Friday, 30 April 2010

Greek riots start outside their Finance Ministry

They say one picture is worth a thousand words so look at this one taken yesterday in Athens outside the Greek Finance ministry of Greek riot police dealing with protesters.

As the weather hots up and as the full severity of the public sector cuts come through there will be more, bigger and more violent protests in Greece. Most significantly this story made the BBC Radio 4 8:00 am news.

Meanwhile the EU continues to procrastinate issuing vague bulletin like statements. The aid deal is almost complete, we expect it soon etc which goes down like a lead balloon in the markets.

Greece agrees 24 billion austerity package which will see a pay freeze and VAT rises is one of the paper headlines this morning. It puts Gordon and Dave's  6 bn VAT spat into context and Portugal says deficit cut may exceed 2010 goal. Its all part of an EU orchestrated attempt to convince the markets they are doing something. The markets have stabilised but I think this is just a breather, time will tell.

There are clear threats from the Greek unions of a mighty battle to come. Union officials said the International Monetary Fund asked Athens to raise sales taxes, scrap bonuses amounting to two extra months pay in the public sector, and accept a 3-year pay freeze.

"They want Greece to cut the deficit by 10 percentage points in 2010 and 2011 ... so that Greece can go back and borrow on markets in the third year of the programme," said a union official who requested anonymity.

Andreas Loverdos, social affairs minister, said pensions would be reformed. "There isn't much room for manoeuvre -- this is about saving the country from collapse," he told the FT.

This is what Gordon, Dave and Nick were not saying last night but its what is going to happen in the UK.

On UKIP matters I thought Farage's comments on BBC TV before the great debate to Huw Edwards on leaving the EU were very good as were his comments after the debate on the unanimous evasion of the immigration issue by all three LibLabCons. Its a pity he chooses to surround himself with such low grade colleagues.

Thursday, 29 April 2010

Merkel demands faster Greek rescue but keeps her purse shut

The Euro has stabilised slightly this morning to 1.32 per US dollar. Greek bond spreads have come in from a staggering 10% to a not quite so staggering 8% so is the crisis on the mend, well I think not. The market has paused for breath and the hedgies etc will be taking some profits and eyeing up the next target. Merkel like St Augustine wants to do something but not quite yet.

The EC has produced its usual solution to its perceived problems with the rating agencies, more regulation! These nasty agencies must be made to think correctly. The announced aid package gets bigger, now €135 bn, but the details get scarcer. The EU does not do clarity, transparency and action. It prefers dither obfuscation and 'constructive' ambiguity. The EU is just a motley collection of squabbling mid Europeans.

I bet the German Bundestag loved being told yesterday by Frenchmen Trichet and Strauss-Kahn that it was up to them to get out the cheque book!

The British journos have been having a great time with their metaphors and hyperbole. Jeremy Warner has a big piece in today' Telegraph with quotes from EU people of cutting off the gangrenous Greek leg before it infects the rest of the Eurozone. Wake up, that has already happened! Everyone is concerned at a rerun of Lehmans and the amount of Greek debt held by German and French banks.

I don't see the latter as a big problem. Any banks that regularly participate in the ECB repo refinancing operations ie all the big Eurozone and British banks will hold a stock of Greek bonds to use as collateral in these operations as these are the cheapest bonds to buy. That is why Trichet saying the ECB will continue to take them as collateral at any credit rating was so important. It is only if the Greeks default these bonds banks will lose money. That is why the EU is in denial over any suggestion of a default but of course they cannot say anything else!

As Warner says, " Dithering is the worst thing you can do in a crisis but with so many moving parts to its name, the Eurozone takes the concept of long winded compromise and inadequate decision making to a whole new plane". Well its not new Jeremy for those who know how the EU does not work.

Many are exercised by the Greek disease spreading to the UK. I do not think it will directly but if the Eurzone economy collapses as a result we will of course be badly affected.

The most potent force at work long term however is the power of TV. Already British TV news is carrying footage of Greek street protests. Recall the effect that pictures of the huge queues tying to get their money out of Northern Rock had in blowing up that crisis. wait till the austerity measures start to bite in Greece and we see on our TV screens riots and burning effigies of the Eurocrats in Athens. Let us hope UKIP is still solvent to capitalise on the wave of EU concern this will generate in the UK but this presumes we get rid of the Pearson Farage Tory pressure group regime and get Nikki, Gerard or John Bufton in to lead UKIP as a proper political party.

