Living in a parallel universe

Alan Johnson has been on the radio quite a lot in the last few hours, probably to knife his boss, but he manages to get a few words in to enlighten u with his view of the economy.  He does his job well, and his job is to get across the Labour spin, not that he understands a word he is saying because if he did, he would know what he was saying was guff.

First he comes out with the tired old Labour line that the budget deficit is due to the bank failures in 2008.  Not so the one time cash that the government put into the banks was of the order of £60 billion, whereas the recurring budget deficit is over £150 billion a year for the last 2 and the next 5 years. The other support through guarantees is a non-cash item, largely synthetic in that it tidies up the banks' capital ratios without ever being likely to trouble the government, and doesn't show up in the deficit numbers.

No the real reason there is a deficit is that under Labour government spending rose 100% from £350 billion to £700 billion, while receipts from taxation rose only 51% from £350 billion to £530 billion, while the private sector portion of GDP has only risen 23% from £525 billion to £650 billion. First we had more tax on the private sector (remember stealth taxes) which pretty much killed off investment and then we had the Gordon Brown GDP fetish whereby the Balls and Brown thought that if they could keep pushing up the headline GDP figure by borrowing and spending the media and thus the populace would be fooled into thinking everything was fine and dandy.

If the banks were at fault, the government and FSA were equally culpable not for a lack of regulation, but for a lack of supervision. You can have all the rules you like, but usually banking risks can be handled by common sense. Banks have an obligation to be prudent but they only see their own hand in the poker game whereas the bank supervisor sees them all.  The quid pro quo of the banks consenting to be supervised (and of politicians seeking to be elected) is that those with the bank supervisory powers are supposed to take their role seriously, and not turn the whole exercise into class war/banker bashing to protect their skins while abdicating their responsibility to the tax payers.

The reality was that the UK economy (and other economies) resembled one of those cartoon characters that had run off a cliff.  For a moment they run in mid air before plummeting.  The British electorate got wise to what was happening and are clinging to a rope trying to haul themselves back.  The Irish on the other hand have hit the bottom of the ravine.

But to compound the unreality we also heard Mr Johnson tell the Conservatives that they should learn from the lesson of Ireland, that cutting Government expenditure would lead to economic collapse.  For the umpteenth time, the UK government is not spending less year on year like the Irish government, but is actually increasing spending approximately in line with inflation.  All that is being cut are the Labour spending plans which were a continuation of the same fantasy economics of the last 13 years.

If the Conservative government have anything to learn from Ireland it is the same lesson that they can learn from Labour, that a government cannot sustain a large deficit indefinitely and the shyster economists of the Labour Party deserve to be kept out of power for a long time.

Who said crime doesn't pay?

I see that "philanthropist" who bankrolled Michael Brown so that the Lib Dems could hang onto the £2.5 million "donation" that funded half of their 2005 election campaign funds has been rewarded with a free trip to the House of Lords.

Over the past five years Mr  Paul Strasburger and his wife Evelyn have made donations to the Liberal Democrats of more than £765,000."I am a donor and I have got a peerage," Mr Strasburger told the Bath Chronicle today. "If people think those things are linked that is up to them. They may or may not be right, I don't know."

Amongst the financial support that Mrl Strasburger gave to the Lib Dems was the offer to stand bail for Michael Brown, the convicted fraudster, fugitive, and notorious major donor to the Liberal Democrats before the 2005 election.  What has never been clear is whether Mr Strasburger knew Mr Brown before he stood bail (I presume not), and we know that when Mr Brown absconded Mr Strasburger forfeited his bail money.

He is now repaid in the only commodity that the Lib Dems have to offer: ermine (rhymes with vermin).

Lord Young was right

My local Somerfield wasn't particularly good, but I patronised it from time to time for the odd packet of biscuits or last minute ingredients for supper. And then it got taken over by the Co-op, and there wasn't a great deal of difference, except that the prices went up, but I signed up for my Co-op membership card, so I get their monthly junk mail telling me what I can buy.

So now I know that at £12 for the "delicate and aromatic" Janisson Brut, you too can be a Champagne Socialist.

Truly, you never had it so good.

We are going to have such fun

Looking at Government spending

It took me 2 minutes to find this:

Department of Health
Department of Health 20/05/2010 Consultancy/Professional Advice COMMISSIONING MCKINSEY AND CO INC UK 11064 £6,121,750


That's more than the NHS pay their Chief Executive over 25 years.

