Translate

Thursday, September 30, 2010

Ireland Is Borrowing 32 PC Of GDP PER ANNUM!

Rob Kitchin writes Ireland after NAMA  The National Management Asset Agency, which buys troubled assets to ease the financial crisis.  This is an extract, which in one short paragraph explains why Ireland's economic plight is the worst bar none within the eurozone.


A year’s tax receipts at present is €33bn.  


The €29.3bn that’s gone into Anglo has disappeared into a black hole never to be seen again.   Another €15.4bn has been pumped into the other banks (Bank of Ireland, AIB, Irish Nationwide, EBS), which hopefully will be recovered over the long term.  The €40bn or so going into NAMA may or may not pay back depending on the nature of the assets transferred in and whether the Irish property market recovers sufficiently over the next 10-15 years.   


The government are presently borrowing €20bn per annum to bridge the gap between tax receipts and the cost of running the country.  Since the bank guarantee two years ago, the Irish state has borrowed a fantastic amount of money, so much so that the Guardian reports that government debt now exceeds GDP, with the deficit 32% of GDP (easily the highest in Europe).  

If there is a reason that overseas investors are nervous, this is it.  Our economy has shrunk markedly, our unemployment and welfare bill grown significantly, our austerity measures do not seem to have worked, the banks have been financial blackholes, and we owe a fortune. Yet we are committed to reducing the deficit to 3% of GDP by 2014, committed to the bank guarantee, and to paying back our debts in full.


http://irelandafternama.wordpress.com/2010/09/30/irelands-black-thursday-but-are-there-any-other-black-days-to-come/


Another statistic not mentioned by Kitchin is that Irish banking liabilities are five times Irish GDP.  In economic terms this a high wire act.  It would be in Ireland's best interests to default.  The austerity will otherwise last a decade.  But the EU can't contemplate any Euro member doing that.  Without political direction, the proEU Irish political elites will play Brussels' tune.  Ordinary Irish will pay a heavy price.  As Kitchin says, there will no doubt be more Black Days to come, which could send the crisis out of everyone's control.  Let's hope the plans for an orderly default are being prepared.

If Anglo fails, there will be nothing else in line to stop Ireland defaulting apart from EU money, backed up by money from the US.  The bill for rescuing Ireland and her banks could yet top hundreds of billions of Euros.  And that would merely be the cost of saving just one tiny eurozone economy.  The mind boggles at what the cost of saving the whole eurozone could yet become.  If the ECB issues the money, what IOUs can Ireland offer as collateral that would be worth much?  Do the world's central banks want to be hung up with junk?  It will be cheaper in the long run to permit default, and get Ireland's economy rolling again.

FT

On Wednesday Standard & Poor’s, the credit rating agency, downgraded Anglo Irish’s subordinated debt by three notches to triple C and warned there was a “clear and present risk” of a restructuring of the bonds. Earlier this week, Moody’s Investors Service similarly downgraded the bank’s sub bonds, but also downgraded Anglo Irish’s senior bonds by three notches because of the “greater marginal risk” that the government would not support those creditors.









“I don’t expect that hospitals will have to close or schools will have to close, but I do expect a fundamental reappraisal of the public sector will have to take place in which we secure absolute value for money in the delivery of services,” Mr Lenihan said. (economics minister)
Ireland's economic woesThe rescue costs for this one bank represent a staggering 21 per cent of Irish GDP, more than the entire bill for sorting the Japanese banking crisis of 1997 and almost twice the cost of the Finnish crisis in the early 1990s.
Investors warned that Ireland may still be forced to turn to the eurozone bail-out fund, the European Financial Stability Facility, even if it succeeds in delaying such a move until the middle of next year at the earliest. Some investors are also sceptical over how Ireland will pay for its financial clean-up, although officials stress the country’s pension fund has assets of €24bn, most of which is liquid assets or cash that it can use to help its banks.

OPEN EUROPE


Irish Finance Minister Brian Lenihan said yesterday that "there will be a significant increase in [Ireland's] public deficit due to the financial support we are providing to our banks, which amounts to around 20% of GDP". After the bank bailout - which may be worth up to €50 billion - Ireland's public deficit will therefore attain a record 32% of GDP, while government debt is expected to reach 100% of GDP by the end of the year, Le Monde reports. However, both Eurogroup Chairman Jean-Claude Juncker and IMF Chief Dominique Strauss-Kahn have said that they do not expect Ireland to tap the €440 billion European Financial Stability Facility (EFSF). 

An article in the Economist notes: "There is speculation that, if bond yields rise further, Ireland and Portugal might soon be forced to borrow from the EFSF [...] That is unlikely [...] But if Ireland were eventually forced to borrow from the EFSF, the fund might find it hard to impose conditions harsher than the ones it has volunteered for already. You cannot ask a non-smoker to give up cigarettes".

In City AM, Allister Heath argues: "There is one aspect of the Irish crisis that everybody appears to have forgotten about. Yet it goes a long way towards explaining Ireland's problems. It is, quite simply, its membership of the dysfunctional single currency, an institution which it should never have joined".

In the Telegraph, Jeremy Warner argues: "Stuck with a monetary policy which is essentially set to suit German needs, Ireland could be condemned to a semi-permanent deflationary funk".

In the Independent, Hamish McRae argues: "The [eurozone's] 'one-size-fits-all' interest rate caused huge problems during the boom years, for had Ireland and Spain been in control of their own interest rates they might have slowed the expansion of their property bubbles".

RTBF reports that Portugal has announced 5% cuts in public sector salaries and a 2% VAT increase after the European Commission urged the government to speed up the consolidation of its public finances. Les Echos reports that Portugal will also try to raise between €7 billion and €9 billion through new government bonds auctions by the end of the year.    

The FT notes that the Greek parliament has pushed through legislation granting in effect a tax amnesty to millions of citizens, in a move that goes against advice from the EU, the ECB and the IMF.

Warsi 'Labour MPs Elected By Fraud'.

