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Wednesday, 28 December 2011

Luvvie logic

I sing in a choir, and it is great fun. I also play a few instruments, sometimes in public, and I am always buying new music to practise, learn develop and sometimes perform. So I am happy to contribute to the composer/ arranger/ publishers' profits because without them I wouldn't have so much too play or sing. But is there is one thing that gets my goat every time that I see it, it is the brash assertion across many pieces that I buy nowadays that says "It is illegal to photocopy music".

Which is bunkum. There is no law in the land that says it is illegal to photocopy music per se, any more than it is illegal to photocopy text or pictures. What is illegal is to breach the copyright on a copyright protected work, but a quick Google shows that there are plenty of sites offering copyright free scores, which of course you are perfectly entitled to photocopy.

Indeed, if I were to transcribe a version of an old tune such as Greensleeves, I would be reasonably confident that there were no copyright issues, and without going into the minutiae of the Berne Convention, most countries seem to allow me to copy the original publication of music free from copyright 50 or 70 years after the composer's death.

The reason I mention this is that I came across a different version of the same thing from a similar source. A long-standing acquaintance, a professional film editor, is a member of BAFTA. This means that he receives a DVD for each of the more than one hundred films that have been nominated for a BAFTA award. Some of these have been released earlier this year, while others (for example, Spielberg's War Horse) have not been released here. Naturally the distributors who send out these films are very careful and they "watermark" the disks and send out strict notices that they are provided solely for the purposes of evaluating the films for a BAFTA award.

Fair enough, but the blurb on each DVD ends with the threat "Any unauthorised use will be prosecuted."

It will? Under which statute? Sure enough, if the recipient chucks the DVD into a duplicating machine and sends the copies to a Far Eastern wholesaler, then they deserve to get done, but what about every other "unauthorised use"? There is only one authorised use, so any other use such as letting friends see the film, using the silver discs as a bird scarer or kitchen tool for flipping burgers or scraping pans is an unauthorised use, but I don't think any of them amounts to a crime that can be prosecuted under our existing laws.  There might be a breach of contract, a civil case for whatever, but criminal prosecution?  I think not.

OK, this might sound like pettyfogging, but it exemplifies the attitude from many "progressives" that starting with the position that (a) is wrong, therefore we outlaw (b) and say that doing (c) will be prosecuted. A more reserved attitude would say that in order to prevent abuse of (a) we need to create some statutes to interdict those acts and only those things specifically made illegal by the legislation are illegal. Which doesn't quite have the same impact, but at least it wouldn't get my goat.

But we see exactly the same behaviour from the likes of UKUncut and OccupyLSX: (a) is wrong, (b) is a close proxy for the people/person doing (a), so I am quite justified in harrassing (b).

For example, in the case of OccupyLSX, the "poor" (whoever they may be) will suffer under the "cuts" (even though spending is actually increasing and the only cuts are cuts in proijected spending increases), and the problems were all caused by "The City" (not just a part of it), and the London Stock Exchange is core part of the city, so the protesters are quite justified to defecate on the steps of St Pauls. OK, the last logical step defeats me at the moment, but to a radical luvvie they are all part of the same establishment cabal (allegedly) so that is all right.

Is it too much to ask that in 2012, the media will actually try to deconstruct these arguments to show that they are held together by little more than blind prejudice? Yes, it probably is.

Sunday, 25 December 2011

Merry Christmas

Pope Benedict XVI has attacked the commercialisation of Christmas, as he held the traditional Christmas Eve Mass at St Peter's Basilica in Rome.

 In his homily, he urged worshippers to "see through the superficial glitter of this season and to discover behind it the child in the stable in Bethlehem".

..... as though the Vatican City is not full of glitter.

Friday, 23 December 2011

LabourTV caught out again

One of the recurring themes in this blog has been how the BBC persistently talk down UK economic statistics before they are announced, and then drop the story when their predictions of doom turn out to be false.

Yesterday, we had it again with the presenter of John Humphries, the Today Programme saying "We know the economy is slowing down, which is another way of saying the nation won’t be getting much richer, if at all. But today the latest revised growth figures will be published and everyone seems to think they will show it’s even worse than we thought."

I am not sure who counts as "everyone", because "everyone" was proven wrong, but the BBC doesn't apologise or even give the good news as much prominence as its earlier predictions of doom and gloom.

The bias is so obvious, even the Daily Mail has noticed.  So it must be true.

Thursday, 22 December 2011

Alan Hansen: disgraceful

How dare a highly-paid TV personality give us his views on racial politics without knowing the current list of taboo words for non-Caucasians.

If this was the USA, the NAACP would be all over him.

Wednesday, 21 December 2011

Banks take cheap money shocker

The European Central Bank has reported strong demand for an offer of unlimited three year loans. Banks were urged to take the funds to ease pressure on the eurozone financial system.

More than 500 European financial companies took €489bn worth of loans from the ECB’s longer-term refinancing operations, or LTROs.

Of course what are those banks going to do with loans priced at 1%.  Most likely they will use it all to buy European government bonds yielding several hundred basis points more, in a straightforward carry trade.

That in turn allows the various European governments to raise the cash they need to back their recent IMF commitments.

So nothing really happened except cash flow from the ECB to the IMF via the banks and national governments.  The banks make a spread, and you dear tax payer, will be picking up the tab.

Tuesday, 20 December 2011

In other news

Jon Bon Jovi has denied online reports that claimed he had died.

And I am prepared to take his word for it.

Do as I say not as I do

Yesterday we had the spectacle in parliament of the Labour Party attacking the government for its own mistakes. I don't like to discuss immigration here, not least because I have worked in many other countries and lived round the world, but in this particular case, the issue provides an illustration of Labour stupidity.

Yesterday, Chris Bryant called the immigration minister to explain a newspaper report of a leaked memo that showed an increase in the number of convicted illegal immigrants awaiting deportation.. What was the minister doing about it, government out of control etc...etc?

Not so replied the minister, the majority of those cases involved former prisoners released on the orders of the courts not the Home Office. Moreover, they were released because they had not got the correct travel documents to be sent home, either because of a lack of cooperation from the convict or from their home government. Policy has now been changed so that unlike under the last government, preparations for deportation begin 18 moths before the end of the sentence.

But the killer blow was when Mr Green pointed out that the comparison was not with the status quo in March 2010, but over 2 years ago in March 2009, with most of the increase in that number being under the previous government. Indeed, when Bryant accused the Conservative government of releasing foreign prisoners who went on to commit 3 murders, he missed the fact that one of the "murderers" was acquitted, while another was release, committed the crime and was sentenced during the last government.

But then we had the same thing this morning. Margaret Hodge and others came on the airwaves with their blather about tax avoidance and big business (more on that in a later post), and condemning Dave Hartnett for having too many lunches with big tax payers and tax lawyers.

Now that may be appropriate or not, but when did these 107 lunches take place? From 2007 to 2009. remind me again. Who was running the country at the time?

You couldn't make it up

Well, it seems they did.  The world's second or is it third largest economic world power said a few weeks ago that it was going to raise a trillion dollars, euros, or whatever, and we all laughed, especially the Chinese.  It was fairly obvious that with most of the world's spare cash in the hands of despots from Jeddah, Kazakhstan to Beijing, the chances of a 13 figure cash call to bail out the cradle of democracy always looked pretty slim.