Oh my God, it's so big

One of the smaller pleasures of banking is reading the fraud reports  In fact as small pleasures go it it comes second only to the aviation incident reports, which sometimes read like an installment of the Keystone Cops, particularly when they involve helicopters and logging (load of logs drops out of harness, harness bounces up and wraps itself round the rotor blades, surprisingly frequent).

Anyway the fraud reports, which are crculated amongst banks list the dodgy characters who walk in with all sorts of weird and wonderful instruments which they try to use as collateral for borrowing real money - fake diamonds, Bolivian bearer bonds, US Treasury bills from the 1920's whose face value exceeded the entire US National Debt of the day, letters of credit signed by Napoleon III etc, you get the picture.  The reports usually end with the words: "Business declined".

But until yesterday I had never heard of anything as daring or foolhardy as this *3 trillion* dollar attempted fraud.

10/10 for ambition, but 0/10 for common sense.

I received an e-mail

Fifa-strasse 20,
8044 Zürich, Switzerland

Dear Friend,

I got your contact today,with report you are reliable and trustworthy.

Am the member of the contract award committee and for FIFA World Cup 2018 which as you will be aware is due to be award later this month.

Due to unforeseen and most fortuitous circumstance which I am not able to at present divulge, I need your assistance to bank (USD10.5M) and subsequent investment it on properties in your country urgently. It go without saying that is matter is to be held secret between us and I know from accounts of others that you are a person of super integrity and I am sure will not divulge.

You will be required to.

(1) Assist in the banking safely of the said funds

(2) Advise on lucrative areas for investment

(3) Assist in purchase of properties.

If you can render your assistance in this regard, 20% of the total investment sum will be for you as your commission. It will be done under a legitimate process so that we will not breach any international or local  laws governing the same. Making it a 100% risk free. For the security reasons i will advise you to email me use my private email: [xxxxx]@hotmail.com

I wait in anticipation of your reply and co-operation.

Best Regard,

[Name redacted to protect the guilty].

Private Box: [xxxxx]@hotmail.com

2 problems solved for the price of 1

As I have noted before, it is amazing how problems can often be solved when they are combined. It is just a question of thinking laterally and putting the two together:

1. Ireland wants a bail out.
2. Britain wants somewhere to put its nuclear waste.

Genius.

Doing more for less?

"‘Doing more for less’ has become the mantra by which the public sector deals with the substantial financial challenges facing our economy and society. For too long local government has been perceived as part of the problem, not the solution.
In the past year, the LGA Group has been turning that image around."

Or so says the last Annual Report of the Local Government Association, a lobbying group working on behalf of local councils to lobby government with an annual budget of £35 million paid for by your taxes. Yes that's right, you are paying for one bit of government paid to lobby another bit of government.

But, more for less? Apparently not because the chief executive has just awarded himself a £70,000 pay rise, so that he now trousers £302,840 a year.

Hang on, that's more than the Chief Executive of the NHS who is responsible for a £100 billion budget. Perhaps that was what they meant by "more for less".

Unemployment down, but it is better than that

Unemployment, that is to say those registered as unemployed reduced by 9,000 last month, although the number actually receiving job seekers allowances actually went down by slightly less (5,300) showing that people on benefits are more likely to hang on to them than those people who are out of work but living off their own resources.

But that only tells half the story because overall employment in the UK economy increased by 167,000 in the three months to September, compared with the previous quarter, reaching 29.19 million.  What is actually happening is that over 150,000 people who had actually given up bothering to register as unemployed got back into work in the 3 months immediately following the Conservative election victory.

Why is this happening?  Take a look at this story from a few days ago

LONDON, Nov. 4 (UPI) -- The British government supports a plan by BP to broaden its exploration licenses in the regional waters of the North Sea, the company said.
British supermajor BP announced it won seven offshore exploration blocks in the North Sea during the latest licensing round from the British government.
BP has been offloading foreign assets to pay for the damages incurred from the oil spill in the Gulf of Mexico during the summer.
BP in its latest financial report said its $39.9 billion tab for the Gulf of Mexico spill "represented its current best estimate of those costs that can be reliably measured at this time."
Trevor Garlick, the company's regional president, said strong investments in the North Sea, however, were a boon to BP's continued success.
"These license awards are a significant success for BP and a further boost to the long-term future of our North Sea business," he said in a statement.
Garlick added that projects in the North Sea are part of a strong investment strategy in the region.
The awards were from the British Department of Energy and Climate Change.

