Saturday 30 January 2010

Suffer Little Children - Edinburgh City Council

This item below is from Alex Massie's blog in "The Spectator" who is rightly very angry about the gross conduct of Edinburgh City Council. As well as serving with the tanks later I was involved for many years in placing children in schools for the disabled and blind and once chaired a committee on the whole issue of special schools provision for these childen. Quite what Edinburgh City Council thinks it is doing I do not know. If the links do not work, blame me and look up Alex Massie.
Warrant Officer Mac McGearey, who serves in the Royal Tank Regiment and is due to ship out to Afghanistan in June, has a blind daughter who contracted meningitis when she was just three days old. This left her blind and suffering from, one gathers, a range of other disabilities.

At first Ciara, who is now 13, was educated at the Royal Blind School in Edinburgh. Then McGearey was posted to Suffolk. Now he and his family have been posted back to Edinburgh, the City Council is refusing to pay for his daughter to return to the Royal Blind School, insisting instead that she be enrolled at a different school that, whatever its merits, does not specialise in educating blind children.

The Council has refused to change its mind even though an independent tribunal has ruled that a place at the RBS is in the best interests of the child. Now the Council is appealing that ruling.

Warrant Officer McGearey, who has already done a tour in Iraq and has served in the army for 23 years, has been granted leave and began a 500-mile sponsored walk around Scotland yesterday. He hopes to raise £20,000 for his daughter's education, money that will at least see her back at the royal Blind School until he ships out to Afghanistan this summer.

Should you be so minded and have a few pounds to spare, I'd urge you to contribute online here. Further details from The Herald here and The Scotsman here.

Haiti - The Future And Energy Supply

Returning to Haiti and its future again. In the web site theoildrum dot com on 30 January, Gail The Actuary posted a 2300 word analysis titled “Haiti’s Energy Problems”. Given the critical nature of energy supply and use to any economy that is “modern” and has a degree of prosperity the information makes it clear that not only is Haiti already poor and deprived, the future looks perilous.

At present the estimate is that total per capita energy consumption is around 1/22 of the world average, perhaps 1/100 of that of the USA, 1/22 as much of China, and 1/17 that of India. The chances of finding local sources are limited and the capital requirements of creating an infrastructure look beyond even an optimistic view of the Haitian economy of the future.

The implications are serious, but Haiti is not alone in that has major issues relating to energy, and the article lists some other states possibly with similar situations. In the meantime as an article further down on 28 January on the Nord Stream pipe line suggests, in Europe we are becoming more dependent on Russia.

And as in Haiti any considerations about the environment will have to be subordinate to short term economic needs.

Wednesday 27 January 2010

Election 2010 - Cutting Out Waste

One issue figuring little in the hurly burly of the election is that of just how major economies can be made in the burden of government. Critical to this are the issues of waste, dispersion of responsibility, confusion, and the fact that many of the “non-government” bodies and agencies granted powers since 1997 are non-elected. They have become largely mechanisms for laundering taxpayer money into wealth opportunities and job havens for the Labour Party and its affiliates. For the ordinary citizen who has been forced to foot the bill is has become very difficult to work out who is in charge, why, and to what purpose.

There have been noises off from a number of quarters, largely on the Right, but now a set of proposals has been tabled to begin the real debate. Paul Carter, the Conservative Leader of Kent County Council has produced a document “Bold Steps For Radical Reform” available on the KCC web site in pdf sets out his ideas for England. What they amount to is taking the existing English Shire Counties and single authority Cities etc. and putting much of the relevant powers in their hands. This will mean the 46 councils absorbing the work and functions of the Regions and a large number of Quango’s.

A great deal of our lives and the services immediate to us are in the hands of these organisations and local government but we take little interest in them or have any awareness of what they do. The coverage of local affairs in the media has become minimal, so few of us know anything unless something immediate matters that directly bears on our day to day work or leisure. For this reason the issue of reform of all this is not a vote winner, if anything it could be a vote loser later if mishandled.

This is one explanation of the proposals to depend on the existing 46 authorities as they stand. That is to minimise disruption and the costs involved. Those of us who have waking nightmares of the Edward Heath upheavals of 1973-74 will know how bad it can be. The botch made in several parts of the country together with ducking the critical problems of the old rating system made it a mess for years. Perhaps as a first stage reform it would make sense to do it this way and then to mop up on some of the detail in particular areas later piece by piece. The current situation is such an expensive shambles that at least it would begin to establish some coherence.

The existing Regional Boundaries at present are a relic of the mid 20th Century wartime needs that became a tool for the Civil Service requirements for consultation and the occasional means of joint efforts in specific areas where some sort of established co-ordination was useful. For a few years I chaired one of these committees as an extra to my work commitments and all who attended did the same. Often sharing things could save us time and trouble in our own job

We did useful work without budgets or legal powers making sure that we knew what our neighbours were doing and making joint submissions to Whitehall with the agreement of our own councils to the central government departments. For these semi-informal committees to be elevated into actual major spending entities, making key strategic decisions and directions, moreover without any direct elections or democratic control over their membership, was stupid and asking for trouble and runaway costs. Also their boundaries mostly have little or no relation to realities on the ground by the end of the 20th Century.

Clearly Cr. Carter and KCC have an interest in reform of this type. Personally, I would prefer to see some additional mergers amongst a few neighbouring small authorities with a more careful structuring of responsibilities and reforming the mess that Council taxes are becoming. But if any new government could do something soon and something effective it might end so much of the confusion, corruption, and chaos of the present.

Monday 25 January 2010

USA & UK - Special Relationship Farewells

It is likely that the “Special Relationship” (SR) is defunct, over, etc. and not even Global Warming, or Cooling, or extra-terrestrials are going to revive it. There is a temptation to review the history since August 1941 Atlantic Charter negotiated in St. Johns Harbour, Newfoundland, with Winston Churchill on board the HMS “Prince of Wales”, a major battleship and pride of The Fleet.

I will have to skip the first fifty or so years, it might and perhaps should have ended earlier, but the Soviet Union and various other problems kept it more or less alive, down the decades. Why now? The problem is a familiar one after a party that went on too long and in which too many people enjoyed free drinks and hospitality which has been the case since the late 1990’s. Who is going to pay the bills?

