Wednesday, 24 December 2008

The Next Financial Crisis & the EU

"So if 2009 goes horribly wrong it’s probably because there’s a run on a major currency or a Government bond market than because of wide scale corporate defaults. At the moment the UK remains the lowest hanging developed market fruit. For those of us living in the UK it remains scary how exposed we are to the full force of this credit crisis.", Jim Reid of Deutsche Bank

It all starts with Gordon's celebrated raid 1997 raid on the pension funds by abolishing the dividend tax credit. This also hit those holding equities in PEPs. As a result pension funds received less income from their equity investments
making equities as an asset class less attractive to pension funds. Now as pension funds were the largest holders of equities the demand for equities was less, their price fell and so hence so did the value of the pension fund itself, a vicious circle, leading to the underfunded pension fund corporate scenario and the Equtable Life bust.

As always Gordon responded with more regulations to curb these naughty fund managers and thus arose the MFR rules in which R Maxwell, deceased, played no small part. So the new investment paradigm of asset liability matching became the fashion and as bond interest is tax deductible for corporates and is paid gross to pension funds, corporate bonds became the asset of choice for pension funds. Boots PLC was one of the first into this bond/equity switch and did very well out of it.

Unfortunately the UK corporate bond market is neither very big or very liquid. At the same time Gordon's coffers were awash with cash from the sale of mobile phone licences so not a lot of gilts were being issued either. Gordon was working hard to rectify that by thinking up all sorts of igenious ways to spend our money of which more later.

Never ones to let a sucker go unsatisfied the US investment banks spotted an opportunity. If they lent money as mortgages to the great US house aspirant, then parcelled up these mortgages as nice little bite sized chunks, stuck a seal of good housekeeping approval, called a credit rating on the package, easy as they paid the credit rating agencies, then offer these tasty morsels with a much more attractive yield than gilts or corporate bonds to pension funds then bingo they just flew off the shelf. For the investment banks who were raking in huge fees it was a licence to print money.

But as always it was too good to last, The need to issue more mortgages lead to a drop in the ability of the mortgagee to repay, some did not. A default ensued and questions started to be asked. Gordon however had now got his gilt issuance firing on all cylinders helped by the credit crunch and the need for cash to nationalise these banks who may be holding these securitized, now rechristened, toxic assets. And who was buying Gordon's new gilts? Why the pension funds of course.

But again as we approach 2009 there is a snag, the UK pension funds cannot now supply Gordon's gargantuan appetite for cash. These will have to sold to non-UK funds. Hence the Treasury's laid back attitude to the fall in Sterling. Sterling is now low enough to assure foreign buyers, after a stabilisation period at this low level, that their risk of Forex loss on buying gilts is minimal and indeed they may gsin on the deal. Hence the 10 year Gilt-Bund spread has come down from 50 bps to around 20 bps in the last 2 months. Johnny Foreigner wil save the pound despite Gordon!

Compare this with what has happened to Greek and Italian bonds. The Greek -Bund spread has gone out from 90 bs to 225 bps in the same period and the Italian from 75 bps to 135 bps. Unlike Gordon neither of these countries as members of the Euro can print the money to repay or service this debt. The are in the hands of the ECB.

The markets know this and going forward into 2009 will not be keen to buy Greek and Italian sovereign debt, Civil unrest will spread throughout Greece and into Italy as these governments struggle to finance their debt and will threaten to default. If this happened it would be the end of the Euro. The EU cannot let this happen and will have to step in. They will do this by either underwriting Greek and Italian bonds or more likely issue EU bonds whose proceeds can be lent on to Greece and Italy. This is the real danger in 2009. Once this happens the EU is effectively a sovereign country and pressure to increase its tax base will increase dramatically. Increasing amounts of the UK tax take will be hypothecated to the EU. We lose a bit more of our independence and the power of Brussels grows yet more.

Monday, 22 December 2008

How the EU affects Brown's fiscal stimulus

The most effective way Gordon could have cut our tax burden would have been to reduce VAT to zero on domestic gas and electricity. This would have cost the same as his 2.5% overall reduction but would have benefited the old and those on low incomes the most. He did not do this because it was against EU rules to cut VAT below 15%. Why is this? Well a chunk of all our VAT payments goes directly to the EU and the boys in Brussels don't want to see their income drop.

