On October 7, CMA DataVision released their third-quarter report on the credit ratings of sovereign countries. CMA's ratings are worked out by looking at what the credit market charges for insuring against default. This market-based marking is different from the assessments of Standard and Poor's, Moody's, Fitch etc, who are paid by the organisations they rate and whose reputation has been brought into question after the events of 2008.
On page 4, CMA says that four of the 10 most risky nations are in the EU (Greece, Ireland, Portugal, Romania). It's worth remembering that a fifth on that list, Ukraine, is eager to join the EU. (For those who want to know about all the "PIGS", Spain is 21st most risky.) How is the currency and banking of the European Union meant to contain these problems?
The UK is rated 59th most risky (or 13th safest), with an implied credit rating of aa+ (as opposed to the official AAA rating that has helped to keep down the cost of our credit).
Four Nordic countries lead the list of securest debt: Norway, Finland, Sweden and Denmark. Only four other countries share their "implied AAA" rating: Germany, Switzerland, the Netherlands and Australia.
The United States has been downgraded this quarter, from "aaa" to "aa+" - the same as for the United Kingdom.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
Monday, November 15, 2010
Sunday, November 14, 2010
Shares as a safeguard against inflation
Previously published on the Broad Oak Blog (Nov. 14, 2010):
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It is well-known that German money became worthless in 1923, thanks to hyperinflation. The value of cash savings was wiped out; fixed rents also became worthless, which benefitted the ordinary person; but practically all one's income was spent on food, instead (see Table 6 at the bottom of this page).
What is less well known is how investors who didn't have to sell their shares actually gained, after a market pullback.
_________________________________________________
It is well-known that German money became worthless in 1923, thanks to hyperinflation. The value of cash savings was wiped out; fixed rents also became worthless, which benefitted the ordinary person; but practically all one's income was spent on food, instead (see Table 6 at the bottom of this page).
What is less well known is how investors who didn't have to sell their shares actually gained, after a market pullback.
UPDATE: As Michael Panzer points out, what I called a "pullback" should more properly be termed a horrendous crash! Unless you have the titanium nerve to hold on through such an event, there is a grave danger that you could buy in now and sell in a panic later and lose most of your wealth.
CLARIFICATION / CORRECTION:(I should have made it clearer that the graph above is not mine - it comes from the site I linked to in the text, i.e. Now and Futures. Apologies for any misunderstanding, which I didn't intend.)
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
Could shares protect against inflation?
It is well-known that German money became worthless in 1923, thanks to hyperinflation. The value of cash savings was wiped out; fixed rents also became worthless, which benefitted the ordinary person; but practically all one's income was spent on food, instead (see Table 6 at the bottom of this page).
What is less well known is how investors who didn't have to sell their shares actually gained, after a market pullback.
What is less well known is how investors who didn't have to sell their shares actually gained, after a market pullback.
UPDATE: As Michael Panzer points out, what I called a "pullback" should more properly be termed a horrendous crash! Unless you have the titanium nerve to hold on through such an event, there is a grave danger that you could buy in now and sell in a panic later and lose most of your wealth.
CLARIFICATION / CORRECTION:(I should have made it clearer that the graph above is not mine - it comes from the site I linked to in the text, i.e. Now and Futures. Apologies for any misunderstanding, which I didn't intend.)
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
"A liar and a cheat"
ONE
Black Dog, in the Mail on Sunday:
A new twist in the resignation from London’s Garrick Club of Guardian editor Alan Rusbridger after he unsuccessfully proposed ex-Labour City Minister Lord Myners as a member.
Now Dog hears of a contretemps over an unpaid dinner bill. When chased by the club some months later, Rusbridger sent a photocopy of the cheque he paid with.
The Garrick could still find no record of receiving the original cheque, so he sent a second one bearing a serial number consecutive to the first. Times are hard at The Guardian.
TWO
Mr Rusbridger himself (editor of The Guardian newspaper) about the collapse of Jeffrey Archer's libel case against that newspaper, in an article titled "A liar and a cheat" (highlights mine):
"The Guardian has never doubted the truth of its original story. We would have produced damning evidence of Mr Hamilton and Mr Greer's lack of integrity if the case had proceeded. No doubt that is why they dropped the action."