The UK is bust, the USA is all but bust. They are both in hock to many and various creditors. They are both dependent on imported oil and lot of other imported products. They have both spent the wealth that came to them from an era of cheap oil and cheap commodities. They have both embarked on a debt fuelled property and funny money enterprise that duly went down taking their essential assets with it. The UK has sold off most of its economic enterprises to either foreigners or global money machines, and the USA is doing much the same.

For much of its life the SR had a fairly clear military basis. In the last decade the UK has made a botch of its intervention in Iraq and is an unreliable dependent in the campaign in Afghanistan, both of which have compromised USA intentions. This is due to failures in the UK both of strategy and any perception of the logistics, support and cost implications of these campaigns.

The UK might provide useful business for some US procurement companies, but as an ally they are an unpredictable liability. The UK defence cuts in expenditure will finish it as a player anywhere in the world and even in its home waters. If the UK is no longer a viable military ally then what is it useful for?

The world has faced one of the major financial crises in history. So what does the UK government do? It blames the USA whilst itself being directly responsible for much of damage and the foolishness that caused the crisis. It is becoming clear that part of the financial complexity that is at the heart of the fiscal crisis in the USA and the UK rests with the huge increase in the activity of tax avoidance and evasion through tax havens and that the UK government and the City of London is at the centre of many of these entities.

Along with this is the creation of mega-companies and banks that are engaged in asset stripping and rapacious financial behaviour on a large scale. This has led to major job losses in the USA and in the UK. The attempt to defuse this has led in both countries to large increases in public sector expenditure and necessarily debt that are making greater and directly competing demands on the international credit markets. The question is becoming one of who blinks first loses.

A contingent problem internationally is that many under developed countries have had their own efforts to improve badly damaged or even ruined by the activities of the global financial companies and associated development and aid agencies. The UK government is proudly building shopping malls erected by its politicians’ favourite property companies in urban areas for elites sending the wealth lent to the nation offshore in personal accounts whilst out there in the country districts people are starving and fighting over food and diminishing water supplies. This creates more problems for the USA to solve.

In the meantime both the USA and the UK have electoral considerations. In the late 1950’s Eisenhower, having secured his second term and who disliked flying and media posturing, preferred the occasional round of golf at home. He was content to allow Harold Macmillan to flit about the world doing the Supermac routine to win votes. These days American Presidents like to see and be seen and to fly in on Air Force One with due state and authority.

When Gordon Brown turns up pretending to be important with his staff in economy class on a spare charter plane hired from a soon to be bankrupt holiday company it does not make the same impression. This kind of attempted upstaging of the President too readily turns into farce as at Copenhagen and does any SR no good at all, especially when votes are vital to political survival.

At one time it was suggested that it was the needs and the lobbying of the industrial military complex that exerted critical influence over the governments of both the USA and the UK that helped to keep the SR alive despite occasional spats when major contracts were under competition. By the second decade of the 21st Century this has changed. This complex still exists but since the 1990’s has been supplanted by another breed of lobbyists and key financial input into the political process.

Bluntly, the Labour government and the UK media are owned by the international oligarchs and financial mega-companies. The same is true of most of the US Congress; one of the running jokes is which Senator is owned by which company. For these organisations any government anywhere is simply a subsidiary that has to be managed to guarantee the rate of return on the capital employed by the owners.

In the UK the National Health Service is run mostly by Big Pharma and the financiers behind the Private Financial Initiative schemes. In the USA most of health care is at the mercy of the insurers and the lenders. None of these owners of governments have any interest in SR as moral commitment. If they wish to pit one government against another then that is what will happen.

Legal systems, constitutions, rights, social services, utilities, anything you care to mention are now all distorted and corrupted. The SR is a time expired product; politicians need to win elections and the money to win the media wars goes to those who the hirers think can deliver. In addition demographic changes in the USA and the UK have led to new populations in each antagonistic to the other partner. Londonistan is recognised as one of the world centres for terrorism operations and planning due to the bungling of the UK government.

The 21st Century is going to be one of grim economic struggle and competition for scarce resources between most of the present developed countries some of which may become under developed quite soon.

HMS “Prince of Wales” was sunk off Northern Malaysia on 10 December 1941 by Japanese air forces immediately after the attack on Pearl Harbour. The Special Relationship was sunk by Goldman Sachs.

Saturday 23 January 2010

Haiti - A Wider Aftermath

People in Haiti will be on the move again. The media coverage has been mostly around Port au Prince, understandably given the problems of communication and contact. Even had Haiti a well established efficient government, wealth, and good public services then the collapse in the internal structures would have been severe and the challenges perhaps too great to meet even then. That they did not has made matters worse, but the effects would have been catastrophic.

Although there had been a few minor earthquakes around Puerto Rico there was no indication that a major earthquake was imminent. After it occurred within the next two days there were 35 significant aftershocks, with almost unceasing minor tremors. There has been another major shock and there are fears that more aftershocks may occur.

That the situation is being taken very seriously by the USA is clear. On one news bulletin I saw the divisional flashes, the double AA of the 82nd Airborne Division from Fort Bragg. They had been destined for Afghanistan, now they were in Haiti. It was very sobering that on Tuesday 22nd December I had posted on the subject of this formation. The tasks faced by all the incoming support agencies are immense across the whole of the country, let alone the Herculean problems of the capital.

The purpose of this post is to deal with a specific issue, the implications across the region of the Haiti Disaster. On Friday 1st May last I posted “More Taxing Problems” when I wondered if a situation in somewhere like The Bahamas might lead to US Marines landing on a beach there. This connected to a post on Wednesday 25th March last “A Taxing Problem” which again deals with The Bahamas with a specific mention of the impact of Haitian refugees, many arriving as “boat people”.

Already it appears that in the few flights out of Haiti the first are on the move. As in so many migrations in the past often the first out are those with cash and the ability to do so. They are usually people with education or skills who may have business or other contacts to help them wherever they go.

The population of Haiti is around ten million and over the last decade or two already there have been outflows of people because of political difficulties and upheavals. The potential number of refugees in the immediate future can only be guessed, but past experience suggests a possible outflow well into six figures.