So then the Eurocrats, who if truth be known had never raised a penny from the markets, decided that they could get by for the moment on a more modest €200 billion, €50 billion of which would come from EU members who had no particular interest in the euro.  Well that fell through and now we get this:

EU Member States support a substantial increase in the IMF’s resources. These resources will enhance the IMF’s capacity to fulfill its systemic responsibilities in support of its global membership, which is especially important given the ongoing economic slowdown and financial market tensions. The IMF’s involvement will be based on normal IMF conditionality.

The EU, and in particular Euro area Member States are fully aware of their special responsibility in the current circumstances. Therefore, on 9 December, euro area Member States have committed to enhanced governance to foster fiscal discipline and deeper integration in the internal market as well as stronger growth, enhanced competitiveness and social cohesion.

Ministers confirmed today that, as part of a broader international effort to improve the adequacy of IMF resources, euro area Member States will provide EUR 150 billion of additional resources through bilateral loans to the Fund’s General Resources Account.

Burden-sharing among euro area Member States will be based on quota shares resulting from the 2010 quota reform.

The Czech Republic, Denmark, Poland, and Sweden indicated their willingness to take part in the process of reinforcing IMF resources. The United Kingdom has indicated that it will define its contribution early in the new year in the framework of the G20.

For some Member States, commitments will be subject to parliamentary approval.

The EU will also work expeditiously to implement in full the 2010 quota and governance reform of the IMF.

The EU would welcome G20 members and other financially strong IMF members to support the efforts to safeguard global financial stability by contributing to the increase in IMF resources so as to fill global financing gaps.

I just love the last paragraph: Hey world, send all your money to the eurozone black hole; if you don't there'll be trouble. Every struggling business should cut and paste it mutatis mutandisinto all of their letters to their banks.

The upshot is that the Germans have agreed to put up about €40 billion, which is barely more than the €38.5 billion that Italy and Spain hae agreed to put up - to bail out Italy and Spain amongst others. If the rest of the world would like to chip in €960 billion to sustain their export driven economy, they would be very grateful.

Monday, 19 December 2011

From the comments in Le Figaro

From a commenter on the web pages of Le Figaro:

"Soyons juste, on riait aux nez des rosbifs quand on allait adopter l'euro. On s'est moqué d'eux en les traitant avec le plus grand dédain. Maintenant, il s'avère qu'ils ont eu raison et la France a le boulet des autres attaché au cou et les rosbifs non.. et on est fâché contre eux?

Puis nos délégués les cassent carrément avec des insultes à la c..? Même si on n'est pas chaque fois tous d'accord, au moins leurs représentants se comportent avec un minimum de dignité. L'euro est un désastre et on ne veut pas admettre qu'on a eu tort.

Sarkozy veut chercher quelques votes chez Marine parce qu'il voit que le nationalisme est très efficace. Sans doute, il en a parlé avec Noyer avant qu'il n'ouvre la bouche. Compte tenu des commentaires ici, Sarko a peut-être une chance raisonnable de réussir! Effrayant."

Or for those who funked their French O-level.

"Let's be fair, we were laughing in the face of the "rosbifs" when we were going to adopt the euro. We made fun of them, treating them with great disdain. Now it turns out they were right, and France has the weight of  the other [euro members] round their necks, unlike the rosbifs .. and we are angry with them? 

Then our politicians insult them outrageously? Even if we don't always agree with them, at least their representatives behave with a modicum of dignity. The euro is a disaster and we do not want to admit we were wrong.

Sarkozy wants to get some votes from Marine [Le Pen] because he sees that nationalism is very effective. No doubt he had spoken with Noyer before the latter opened his mouth. Given the comments here, Sarko may have a reasonable chance of success! Scary."

Couldn't have put it better myself.

Christmas embargo

"...one prefers to be French than British at the moment on the economic level" - François Baroin, French economy minister
" ... they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping" - Christian Noyer, governor, Bank of France

I regret to announce that after last week's unfortunate but obviously co-ordinated outbursts from the Governor of the Bank of France and the French Finance Minister, that the Masterley household will boycott French wines this Christmas, including unfortunately, Champagne for which at present we have no suitable substitute, although suggestions are welcome in the comments. In extremis we may resort to consuming stocks in the cellar and refrain from seasonal purchases.

Whilst we believe that in the long term, there is scope for a strong consumer-producer relationship with selected French vineyards, we believe that in the present political climate it would be wrong to make large-scale purchases of claret and Burgundy, and we shall be continuing our buying in support of Chilean miners, which we believe is a suitable short-term substitute.

In one exceptional move and in the absence of any suitable substitute, an embargo-busting slug of brandy was used in the preparation of a highly recommended canapé dip: fried bacon, flambéed in brandy, with double cream and served with Brussels sprouts on a stick.  The offending item was £5.99 from Tesco. At that price seems to approximate a combination of kerosene and lighter fuel, and we suspect that sales of his particular brand will do little to strengthen the French economy.

Overweight leader of starving nation dies of heart attack

The world's only hereditary communist leader is reported dead.  The leader of the most insulated and backward nuclear power has suffered ill-health  for many years.

The world is on tenterhooks awaiting whatever sort of delusional response might come from his 28 year old son and heir in order to prove his ability to front up the military committee that oppresses the people at the northern end of the Korean principle and stops them joining up with one of the more dynamic nations of the world.

On the other hand, he and the rest of his family could bring down the whole farce and open up his country's borders.  That would be one Christmas present worth having.

Thursday, 15 December 2011

Moody and poor: is France going under M. Noyer?

Now it's getting nasty from the French. Its central bank chief has suggested that Britain's debt should also be downgraded, inviting the obvious response that:
  1. The government that cause the UK's financial problems has been replaced.
  2. The UK government has a deficit reduction plan that has been shown to the rating agencies and the markets, with which they are broadly happy - hence the lower yield on UK government debt that on German debt, not just French debt, although UK gilts yield about 100bp less than their French equivalent.
  3. The UK is not tied into the euro-zone and has no obligations to lend to other countries to suuport its currency.
  4. Having an independent currency has allowed the UK government to deflate by 15%, so that the odds of default on their sterling denominated debt has reduced proportionately.
  5. UK government borrowing is around 90% of GDP.  French government borrowing is about 98% of GDP.
  6. YK government debt duration is about 9 years, A lot of French borrowings mature soon.  New bonds will have to be issued at the relatively high yields.
Any central bank governor worth his salt could have figured that out.

Yet another EU summit has been called for early next year, amid fears that last weeks fiscal compact is falling apart.  A bit like last month's €1 trillion Chinese funding that has been swept under the carpet.

Which is a good time to remind the French that the Chinese still like the look of £100m of UK infrastructure products, that dozens, nay scores of Chinese firms are listed in London (none in Paris or Frankfurt) and that there is even one Chinese member of the London Stock Exchange. Just thought I would mention it.

