will catch on, which accurately describes what our supposedly democratic republic has become.
The corporation functions in a similar manner to a democracy. Decisions are made and representatives are named by vote. The difference is that instead of each member of the organization receiving a single vote, each share in the corporation represents a vote.
This is fine in business. It makes perfect sense. A person owning 2% of a business has 2% of the decision-making power. The problem is that as a system of government, this would be a perversion of democracy.
Corporations, whose decisions are made in a democracy of capital, in which votes are bought and sold, are an important source of funding for our election system. Donations for the two major parties come largely from corporations and the wealthy, who are also the owners of communication media and control the think tanks and political action committees which lobby, advertise, theorize, and attempt, rather successfully, to frame and shape the public dialogue.
And while, in the end, the voters do make the final decision, assuming that our election system is trustworthy, no mainstream candidate is presented to them without first and foremost winning the support or at least approval of enough monetary power, mainly derived from the major holders of capital. And the decisions of who receives corporate donations and what issues and political organizations receive corporate funding for their promotion are made by representatives chosen in this system of corporate democracy, where votes are bought and sold. It’s kind of like a run-off election, but instead of voting once among a full list of candidates in the first round, and then voting for the top two candidates in the second round, the first round is decided for us by the holders of capital. As shareholders and, thus, partial decision-makers for corporations, the people choosing our candidates don’t even have to be U.S. citizens.
The decisions made in government are made taking two things in mind, the voters and the capital which funds campaigns and shapes the public dialogue. The part the voter plays in the process is shrinking, as many people are giving in, without even knowing it, to the ideas the money power is working hard to distribute. It’s a problem which will get worse and worse as the generations pass, as people will take the talking points written by a corporate-funded PAC to justify the rich getting richer as the wisdom of their fathers passed down to them.
Every citizen has a right to submit legislation to Congress for consideration, except the president. Why is it, then, that so many of our laws today are written by lobbyists and corporations? At best, the legislators are not doing their jobs. We have industries writing their own regulations, then complaining that they are regulated too much, and that they can regulate themselves without legislation.
Democracy is government of the people, by the people, and for the people, with each person having equal representation, one man, one vote. This is clearly not how things work in the U.S. The money power gets first pick of the candidates in every election, and presents their top choices to the people. Their voice is the loudest in the public dialogue. And they write many of the laws we live under.
This is a government of capital, by capital, and for capital. This is a capitalocracy.
We’re looking for creative ways to take the power back.
Wednesday 5 October 2011
Review 3Q 2011 3rd October 2011
“Successful investing is anticipating the anticipations of others.”------------------John Maynard Keynes
I’ve been looking for a positive quote that I can apply to the current Q review, something that might liven up the proceedings and may actually amuse or provide some good news. Alas I haven’t found one suitable for the current malaise that we find ourselves in. On several occasions recently I’ve been asked for some good news. On one level alone there does appear to be some value in equities with S&P trading on 10.2 x earnings versus an historic average of 13.7 x during the previous nine recessions going back to 1957 but the current backdrop perhaps should be compared to the ‘30s. But then again this market scenario is something that we have never seen before. In the aforementioned previous recessions corporate profits declined on average 12% but there’s every chance that the current recession or depression may take a different degree of attack that may alarm everyone. The western banking crisis may be taking a different twist as I write. Alarm bells are ringing in Europe with Dexia and Commerzbank joining the ranks of the walking wounded such as Credit Agricole, BNP Paribas, Societe Generale, the greek banks, the portuguese banks, Bank of Ireland and a host of others. In UK both RBS and Lloyds continue to meander below the bailout breakeven thresholds and there’s little chance of tax payers recouping their investment unless the magical rabbit miraculously appears. Last week Santander UK issued a severe profits warning and with the backdrop of a failing retail market (other than Central London) prospects look extremely uncertain for owner occupiers. In US even MorganStanley are embroiled in the cleansing process; their CDS (credit default swaps) insurance premium is now higher than Italy which implies there are hidden problems there too. Of course, no-one knows if a Lehman mark II is imminent but my feeling is that the derivatives timebomb is ticking louder. How much is the global exposure in derivatives? Well it’s estimated at $500-600 trillion via the clearing process but so much is synthetic (socially and financially useless in my opinion) and it doesn’t help that the Bank for Int’l Settlements based in Basle is not exactly transparent with the state of global derivatives against a backdrop of friction amongst the global clearers which is coming to a head according to the FT. So it would appear that the problems now surfacing in the global clearance of derivatives is not that different to the frictions appearing in the EU doctrine as millions are being asked to pay for bailouts. The transaction tax (“tobin”) imposed by the Eurozone can only damage markets and investors hopes in the medium to long term. What perhaps is more alarming is that there are clear divisions between politicians, regulators, central bankers and economists who all appear to be acting in a cartel against the wisdom of markets. This does not bode well. Last week’s Euro450 billion (capped) support for the EU banks from Germany pales into significance against the call from IMF for at least Euros2 trillion of (QE) support. It remains to be seen too whether the EFSF (European Financial Stability Fund) can gain enough momentum to raise enough Euros to bail the debtors out. There are even those calling for a Euro 3 trillion bailout. Where and when will this all end?
It’s clear at least that these market conditions do not favour investors. Traders meanwhile face extraordinary volatility as the newsflow is mesmorising; the casino mentality that has been so heaviliy criticised is still with us. Arguably it’s too late to sell anything and too early to invest but there have been indicators that private investors and institutions are putting their toes into the ‘hot’ water on occasions. There is some value appearing especially in emerging and frontiers markets and some outstanding value amongst precious metals stocks even despite the recent gold correction from c.$1,900pto to low $1,600’s. Incidentally this 15% correction was made more severe by increased margin calls on gold traders at CME in the midst of the initial sell off. The trend for Gold has NOT been broken here and it’s still feasible that $2,000-2,500 could be reached if more QE is triggered in the final Q. Meanwhile generally speaking the consensus view about oil is that higher prices will be seen hereon.
With regard to stock selection amongst the majors I still continue to look to buy Royal Dutch Shell (yield 5.5%) in £20 down to £16 range and quite like BP at around £4 as there is talk of more asset sales (JPMorgan 575p & Merrill’s BUY 580p) as well as recurring stories of RDS looking at them. I don’t think that Tullow 1298p are that compelling at the moment despite the positive Ghana news; I’m still wary of the Uganda investment. Vallares are suspended currently pending a reverse takeover by Genel of Turkey/Iraq and an entry into FTS100/250 is anticipated. The mid-range oils have yet to close the n.a.v gaps and still offer some good upside hereon. Cairn, Soco, Hardy O&G (484p n.a.v. also Arden target), Premier Oil (Deutsche BUY 605p target & UniCredit BUY 615p) and Heritage have traded sideways in the last Q. Elsewhere In FTSE I am extremely cautious although some previous targets to buy at have been reached. Arguably there is some value here in BAE Systems now 260p yield 6.7% p/e 9 (going lower perhaps after recent redundancies), GlaxoSmithKline firm at 1315p yield 4.9%, Sainsbury now 275p yield 5.4% p/e 8 (Seymour Pierce have HOLD 270p target), HSBC now 485p yield 4.7% and Standard Chartered now 1222p yield 3.6% as well as a few others but I am still hesitant to go aggressive here just yet so the selective investment trust approach seems more prudent. Investments in JPMorgan Claverhouse (4.7%), Henderson Far East (5.2%), Schroder Oriental (4.0%), Scottish American (4.4%), Securities Trust of Scotland (4.4%) and Merchants Trust (6.3%) are still compelling for income investors whereas emerging markets trusts such as Templeton Emerging now 505p, JPMorgan India now 354p, JPMorgan Brazil 81p (just a hunch but this is tempting against a n.a.v of 84p), JPMorgan Russia now 425p and BlackRock Latin America now 505p yield 3.0% could also be considered. There isn’t a suitable trust for the Final Frontier, Africa so a selected basket of equities is preferred here. In particular I still like Randgold now 6455p (the Ivory Coast problem is now behind them), African Barrick now 513p and Shanta 22 1/2p (Fairfax increased its BUY target to 74p last week) are attractive african exploration plays whereas elsewhere globally I am still persevering with Patagonia Gold 52 1/2p, Norseman 15p, Orosur 53p, Peninsular 31p and Nyota 7 3/4p. Anglo Pacific at 249p yield 3.6% is a classic royalty play that provides some variety.