Wednesday, 28 April 2010

Greek bond crisis spreads and threatens whole Eurozone

Tempted as I am to write on the latest lunatic public pronouncement of UKIP's leader Pearson advising UKIP members in Somerset to vote Tory I think the real damage to the EU is being inflicted in Greece which makes the ramblings of a useless UK peer irrelevant nonsense. The Greek bond crisis is now the leading item on all news bulletins and has eclipsed Clegover mania. Those interested in Lord P's latest effort for his Tory masters can read it by clicking this link

Greek 2 year bond rates rose to around 20% yesterday, credit card levels, and clearly unsustainable. Merkel continues to be caught in an electoral bind on 9th May in Westphalia that threatens to emasculate her government for the rest of its period in office. The German Volk think quite simply the Greeks cooked the books to get themselves into the Euro so why should their hard earned be used to bail out this shower of fraudsters.

So the EU have resorted to that favourite Gordon Brown tactic of obfuscation and delay, call an international summit on 10th May the day after the German election. That's called taking a tough decision in politics speak. Its exactly what the markets did not want and will lead to another feast of spin and inaction. Only the IMF are acting correctly with its head Strauss-Kahn addressing the Bundestag today to urge immediate action before markets worldwide go into free-fall and we have another banking crisis.

The ECB will also have to act immediately and introduce under their emergency powers a bond purchase scheme similar to our so called quantitative easing or money printing or risk Greek banks and then other European banks failing. The Greek collateral held by Greek domestic banks and other Eurozone banks, particularly the French can still, thanks to Trichet waiving the eligible collateral credit rating rules, be used in ECB repo refinancing operations but that can only be used at market price less a significant margin. Frankly I doubt if a decent liquid market exists for this Greek crap so you do not have a market price to value the collateral at and therefore how can you lend against an asset you cannot values?

This is how contagion spreads. A hole in a Greek bank's balance sheet quickly becomes a hole in a non-Greek banks balance sheet and the dominoes as we have seen with Lehmans, RBS etc start to fall.

The BBC also ran a report from the streets of Athens on a mass protest by the Greek people shadowed by a strong contingent of riot police. They feel they have lost control of their own country to the IMF, bad enough, but even worse to the Germans.

So the clash I predicted between domestic needs and politics and EU superstate ambitions is now with us on the streets of Athens and the ballot boxes of Westphalia. The EU been shown up as a stage only fit for third rate politicians to preen themselves and prance on.

Reuters today summarised the amounts and legal procedures each EU government will have to go through to release their funds to Greece. It looks fraught with difficulties to me. I list the major players below:

Greece needs to pay back 8.5 billion euros in maturing debt on May 19.

Below is an overview of how much donors would contribute, dependent on their shares in the capital of the European Central Bank, and the legal hurdles the loans face:

IMF - up to 15 billion euros; IMF officials have said the Europeans want IMF financing not to exceed a third of any total aid package.

When a member country seeks an IMF loan, the fund dispatches a mission to reach an agreement with the country on an economic programme. An IMF mission began talks in Athens last week. The IMF has declined to give an end date for the talks, but has said it can move quickly if needed.

Once a programme is agreed, IMF loans need the approval of the IMF management and board.

GERMANY - 8.4 billion euros. By adopting accelerated parliamentary proceedings, Germany could approve a law to bail out Greece on Friday, May 7, according to Finance Minister Wolfgang Schaeuble.

Schaeuble said on Monday he hoped talks in Athens between the European Commission, the IMF, the European Central Bank and the Greek authorities on a detailed austerity programme for 2011 and 2012 would be finished by the end of the week.

Any legislation for Greek aid would need a simple majority in a vote by the lower house of parliament. It may also require approval from the upper house, depending on what kind of bill the government drafts.

If upper house approval is required, it could only delay the passage of the bill by calling for mediation to amend it. Were the amended bill to be rejected by the upper house again, the lower house could overrule the upper house.

The opposition Social Democrats (SPD) have threatened to hold up the fast-track process to permit further debate on the Greek aid, which most German voters are opposed to. However, the party is not opposed to aid for Greece in principle.

FRANCE - 6.3 billion euros. The package needs approval by both houses of parliament. The bill is set to be given fast-track treatment and the government hopes it will be passed into law by May 10. Some 3.9 billion euros can be mobilised in 2010. The rest would come later. President Nicolas Sarkozy's centre-right allies say they support the bill. Opposition leftist parties have said nothing, suggesting they won't create any problems.