Whatever the role played by the USA and for that matter France in respect of current conditions in Haiti, what is clear are their concerns if there is large scale refugee movement in the next few months. For the USA, Florida, the State most likely to be affected, already has economic and fiscal problems enough and there are important elections pending for the House of Representatives in Congress. There will be concern also for Puerto Rico, although that is less accessible from Haiti.

The USA and the UK share interests in The Bahamas. For the USA they can be a springboard to Miami and Florida and for the UK there are inherited links as well as a good deal of finance tied up in that tax haven, much if it connected to the UK legal and political establishment. The population of The Bahamas is currently around 330,000, about half on New Providence Island where Nassau is located. The figure has gone up sharply in the last decade largely because of Haitian immigration, almost all amongst the lowest paid of the workforce. The Government of The Bahamas is currently experiencing considerable political and fiscal problems.

Also adjacent to Haiti are the Turks and Caicos Islands, another tax haven with a great deal of UK money lodged there. Its government ran into a chaotic mess last year and the UK now is exercising direct rule. Its population was around 36,000 and it is no condition to deal with any major refugee influx. If it happens there are direct implications for the UK.

Much the same applies to the Cayman Islands, which is said to have around one or two trillions of wealth in its trusts and tax efficient companies, but with a government that is broke. The Caymans are rather further from Haiti and less vulnerable, but any number of Haitians landing there to join its 52,000 people will present a serious problem for the UK.

Jamaica would seem to be better placed, with a population of close to three million and a more robust economic situation. However, the incursion of any significant number of Haitians into its poorest communities will have an impact. As we know any problems that occur in Jamaica can be exported to South London.

Cuba should be able to cope with modest numbers, but again has its own difficulties. Haiti’s neighbour the Dominican Republic is in little condition to take on any major responsibilities for large scale refugee movement. Whose task it would be to deal with issues if there was destabilisation in that country is difficult to estimate.

Then there is France and whether any number of Haitians would make it there. They are likely to be the better off but it could still be the place of choice for many. What might happen if many do make it to Paris is a real question.

It is several years now since I stood amongst a few Haitians cheering for their team who were playing against one made up of expatriates, mostly bankers and lawyers. They wondered why but when I explained that the expat’s were mostly Arsenal and Manchester United supporters they understood completely. I left them with a few football chants from The Kop of old, suitably translated.

Our government are saying little about the aftermath of the Haiti earthquakes and implying it is largely a matter for the USA, I assume to avoid annoying the French. But it could be a UK problem and one that will test the government to its limit.

Thursday 21 January 2010

The Great Game - The End Of The Raj

One of the more disregarded items of news in the torrent of tragedy and politics we have had in the last few days is that the UK Foreign Office, headed by Miliband, apparently is seeking to create a regional joint stabilisation council made up of the governments of Afghanistan, Pakistan, and India. Possibly other small states in the region might be invited along as observers or contributors.

It is déjà vu all over again. One of my uncles found himself up on the North West Frontier in the early 1940’s and did not enjoy the experience. He returned with the conviction that the sooner we were out of the sub continent the better and that we should stay out at all costs. Because so much of our history is seen through the murky glass of hindsight and modern ideas we have forgotten, or found it more convenient to forget because of our current ideologies that we may have been here before.

The picture above is of the Viceroy’s Body Guard in the 1890’s, after 1947 it became the President’s and before the 1870’s it had been the Governor General’s. For those who have watched the series “Jewel In The Crown” it appears in the introductions. The engagement with the sub continent changed and developed down the years and the image we have from The Raj of Kipling’s time and later is false in terms of the situation before the Mutiny of 1857 and the creation of the Imperial India of 1876. The imposition of a more Anglo-Centric character on the administration of the territories then under control or compliant began in the late 1830’s.

Before the Governors’ General Macaulay etc. in the time of Charles Theophilus Metcalfe and before there was a more Asiatic approach to governance. Metcalfe encouraged the study of the History and Culture of the East. His Aide, Major Turner Macan was instrumental in rescuing and enabling the survival of the “Shah Nameh” of Firdausi, the great classic of ancient Persian literature, a relative Caswall wrote the first grammar of Hindi, and William McNaghton in the Royal Asiatic Society created a body of study that recognised the wealth and value of the Eastern languages, literature, and culture.

The aims of the Honourable East India Company was not so much direct control and deep involvement, that was clearly beyond the resources of either the Company or of the UK, but across the sub continent the “stabilisation” of the wide mix of contending local rulers to enable trade and the reliable flow of bullion critical to the City of London and UK public finances. They wanted peace, treaties to enable admission, and a willingness for local rulers to accept trade and guidance on Company terms.

The trading and bullion issues in India were intermingled with the China trade and the Company was reaching out to that Empire because it was in the familiar grip of the expand or fail situation so familiar to much of commerce. We now may like to separate all these ventures in distinct modules for study, but for the Company and the traders of the time all things were connected. Eventually, the British lodged themselves in Hong Kong, Canton, and Shanghai in competition with other powers for as big as slice of the action in Chinese riches as they could get. This included trading in substances that were illegal in China, notably opium.

Now, at the end of it all, in the last dying gasp of Empire (aka Commonwealth) having gone from stabilisation to influence and trade, then rule, turning into Empire, we are back where we started and in a lot more financial trouble than we were at the end of the Napoleonic Wars.

We are a relatively small state with ideas above its station in the world, relying on threats and influence, needing to repair our public finances and to exert some sort of control over the international drugs trade. The men I have mentioned were giants of intellect and understanding. We are left with Miliband and Brown, neither of whom speak coherent English let alone any Eastern tongues.

And the HSBC Bank are off to Shanghai in the morning.

Tuesday 19 January 2010

Drink And The Devil - Buckfast And Loose

Sprawled out on my couch necking a bottle of Chateau Latour 1961 somehow or another I started BBC 1 Scotland about the scourge of Buckfast Tonic Wine (15%) north of the Border. There is a note of resentment in this, because it is clear that they are drinking my share as well as their own, not satisfied with drinking nearly as much vodka as the Russians, or as much Stella as the Belgians.

