Reality bites – at last …triple AAA? (ask Mr Micawber, he knows)

 

The AAA rating, by Mr Micawber’s definition (and that of reality and your grandmother) is earned when your income just exceeds your expenditure and that future prospects are stable. Neither of these simple criteria apply to any country in Europe, including Germany, and certainly not to the USA or to Great Britain. So why all the excitement when the USA which has not met these criteria for years (as indeed, we have not) loses the AAA rating?

Politicians have been lying their heads off for years, and money, an artificial contstruct at best, has been warped far away from its original purpose (a means of exchange) – that’s why. The incredible thing, to me at least, is that everyone (journalists, financial services and economists – but not the banks!) has been believing them and the warped money definition –  but it seems that some have at last woken up to the fact that having politicians in charge is just like a company being run by the marketing department. Reality will bite – once the customer has bought the product and found it not to be as advertised.

It has been a long time coming but Mr Micawber’s lesson is slowly beginning to be understood by economists.

Of course it will be a few weeks more before politicians and banks can bring themselves to understand, but reality will bite, sooner or later. It really is so easy to understand.

The Thatcher era started off the real stupidity of modern ‘fast’ stock market madness and the Blair / Brown followed on like unthinking lap dogs. Cameron is still lapping at the bowl of Blair’s stupidity – he (Cameron) will probably be  the last to get it.

But its all OK – really, if the banks are allowed to “take their haircut” – as they must in order to start correcting the massive overvaluation of the banks and the stock markets around the world. 

It will take just one brave politician somewhere to start the process – say with RBS, or Lloyds (banks that we the people now own). Return the banking model to that of the 1960s and a lot of very rich people will lose billions but reality will slowly return to the world.

Discuss …

 

Aha – someone agrees with me – but no celebration …

 

Terry Smith, chief executive of Tullett Prebon, one of those “financial sector” companies that scare me to death, because I don’t really understand what they do, Terry Smith runs a blog too, and his latest posting is well worth a read so are his other musings; so good in fact that I have added his blog to my list of wisdom eschewing sources – see ‘Blogroll’ on the right hand column. That he mentions the Avengers is evidence enough that he must be a jolly good egg to boot.

Most of our ills, it seems to me, come from incompetent, hubristic mismanagement of our resources by our politicians and the simple greed of corporates; if that is now obvious to you, then hurrah!

How to replace / improve / punish our “managers” is up to philosophers, journalists, comedians but finally, you and me.

Oh, and by the way, I do realise that nobody is reading this but it does reduce my blood pressure …

Anyhow, onwards and upwards, a summary of Terry’s current musings mixed with a few of mine follow:-

Nothing “real” has been done for Greece despite the latest “bailout being hailed as a success’;- her debt level appears to have gone from 140% to 130% of GDP – wow… Quite how this happens when Britain and the Euro-zone has increased Greece’s debt by offering loans of a further £21bn. Beats me – ah well…

The ‘global’ credit Credit crisis occurred 3 years ago – however British public & private debt has still not been dealt with by our disfunctional politicians – we are talking about inactivity since 2008; they have had 3 years and yet nothing of any significance has been done. Interest rates at 0.5% are simply postponing the day of reckoning for those British private individuals who over-borrowed £1.3 trillion quid and still and rising. An indication that nothing has been learned is the simple fact that 300,000 people have obtained interest free mortgages in the last 2 years – incredible; this means that when interest rates go up again … <left intentionally blank> …

The real culprits – i.e. borrowers; individuals, private companies and the government (Ed: but isn’t that everybody..?; Yes, that’s correct!; Ed: Oh, er, oh dear me …), have NOT paid the price yet. Interest rates are at historic lows yet no real understanding of past stupidity has been realised.

The biggest issue for our government is public sector pensions which are simply untenable; yet this has, at best, been dodged and kicked into the long grass that has not yet even grown. The grass will be have to be mown by our children’s children so it seems.

If I hear another politician say that we doom mongers are ‘talking down’ the economy – I say poppycock!  The economy is going down the toilet all on its own and the government is not helping one bit; It is going to happen anyway.

Norway is a shining example of how we should have been governed since the 1970s (“managed” is perhaps better) because it treated its oil revenues as a welcome one-off surprise and banked most of the dosh for the future benefit of the Norwegian people, whereas we, Thatcher that is,  just frittered it all away whilst at the same time selling our water supply and electricity grid to the highest bidder – criminal behaviour, unbelievable! Norway is perhaps the strongest, most stable, most morally mature country in the world despite being overwhelmingly secular <just had to get that one in … hehe>. It’s far from perfect perfect but we have many things to learn from Scandinavia.

It’s a funny old world (#1) So our Vince was right then ..?