These are extremely difficult and dangerous market conditions as the capitulation moment dubbed as the SPUTNIK MOMENT by PIMCO is possibly nearly upon us. A disconnect amongst metals is quite likely with base metals and precious metals divurging. The recent flight to US Treasuries and the US $dollar has surprised quite a few as the liquidity argument increases. Eventually though the rationale should point to a big bull move in Gold and other precious metals.
With all this bearishness I continue to favour portfolio weightings such as 0% Fixed Interest (a bond implosion is forecast), 20-35% cash, maximum 80% equities (overseas earners mainly incl. 25%-40% in precious metals stocks, a spread of investment trusts). It’s important to stress that investors are entering a new era where stagnant growth (or even negative growth) in the west could be offset by continued growth in emerging and frontiers markets. Even though China’s growth of 7-10% is forecast to slow to 5% its long-term effect on the rest of the world will imply high growth rates elsewhere. Africa a.k.a the Final Frontier presents amazing opportunities today with a 7% GDP growth rate whilst I still feel that India, Brazil & Russia present excellent value whilst the western developed markets undergo a restructuring process. One interesting angle right now is the North American market as somewhere to invest and I am keeping an eye on US Smaller Companies Funds and the Canadian resources market. As Louise Cooper of BGC Partners suggested on Bloomberg this week equities are “cheap as chips” as gilt yields are below 3% versus the average FTSE yield approaching 4%. My own view is that average equities yields could well reach 5-6% in UK ; some investment trusts are already approaching 5%. The correlation between deflation and inflation needs to be watched closely which is why there’s a growing case for increasing equity exposure especially on any decline across markets. The level of the coming decline is the key and I still feel that 10-30% is possible which implies 4,400 down to 3,500 on FTSE100. I think we are about to witness the SPUTNIK MOMENT as has already been discussed.
As Hoblyn & King’s former client JM Keynes reportedly suggested before WW2, the skill and art of “successful investing is anticipating the anticipations of others” even though we don’t necessarily agree today with the way that markets are being led. Easier said than done.
I’ve been looking for a positive quote that I can apply to the current Q review, something that might liven up the proceedings and may actually amuse or provide some good news. Alas I haven’t found one suitable for the current malaise that we find ourselves in. On several occasions recently I’ve been asked for some good news. On one level alone there does appear to be some value in equities with S&P trading on 10.2 x earnings versus an historic average of 13.7 x during the previous nine recessions going back to 1957 but the current backdrop perhaps should be compared to the ‘30s. But then again this market scenario is something that we have never seen before. In the aforementioned previous recessions corporate profits declined on average 12% but there’s every chance that the current recession or depression may take a different degree of attack that may alarm everyone. The western banking crisis may be taking a different twist as I write. Alarm bells are ringing in Europe with Dexia and Commerzbank joining the ranks of the walking wounded such as Credit Agricole, BNP Paribas, Societe Generale, the greek banks, the portuguese banks, Bank of Ireland and a host of others. In UK both RBS and Lloyds continue to meander below the bailout breakeven thresholds and there’s little chance of tax payers recouping their investment unless the magical rabbit miraculously appears. Last week Santander UK issued a severe profits warning and with the backdrop of a failing retail market (other than Central London) prospects look extremely uncertain for owner occupiers. In US even MorganStanley are embroiled in the cleansing process; their CDS (credit default swaps) insurance premium is now higher than Italy which implies there are hidden problems there too. Of course, no-one knows if a Lehman mark II is imminent but my feeling is that the derivatives timebomb is ticking louder. How much is the global exposure in derivatives? Well it’s estimated at $500-600 trillion via the clearing process but so much is synthetic (socially and financially useless in my opinion) and it doesn’t help that the Bank for Int’l Settlements based in Basle is not exactly transparent with the state of global derivatives against a backdrop of friction amongst the global clearers which is coming to a head according to the FT. So it would appear that the problems now surfacing in the global clearance of derivatives is not that different to the frictions appearing in the EU doctrine as millions are being asked to pay for bailouts. The transaction tax (“tobin”) imposed by the Eurozone can only damage markets and investors hopes in the medium to long term. What perhaps is more alarming is that there are clear divisions between politicians, regulators, central bankers and economists who all appear to be acting in a cartel against the wisdom of markets. This does not bode well. Last week’s Euro450 billion (capped) support for the EU banks from Germany pales into significance against the call from IMF for at least Euros2 trillion of (QE) support. It remains to be seen too whether the EFSF (European Financial Stability Fund) can gain enough momentum to raise enough Euros to bail the debtors out. There are even those calling for a Euro 3 trillion bailout. Where and when will this all end?
It’s clear at least that these market conditions do not favour investors. Traders meanwhile face extraordinary volatility as the newsflow is mesmorising; the casino mentality that has been so heaviliy criticised is still with us. Arguably it’s too late to sell anything and too early to invest but there have been indicators that private investors and institutions are putting their toes into the ‘hot’ water on occasions. There is some value appearing especially in emerging and frontiers markets and some outstanding value amongst precious metals stocks even despite the recent gold correction from c.$1,900pto to low $1,600’s. Incidentally this 15% correction was made more severe by increased margin calls on gold traders at CME in the midst of the initial sell off. The trend for Gold has NOT been broken here and it’s still feasible that $2,000-2,500 could be reached if more QE is triggered in the final Q. Meanwhile generally speaking the consensus view about oil is that higher prices will be seen hereon.