This ultimately led to a trial of Lord Archer for perjury. He was found guilty and sentenced to four years in jail.
THREE
Wikipedia, on the philosopher and media personage C.E.M. Joad:
In April 1948, Joad was convicted of travelling on a Waterloo-Exeter train without a valid ticket. Although he was a frequent fare dodger, he failed to give a satisfactory excuse. This made front-page headlines in the national newspapers, and the fine of £2 (£54 as of 2010) destroyed all hopes of a peerage and resulted in his dismissal from the BBC. The humiliation of this had a severe effect on his health, and he soon became bed-confined at his home in Hampstead.
Joad died a few years later, a broken man.
_________________________________________
Why were Mr Rusbridger's two cheques to the Garrick Club sequentially numbered? Is it really the case that he wrote no cheques at all on that account for the intervening months? This could easily be proved by revealing the dates of cheques written immediately before the first cheque to the Garrick.
One would think that the implications of Black Dog's article are potentially quite damaging for the editor of a national newspaper that, whatever its political inclinations, has built a reputation for truthfulness and integrity, qualities it seems to have found lacking in Mr Hamilton and Mr Greer.
I wonder what Mr Rusbridger may be prepared to do to combat the seeming innuendo of Black Dog's article?
Black Dog, in the Mail on Sunday:
A new twist in the resignation from London’s Garrick Club of Guardian editor Alan Rusbridger after he unsuccessfully proposed ex-Labour City Minister Lord Myners as a member.
Now Dog hears of a contretemps over an unpaid dinner bill. When chased by the club some months later, Rusbridger sent a photocopy of the cheque he paid with.
The Garrick could still find no record of receiving the original cheque, so he sent a second one bearing a serial number consecutive to the first. Times are hard at The Guardian.
TWO
Mr Rusbridger himself (editor of The Guardian newspaper) about the collapse of Jeffrey Archer's libel case against that newspaper, in an article titled "A liar and a cheat" (highlights mine):
"The Guardian has never doubted the truth of its original story. We would have produced damning evidence of Mr Hamilton and Mr Greer's lack of integrity if the case had proceeded. No doubt that is why they dropped the action."
This ultimately led to a trial of Lord Archer for perjury. He was found guilty and sentenced to four years in jail.
THREE
Wikipedia, on the philosopher and media personage C.E.M. Joad:
In April 1948, Joad was convicted of travelling on a Waterloo-Exeter train without a valid ticket. Although he was a frequent fare dodger, he failed to give a satisfactory excuse. This made front-page headlines in the national newspapers, and the fine of £2 (£54 as of 2010) destroyed all hopes of a peerage and resulted in his dismissal from the BBC. The humiliation of this had a severe effect on his health, and he soon became bed-confined at his home in Hampstead.
Joad died a few years later, a broken man.
_________________________________________
Why were Mr Rusbridger's two cheques to the Garrick Club sequentially numbered? Is it really the case that he wrote no cheques at all on that account for the intervening months? This could easily be proved by revealing the dates of cheques written immediately before the first cheque to the Garrick.
One would think that the implications of Black Dog's article are potentially quite damaging for the editor of a national newspaper that, whatever its political inclinations, has built a reputation for truthfulness and integrity, qualities it seems to have found lacking in Mr Hamilton and Mr Greer.
I wonder what Mr Rusbridger may be prepared to do to combat the seeming innuendo of Black Dog's article?
Saturday, November 13, 2010
In praise of "First Life"
How wonderful, to learn of creatures with rock bodies and crystal eyes, roaming shallow seas in endless variety, an infinite case of intricate, animated jewels.
Thursday, November 11, 2010
Prospering during the collapse
Some of the websites I visit seem to be aimed at investors who want to make a killing out of the turmoil. There's even books about it, notably Peter Schiff''s. The mindset is, devil take the hindmost and aren't we the smart ones.
So where are all the wise guys from the Mayans, Toltecs, Aztecs, Inca?
Perhaps their descendants are quartered on some as yet undiscovered Caribbean island, living off the interest on their interest and drunk on Inca Pisco every night. Maybe Dan Brown is working on another thriller about the secret inheritance of the ancients.