It is possible that the declamations against the drink owe as much to the views of John Knox about the religious orders as the scientific evidence. There was clear proof offered that if you smash a bottle, the remaining top can inflict nasty injuries. I recall much the same was found of filed down bicycle chains long ago.

The “proof” came from the University College of Polmont. OK, at present it is a young offenders penal establishment, but doubtless will be rebadged soon to help the government meet its 50% university admission target. It seems that many of the chaps given to violence had been swigging Buckfast. Again I recall that when rugger chaps went on the razzle and did stupid things long ago they had often been on the Bucks Fizz, and nobody then blamed the champagne and stout companies.

However, there are other things. I believe that Buckie is sweet and does have a high caffeine content. As well as the alcohol there is sugar. Nobody mentioned sugar. Also it is made from a secret recipe. This means flavourings of one sort or another. Nobody mentioned the other stuff that could be in the mix. There are other things. The chaps on view were not I suspect gourmet eaters or eco-freaks. Possibly they were on a very solid diet of junk food. Need I say more? Some of the artificial flavourings, flavour enhancers (including MSG) and colourings do have brain impact. Not quite as much as a Glasgow Kiss perhaps, but they can give it a whack.

Besides alcoholic beverages the boys will have been drinking other wet things as well, fizzy drinks and energy drinks. There is some decidedly funny stuff in these and although sugar free, the sweetening agents can have nasty and unpredictable chemical effects. Moreover these days for the young there is almost a seamless transition from heavily promoted fizzy drinks to well advertised alcopops to the spirits and heavy duty stuff. Buckie is almost a statement of individual protest against the drinks establishment.

A heavy dose of Buckie may not be the only cause, just the final trigger element in a constitution already dosed up for irrational action. It is also cheap, which may explain why so many of those on benefits drink it. You will appreciate that here we have moved on from a simple basic explanation to a more complicated one which points not one finger but several at many of the most powerful commercial entities that supply and feed us, as well as making contributions to the personal welfare of so many politicians.

The monks are easy targets and fall guys. So blame them and look good with the spin but don’t mention the other matters. After all this and half an hour of football I started on the Chateau d’Yquem 1996 and took in Delia, the BBC food goddess. She can do things with pork chops that you would never believe. After her the second half of the Newcastle v West Brom game seemed small beer and a bottle of the Graham Port of 1955 was needed to carry me through.

At least I know how to control my intake. Does Waitrose stock Buckie, I wonder?

Saturday 16 January 2010

Election 2010 - Not A Class Act

The picture above has on the left the Grand Inquisitor of Govan, Rab C. Nesbitt, adopting a regal stance with on the right the late Patrick Lichfield, a leading professional photographer related to the Royal Family. Which of them might be a true Nesbitt by descent?

Firstly, Govan is an interesting place to begin a discussion of social mobility. Sir Alex Ferguson is its most famous son presiding over the fortunes (or as it now appears the lack of them) of Manchester United, the elite English soccer club. Of an ordinary ship building family he went from being a player to a publican to manager of one club and them on to the one that brought him wide fame, fortune (much of it gone on the horses), and a knighthood.

Gordon Brown was born in Govan, a son of the manse, a member of the elite of the Presbyterian faith, who went on to higher or lower things depending on your standpoint. Leo Blair, father of Tony Blair was brought up in Govan after adoption by an ordinary Govan family. His two sons, William and Tony went on to higher things, William an eminent Scottish lawyer expert in international law and financial matters (does he know where the money is?), and Tony of whom the less said the better.

Who amongst them might boast a Nesbitt/Nisbet descent is something that might be determined by research, but this is an intricate business. At a first speculative guess it is possible that given the Donegal background to Hazel Blair, born Corscadden, the mother of Tony, might well have that privilege given the presence of a number of Nesbitt families there from Scotland from the 17th Century onward. There are some interesting people and connections amongst them.

Rab C. Nesbitt, alas, is purely fictional, an imaginative creation of the writers’ mind whose life and works are there purely as social comment. On the other hand, Patrick Lichfield, surname Anson, who was Earl of Lichfield is of Nesbitt descent, and descended from the same person who is ancestor to other Earls, including Home and Antrim, as well as a number of other members of the titled aristocracy, some still rich, more rather poorer. It was the impact of death duties that relieved Patrick, along with many others, of the family estates and sent him out to earn a living as best he could.

Social mobility can be up or down. When there are larger families, as in the 18th and 19th Centuries, then there can substantial downward mobility if many marry. Patrick shares his ancestry with many people found dotted about the various levels of wealth and standing, very many of them closer to the foot of the ladder than they would like to be. Patrick Lichfield’s Nesbitt ancestor, Cairncross Nesbitt, lived in County Longford, but was one of a group of Donegal Nesbitt’s descended from the Ilk of Nisbet of Nisbet of the Scottish Borders, and inevitably from King Robert The Bruce.

So if a Donegal Nesbitt lurks in Tony Blair’s genes, we have a connection to the Arnold Nesbitt whose financial speculations made a major contribution to the devastating 1772 credit crunch that brought down so many British landed families, ruined much of commerce and the trades, and inflicted poverty on a large proportion of the American Colonists, to add to his many other talents in that direction.

Patrick Lichfield on the other hand was a cousin of the Queen Mother by marriage. She claimed to be of good family, but amongst the English heiresses wisely married by her male financially embarrassed immediate forebears, it does not take too long for her to have origins amongst persons of wealth whose business interests are decidedly industrial and who have made good by their own efforts.

So we have taken a handful of well known names and already it is looking very complicated. Out there in the real world it is fast moving, complex and uncertain. One feature of the several genealogy and inheritance programmes on TV recently is how mixed up and unpredictable it can all be. Families once rich losing it within a generation or two. Families once poor managing to rise with the efforts of one or two people, sometimes to be lost again quite quickly, rags to rags in three generations. Or in my case one generation with a bare spasm of time with a positive credit rating.

If there is one thing designed to confuse and contradict realities it is the classification and recording of class in government statistics. So if you hear our politicians going on about class, ignore them, they will be mostly spouting rubbish based on ancient ideologies and statistical systems that were deeply suspect even in the period of their origin. In 1881 the wife of a major diplomat was somehow recorded as being the wife of a General Labourer. When you really get down to the detail in the original documents it is not half as simple as it is made out to be.