British Petroleum didn't invest a penny in the North Sea while the Labour windfall taxers and profit ring-fencers were in power, but now they look as though they have gone for a while, BP are back to extract oil deposits that were there all along. The UK can count on £6 billion of productive investment that wouldn't have happened under Labour.

You could not make it up

The BBC is carrying reports from whingers who want the Royal Family to pay for the cost of their own wedding, or in other words, the BBC news editors are voicing their own opinions by reporting the view of proxies.

Let's get this straight:  the BBC who sent more staff to the Beijing Olympics than the UK sent athletes, who sent 17 staff to cover 33 miners coming out of a mine in Chile, who send more staff to cover major diplomatic meetings that the country sends delegates, is telling the Royal Family to go easy on the public purse.

Facts:

The Royal Family costs the tax payer £36 million a year (but in return the country gets to enjoy the benefits of the Crown Estates which generate far more than £36 million a year for the Exchequer).  For that we get an independent head of state, a figurehead for the armed forces and a substantial stream of tourist revenue.

The BBC costs license payers £3,600 million a year.  For that we get glitzy ballroom dancing on Saturday night, innumerable house/life swap/antique/cooking/chat shows, ubiquitous unfunny comedians in lieu of scriptwriters and darts and snooker as a poor substitute for sport.

At least a Royal Wedding would give us something different on TV.

I have managed to contain my joy and excitement

But sadly things aren't looking too good for the young couple when it comes to picking a date:

The French Open             23 May 2011 to 05 June 2011     Roland Garros
Chelsea Flower Show        24 May 2011 to 28 May 2011    Royal Hospital, Chelsea
Epsom Derby 2011         03 June 2011 to 04 June 2011     Epsom Downs Racecourse
England v Sri Lanka Test Match     03 June 2011 to 07 June 2011     Lord's
Queen's                 06 June 2011 to 12 June 2011     Queen's Club
Royal Ascot             14 June 2011 to 18 June 2011     Ascot Racecourse
Wimbledon             20 June 2011 to 03 July 2011     All England Lawn Tennis Club
Henley Regatta             29 June 2011 to 02 July 2011     Henley
British Grand Prix        08 July 2011 to 10 July 2011     Silverstone
The Open Golf Championships     14 July 2011 to 17 July 2011     Royal St George's Golf Club

It seems I may well be corporately entertained on the day, and my attention will be elsewhere.  I am of course open to offers.

How did I miss this?

PricewaterhouseCoopers, one of Britain's largest accountancy firms, has launched an investigation after male staff at one of its branches in Ireland were found circulating emails where they rated the attractiveness of their female colleagues.

But just for the record, reading from left to right, top row first: 6, 7, 8, 9, 7, 8, 7, 7, 7, 6, 8, 6, 7.

The ideal Christmas present for anyone

• who wants to make phone calls
• on the move
• whose name is John.
• err.. that's it

That Irish bail out which they say isn't going to happen

How much are you on the hook for, dear tax payer?

Well there is the EU bail out fund to which the U K isa 13% contrbutor.  Chances are thy will tap that for £70 billion, so that's £9.1 billion right of the top, courtesy of Mr Alastair Darling who signed us up for that just before he got booted out of office.

Then there is the small matter of the government shareholding (84% as it happens) in RBS who say they have Irish bad debts of £4.3 billion, so I put £3.6 billion of that down to you dear reader, but of course, there may be more to come.

And then we have another £4billion of ‘impaired loans’ in Ireland over at Lloyds, so you can chalk up another £1.6 billion to the tax payer their through their 41% stake..

So I make that a tidy sum.  It may not seem much these days (5 years revenue at al-Beeb, or 2 months cash flow at the NHS), but some of us can remember the time when £16,000,000,000.00 was serious wonga.

BBC waste of money special

Man to wed woman next year (we wish the happy couple all the best).