With regard to stock selection amongst the majors I still continue to look to buy Royal Dutch Shell (yield 5.5%) in £20 down to £16 range and quite like BP at around £4 as there is talk of more asset sales (JPMorgan 575p & Merrill’s BUY 580p) as well as recurring stories of RDS looking at them. I don’t think that Tullow 1298p are that compelling at the moment despite the positive Ghana news; I’m still wary of the Uganda investment. Vallares are suspended currently pending a reverse takeover by Genel of Turkey/Iraq and an entry into FTS100/250 is anticipated. The mid-range oils have yet to close the n.a.v gaps and still offer some good upside hereon. Cairn, Soco, Hardy O&G (484p n.a.v. also Arden target), Premier Oil (Deutsche BUY 605p target & UniCredit BUY 615p) and Heritage have traded sideways in the last Q. Elsewhere In FTSE I am extremely cautious although some previous targets to buy at have been reached. Arguably there is some value here in BAE Systems now 260p yield 6.7% p/e 9 (going lower perhaps after recent redundancies), GlaxoSmithKline firm at 1315p yield 4.9%, Sainsbury now 275p yield 5.4% p/e 8 (Seymour Pierce have HOLD 270p target), HSBC now 485p yield 4.7% and Standard Chartered now 1222p yield 3.6% as well as a few others but I am still hesitant to go aggressive here just yet so the selective investment trust approach seems more prudent. Investments in JPMorgan Claverhouse (4.7%), Henderson Far East (5.2%), Schroder Oriental (4.0%), Scottish American (4.4%), Securities Trust of Scotland (4.4%) and Merchants Trust (6.3%) are still compelling for income investors whereas emerging markets trusts such as Templeton Emerging now 505p, JPMorgan India now 354p, JPMorgan Brazil 81p (just a hunch but this is tempting against a n.a.v of 84p), JPMorgan Russia now 425p and BlackRock Latin America now 505p yield 3.0% could also be considered. There isn’t a suitable trust for the Final Frontier, Africa so a selected basket of equities is preferred here. In particular I still like Randgold now 6455p (the Ivory Coast problem is now behind them), African Barrick now 513p and Shanta 22 1/2p (Fairfax increased its BUY target to 74p last week) are attractive african exploration plays whereas elsewhere globally I am still persevering with Patagonia Gold 52 1/2p, Norseman 15p, Orosur 53p, Peninsular 31p and Nyota 7 3/4p. Anglo Pacific at 249p yield 3.6% is a classic royalty play that provides some variety.
These are extremely difficult and dangerous market conditions as the capitulation moment dubbed as the SPUTNIK MOMENT by PIMCO is possibly nearly upon us. A disconnect amongst metals is quite likely with base metals and precious metals divurging. The recent flight to US Treasuries and the US $dollar has surprised quite a few as the liquidity argument increases. Eventually though the rationale should point to a big bull move in Gold and other precious metals.
With all this bearishness I continue to favour portfolio weightings such as 0% Fixed Interest (a bond implosion is forecast), 20-35% cash, maximum 80% equities (overseas earners mainly incl. 25%-40% in precious metals stocks, a spread of investment trusts). It’s important to stress that investors are entering a new era where stagnant growth (or even negative growth) in the west could be offset by continued growth in emerging and frontiers markets. Even though China’s growth of 7-10% is forecast to slow to 5% its long-term effect on the rest of the world will imply high growth rates elsewhere. Africa a.k.a the Final Frontier presents amazing opportunities today with a 7% GDP growth rate whilst I still feel that India, Brazil & Russia present excellent value whilst the western developed markets undergo a restructuring process. One interesting angle right now is the North American market as somewhere to invest and I am keeping an eye on US Smaller Companies Funds and the Canadian resources market. As Louise Cooper of BGC Partners suggested on Bloomberg this week equities are “cheap as chips” as gilt yields are below 3% versus the average FTSE yield approaching 4%. My own view is that average equities yields could well reach 5-6% in UK ; some investment trusts are already approaching 5%. The correlation between deflation and inflation needs to be watched closely which is why there’s a growing case for increasing equity exposure especially on any decline across markets. The level of the coming decline is the key and I still feel that 10-30% is possible which implies 4,400 down to 3,500 on FTSE100. I think we are about to witness the SPUTNIK MOMENT as has already been discussed.
As Hoblyn & King’s former client JM Keynes reportedly suggested before WW2, the skill and art of “successful investing is anticipating the anticipations of others” even though we don’t necessarily agree today with the way that markets are being led. Easier said than done.
Monday 26 September 2011
The Cavalry are just over the hill, or are they?
In November 1976 Jim Callaghan faced a sterling crisis which forced him to apply to the IMF (International Monetary Fund) for a £2.3bn rescue package. At that point it had been the largest ever call on IMF and as part of its conditions the IMF requested massive cuts in public spending. The ship steadied and the UK entered the Thatcher years shortly thereafter. The rest is history.
Today the UK has NATIONAL DEBT approaching £1 trillion (£940.1billion-July 2011) equating to 61.4% of total GDP. Annually the cost of servicing this spiralling debt is circa £43bn (or 3% of GDP) which also matches the size of the UK defence budget. The debt is increasing at c. £121bn p.a or £2bn a week.
Now these figures may seem extraordinary but when one looks elsewhere severe alarm bells start to ring and they're getting louder by the minute. The UK is at number 23 in the Premier League of Debtor Nations (source CIA World Factbook).Interestingly the CIA added the European Union to their Factbook (on 16th December 2004) because the EU "continues to accrue more nation-like characteristics for itself". Seven years later things seem to be at breaking point.
But let's take a look at the Cavalry shall we?
It's called the IMF.
It was formed at the end of WW2 and designed to stabilise international exchange rates and facilitate development through the influence of neoliberal economic policies in the forms of loans, debt relief and even aid to countries especially in the Third World. There are 187 member states or members working to foster global co-operation, secure financial stability, promote high employment and sustainable economic growth and reduce poverty. Each member has a quota and vote on all major decisions requiring an 85% supermajority. Now this gets interesting!
The following countries have been running the IMF helmed by the incumbent Managing Director at the time (when UK went "cup in hand" in 1976 the MD then was a Dutchman); 1946-1951 Belgium, 1951-1963 Sweden, 1963-1973 France, 1973-1978 Holland, 1978-2000 France, 2000-2004 Germany, 2004-2007 Spain and 2007-to date France. It's interesting that USA, UK, Canada, Australia and the anglo nations have NEVER had a leader of IMF and with the recent Strauss-Kahn scandal there was a call from the BRICS's bloc to elect someone from outside the EU as by appointing a European undermined the legitimacy of IMF, in fact asking that the appointment be merit-based too. As an aside it wouldn't be understated if one said that the whole undertone of the structure of the IMF might be construed as being biased towards the EU (& France in particular with 5 of the total of 11 MD's being french); it's in effect an EU based culture that is prevalent in the IMF.
Now let's fast forward to the present crisis in the global economy. Christine Lagarde, the current MD (the former Finance Minister of France) has called for cohesion across Europe and global markets and meanwhile is suggesting that a Euros 2 trillion (£1.75bn) fund is created creating a firewall around the most indebted eurozone nations, allowing for an orderly Greek default (the creditors are standing by Christine!) and bailing out European banks (mostly french banks so the markets believe) most at risk. Note Greece is currently paying 66% interest on its short-term debt.
The scenario unfolding reminds me of the young man who has over-extended his overdraft (unauthorised), requesting that the bank assist him by extending his credit and then is told curtly by the Bank Manager that the bank finances are in a total mess anyway so there's absolutely no chance of any assistance. Except of course there's a twist. The young man's grand-father is the Life President of the bank in question.