What matters now, as ever in the UK, is money, contacts, opportunity and access to credit and to lawyers to mind your back. In the UK today you can hide it where you want, avoid or evade tax almost at will, silence anyone who asks questions with an injunction granted by phone by a friendly judge who has been in chambers with or knows someone you know or hire and there is almost no risk of being charged with fraud unless you are too flagrant to be missed or you cross someone who has more power and influence.

The nature and extent of migration is a factor as well. In the past the element that is rarely taken into consideration by historians with fixed dogmas is the religious issue as a barrier. I can recall religion being a major issue in many instances. There are other complications as well. The Temperance Movement, which became substantial in the late 19th Century had its own structure and complications almost parallel in local communities to the traditional one. Quite what vertical divisions there are at present as well as the theoretical horizontal ones I will leave for others to work out.

If class in its old sense is to be an election issue then we will be arguing about the wrong matter at the wrong time and to the wrong purpose. But with Brown in charge what else do you expect? Perhaps he should have got out more back in Govan and Kirkcaldy.

Monday 11 January 2010

Iceland - Tell The Bankers To Jump In The Crater

Iceland should withstand the grubby, corrupt, and bullying antics of the UK and Dutch governments in attempting to foist off some of their losses and the blame for it on a people who were betrayed by their government. Inevitably they have been threatened with what amounts to sanctions and punishment if they fail to agree.

Just who have the three banks concerned based in Iceland who conned the local politicians into allowing them tax privileges been involved with and who are the big money people at the end of the line who have been caused serious difficulties? They include English Premiership football clubs, many of whom are going through the throes of financial reorganisation and retrenchment. Why should a captive Icelandic population approximately the same as the City of Hull stand the racket for one of the most overblown, overpaid, privileged, and indebted groups on the planet?

Much is made of the losses of UK local councils and a lot less said that they were throwing money at Icelandic high risk accounts despite ample warnings that the banks in question were not as good as they claimed to be. Even less is said that it was John Prescott who was in charge when the local councils were urged to be fancy free with their investment deposits.

Who else is there? The many very wealthy financiers are include those who have been highly leveraged in real estate and property, people who for years had the financial press grovelling and fawning on them. One has taken substantial losses in his field. Now it seems that another specialises in is ripping off the very aged in sheltered housing and have provoked the foundation of an organisation led by eighty year olds striving for justice. What a comment on the nature of the UK government, robbing the aged and vulnerable poor to pay off the rich.

True there will be a number of depositors who were unwise enough to accept advice urging them to put major deposits, or even their life savings and pensions into these accounts, but I suspect that these could covered to some extent by the UK and Dutch governments, and may be a relatively minor cost.

Why is so little said about the dealings of any of these people? Why is the UK media so shy of telling who has what, where it is, and how they came by it? In the 18th Century, a period of elite power, corruption, exploitation, and distaste for democratic ideals almost as bad as in the last thirteen years, at least people knew who had the money, where it came from, and the size of it.

We do not know much about any of these or their liabilities that generations of Icelanders and UK taxpayers are expected to rescue. If any enquire too closely to comment they are faced with the super-injunctions which silence them completely. We do not even know who is protected by them. How come the Prescott family dealings seem to evade any notice? Just what have Tony and Cherie been up to? Where is Gordon’s piggy bank? Alastair’s post Northern Rock? Jack’s? Harriet of the dropped charges? Balls and Coopers?

Many senior politicians in the Labour Party seem to be very well provided for, so where is it all? Just who is connected to the Iceland monies and how? We do know that RBS and HBOS and others are and we do know that the vulnerable condition of the UK commercial real estate has a lot to do with government activities.

My view is that the Icelanders should react positively and learn from their ancestors. They should send emissaries to other places in the northern waters proposing a Confederation of the North based on a shared heritage and a common economic interest. The Faeroes, The Shetlands, The Orkneys, Greenland, perhaps the Outer Hebrides, perhaps even the Scottish Highland region could be a new truly democratic multilingual state on the Swiss pattern free from either the financial agglomerations of London and New York or the EU and all its evils, never mind the protected elite withdrawing rooms of Edinburgh.

With care and determination the Confederation might be central to agreements with Canada, Norway, Russian and Sweden over the control of the Arctic and all its assets. The eruption all this would cause would have a greater impact than even the Laki Fissure event of 1783-4.

Saturday 9 January 2010

The Pound - Happy Holidays

Still under the cosh so posting this one from Money and Markets in line with my guess that the pound must be about to take a hit.


Pressure Mounting on the British Pound

By Bryan Rich - 01-09-10 – Money and Markets – Graph source Bloomberg

The UK economy is in a tough spot … it’s the only major economy that has yet to emerge from recession. It’s running the largest budget deficit of any industrialized country. And its central bank has thrown everything, including the kitchen sink at the problems trying to stimulate economic activity.

While the U.S. and the Eurozone are talking exit plans for extraordinary stimulus, the UK has re-upped its asset purchase program, twice. And major UK banks have been nationalized by the government, recently requiring even more cash injections. The British political leadership is under fire for leading the country into its longest, deepest recession and biggest budget deficit since the second World War. Consequently, infighting has polarized legislators and policymakers.

Recipe for Pain …

As you might expect, none of the above is a good recipe for currency stability.
However, since June of last year, the pound has managed to maintain a fairly stable range against the dollar. Yet it has had a steady fall against most other currencies.
Through the past six months the pound lost:
17 percent against the New Zealand dollar,
16 percent against the Australian dollar,
12 percent against the Brazilian real,
8 percent against the Canadian dollar,
6 percent against the Japanese yen, and
3 percent against the euro.

On top of that the pound lost 27 percent against gold. That’s a bigger slide than the dollar experienced against gold over the same period … even as the buck was battling a landslide of attacks!

Moreover, I looked up the performance of 63 world currencies since June of last year. Of that group, the pound only outperformed the currencies of Nigeria, Iceland, Argentina, Jamaica, Iran, Vietnam and Pakistan — and just marginally. A common thread in those seven countries: Instability.

Such performance argues for a sharp slide in the pound versus the dollar if the dollar continues with its bounce back of the past month.