Sayeeda Warsi , said in an interview today


There are at least three seats where we lost, where we didn’t gain the seat, based on electoral fraud. 


Let's have a guess then.  At least three seats is playing the allegations down to the defensible minimum statement of the real situation.  It means there were potentially thirty seats where fraud lost the Conservatives seats, and awarded them to Labour.  The fraud, which Sayeeda says was based predominantly amongst Asian voters,  was well known about by Gordon Brown, and the New Labour zombies, let's have no doubt.  Without it, they would have had thirty less seats, and Conservative thirty more, giving a clear outright majority to Conservative.


Nick Clegg is tidying up the system for postal and proxy voting.   If he does a good job, Labour will have not a chance of becoming the country's government for a generation, once the constituencies have been equalised, if overseas voters are brought back in and encouraged to vote, and if there is an electoral pact with the Lib Dems, Labour might be driven down to a tiny number of seats.


Let's hope!


http://conservativehome.blogs.com/goldlist/2010/09/fraud-in-asian-communities-cost-tories-at-least-three-seats-claims-sayeeda-warsi.html

FROM EARLIER BLOG POST



http://playpolitical.typepad.com/labour_party/2010/10/newsnight-investigation-goes-to-halifax-to-probe-warsi-claims-of-asian-labour-postal-vote-fraud.html



Officials at Calderdale Council, which covers Halifax, say the signatures of every single postal ballot that arrived on the day of the general election were checked throughout the night. But Philip Allott, the Conservative's candidate who lost to Labour, says the current vote-checking system cannot tell whether someone has voted multiple times using more than one postal vote.

"It is possible in Calderdale to apply for multiple postal votes because although the signature of the application form and security slip when the person votes are cross-checked via scanning, the scanner does not check whether the person has voted twice or more," he said. "We can't say for sure whether fraudulent voting affected the outcome but I do believe there is enough prima facie evidence to show that fraud happened. It's simply not good for democracy when this sort of uncertainty exists."

The Conservatives in Halifax say that they cannot afford to launch a legal challenge which would need to be submitted by tomorrow. Mr Allott said the rules stating that complaints have to be launched within 21 days of an election meant there was not enough time or money to gather evidence.

"Just to launch a challenge would cost around £100,000 – or £200,000 if we lost," he said.


So none of it will come to light. 


Except when it does as here -


http://gatesofvienna.blogspot.com/2010/10/banana-republic-britain.html

Conservativehome - October 10th.  Behind Sunday Times paywall.

Police to investigate allegations of voter fraud in Halifax and also Poplar and Limehouse
"Police are to investigate voting in at least two constituencies that the Conservatives believe they may have lost at the general election because of fraud. Dossiers compiled by Tory activists in Halifax, West Yorkshire, and Poplar and Limehouse, east London, have been passed to the authorities. Questions have also been raised about polling in Bradford West." - The Sunday Times (£)

Wednesday, September 29, 2010

Ten Year Gold Chart Shows Parabolic Shape. Meaning Bubble.

During the oil price boom, forecasters were predicting levels of $250 a barrel.  It topped at $140 after piercing the psychologically important $100, and then fell heavily to bounce at $40.  Gold pierced the $1000 level on its second attempt, and then has flown over $1300.  The shape of the rise since 2001 is the dreaded parabola.  The more the price rises, the more it rises.  It's the shape of a herd driven price rise.  

Once the herd turns, the charge south can be devastating.  At least with oil, people in the real world had to keep buying the stuff.  Gold is simply being hoarded.  Jewelry sales worldwide are collapsing, and scrap is being traded at a significant discount to the market price.  The moment the market will break is when the bulls get nervous.  That moment could come at the same time as a stock market reversal.  We will see.  The bulls I know will be checking inhere to comment.  But here anyway is your parabola.  It's a bubble, and we know what happens to them.

Nadler on Kitco

the fact that equities and gold are presently rising basically in tandem is also a reflection of the fact that hedge funds and similar specs have infiltrated the market and are stripping away one of gold’s historically reliable attributes; that of being a shelter from falling stocks.


The same money that is driving up shares is driving up gold.  As one turns down, so will the other.  I imagine shares cannot keep up record rises ad infinitum, as they have in September, the best since 1939, which is not a great year to seek a  parallel from.

The Liam Fox Leak Doesn't Mention The Real Threats We Face

Fox is worried by Russian rearmament.

1000 planes and helicopters, 5000 tanks plus a new submarine fleet are all under construction.

Putin has shown himself quite ready to use his army to invade neighbouring states, and he has withdrawn from the arms limitation treaty on conventional weapons in Europe.

Fox is quite right to state that now is not the right time to cut back.

China is sabre rattling in the South China Sea, and Japan and Korea are concerned by both that and also the firing of missiles and torpedoes by North Koreans.

Recessions make governments more desperate to create a diversion from economic troubles.  It does not make sense to cut back on defence now.

Churchill warned us in a similar way in the 1930s.  Fox is doing the same now.  There are significant threats of war breaking out in the world's trouble spots.  We should be well prepared.

British submarines are being tracked by Russian submarines as in the Cold War.  Our airspace is invaded every day by Russian fighters.  Why relax our guard now when the threat level is rising?  Fox has got it right.

EXTRACT FROM LIAM FOX ARTICLE IN TIMES 2007
Russia’s petrodollars are financing a $189 billion overhaul of its armed forces between now and 2015. They will purchase more than 1,000 new aircraft and helicopters, 4,000 new tanks and armoured vehicles and a new submarine fleet. New missiles will carry nuclear warheads. Western addiction to oil and gas is causing us to fund the threat against us.

Reports that Russia is now withdrawing from the Conventional Forces in Europe Treaty will only fuel suspicions about Putin’s defence posture.



Since then Putin rolled his tanks into Georgia, and has been issuing large numbers of Russian passports in the Ukraine and Moldova.


Spying In Britain


It has been reported that Russian espionage has been making great efforts to penetrate British security.  They have had much success.  Our best code breaker was recently assassinated, Gareth Williams.  That sounds more like a Russian op than anything Al Quaeda would normally be capable of.


