Just another straw in the wind as 2.5%-off-VAT-day looms . . .
Mrs D and I occasionally patronise a well-known hotel chain. A day or so after the PBR, they wrote to us thus:
We will immediately be passing through the full 2.5% VAT reduction - book now !
Fair enough, very public-spirited of them; but wait, what's this ? Yesterday, they wrote to us again:
50% off all breaks - book now !
What will they be saying next week ? If we wait a bit, it will be cheaper to go and live there. Why would we book now ?
Sunday, 30 November 2008
Saturday, 29 November 2008
"Of course, they're all raving mad, you know!"
Friday, 28 November 2008
In 2007 Gordon Brown delivered himself of a pompous lecture on Liberty. He was probably very proud of himself.
Wednesday, 26 November 2008
The Pesto Wire has another flash - apparently Woolies will go into administration, the Stores part tonight. BBC worlwide, the capitalists armed with the licence fee, will buy another piece and the distribution business will carry on as a profitable venture.
Long negotiations with the banks have failed, as they always do unless a company genuinely truns around its cash flows and builds working capital. Peter Mandelson could not help, much like Darling could not help Northern Wreck raising rates on mortgages today - the government is howling into a gale. Perhaps these setbacks will encourage a little more sobriety and less shouty 'saving the world' mouthiness on their part.
However, I have not yet entirely given upn on Woolies. Hilco was trying to buy the stores to sell some to Tesco and keep the profitable ones. It could buy the leases and warehouses out of administration, much like Barclays bought Lehman's having walked away when the company was alive.
At least Deloitte are the administrators, with a bit of luck it will be Lee Manning who is always very keen and good at keeping companies going.
Tuesday, 25 November 2008
Commenter Dennis posted this in the comments to the item below:
Monday, 24 November 2008
So, predictably, it starts with a reference per sentence to the Global economic situation. Yawn, if repreated enough do they think I will believe?
Labels: UK Politics
Gordon and Alistair have been in this race for sometime. The end destination is a massive pension pay-off and autobiography sales. All they have to do is drive the UK Plc car for a 3 year stage, but they seem to be struggling on the way....
"Gordon we have to stop going left all the time."
"Darling its the only choice, right takes us down the dark path, it can't be the correct choice, you are reading your map wrong"
"Don't talk to me about map reading, when you gave me the map it was upside down and the route had to be crossed out and re-marked"
"That is not true Darling, the route was clear and there had been only minor historical revisions to re-order the effects poor statistical analysis"
"Mind that bump there or we will hit another credit crunch"
The car wheels left and nearly off the road.
"Make your mind up Darling, are we going to deal with that crunch or just keep avoiding it"
"I don't think the car can handle it Gordon, there is a long-route around, let's try that today"
"But we nationalised the Banks, lectured the world on fiscal prudence. We will go over that crunch without a bump. I am a genius driver, but just in case I am not what is the alternative?"
"Gordon, your the Boss the, next alternative turn is a hard right into the forest of fiscal stimulus"
"Hard right it is then, don't think I have ever done one before, but if we are going to get our rewards then we had better take some risks. After all tax cuts are what Socialism in the 21st Century is built upon."
"You have the knack now Gordon, you seem to have Tony's victorious twinkle in your eye now.It's OK Gordon, once we have done the first turn there are a myriad of small left's to tale in the future, higher taxes, government subsidies - a miasma of Big Government tinkering. It looks like a right now, but actually the end point is considerably Left of where we are as the crow flies"
"Let's get on with the job then"
"One Hard right to beat the opposition then Left all the way"
"I love you. You arte taking me back to my dreamy university days of the 70's - oh the joy of my misspent youth in the library with mr Marx. We are going to go so far left and back in time that Michael J Fox won't be able to find us"
The wheels screetch as the car braces against the turn, but can the turn be made of does the car go off a cliff? To be continued at 3.30pm today...or not.
Sunday, 23 November 2008
The other day I posted about using a monetary stimulus, printing £'s that is as a possoble solution. This had a mixed reception but I was glad to see the idea being discussed on Newsnight on Friday; so maybe not as barking as some would have you believe.
Saturday, 22 November 2008
Friday, 21 November 2008
Spoke to my bank manager yesterday, he looked really stressed. We had a chat about all his problems and he said from now on I am going to stick to the big issues.
Thursday, 20 November 2008
Yesterday we disclosed how the BOE has lost control of monetary policy. They only have the interest rate to control and this is meaningless in the face of LIBOR and CDS and the Bond market.