More Pain Ahead …

This week, the news got worse for the UK government: It was reported that PIMCO, the largest bond fund manager in the world, announced that it would be a net seller of UK government bonds this year citing the burgeoning debt load in the UK and feeble economic prospects. They went further to say that they have assigned a high probability on the prospects that the UK will lose its AAA credit rating on sovereign debt.

Scott Mather, PIMCO’s head of global portfolio said “The (UK) government’s debt reduction is lacking in convicition and it is lacking in details.”

Given the problems in the UK and with sovereign debt problems on the rise globally, the cost of insuring UK debt has nearly doubled since October. For a while, the aggressive policy responses by the Bank of England and the UK government were being praised in the market. That’s in part why the pound rallied off of the lows of its 2008 plunge.

But over time, it’s become clear that even with the aggressive easy money policies, the UK economy is still not showing the encouraging signs seen in the U.S. and Eurozone economies. And the internal and external pressures to curtail the budget deficit threaten to stifle recovery efforts.

With the evidence weighing heavily against it, the pound looks vulnerable for another tumble. According to Bloomberg, BNP Paribas is looking for the pound to fall 12 percent against the dollar this year. That would mean a move from current levels down to 1.40 vs. the dollar.

If you look at the chart above, you can see the pound’s dramatic fall from its multi-decade highs as the global financial system began to unravel. In fact, it ultimately plunged 36 percent against the dollar. Subsequently, you can see the retracement that has taken place over the past year. But while many currencies have had aggressive recoveries following a sharp crisis-induced collapse, the pound’s retracement has been relatively shallow.

With few technical barriers keeping the pound afloat, a break of the October lows of 1.5708 would likely mean an accelerated slide for the British currency.


Thursday 7 January 2010

Iceland - The Latest Saga

With a nasty cold or summat and the brain in reverse gear I wanted to post something about Iceland, having already posted on the subject long ago, but could not get it together. But on The Automatic Earth dot blogspot dot com I saw this item by Ilargi, a very perceptive commentator, and thought it was as good as any you will find.


The case of Iceland and its financial shenanigans is, if nothing else, intriguing and amusing. Not for some of the people involved, I know, and I mean no disrespect. But it is in the way the situation is dealt with and in how various parties try to come out on top.

A short background: Iceland had 3 main banks who all, albeit to various degrees, made unrealistic profits for investors and depositors in early 21st century times, and then went bust. One bank, Icesave, which had many clients in England and Holland, owes these clients some $6 billion, a sum the Iceland government is held responsible for and initially seems to have agreed to pay. The people of Iceland, all 320,000 of them as it were, have started questioning why they should pay for foreign investors' losses with banks with whom they have no connection other than that they happen to be located in their country.

Britain's decision to put Iceland on some terror alert list because of the banking affair is likely a big factor in this, as well as in the decision by the president to let the people decide in a referendum on February 20 whether they want to pay back the losses of foreign investors who had accounts with Icesave only so they could get a few basis points more interest on their funds. It doesn't look like they will.

Which may put Iceland on some black list, with the IMF threatening to withdraw emergency funds and Scandinavian loans in peril. The Dutch threat to block Iceland's entry into the EU is seen in Reykjavik as similar to Britain's terror list boondoggle. The prevailing sentiment these days among the geysers can best be summarized like this: "We may be small, but we ain't your bitch". And that is a sentiment that may provoke a lot of sympathy, provided the Icelanders play their cards right.

In the next 6 weeks they will come under huge international pressure to pay up or else, for there's nothing the international community fears more than members who don’t play by the rules, no matter how inane and insane they are. Plus, of course, Iceland is not some small African nation full of poor black people, it’s a small European nation full of the kind of people that wealthy US and EU citizens can identify with: white and relatively affluent. They could be your neighbors. They could be your family. They could be you.

So how reasonable is it for Britain and the Netherlands to demand restitution of losses suffered? Interesting question. The answer is not that easy, since it begs the next question. Who is to blame for the losses? There's the bankers, who went megalomaniacal, and got much bigger than banks based in what is population-wise not more than a mid-size town ought to be. But Iceland is a member of the EEA, the European Economic Area, which gives its banks the right to expand to the rest of the EU.

So alright, let's see. First to blame: the bankers. Second: The Icelandic government, who should have regulated its banks much closer. Third, the governments of Holland and England, who should have done due diligence and demanded far more strict guarantees from the banks. Fourth, the Dutch and British investors, individuals, local governments and companies, who all should have read the fine print. Fifth, the people of Iceland, who were living it up with the cash floating in freely.

But we all know how blame moves. The investors point to their own governments, who didn't warn them. These governments point to the government of Iceland, which didn’t warn them. That government points to the bankers, who went nuts, but who they still have to cover for. And last, the people of Iceland point to all of the above and say they should all have been wiser, and the fact that they were not doesn’t mean Icelanders now have to fork over, no matter how certain parties like to interpret laws and regulations. Some things just don't feel right.

And what do we feel about this, who are not directly affected by any of it? Well, try this one on for size. If you allow me to numb and dumb down the numbers a bit, the US at 308 million citizens is about 1000 times bigger than Iceland (320,000). Which means that the US equivalent of what the British and Dutch are demanding from Icelanders would be, loosely, $6 trillion. Now what would you say the odds are that the American people would agree to pay that kind of money, if it were payment for what their banks have (mis-)done in the past, to a group of foreign investors? Let's say Chinese and Japanese?

I may be wrong, of course, but I have the feeling that I know what Americans would think of that. They'd be marching in the streets, on their way to embassies and consulates, if not private businesses. They'd say: we have a hard enough time ourselves as it is, and we ain't paying no foreigners who weren't making sure they knew what they were doing.

The same reaction would come in London and Amsterdam as well, naturally. Funny thing is that the governments there were very quick to guarantee their citizens' losses, and only after that claimed them back from Reykjavik. There doesn't seem to be any legal obligation for them to do so, it looks more like an election-related issue. There are all sorts of depositor protection schemes in place, that's true enough, but everyone could have known that the established $30,000 guarantee from Iceland for every depositor account wasn't worth much, given that it’s backed only by the full faith and credit of 320,000 people. Britain is what, 200 times bigger than that?