So where are all the wise guys from the Mayans, Toltecs, Aztecs, Inca?
Perhaps their descendants are quartered on some as yet undiscovered Caribbean island, living off the interest on their interest and drunk on Inca Pisco every night. Maybe Dan Brown is working on another thriller about the secret inheritance of the ancients.
Or maybe not. I think we should be told.
Can the elite really control the outcome, as Charles Hugh Smith thinks?
Tuesday, November 09, 2010
Bewildered
Why do they call it "waterboarding"? I've always known it as surfing. So what is "snowboarding"?
Sunday, November 07, 2010
The class system
Why, after all the supposed socialist and proto-socialist governments since WWII, do we have such a high and rising gap between rich and poor?
Even our postal service has become class conscious - in 1968 and under a Labour government. You'll note it's not "Express" or "Priority" as with the US system, but "First Class" versus - what is it now - "Steerage"?
Something is completely ripe and succulent in the state of Denmark
UK is more corrupt than Qatar, Barbados or Luxembourg, says Transparency International.
Mind you, at 20th we're way above Italy, which ranks below Rwanda.
Mind you, at 20th we're way above Italy, which ranks below Rwanda.
Having a go, because they won't
Ex-MP Matthew Parris pleads the case for our Parliamentary representatives. Understandable, since he has simply moved from one profession that imagines it knows better, to another.
As usual, he does coy, paradoxical and faux modest so well; but not well enough to disguise the fact that the Fourth Estate has become as conceited - and part of the in-crowd - as the rest of our masters. I will allow them the first, if they will relinquish the second.
A recurring fantasy pesters me, about the episode (sadly the clip omits the marching, menacing entrance of AC; audio fly on the wall here) in which the now pointedly poppy-less Jon Snow deals with a gatecrashing Alastair Campbell rather differently:
JS (before AC even reaches the desk): Please leave the studio, you have not been invited onto this programme.
AC: I phoned to say I was coming.
JS: And you had your reply. Please leave immediately.
AC: No I won't, there's something that needs to be said right now!
JS: Please leave now, or Security will escort you off the premises.
AC: I'd like to see them try! Now be sensible, Jon -
JS: - We'll take a break. Security!
Instead, we got "And now we are joined by Alastair Campbell - a rare moment - thank you for coming in" etc - and the chummy handshake at the end. Channel 4 News patted itself on the back for a journalistic coup, but out here in the bleachers it just looked as though Campbell felt entitled to treat a news studio like an airport executive lounge.
Reporters Without Borders' "Press Freedom Index" says we've gone backwards since 2003 - and even two points down on 2009. Our national ranking is now 19th, below most of the Nordic and Baltic countries. Is there a link between cold weather and integrity?
As usual, he does coy, paradoxical and faux modest so well; but not well enough to disguise the fact that the Fourth Estate has become as conceited - and part of the in-crowd - as the rest of our masters. I will allow them the first, if they will relinquish the second.
A recurring fantasy pesters me, about the episode (sadly the clip omits the marching, menacing entrance of AC; audio fly on the wall here) in which the now pointedly poppy-less Jon Snow deals with a gatecrashing Alastair Campbell rather differently:
JS (before AC even reaches the desk): Please leave the studio, you have not been invited onto this programme.
AC: I phoned to say I was coming.
JS: And you had your reply. Please leave immediately.
AC: No I won't, there's something that needs to be said right now!
JS: Please leave now, or Security will escort you off the premises.
AC: I'd like to see them try! Now be sensible, Jon -
JS: - We'll take a break. Security!
Instead, we got "And now we are joined by Alastair Campbell - a rare moment - thank you for coming in" etc - and the chummy handshake at the end. Channel 4 News patted itself on the back for a journalistic coup, but out here in the bleachers it just looked as though Campbell felt entitled to treat a news studio like an airport executive lounge.
Reporters Without Borders' "Press Freedom Index" says we've gone backwards since 2003 - and even two points down on 2009. Our national ranking is now 19th, below most of the Nordic and Baltic countries. Is there a link between cold weather and integrity?
Monday, November 01, 2010
It's an ill wind...
(Please click on pictures to enlarge.)