I was travelling by train via Crewe two weeks ago.  A gentleman was photographing the railway with a very nice camera, so I asked him what he was taking pictures of.  He was a Russian engineer, he said, buying aircraft parts from British Aerospace for Russian commercial jets, and he said he was interested in taking pictures of British railways and stations while he was over in the UK.  


He then asked me what were the best tourist sites to visit around Wrexham where he was headed.  


The conversation all seemed a little contrived.  


You never know.  That guy could well have been a spy.


http://www.telegraph.co.uk/comment/telegraph-view/8033376/The-strategic-defence-and-security-review-must-not-be-rushed.html




Groaning New Labour Zombies Finally Buried

Labour is a complete shambles.
It would be kinder to look the other way while they bury the corpse of New Labour. They only just now seem to realise that it has died. The smell has been bad for weeks, but somehow they all refused to accept the reality.
The NL banner which for a while rallied the party out of the dying embers of the era of industrial strife, is now itself on its way to the graveyard.
In its soul, Labour wants a speedy return to smokestack industrial warfare, Victorian mine owners and hungry children. But they are instead lost in a world defined by social security payments and supermarket shelves bursting with produce.
Only if they tax the country to oblivion do they stand a chance of wrecking the economy to the point where class warfare seems even a faint possibility. That, after all, is the only game they know.
New Labour was an attempt to cover up the fundamental pointlessness of the party, which has little purpose in the modern world. Declaring wars in far off countries was all Blair could find to define his party and his era.
Now all we have is a pointless argument as to which was the more pointless, the war or the party that decided that was all they could do with our country’s former wealth. As our wealth has now been well and truly squandered, there’s a limit to how much more pointlessness people can tolerate. I’m afraid Labour, provided with the full exposure that the modern media affords, are into the red zone in that regard. They are now the dull, pointless and dying party.
Let them slide off and hold their various political funerals in peace.  Now they realise the body is dead, let them bury it.  Maybe at last we might find our screens and journals becoming free from ghastly ghostlike figures from the New Labour morgue, who have been parading themselves like zombies talking avidly and with strange anticipatory enthusiasm, unaware of the seriousness of their true medical condition.

UPDATE

Prescot is out.  Miliband D is out of front bench politics.  Now Nick Browne Chief Whip is sacked.  There will be few New Labour zombies left in the frame.  Maybe Peter Hain will for some strange reason remain unburied.  The groans of the unburied, otherwise, are dying away.

http://order-order.com/2010/09/29/nick-brown-pulls-out-of-whip-race/

POLLING

From PB Comments


You know that whole Bounce parties normally get from a conference? Yeah…


Latest figures 29th Sept 2010; CON 41%, LAB 39%, LD 12%;

Latest government approval: +1 (Approve 41%, Disapprove 40%)

Tuesday, September 28, 2010

Ed's The New Head

He’s all of a head teacher handing out the corrections.
Now Class, you were wrong about Iraq, cuts, taxes, AV, economy (boom & bust), equality and your marks are well down on what should have been expected. But we’ll remain optimistic, and most of you should get through next time. I want a big effort and you will need to adopt a very different attitude from hereon. Do I make myself clear?
NL was quasi religious, with Tony planning his next uplifting sermon in the vicarage. 
Different Labour is classroom, with Ed pontificating from behind the desk in his study.

Ed's speech wasn't an epoch defining moment.  It was more like 'We need to pull our socks up.  We really do, don't you see.'



EARLIER  .  Head Ed was speaking to another class on the subject of renewable energy.  He had this to say 'It is socially unacceptable to be against wind turbines in your area'.  As the man says, ''come on, class.  now pull your socks up.''

BREAKING

One of the teachers who is refusing to accept a telling off from the new headteacher is his brother David, former head of foreign languages.

From Political Betting comments


Labour’s new leader Ed Miliband has said that going to war in Iraq was “wrong”, a statement that appears to grate with his brother David.




“His brother and defeated Labour leader contender David Miliband, who voted for the war, did not join in the applause. In footage shown on ITV news David Miliband turned to deputy Labour leader Harriet Harman and said: “You voted for it. Why are you clapping?”
Her response was unclear.”

Perhaps the muppet who wrote the BBC report needs to stop spinning and take the trouble to rerun the ITV or C4 tape.

Monday, September 27, 2010

Who Coined ''Red Ed''?

70. ''Red Ed'' was coined by Iain Dale on LBC.


Commenter Sean Fear on PB wrote this today.


The poll that astonished me was the Conservatives leading Labour 38:33 with Yougov, straight after their awful 2003 Conference (obviously, it didn’t last). Sean Fear


Were you at the conference?  I was.  It was a joyous occasion with IDS making a great speech, memorable with phrases such as 'Mr Blair, no one believes a single word you say.'  The media refused to present such trashing of their hero in a favourable light, and the nation heard only their echo or take.  It was a time of great hope that we might get our commitment to the CFP revoked, that we would get out of the EPP and that we might get a crack at withdrawal from the EU.  Everyone in the room that I spoke to thought it was a great speech.  But the nation heard only Mark Mardell.


All the excitement and hope at the conference was buried, and IDS' assassination went ahead immediately with all wings of the media moving in for the kill.  Sadly it was in pre blogosphere days and with Alastair Campbell calling the media tune entirely, Conservative MPs crumbled, and failed to back IDS by 6.  The moment of hope was snuffed out.


Even Labour voters liked IDS.  People trusted him.  Only in the Westminster village was he disliked.  They just had to get rid of him as he was making the demiGod Blair and the EU look vulnerable.  Truth telling was simply impermissible in 2003, where the world and his wife was being sent to war.


Even IDS underestimated Blair's capacity to lie, and he fell for the military 'intelligence' that Alastair Campbell cooked up.


Interesting that David Blood Miliband is trying to get some traction out of Burma.  He really loves to find the bloodiest and most bestial arenas to frame his politics, the Baltic SS, fox slaughter, and now Burma's genocidal junta.   Ed's topics seem a lot more mundane.  David's ''Í'm not here to wage class war, but to end class war'' quote might easily be reversed. ''I'm here to end class war, by successfully waging class war.''  