 BBC News 24 (most-watched news channel, delivering breaking news and analysis all day, every day or so they claim).switches to non-stop coverage and ... launches a helicopter to circle over Buckingham Palace

Why Formula 1 is so overrated

I used to enjoy Formula 1 racing, but that was years ago when there was some racing. These days it depends almost entirely on which car gets to qualify first, which is not so much a question of driving skuill as engineering, and we can have a drivers' champion who is nothing more than a boy racer in a fast machine who has to start at the front of the grid to win because he doesn't know how to overtake at this level.  For all the glitz and glamour I have no idea why any serious company would waste money sponsoring a cross between a high-tech procession and a tyre change race.

Well it's somewhere to put the flowers

What would you rather have: a vase or a Bugatti Veyron? OK, not everyone is into cars, so what if I say: a vase or a villa in the South of France?  Fair enough, some people don't go for houses abroad, so let's say a fully furnished apartment in Knightsbridge, just around the corner from Harvey Knicks, or a vase?

You still want the vase?  It's just a vase, nice design with a bit of history but its less than 300 years old, so in the whole scheme of things it is really no big shakes.  Nice craftsmanship but hardly the originality of a Van Gogh or a Monet.

You still want the vase? OK, you've got an honest looking face and I like you so here's what I'll do.  You can have the Bugatti, I'll throw in the villa and and the flat in Knightsbridge and I'll tell you what:  you can have a 200 seater passenger jet aeroplane, I would say that little lot would set you back a cool £53 million or thereabouts (including commission), so which would you prefer?

You still want the vase? Well, I suppose its less than a Cristiano Ronaldo.

Not above the law

Some good news from the courts where the judge has ruled that MPs who cheat on their expenses are no different than any other fraudster or false accounter and should be tried in the plain vanilla bog standard criminal court. The BBC report is here.

Perhaps they will begin to see that they are not above the law, and the same principles apply to the Woolas case.  The High Court judges who declared his election void are not trying to limit his freedom to speak out.  In fact they were quite happy to let Mr Woolas say what he liked, true or untrue, hurtful or kind.  They didn't actually serve any punishment on him for that.

What they did do was to apply a law that had been enacted by Parliament that said that when a candidate lied about an opponent their election should be declared void.  The courts have acted as parliament decreed and the Labour MPs who are crying foul should realise that just like the MPs who will be tried in the usual criminal courts for falsifying their expenses, they are not above the law.

I am not a lawyer, but

.. it seems I know more about the law than those who make it.  It seems the High Court agree with my post below that judicial review is not the correct venue for an appeal against a decision of the High Court and the correct procedure is to go to the Court of Appeal. Any lawyers reading might care to confirm/deny that.

That doesn't stop Woolas and his hack lawyer protesting that it is, but on the one one hand there is a High Court judge telling Woolas to go away, and on the other we have one of those Labour MP's divorced from reality who thinks he can spin his way out of any situation who thinks he knows better or can persuade the rest of the world that he does.

If that wasn't bad enough, we now have the half-pint Mr Speaker telling us that Woolas' seat won't be contested until after the case has gone to judicial review.  Perhaps we can understand Woolas' strategy now, because that judicial review is never going to happen, so by protesting that the case should go to judicial review, Woolas gets to hang onto his seat indefinitely.

Pulling the Woolas over viewers eyes:

The BBC covered the Woolas  court case by saying the former minister vowed to fight the judgement of the High Court by seeking a judicial review.  Fair enough, but one can't help thinking that if they were reporting a Conservative MP they would have given more prominence to the fact that the former minister was found guilty by two High Court judges of lying in his election material and was banned from sitting in Parliament for three years.

If the BBC had less of a numpty writing up the case they would have pointed out that judicial review is for the review of administrative matters and legislation.  The proper venue for appealling against a High Court decision is the Court of Appeal.  Thank goodness these people aren't running the country any more.

A little quiz

Whose manifesto said "Our goal is to make responsibility the cornerstone of our welfare state. Housing
Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford."?

 Answer here (see page 2:3).

The Sun sheds some light

I am not an avid reader of the Sun, but I admire its writers who can put a cross a message boldly and clearly

THE BBC should hang its head in shame.
At a time of grave economic peril, it is this public sector broadcaster's duty to tell the impartial truth.

Instead it has chosen, disgracefully, to take sides.

As The Sun reveals today, it is ready to bend the facts in a relentless propaganda war against the Government. It falsely portrays shiftless, workshy scroungers like James Van-Cliff as hapless victims of cruel coalition cuts.