ITALY - 5.5 billion euros. The contribution will be authorised by a government decree, which comes into force immediately after it is approved by the cabinet. The decree needs to be approved by both chambers of parliament within 60 days. An Italian Treasury official said last week the government was readying the decree but gave no details on the timeframe.

SPAIN - 3.7 billion euros. Needs to be approved in parliament to be disbursed although the government has not yet provided any date for when it will be presented for approval and Deputy Prime Minister Maria Teresa Fernandez de la Vega said last week the country was ready to release the money for Greece when needed.

NETHERLANDS - 1.8 billion euros. Approval is needed from the both houses of parliament, though a majority of MPs have already said they would back the aid plan. The finance ministry says it will notify parliament the aid is needed after the EU and IMF complete their review in Greece. As soon as the next day the government will submit a supplementary budget bill to parliament with the aid request. It is expected that parliament could act on the bill in as soon as a couple of days.

BELGIUM - 1.07 billion euros. The Belgian government has already approved a text of a draft law, which a government spokeswoman said could be passed by the parliament relatively quickly. However, because of a new government crisis other, unspecified options, may be explored, the spokeswoman said. Belgium expects to have approval for the disbursement of the money at the same time as other euro zone countries.

AUSTRIA - 858 million. Needs approval by both Austrian Finance Minister Josef Proell and Chancellor Werner Faymann. Proell told the Austrian press agency APA on Tuesday that Austria's contribution will be made available only after Greece fulfils every condition to aid as set out by the IMF and euro zone countries, and the entire 30 billion euros has been put together.

Meanwhile Market operators estimate the Euro could fall to $1.29 from a current $1.32. Portuguese Bund 10 year bond spreads are now 3.1%. The IMF will have to raise its contribution and act quickly because as Reuters says, 'The Greek crisis sweeps all before it', a bit like Icelandic banks sorry volcanoes.

Tuesday, 27 April 2010

Greek bond yields hit 12 year high on bail out fears

Thus reads today's headline in the DT business section. Not exactly what the EU wanted to hear but a rate they quote on Greek 10 year bonds of 9.39% is higher than before the Euro bonds hit the market and Greeks were trading on convergence trades. Dr Frau Merkel has pledged support for the aid package for the sake of Euro stability but said it was contingent on certain conditions being met. Not what the market wanted to hear. It wanted a clean done deal which this certainly is not!

The Greeks have satisfied the EU that it has done enough to cut its budget deficit by around 4% of GDP in 2010 but what comes after that? That is what the Germans and the market wants to know. As Barclays Capital put it this is 'a marathon not a sprint'. The proposed €45bn package is only enough for one year. At least that much again will be needed to cover subsequent years. Meantime fear of contagion stalks the market with Portuguese CDS at record highs yesterday.

Meanwhile Reuters reports the ECB is still blaming speculators. The measures taken by Greece to cut its budget deficit this year are "convincing and encouraging," but it has not been helped by market speculators and poor communication, European Central Bank Governing Council member Yves Mersch said in a Belgian newspaper yesterday. M Mersch then went on to say, "Unfortunately, the scope of this effort has suffered from a communication that I would not describe as optimal, neither from Greece nor from Europe. Markets have been disrupted by indiscriminate declarations at all levels. This is a lesson in what not to do."

Well I would second that but that is how things happen in the tower of Babel that is the EU.

Monday, 26 April 2010

Markets volatile as Greece is still in Limbo

Markets still need convincing with details of Greek rescue. They still remember the Argentinian $100bn debt default in 2001-2002 preceded by similar statements to Greece that they had no plans to default on their debt or restructure it.

Merkel as with all EU politicians speaks with a forked tongue, one story in the cosy hidden confines of the EU and another for the home market. Unfortunately for the Dr Frau there is a tricky election coming up in Rhine Westphalia where the EU/IMF bailout is about as popular as Gordon Brown. Hence the German finance minister, Herr Schauble, is making tough noises about the outcome being 'negative' and wanting to see tougher terms with strings imposed on the Aid package.

Worse, Merkel's coalition 'partners' are questioning the wisdom and legality of the proposed aid package with the leader of the CSU group suggesting Greece should leave Euroland. Every politician knows his real enemies and problems are not with the opposition in front of him but with his 'friends' behind him.

The package will eventually be forced through as necessary to 'defend the stability of the Euro' but would only happen legitimately in extremis. Its difficult to get a motley crew of mid Europeans to agree on anything until the water gets up round their necks.