With Red Ed stripping away the nation's potential to build private wealth, and in the same breath expanding the nation's debts, here is the perfect recipe for financial disaster.  They might as well say it straight, Vote For National Bankruptcy.  We Know How To Feck Capitalism.


Marxist Recipe to End Class War.


Stop people making money.
Tax the money that they do have.
Spend it.
Borrow and spend more.
Again.
Again.
Again.
Economy collapses.
End all private ownership, blaming speculators, and private greed.
Nationalise everything.
Force everyone to undergo indoctrination and retraining.
All must wear red and worship Lenin.
Class War is over.
Miliband has won.

Ireland's A Gonner

Sometimes it takes an outsider to see things clearly.  The debts of Ireland's nationalised banks are five times Irish GDP.  The country's austerity programme is already severe but is still not nearly enough to bring the government's finances back into shape.

There is only one outcome possible from here.  The EU are in denial.  They will delay and defer as long as they can.  But each delay merely worsens and prolongs the depression in Ireland, which is sending the Taoiseach, Brian Cowen, into a state of near mental collapse, as a recent radio broadcast revealed, where he seemed to be losing it completely. 

This American writer sums it up today in the FT 
one must expect that European policymakers will try to paper over Ireland’s solvency problems with a heavy dose of IMF-EU financing. This might buy useful breathing room for a European banking system overexposed to its periphery. But it would hardly be in Ireland’s best interest since, in the absence of debt restructuring and of a euro exit, IMF-imposed austerity runs the real risk of plunging Ireland deeper into depression and deflation.

If it is indeed inevitable that, in the end, Ireland will be forced to renege on its government’s debt obligations and to exit the euro, from an Irish perspective it is better that it be done quickly without pointlessly prolonging pain and saddling the country with a mountain of official debt. For at least that route might offer Ireland some prospect of recovering from its present economic depression.
The writer is a resident fellow at the American Enterprise Institute



Brussels?


Sunday, September 26, 2010

Cameron's A Tactical Genius

A commenter on Politicalbetting, referring to the Conservative leadership battle in 2005, won by Cameron, wrote 'Cameron would have won easily had Fox come second'', meaning in the Parliamentary round, where the four candidates, Davids Cameron and Davis, Liam Fox and Ken Clarke were narrowed down to two by the votes of MPs.  The play off between the two winners of that round, had it been Fox and Cameron, would then have been subjected to the choice of the Party members.
I don’t agree with the commenter at all. The membership would undoubtedly have gone with the most eurosceptic candidate, Fox, as Cameron was not trusted as a eurosceptic by the membership.  Fox was promising immediate exit from the EPP, which Cameron had to copy.
Fox though in victory as party leader would not so easily have made common cause with Nick Clegg, and the media would have nailed him down as an extreme rightwinger all the way to the election.  Fox would have beaten Cameron, but Labour would still be in power, in coalition with the Lib Dems.
The Bregg Clown era would now have been upon us.
Fox would have beaten Davis in the Parliamentary rounds, and come second with MPs, had Cameron not posted ten of his own supporters to back David Davis, pushing him ahead of Fox. 
On such minor tactical play do great events turn.
The general election of 2010 was the second contest that Cameron won by a whisker, using clever tactics.  If Clegg hadn't surged, Brown's advantage with young women would have been enough to keep Cameron out.  By agreeing to the TV debates, Clegg was given maximum exposure with the idea of neutralising Brown's key advantage with women.  It worked, just as the posting of supporters to back David Davis worked in 2005.
Whatever else Cameron is, he is a tactical player of some ability.  There can be little doubt about that.  And that's without considering how he recently played BP back into favour with the President.

Saturday, September 25, 2010

Does Red Ed Understand Money?

You couldn't make it up.
Gordon Brown's Longterm Economics Adviser Is Now Labour Leader
He must have been against the Euro,  or he was at least cautious of it.  That's to his credit.  But will he understand that the only way a country can afford endless left wing spending and rising government debts, presumably something else he approved of, is if the country's asset account is growing at the same rate or faster than the debts?

Maybe Red Ed thinks that the government did enough to build assets by allowing property prices to inflate to levels that no one could afford.  Now they are falling back to earth, to the level of affordability, we are stuck with our debt levels still rising, while our asset values are tumbling.  Shares too and company values look set for further falls.  Britain's problem going ahead is not only the high debts, but also a poor mix of bankable assets.  This has much to do with Labour's confiscatory taxation policies.

We all know Red Eds like to spend money they don't have.  But do Red Eds have the ability to get it that the government can only borrow big, if the private sector is getting rich in a big way too.  The kneejerk reaction of Red Eds is always to ensure private wealth, apart from that in the hands of large corporations, is confiscated and prevented through taxation.

Corporate wealth, their tolerated form of wealth, in turn owned by government approved pension structures, which they can milk, can prove fleeting as the recent BP Caribbean fiasco demonstrates.  It pays hired hands to up the risk level, while longer term ownership wants longterm success.

The only politician who understand that large private wealth owned by families is of great benefit to the whole of society is George Osborne.  If wealth is held by private people and is not placed entirely in the control of hired hands seeking big bonuses, it seems to be a lot more solid and durable.  This is evidenced by the fact that the countries that grow the fastest, and are most bankable, are those that tolerate high levels of private wealth.


Tony Hayward BP's former boss.  He had little to lose and much to gain by taking risks which a longer term player would have avoided.  Big businesses run by hired hands seeking big bonuses will always engage in higher risks than privately owned companies looking for longterm growth.   With oil companies just as with banks.  Taxation and a socialist anti wealth culture have reduced the size and power of individual owners.  This needs to change.
But will a Red Ed ever be able to concede that whole financial basis of Marxism is clearly doomed to failure?  Red Eds want to stop wealth being created and surge the spending of money all at the same time.  Durrr.  The inevitable result is exactly what we find now after thirteen years (well sixty actually) of Reddism,  near bankruptcy and national insolvency.