Looking at the current IMF make-up the Eurozone nations % call would be;-
Germany 6.13% of the quota
UK (not in EU but would have to participate anyway) 4.52%
France (AAA status under watch) 4.52%
Italy (almost bust) 3.32%
Holland 2.17%
Belgium 1.94%
Spain 1.69%
Switzerland (not in EU) 1.45%
There are of course peripheral eurozone nations that didn't make the 1% cut but a guesstimate total of Eurozone % influence within IMF would be 19.77%-25% of the fund. So in effect somewhere in the region of Euros 500billion would have to be paid by the Eurozone to contemplate a Loan to itself of Euros 2trillion. The terms have yet to be decided but it's likely to look pretty rosey for the recipients although I doubt the investors/depositors would achieve anything comparable to the current inflation rate. On this basis alone it's a dead duck but what I find extraordinary is why any capitalist would think this a sensible approach. Although a QE style assist (sorry for the baseball analogy Mr Geithner; btw is that a german surname Tim? just curious!) seems initially a good idea the make up of the quota within the IMF would have to change first in my professional opinion for this program to work. Let me explain. Most of the principle nations within the quota are indebted e.g USA 17.72% Japan 6.57% in addition to the above list BUT (& this is the big BUT) if Madame Lagarde is to obtain any credibility here she must insist that the CREDIT nations increase their quota %'s. In this regard I cannot see that China 4.01%, Saudi Arabia 2.94% (how daft is this quota?), Canada 2.68%, Russia 2.50%, India 2.45%and Brazil 1.79% by example have even remotely fair or equitable quota %'s.
Now there's one other thing that's going to rear up here before long too. It's called CONFLICT OF INTEREST and in this regard France clearly has a major conflict of interest here. Trichet is at the ECB and with Lagarde at IMF in my opinion this is NOT healthy for the anglos & ROfW (Rest of the World). I wonder how long it will take before co-conspirators see that Lagarde's position at IMF is untenable if this monstrous bailout is allowed to succeed! She was ill advised to accept this job but I suspect that it was a classic case of Sarkozy massaging the process. By the way I wonder how many of the EU electorate know that Lagarde is currently under investigation (since 3rd August 2011 by a french court) into her role in a Euro 285 million arbitration deal that favoured Bernard Tapie. Oooopppppssss!
The 3rd November 2011 G20 meeting should be a hoot!
Today the UK has NATIONAL DEBT approaching £1 trillion (£940.1billion-July 2011) equating to 61.4% of total GDP. Annually the cost of servicing this spiralling debt is circa £43bn (or 3% of GDP) which also matches the size of the UK defence budget. The debt is increasing at c. £121bn p.a or £2bn a week.
Now these figures may seem extraordinary but when one looks elsewhere severe alarm bells start to ring and they're getting louder by the minute. The UK is at number 23 in the Premier League of Debtor Nations (source CIA World Factbook).Interestingly the CIA added the European Union to their Factbook (on 16th December 2004) because the EU "continues to accrue more nation-like characteristics for itself". Seven years later things seem to be at breaking point.
But let's take a look at the Cavalry shall we?
It's called the IMF.
It was formed at the end of WW2 and designed to stabilise international exchange rates and facilitate development through the influence of neoliberal economic policies in the forms of loans, debt relief and even aid to countries especially in the Third World. There are 187 member states or members working to foster global co-operation, secure financial stability, promote high employment and sustainable economic growth and reduce poverty. Each member has a quota and vote on all major decisions requiring an 85% supermajority. Now this gets interesting!
The following countries have been running the IMF helmed by the incumbent Managing Director at the time (when UK went "cup in hand" in 1976 the MD then was a Dutchman); 1946-1951 Belgium, 1951-1963 Sweden, 1963-1973 France, 1973-1978 Holland, 1978-2000 France, 2000-2004 Germany, 2004-2007 Spain and 2007-to date France. It's interesting that USA, UK, Canada, Australia and the anglo nations have NEVER had a leader of IMF and with the recent Strauss-Kahn scandal there was a call from the BRICS's bloc to elect someone from outside the EU as by appointing a European undermined the legitimacy of IMF, in fact asking that the appointment be merit-based too. As an aside it wouldn't be understated if one said that the whole undertone of the structure of the IMF might be construed as being biased towards the EU (& France in particular with 5 of the total of 11 MD's being french); it's in effect an EU based culture that is prevalent in the IMF.
Now let's fast forward to the present crisis in the global economy. Christine Lagarde, the current MD (the former Finance Minister of France) has called for cohesion across Europe and global markets and meanwhile is suggesting that a Euros 2 trillion (£1.75bn) fund is created creating a firewall around the most indebted eurozone nations, allowing for an orderly Greek default (the creditors are standing by Christine!) and bailing out European banks (mostly french banks so the markets believe) most at risk. Note Greece is currently paying 66% interest on its short-term debt.
The scenario unfolding reminds me of the young man who has over-extended his overdraft (unauthorised), requesting that the bank assist him by extending his credit and then is told curtly by the Bank Manager that the bank finances are in a total mess anyway so there's absolutely no chance of any assistance. Except of course there's a twist. The young man's grand-father is the Life President of the bank in question.
Looking at the current IMF make-up the Eurozone nations % call would be;-
Germany 6.13% of the quota
UK (not in EU but would have to participate anyway) 4.52%
France (AAA status under watch) 4.52%
Italy (almost bust) 3.32%
Holland 2.17%
Belgium 1.94%
Spain 1.69%
Switzerland (not in EU) 1.45%
There are of course peripheral eurozone nations that didn't make the 1% cut but a guesstimate total of Eurozone % influence within IMF would be 19.77%-25% of the fund. So in effect somewhere in the region of Euros 500billion would have to be paid by the Eurozone to contemplate a Loan to itself of Euros 2trillion. The terms have yet to be decided but it's likely to look pretty rosey for the recipients although I doubt the investors/depositors would achieve anything comparable to the current inflation rate. On this basis alone it's a dead duck but what I find extraordinary is why any capitalist would think this a sensible approach. Although a QE style assist (sorry for the baseball analogy Mr Geithner; btw is that a german surname Tim? just curious!) seems initially a good idea the make up of the quota within the IMF would have to change first in my professional opinion for this program to work. Let me explain. Most of the principle nations within the quota are indebted e.g USA 17.72% Japan 6.57% in addition to the above list BUT (& this is the big BUT) if Madame Lagarde is to obtain any credibility here she must insist that the CREDIT nations increase their quota %'s. In this regard I cannot see that China 4.01%, Saudi Arabia 2.94% (how daft is this quota?), Canada 2.68%, Russia 2.50%, India 2.45%and Brazil 1.79% by example have even remotely fair or equitable quota %'s.
Now there's one other thing that's going to rear up here before long too. It's called CONFLICT OF INTEREST and in this regard France clearly has a major conflict of interest here. Trichet is at the ECB and with Lagarde at IMF in my opinion this is NOT healthy for the anglos & ROfW (Rest of the World). I wonder how long it will take before co-conspirators see that Lagarde's position at IMF is untenable if this monstrous bailout is allowed to succeed! She was ill advised to accept this job but I suspect that it was a classic case of Sarkozy massaging the process. By the way I wonder how many of the EU electorate know that Lagarde is currently under investigation (since 3rd August 2011 by a french court) into her role in a Euro 285 million arbitration deal that favoured Bernard Tapie. Oooopppppssss!
The 3rd November 2011 G20 meeting should be a hoot!
Friday 23 September 2011
You can't always get what you want...ROLLING STONES --- a challenge to TWIST & SHOUT
Wow what a week!
It's hard to summarise what's been happening to capital markets over the last few days but one thing is certain, investor confidence is disappearing by the minute. I've had plenty of chats with those clients brave enough to contact their brokers and one thing that is coming out LOUD & CLEAR (please turn up the volume) and this is...