While on the other hand, that great international financial bellweather the Dagong Global Rating Co has downgraded French government debt citing the fact that the French banking system's exposure to Portugal, Italy, Ireland, Greece and Spain has reached €852.36 euros. Which is rather a lot. Moody's has downgraded France's three big banks due to their difficulty borrowing money. The agency cut Credit Agricole and BNP Paribas from Aa2 to Aa3, and Societe Generale from Aa3 to A1.

I might add that the name of the Governor of the Banque de France, M. Noyer, translates into English as "to drown".

Sarkozy hits out - gets downgraded

Sarkozy yesterday hit out at David Cameron,. calling him "an obstinate kid" because he refused to sign a eurozone treaty.

France was promptly downgraded, not one but 2 notches.  One can only presume that Sarkozy knew this was coming - the rating agencies usually give some warning to the issuer, so this can only have been Sarkozy saying "Hey, look over there".

In other developments, the EU seems to think that it has agreed on our behalf for us to contribute €50 billion to the IMF as part of the €200m contribution from EU countries, €150 billion coming from eurozone countries and the rest coming fromnon-eurozone countries, i.e. the UK.

This comes from an IMF report of a meeting with hte eurozone countries which differs from the EU released version and is not what the British government says happened.  Sounds like the Germans and Brussels civil servants have tried to stitch up the British, but the IMF let the cat out of the bag before Brussels and Bonn could stick it to Cameron.

Not only can they not run a currency zone.  They cant even stab a politician in the back.

French politician guilty- world yawns

A French court has given former President Jacques Chirac a two-year suspended prison sentence for diverting public funds and abusing public confidence. Mr Chirac, 79, ho was apparently fit and well enough only 4 years ago to be President of one of the most important nations in the world, unfortunately suffers from Saunders syndrome and suffers from memory lapses

He was convicted of paying members of his party for non-existent local government jobs, which sounds less like corruption and more like fraud to me. In a bizarre twist the prosecution had urged the judge to acquit Mr Chirac and nine others accused in the trial, but clearly the wrong payoffs were made because the accused still went down albeit with a soft landing.

Of course Chirac wasn't the only politician to pick up a criminal record from the case. In 2004, several politicians including Alain Juppe were convicted in connection with the case. Mr Juppe was given a 14-month suspended sentence, but the fact that he wouldn't get through a CRB check hasn't held him back; he is now France's Foreign Minister.

Chirac is the first French head of state to be convicted since Marshal Petain.  Of course, if Dominique Strauss-Kahn makes a political comeback, which seems entirely possible if not likely, then I would lay good odds on him being the next.

Wednesday, 14 December 2011

Where is Baroness Ashton?

A couple of months ago I posted that she was a waste of space.

Hard to say I was wrong.

Christmas tips

One of the best tips for surviving the Christmas season is to exhibit the most exquisite manners to those you meet, and in particular to show good grace to those who offer you presents.

If for example somebody offers to pay you £50 billion a year and to let you fish for 80% of the stocks in their territorial waters, do not go off in a hissy fit just because they didn't agree to your pet money scheme.  Bear in mind that they may not have the time or inclination to play with you all the time, and just be grateful what you do receive.

In fact, be mindful that all those temper tantrums do not go unnoticed, and all that foot stamping and talk of retribution simply marks you out as a nasty little person who will probably get less next year. And that nice Mr Wong from down the road might miss you off his Xmas list altogether.

Tuesday, 13 December 2011

You can tell when a European politician is lying - their lips are moving

Barroso says UK demand put EU internal market at risk
Of course it wouldn't and it never did.  What the British veto did stop was a Europe wide Tobin tax that would have destroyed the London markets as all the business there moved to Switzerland, Hong Kong, Singapore, New York or Dubai.

But you can tell who the real losers are by their anger: the EU politicians who thought they would be onto a nice little earner (they wouldn't).

In fact London is the most open market in the world, which is why it is the most established international market for trading of foreign currency and Eurobonds and a whole lot of commodities, but rather than being regulated by the bureaucrats of Brussels, it takes a more worldly view with its banking regulatory norms agreed in Basel with the entire world community, not some power crazed nation barely 65 years on from its seven figure bout of ethnic cleansing.

The stupidity of politicians

There is no finer example of the stupidity of politicians than the attempts reported in the media to remove a British MEP from the chairmanship of a European Parliament committee on financial regulation.

As though the chairman who is supposed to act independently of national interests is any less capable, or that monetary regulation will be applied any differently in the UK than elsewhere.  The only difference is currency and fiscal approvals from the EU Commission, which only applies to 17 out of 27 member states at the moment and probably at least 4 less than that within 12 months.

Hostile crapshoots

The FSA wants hostile takeovers by banks to be made illegal, on the basis that it is too risky.

I can't say that I disagree with any of that, but if the FSA had been doing its job properly then hostile bank takeovers would not have been possible. RBS would not have been permitted to blow many billions of capital on a pool of assets that it didn't understand.

The reason there is no criminal penalty for such reckless behaviour is simple.  There is a presumption that banks are sufficiently tightly regulated that they wouldn't be able to do the boardroom equivalent of staking all their chips on red at the roulette table.  There are already criminal offences if directors act recklessly or negligently.  Further sanctions should be unnecessary for banks because they are regulated.

The FSA report reads as follows:
RBS management and Board undoubtedly made many decisions which, at least in retrospect, were poor. They took risks which ultimately led to failure. But if they had taken similar risks in a non-bank company, the question of whether regulatory sanctions were applicable would not have arisen. That is because in non-bank companies the downside of poor decisions falls primarily on capital providers, and in some cases on the workforce, and to a much lesser extent on the wider society.
The ABN AMRO acquisition illustrates the point. The due diligence conducted was inadequate to assess the risks. But it was typical of all contested takeovers, and in non-bank sectors of the economy launching a bid on the basis of limited due diligence might be a reasonable risk to take if the Board believed that the upside opportunities justified it. If the acquisition went wrong, shareholders would suffer, and it would be for them to decide whether to sanction the management or Board by firing them.
The glaring hole is that the FSA was not doing its job.  RBS bought ABN for £50 billion on the basis of 2 ring binders of data and a CD, That is probably too little to support a £10 million overdraft facility, let alone an equity purchase 5,000 times the size.

For the FSA there is a simple 5 step bank supervision process

  1. Why are you doing that?
  2. I really don't think you should be doing that
  3. I said I really don't think you should be doing that
  4. Stop that
  5. You're fired

But if RBS' purchase of ABN is to be treated as a criminal act in future, what is the FSA's reaction to the supposedly friendly but similarly blind pucchase of HBOS by lloyds, which was forced through as a political imperative by Brown & Victor Blank  ...   with scarcely a murmur from the FSA.

Monday, 12 December 2011

Worse than useless

Last year I blogged that the FSA employed more than 241 employees who were paid more than £100,000.

A few months later I blogged that the FSA had given the directors of RBS a clean bill of health but declined to publish their report in full.  I speculated that was because it would show the full incompetence of the FSA.

Then about 8 months ago, we had Gordon Browns admission that putting the FSA was probably a mistake.  Thanks a bunch.

A couple of weeks ago I blogged that Mervyn King said that when the sub-prime mortgage market was discussed by central bankers none of them thought the size of the market was enough to cause a problem.  That was because the banking supervisors failed to recognise the scale of the settlement risks in the credit derivatives markets built on the back of the sub-prime debt.