Meanwhile the markets are not buying the latest soothing noises coming out of the EU/IMF. Each headline that sows even the slightest doubt in the mind's of investors that any plan to help Greece is delayed or insufficiently sized pushes the currency ever lower. Greek bond rates remain unaffordable. Bets are building against other European nations such as Spain and Portugal, particularly in the credit default swaps market, which offers protection against defaults or restructuring.

Portuguese yield spreads over Bunds have doubled during April to hit 200 basis points, while Italian and Spanish spreads were at their highest since February. Rising debt costs for the other weak links in the euro zone have raised the spectre of even more bailouts. The need for a Greek fix grows more urgent by the day but all the 'crats offer is even more waffle. A UK hung parliament on 7th May could be the trigger that sets of the next crisis.

Sunday, 25 April 2010

Greek people versus the EU is a rerun of Athens versus Sparta c 500 BC

Athens is the home of democracy, a word derived from the Greek word for the people, demos and power, kratos. Athenian democracy was a direct democracy where the people voted themselves on the legislation and executive bills. Representatives i.e. corrupt politicians MPs and Peers were not elected or nominated. People spoke and voted themselves. Only adult male citizens who had done their military service and were not in debt to the state could vote, roughly 30000 people but they participated on a huge scale. The public opinion of voters was remarkably influenced by the political satire performed by the comic poets at the theatres, the mass media of the time. The Swiss system of referendums, military service and adult franchise comes closest of modern democracies to the original Athenian model.

I always feel humbled when I study other systems of government like Athens, the US and Switzerland how prescient their founding fathers who set up their constitutions were. The UK may have the mother of parliaments but cannot claim to have founded or carried the torch of real democracy. We have been, and still are, ruled by a political class of Old Etonians and other public schoolboys etc and Lords hereditary and nominated by the government. It is not my idea of democracy. I prefer the old Athenian model of Pericles and Solon.

There are still voices of common sense such as Herr Friedrich of the Bavarian CSU urging Greece to be ejected from the Euro. Its the best thing for the Greek people just as leaving the EMS in 1992 when the Germans refused to support us was the best thing for the UK and led us into prosperity until Gordon arrived.

The rabidly Europhile Financial Times writes in the Saturday leader of the Greek PM 'bravely putting an end to an excruciating sequence of face saving pretences"? And what was this brave act? To ask for a draw down on a loan to prop up the Euro system for a few more miserable months to save the faces of the faceless bureaucrats of Brussels and their delusions of worldwide grandeur. The system is bust and violent protest will erupt on the streets of Athens this summer.

So now in 2010 AD, 2500 years after Pericles, we see the same old conflict in Athens between the democratic will of Greek people and the non-democratic Sparta now reincarnated in the EU. Let us hope we get the same result as happened in 500 BC.

Friday, 23 April 2010

Greek rescue package, a few more details

Greek government sources have given some more details this morning of the aid package Greece will get. It will be for 3 years with €30bn from the EU at 5% and €10bn from the IMF at 3.75%. Yesterday danger signs were flashing on not only Greek bonds where the bund spread got near to 6%, Portugese CDS surging 50 bps to 270bps and Spanish CDS jumping to a fresh record of 175 bps. This contagion is what is putting pressure on the EU to act. The IMF has a wider perspective and can see the Greek contagion spreading to non-EU sovereign debt as well. Many countries have far to much public and private debt so conditions are ripe for a spread of this contagion.

Yesterdays panic was set off as I predicted by the revelation that the Greek budget deficit last year was larger than previously reported. There is still talk from Greece of debt restructuring. This would be very dangerous and is not a cheap solution in the longer term. The Russians defaulted in 1998 and had their debt restructured eventually by the London creditors club but have paid for it by being shut out of the capital markets until this week when they sold their first dollar bonds for over 11 years. Bond markets have long memories!

Civil unrest and strikes continue in Greece and the IMF have not yet started! The Parthenon was closed to visitors yesterday by a public sector strike.

In Germany the right wing Free Democrats called for Greece to 'voluntarily step out side the Eurozone' if it cannot comply with the austerity demands. "Any other way is frankly a placebo to calm the markets". How very true. The Germans as a whole are very wary. Its their money and future money they can see disappearing into a bottomless pit.

The semi-announced solution is not a done deal. I give below some analysts comments quoted on Reuters this morning:


"I don't necessarily think we're out of the woods here because there's a fair bit of wrangling to go in terms of how much the package is going to be, and the terms that are going to be attached to it. I think the reaction we've seen so far is understandable but whether it extends another significant amount from here is another question.""