Yet Red will be assured of full support from the media.  Andrew Marr will be promoting Miliband at every opportunity and jumping down George Osborne's throat.  Yet it is George Osborne who is right.

The government can only borrow if its IOUs are seen as creditworthy.  Right now the market is still relaxed about Britain's sovereign risk, and rates are falling.  But such confidence could evaporate very quickly if some fringe economies like Ireland's fell into default.

At that moment, the bankers will look at the country's total assets against its debts, and see if there is any hope of the assets covering the debts.  As Britain's potential to accumulate wealth has been heavily suppressed for two generations by capital taxation, with that outcome the deliberate aim of the taxes, incidentally, our asset cupboard is much barer than it should be.  Creditors know that, in the end of the day, a government can seize all private wealth if it has to do so to prevent default and pay its debts.  Britain's has either already been seized, or worse still, it has been prevented from coming into existence in the first place.  Britain should be one of the wealthiest countries on earth.  The fact that we are facing possible default has nothing to do with the lack of skill amongst her people.  It is entirely to do with the belief of the political class that they are the ones who deserve to be wealthy,  (see Blair's slimy taxfree empire), and everyone else has to be held back.

Now for something completely different
David Laws & George Osborne

George Osborne is saying to industrialists and private people.  I want to set you free and cut IHT to the ground or abolish it.  This message has been suppressed by the coalition.  But it  is right.  The only reliable repository of wealth in society is having it spread out amongst millions of wealthy individuals and families, beyond the reach of and protected from Red Eds.  Only one there is wealth, can debt ever be sensibly justified.  Britain with wealth amongst her people, could afford to borrow to fix all infrastructure, and rise out of our sqalour.  But our strength has been sapped by Marxist dogma determined to keep everyone equal.  The only equality available is in the sewer, which is exactly where we are headed.

Red Ed will be trying very hard to keep us in the grubby slime that Labour has reduced us to, and it is his borrowing tendency, combined with his wealth destruction which is the exact cause of it.  There will be no congratulations to Red Ed Miliband on these pages.  Just the venom and anger that what he has done already to this country deserves.  We must ensure he never gets the chance to deliver any more of it.  His political beliefs must be consigned to the dustbin of history.  Only then could Britain become Great once more, with better lives enjoyed by all her citizens.

Cameron will ,counterintuitively, find it easier from hereon.  With an enemy in the field,  he will no longer be playing in a political vacuum.  Having attacks coming in from a resurgent Labour machine will make it easier to expose the weaknesses and stupidity of their arguments.

Friday, September 24, 2010

After Sixty Years Of Socialism Britain Rightly Hates Herself

Monica Mint charges her clients one Rooney  GBP1200.  Is this the only enterprise Britain is capable of?
That's right.  We hate ourselves.  We have become craven, dependent beings, dependent on Big Brother, on the media for our opinions, on governments for handouts, on banks for loans and on subsidies and permissions to do everything and anything else.

There is another way, a way that hasn't been tried or spoken of for two generations.  People could fight to become wealthy in their own right, to stand proud with their own independent viewpoint,  not just to own houses, but to buy shareholdings in good companies at the right time in the market, and build their own businesses , not just to sell them after ten or twenty years for a fat check, but to dig in and own businesses through generations in one family.  To create a strong private sector which stands apart from the corruption and pathetic, mind crippling arrogance of the Client State.

If the same workforce can stay employed by the same family over generations, with no sellout to giant corporations ever planned for,  if people had enough money to fund their own ventures rather than crawling to the sharks on Dragon's Den, who only want to get their money out with a fat return, then, and only then might people start to be able to look each other in the eye and see ourselves and each other as anything more than pathetic socially engineered Blair admiring creeps.

For that is all we are, whingeing about bank charges, government debts, bankers'debts, government cuts and ending of useless state programmes.

All we need is a tax system which permits the determined to build their own strength and independence outside the control of the state.  People will dedicate their lives to fight for indepenence and the right to stand apart from the slovenly mess than our society has become.  Government has taken too much, most of our cash, and our patience as they unfurl lunatic regulatory programmes designed to cripple our entrepreneurial spirit.  What do we have to show for it?  Peace and calm on our streets?  No.  We have thugs and yobs steeling anything that's not nailed down from every house in the land, confident they will never be troubled by the police or the courts.

Do we have brilliantly educated kids?  No we have  a generation that can no more think than it can spell or do arithmetic.  Our hospitals kill as many as they save.  We have the greatest mess and disappointment possible to imagine, yet still, with the media controlled by Marxist activists, like Andrew Marr, and so on, everyday we have to listen to more of the same socialist dogma that wrecked our society in the first place.

People don't believe in success.  They don't believe in wealth.  They prefer state handouts, debts and failure writ large in every institution in the land.  They just want their fair share of the dwindling bundle of notes to feed their incapable selves and children.

More socialism will not repair the damage done by the dogmas that hate eneterprise and independence.  Only an aggressive anger as with The Tea Party in America will seize back peoples'right to be successful, to have their own money and not see it surrendered to the uncaring irresponsible state.  The power of the unions was broken by Thatcher.  Next must the power of the media be broken in similar vein.  People must be told that the alternative to debt sinking the country into oblivion is not merely less debt as is the only talk in the media, but the far more positive aspiration  Wealth.  Success.  Pride.  Confidence.  Enterprise.  Activity.  Determination.  Willpower.  This is what will build a better world, not just 10 per cent added to Capital Gains Tax so people who haven't made any gains can feel less miffed, and government sponges can soak up a little more free gravy.

Cable  a misguided accountant


The State has failed, not capitalism.  It is the State that must be broken.  Cameron and Clegg understand the urgency of this task.  Vince Cable the accountant does not.  He wants to adjust some figures in some accounts somewhere and by fiddling the figures a little, he hopes to achieve a totally different outcome.  He won't.  He needs to think back to first principles.  What is a human society all about?  If the aim is collective failure, then let's have as much as we can get.  Blair and Brown have shown the way.  Let Cable finish the job.  We don't need accountants any more than bankers at this point.