Equally worrying is that the benefit of his 2.5% reduction will benefit our EU trading partners more than us. We do not make as many motor cars people now want to buy compared with Italy, France, Germany etc. So the benefit of our tax cut will simply leak away to the EU

Comments in the last week from both Bank of England deputy governors, Bean and Gieve have hit sterling hard. Interest rates may have to go to zero, we did not appreciate the severity of the banking crisis did not play well on the Forex market. The usual platitude about learning lessons also goes down like a lead balloon. Central bank deputy governors should know what the are doing and not still be at banking school.

One universal characteristic of all busts is that they are always preceded by a huge bubble. The seeds of our current banking crisis were sown during the years of easy credit and low interest rates which pushed up house prices to an unsustainable level. Many of us who worked in the Bank of England at the time knew this but those at the top did not want to listen. You don't get reappointed as Governor or on to the MPC by telling HMG the politically inconvenient truths or asking awkward questions. Come to think of it its the same on UKIP NEC!

It is a sad truth that the ECB have handled the banking crisis better than we have. The ECB was modelled on the Bundesbank which was, and is, a genuinely politically independent central bank unlke the BoE. The reason for this lies in the hyper-inflation Germany experienced around 1930 at the end of the Weimar republic and secondly at the end of WWII. Its a case of twice bitten. If you cast your mind back to when the UK was kicked out of the ERM, Lamont asked the German Chancellor to use German reserves to support sterling. He rightly told Lamont this was not in his power but was a decision for the Bundesbank. The BU refused and sterling left the ERM to our great eventual benefit. Sometimes it is better to leave things to the markets as we shall eventually come to realise as our current banking crisis plays out.

How does this affect UKIP. Well, when the penny drops with the British public that the ECB has done quite well and the BoE/HMT behaved like headless chickens there will be a huge build up of pressure for us to join the Euro. The Tories will oppose this and demand a referendum. They may not get one but public opinion will polarise in the UK for and against the EU. We may be faced with another Lisbon Treaty situation but this time UKIP will have to fight and that fight will be in the UK. We will need a strong grass roots organisation in the UK. Current UKIP party policy on 'rooting out' activists is weakening and destroying our capability for this, the real fight. We have to stop this silly policy now before it does irreperable damage to our core cause.

Thursday, 18 December 2008

UKIP - the next 6 months

As I noted last time Animal Farm details UKIP's progress. Click on the link below for an excellent summary of the book. I will not insult your intelligence by identifying the UKIP characters and plots involved in the book.

In the New Year we shall have the new party constitution to approve. The guiding principle will be Nigel is always right. Approval is certain. The voting system will ensure the right result. Mass expulsions from the party of the less equal members will then ensue. Those expelled will be accused of supporting the BNP along the lines currently pedalled by the anonymous cowardly Common Man. David Abbott and I however stand ready to sue anyone who puts their real name to his, or is it her, pack of lies.

Candidates for the next round of NEC elections will be carefully vetted. Disciplinary charges will be brought against candidates likely to ask questions on the NEC so debarring them from standing.

All previous UKIP failures will be blamed on those expelled. I remember NF at the NEC blaming the UKIP disaster in the Henley by-election on the failure of South West activists to work in Henley! David, Del and I burst out laughing at this ridiculous remark saying "..but Nigel, Henley is in the South East region not the South West. The South East is your region where were your activists?". Ms Duffy took great exception to our daring to laugh at the great leader but when he makes such ludicrous remarks it is difficult to keep a straight face.

Activists will be demoralised by these expulsions and NEC manipulation. The media will be concentrating on Ganley and he will get huge coverage. UKIP will be squeezed between Ganley in the South and the BNP in the North. Ganley is the bigger threat. It is going to be very difficult so why make it harder by purging some of our best people and wasting time and goodwill on pointless constitutional changes? Blaming BNP infiltrators is untrue, stupid, and reeks of Animal Farm.

I dread what will happen to UKIP in June. Failure however will still be blamed on those expelled and any success will be because of NF. Believe it if you like.

