Thursday, April 09, 2009
Thirty years on
2009: Ian Tomlinson
1979: Blair Peach
When Britain turns to Fascist methods, it employs them totally incompetently. And this is the Left at work, too; we are led by people who themselves were on the picket line and putting the "chicks up front" so the "pigs" couldn't clobber the guys.
1979: Blair Peach
When Britain turns to Fascist methods, it employs them totally incompetently. And this is the Left at work, too; we are led by people who themselves were on the picket line and putting the "chicks up front" so the "pigs" couldn't clobber the guys.
Sunday, April 05, 2009
Interlude
Off air for a few days - back soon. In the meantime, can anybody find me a picture of "Three Homes" Geoff Hoon that makes him look fully alive? I've had my doubts for a long time.
The truth will out: it WAS fraud
William K. Black, a former financial regulator who has written a book about the U.S. Savings & Loan disaster of the 1980s, is unequivocal: the banks defrauded us. It was deliberate and with full knowledge of what they were doing. How much longer before mass trials are set up?
Worse, the regulators didn't even start to investigate until the crash, whereas in the S&L crisis they were making preparations even while the lenders were boasting of record profits.
Black says the current mess is at least 100 times worse than the S&L debacle. In his view, Bernard Madoff is a mere "piker", not even in the first rank of the fraudsters responsible for all this.
(htp: Michael Panzner)
Worse, the regulators didn't even start to investigate until the crash, whereas in the S&L crisis they were making preparations even while the lenders were boasting of record profits.
Black says the current mess is at least 100 times worse than the S&L debacle. In his view, Bernard Madoff is a mere "piker", not even in the first rank of the fraudsters responsible for all this.
(htp: Michael Panzner)
Saturday, April 04, 2009
Divination by horses
Hippomancy is an ancient art, still alive in the Grand National. My wife's uncle was in Liverpool in 1959 when the workforce at Oxo all backed the horse of the same name: it won at 8-1. He says the town was lit that night.
Well, I backed Golden Flight and down it went at the first fence - though the name is Delphic: will gold flee or take wing? For adherents of cash, Offshore Account stayed the course, but lost ground as the pace picked up, miming the effect of inflation.
On a political note, I was pleased that Eurotrek failed to complete. And we bloggers should not have been surprised to see Fleet Street unseated.
The winner, against all expectation, was Mon Mome (= "my kid"), perhaps a sign that we should be thinking of the next generation, as skewed demographics meets declining GDP. The trainer, Venetia Williams, was sporting a striking golden coat...
Well, I backed Golden Flight and down it went at the first fence - though the name is Delphic: will gold flee or take wing? For adherents of cash, Offshore Account stayed the course, but lost ground as the pace picked up, miming the effect of inflation.
On a political note, I was pleased that Eurotrek failed to complete. And we bloggers should not have been surprised to see Fleet Street unseated.
The winner, against all expectation, was Mon Mome (= "my kid"), perhaps a sign that we should be thinking of the next generation, as skewed demographics meets declining GDP. The trainer, Venetia Williams, was sporting a striking golden coat...
Who ruins Britain?
It's not just the bankers and the politicians. I'm reading Robert Peston's book "Who runs Britain?" and I'm wondering about the social benefits of private equity entrepreneurs.
Take store group Arcadia, for example. In the year 2000, it was acquired by Stuart Rose, at which time it had a turnover of £2.5 billion, debts £250 million and a market capital value somewhere around £100 million. "The business was viewed as dead meat when he arrived." Two years later, the turnover was down to £2 billion, but all the debt was cleared and the group was making an annual profit of £106 million.
Rose then sold out to Philip Green for a reported £850 million (Peston says £775 million), of which Green's personal investment was only £9.2 million.
In 2005/2006, Arcadia's sales were down to £1.8 billion, but profits had risen to £300 million, according to Peston. Green then made it declare a £1.3 billion dividend, £1.2 billion of which went to his wife - who by then was, technically, domiciled in tax-free Monaco. This record-breaking payout was funded by bank loans to Arcadia totalling £1.35 billion, with the result that the group's net asset position went from plus £303 million (in August 2004) way into the red - minus £807 million. You'll see that the dividend accounted for the decline in Arcadia's net worth, and more besides.