On Monday, whatever Darling and the media report, the Government will outline the loss of control of fiscal policy. perhaps with debt ballooning to 50% above target for the year.
As a result of the above the pound has sunk, now trading at £1.48 to the US Dollar and £1.20 to the Euro; Osborne's little saga apart there has been little public reaction to this.
When we then consider the issues facing us; deflation of asset values in all classes, capital inadequate banks, low savings, consumer over-indebtedness - we are in quite a pickle. it is very Japan circa 1990-91. They had a 10 year recession and their stock market is now 85% below its peak (=FTSE100 at 800, rather than 4000 as today).
But perhaps the BOE do have an answer. Print money now, deflation is setting in for the moment as global deleverage occurs - so the inflationary effect will actually be countered in the short-term. Plus inflation would then allow the BOE to raise interest rates back to levels which may enourage saving. Asset prices would be reduced in real terms and there would be more money to spend to stimulate the real economy. Also with no need to issue gilts, the government will not need to get into such financial hole as is currently planned.
In the US, The Fed Chairman Ben Bernanke has hinted at the US going down this road to avoid depression. The time to do it is now, in the deflationary window. If we wait until the deflationary period is over we could set-off hyper-inflation.
Thus there is a strong argument for printed monetary stimulus today. Comments?
Wednesday, 19 November 2008
The Prime Minister: I think that we are both agreed that this is a tragic and serious loss of a man who had captured the nations heart and that lessons can be learned. I think that the right hon. Gentleman would agree that appointing Sir Bruce Forsyth to go around the country and look at what is happening in each area so that we are assured about what is happening is the right thing to do.
The PM then went on to say that Mr Cameron should
Mr Cameron replied "That's just Bollocks"
The notes from the last BOE meeting are out today. They make grim reading. In short as I see it, they say they had little idea of what was going to happen to Lehman's or post Lehman's.
great - they have no foresight, by admission. Historically interest rate adjustments have been use to control the economy over the next 2 years. So a lack of foresight is rather a problem.
Then they go on to note that rates will come down further as inflation falls below target. This is all well and good for the next 6 months. then what?
I fail to see how inflation can remain low when all the deleverage has occured. The £ will be low and imports will cause inflation, the closing of factories will mean less suppliers. less suppliers eqauls infaltion in time as demand picks up again.
Given that commodities et al are markets I fully expect them to over-shoot on the downside. Hence we will have inflation, especially if the dollar tanks too as is likely at some point next year. G20 Global fiscal stimulus is inflationary too in the medium term.
Yet the bank sees maybe 0% interest rates next year. maybe so, but I hope not for long. otherwise the doomsday scenario o f borrowers being killed by deflation and then savers by inflation will come to pass and we will all be immeasurably poorer for it.
Tuesday, 18 November 2008
Our embattled government, currently being given a bizarre free ride in the media, continues to act in an authoritarian and cynical manner;
- Next week, a Labour Government who have raised taxes for11 years are to announce tax cuts to stimulate the economy. This in itself it ideologically, morally and fiscally wrong. Labour know it, bu they have no clothes. No doubt they will attack the Tories for opposing them. This is real George Orwell Doublethink territory.- Finally today and crucially the economic news is still very bad, inflation has fallen by 0.7% and the markets continue to tick down anyway. Worse, rents are falling as demand for housing dries up. House prices cannot find a new level with rents still falling - so expect a much further fall in house prices next year. Current predictions of 15% are laughable. it is quite possible top to bottom average fall will be nearly 50%; that is 30% more from here.
You won't here this from the housing minister. Next week the Government will announce more borrowing to spend our way out of a debt crisis. The insanity continues and I am at a loss as to why the media either cannot grasp this or are happy to see the current Government take little flak for its appalling economic mismanagement.
Monday, 17 November 2008
Gordon Brown explains Milo Economics to the other leaders of the G20
Milo's M&M Enterpises syndicate is selling seven-cent Maltese eggs to the mess halls at a price of only five cents an egg while still making a profit.
Seven-cent Maltese eggs cost the sellers in Malta four and one-quarter cents each to procure. Milo is actually buying the eggs from himself in Malta, which means that as a seller there he is making two and three-quarter cents each egg. After he resells the seven-cent eggs to the mess halls for five cents each, he is still making a three-quarter cent profit per egg.
However, it turns out that Milo's Maltese eggs are actually one-cent Sicilian eggs which he has secretly shipped to Malta to drive up their value, yielding him another three and one-quarter cents profit per egg.