But in the end, as I'm pondering all this, what is probably the most interesting part of it is that the American people ARE in fact in the same boat as the Icelanders. The main difference between them may well be that the latter stand up for themselves, where the former don’t understand what's going on. The US government has indeed already pledged $14 trillion in public funds (with a total risk of up to $24 trillion) for US bank losses. It's just that American banks are covered by the ability of the US to borrow enough money in international markets to cover their losses, something for which Iceland is simply too small. And also, the US gets to bleep around with accounting rules, so bank losses can remain hidden for a long time (though not forever).

So while it may look like the situations are entirely different, they’re not really. On the ground level, it's the citizens who are being forced to pay for institutional gambling debts, the old adage of keep profits private and make losses public. China doesn't go to Obama to demand payment guarantees tomorrow morning, but it's all just a matter of size. That size determines that the Icelandic situation is far more transparent, since smaller make simpler. But down the line, the Iceland banks weren't the greatest gamblers, it was Wall Street and the City of London. And the $20,000 that Icelanders "owe" per capita (in the eyes of others) isn't really the issue, it won’t kill them. They just take a stand against what they see as bullies.

The amount Americans "owe", though, is already more than twice as much per capita at $14 trillion. And there's no end in sight, since none of that money has been used to actively solve problems, it's all merely hiding them for a while longer.

In other words, here's waiting for the moment Americans become more like Icelanders, and stand up against bullies (I'm sure Oprah has advice to provide on the topic). But also, here's not holding any breath, and here's expecting that by the time any sizeable group stands up, the amounts owed will be a multiple of $20,000 and enough to generate debt and poverty for years, if not decades, to come.

And you know what the funniest thing about it all is? In America it wouldn't even take 320,000 people standing up, for real, to change policies and history in a heartbeat.

But they're not there. They’re in Iceland.

Size matters. But so does courage.


Wednesday 6 January 2010

Election - Railways - Where Do You Think You Are Going?

When did you last talk to the engine driver? Probably the last time I did was at York sometime in the 1960’s when there was confusion after signals problems. When in doubt, in those days, you asked the driver where he thought he was going. I had learned to twenty odd years before when the Luftwaffe were more often responsible for delays and diversions. In between I had worked at odd times on the railway and had enjoyed exchanging obscenities with drivers about their positioning of parcels, fish, and pigeon vans.

Trains are different now, but they are still big toys for boys to get excited about, notably politicians in need of a major project to entice the unwary voter. I was going to go on about the sheer stupidity about their wild promises to build new French and Japanese style high speed lines alongside the several existing lines in the UK. However, Simon Jenkins, a perceptive columnist and critic of extreme posturing in politics, has an article in the Comment in the “Guardian” of today, Wednesday 6th January, which covers much of the ground.

So the election campaign has come to this, my recommending an item in the “Guardian”. There are aspects that Simon Jenkins does not deal with and that is how far existing lines can be improved, or what series of improvements, links, etc. here and there could lead to faster times and more frequent trains. This kind of approach, alas, requires an attention to detail, a knowledge of just what is where, and an awareness of the possibilities.

It is work that is beyond our present Civil Service or political system. It may well be well beyond the accountancy and management driven railway companies, including Network Rail. Try this one, just as a single example and this is after long and detailed study taking nearly five minutes with my 1923 Edition of “Bradshaw”.

The old Midland Main Line was four track from St. Pancras down to Kettering where it split with a two track section down to Leicester, and two tracks down to Nottingham via Melton Mowbray. It is already electrified to Bedford. North of Leicester there were four tracks again up to Toton, by Long Eaton, with a two track link to Melton Mowbray and Peterborough at Syston then south of Nottingham splitting again with two tracks up to Derby and Manchester. The other two tracks go to Nottingham with lines down to Sheffield. A line ran from Derby to Sheffield, leaving the Manchester link at Ambergate.

Quite what extra tracks might be needed on any of these two track sections, or what other approaches might be adopted offers a number of options. Just south of Leicester there is a two track line junction to Nuneaton and Birmingham crossing the West Coast Main Line close to the existing Nuneaton station.

The Manchester line is closed now north of Darley Dale. It might be possible to reinstate it, however one way or another there are still links to Manchester. From the vicinity of Sheffield and from Manchester there are lines to Leeds and also to Huddersfield. Beyond Leeds there is the Settle and Carlisle line. Beyond Carlisle there are two lines to Glasgow and for Edinburgh what better way of celebrating Scottish political separation from London would be the reopening of the Waverley Line?

The many and various improvements would be a cost, electrification is not cheap, but it would all be hugely less than what is being proposed. It would not be much slower, and more to the point, would allow much cheaper fares. It would be an intricate, detailed, unglamorous long term project. As for Crossrail that Simon Jenkins includes in his article, again there are alternatives. It will be too late for the 2012 Olympics so that cannot be an excuse, so it is essentially yet another bankers ramp. My view is that the resources would be better used establishing reliable rail links directly between a number of airports again along improved existing lines with added links.

But politicians and the London media are not interested at all in that kind of work, as I have said, the big boys want their toys, and at our expense.

Monday 4 January 2010

What's For Dinner?

If you think the queues at the supermarket checkout are a pain then you have never queued for food for real. This kind of thing only happens in other places where there is either famine, some sort of breakdown or where food is scarce and expensive. But it has begun to happen in the USA where many people dependent on food stamps are having to learn how to.

On December 25, a good day for it, when very many were feasting and putting away enough calories for a week or two, The Market Oracle blog featured an item by Eric de Carbonnel engagingly titled “Global Food Crisis 2010 Means Financial Armageddon”. In brief he rubbished the US Department of Agriculture spin on 2010 production pointing out that on its own detailed evidence the USA could need imports of food with implications for world markets.

Given what is and is likely to be happening in the wider world, a large subject, he suggests that the margins of supply and demand will shift enough to trigger major price rises that in turn will have substantial economic effects notably on financial systems. The EU has been doing its bit towards causing chaos in European agriculture moving resources from where it is needed to where it is not needed.