Stuart Rose is like a man who buys a sick donkey, nurses it back to health and sells it at a profit. Green appears to me like the new owner who nurtures it further, then suddenly puts back-breaking quantities of heavy stone in its panniers and wanders off on other business, whistling merrily while the poor, over-laden beast staggers behind him in the wilderness. If it should stumble...
I can see what's in it for the bankers (less so, their shareholders). I can certainly see what's in it for Philip Green. But what's in it for us? We work, earn money, pay taxes and what is left we spend in stores that export our capital.
If this is to be the pattern for British business, we are finished. I don't see Johnny Foreigner making plans to take on the obligations of our Welfare State when we no longer make anything he wants; if he's looking for maltreated, ill-bred, indolent slaves, he'll find all he needs closer to home.
Are we making a nation fit for Marxists?
Take store group Arcadia, for example. In the year 2000, it was acquired by Stuart Rose, at which time it had a turnover of £2.5 billion, debts £250 million and a market capital value somewhere around £100 million. "The business was viewed as dead meat when he arrived." Two years later, the turnover was down to £2 billion, but all the debt was cleared and the group was making an annual profit of £106 million.
Rose then sold out to Philip Green for a reported £850 million (Peston says £775 million), of which Green's personal investment was only £9.2 million.
In 2005/2006, Arcadia's sales were down to £1.8 billion, but profits had risen to £300 million, according to Peston. Green then made it declare a £1.3 billion dividend, £1.2 billion of which went to his wife - who by then was, technically, domiciled in tax-free Monaco. This record-breaking payout was funded by bank loans to Arcadia totalling £1.35 billion, with the result that the group's net asset position went from plus £303 million (in August 2004) way into the red - minus £807 million. You'll see that the dividend accounted for the decline in Arcadia's net worth, and more besides.
Stuart Rose is like a man who buys a sick donkey, nurses it back to health and sells it at a profit. Green appears to me like the new owner who nurtures it further, then suddenly puts back-breaking quantities of heavy stone in its panniers and wanders off on other business, whistling merrily while the poor, over-laden beast staggers behind him in the wilderness. If it should stumble...
I can see what's in it for the bankers (less so, their shareholders). I can certainly see what's in it for Philip Green. But what's in it for us? We work, earn money, pay taxes and what is left we spend in stores that export our capital.
If this is to be the pattern for British business, we are finished. I don't see Johnny Foreigner making plans to take on the obligations of our Welfare State when we no longer make anything he wants; if he's looking for maltreated, ill-bred, indolent slaves, he'll find all he needs closer to home.
Are we making a nation fit for Marxists?
Back a winner!
Grand National today. There's something superstitious about the naming of the horses - remember winners Party Politics (1992) and Earth Summit (1998)? On that basis, my monkey (well, maybe a quid each way) will be riding Golden Flight.
Follow the Money
I grew up in a British army family during the Cold War. During that period,we were bombarded with the message that the Russians had a vast and powerful military machine. By contrast, when I read about the USSR, the discussion was always that their equipment broke down all the time. This week, I talked with an ex-Soviet tank commander, who told me that his tank was inoperable every three days.
The source of this disparity was a combination of the arms manufacturers, faced in the late 1970's with their first downturn since 1939, and Leo Strauss' neo-conservative movement. Their propaganda assured us that the Soviets had invisible and powerful secret weapons that we had to counter. Under Reagan, the US engaged in the biggest peacetime arms build-up in history.
When the USSR collapsed, so did the need for all of our weapons. Just in time, we had the War on Terror. Rather than a counter-terrorist operation, we managed to turn it into a massive conventional war, when we chose to invade Iraq.
To date, we have spent at least $1 trillion in Iraq, $4 trillion on an uneccessary and unworkable Star Wars missile defense, and the military consumes over 50% of the budget.
Had we not been consumed by paranoia and fear, would we have a deficit now?