The art school dropout is allowed to claim on the flagship News at Ten that he is being thrown on the streets by new housing benefit rules.

Nowhere is he asked why he refuses to work and has chosen to live off the backs of taxpayers.

This is not just an abject failure in the first rules of journalism. Nor is it the only example.

The Beeb is today the pompous voice of defeated socialism.

Labour lumbered us with terrifying levels of debt. Yet Newsnight relentlessly blames "nasty" Tories for trying to bring it under control.

Radio 4's Today programme gives Government critics like hysterical Polly Toynbee endless airtime while constantly interrupting ministers.

Its news programmes rip into any plan to make Whitehall's big spenders more efficient while rarely saying why savings are needed.

We are sitting on a powder keg of national debt, yet the BBC treats the crisis as if it were the coalition's fault, not Labour's.

It broadcasts ludicrous warnings about cardboard cities, mass evacuations and Nazi-style extermination of poor families as if they were fact.

Yet it scarcely mentions that Labour was planning almost exactly the same VAT hikes and draconian cuts to housing and incapacity benefit.

Nor does it mention the legion of Labour ex-ministers who have denounced mealy-mouthed Red Ed Miliband for failing to say so.

Labour is playing politics. That's their job.

The BBC is generously run on public money. It has a charter promising editorial independence.

That must not become a licence for malicious and unscrupulous propaganda.

Britain as a basket case

Yet more evidence of the truly dire mess that the country was left in by the Labour Party comes in the form of graduate employment figures for 2009 graduates, the last gradation year under the old government.  Much heralded in the news is the 1% increase to 8.9% of those reporting themselves as unemployed, but more illuminating ar the other figures, 59.2% in full-time employment (down from 61.4%), 15.4% in further study/training (up 15.4%), 8% working and studying (down 0.1%) and 8.4% "Other" (down 0..1%).

So what does that tell us? 83% of graduates are either working or studying, although a fair number of those "working" will actually be doing unpaid internships, but an amazing 17% have nothing to do when they get up in the morning.  Even more worryingly, only 5% of graduates have gone into business or financial services. So don't be surprised if we slip further behind in the next 20 years.

And before anybody tells me that all the unemployed graduates are feckless layabouts, get in touch with me.  I can put you in touch with numerous Oxbridge graduates, 1sts and 2:1's, hard working and sensible, whose talents are going to waste in post-Brown Britain.

BBC should put some of its reporters on hold

You would have though that with a budget of £3 billion or so, the BBC  would have been able to put together a more professional report on the pcketing of Vodafone shops than the student journalism on display on their website.

The simple facts are that Vodafone and HMRC won and fought a case through hte Revenue Commissioners, High Court and Appeal Court, plus a trip to the ECJ with each side winning and losing points on the way, but in the end both sides agreed to settle on a liability of £1 billion or so.

The story had been covered in Private Eye mentioning a liability of £6 billion, which is easily seen to be implausible with a bit of simple maths but is taken as gospel by a bunch of ignorant protesters, encouraged by the usual left wing suspects. An HMRC spokesman has said: "We can't comment on the details of the settlement but we can confirm that it was reached by HMRC following a rigorous examination of the facts. It was agreed that Vodafone's liability was £1.25bn and at no point was the liability greater than that", so it is very unprofessional of the BBC to give this story any prominence.  If HMRC say the figure at issue was never more than the amount Vodafone paid the protesters are not credible.

Amongst the poor reporting was the following claim that the issue "purportedly stems from Vodafone's purchase of the German telecoms firm Mannesmann, which was supposedly bought through a Luxembourg subsidiary to avoid paying tax in Britain."

Well no it doesn't.  If the German comapny had simply been bout by a Luxembourg holding company then there would be no tax payable in Britain if the profits remained in the foreign subsidiaries.  The issue was that the Luxembvourg subsidiary provided loans to the German and other subsidiaries which HMRC claimed provided low taxed passive income to the Luxembourg subsidiary which should be allocated to the parent under the UK controlled foreign corporation rules and which Vodafone claimed was a bona fide active part of its business and protected from those rules by the EU directives providing for freedom of establishment in the EU and non-discrimnatory taxation.