You can't always get what you want....Mr Bernanke (sung with a Deptford accent please)
A Mr B from Wales (his name isn't Bernanke) rang me earlier in the week and we both concluded that the other Mr B is more interested in trying to control the diseased oak tree rather than focusing on the acorn. Isn't it just marvellous news that I no longer have to listen to those folk on Bloomberg and BBC entertain us all with notions of "green shoots"? Well it would be except that like millions of people across Europe UK and the good ol' US of A there are bills to pay and strategies to adopt to allow some safe navigation through what is becoming a heavily fortified and dangerous mine field.
As a broker I'm of the opinion that all and sundry around me are losing the plot but I expect everyone is thinking the same. I heard for the first time a respected strategist mention the dread 'R' word last night on B'berg. He suggested that the US is bogged down in REGULATION. So let's wind back to pre-1980's shall we? Yes you've guessed it there was NO regulation and the OLD WORLD ORDER did indeed manage to avoid the pitfalls of Contangos and Arbitrage back then so the question is what is going wrong in the developed economies. Well we all know that for the last 50 years the west has outpriced itself. Firstly it was Korea that undercut British shipbuilding, then Japan that provided the enterprise with cheap efficient cars and electrical goods and more recently it has been the BRIC's nations that are leading the way. No-one in the west wants to work anymore and the governments and regulators are kowtowing to this extraordinary lack of will by massaging the welfare systems. Unfortunately the welfare model is BROKEN (just look at the waves of mexicans crossing the Rio Grande into the southern states and the africans paddling their way across the Med) and needs to be reworked quickly. But as we all know it's worse than that. I've NOT heard a single politician, broadcaster, banker, regulator or strategist say how it really is on the networks for months now. Why is it that no-one can understand that economies are driven from the bottom up NOT top down. Yet of course these same people keep mentioning the global economy (when wasn't there a global economy?) in tandem with emerging markets, frontiers markets and just about everywhere except our own back yard. They understand that the indian economy, for example, is being driven by the people and yet due to some socialist mindset think that they all have the right to shackle the millions out there in the west who are struggling. It is rapidly becoming THE NEW WILD WEST here and the riots in London and the ARAB SPRING are not worlds apart as many are being drip fed.
So where do we go from here? I've had a long hard think about this since 2007 and it seems to me that we're all looking at the solutions to our problems the wrong way round. Governments cannot and never can solve these problems. Only the people can and until we get some leadership that stops spinning the kick start regulatory and monetary yarns the west will remain in a trough for years to come.
Here's my quick fix if anyone from the World Bank/IMF/G20 wants to take a look (fat chance);-
1. Abolish Income Tax for all earning less than £100,000 US$150,000 Euro 110,000 p.a....let the income flow back into savings and purchases
2. Simultaneously increase the top earners tax rates to 70% across all three areas
3. Investigate ALL non-domicile status & abandon any investigations on offshore tax havens. Tax all non-domicile people & companies at onshore rates. In fact abandon the notion of tax havens and treat all democratised economies in the west the same way re tax treatments.
4. Increase Corporation Tax across all 3 zones by 10% firstly harmonising the corporate tax treatments & preventing relocations elsewhere.
5.Abandon ALL forms of regulation & legislation for individual investors, stockbrokers and focus regulatory attention on BANKS, DERIVATIVES and an OPEN & TRANSPARENT REAL-TIME ACCOUNTING universe.
6. Let insolvent banks go to the wall and investigate the bank bonus culture and if necessary tax bankers retrospectively. It's NOT going to be easy but essential if capitalism is to survive as the governments have effectively been running a bonus ponzi scheme since Lehman's.
Oh yes....& sack Mr. B
Happy days are here again!
ps Oh yes & the Welfare State needs to be scrapped too.
It's hard to summarise what's been happening to capital markets over the last few days but one thing is certain, investor confidence is disappearing by the minute. I've had plenty of chats with those clients brave enough to contact their brokers and one thing that is coming out LOUD & CLEAR (please turn up the volume) and this is...
You can't always get what you want....Mr Bernanke (sung with a Deptford accent please)
A Mr B from Wales (his name isn't Bernanke) rang me earlier in the week and we both concluded that the other Mr B is more interested in trying to control the diseased oak tree rather than focusing on the acorn. Isn't it just marvellous news that I no longer have to listen to those folk on Bloomberg and BBC entertain us all with notions of "green shoots"? Well it would be except that like millions of people across Europe UK and the good ol' US of A there are bills to pay and strategies to adopt to allow some safe navigation through what is becoming a heavily fortified and dangerous mine field.
As a broker I'm of the opinion that all and sundry around me are losing the plot but I expect everyone is thinking the same. I heard for the first time a respected strategist mention the dread 'R' word last night on B'berg. He suggested that the US is bogged down in REGULATION. So let's wind back to pre-1980's shall we? Yes you've guessed it there was NO regulation and the OLD WORLD ORDER did indeed manage to avoid the pitfalls of Contangos and Arbitrage back then so the question is what is going wrong in the developed economies. Well we all know that for the last 50 years the west has outpriced itself. Firstly it was Korea that undercut British shipbuilding, then Japan that provided the enterprise with cheap efficient cars and electrical goods and more recently it has been the BRIC's nations that are leading the way. No-one in the west wants to work anymore and the governments and regulators are kowtowing to this extraordinary lack of will by massaging the welfare systems. Unfortunately the welfare model is BROKEN (just look at the waves of mexicans crossing the Rio Grande into the southern states and the africans paddling their way across the Med) and needs to be reworked quickly. But as we all know it's worse than that. I've NOT heard a single politician, broadcaster, banker, regulator or strategist say how it really is on the networks for months now. Why is it that no-one can understand that economies are driven from the bottom up NOT top down. Yet of course these same people keep mentioning the global economy (when wasn't there a global economy?) in tandem with emerging markets, frontiers markets and just about everywhere except our own back yard. They understand that the indian economy, for example, is being driven by the people and yet due to some socialist mindset think that they all have the right to shackle the millions out there in the west who are struggling. It is rapidly becoming THE NEW WILD WEST here and the riots in London and the ARAB SPRING are not worlds apart as many are being drip fed.
So where do we go from here? I've had a long hard think about this since 2007 and it seems to me that we're all looking at the solutions to our problems the wrong way round. Governments cannot and never can solve these problems. Only the people can and until we get some leadership that stops spinning the kick start regulatory and monetary yarns the west will remain in a trough for years to come.
Here's my quick fix if anyone from the World Bank/IMF/G20 wants to take a look (fat chance);-
1. Abolish Income Tax for all earning less than £100,000 US$150,000 Euro 110,000 p.a....let the income flow back into savings and purchases
2. Simultaneously increase the top earners tax rates to 70% across all three areas
3. Investigate ALL non-domicile status & abandon any investigations on offshore tax havens. Tax all non-domicile people & companies at onshore rates. In fact abandon the notion of tax havens and treat all democratised economies in the west the same way re tax treatments.
4. Increase Corporation Tax across all 3 zones by 10% firstly harmonising the corporate tax treatments & preventing relocations elsewhere.
5.Abandon ALL forms of regulation & legislation for individual investors, stockbrokers and focus regulatory attention on BANKS, DERIVATIVES and an OPEN & TRANSPARENT REAL-TIME ACCOUNTING universe.
6. Let insolvent banks go to the wall and investigate the bank bonus culture and if necessary tax bankers retrospectively. It's NOT going to be easy but essential if capitalism is to survive as the governments have effectively been running a bonus ponzi scheme since Lehman's.
Oh yes....& sack Mr. B
Happy days are here again!
ps Oh yes & the Welfare State needs to be scrapped too.