We need belief, a new set of values to hang our efforts and actions upon, something which tears up the postwar consensus and allows a new age of prosperity to surge where the world's bankers would love to lend to us, if only we would allow them to, but we don't need them thank you very much.  Now come on Cable.  Start using your imagination for once.  No more tinkering.  Private wealth built on the pride of industry, where the taxman keeps out of it, where jobs flow, investment and hope.  That is what we must have.  Give us that as that is all we will accept.  We've had a bellyful of this other rubbish.

NOTE that in Europe Italy has the highest level of private savings, and not uncoincidentally, her IHT is zero.  Is that why her government's debts don't worry investors as much as those of Greece, Spain and Portugal?   Private wealth provides stability against corrupt and wasteful government, of which Italy has one of the worst.  Japan too can carry huge government borrowing because she has allowed private people to become wealthy.  IHT there is complex but no more than 20 per cent.

Only and exclusively in Britain, it seems, is wealth thought of a Vince Cable dirty word.  Our IHT is the highest bar none in the world, and it commences at one of the lowest levels.  Our self loathing will continue until financial success is considered something other than something to be ashamed of, like bad breath, or a socially embarrassing condition, which the taxman can help you with by removing it for you.

Sod the taxman.  Wealth can take a lifetime or many lifetimes to accumulate, and the effect of taxing it highly is to prevent people from bothering.  Private wealth works.  Capitalism works.  They make society and the economy stronger.  Government dependency, on the other hand, creates growing incompetence and incontinence.  If we don't turn it round, the backlash after another ten years of socialist social disintegration will be truly frightening.

The Tea Party will be crossing over soon enough.  Vince Cable's warbling is socialism's swansong.  If he keeps going, someone will have to choke this misguided accountant, while the debts created by his fine political beliefs drown his intended beneficiaries and destroy the last vestiges of our civilisation.

The next stop after David Cameron will be something far more brutal.   It's time Britain decided that financial success was not only allowable but something to be encouraged for as many people as possible.  It used to be in our great days  and was not just something for young footballers and other celebrities to lavish on their charmless whores.  We need to get the money back from government where it is being wasted, and allow it to grow once more in private hands.  Yes Mr Cable, we want people who accept the longterm responsibility of wealth, and make as many wealthy people as we can..  That will create the new era of prosperity, and drive us forwards towards a better world.  It ensures that however irresponsibly governments behave, the country will have enough reserves to keep going.  We won't fall for the idea that governments can do it all for us again, or even any of it.  So let's tell them and keep telling them.  Give us our money back and  get out of our way.

6 Million Overseas Brits Could Change The Political Map

The number of voters who live abroad, who polled at the General Election was about 25,000 according to some sources.  As 6 million Britons are now dotted around the globe, most of whom are still entitled to vote, this seems to be a very low figure.   Labour reduced the time spent abroad to fifteen years, as the permitted maximum to still qualify, but that would still be 3 million people.

No effort was made to make voting easy by Embassies in 2010, which could have helped to increase the numbers considerably from 25,000, if they had done.  If there were polling stations set up in major conurbations, and meetings held, it is not inconceivable that perhaps 500,000 lost voters could be regained in the future.  That would easily be enough to change the result of a British election.

If it was imagined that these voters would  be mostly Labour supporters, you can bet that Blair and Brown would have insisted these voters were brought back in before, with sufficient organisation put in place.  You can only conclude that overseas voters would be mostly Conservative, from the fact that Labour let these voters stay out of it, and took steps to limit their numbers.

The new initiative taken today by Nick Clegg to find overseas Lib Dem voters is the first sign that this sleeping yet potentially explosive electoral battlefront is going to be opened up.  Labour election planners will not be pleased.

http://www.libdems.org.uk/latest_news_detail.aspx?title=Nick_Clegg_launches_Lib_Dems_Abroad&pPK=56bb0dce-6abc-4195-853b-356eb0fb400b

EXTRACT -  “In response to requests from our many supporters overseas and reflecting the Party’s internationalist outlook, we have decided to set up a new organisation called Liberal Democrats Abroad to connect with our members and supporters living overseas."




Today Liberal Democrat Leader and Deputy Prime Minister Nick Clegg launched Liberal Democrats Abroad, a network of branches for party members living outside of the UK.



Commenting, Nick Clegg said:



“In response to requests from our many supporters overseas and reflecting the Party’s internationalist outlook, we have decided to set up a new organisation called Liberal Democrats Abroad to connect with our members and supporters living overseas.



“Our aim is to ensure that Lib Dems living overseas can stay in touch with the Party in the UK and make certain that, in return, the Party understands the concerns of its members overseas.



“We will also encourage our members and supporters to register to vote in the UK.



“To this end we will set up a network of Lib Dems Abroad branches in as many countries as we can. We will then give them our continuing support."

What with proper voter ID, equalised consituencies, and good overseas voter organisations being estabished, Labour might be lucky to get elected ever again.    That would need the coalition to survive though.

Cable, Old Chap. Wealth Is Not The Problem. It's The Solution.

The key word is wealth.




To Vince Cable, it is a dirty word. So dirty that he wishes to legislate it out of existence with taxes.



That however sends our society's money to the most irresponsible money-handler of them all, government.



Wealth is the counterpoint to debt. If we have wealthy citizens this is not a bad thing. It is a good thing. It gives the economy bigger lungs. Debt is the belt tightening across our stomachs. Wealth buys time, and in private hands can be put to responsible effects. Those who cannot handle wealth responsibly, lose it. Wealth is the result of long term planning and responsibility-taking, and also the cause. Without wealth we are all debtors. Markets are less stable. Investment is harder.



That's what must be rammed down Cable's throat and into his tiny little brain. Wealth is the solution, not the problem.  It's much fairer if we are all broke.  I would agree.  But why not have a few positive things to look forward to, a way to build the future out of the mess we are in now? 