When Vodafone firsbought Mannesman they asked the Revenue whether there proposed arrangements wouldcauise the CFC rules to be disapplied.  The Revenue as is usually the case decided not to play ball, but as they usually do, told the company to do what they intended to do and file a tax return, which is what they did. After severalyears and a lot of haggling HMRC, the courts and Vodafone have basically determined what level of substance is required for the Vodafone treasury operations in Luxembourgf, which is why Vodafone now have an agreement that establishes that they won't be liable for any UK tax on their Luxembourg and other EU operations under the current UK laws, at least until they bring that income back to the UK. And quite right too.

Turning London into Paris

Chris Bryant has said that capping housing benefit at £20,000 a year risks turning London into Paris.  Now having lived in both Paris and London, that may be no bad thing.  Paris has an inner ring road that may be a death trap but it ensures that it takes no more than 20 minutes to get from the centre of town along one of the military boulevards to get onto the motorway and away.  Compare driving up the Champs Elysees and down the Avenue de la Grande Armee to get onto the Peripherique with the 90 minutes I spent last Sunday night getting from Battersea to the M4 and you will see what I mean.

But we shouldn't dismiss the idea out of hand, because Mr Bryant may have hit on an idea.  Instead of paying £2,000 a moth in rent in London, the government could save a fortune by sending the homeless to live in Paris. €2,025 a month gets a very nice 3 living room 2 bedroom apartment in Neuilly close to the shops and metro, and of course for EU residents would pass the cost of unemployment and health care onto the French. Plus they might learn to speak a foreign language.

The (New Labour) police state we were in

101,248 people were stopped and searched last year in England, Wales and Scotland under Section 44 of the Terrorism Act.

506 of those searches resulted in arrests. None of those arrests were for terrorist offences.  I suspect many were for objecting to being stopped

Since July, the police are not allowed to stop and search people unless they "reasonably suspect" them of being a terrorist. It will be interesting to hear what those "reasons" have been so far.

Global Warming Update: coldest October night in 17 years

Do I hear "short term fluctuations", anyone?

Left wing wrong-footed by reality

The BBC set out its anti-government stall this morning by saying that a consensus of City economists took a dim view of the state of the economy.  These let us remember were the same economists working for banks that the BBC was happy to chastise only a few days earlier because of the size of their bonus pools.  That was enough to allow Lord Mandelson to grace the airwaves saying that the Coalition had failed, blah, blah blah..

But then we hear the news that the UK economy grew at a "faster-than-expected" 0.8%.  Faster than expected by the BBC, New Statesman, Guardian and their ilk, but not by anybody who has seen the recent growth in activity by UK companies following the election.  Nothing too dramatic, and pay is still restrained but companies are building headcount and expanding hence the 3.3% (annualised) GDP growth rate.

Of course that doesn't stop the BBC wheeling out their latest economics correspondent, the Shadow Chancellor Alan Johnson, who tells us that it is not as rosy as the figures tell us, because, err, because .. he doesn't want it to be. In fact according to the Labour Party the cuts (which of course aren't cuts in reality because actual spending is going up by more than RPI) should be reduced us to stave off the fall in GDP which ... isn't happening.

Alan Johnson even wentso far as to say that the government were still taking a "reckless gamble" with the economy, although he stopped short of saying why Labour's planned 1% extra cut was not even more of a gamble, and for the more economically astute, why government spending which is actually 3% more than last year is a gamble.  Well, he wouldn't, because it isn't.and more fool Labour and the BBC for thinking it is.

Meanwhile rating agency Standard and Poor's upgraded its outlook for the UK's triple-A credit rating, which is nice.

But how did the Labour Party get it so wrong? The main reason appears to be a poor grasp of reality.  The "cuts" aren't cuts in totality, merely a scaling back of the preposterous notion that we can boost our way to prosperity by ever greater borrowing and spending. 

What is more, while some government spending may be cut back. total government spending is still increasing.  This means that GDP, which measures broad activity in nominal terms, will not actually fall (because actual spending is not falling).  Add to that the reassurance to business that the new government has a dose of sanity about it (capping benefits at a figure significantly higher than the average wage is not meanness, but a recognition that while some do little to receive their weekly cheque from the state, many others work for 40 hours and pay taxes to receive far less), and the effect is a boost to the economy after several years with a negative outlook.