Funny then that today the FSA reports that RBS nearly collapsed in 2008 because of poor management decisions, inadequate regulation and a flawed supervisory system, which doesn't really fit with the clean bill of health they gave a year ago.

The FSA admits that its own supervision was "flawed" and "provided insufficient challenge" to RBS. And it says RBS had too weak a capital position to proceed with the takeover of parts of the Dutch bank ABN Amro. The report concludes that the FSA was too focused on conduct regulation at the time and its prudential supervision of major banks was inadequate.

Good to know that the deals that threw a spanner in the works of the world financial system were passed for money laundering purposes though.

FSA Chairman Adair Turner's salary for 2010/11 is £426,000, rising to £500,276 including bonuses. Chief Executive Hector Sants will take home a total of £806,810 in salary and benefits this financial year, an increase of £33,743 on last year, according to the FSA's Annual report 2010/11.

Turner defended the actions of the regulator on the BBC's Andrew Marr show on 15 February 2009. His comments were that other regulatory bodies throughout the world, which had a variety of different structures and which are perceived either as heavy touch or light touch also failed to predict the economic collapse.

According to Turner, in line with the other regulators, the FSA had failed intellectually by focusing too much on processes and procedures rather than looking at the bigger economic picture. In response as to why Sir James Crosby had been appointed deputy chairman when his bank HBOS had been highlighted by the FSA as using risky lending practises, Lord Turner said that they had files on almost every financial institution indicating a degree of risk.

He did not apologise for the actions of the FSA, which had overseen the near total collapse of several major banks, and accepted that his organisation had not foreseen the likely consequences for Lloyds Bank of its merger with the ailing HBOS arranged in September 2008.

Despite raging controversy over bonuses for employees of the struggling Lloyds Bank, he sought to justify upcoming bonuses averaging 15 per cent for his approximate 2,500 staff, arguing "If you're saying we should now cut the bonuses (of FSA employees), you're saying you should cut their pay by 15%"

Sunday, 11 December 2011

Scottish independence: how's it looking?

Assuming that an independent Scotland would have to adopt the euro (who is going to lend in a puny currency such as the Scottish pound?), then how does their economy stack up against the 3% permissible deficit of the Euro zone?  I suspect that it is not that good, and they will be up before the European beak every other week

Saturday, 10 December 2011

Godwins law in a few easy steps

Very amusing to see the indignation about Britain in the German media.  On the one hand they are grumbling about friends not helping in a crisis, on the other hand the von Lambsdorff;'s and the Bendit-Cohn's of the world want to drive Britain out of the EU.  Bendit-Cohn's idea is to impose financial regulations on all EU countries in order to drive Britain towards leaving the EU.  Talk about cutting off your nose to spite yor face.

The simple response is that it is the eurozone's problem and it is for the eurozone countries not the EU to fix the problem.  Britain signed up to be a member of a free trade zone and has never signed up to a common currency agreement, let alone of the German Lander.

In a sense, Der Spiegel answers itself by a a link at the bottom of the webpage. We signed up for what we signed up for and nothing more, and unlike the other states of Western Europe we are not going to keel over or sue for peace in response to German demands.  At the moment we are at the stage of the Scandinavian non-aggression pacts.  Can we expect the annexation of Memel and Bohemia/Slovakia next.

Friday, 9 December 2011

With one bound he was free

There are plenty of stories emerging today about how the devious French have schemed for years to uproot the financial markets from London and move them to Paris, at least insofar as they relate to Europe.  But it ain't gonna happen, not least because Cameron has refused to let financial services be regulated by the EU.

But there are other reasons:

  1. The Americans and the Japanese.  Their bankers and traders like to live in London.  It is a big city and easy to adapt. Paris is fine for weekend trips, but you wouldn't want to live there.  Hard to settle in, few international schools, and then there is the French
  2. Language: everybody learns English at school these days.  The English, well some of them, learn French, but for the rest of the world, it is a second choice.  OK, they could do business in English, but English speaking support staff come at a price in France, while spoken and written English comes as standard in London.
  3. Legal systems. London contracts are written under English law.  Sometimes they might agree to US law, but except in particular circumstances, usually some common law based system, not codified European legal systems.  Which means that a large French financial centre would require lots of trained Anglo-Saxon lawyers.  Cheaper to get the real thing in London.

Crystal balls

Speaking to the House of Lords Economic Affairs Committee, the Chancellor urged the public not to assume that a eurozone disintegration would be felt in the UK for only one or two years. "There would be enormous damage," Mr Osborne said. "Those who say we'd have a year or two of hardship and then bounce back out of it may be somewhat optimistic."

Which is all very interesting, but pointless.  Osborne no more knows what the outcome would be than any other commentator.  When Mervyn King is asked what is going to happen next he replies that he doesn't know, so how the hell Osborne thinks he knows is beyond me.

The more likely outcome is that there will be little obvious impact jut as there was little immediate impact when the euro was created.  The Greek baker, the German butcher and the French candlestick-maker will continue with their business as before.  Governments will still pay rates of interest according to the risk of their non-payment and life will carry on with or without the euro and with or without the UK.

The only tangible difference will be whether if Britain is marginalised, will it want to continue to contribute a net £8 billion a year to the EU?

Wednesday, 7 December 2011

Super bazookas

According to another pink paper, negotiations have been started over a much a much bigger financial “bazooka” to present at this week’s European Union summit that could include running two separate rescue funds and moresupport for the International Monetary Fund. This three-pronged rescue system would form part of a carefully crafted package EU leaders hope will win over financial markets, just two months after a similar summit failed to convince bond investors. The rescue system would be introduced alongside proposals to rewrite EU treaties with far tougher budget rules for the eurozone. Well that ain't gonna work, and the politicians and bureaucrats are too stupid to realise why, so let me explain. We are now at the position where it is the lenders of last resort that are at risk or potentially at risk of default. There is no real backstop (if we discount the US and China). Sure there is the IMF, but do we really thing that the world's countries from Afghanistan to Zimbabwe are going to backstop the euro? No the idea is that the Euro area is going to bolster its finances by borrowing top boost its financial resources. It will then have enough cash to bail out countries as required? Does that make sense? Of course not because the whole euro area or may be EU becomes more indebted. Of course to a politician, much like a businessman whose business is going under, the obligation to repay the loan gets ignored as though it is somebody else's problem. The rest of the world sees it differently. The country/company is up a creek and it needs to find a paddle, not borrow more money. For the euro zone countries that means taxing more or spending less. It also means more exports and fewer imports. In the long run there is no other solution, but that doesn't stop the incompetents in Brussels trying to take control of a €500 billion or €1 trillion fund, despite their obvious lack of relevant experience or talent. Expect to hear a lot more in the coming weeks from the likes or Messrs Barroso and Juncker (ex-PM of a country with a population smaller than the city of Nottingham).

Monday, 5 December 2011

So how is this going to work?

France and Germany have reached a “comprehensive” agreement on a new set of fiscal rules for the eurozone which they will ask a European Union summit in Brussels to approve on Friday. The proposals effectively amount to the “fiscal compact” asked for by Mario Draghi, president of the European Central Bank, to enforce budgetary discipline in the single currency region.