Tuesday, 16 December 2008

NEC - MEP Luminaries

It seems unfair not to mention our MEP's appearances at the NEC. The permanent member is Derek Clark who was elected along with, or because, of Kilroy in the East Midlands in 2004. Mr Clark is even now rewriting the UKIP constitution to make it easier for the ruling cabal, via unelected Chairman Nuttall, to expel those UKIP members who fall out of favour with the great leader. The infamous hit list will of course come first. This masterpiece of constitutional drafting will be put to the members for approval in the January edition of Independence News. It will be supported by some one sided articles pointing out how this will enable the party to function more 'efficiently' by making it easier for the ruling cabal to get rid of any party members who disagree with NF. Who needs democracy? It is demonstrably inefficient. Political elitism as practised in the EU is a clearly superior system.

The whole business will be eerily similar to Wilson's 1975 referendum on staying in the Common Market. A one sided series of presentations with a few BNP scare stories included for added spice. Voting slips will be included with the News and a rapid response requested. There will be no debate. I can confidently predict the ensuing ballot will not be handled by the Electoral Reform Society or any other independent agency. Mr Clark opposes using the ERS. The ballot will be done in-house. It is the UKIP way.

I first crossed swords with Mr Clark at the NEC this summer. The House of Lords committee considering the Lisbon Treaty had earlier requested submissions from interested parties on the Treaty. Our excellent branch chairman Ken Perry noticed this and requested all the Yeovil branch committee make our case to the Lords. This we all did and about two months later a large red backed book came through our letter boxes giving the minutes of the committee plus a list of all these who had submitted evidence and views. All the Yeovil committee were named in it. Many other MEP's had submitted evidence and were named including a number from outside the UK. Not one UKIP MEP however had submitted anything.

I produced this report at an NEC meeting and asked Mr Clark to explain why neither he nor any of his colleagues had submitted their views to this important committee. Mr Clark stated he had not known about it, that we should have told him and anyway he had been very busy with his EU committee work at the time. I made three points to Mr Clark:

The only organisation that could get us out of the EU is the UK Parliament of which the Lords is part. The EU committees he regarded as so important could not, and would never, take us out of the EU.

He has a large research budget and has a number of full time, paid, research assistants. MEP's from other parties including non-UK parties knew about this committee. Why did he not know?

Finally, he had been elected as a UKIP MEP to get us out of the EU not to sit on their committees and thus lend democratic legitimacy to the EU.

Mr Clark fulminated, huffed and puffed and blamed me as is the UKIP way.

(I should say that Lord Pearson did submit evidence as did Torquil Dick Erikson who lives in Rome but obviously they had not informed Mr Clark either.)

Mr Clark further excelled himself at the infamous Nov 3rd meeting. He became very angry shouting that the East Midlands was 'his seat'. At the same meeting, Mr Bloom also became over-excited and hysterical.

Mr Clark it was who supported the EU core idea of subsidiarity at the infamous Rumania meeting of the IndDem group. People like Mr Clark and Mr Nuttall are extremely useful to NF. The great leader gets his way. Nothing links directly to him. It can be denied if anything backfires. It is therefore distressing to hear rumours that neither Mr Clark or Mr Nuttall may win MEP seats in 2009. This sadly may have to be accepted as a price worth paying.

Mr Clark is a reminder of how UKIP MEP's exposed to EU temptations and flattery can go native and forget why they were elected in the first place. He is not the only one. He seems to exhibit many symptoms of the EU contagion. There is unfortunately no known cure for this condition. The only known way to avoid contracting it is not to take the EU's Euro in the first place. As St Paul, a citizen of Rome said, the love of money is the root of all evil.

Animal Farm, George Orwell's satire on communism, gives an excellent account of pigs going native. It details how UKIP has developed and predicts where UKIP is going. It is well worth a read. The main players in UKIP are readily identifiable. Ask yourself, does the overnight re-writing of the Farm rules on the Barn Wall ring a bell?

Thursday, 11 December 2008

NEC - More Characters

For completeness I give my views on Martin Haslam (non-elected, but invited),Marta Andreasen (ex-officio, non elected) & Michael Zuckerman, elected.