Britons need to drop their anti-wealth notions, unless they love poverty more, of course.  Everyone gains from the greater stability that more private wealth would offer us.   As in Japan, where private wealth and savings act as a counterbalance to the largest public debt in the G20.  Private wealth makes the country's debt the most bankable and cheapest there is.  If Britain got rid of her outdated socialist notions, we too could enjoy higher status amongst the word's bankers, and our own banks would not be so exposed to an economy, held up on a vibrating cushion of insecure debt.

Cable's message is to reassure people that feelings of jealousy against the wealthy are healthy.  They are not healthy, either for the victim, or for the perpetrator.

Jealousy is entirely negative.  It is based on the assumption that success can never apply to the green-eyed self.   Success comes first from belief, a feeling of contentment, constructed out of hope.  Only those with no hope need to feel jealousy at the success of others.  This is the deficit that matters - making people believe that they can do it, not assuring them that no matter how hard they try, don't worry,  the government will always come along and wreck their good work.  Political leadership in recessions has to do better than that.  Cable should be driving people on to believe in themselves, to build the future, and not waste time carping about the unevenness of the process of economic growth.

He is after all an accountant.  That's how they tend to think, as they walk pedantically into the future facing backwards, looking painfully at the past.

No wonder he always looks so bloody miserable.  Come on, Mr Cable.  Get a life.

See John Redwood's Diary today.  www.johnredwoodsdiary.com

Thursday, September 23, 2010

Eurosceptics Should Get Ready To Assault

Throughout August with the news media broadcasting in unison the message that the euro's troubles were over and to all intents and purposes, fixed, the markets were telling a very different story.  It was exactly at the beginning of August that the cost of insuring Ireland, Greece and Portugal began to climb again.  They are all at higher levels than they were in the spring, when crisis was on everyone's lips.  Such are the ticks of media perception.


Currency markets are at extremes of sentiment favourable to the Euro, and negative to the dollar.  As they say, all players are standing at the same end of the room at the moment.  But when stocks fall, the dollar tends to rise, and precious metals to get clipped back also.  The fears of a european default have been cleverly suppressed through a daily programme of news management.  The markets,however, tell you clearly that the threat has far from gone away.  Reality will return, and the political pressure will land firmly on the doorsteps in Brussels, Berlin and Paris once more.  Eurosceptics should time their political moves to take maximum advantage of the coming economic events.  The pressure will be far greater on the government to make concessions, when money is talking our language.

Open Europe -

Lord Leach: "I can not think of any satisfactory solution which does not lead to a breaking up of the eurozone as it is now"


Following a series of round table events organised by Open Europe in the Netherlands, Dutch daily NRC Handelsblad features an interview with Open Europe's Chairman Lord Leach. Asked about the euro, Lord Leach replied, "I'm not against European cooperation...A complete free trade area would be perfect, that brings about prosperity. But a monetary union is also a political union and there it goes wrong. The European system of supranationality comes at the cost of democracy."



He added, "More and more Europeans are starting to express their dissatisfaction with their lack of influence on European decision making. One of the most important examples is Germany. A considerable part of the population didn't think it a good idea that Germany rescued Greece."



When asked about the future of monetary union, Lord Leach said, "Politicians must understand that this isn't a temporary crisis, but a permanent problem. It is no banking or debt crisis, but a problem of competitiveness. The South of Europe is too far behind on the North and will never be able, within one monetary union, to close the gap...I can not think of any satisfactory solution which does not lead to a breaking up of the eurozone as it is now. That could however be either controlled or uncontrolled. Controlled means that vulnerable countries would be led to the exit...An uncontrolled exit means that financial markets force a break-up."

Wednesday, September 22, 2010

Gold Price In The Real World Is Falling

The funds buy and buy and their paper profits increase on their long gold positions.  As with oil two years ago, fund buying can send a commodity spiralling upwards, until someone starts to cash in their chips and the rise turns to a fall.


Yet in the real world there are cut-off points, prices where consumers start to back away.  Jewellers have to keep their prices below these levels, or starve.  The way they are going now is to trade bullion bars made from scrap, avoiding the need to buy gold in the commodity markets.  The trade in gold in the real world is now working at a substantial discount to the published commodity price.


Jon Nadler on Kitco writes - 


As expected, while the futures and options players were out raving following the Fed, Indian buying withered some more. The growing availability of bullion bars made from scrapped gold tilted the local spot market towards a larger discount and further ate into primary dealers' bullion sales. "I am hearing of a discount of about 5,000 rupees (per kg) in Chennai spot market, which is affecting our sales" said a bullion dealer from a state-run bank’s trading desk overnight. Similar trends are underway in Thailand and Indonesia as the core market is struggling amid the maelstrom brought on by the spec funds and their millions.


This will no doubt all lead to a fall as with the oil price in 2008.  Funds can all get into a bidding game, a huge game of chicken, but on street level, gold like oil has a role in society which somehow will survive.  The current price surge has no rational explanation, other than the herd instinct.  As we know with herds, they can rush the other way just as strongly, once the lead animals turn their heads.  



I found this longer term chart of silver, which shows how the rise fell back at the same time as shares and then rebounded with shares.  