Mr Sarkozy said he had agreed with Ms Merkel’s demand for a revision of the full EU governing treaty to enshrine an enhanced fiscal disciplinary regime.

The changes will include more “automaticity” in the process of punishing states that breach the EU’s 3% public deficit limits. A move to fine a country will in future only be overturned if a qualified majority of eurozone countries agrees to overturn it.

Ms Merkel has watered down her demand that the European Court of Justice adjudicate on breaches of fiscal rules. Under the compromise, each eurozone government will have to adopt in its constitution a “golden rule” that prevents it from persistently running budget deficits. The ECJ will merely rule as to whether each eurozone country’s “golden rule” complies with the new treaty.

OK, so you are an Italian or a Greek.  Right now you have a government that you have not elected having terms dictated to it for a new treaty giving powers to a foreign body to decide whether they are to fine your country if the government you haven't elected fails to collect as much tax as it expected to pay all its bills.

And if your government fails to pay, what is the recourse?

Thursday, 1 December 2011

Airheads enrich banks at the expense of charities

According to The Register, Anonymous and other hacktivists have joined together to launch an attack on banks in response to recent crackdowns against the Occupy protest movement.  TeaMp0isoN and Anonymous are joining forces to run OpRobinHood, which will involve using stolen credit details to donate to charities and others, supposedly at the expense of banks.

OK, so far so good as long as they don't do anything illegal, although they probably will ....  They say
In regards to the recent demonstrations and protests across the globe, we are going to turn the tables on the banks. Operation Robin Hood is going to return the money to those who have been cheated by our system and most importantly to those hurt by our banks. Operation Robin Hood will take credit cards and donate to the 99% as well as various charities around the globe. The banks will be forced to reimburse the people there [sic] money back.
Which sounds very devious, but it doesn't work like that.

When banks identify a fraudulent transaction they usually reverse the transaction and levy a chargeback – a reversal of a prior outbound transfer of funds. So while customers with compromised credit cards might not lose out, charities who receive fraudulent donations will probably end up out of pocket.

Ah, say the activists, we want the charities to move their money out of the evil banks and into credit unions. Well OK, its a point of view, but:
  1. The charities probably want to use their bank accounts for receiving donations and making payments, both of which are more easily done from a bank account than a credit union account, and
  2. They could have asked the charities first.

Sunday, 27 November 2011

Timeo Danaos et dona ferentes

The head of Elstat, Greece’s new independent statistics agency, faces an official criminal investigation.  According to reports, he is alleged to have overstated the extent of the country’s fiscal crisis and acting against the Greek national interest.  All of which is likely a question of opinion.

Andreas Georgiou had worked at the International Monetary Fund for 20 years, and he must have thought he was onto a cushy number back at home when he was appointed in 2010 by agreement with the fund and the European Commission to clean up Greek statistics after years of official fudging by the finance ministry.

If he is convicted for telling the true but bad news Mr Georgiou could face life imprisonment.  If that sounds bad, remember that Jeff Skilling got 24 years, Ken Lay died before sentencing and Andrew Fastow went down for 6 years. In fact in sentencing terms this is way beyond Millken and Boesky territory, past Bernie Ebbers and Dennis Kozlowski, and right up there with Bernie Madoff.

All for "true and fair" accounting.  But what do you expect from an unelected government?

See how the BBC reports good news

"UK economic growth confirmed at 0.5% by official data
UK economic growth between July and September was left unchanged in the latest figures from the Office for National Statistics. Growth in gross domestic product was confirmed at 0.5%, compared with a 0.1% expansion in the second quarter."

It obviously hurts to much to say that GDP growth rose by 0.4% between the second and third quarters.

Saturday, 26 November 2011

If you are not exporting, you are part of the problem

I went to a lecture yesterday evening at St John's College, Cambridge given by Professor Sir Mervyn King.  You may have heard of him.  He is the Governor of the Bank of England.  One of the conditions of entry was that it was a private meeting, whose contents were not to be divulged, so for your benefit dear reader let me draw your attention to a speech Professor King made in Liverpool, with the BoE have posted on their website here and you will find here.

The essence of the speech in Liverpool is quite simple.  Ever since the fall of the Berlin Wall, Asian economies have realised that the route to prosperity has lain with developing export driven economies, selling mostly to the more prosperous developed nations.  The developed nations have run consistently large trade deficits funded mostly the same Asian countries that have a strong saving ethic (or ridiculously large cash flow in the case of oil states).

Central bankers have met every year at G20 meetings and in Basle/Basel/Bâle and talked about the unsustainability of trade deficits, but nothing was ever done.  Now, the politics hae been overtaken by the arithmetic.
"Let me sum up. From the very beginning of the global crisis there has been a reluctance by governments to face up to the underlying solvency problems generated by apparently unending trade deficits with no mechanism, whether flexible exchange rates or some other means, for correcting these disequilibria. Those solvency problems have shown up on country and bank balance sheets. The initial reaction has always been to provide liquidity: through central banks or an extension of official lending by governments. Providing liquidity to buy time to devise and put in place a coherent response to the underlying problem can be not only valuable but necessary. But liquidity can never be the answer in itself. And if the time bought is not used then the size of the debt problem becomes larger and its cost is gradually transferred from private sector creditors to taxpayers."
The solution is long and hard.  It requires a transformation of the economy and will take years to correct.  From now on, if you ain't exporting, then you ain't worth a fig. If you are a diversity co-ordinator, NHS manager or even domestic house builder, expect to get paid your true worth, which is going to be a lot less until the west can get its act together.

Thursday, 24 November 2011

Compare and contrast

Toyota says it will create 1,500 new jobs at its plant in Derbyshire over the next two years. The new positions are needed as the company plans to increase production and build its new generation family-sized hatchback at the UK factory. Toyota said it would be investing more than £100m at the Burnaston plant as a result of the production decision, taking its total investment in the UK to more than £2.1bn since 1989.

In other news, the Government says the public sector pensions strike next week could cost the economy half a billion pounds and lead to job losses. The planned walkout on November 30 by over two million workers will lower output in the public and private sectors, said the Treasury. Ministers said the biggest impact will be caused by thousands of school closures, forcing parents to work from home, make childcare arrangements, or take their children to the office.

Monday, 21 November 2011

Champagnes League (aka the PremierCruShip)

Dubois Caron Champagne Brut style=
Charles de Ravon Brut Champagne style=
Champagne Brut style=
Leo Deviroy Champagne style=
De Vallois Champagne style=
André Carpentier Champagne style=
Nicolas Feuillatte Brut Champagne style=
Tesco Finest Premier Cru Champagne Brut style=
Pol Aime Champagne style=
Heidsieck & Co. Monopole Blue Top Champagne Brut style=
Champagne Henry Dumanois Brut style=
Champagne Madame de Maintenon style=
Jacquart Tradition Champagne Brut NV style=
Heidsieck Red Top Champagne Brut NV style=
Louis Chaurey Champagne style=
Piper Heidsieck Champagne Brut style=
Heidsieck Blue Top Champagne Brut NV style=
Pierre Darcys Champagne Brut Rosé style=
Waitrose Brut NV Champagne style=
Nicolas Feuillatte Brut Champagne style=
Canard-Duchêne Brut NV Champagne style=
Francois Dubois Brut  style=
Jean-Noël Haton Brut Classic Blanc de Noirs NV style=

Socialist Champagnism

In these hard times, we are all looking for a bargain for the festive season, and as ever I am on the look out for the lowest priced champagne that cuts the mustard. Prompted by an email from Tesco offering Lanson Black Label Champagne at £91.14 a case (for the benefit of innumerate inebriates that's £15.19 a bottle) I thought I would shop around to see if I could shave a few pence off that.