Friday 16 September 2011
Back Seat Drivers (& a view on that chap from UBS)
I promised during my last visit to Enterprise Britain that I would spill the beans on a new scandal that I'm aware of in UK outside the City of London (& NHS) but of course the events of the last 24 hours concerning Mr Kweku Mawuli Adoboli of UBS have rather got in the way of the scoop.
Instead I'm going to talk about another hang up of mine that I call "BACK SEAT DRIVERS" which is bound to upset a few people but frankly m'dear I don't give a damn. I'll discuss Mr Adoboli later. READ ON Dear Reader.....
Years ago my grand-father, a respected and well known stockbroker, used to travel to his office in Copthall Avenue from a small railway station in Kent, Hildenborough with 2 friends, a Mr Letts (of the diary family) & a Mr Abrams of Coutts & Co, Bankers. For years they enjoyed respectable living and yarns of the Penshurst Home Guard that they were all part of. Sadly my grand-father was diagnosed with various ailments in the late '50s leading to various operations and amputations so he decided to get himself a chauffeur and a new Citroen DS to go with it. Or was it the other way round? Anyway, the chauffeur, Mr Weston, used to drive him to the City and back most days until he was forced eventually to give up work at the firm. My grand-father like most of the privileged few used to talk openly to Weston (I never knew his first name) about all matter of things and became part of the furniture so to speak. The interesting thing about this relationship was that both knew what their roles were. My grand-father would read the FT, probably the Racing Post too, in between nodding off and Weston knew his way around the country lanes and City streets. It was a perfect match. But in the mid-60's my grand-father died and Weston was subsequently killed in a car accident after hitting black ice somewhere in Kent. That was that. Fast forward to the '80s and few new age Big Bang stockbrokers could afford chauffeurs and by then it was almost a taboo anyway even to consider it. So to use the analogy many rear seat City folk were forced to drive to work in their own cars or by whatever method available. Often in business, in the financial world especially, it's become imperative for those who once may have occupied the rear seat to actually drive (their businesses) with their assistants or batmen in the passenger seat (one might call them dealers or traders). This sort of scenario explains how independent brokers, investment and insurance, would operate during that period but then as computer systems got more complicated the real stars became the software personnel and the quant gang. Then came the settlements men who up till Big Bang had taken their lead from business getters like my grand-father. In fact in the financial world historically everyone took their lead from the experienced business getters who had personal liability and responsibility for their firms and staff. Around 1960 My grand-father bailed out a client for £30,000 because a broker, a Mr Skrimshire, had made a grave error over this clients affairs. You see he had supreme integrity (and didn't need to take an exam to prove it: TAKE NOTE Mr Sants and Ms Nicoll). As FSA came into its own more and more back office personnel joined the ranks of the settlement people. Of course they're called Compliance personnel, Credit Controllers and of course they are ALL referred eloquently as MIDDLE MANAGEMENT. None take any responsibility for clients, know very little about the real workings of capital markets, rarely apologise for errors and think that they can drive the businesses from the rear seat just like my grand-father. But there is a fallacy here isn't there? Very few have any real skills about what the raw business is and despite sitting in the rear seat think they can drive the motor car by shackling people such as myself who are actually driving the revenue stream. So many cars have now been produced that have BACK SEAT DRIVERS that any sensible government should really question the need for some of these people. I am of course referring to REGULATORS who no longer regulate the safety valves but want to instigate directives about where the driver should head. It's got that bad folks!
Recent events at UBS are no surprise to me. There are probably '000s of similar scalps and scalpees out there in London, NYC and possibly working from home somewhere. What is interesting is that despite Nick Leeson of Barings fame, Jerome Kerviel of Societe Generale (he couldn't have done it on his own despite what the french courts concluded) and now the man from Ghana, Mr Adoboli none of the BACK SEAT DRIVERS are ever mentioned in the press reports. According to the FSA's own web site Mr Adoboli was first registered as a Trainee CF22 Investment Adviser on 14th Match 2006 and full non-trainee CF26 Customer Trading on the same date, both licences becoming CF30 Customer on 1st November 2007. His licence was withdrawn yesterday (so much for innocent until proved guilty). But what is really alarming is that a young man of this degree of experience could Trade more than £10m a ticket. It's clear that the experience is NOT there. By comparison my current licence for retail is also CF30 Customer which is extraordinary. How does an inexperienced SYNTHETICS TRADER at any bank get the same licence as someone such as myself with over 40,000 trades (albeit investment driven) and 36 years behind me?
God help us all if Mr Adoboli had been driving the motor car rather than acting as a passenger helping his senior colleague(s)!!!!
It seems that society has too many BACK SEAT DRIVERS and far too many young people especially in the City have been propelled into jobs beyond them. This is the real effect of QUALIFICATION over EXPERIENCE and EDUCATION.
Instead I'm going to talk about another hang up of mine that I call "BACK SEAT DRIVERS" which is bound to upset a few people but frankly m'dear I don't give a damn. I'll discuss Mr Adoboli later. READ ON Dear Reader.....
Years ago my grand-father, a respected and well known stockbroker, used to travel to his office in Copthall Avenue from a small railway station in Kent, Hildenborough with 2 friends, a Mr Letts (of the diary family) & a Mr Abrams of Coutts & Co, Bankers. For years they enjoyed respectable living and yarns of the Penshurst Home Guard that they were all part of. Sadly my grand-father was diagnosed with various ailments in the late '50s leading to various operations and amputations so he decided to get himself a chauffeur and a new Citroen DS to go with it. Or was it the other way round? Anyway, the chauffeur, Mr Weston, used to drive him to the City and back most days until he was forced eventually to give up work at the firm. My grand-father like most of the privileged few used to talk openly to Weston (I never knew his first name) about all matter of things and became part of the furniture so to speak. The interesting thing about this relationship was that both knew what their roles were. My grand-father would read the FT, probably the Racing Post too, in between nodding off and Weston knew his way around the country lanes and City streets. It was a perfect match. But in the mid-60's my grand-father died and Weston was subsequently killed in a car accident after hitting black ice somewhere in Kent. That was that. Fast forward to the '80s and few new age Big Bang stockbrokers could afford chauffeurs and by then it was almost a taboo anyway even to consider it. So to use the analogy many rear seat City folk were forced to drive to work in their own cars or by whatever method available. Often in business, in the financial world especially, it's become imperative for those who once may have occupied the rear seat to actually drive (their businesses) with their assistants or batmen in the passenger seat (one might call them dealers or traders). This sort of scenario explains how independent brokers, investment and insurance, would operate during that period but then as computer systems got more complicated the real stars became the software personnel and the quant gang. Then came the settlements men who up till Big Bang had taken their lead from business getters like my grand-father. In fact in the financial world historically everyone took their lead from the experienced business getters who had personal liability and responsibility for their firms and staff. Around 1960 My grand-father bailed out a client for £30,000 because a broker, a Mr Skrimshire, had made a grave error over this clients affairs. You see he had supreme integrity (and didn't need to take an exam to prove it: TAKE NOTE Mr Sants and Ms Nicoll). As FSA came into its own more and more back office personnel joined the ranks of the settlement people. Of course they're called Compliance personnel, Credit Controllers and of course they are ALL referred eloquently as MIDDLE MANAGEMENT. None take any responsibility for clients, know very little about the real workings of capital markets, rarely apologise for errors and think that they can drive the businesses from the rear seat just like my grand-father. But there is a fallacy here isn't there? Very few have any real skills about what the raw business is and despite sitting in the rear seat think they can drive the motor car by shackling people such as myself who are actually driving the revenue stream. So many cars have now been produced that have BACK SEAT DRIVERS that any sensible government should really question the need for some of these people. I am of course referring to REGULATORS who no longer regulate the safety valves but want to instigate directives about where the driver should head. It's got that bad folks!