The source of this disparity was a combination of the arms manufacturers, faced in the late 1970's with their first downturn since 1939, and Leo Strauss' neo-conservative movement. Their propaganda assured us that the Soviets had invisible and powerful secret weapons that we had to counter. Under Reagan, the US engaged in the biggest peacetime arms build-up in history.
When the USSR collapsed, so did the need for all of our weapons. Just in time, we had the War on Terror. Rather than a counter-terrorist operation, we managed to turn it into a massive conventional war, when we chose to invade Iraq.
To date, we have spent at least $1 trillion in Iraq, $4 trillion on an uneccessary and unworkable Star Wars missile defense, and the military consumes over 50% of the budget.
Had we not been consumed by paranoia and fear, would we have a deficit now?
Thursday, April 02, 2009
What goes up
Dow over 8k, FTSE over 4k...
I dont know where Im going
But, I sure know where Ive been
Hanging on the promises
In songs of yesterday
An Ive made up my mind,
I aint wasting no more time
But, here I go again
Here I go again
(Whitesnake)
Maybe the national brokers are right. I don't think so.
I dont know where Im going
But, I sure know where Ive been
Hanging on the promises
In songs of yesterday
An Ive made up my mind,
I aint wasting no more time
But, here I go again
Here I go again
(Whitesnake)
Maybe the national brokers are right. I don't think so.
The concrete life saver
We Brits are naive with money - we're so unused to having any - our Government has always looked after it for us. Perhaps this is why there are so few Brit blogs that help us understand finance.Speaking of ruinous government help, Karl Denninger describes a trap that seems likely to bankrupt General Motors.
It seems that people who own GM's corporate bonds have an incentive to let the firm collapse: their losses will be made good by the equally-bankrupt former financial giant AIG, through Credit Default Swaps (CDS), which are insurances against default on loans. In its panicky attempt to keep the financial system functioning normally, the US Government has effectively become the guarantor for AIG's CDS contracts. So creditors of GM can expect 100% return of their capital.
Better still, once GM goes under, the bonds are unlikely to become entirely worthless. So GM bondholders will get 100% PLUS...
And this means that the Government's "help" is about to ruin a huge manufacturer and employer.
Wednesday, April 01, 2009
Lessons not learned?
Dubious long-term decision-making does not appear to be restricted to the UK and US.
Adu Dhabi is has announced that it will change to coal-fired electricity generation. Dubai is currently building four such plants, with combined output of 4 gigawatts - enough to power 400,000 typical American homes. Oman is contracting with South Korea to build several as well, and Egypt proposes to build at least one on the shores of the Red Sea.
The supposed incentive is that coal from Australia is cheaper than their own natural gas. One wonders why they aren't using the desert for solar power. Perhaps it isn't the panacea that we have been told it is?
China, of course, puts one plant on their grid every 10 days, but at least they have their own mines.
Haven't the Arab nations learned the danger of energy dependence?
Adu Dhabi is has announced that it will change to coal-fired electricity generation. Dubai is currently building four such plants, with combined output of 4 gigawatts - enough to power 400,000 typical American homes. Oman is contracting with South Korea to build several as well, and Egypt proposes to build at least one on the shores of the Red Sea.
The supposed incentive is that coal from Australia is cheaper than their own natural gas. One wonders why they aren't using the desert for solar power. Perhaps it isn't the panacea that we have been told it is?
China, of course, puts one plant on their grid every 10 days, but at least they have their own mines.
Haven't the Arab nations learned the danger of energy dependence?
Where we went wrong?
I have written earlier this week about my doubts as to the value-added by stockbrokers and other financial administrators.
While this data may be a little old, it may support my impressions that too much money is going to too few people, making the system inherently unstable.
In 2005, there were over 9,000 hedge funds, with over $1 trillion in assets. The managers earn 2% of the assets per year, plus 20% of any profit. Given the performance for those years, that's over $4 million per manager per year. The top three incomes reported in New York Magazine were all for hedge fund managers, with Edward Lampert topping the list at $1.02 billion.
