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 It seems that the phrase "Too Big To Fail" has been replaced by "Too Easy To Buy".This trend of high profile people acquiring businesses at attractive levels is not, however, confined to UK.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?
Tuesday, 22 November 2011
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.
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