The best I have come up with so far is Champagne Madame de Maintenon from the Co-op.  Overlooking the fact that the wine is named after the mistress and second wife of Louis XIV, the wine maintains its left of centre credentials by being made by N.V. Coopérative Régionale des Vins de Champagne.

Although not yet at the price levels of last year's £12 bottle from the same shop (that made such an impression that I have forgotten its name) Champagne Madame de Maintenon currently leads by a short head at £14.99 a bottle.

I will post more on this as Christmas approaches.

This is going to hurt

Over the weekend we got the usual guff from the left about NHS nursing jobs being under threat.  The following from the Morning Star is typical:

NHS nurses today blew the lid off a looming crisis in the service because of Tory budget cuts that have seen 56,000 posts axed or threatened. A Royal College of Nursing investigation revealed that 56,058 NHS jobs have now been lost or at risk - double last year's figure. Data from NHS trusts showed that that figure has shot up from 27,000 a year ago and 40,000 this April. Roles affected included thousands of nursing and doctor positions as well as support staff. Among potential job losses include those at Birmingham Own Health, a service designed to help people with long-term conditions, and others in mental health services in Camden and Hampshire. RCN general secretary Dr Peter Carter said the figures showed a "deeply worrying acceleration" in job cuts that would threaten patient care.

Now for the truth.  The number of nursing jobs in the NHS is only 1% lower than in 2007 when Labour was throwing money at the service.  Once they are through training nurses pay is not at all bad (although they have to reach Band 7 to have a lifestyle equivalent to 80,000 of the unemployed).

But many nurses, particularly in inner cities, earn far more than this by working through agencies.  The logic of using agency nursing is to give flexibility when demand changes.

Two years ago I wrote a very innovative report for a part of the NHS, NHS Professionals, to teach them about option pricing, or effectively, what premium should be paid to meet variable demand for nurses.  From this, and using data on the number of shifts worked through out the year it was possible to work out which trusts had too many fixed positions and thus excess capacity, but worse than this, which trusts had more agency nurses than were warranted by the relatively small variability in demand.

Needless to say, the results were quite astounding.  In many inner London trusts the nursing staff were predominantly employed through agencies even though the average tenure of positions was many years.  In effect, agency nurses were not there to fill swings in demand, but were permanent.  In some nursing specialties, on qualification nurses would quit there NHS jobs and join the agency closed shop, returning to the same hospital on higher pay.

Effectively, you dear tax payer are paying way over the odds for these services, and the proposed savings are simply clawing back some of those costs.

It's déjà vu all over again

So the government has decided that the best way to get the economy moving is to build some affordable housing and to get the tax payer to underwrite the risk of the mortgages.

Two points:

  1. Nobody got rich building unaffordable housing, but equally nobody got rich by building property, selling it to people who can't really afford it and guaranteeing the banks that the buyer could make the payments.  The same goes for all sorts of other assets such as planes and ships.  If you build it, sell it and guarantee the sellers obligations to the banks you still effectively own the asset.
  2. Haven't we been here before, like in 2007?  The cause of the failure of the mortgage backed securities market and the rest was the fact that in order to give a veneer of rising prosperity, mortgages were given out willy nilly, packaged up with  fancy ribbon and flogged off.  The truth was that once you stripped away the icing of credit enhancement and cash collateralisation that gave them their desired credit rating, underneath they were mostly a heap of doggy doo.
But what the heck, it's only tax payers money. We wouldn't want to waste it. Oh it looks that was what we were doing in 2009.

Sunday, 20 November 2011

And now for the good news

40,000 Eurocrats are threatening to strike over plans to increase their working week from 37.5 hours to 40 hours (just like the private sector), raise their retirement age from 58 (!! 65 would be generous, 67 realistic), and award a pay rise of 1.8% (at the same time that the EU is telling governments across the eurozone to adopt harsh austerity measures and public sector pay freezes). The unions are demanding more than twice as much as they have been offered,.

Go on, give us all somthing to laugh about. Walk out and watch as nothing happens.

Men in beards

A message to the out-of-touch leaders of the Church of England who think that capping welfare benefits to the after tax income equivalent of £35,000 a year.  Their complaint is that doing so will plunge thousands of children into poverty.

Poverty is a relative measure, but as India and China drive down the salaries in the private sector, both in nominal and real terms, the national median salary also declines, plunging thousands of children out of poverty. Time for the unemployed to take some of the pain.  And don't tell me that is hurting the most vulnerable members of society.  The families are picking up 150% of the national average household income, and have 40 hours of free time when the rest of us are working.  How poor is that?

I have just checked the website of Jobs Direct to see how many jobs there are listed.  Turns out there are 250, so no trouble getting a job round here.  4 of them are paying £35,000 or more.  So that settles it then .  If you can get a salary equal to the top 1.5% of  jobs being advertised, without leaving home or lifting a finger, why would you take a job?

The truth will out

One of the more interesting asects of the upcoming trial of Saif-al Islam Gaddhaffi will be if we find out whether in 2006 former Prime Minister Blair became an adviser to the Libyan Investment Authority, a £40 billion fund established by the Gaddafis.

Saturday, 19 November 2011

Get your eyes out for the lads

I have no qualms about religion, being a fully paid up member of one of the world's foremost Abrahamic schools of thought, but I sometimes despair of the institutions that have been built up over the centuries.

Women with attractive eyes in Saudi Arabia may be forced to cover them up, according to the spokesperson of the Committee for the Promotion of Virtue and the Prevention of Vice (CPVPV) in the conservative Gulf kingdom.

Spokesman of the Ha’eal district, Sheikh Motlab al-Nabet said the committee has the right to stop a women whose eyes seem “tempting” and order her to cover them immediately.

Saudi women are already forced to wear a loose black dress and to cover their hair and in some areas, their face, while in public or face fines or sometimes worse, including public lashings.

The announcement came days after the Saudi newspaper al-Watan reported that a Saudi man was admitted to a hospital after a fight with a member of the committee when he ordered his wife to cover her eyes. The husband was then stabbed twice in the hand.

The CPVPV is Saudi’s Sharia, Islamic law, executive arm and was founded in 1940 to ensure Islamic laws are not broken in public, yet over the years, the committee has been largely criticized over its human rights violations.

In 2002, the committee refused to let female students out of their burning schools in Mecca for “not wearing the proper head cover,” which contributed to a large number of dead. 15 young girls died in the fire and dozens more were injured. The CPVPV men banned the firemen and policemen from accessing the girls as “it is not okay for girls to be seen without their full Islamic dress in front of strangers.”

Better off dead then.