 

This is the first of a new series of posts pointing out the obvious hypocrisy of politicians that most people don’t have time to spot – I do, so here is a classic example.

The following article appeared in the Guardian on 21st December 2010.

A humbled and diminished Vince Cable was tonight allowed to cling on to his cabinet post as business secretary, but was stripped of all responsibility for media policy after it emerged he had told undercover reporters that he had “declared war” on Rupert Murdoch over the media magnate’s plans to take over all of BSkyB.

Cable’s reckless claims, in a secretly recorded conversation, were considered a flagrant breach of his duty to take a quasi-judicial approach to the proposed takeover, and were declared “totally unacceptable and inappropriate” by Downing Street. Many had expected an angry David Cameron to sack Cable or transfer him to a lesser cabinet role.

But instead the business secretary was hauled in front of his party leader, Nick Clegg, and then Cameron. After a series of emergency meetings, which included George Osborne, the chancellor, Clegg felt he could not afford to lose the second most senior Liberal Democrat from the government.

Nearly 70 civil servants responsible for all aspects of media and telecoms policy will now be transferred from Cable’s business empire to the Department of Culture Media and Sport headed by Jeremy Hunt, the culture secretary and a Conservative likely to be sympathetic to Murdoch

Now that Murdoch has been accurately exposed as a gutter dwelling, lying stinkpot (which we all knew anyway), Vince Cable is seen to have been justified and correct in his observations.

So much for a rational and principled response from politicians then eh? Cameron, Clegg and Miliband owe Vince a huge apology – but I haven’t spotted one yet – have you? Cable has obviously been gagged by Clegg and Cameron – can’t have truth being aired in Westminster village, can we – bah, poo & piffle says I.

The pathetic displays of self righteousness, in the last few days, from people like Prescott, Brown and Cameron is truly nauseating …

Are we being run by idiots? (Euro bailout #2)

 

Did you know that when Italy joined the Euro, it failed several of the main criteria set up for countries joining the Euro?

Did you know that “bail outs” of failed economies in the Eurozone are prohibited by EU law?

You may have heard that we (residents of Great Britain – the UK …) are in a bit of financial bother and that for every £4 we spend we have to borrow £1, at around 3.0% from China. This is couched in a wonderful term “the PSBR or Public Sector Borrowing Requirement”  which makes it sound quite normal to have to borrow cash to meet our ordinary annually recurring spending needs. 

Most of us learned from Mr Micawber in Charles Dickens book David Copperfield, the following simple lesson, “Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six pence, result misery.”  This statement is simple common sense, obvious to anyone other than a politician or financial journalist.

That does not include the future PFI commitments and public sector and funding conventional old age pension commitments.  (Ed: ‘Why not? ‘Answer: “It would make our finances look worse than those of Greece”. Ed: ‘Ah – of course, silly me – thanks.’)

Public sector borrowing is only ever sensible if it is for capital projects like roads, hospitals, railways etc., and then, only if future tax receipts take it into account – even this basic accounts stuff passed by Gordon Brown who criminally borrowed ever more and more without providing control systems to manage what was being spent and why.

The loan interest payments we paid in 2010 were £46 billion and will be worse in 2011.  (Same as the 2012 defence budget) … and, NO I’m not making it up!) See  here.

So then, let’s give another £9.2 billion to the IMF to help out the Euro-zone, i.e. Greece, Portugal, Spain, Ireland & now Italy shall we?

Yes great idea!

This of course is on top of the £12 billion already committed by our leaders last January.

Sounds like a good plan to me!

We can afford it!

Let’s put Gordon & Tony’s pensions up shall we? (Ed:- er, we already have – so would you like us to put them up again? <embarrassed laugh – Ed was not quite sure if I was joking or not …>) The current lot, Cameron and Osborne, are not even attempting to balance the books this year or next!

I am afraid to say that Great Britain (and many other “developed” (ho ho) countries) are in more or less the same “over- leveraged*” position; the USA, France, Spain, Portugal, Italy, Germany (yes, Germany – but they have a good chance of paying off their debt – or rather did have until Italy went bust last week…).

Don’t check up on public debt positions of countries other than China, Brazil and Arab oil producers if you want to sleep tonight.

Are we being run by idiots?

Yes we are!

The sound of gentle weeping can be heard from my study …

* “Over leveraged” = ‘bust as arseholes’ as a former insolvency accountant acquaintance used to say.

Our Dave gives a master class in arse covering

 
David Cameron wriggling but failing to cover his arse

The main theme of meBook  is that “party” politics corrupts the decision making process in government thus ensuring that unforgivable errors are made in managing Britain’s resources.
The last few days have made me glad to be grumpy – my cup runneth over with material for a grump-fest not seen since Blair made the BBC apologise for telling the truth about his mad, bad, god inspired decision to invade Iraq.
Politics” (original meaning = ‘of the people’) has come to mean (‘of the politicians’) and this subtle and ego driven corruption has spawned the current media frenzy.