Recent events at UBS are no surprise to me. There are probably '000s of similar scalps and scalpees out there in London, NYC and possibly working from home somewhere. What is interesting is that despite Nick Leeson of Barings fame, Jerome Kerviel of Societe Generale (he couldn't have done it on his own despite what the french courts concluded) and now the man from Ghana, Mr Adoboli none of the BACK SEAT DRIVERS are ever mentioned in the press reports. According to the FSA's own web site Mr Adoboli was first registered as a Trainee CF22 Investment Adviser on 14th Match 2006 and full non-trainee CF26 Customer Trading on the same date, both licences becoming CF30 Customer on 1st November 2007. His licence was withdrawn yesterday (so much for innocent until proved guilty). But what is really alarming is that a young man of this degree of experience could Trade more than £10m a ticket. It's clear that the experience is NOT there. By comparison my current licence for retail is also CF30 Customer which is extraordinary. How does an inexperienced SYNTHETICS TRADER at any bank get the same licence as someone such as myself with over 40,000 trades (albeit investment driven) and 36 years behind me?
God help us all if Mr Adoboli had been driving the motor car rather than acting as a passenger helping his senior colleague(s)!!!!
It seems that society has too many BACK SEAT DRIVERS and far too many young people especially in the City have been propelled into jobs beyond them. This is the real effect of QUALIFICATION over EXPERIENCE and EDUCATION.
Friday 9 September 2011
The Crocodile Farm Syndrome
For some months now I've been meaning to get something off my chest. Like 'Mr Angry' on the Enterprise Britain blog I have a few hang ups but I'm increasingly alarmed at a new style of bureaucracy that I have seen 2 perfect examples of develop in UK in the last few years.
In both cases there is 'a lack of reason, a lack of common sense' and both are perfect and plain examples of how not to treat Professional people. For years we've heard how Doctors have been mistreated in NHS but there are more disturbing examples of what I call THE CROCODILE FARM SYNDROME.
You see 'Dear Reader' this is how a crocodile farm is built. Some villagers in a small farming community are thinking of how to better their lives. They don't like farming. It's dirty, hard and unprofitable work but they occasionally use their dugouts to assist big white hunters, the established bread winners for their part of the jungle, to use their skills to seek out, capture and kill large crocodiles for these trophy hunters. At the end of the hunt they get given the meat and the pieces of the crocodile that the hunters don't require as well as a small moderate payment to buy some beers and the extortionate malaria tablets that their fellow villagers need. The hunters are happy, they've had a great trip catching crocodiles, go home with their trophies, some skins to sell to the handbag trade and many macho stories to tell their wives and friends when they get home. BUT one day one educated villager returns to his village and is told by these farmers that the big white hunters regularly come to their river, capture crocodiles with the assistance of his friends and family, and profit enormously from this sport. So he calls the tribal leaders over and suggests that the villagers construct their own crocodile farm and stock it with young crocodiles and entertain a breeding program. The object of course is to nurture enough crocodiles for food and skins and sell the best skins to the western handbag buyers. Before long the hunters no longer visit the river because there are no crocodiles and the sport is terrible. The proprietors of the lodges are not amused but what can they do? After many years the crocodile farm is a big business. The full life cycle of the crocodile is operating efficiently. The eggs are incubated, there are '000s of hatchlings in what look like fisheries, '000s more in the 1st year pens, '000s more in the 2nd year pens, not so many in the next until there are some 15 metre monsters in the last pen. The crocodiles are being fed of course on crocodile meat but they're NOT that happy. Neither are the villagers who have to work at the crocodile farm as there are some villagers profiteering out of the community operation. There is corruption in the air. But the farm is the biggest provider of work for the village as the farmers regularly have failed crops and they've got used to the reliability of the farm for income. There are now too many crocodiles, the villagers can't cope with looking after them, their managers are incompetent and often ignorant of the operations of the farm and ignore the demands of their ultimate customers, the handbag manufacturers. And there's a new threat too. There is now a government department that has been set up to control this farm and others so more villagers are employed to oversee the managers, the researchers who monitor the gene pool and the pen handlers. For sake of confusion let's call them the Farm Regulators....
And guess what happens next!
The health of the crocodiles start to deteriorate, conditions get bad and worse by the minute. Very soon the crocodiles escape and eat all the people as well as the smaller crocs in the farm except of course the Farm Regulators who run away because they don't want to face reality.
And what is the farm called folks?
If you haven't guessed by now it could be called the
London Stock Exchange
or more specifically this is what is happening thanks to the peculiar misgivings of the great CISI the Chartered Institute of Securities and Investment who used to look after the interests of the experienced operators of business on the exchange. After all OPPORTUNITY must be given to everyone regardless of what knowledge, experience and education they may have. IT'S AMAZING WHAT A BIT OF GREED AND A QUALIFICATION CAN DO TO COMMON SENSE!
For the second example of the Crocodile Farm Syndrome you'll have to watch this space. It's even more alarming and I can assure you it will be a journalistic scoop. And it has nothing to do with the City of London or NHS by the way!
In both cases there is 'a lack of reason, a lack of common sense' and both are perfect and plain examples of how not to treat Professional people. For years we've heard how Doctors have been mistreated in NHS but there are more disturbing examples of what I call THE CROCODILE FARM SYNDROME.
You see 'Dear Reader' this is how a crocodile farm is built. Some villagers in a small farming community are thinking of how to better their lives. They don't like farming. It's dirty, hard and unprofitable work but they occasionally use their dugouts to assist big white hunters, the established bread winners for their part of the jungle, to use their skills to seek out, capture and kill large crocodiles for these trophy hunters. At the end of the hunt they get given the meat and the pieces of the crocodile that the hunters don't require as well as a small moderate payment to buy some beers and the extortionate malaria tablets that their fellow villagers need. The hunters are happy, they've had a great trip catching crocodiles, go home with their trophies, some skins to sell to the handbag trade and many macho stories to tell their wives and friends when they get home. BUT one day one educated villager returns to his village and is told by these farmers that the big white hunters regularly come to their river, capture crocodiles with the assistance of his friends and family, and profit enormously from this sport. So he calls the tribal leaders over and suggests that the villagers construct their own crocodile farm and stock it with young crocodiles and entertain a breeding program. The object of course is to nurture enough crocodiles for food and skins and sell the best skins to the western handbag buyers. Before long the hunters no longer visit the river because there are no crocodiles and the sport is terrible. The proprietors of the lodges are not amused but what can they do? After many years the crocodile farm is a big business. The full life cycle of the crocodile is operating efficiently. The eggs are incubated, there are '000s of hatchlings in what look like fisheries, '000s more in the 1st year pens, '000s more in the 2nd year pens, not so many in the next until there are some 15 metre monsters in the last pen. The crocodiles are being fed of course on crocodile meat but they're NOT that happy. Neither are the villagers who have to work at the crocodile farm as there are some villagers profiteering out of the community operation. There is corruption in the air. But the farm is the biggest provider of work for the village as the farmers regularly have failed crops and they've got used to the reliability of the farm for income. There are now too many crocodiles, the villagers can't cope with looking after them, their managers are incompetent and often ignorant of the operations of the farm and ignore the demands of their ultimate customers, the handbag manufacturers. And there's a new threat too. There is now a government department that has been set up to control this farm and others so more villagers are employed to oversee the managers, the researchers who monitor the gene pool and the pen handlers. For sake of confusion let's call them the Farm Regulators....