Martin Haslam is one of the most honest and decent men I have ever met. He was nominally deputy treasurer of UKIP but in fact did all the Treasury work. I am not quite sure what Ms Andreasen did. He has donated over £10000 to UKIP and also paid La Andreasen's salary of £36000 for the first three months. I have never met anyone with a bad word to say about Martin except NF. Nigel arranged for a journalist from the Independent newspaper to phone Martin when he was playing tennis with the sole purpose of entrapping Martin into speaking to a journalist without informing NF. NF brazenly stated he was testing Martin's loyalty. It beggars belief that anyone could doubt the integrity, honesty and loyalty of Martin Haslam. He is a man without fault.

Ms Andreasen's character shows through in her interview with the BBC. Click on the URL below, click on "Watch full interview " button, turn up the sound and settle down for 30 minutes informative viewing.

After watching ask yourself if you would wish to work with this woman, have her working for you or have her represent your party and your views.

After Martin's entrapment he was removed from the NEC by NF. Ms Andreasen is now signing the cheques and keeps the UKIP books presumably in Barcelona where she lives.
As La Andreasen is now an MEP candidate she might well be signing cheques payable to herself. This is called a conflict of interest and is not recommended as good practice.

Mr Zuckerman also has ambitions to be an MEP. He is on the London list but Mr Batten and Mr Atkinson are ahead of him. Mr Batten and Mr Atkinson had some bitter arguments during the MEP election. Mr Bannerman has helpfully suggested if these arguments continue then Mr Batten and Mr Atkinson should be demoted in the list leaving Mr Zuckerman as numero uno.

Mr Zuckerman as party secretary and legal advisor was also helpful in confirming that Mr Bannerman being paid by EU money, an organisation UKIP avowedly wishes to leave, was not a bar to Mr Bannerman being a member of UKIP NEC and formulating the charges against me. The ways of the law are indeed strange.

I expect to have more to tell you about Mr Zuckerman in the New Year.

On Tuesday, 9th Dec, I attended a meeting of my local branch committee to which our excellent chairman, Ken Perry, had invited our RO and long time friend of Mr Farage, Malcolm Wood to explain by what authority the NEC could remove an elected member whose only crime was to disagree with some of the great leader's views. Ken and the other committee members were clear that they were minded to dissolve the branch if necessary.

I was humbled and proud of the way Ken and all the committee members refused to be distracted by Mr Wood's dissembling and obfuscation. They repeated their argument that UKIP's ruling cabal had no democratic authority to expel me. That by so doing they were behaving just like the EU and were turning UKIP into a Fascist organisation. Why do we have elections at all if the NEC ignores the result? How can the NEC be prosecutor, judge and jury in its own case?

They have written to Nuttall demanding I be reinstated.The decision to disband will be deferred until they get his answer but they demand his answer by Xmas. They also noted they had not yet received a reply from Nuttall to their previous letter.

Our committee represents all that is best in UKIP and indeed why I joined UKIP in the first place. Mr Wood's waffling and persistent avoiding of questions went down very badly indeed. As Mr Lincoln said, "You cant fool all of the people all of the time"

Friday, 5 December 2008

More tales from the NEC

It seems only fair to talk about members of the NEC who have so escaped my mention. Mr Gill was formerly Tory MP for Ludlow for around 15 years. He appears never to have held government office even as a Parliamentary Under Secretary, Pussy for short, but I am happy to be corrected on this point. This former luminary of the Tory party was charged with overseeing the UKIP MEP selection process and seeing the rules were obeyed. As referee he reported not to the NEC but to the Farage appointed Political committee. He it was who waved (or should I say waived) through Ms Andreasen's MEP application which clearly breeched a number of UKIP rules that were rigoursly applied to lesser mortals. Worse, when the complaints from those lesser beings started to roll in on the MEP selection process, Mr Gill was on holiday, sailing around the Med and I was unable to contact him. I found this passing strange as only 3 weeks previously I had sailed for two weeks on a very small yacht round the Eastern Med and had been able to access my emails every evening at the local Tavernas. I also add I narrowly avoided the Taverna frequented by Russian oligarchs, former EU commissioners and ex Bullingdon club members now on the Tory front bench. I plead poverty for this omission. To use a football metaphor Mr Gill refereed the first half but then failed to appear out of the tunnel for the second half and as we all know its a game of two halves Nigel.