Meanwhile, in the real world we, with the time and inclination to see, can see the soap opera for what it is – a mad panicky attempt to maintain the power base of our political masters and their support base of journalists who earn their salaries by talking about power mad egocentric marketing executives (that’s the current and last government if you were wondering…

Dave’s speech yesterday was straight out of chapter 1 of “Arse Covering for Idiots” and fooled no-one, well, not me … 😉 Please watch Dave  “taking full responsibility” … by staying in his job to save his arse, pension, credibility and salary. (55 seconds of skin crawling fake humility …yuk)!

Clueless government + petty minded Unions

 

The news is full of mass strikes “the like of which we have not seen since the 1926 General Strike”.

For the want of some honesty & simple common sense we are all going to be in the doodoo again. I refer you to my last post on the 6th June 2011.

I simply despair of the petty mindedness of both the Unions and the hubris* displayed by all our party politicians.

The solution is painful but obvious! You, the government, must let the bad banks fail, the hedge funds must “take a haircut” and the rest of the solution is sharing out the financial pain fairly (see my post 6th June 2011)!

* ‘hubris’  : insolent, contemptuous disregard (‘we know best, trust us we’re politicians’; ‘calm down dear’ etc.)

We’re all in this together – but don’t dare strike says our Vince!

 

Remember this from our mate Dave? (Tory Conference – October 2009 – full text here)

It means showing that we’re all in this together, which is why we’ll freeze public sector pay for all but the one million lowest paid public sector workers for one year to help protect jobs. And it means showing that the rich will pay their share which is why for now the 50p tax rate will have to stay and child trust funds for those on middle and higher incomes will have to go.” + “But if we pull together, come together, work together — we will get through this together.”

Vince Cable upset the GMB union this morning by hinting that the government won’t tolerate joined up strikes protesting against “the cuts”. However, both “sides” of the argument are wrong; Because of the farcically weak position we are in thanks to the “financial markets”; bank bailouts; 2 world wars; and a series of inept and incompetent governments, we simply have to make cuts.

Had our “Dave” shown some leadership by:-

  • cutting, say, all current & future public sector pensions over, say, £40k by, say, 50% until the “deficit is cleared”
  • cutting public sector salaries over, say, £100k by 50% until the “deficit is cleared”
  • freezing public sector salaries for “at least” 12 months or until the “deficit is cleared”
  • dealing with errant MPs in the same way “we” are, i.e. gaol + 100% penalties (instead of letting most get away scot free
    •  even those 4/5 who are jailed don’t pay penalties)
  • reclaiming £6bn  tax avoided by Vodafone
  • reclaiming £285m tax avoided by Philip Green (Top Shop, Arcadia Group etc: “its my wife you have to talk to, she owns the company – oh, by the way, she resides in Monaco .., so you can’t get the tax, tee hee”)
  • not actually then hiring Green to help make efficiency savings! Difficult to make this up but its bloody true! 
  • renegotiating the PFI fiasco started by Thatcher & then embraced by Blair and Brown (£50bn of your cash criminally wasted)
  • reclaiming Fred the Shred’s pension & suing him for incompetence
  • dealing with the casino bankers properly & decisively
  • etc. etc. etc

… then he might have got away with saying we are all in this together and the unions might be supporting him in his attempt to cut public sector pensions for less well off workers.

Strikes won’t help the country either – what we need is some serious, loud debate from journalists, politicians & unionists – do we get it? Do we hell! (*)

* Actually we do – but only in “Private Eye”, as far as I can see…  

Lovely dry and sunny weather isn’t it? Yes, but …

 

Sub-title: Sell your Chinese “Emerging Market”stocks soon – you heard it here first. 😯

It hasn’t rained much this year, in fact it is looking like being one of the dryest years ever and the trend is probably going to continue.

So, I ask, where is the joined up thinking, the planning and investment designed to improve matters now before we find out out that it is too late? Answer is there none. That’s because the problem is not really an issue for the owners of our water supply – they will just put the price up to maintain profits – easy; in any case they don’t live here so “not a problem” then…

If you want to see who owns our water supply  you can check at the Office of Fair Trading website for an answer, but to summarise – Northern Ireland actually owns its water; Spain owns Scottish water supply;  but (from here on in the news gets progressively worse); Australia, Singapore, Malaysia and South Korea own England’s water and Canada owns Wales’ water. Hedge funds (of course) are somewhere in there but it is very difficult to find out the detail.

If you, like me, think this is just too daft to be true then … WAKE UP!

