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Friday, February 05, 2010

Blood in the water

Blood in the water

Back in December I posed the following question:

The only net buyers of UK gilts this year are the Bank of England (through Quantitative Easing) and UK banks, thanks to a Govt. requirement to improve their capital adequacy.  Fund managers and overseas investors are net sellers.  When QE stops, who is going to do the buying?  And at what price?

Well, QE has just stopped – for the time being at least.  So it looks like we’re going to find out.  The initial prognostications are not good, to say the least.

Managers like Threadneedle, Schroders and Sarasin are underweight, short duration, or shorting UK gilts, concerned that as the BoE ceases quantitative easing (QE) and issuance builds, buyers will refuse to play ball.

"The market has moved to a defensive posture," said Quentin Fitzsimmons, executive director, fixed income, Threadneedle. "If investors go on a buyers' strike, prices could fall sharply and yields could rise."

If investors go on a buyers' strike then we are all in a lot of trouble.  Have a look at this (horrifying) chart of sovereign risk – what’s really noticeable is that the UK deficit is up in a toxic group of four – Spain, Greece, Ireland and us.  Why are we the odd one out there?  The others have all had their credit ratings downgraded.  The markets simply will not continue to view this sort of deficit with equanimity: the UK is beginning to look like a really bad risk.  Once that happens, the spiral is quick and painful.

The Keynsian argument that a recession is the worst time to cut spending remains as true as it has ever been.  Unfortunately the counter-argument – that if we do not cut spending our debt will be down-graded making it more expensive to borrow,  meaning that we will have to borrow even more – is coming ever more sharply into focus.  As Churchill said:

You cannot ignore the facts, for they glare upon you.

Thursday, February 04, 2010

It's the end of the world (as we know it (again))

It's the end of the world (as we know it (again))

You sometimes have to worry about the mental fragility of the left.  Not just Gordon of course, although God knows there’s enough to worry about there, but the whole damn mindset itself.  Remember May 2008, when lefties were fighting a desperate last-ditch defence of Ken Livingstone?  The Guardian decided that sanity was no longer required, and conjured up desperate doom-laden images of what the future had in store under a new Borisian overlord.  The best of these was undoubtedly Arabella Weir’s pledge:

I will go on hunger strike and throw myself in front of the next horse at Ascot if he wins.

Luckily, of course, none of it happened (even the hunger strike – poor old Arabella was still complaining about being a bit fat two months later.  You think eight weeks of solid hunger striking would have shifted some of the flab), and Zoe Williams even, and rather decently, recanted the most bilious of her attacks, and suggested that Boris was just mildly out of his depth.  The world, at any rate, had failed to cease to turn in its orbit.

It’s not a delusion limited to Guardian journos either.  John Rentoul, the Martin Bormann of the Blair bunker (and I mean that in the nicest possible way), wrote an even more bizarre ‘looking into the future’ piece about Boris’s victory in London, in which he stated that it was Boris’s policy of urban fox-hunting that allowed David Miliband (with, oddly, Chancellor Ruth Kelly at his side) to pull off a 2012 election win.  Rentoul’s epic predictive powers are amply displayed later in that piece:

"President McCain called to offer his sympathy," said the private secretary in the front.

Quite.

Anyway, in for a penny, in for a pound.  Rounding off the trio of lefty gobshite papers is the New Statesman.  Unusually, this time the epic political and journalistic powers of James Macintyre are not at issue.  Instead, that shonky crystal-ball gets dusted off once again, this time explaining why David Cameron is, like, the worst person in the world EVAH and, like, we’ll all be sorry when we’re dead.  It starts with a, presumably unintentional, trick:

In a few months' time, we will face one of the biggest political choices in living memory. For the past few years, Britain has stumbled from crisis to crisis under the direction of one of the worst governments any of us can remember. Our economy is hamstrung by recession and public debt, many of our best-known retailers have been wiped off the high street, and the vacant eyes of the young men on street corners testify to the devastating impact of high unemployment.

Indeed.  Not, in fact, a bad summary of where we are. 

This is David Cameron's broken Britain in 2015. How did we come to this?  To contemplate the state of the nation today is to gaze upon a picture of near-unrelieved misery.