Enjoy Jon Nadler of Kitco on 24th September, who describes brilliantly the slimy goings on behind the scenes in the current gold bull market 

Meanwhile, in DC, hearings over alleged shoddy bullion sales practices continued to spark heated words between businessmen, their lawyers, and politicians. “The TV gold industry is lead by one company, Goldline, which focuses its energy on fear, lies -and rip-offs. Goldline gets people scared about the economy and their future, then they transition to a lie saying buying certain gold coins acts as a hedge against economic downturns and then the consumer is profoundly ripped off almost irrespective of how high the gold market is.” Pretty charged words by US Rep. Anthony Weiner. None quite as dramatic as those spoken by a New York neurologist who testified that he instantly lost some $55K on a purchase of certain coins that he says he was pressured into buying. Some very mad men, over there, on Capitol Hill.
Not much difference between that fear-stoking and certain newsletter urgings about what to buy and where to buy it, as allegations of imminent gold confiscation by Uncle Sam and grim visions of TEOTWAWKI are in ample supply in that niche as well. Not to mention stories of gold price suppression, collusion among the world’s elite to rob us all of our last nickel and the need to dig bunkers a la the Cold War period.
Fear sells very, very well – of that there is little doubt. Then again, so does greed and all you have to do is listen to any single book-talking, long-gold, hedge fund manager who is stoking that particular emotion and is leaving Gordon Gecko way down in the dust when it comes to oratorical skills of the profit-seeking/ profit-promising type.
The same folks who ascribed gold’s 2008/2009 gains to the fear of hyperinflation are presently explaining the latest such price rallies as being due to rising fears over deflation. “What do you want to bet that we will get neither?” – they ask, leaving you in a quivering pile of nerves. CNBC titled one of its reports yesterday: “What’s behind the new gold rush? Anxiety.”
Sure, there is a dose of that present in the equation. However, do not leave out the ‘bigger’ component; the quest to make a buck with a cheap buck. That’s not what the man in the street traditionally bought a modest gold holding for. That is precisely what the men in the (Wall) street are buying it for. Of that, you should be scared (and less so, of their words).
Watch for US econ data. Durables were…almost as expected. Stock futures gained. Gold? Your guess is as good as anyone else’s right about now.


Vince Cable Says Wealth Is A Dirty Word

Raising capital gains tax to 28% is cutting back the rate at which money moves around. If you have a gain, you sit on it to avoid tax, whereas when CGT was 10%, you were more likely to cash it and move on.
Cable is behind the curve. Even Gordon Brown appeared to understand how capital taxes kill off investment. The fairness agenda is misplaced when it comes to taxing success.
Cable talks of quick killings. Maybe he doesn’t realise but that’s what economic growth is all about. Few ‘killings’ are quick. Most require risk-taking, skilful assessment and dedication. Oil the industry he comes from is a good example. If you raise the tax on success, you get less of it. The oil majors abandoned the North Sea when Brown was Chancellor due to his Windfall Profits Tax. Now they are coming back, with BP spending £5 billion there in the next five years. Aberdeen is booming once more.
Marxists love to kill off capitalism, and in the process force the country into greater poverty. But that’s where they get votes from. It’s hardly surprising they have a predisposition to destroying wealth. Marxists love us to be in debt which cripples our efforts to better ourselves. Wealth is their dirty word.

CONSERVATIVE HOME -


No, the biggest problem with Cable isn't his views on banks, but his stance on tax.  He conceded yesterday at a fringe meeting that higher taxes bring in little extra revenue, but are there to ensure that - as he put today - "the broadest backs carry the biggest burden".  He itemised for the Liberal Democrat's victories on tax: no inheritance tax cuts, the capital gains tax rise, income tax reductions for poorer workers only.
Indeed, he went further by banging on about his beloved mansion tax, regretting that it hasn't made it into the Coalition Agreement.  And he emphasised his own personal commitment to higher taxes in the form of a graduate tax of some sort, which he told the conference he was pushing for "as best I can".  

Tuesday, September 21, 2010

Fringe Eurozone Debtors Start To Creak


The ECB bail-out programme is stuck.  Germany would not permit loans to be made to the indebted countries in sufficient quantity to ease the pressure on their governments.  The sums being lent by the ECB are becoming a drip-feed, just enough to keep the patients alive, but not enough to bring about recovery or stability.  The loans are issued against IOU's from the countries such as Ireland, Greece and Portugal, and these are falling in value progressively as long term interest rates rise.  These falling values could ultimately threaten the security of the ECB itself if it were to get too heavily involved.
Greece's long term borrowing costs are now at 12%.  Ireland's half that but rising.  It's like watching a glider crash with the aircraft riding a current of warm air which is not quite enough to maintain altitude, and which has only slowed the rate of  descent.
The Wall Street Journal writes -
Higher financing costs compound the difficulty of bringing gaping budget deficits under control. Ireland's central-bank head, Patrick Honohan, warned Monday that although Dublin has taken "prompt and painful steps" to trim its deficit, the economy and interest rates "have evolved in a less-favorable way."


In other words, he knows Ireland is fighting a losing battle.



"Recent movements in the yield spread on government debt...readily demonstrate the costs that can result unless international lenders remain convinced that the budget is going to be kept on a convergent path," he said in a speech.
Analysts say they expect ECB debt purchases to continue at their current level. Elevating them back up to several billion euros a week would likely spark renewed opposition in Germany, where both the central bank and the public were against buying government bonds, Mr. Annunziata says. In addition, he says, the ECB may want to "keep up the pressure" on governments to stick to their austerity pledges.

The Irish Taoiseach Cowen is showing the signs of strain, recently giving a radio interview in the early hours while still suffering from the effects of a heavy night of drinking.

Yet ending the program altogether would add even more instability to already volatile debt markets. "It would create a lot of uncertainty," Mr. Annunziata says.
No one is talking about where this is all heading.   One day someone somewhere will hit the ground, unless the world economy can grow fast enough.  The NEBR in the US stated yesterday that the recession which started in December 2007 ended after 18 months.  Yet not one indicator has risen back up to above the level of December 2007, or even near it (see charts at bottom of previous post about Americans being driven nuts by a long recession).  Employment especially continues to sag.   Let's be realistic.  The outcome of all this is not likely to be favourable.  But that will not be stated in any news media, with so much effort going into convincing people to keep buying risk assets, and into keeping confidence off the floor.

The political consequences will be severe.  The eurozone is unlikely to survive.  The EU could fracture.  It will be a dangerous moment when it comes.  The Lehmans collapse will be as nothing to the arrival of sovereign default in Europe.

UPDATE - News of troubles within Spain and Italy have been heavily suppressed.  The idea is to direct the eyes of the inquisitive towards the smaller fry, and then say that they won't make much difference to the big picture.  It all hangs on being able to keep the illusions of recovery going.