And guess what happens next!
The health of the crocodiles start to deteriorate, conditions get bad and worse by the minute. Very soon the crocodiles escape and eat all the people as well as the smaller crocs in the farm except of course the Farm Regulators who run away because they don't want to face reality.
And what is the farm called folks?
If you haven't guessed by now it could be called the
London Stock Exchange
or more specifically this is what is happening thanks to the peculiar misgivings of the great CISI the Chartered Institute of Securities and Investment who used to look after the interests of the experienced operators of business on the exchange. After all OPPORTUNITY must be given to everyone regardless of what knowledge, experience and education they may have. IT'S AMAZING WHAT A BIT OF GREED AND A QUALIFICATION CAN DO TO COMMON SENSE!
For the second example of the Crocodile Farm Syndrome you'll have to watch this space. It's even more alarming and I can assure you it will be a journalistic scoop. And it has nothing to do with the City of London or NHS by the way!
Thursday 18 August 2011
The Financial Tsunami heading for the City of London -Letter to the Prime Minister
Prime Minister (via email to 10 Downing Street)
I realise that you and your Chancellor are struggling with a few home problems but I am alerting you now to the Financial Tsunami that is currently brewing in the Thames Estuary and heading straight for the City of London that could well lose you the next General Election and provide fodder to the pro-EU brigade who think that jobs can be created through ruthless regulation that satisfies no-one except swathes of legal buffs working for the super regulator and overseas banks that to date have a very poor record of job creation in the UK.
The crux of the problem goes back to your predecessor and the mid-80s when a certain Mr Parkinson did the rounds in the City and decided with the support of your party's Cabinet at the time to strip away the franchises of the many British partnerships and allow banks to compete head to head in securities operations presumably in the name of job creation and better marketibility. I don't intend dwelling on the marketibility issue only to say that recent financial press comments concerning High Frequency Trading and a re-examination of Glass Steagall Act in US leads me to the conclusion that the creation here of multi-faceted financial institutions has been a big mistake and should be reversed asap. Furthermore the untold damage that excessive regulation has done to the City and the UK's prospects viz-a-viz to act as the protector to British business and job creation has been lamentable. Your late father, a respected stockbroker, may well have mentioned to you that 100s of British stockbroking agency partnerships have been shut down due to the FSA and its predecessors but how many people in the City care about the effect that this has had on brokers and their clients or indeed the market as a whole and british business interests? Far too much focus is made on the City success stories but I'd like you to consider briefly the damage that investment banking and derivatives trading in particular has done to British business. I can assure you that one day economic historians will consider the last decade and what we are about to witness as the final nail in the coffin of London acting as a financial trading centre for the UK economy and its outposts in providing a fair and efficient market place for the raising and managing of capital.
I am of course referring to the FSA doctrine known as the Retail Distribution Review which will undoubtedly put between 3,000 and 30,000 advisers out of business and damage for ever true independent advice. But let me enlighten you further. As you know one of your party's main areas of focus is in small business finance (AIM, Plus Markets and Private Equity, etc) but by stripping out independent brokers and IFA's from the equation I think that AIM and small company investing could well get extinguished as FSA is intent on reworking the definition of 'Risk'. The Treasury Select Committee has called for the delay of the RDR but in my view it should be halted now before untold damage is done. Of course, I have an interest in this viewpoint as I am one of the 3,000 or so experienced stockbrokers who are being forced to go back to school which I find a total liberty. The way that many of us are being treated here is all good news for the banks and new age 'wealth managers' who are more intent on collecting their fees than giving a bespoke investment service.
I realise there are perhaps bigger problems to consider for your Government at this time but consider the implications here. The credibility of your party as well as the future of the London Stock Exchange is at stake too. Independent advisers have already taken alot of punishment from 'Big Bang' and regulation. Please use your common sense to put a stop to this nonsense that is the RDR before more untold damage is done because the consequencies for Britain are severe if this doctrine is allowed to be passed through without any proper analysis. I regret that the FSA,LSE, CISI & APCIMS have failed on all counts so far.
Yours
Richard Hoblyn FCSI
I realise that you and your Chancellor are struggling with a few home problems but I am alerting you now to the Financial Tsunami that is currently brewing in the Thames Estuary and heading straight for the City of London that could well lose you the next General Election and provide fodder to the pro-EU brigade who think that jobs can be created through ruthless regulation that satisfies no-one except swathes of legal buffs working for the super regulator and overseas banks that to date have a very poor record of job creation in the UK.
The crux of the problem goes back to your predecessor and the mid-80s when a certain Mr Parkinson did the rounds in the City and decided with the support of your party's Cabinet at the time to strip away the franchises of the many British partnerships and allow banks to compete head to head in securities operations presumably in the name of job creation and better marketibility. I don't intend dwelling on the marketibility issue only to say that recent financial press comments concerning High Frequency Trading and a re-examination of Glass Steagall Act in US leads me to the conclusion that the creation here of multi-faceted financial institutions has been a big mistake and should be reversed asap. Furthermore the untold damage that excessive regulation has done to the City and the UK's prospects viz-a-viz to act as the protector to British business and job creation has been lamentable. Your late father, a respected stockbroker, may well have mentioned to you that 100s of British stockbroking agency partnerships have been shut down due to the FSA and its predecessors but how many people in the City care about the effect that this has had on brokers and their clients or indeed the market as a whole and british business interests? Far too much focus is made on the City success stories but I'd like you to consider briefly the damage that investment banking and derivatives trading in particular has done to British business. I can assure you that one day economic historians will consider the last decade and what we are about to witness as the final nail in the coffin of London acting as a financial trading centre for the UK economy and its outposts in providing a fair and efficient market place for the raising and managing of capital.
I am of course referring to the FSA doctrine known as the Retail Distribution Review which will undoubtedly put between 3,000 and 30,000 advisers out of business and damage for ever true independent advice. But let me enlighten you further. As you know one of your party's main areas of focus is in small business finance (AIM, Plus Markets and Private Equity, etc) but by stripping out independent brokers and IFA's from the equation I think that AIM and small company investing could well get extinguished as FSA is intent on reworking the definition of 'Risk'. The Treasury Select Committee has called for the delay of the RDR but in my view it should be halted now before untold damage is done. Of course, I have an interest in this viewpoint as I am one of the 3,000 or so experienced stockbrokers who are being forced to go back to school which I find a total liberty. The way that many of us are being treated here is all good news for the banks and new age 'wealth managers' who are more intent on collecting their fees than giving a bespoke investment service.
I realise there are perhaps bigger problems to consider for your Government at this time but consider the implications here. The credibility of your party as well as the future of the London Stock Exchange is at stake too. Independent advisers have already taken alot of punishment from 'Big Bang' and regulation. Please use your common sense to put a stop to this nonsense that is the RDR before more untold damage is done because the consequencies for Britain are severe if this doctrine is allowed to be passed through without any proper analysis. I regret that the FSA,LSE, CISI & APCIMS have failed on all counts so far.
Yours
Richard Hoblyn FCSI
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