As for the UK Defra, the Department for Ruination of Agriculture, it has managed to secure reductions in output in key areas whilst its friends in the retailing and food manufacturing industries have driven down farm incomes and production. They have made up the supplies by importing from cheap labour countries with less demanding regulation food quality. These countries may not be exporting quite as much in the near future.

In the mid 20th Century food expenditure in the developed world was a much higher proportion of household outgoings than at present. Although food prices have gone up in the last forty years they have done so at a much lower rate than either the general rates of inflation or other expenditures. The result has been more money in the pockets of most of the peoples in the richer nations to spend on consumer goods, tourism, and other things.

In just about all the predictions I have seen for 2010 food prices do not figure, and whilst they are bullish about commodities in general, they have not taken on board those in very limited supply, for examples the rare earths critical to many high tech’ products. Because everything has seemed so easy for so long, few people are able to comprehend what it might mean if food costs suddenly revert to the proportion of spending of decades ago, or other centuries.

Quite simply for the average family or group you lose around 20% of your disposable income. This would be bad enough if you had been saving a significant amount for future spending as you might in the 1950’s. If you are already running even modest levels of debt it will mean a major contraction in your lifestyle. Amongst the things that have to change will be what goes in the supermarket trolley and how you will have to use and cost it.

The picture above is a 1950’s Domestic Science class. With the introduction of secondary education for all, it was assumed that to be able to manage in the world of that time youngsters would need to be trained in basic cooking technique and the careful management and costing of food use and budgeting. With the big retailers and big manufacturers dominating the food supply from the 1970’s onward this was all dumped and the colleges that trained the teachers closed, as being old stuff no longer needed and ran counter to modern eating and retailing.

For all the noisy flashy culinary and cooking programmes on the TV there is a generation who mostly know little or nothing of how to deal with basic foods, and have been habituated to waste and easy choice. The younger generation may have to start to learn things their parents never knew and their grandparents may well have forgotten. I would like to make jokes about chickens coming home to roost but it would not be in good taste, indeed worse than your typical imported chicken.

My real fear is that after sixty years I might just be back in a two hour queue at the fish and chip shop on the basis of an uncorroborated rumour that they have had a delivery of fish and fat.

Friday 1 January 2010

2010 - A Reminder From The Past

A document unearthed recently by archaeologists from a building site near Kings Cross, evidently a place of ritual, has been translated. It is a public declaration by an official called “Custodian” relating to the year beginning and is dated to early 410 AD in modern form.

“ After due examination of the entrails of several beasts and offerings to the great and good amongst our gods and officials we can confidently state that there is to be a new beginning to our future, quite unlike the beginnings of the past, which will lead to a recovery in our affairs to reinstate what we have lost forever and no longer need.

The reductions in our defence budget and planned future deployment of more of our legionaries to the furthest corners of the Empire to secure our borders against the Persians, Goths, Vandals, Dacians and others will enable us to concentrate our efforts on our own internal security. This will be achieved by the empowerment of local officials in liaison with groups of the auxiliary forces in consultation with local interests. We are sure that the high level of mutual interests will lead to the political stabilisation of the Atlantic Isles for another four hundred years at least.

This will be enabled by the wise foresight of the control of the mints. The progressive reduction of the silver content of the coinage will continue to help increase the amount of money to further trade and critically the great work being undertaken by the money changers and lenders. It is to them and their central role in the getting and spending of money and trade that we look to provide a continuing rise in our prosperity. The reduction in the amount of gold we hold to assist the Empire in paying dues to the peacemakers on our eastern borders has been of great benefit and the continuing reduction will free us from concerns from this quarter.

Our policy of increasing the amount of protective fortification of the dwellings of our patrician class and local tribal leaders together with the concentration of trading in designated walled centres has helped our internal security and protected our vital interests. The continuing troubles amongst the plebeians and the other classes dependent on free grain doles will be addressed by firmer laws and wider powers being granted to lower officials and others to allow them to act without reference to the usual procedures. We have no doubt that the best way of dealing with the problem is to extract promises from the disaffected elements and to then release them to adjust to their communities in accordance with their lifestyle.

Community spirit will be maintained and improved by the provision of extra games and pursuits. Necessarily some of these will be violent amusements and others giving insights into the baser instincts and conduct of ordinary people. This is part of our lifestyle and we must learn to tolerate and welcome this as a staple of social intercourse.

In administration the greater influence and authority of Aquisgranum the city serving the interests of the Belgae, the Germanians and the Gauls is to be welcomed giving the Atlantic Isles a more central pivot to refer to for policy and trade. Similarly the transplantation of local tribal peoples, the Scotti, from the territories of south eastern Britannia around Camulodunum and Venta Icenorum to the furthest north can only be of benefit to all concerned. We are sure they will be welcomed by the Picts and the remnants of earlier peoples who went north in past times.

The Empires greatest achievement is in creating a diversity of peoples and beliefs. The steady flow of the skilled and able workforces from the lands around the Rhine and its northern and eastern neighbours we are sure will be augmented by more of these law abiding and peaceful tribes bringing with them their inclusive and benign gods. Moreover increased trade and contact with the horsed tribes far to the east has opened other wonderful opportunities. The Empire has little to fear from them.

There are other groups with other gods, including some who believe only in a single god. While the great majority of these are meek, submissive and helpful in their beliefs there are small number of extremists who give concern and who are both reluctant and unwilling to respect other gods and practices. Some have taken down bridges to make their places of worship and only allow marriage and child bearing within the terms of their own laws. More worrying is the lack of diversity in their relationships with others and secretive internal dealings. Nevertheless they are important to the Empire as a valuable source of slaves for the galleys and mines.

There are other issues for the Empire to deal with in the coming decade. The deforestation of much of the Isles is leading to difficulties in sourcing fuel and building materials. Also the more fertile soils of the lowlands are no longer giving the yields that they once did which means that the Province is failing to meet its revenue and export targets. The lack of maintenance of water facilities has led to breakdowns in some urban communities that are difficult to rectify. The calls on the legions have removed not only soldiers but the water engineers who have kept the systems running in the past.

Nevertheless the future is bright and the Empire has guaranteed that more coins will soon be had that although different will mean that the chariots and pack mules will soon be as busy as before.

Morituri te salutant!”

How different it all seems from our modern world.