Oh.  Plus ca change eh?  What terrible things have the Tories done to bring us to such a state?  Well, among other things, the eeeevil Tories have made local councils subcontract their gritting services to private firms (the bastards), they rushed into a punitive and misguided package of spending cuts worth as much as £30bn (lets see how that one goes shall we?), and free admission to most museums and galleries disappeared (my God!  Nooooo!).  But the real clincher was Lord Hannan of Brighton's presence in the cabinet since July 2011.  In my opinion, Daniel Hannan and the left in general should just book a room and get on with it.  It might mean that Dan’s a bit busy for the next few months, but really, this much pent-up attraction is just dangerous.  Incidentally, why Brighton?  Wouldn’t Lord Bassam get upset?

The rest of the prophesy is just a bit… odd.

Britain remains the only EU member not to have signed the Budapest Treaty, last year's crucial document reforming Brussels institutions, and Cameron has already stated that he has no intention of submitting it to a referendum.

Why?  No European Treaty will ever pass a referendum here – so why wouldn’t he put it to referendum?  Internal logic fail…

The Murdoch newspapers and Sky News - whose strident tone is increasingly set by star presenters such as Rod Liddle and Jeremy Clarkson - openly tout the Prime Minister as a courageous and reforming historical figure.

Blimey, Hannan, Liddle and Clarkson all in the same piece.  Are we sure Sunny Hundal didn’t write this?

OK, I’ll stop.  Fish in a barrel and all that.  But lets leave it with one more fabulous combination of ignorance and idiocy:

With the deep cuts in news services, radio and factual television, many of the jewels in the BBC's crown have already disappeared. The World Service might be better renamed the Skeleton Service; the Proms have been severely curtailed; and as for the mainstream channels, who could enjoy such a relentless diet of Horne and Corden?

    1. The World Service is not funded by the BBC;
    2. The BBC have been running the proms since 1927 when, I hazard, funding was rather tighter than it is now;
    3. What?  Horne & Corden, ghastly as they are, are ‘star’ BBC performers.  Don’t blame mythical future Tories for them.

Note to lefties – the world did not begin in 1997, springing fully formed from the forehead of Tony Blair.  Nor will it end in 2010, with the fall of the one-eyed king of the Labour Gods.  Perspective: it’s a good thing.  Get some.

Thursday, January 28, 2010

Liar liar

Liar liar

It’s a funny old thing, lying.  People claim to hate it, and say that they hate it when politicians lie, but in reality they don’t – or at least don’t always.  Gordon Brown lost the next election in 2007, when he marched his troops to the top of the electoral hill, and then tamely marched them back again.  But voters really turned against him with a vengeance when he claimed to a press conference that the sharp narrowing of the polls, particularly a marginal seats poll in the News of the World, had nothing to do with his decision to cancel the election.

Bull-shit.  The polls had everything to do with it – if the polls had still been showing a 10 point Labour lead, then there would have been an election.  It was a lie, pure and simple.  And everyone knew it was a lie.  Everyone hates liars, ergo Labour fell of a cliff and have never recovered.

And yet.  Before that election that never was, when it looked certain that the only question was how much Labour would win by, David Cameron was publically insisting that he believed the Tories would win outright.  He can’t really have believed that – the best the Tories could have done in a 2007 election was deprive Labour of their majority.  Further, the whole aim of the Tory conference of 2007 was to spook Labour into calling off the election – an election that the Tories were desperate not to have to fight.  So, this too was a lie.  But it is not one that people seem particularly to disapprove of.

There are, in other words, understandable and expected lies – ‘of course the Prime Minister and I get on’, ‘Bloggs is an excellent MP and a good friend’, ‘I have no plans to run for the leadership’ – all these are lies that we expect MPs to make.  The lies we don’t like are the ones where we feel the politician is not playing the game.  It’s the difference between ‘no dear, your bottom does not look big in that’, and ‘I did not have sexual relations with that woman.’  And in this instance it was Gordon who was left with the sticky dress.

Wednesday, January 27, 2010

Northern Ireland...

Northern Ireland...

Two quick thoughts on Northern Ireland.  First, why should the Conservatives be expected to be an impartial observer in talks between Unionists and Nationalists?  Support for unionism is a founding principle of the Conservative (and Unionist as was) Party.  Is it a problem that the Irish Government are avowed supporters of a united Ireland?  Odd.

Second, is Gordon Brown the first man to go to Belfast to avoid a punishment beating?

Why are we so fucked?

Why are we so fucked?

Well?  Why are we?  The last developed economy out of recession, and that with an anaemic dead-cat growth rate of 0.1%.  The odds must surely be pretty good that we’ll tip straight back into negative growth in Q1 2010.  The paltry growth rate clearly came as a hell of a shock – to economists, to journalists and most of all to the Government.  Liam Byrne effectively admitted that the Government had front-loaded a substantial amount of public spending – ‘to avoid the VAT increase’ – and had clearly hoped that this, plus the annual Christmas boost, would have been enough to give a reasonably healthy 0.5-1% quarterly growth rate.