Ms Duffy I recollect demanding to know what my agenda was. I replied, "To get the UK out of the EU in my lifetime." This obviously came as a surprise to Ms Duffy. She returned to the attack however when David, Del and I had the temerity to burst into laughter at one of the great leader's more outrageous statements. My fate was sealed.

Ms Seymour and Mr Bown both wax eloquent about UKIP's problems when the leader is not present but alas their courage deserts them when faced with the great man and their hands go up in support in the best comradely tradition.

Last week I watched Question Time. There was a strong feeling from the audience and the panel, except for Douglas Alexander the minister, that it would have been far more effective to cut VAT on Gas and Electricity to zero. This would also benefit the poor and needy most. The answer from Mr Alexander was it was against EU law to cut VAT below 15%. This was a god sent opportunity for UKIP to seize an issue of real importance to ordinary people but I am afraid our leadership seems more pre-occupied with BNP witch hunting. To parody Oscar Wilde, the unspeakable in pursuit of the uneatable.

Wednesday, 3 December 2008

NEC 1st December

On Monday, 1st Dec, the UKIP NEC met at the Farmer's club without me or David Abbott. We believe we had been illegally voted off at the 3rd Nov meeting. We both left in disgust at Farage's brazen admission that he had set up Martin Haslam with a journalist from the Independent to entrap him. Neither of us saw Farage as a fit and proper person to be judging our behaviour given his admission re Martin Haslam.

The UKIP constitution requires the NEC to be people of good standing in the party. Does Derek Clarke MEP, allegedly under investigation by OLAF fit this description? Does Michael Zuckerman who accused John West and me of having Tourette's syndrome fit this description? We neither of us have this mental condition. It was a grotesque slander on both of us and worse deeply insulting to those unfortunate people who through no fault of their own suffer from this condition.

The charges against me were fabricated by David Bannerman, an EU employee, aided by Douglas Denny whose petulant attitudes to non-admirers of Farage can be read by all on the threads of Democracy Forum. Charges against David Abbott were trumped up at less than 36 hours notice by Rachel Oxley. Both Bannerman, Denny and Oxley were prosecutor, judge and jury in their own cases against us. What hope did we, or indeed does any UKIP member have, of receiving a fair hearing at the hands of these people. British traditions built up over hundreds of years of impartial justice and fair play obviously mean nothing to Bannerman, Denny and Oxley.

Who voted for Nuttall to be chairman? When I asked this question at the Nov 3rd NEC no one put their hand up. What authority does he have then to chair any sort of hearing? None.

Why was the UKIP press notice announcing David had been expelled from the NEC tacked on the end of a UKIP press notice mentioning the BNP? Obviously so readers would link the two which it seems they have done.

Just as Blair justified new draconian security measures in the name of fighting terrorism so will fictitious BNP infiltration be invoked by Farage to justify him, via his nominee Nuttall, acquiring powers to summarily expel any member who disagrees with him or even annoys him just as the police used Blair's new security laws to silence an 80 year old heckler at the Labour conference. Both David and I as elected representatives would have opposed these measures nodded through on 1st Dec but democracy is now suppressed in UKIP with greater ruthlessness than even the EU or new Labour use.

Monday, 1 December 2008

NEC 3rd November

I notice those coward's who hide behind 'the common man' nom de plume have again published libellous lies about me. Mr Mottram was a member of UKIP when he appeared at the 3rd Nov NEC. My attitude to him at that meeting was exactly the same as it had been for every other member who appeared in front of the NEC when I was on it. I tried to give all members a fair hearing and listen politely to their submissions. I do not believe in hysterical shouting down of ordinary UKIP members as practised by other members of the NEC.

I never said 'Lets hear the deal' once let alone twice. That is a lie.

The Common Man's blog of 3rd Nov, the day of the NEC links me to the BNP. This is a smear on my name and a lie. I have never been a member of the BNP or supported the BNP in any way whatsover. If the Common Man or Woman would like to put their name to their lies about me I will sue them for libel and I will expose their lies in open court for all to see what they are.

I challenge them to put their names to their lies.