Jesse's sidebar links to a website that shows national indebtedness, e.g.:
But this needs interpreting in the light of money owed both ways (the net international investment position, or NIIP), e.g.:
Recent ONS statistics show that as our pound and stocks devalued, our NIIP improved (if that's an improvement):
... so what counts as good news, and how badly-off are we?
Jesse's sidebar links to a website that shows national indebtedness, e.g.:
But this needs interpreting in the light of money owed both ways (the net international investment position, or NIIP), e.g.:
Recent ONS statistics show that as our pound and stocks devalued, our NIIP improved (if that's an improvement):
... so what counts as good news, and how badly-off are we?
Caravan news
We're heading back into the 60s/70s. Turn on, tune in, drop out. But I'd suggest a twist.
I've often said to others - especially my wife - never mind New Age travellers, let's become old age travellers. That is, no tats, no drugs, no atomkraft nie danke stickers. Just go where you like by caravan, pretending you're on holiday from your drab dwelling in e.g. Birmingham. That way the police will just see you as silly old crumblies and leave you alone. Bless you, love, we're on our way to Bournemouth for a fortnight, that sort of thing. My Mum used to say people always think you're dafter than they are, just play up to it.
In other words, don't challenge the system, just sidestep it unobtrusively. We're all too interconnected to bring down the system without horrible things happening to us, the ones we love and the ones we depend on. Find your niche. As the Chinese saying goes, better to light a small candle than complain about the dark.
It's not consistent, I think, to complain about Communist strategies for mass social subversion on the one hand and then on the other to advocate something very similar oneself, e.g. withdrawing all your cash from the bank on a given date, a move Ian PJ appears to support, though I well understand the temptation.
The point is not to smash the system - we've seen the joy that brought to Russia, China, Cambodia etc - but to encourage it to mutate to our preferences. CAMRA turned the tide on proper beer, people like Hugh Fearnley-Whittingstall got Tesco et al to get more serious about humane and organic food - all without torching the pubs and supermarkets.
The first to operate on the new model will doubtless get a free or cheap ride - see the caravanners who've invaded upmarket Venice Beach, a place where they could never afford to buy houses even before they had theirs repossessed - and then the system will adjust.
There's no need for a hey-guys-let's-all approach: do what you've decided, don't put up with what you don't have to, be prepared to pay the price for your decision. If enough others do the same, society will change appropriately; if not, you've suited yourself. I quit teaching in 1989 because I wasn't prepared to put up with the crap and bullying, and it cost me financially - but who knows what carrying on would have cost me? My life has been incredibly richer experientially as a result of realising that it wasn't all decided for me. We forget how free we are already.
No self-destructive emotional spasms, please, we're British.
I've often said to others - especially my wife - never mind New Age travellers, let's become old age travellers. That is, no tats, no drugs, no atomkraft nie danke stickers. Just go where you like by caravan, pretending you're on holiday from your drab dwelling in e.g. Birmingham. That way the police will just see you as silly old crumblies and leave you alone. Bless you, love, we're on our way to Bournemouth for a fortnight, that sort of thing. My Mum used to say people always think you're dafter than they are, just play up to it.
In other words, don't challenge the system, just sidestep it unobtrusively. We're all too interconnected to bring down the system without horrible things happening to us, the ones we love and the ones we depend on. Find your niche. As the Chinese saying goes, better to light a small candle than complain about the dark.
It's not consistent, I think, to complain about Communist strategies for mass social subversion on the one hand and then on the other to advocate something very similar oneself, e.g. withdrawing all your cash from the bank on a given date, a move Ian PJ appears to support, though I well understand the temptation.
The point is not to smash the system - we've seen the joy that brought to Russia, China, Cambodia etc - but to encourage it to mutate to our preferences. CAMRA turned the tide on proper beer, people like Hugh Fearnley-Whittingstall got Tesco et al to get more serious about humane and organic food - all without torching the pubs and supermarkets.
The first to operate on the new model will doubtless get a free or cheap ride - see the caravanners who've invaded upmarket Venice Beach, a place where they could never afford to buy houses even before they had theirs repossessed - and then the system will adjust.