Friday, 18 November 2011

My next car will be battery powered

... or maybe the next one or the one after that. Its going to happen eventually.  With Li-ion battery capacity likely to multiply by a factor of 10 in the next 5 years that means a Tesla Roadster with the current size of batteries would have a capacity of 2,450 miles.  OK I'll take a smaller range in return for less weight.  After all the more energy is stored the longer it takes to charge, but there is good news on that front too.

Northwestern University and Argonne National Laboratory this week published advances on research that takes on lithium ion batteries' weak spot: the electrodes that hold electric charge. Both efforts reflect the quest among researchers to improve batteries by improving the anode and cathode material used in today's lithium ion batteries.

With a better anode, the battery could be charged faster and have 10 times the energy storage capacity of current lithium ion batteries, according to Northwestern University researchers, who predict the technology could be available in three to five years.

Argonne's battery researchers, meanwhile, say that replacing the traditional graphite anode with titanium oxide could lead to batteries that can get half their full charge in less than 30 seconds. Perhaps not practical for cars but figure how that could help your phone.

Lithium ions in batteries move between the anode and cathode end of a battery, drawn by electrical charge. During discharge, the ions move in one direction and then the other during charging, traveling through a gel-like electrolyte. Northwestern University tried to address the speed with which those ions can move by creating a new anode material. Instead of using very thin sheets of carbon graphite, they put clusters of silicon between the sheets. This approach allows more lithium atoms to attach to the sheets since silicon can hold more lithium ions than carbon. By sandwiching the silicon between the carbon sheets and creating tiny holes on the sheets for the ions to move through, the silicon can maintain its integrity.

Researchers at Argonne National Laboratory are also working to replace graphite as the anode material but instead are using titanium oxide. The material was considered a poor candidate for anode materials since it its not a crystalline structure with well-understood electrical properties. But in the course of charging and discharging the battery, researchers said that the titanium oxide molecules began to line up in a way that could lead to much better performing batteries.

OK, I'll believe it when I see it, but if I see it, I'll buy it.

I mentioned it once, but I think I got away with it

Let's get a few things straight.  Britain tried the EMU but didn't join the euro because the economic cycles in Germany and the UK are different.  That means that problems in the euro are not really are problem.  We may be in a minority in the EU, but strictly speaking they are problem of the eurozone and the European Central Bank, not the UK.  So when German Finance or Foreign ministers think they can tell the UK that they are not contributing enough to the bailout, they should be looking at their own contribution first.

Having said that the prime minister (I forget his name, bit of a nebbish with a shiny face), hasn't really done much in his discussions with the Bundeskanzlerin.
  1. No big bailout from the Bundesbank or the ECB even though both are flush with spondoolies.
  2. No progress on the Tobin tax.  Britain wants it, Germany rejects it but it looks increasingly like a negotiating gambit to shoehorn the Brits into a place where they don't want to be.
  3. And then there is the issue of an ever tighter European treaty.  Cameron (see I knew I would remember it), knows that he won't get away with a revised treaty without a referendum.  The price this time will likely be his head.  The Germans OTOH are pushing for a big treaty without any right of veto to hold their flaming currency together.
This will run and run.

Red Nose Day

Today is the day when the British population allows itself to be harangued by televisual "personalities" into handing money over to "good causes", although the exact nature of all the causes being supported is not shown (unlike every charitable fund-raising I have been involved with).  There is nothing wrong with "good causes", but it is the bleating by the overly-paid to bully the less well off that really grates.  Only a few weeks after we learn that just one of the pundits on Match of the Day is paid £40,000 a week to say "The Bolton back four were all over the place for that goal, Gary" - £1.6 million a year,  a reasonable Premiership footballers salary, without the running about or risk of injury, perhaps the BBC should be looking at docking some of their wages instead of blagging money from the rest of the population.

But in case I am thought of as being mean minded, here is a way that the BBC can donate several million without losing a single penny to which it is entitled.  As you are aware dear reader, the Government in its generosity with your money decided many years ago that it would pay for a TV licence for every household containing a pensioner aged 75 or over.  As far as I am aware the licence is not compulsory and the households have to apply for the licence but the take up is quite significant and results in income to the BBC of £550 million a year paid for out of your taxes.

I have no problem with that, mostly because the free TV license was given to cover up a lousy pension increase many years ago. Besides it gives 74 year olds something to look forward to, but it does lead to an unjust enrichment of the BBC.

How is that?  Well the simple fact is that if you die midway through the period of your TV license, your executor can write to TV licensing for a refund. Refunds are available for complete unused quarters that remain on a TV Licence at the point it was no longer needed. Only the executor of the deceased licence holder's estate can apply for a refund in these circumstances.

Now the elderly can be differentiated from the rest of the population in many respects, but chiefly in that they have a much shorter life expectancy.  A 75 year old typically has a life expectancy of around 10 more years while a 90 year old has a life expectancy of 3 years.  Put another way,in very round numbers,  a 75 year old has something of the order of a 10% probability of dying in the next year while a 90 year old has a 25% probability.

Using a back of the envelope calculation, it would appear that something around 8% of the £550 million represents the cost to the government of broadcasting to the dead, and that money is trapped at the BBC.  The government (not the deceased) paid the money, so the executor can't reclaim it for the estate, and the government can't reclaim the money because it is not the executor of the estate of the deceased. The net result is that the BBC and its overpaid onscreen personalities are overpaid to the tune of nearly £50 million.

Hand that over to charity Pudsey and I might pay attention to your unedifying appeal.

Sunday, 13 November 2011

Socialist sell out - nothing to see here

Tony Blair has joined the select group of retired politicians from liberal democracies who make big bucks from authoritarian regimes. He recently signed a contract to advise President Nazarbayev of Kazakhstan, and has opened an office in the capital, Astana, although the nature of the advice is confidential. It seems that the advice is not on electoral matters because Mr Blair's client managed to secure the vote of over 95% of Kazakhs and his party holds all of the seats in the Kazakh parliament.

According to some reports, Blair is advising the president on a bid for next year's Nobel Peace Prize. I wasn't aware that this was a beauty contest,.but that may be my naivety. Tony WMD Blair is a curious source of advice on such matters, although we should not forget the contribution made to world peace by a Nobel Prize winning US Secretary of State by his use of carpet bombing in IndoChina.

If he was a US citizen Blair would be held to account for such actions under The Foreign Agents Registration Act (FARA), enacted in 1938. FARA is a disclosure statute that requires persons acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities.

But in the not-at-all-corrupt UK, Blair's remunerated business interests are not open to public scrutiny. They are not mentioned on the website of the Advisory Committee on Business Appointments (Acoba), the watchdog that oversees the wheeling and dealing of ministers after they have been kicked out by the voters.. Blair is not a peer of the realm, so avoids listing his business interests in the House of Lords register of Members interests and he did not have to notify the Foreign Office of his appointment.

All of this leads towards the question of why we pay this former prime minister a pension immediately after leaving office? The idea was that prime ministers, who would probably be quite elderly would retire to the country with a comfortable allowance with the understanding that participation in any form of politics or world affairs would be likely to either undermine the present incumbent or compromise the dignity of their office.