When that short sighted, criminally stupid woman (Margaret Thatcher, if you were wondering), sold off our water supply to foreign investors in 1989 she forgot (because she probably didn’t care enough to think) to put terms into the deal that would protect the British public from profiteering bastards (I use the term loosely, because what else can you call men who care only for the creation of immorally created piles of dosh for themselves?).

Perhaps Mrs T can see now clearly that water is becoming a bit of a problem for those in low rainfall areas. Nothing however like the problem that those  criminals in China (the Chinese government if you were wondering…) who are in the early stages of overseeing China’s economic doom for the simple lack of a clean water supply and who have embraced the West’s philosophy of believing that money actually exists.

Britain’s water supply should belong to the population of that country; anyone who says different is deluded.

Britain’s electricity energy grid belongs to the British people not, as it currently seems to be, Germany, Spain, South Korea and Canada. There are many more examples of this past and continuing lunacy in meBook.

Obvious is it not? Apparently not, to successive British governments formed by that strange class of people we refer to as “party politicians”.

This “privatisation” has become a disaster waiting too happen, not just for us, but for the USA, China and many other countries.

The basic problem is that we are close to, if not actually at or past, the point where the world’s population is balanced by natural resources. Governments dare not tackle population control (no votes in that!) and can’t act on resources because they sold them! Those, and many other, natural resources are no longer owned by the people to whom they should belong.

The reason that Thatcher’s potty government made Privatisation seem like a good thing was simply that, even then, Britain had run out of money (Ed: not since before the 1st world war have we actually been in the black) so in order to make herself look good she misused North Sea Oil revenues, sold off Council (sorry “Social”  (yuk)) Housing so she could reduce taxes and fight a New Colonial war with Argentina.

Hose pipe ban? What hose pipe ban …?

?

Manufacturing is good for Britain …blimey, at last!

 

There was a discussion on the BBC Radio 4 ‘Today’ program this morning which is probably the most important issue for Britain today and probably the world. (Blimey – pompous or what?)

A conference exploring ways to develop British manufacturing will be held at Cranfield University today. Sir Alan Rudge, chairman of the ERA Foundation which funds and advises technology research, and Justin Urquhart Stewart of Seven Investment Management, debate whether more manufacturing would heal our economy or simply serve to denigrate the UK‘s world-leading financial services sector.”

Making stuff is important and financial services are not.’ I paraphrase, but that is really what it is all about.

My point is that this “story” won’t be published by most of our media or indeed heard the British population as a whole because, I suspect, that it is seen to be a bit difficult to grasp. I suppose that might be actually true, BUT that is no reason to bury it – it is bloody vital!  And here’s the thing, “Money does not really exist”.

The invention of ’money’ was one of humanity’s most important “light bulb” moments and has enabled mankind to trade, progress and develop; but it has been corrupted out of all recognition, to the point where its real purpose has lost, and has become a mystical thing in itself.

Money, in its purest and most useful sense, is simply a means of exchange between the man who has some goat’s milk for sale and the woman who wants to buy some bread.

Investment, in its purest and most useful sense, is the link between the woman who invents a technology to make a  better battery and needs money to market and develop that battery (and boy is she going to be rich!) and the man who has some money he does not need just now for his living costs. 

Real stuff is the work people do when they dig the ground for vegetables or iron ore; 

Fantasy is the world of the hedge funds that make money from betting that such and such a venture will fail, or betting on the future price of coffee falling. Now come on – what is the benefit, to you and me, of that? 

Sadly, financial services, are not services at all – but simply and sadly a conduit, a means to transfer value from a gullible cash holder to the exploiters of same., and remember, money does not really exist – people, ideas and the useful work they might do does.

The sense of self worth a person gains for being paid and appreciated for doing something “worthwhile” is real and priceless but China digging holes all over Africa, poisoning Africans (and its own population)  in the process, just to make iPads is not.

Discuss.

What do we learn from the Ryan Giggs affair

 
These super-injunctions could make us all look very silly indeed!
These super-injunctions could make us all look very silly indeed!

The media is all excited and discussing endlessly how Twitter is ‘challenging the supremacy of conventional law’; so, once again I am lost for words.

The issue is not Twitter, or Giggs, or the F1 bloke who likes his prostitutes 3 at a time wearing Nazi helmets;  it is that the the English legal system is being misused and corrupted by the rich to protect themselves from exposure from their own crass behaviour.

The issue is that,  behind the scenes, our wonderful government is closing down the best bits of our local legal system – the magistrates courts. In this case centralisation is not good – it just makes the law even more remote.

Even before Twitter and Wiki-leaks, the law was seen, by those who in habit the middle and lower levels of earnings in our society, as remote, irrelevant, quaint, far too costly  and so, not for them.

The legal system is corrupt and is used by the rich, i.e. big business and “celebrities” for their own protection and this government is even more remote from us than the last lot of useless beggars were!  

Discuss..