"I make a profit of three and one-quarter cents apiece, and everybody comes out ahead."But Orr crashed into the sea and when the crew went to inflate their life jackets..
The life jackets failed to inflate because Milo had removed the twin carbon-dioxide cylinders from the inflating chambers to make the strawberry and crushed-pineapple ice-cream sodas he served in the officer's mess hall and had replaced them with mimeographed notes that read: "What's good the M & M Enterprises is good for the country."
Chaplin: Cheer up Yossarian. Milo's selling oranges and the syndicate is making so much money.
Yossarian: We won't see any of that money. We won't even see the oranges.
Sunday, 16 November 2008
Mr Osborne suggests that Mr Brown “doesn’t care” how much he borrows. “His view is he probably won’t win the next election. The Tories can clear this mess up after I’ve gone. That is deeply irresponsible. It’s a scorched-earth policy, which I think the history books will write up as a total disaster and which the public will see through between now and the election.”Both Nick Drew and I started this theme of Scorched Earth a year ago. We even had unfunded tax cuts as a key policy idea for this. A bit of google history searching shows The Speccie linked to us and took on the idea and from there it went mainstream.
Glad to know we can indirectly get up the PM's nose when he is in such bombastic posture.
Labels: Sordid ego satiation
Saturday, 15 November 2008
This may seem like an odd title. but I belive it to be true.
Friday, 14 November 2008
I went away for a couple of weeks and it seems you all had a huge party without me. When I left the UK on 28th October the Great British Pound was at 1.63 to the US$ and 1.25 to the Euro.
Thursday, 13 November 2008
Wednesday, 12 November 2008
Throughout 2008 our little SterlingWatch graphic has provided a running commentary on how the world sees Brown's performance. It will get several further airings, one suspects: see this salutary piece by Hatfield Girl.
Tuesday, 11 November 2008
Monday, 10 November 2008
Here’s a powerful illustration of economic theory in action. On the back of strong demand and rising input costs, the steel industry worldwide has spent the first nine months of the year raising prices. See for example these press releases from thriving European steelmaker Corus: 17 of the 30 announcements between January and September heralded price increases. In August they recorded higher turnover, deliveries, earnings, profits and return on capital for the group.
Sunday, 9 November 2008
As a blog that strives constantly to meet the goals set for us by Hazel Blears, in today's effort to add value we are instituting a bit of glamour. I give you the FT's multi-talented Gillian Tett, one of the very few journos deserving of honourable mention when it comes to foreseeing our current economic woes.
Saturday, 8 November 2008
Peston is reporting that there is trouble at Mill re the HBOS merger. Many HBOS ex-employees with shareholdings are aghast at the terms of the Lloyds deal. Sir Peter Burt,left, has form for this too. Earlier this year he was saying we should suspend accounting standards to help his old bank.
Well, good luck to them. Brown backed LLoyds to merge with them and the Government, slowly getting back some form of grip on events, is not going to get taken down on this. HBOS was in a terrible financial position and would not exist as an organisation today were it not for taxpayer support. The same cannot be said of Lloyds.
For all this though, the banks are still a huge cause of pain in the economy. Not lending money as they should, recalling loans and raising rates where they can on customers.
The policy of reviewing their books by the treasury and ordering them to take taxypayer support has still not worked. Libor is going down but is still high. The market are still prone to huge falls on any given day on the slightest bad news (and bounces too, as in all bear markets).
So, the Treasury plan is not working, interest rate drops look desperate. The Government, BOE and Treasury (..and FSA?) are still all flailing; and now they have hung out their credibility.
Expect more bad news until a more coherent plan is put together. The traditional muddling through has only stopped us being engulfed in the quick-sand, we are not free yet.
PS still on hols, back at the end of next week.
Friday, 7 November 2008
So well done Sarah.
Odds shortening on Mr Drew's prediction for an early election?
Thursday, 6 November 2008
Wednesday, 5 November 2008
Tuesday, 4 November 2008
Monday, 3 November 2008
Northern Rock, it will be recalled, foundered on the egregious strategy of not attempting to balance its lending with savers’ deposits, but rather with borrowing in the interbank markets. When liquidity in the latter dried up, the business model - otherwise potentially viable - imploded. To use jargon familiar in other industries, they were not ‘vertically integrated’ and accordingly were heavily exposed to wholesale market conditions.
Sunday, 2 November 2008
Saturday, 1 November 2008