From discussions last weekend with a cabinet minister I understand that this might change for the present and future prime ministers, but it doesn't stop Blair from having his cake and our cake, and wanting to eat them both. But there may be limits. If any advice is given in relation to this country, Blair will likely be in breach of his Privy Council oath, an oath of loyalty to the Queen and her successors and against the opposing interests of all other foreign leaders.

"You do swear by Almighty God to be a true and faithful Servant unto the Queen's Majesty, as one of Her Majesty's Privy Council. You will not know or understand of any manner of thing to be attempted, done, or spoken against Her Majesty's Person, Honour, Crown, or Dignity Royal, but you will lett and withstand the same to the uttermost of your Power, and either cause it to be revealed to Her Majesty Herself, or to such of Her Privy Council as shall advertise Her Majesty of the same. You will, in all things to be moved, treated, and debated in Council, faithfully and truly declare your Mind and Opinion, according to your Heart and Conscience; and will keep secret all Matters committed and revealed unto you, or that shall be treated of secretly in Council. And if any of the said Treaties or Counsels shall touch any of the Counsellors, you will not reveal it unto him, but will keep the same until such time as, by the Consent of Her Majesty, or of the Council, Publication shall be made thereof. You will to your uttermost bear Faith and Allegiance unto the Queen's Majesty; and will assist and defend all Jurisdictions, Pre-eminences, and Authorities, granted to Her Majesty, and annexed to the Crown by Acts of Parliament, or otherwise, against all Foreign Princes, Persons, Prelates, States, or Potentates. And generally in all things you will do as a faithful and true Servant ought to do to Her Majesty. So help you God."

As Borat would say "Yak-she-maj to that"

Saturday, 12 November 2011


I always figured Dominique Strauss-Kahn was a wrong'un, but like the O.J.Simpson trial, it was apparent from the start that the US judicial system is susceptible to money and media influence.  In the DS-K case, that involved a lot of French media pressure to the effect that their boy did no wrong. DSK’s legal strategy, which did dispute the events other than the housekeeper’s willingness to participate, meant that the case rested largely on his credibility, and that of his accuser. The case began to fall apart after prosecutors cast serious doubt on Diallo, her story, and her truthfulness. Neither of the legal teams concentrated on the DSK's behaviour.

But now it turns out that the boot is on the other foot (I have substituted a condom-related aphorism there, but good taste dictates otherwise.  As luck would have it the French police were investigating a pimping racket based on the Hotel Carlton in Lille, implicating a senior police officer, barrister and local businessman when whose name should pop up but that of the former grand fromage at the IMF.

How was this redoubtable public servant implicated?  Just the small matter of having women brought to him not only in Paris but also in Washington.  One of the young ladies involved, a Belgian in her 30s, known as Jade, told the French newspaper, Nord Eclair, she was taken to Washington for an encounter with Strauss-Kahn in a hotel in January 2010. She was paid by businessmen on her return to France. She said Strauss-Kahn showed her around the IMF building the next day and posed for a photograph with her in his office. It seems that somewhere there must be some incriminating evidence if the NY Attorney General wants to reconsider the previous case.

The businessman in the case said he paid for flights and costs. He is believed to have spent thousands of euros of company money on organising soirées for Strauss-Kahn, putting receipts marked with the initials DSK through his expense accounts, but Strauss-Kahn had not paid for anything. Investigators might like to check that out, and the folks back at the IMF might like to check whether Mr Strauss-Kahn registered such lavish hospitality.

Most intriguingly, one of these encounters took place in New York the night before the perv tried to hump the cleanup maid. The one point in DS-K's NY case that might now work in his favour is that he can now claim that it was an honest mistake, and he thought the bill had been settled by someone else.

Le Figaro: Why the economic crisis should kill Keynesian conventional thinking

Another post that is a shameless reposting of something that appeared elsewhere.  This first appeared in French, in Figaro, behind their paywall, but for some inexplicable reason, the English translation appeared on this side of the paywall.  Maybe they want the word spread to the non-French speaking world, which I am happy to do. 

The article is a criticism of Keynesian thinking. On the one hand this might be dismissed as a bit of rhetoric against an Anglo-Saxon economic philiosophy that has some traction in many parts of the world, but I think it hits the nail on the head.

What is missing is a further explanation of the nature of the crisis and more realistic outcomes.  If I had to sum it up, it would be the erosion of the West's competitive economic advantage and the consequent drop in living standards.  This is essentially no different from and old and tired business whose margins have been eroded.  The solution for the business is not to spend more and fund that spending by borrowing, but to cut its costs and if necessary to cut pay and bonuses and change the terms on which it deals with its suppliers.  Borrowing and spending leads to bankruptcy.  Ask any Greek or Italian.

A pre-eminent conservative French economist blames the West’s imploding economy on long-accepted Keynesian policies of boosting consumption via public spending.

PARIS – It would have been only logical that the recent financial crisis and its current consequences radically challenge the prevailing ideas on economics. But it is fascinating to see to what extent people can stick to erroneous beliefs. The strange and enduring success of anti-capitalist ideas after the spectacular collapse of communist and socialist societies illustrates this tendency all too well!

The ideas inspired by Keynesian theories are dangerously dominant. Despite the fact that they give no coherent explanation for the appearance of crises, everybody defined their “policies to end the crisis” according to Keynes’ ideas. The main point is simple: if there is an economic crisis, if economic growth is weak and the unemployment rate high, the right thing to do is to increase the global demand, which implies in particular to increase public spending. Every government favors this method, since it enables them to justify any demagogic spending, any waste of money.

Nevertheless, in all areas of human activity, wisdom means understanding the causes of a phenomenon before implementing measures to solve it. In our case, the economic and financial crisis was absolutely not the consequence of a lack of demand, but, on the contrary, of an excess of monetary credit and an excess of spending (for example, on real estate.)

A strange incoherence

Moreover, the very idea of increasing ex nihilo the global demand is an absurd idea: if a government spends more, it must find a way to finance it. Public spending always corresponds to a transfer of demand (at the expense of the taxpayers if it is financed by taxes, at the expense of the economy if it is financed by loans) and never to a net growth of demand. We should not be surprised if such a policy doesn’t bear fruits, as the American example shows: the public deficit of more than 13 percent of GDP did not prevent low economic growth and a high unemployment rate, while seriously disturbing the financial markets.

Keynesian thinking habits lead to a strange incoherence. Indeed, on the one hand, we recommend re-boosting consumption – which implies reducing savings – and on the other hand, we pretend to stimulate the economic activity and the investment by policies of monetary growth and low interest rates. But it is that kind of policy that caused the financial crisis in the first place, creating the illusion of important financing means thanks to purely artificial monetary credit, as we strive to reduce savings.

We should do exactly the opposite: cut out all obstacles – especially fiscal, which eliminate the incentive to save – and prevent any monetary growth which can only provide illusions and instability. That’s why it is dangerous to ask the European Central Bank to not only reduce inflation but also encourage growth. Like any central bank, it is quite unable to do so with success. The best thing to ask for would be to stop any monetary creation.

It is high time that we completely change the configuration of economic policy. It has consisted until now in creating massive public deficits and strong monetary growth. We should, on the contrary, drastically reduce public spending and tax burdens in order to encourage mass production, prevent any increase in money supply and incite people to save money within the framework of a major tax reform. The revolution we need now is first and foremost an intellectual one.