There's no need for a hey-guys-let's-all approach: do what you've decided, don't put up with what you don't have to, be prepared to pay the price for your decision. If enough others do the same, society will change appropriately; if not, you've suited yourself. I quit teaching in 1989 because I wasn't prepared to put up with the crap and bullying, and it cost me financially - but who knows what carrying on would have cost me? My life has been incredibly richer experientially as a result of realising that it wasn't all decided for me. We forget how free we are already.
No self-destructive emotional spasms, please, we're British.
Sunday, October 31, 2010
He who pays the piper
Why do we talk about British freedom and independence when our political and business leaders have sold the country from under us?
Germany's Deutsche Bahn has owned the Royal Train since 2007 and has now just sacked the manager despite his 30 years' service. Follow the money, and you'll see that you have to pay a Frenchman to get from England to Wales across the Severn. The Frogs also own British Energy. Cadbury's is now American, HP Sauce Dutch, Coca-Cola has just closed down Malvern Water, even the UK's tax offices are owned by a property company based in Bermuda... Banking, car manufacture (or rather, assembly), we could go on. It would be far easier to list the few major enterprises that are still (as ultimate beneficiary) British-owned.
A new book by Matt Taibbi reveals that the same is now going on in America.
Will it eventually become a war of the people against their rulers?
Germany's Deutsche Bahn has owned the Royal Train since 2007 and has now just sacked the manager despite his 30 years' service. Follow the money, and you'll see that you have to pay a Frenchman to get from England to Wales across the Severn. The Frogs also own British Energy. Cadbury's is now American, HP Sauce Dutch, Coca-Cola has just closed down Malvern Water, even the UK's tax offices are owned by a property company based in Bermuda... Banking, car manufacture (or rather, assembly), we could go on. It would be far easier to list the few major enterprises that are still (as ultimate beneficiary) British-owned.
A new book by Matt Taibbi reveals that the same is now going on in America.
Will it eventually become a war of the people against their rulers?
Saturday, October 30, 2010
UK banking system overconcentrated
According to the advert on the left of this article, the USA has 7,830 banks of which 437 are judged to be in immediate danger of failing. Assuming that happens, that leaves 7,393 banks servicing a population of 310,592,000 - equivalent to a little over 42,000 people per bank.
The UK has "about 400" banks and building societies (FSA list here) to service a population of 62,008,049 - equivalent to over 155,000 per bank.
In other words, the US has about 3.69 times the number of banks per million head of population - a much smaller average customer base, but a correspondingly larger reserve of lesser-sized organisations to take up the slack if one or more of the big ones goes down.
This suggests that it is even more important for the UK to consider breaking up the biggest outfits, because the fall of one of our greatest trees would create a much bigger clearing in our forest than it would in the States.
The UK has "about 400" banks and building societies (FSA list here) to service a population of 62,008,049 - equivalent to over 155,000 per bank.
In other words, the US has about 3.69 times the number of banks per million head of population - a much smaller average customer base, but a correspondingly larger reserve of lesser-sized organisations to take up the slack if one or more of the big ones goes down.
This suggests that it is even more important for the UK to consider breaking up the biggest outfits, because the fall of one of our greatest trees would create a much bigger clearing in our forest than it would in the States.
Pulling the wool, or something
Is there any evidence that the EU seriously expected to get a 6% increase in its budget? Wasn't this merely a headline figure for the punters, so that Europhile leaders could go back to their nations claiming a bargaining victory?
Friday, October 29, 2010
Friday, October 22, 2010
Politician requiring tuition
Alan Johnson has said he'll need to buy a book on economics now he's been made Shadow Chancellor. He's not alone, as it seems most of political class know nothing about the subject, even though many must have read PPE at Porterhouse.
What one book would you recommend politicians should read before we let them play with the toy train set of our economy?
I think a new Ladybird book would be a wonderful help - they used to be so clear and concise. So much better than turgid, shut-you-out academic and wrong.
What one book would you recommend politicians should read before we let them play with the toy train set of our economy?
I think a new Ladybird book would be a wonderful help - they used to be so clear and concise. So much better than turgid, shut-you-out academic and wrong.
Tuesday, October 19, 2010
Pin the tail on the economic cycle
Where are we in the cycle, would you say? (Click on pic to enlarge.)
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