It's what farmers used to call eating your seed corn.
While this data may be a little old, it may support my impressions that too much money is going to too few people, making the system inherently unstable.
In 2005, there were over 9,000 hedge funds, with over $1 trillion in assets. The managers earn 2% of the assets per year, plus 20% of any profit. Given the performance for those years, that's over $4 million per manager per year. The top three incomes reported in New York Magazine were all for hedge fund managers, with Edward Lampert topping the list at $1.02 billion.
It's what farmers used to call eating your seed corn.
Monday, March 30, 2009
The "correction" will come soon
Michael Panzner reminds us that he predicted hyperinflation to follow after deflation, and quoting Edward Chancellor's recent article, thinks the phase change may be on its way. Chancellor answers the argument about global oversupply by reference to run-down inventories, widespread bankruptcies etc - there is now less productive capacity than there was, and what's left is not running smoothly.
A sleep-deprived Jim Kunstler experiences some of this disruption in a Colorado over-dependent on the vagaries of aviation, and rehearses his central theme that US living standards must (in his view) drop 20 to 50 per cent, whether through deflationary depression or savings-destroying inflation. He thinks the page will turn soon, too - maybe in June.
I said to my brother this weekend, that I think America can cope with being poorer, though the adjustment will be nasty; I didn't think it could survive being so rich. Look at what all that easy, phoney, fraudulent wealth did: that gallery of fat rogues in Wall Street and elsewhere, while the poor were exploited with credit cards and doomed home loans.
Kunstler's healing vision is bucolic, like Alexander Pope's:
Another age shall see the golden ear
Imbrown the slope, and nod on the parterre,
Deep harvests bury all his pride has planned,
And laughing Ceres reassume the land.
Sunday, March 29, 2009
Horrifying budget
Fraser Nelson in the Spectator:
To comprehend the scale of the sickening task awaiting George Osborne if he becomes chancellor, consider the following. If he were to raise VAT to 25 per cent, double corporation tax, close the Foreign Office, cancel all international aid, disband the army and the police, release all prisoners, close every school and abolish unemployment benefit he would still be unable to close the gulf between what the UK government spends and what it raises in taxes.
Where does all the money go? How can we get out of this in one piece?
To comprehend the scale of the sickening task awaiting George Osborne if he becomes chancellor, consider the following. If he were to raise VAT to 25 per cent, double corporation tax, close the Foreign Office, cancel all international aid, disband the army and the police, release all prisoners, close every school and abolish unemployment benefit he would still be unable to close the gulf between what the UK government spends and what it raises in taxes.
Where does all the money go? How can we get out of this in one piece?
Saturday, March 28, 2009
(Data source)Back to the Constitution - and its underlying principles
A fine rhetorical performance by Bob Basso (htp: Karl Denninger), reminding Americans that the issue isn't money, but liberty and national integrity (as in holding the pieces together).
I agree with everything before the tea-bag (never as good as leaves, old chap) and the call to buy guns; some might go further.
Götterdämmerung
The British Prime Minister has become a desperate man. Whether it be the countless borrowed billions dashed at an economy he has personally supervised in its progress towards ruin; the chainsaw systemic attacks on personal liberty; the arrest of an MP in the House of Commons for the offence of performing his constitutional duty; the tour of foreign countries to "gild o'er" his failures at home; and now the attempt to meddle with the royal succession in order to divert some of his deserved unpopularity onto an institution that gives us continuity with a past he has assiduously sought to obliterate; all combines to show a man floundering, willing to sacrifice all others to maintain his wretched office for a few more miserable years. The Birnam Wood of financial collapse is, however improbably, marching towards Dunsinane; how apt that he should have chosen to domicile his family in Fife.
Thursday, March 26, 2009
Divided consciousness
It's a strange feeling. I go about my daily work as though everything is normal - meetings, calls, teaching, memos, make a cuppa for others - and then I remember the financial volcano beneath our feet. One or the other must be a fantasy, yet I neither run away nor stop following the crisis on the Net. I hate the fuzzy-headedness you get from doublethink.
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