It hasn’t worked out that way.  I’m not an economist, which seems frankly not to be much of a handicap given how far off so many of them are on forecasts at the moment, but I do have a thought as to why Britain is so stubbornly resisting a return to growth.  Uncertainty.  The Government has pursued an Augustinian policy of advocating a return to sound money and fiscal discipline – but not yet.  Not until after the election at any rate.  The election that they, and everybody else, knows that they will lose.  For everyone else, then the situation is getting worse by the day, as public debt increases inexorably, but there is no real indication of what will be done to remedy it.

The only options are tax rises and spending cuts.  And everyone knows that these are coming (even Peter Mandelson admitted as much in his pantomime dame performance on Channel 4 last night).  The problem is that no-one knows when they are coming, or how bad they will be.  In the circumstances, it’s not unreasonable for people to keep a tighter hold on the purse strings and try to put money away for the hard times ahead – especially when you consider that unemployment is always a lagging indicator, and job uncertainty is pretty strong.

So, it’s all Labour’s fault then, thank goodness for that. 

It isn’t of course, there would be precisely this sort of uncertainty coming up to an election regardless of how forthcoming the parties were about their spending policies.  But Labour’s current extreme reluctance to admit that things will have to change (a reluctance borne out of the fight between Brown/Balls and Darling/Mandelson over that old cuts/investment dividing line) has made matters worse.

All doom and gloom then, but there is a possible positive side to all this.  Anticipation usually makes things even worse than they really are.  After the election, and provided the Tories get the sort of majority I expect them to, the uncertainties will to a large extent be removed.  And when we know the state we’re in, we are more likely to make the best of things.  Fear really is the thing we are most frightened of.

Tuesday, January 12, 2010

Don't these people ever do their research?

Don't these people ever do their research?

OK, enough ragging on the Guardian.  It’s not really fair to shoot a sitting target after all.  Lets return to my other great pleasure, ragging on Simon Heffer.

With England needing to avoid defeat in the final Test against South Africa to win the series, can they really take a chance on Kevin Pietersen again?

A double failure at Cape Town seemed to confirm the psychological flaws of this tiresomely narcissistic man. Apparently, he is very upset that his former fellow South Africans barrack him wherever he goes in his native country. I don’t recall one of English cricket’s greatest leaders, Douglas Jardine, cracking up when the Australians gave him far worse on the Bodyline tour of 1932-3.

Well, since we apparently can’t rely on Simon Heffer’s memories of a Test match series that took place some thirty years before he was born lets do the unthinkable and – go to the facts!

Kevin Pietersen in South Africa 2009/10 (so far…)
Innings: 5
Runs: 158
Average: 31.60

Douglas Jardine in Australia 1932/33
Innings: 9
Runs: 199
Average: 22.11

Fathead.

Friday, January 08, 2010

The Guardian distilled into 20 words

The Guardian distilled into 20 words

This is getting a bit like fish in a barrel.  From child-rearing tips to film reviews

The story of an overweight, illiterate teenager in 1980s Harlem, pregnant by her abusive father for the second time…A must-see.

Gosh, how can I resist?

Tuesday, January 05, 2010

The Guardian distilled into 52 words

The Guardian distilled into 52 words

A return to an occasional series in which the essential nature of the Guardian newspaper is boiled down to its basics.  Last one was, admittedly, briefer, but focused more on the whingy complaining side of the Guardianista.  This one, however, captures beautifully that essentially well-meaning type of thinking that makes all right-thinking human beings want to kick lumps out of them.

I thought that by restricting the types of programmes he watched on television, offering him mostly gender-neutral toys that had been designed to be educational and not allowing him to play with toy weapons of any sort, I would be able to instil in him my values of pacifism and gender equality.

You can sort of see where this is going, can’t you?  Yup.

What was dismaying to me was that he strongly preferred the "boy" toys over the gender-neutral and educational ones from the word go. Offer him his Baby Whoozit or his green plastic race car and he would go for the race car every single time.

Well, quite.

Happy New Year (eventually...)

Happy New Year (eventually...)

Happy New Year everyone. 

Posting will, I promise, become marginally less sporadic, but the twin perils of a political scene that is, basically, still pretty dull and a baby daughter who is the precise opposite, do form something of a barrier…