But if you really want to see the bizarre narrative of the Labour Party, you need look no further than Ed Miliband's speech at the CBI, which the BBC covered in much more detail than the Chancellors' (but there you go).  The problem in Britain, says Red Ed, is that we don't put enough emphasis on industry. 

True enough. I don't disagree, having spent much of the last 25 years trying to finance UK industry and its exports.  The problem is that the last government of which Mr Miliband was a member and previously a Treasury policy wonk, had a series of policies that acted against British industry more than any other government.


Leaving aside all the red tape, compliance costs and bureacracy, let us just look at the financial measures enacted by the Labour government from 1997:

1. effectively preventing capital intensive companies from financing their assets through sale and leaseback in the second (i.e. post-election) Finance Act 1997, 
2. effectively banning finance leasing (which had been used to finance all of the inbound industrial investment - think Japanese - in the 1980's and 1990's), unless you happen to be a foreign shipping company taking the UK tax payer for a rise in Giovanni Prescott's Tonnage Tax abortion, 
3. the promotion of multiple film finance schemes using tax breaks snapped up by Hollywood studios, on the basis that it would stimulate the British Film industry, when in reality film crews pack their bags and move elsewhere as soon as the film completes and the subsidies dry up, while there were no such tax breaks for investors in British industry where an investment in plant and machinery would likely result in 25 years of employment, rather than a summer of filming; and
4. the crassest of Budget manoeuvres where a reduction in the corporation tax rate from 30% to 28% is announced, to be funded by ..... a drop in the rate of capital allowances from 25% to 20%, or in other words, since there is no net cost to the tax payer, this is a movement of cash from the capital intensive, plant and machinery buying industry and utilities to the much less asset intensive advertising agencies, investment bankers and estate agents.

As buggers' muddles go, that doesn't just take the biscuit.  It ransacks a whole tin of Huntley & Palmers' finest.

Cutting back to ... 2009

Many years ago (which in City terms means at least 3), I worked for a specialist corporate finance boutique that was linked to Tullett Prebon.  That little venture flourished and then several years after my departure grew like topsy before imploding in a big way down in Australia.  The Tullett Prebon connection was no less racy, being a money broker, whose trading floor it was unwise to cross in a skirt, nay positively dangerous.

Those days are long gone, with Tullett Prebon somewhat tamed by its acquisition by Collins Stewart, although the groups have recenly announced a de-merger, with the chairman of the former group, Terry Smith, deciding to go with the interdealer broker rathar than the stockbroker.

Those with long memories will remember Mr Smith when he was an analyst for BZW and issued a sell recommendation against the parent bank.  I can't say I would have blamed him at the time. Barclays was in a big mess.  Mr Smith went on to earn muchos kudos by penning the classic Accounting for Growth, an encyclopedia of UK GAAP accounting scams, which won him royalties from book sales to the likes of me, but cost him his job as head of research at UBS (see previous comments on UBS). It is surely because of Mr Smith's chairmanship that we should pay attention to a simply stated paper on the likely impact of the cuts from Dr Tim Morgan of TB who predicts a shower not a hurricane.

UBS-a-daisy

I'll admit I have never been a great fan of UBS. To be a major league investment bank, you have to have smarts, but to be honest, the typical UBS banker always had the whiff of mountain goats about him. They aimed to ape their cousins on Wall Street, but somehow they seemed to end up more ape than banker. Some would say that a lot of their presence owed itself to their "advice" to wealthy individuals and businesses who wished to avail themselves of the dicrete attractions of central European banking, but whatever it was, they always seemed to be copying the behaviour of the Americans without ever leading the way.
Which is why it is hardly surprising that we should read in a 69-page “transparency report” prompted by a Swiss parliamentary committee this year, that the bank's losses were attributed to the bank’s drive for growth in investment banking, notably by originating and distributing structured products that were based on US mortgages. The bank says its risk controls had been based too heavily on statistical models, while ratings supplied by external agencies were seldom questioned.
“The incentives in place at that time to generate revenues without taking appropriate consideration of the risks underpinned this strategy and facilitated losses,” said UBS.
So as I have said before, while stochastic models might be a good measure of something, perhaps fairness of pricing, they are no measure of the overall risk in a security. The Swiss relied on their models and the model based valuations of the rating agencies. But that risk management strategy, like a Swiss cheese, is full of holes.