"It does not come as a surprise. Even if there is a short term solution there is still uncertainty. It still has to go through national parliament and we do not know what the reaction of Germany will be. Does this mean it stops here or will it spread to Portugal and Spain. I think it will still weigh on markets and it is not a done deal."


"It's a positive development in the short term. The comments coming out of Germany suggest they won't be stonewalling Greece's request.

"In the longer-term, it's just a sticking plaster over the situation. The question remains how can Greece extract itself from its problems, and the situation remains highly uncertain.

"The euro has not seen a sizeable bounce. It shows investors remain uncomfortable with being bullish on the euro."


"It (the aid package) is something that might help market sentiment in the short term because it could alleviate the fears that have arisen regarding a possible debt restructuring for Greece that was discussed in the markets lately. But at the end of the day it is nothing that will solve the fundamental problems of the Greek government."


"We aren't really much further into solving the problem - we need to know how much Greece will get and when, so uncertainty will continue to be a problem, hence no major reaction since the formal announcement."


"It is certainly no surprise; we have been feeling for a little bit now that it was inevitable that they were going to ask for it sooner rather than later. With the pressure on the markets in the last few days it really was inevitable.

"The yields have fallen back a bit but they are still incredibly high, which perhaps suggests that there are still doubts about whether the aid can be delivered fast enough. But I think there are probably ways around that ... I am sure the money will come to Greece sooner rather than later.

"But the bigger picture is still that there are huge issues in the medium term in terms of Greece getting its finances in order.

"This certainly does not mark the end of the crisis, there's still much further to go. They've still got the medium-term problems of getting their public finances in order, and obviously the issue of competitiveness."

Its not over until the fat Greek lady sings!

Thursday, 22 April 2010

IMF fears Greek disease could spread

Syphilis was a disease always blamed on other countries. Back in Roman times it was called the Punic (Carthage) curse and later we called it the French pox and the French called it the English pox. Its been a standard political tactic for over 2000 years. Its latest UK exponent was of course Gordon Brown's Labour party who blames every one of his self created problems on 'international' factors. There is a small nugget of truth in this excuse but it hides that the overwhelming cause of the rapid spread of any contagion syphilis, or economic, lies in the domestic structures of particular countries for which their own government was largely responsible.

This is what concerns the IMF about the Greek situation. The public finances of many countries are in a dire state of indebtedness and imbalances and as such provide a fertile breeding ground for the spread of what they will no doubt call the Greek disease, bloated public expenditure that exceeds income, huge public sector pension liabilities caused by over generous pension schemes.

The 10 year Greek bond to Bund spread is reported this morning as 529 basis points. The Greek government is reported as in a 'state of nervous exhaustion' or as I wrote yesterday, it does not know what to do next. Strikes are rapidly spreading and the budget deficit is, as I predicted earlier, being revised up. I opine it will not be the last upward revision.

The new breeding ground is in the other PIGS. Credit Default Swaps (CDS) for Portugal increased by 36 bps to 235 bps and for Spain rose by 17 bps to 162 bps. These CDS values equate pretty well with the credit spread on the these countries bonds which in turn are related to the annual probability of a default. The IMF are terrified if the contagion spreads to Spain and Portugal it may spread worldwide with dire consequences for us all.

The Brussels bureaucrats however are preoccupied with saving their 'grande project'. The IMF are going to have to use their big stick soon to bring the 'crats to their senses. This may come when Brussels see what happens to the Greek government at the hands of its own people this summer but I would not bet on Brussels ever doing the sensible thing.

The IMF are in the invidious position, as they were in Argentina, of trying to prop up an unsustainable structure and throwing good money after bad into a country that must in the end default. There is now much talk of a Brady bond solution, used to rescue Latin America in the 80s. It worked then but the US ran the show without interference. The EU will never countenance that. The loss of face for the French would be akin to the aftermath of Waterloo when the Brits banged up the great French hero Napoleon on St Helena and left him to rot.

Greece needs a major debt restructuring and I do not see how even this can be effective without a devaluation.

Wednesday, 21 April 2010

Decision week in Athens and UK immigration

Greek 10 year bond rates are now 8.3%, that's getting on for 5% over comparable German rates! All three protagonists are now in Athens, the Greek government, the EU and the IMF. The Greeks have a bond maturing very soon so if they can't repay its a default. So whatever they come up with it better be quick and it better be good.

I drove down to Cornwall today and listened to Radio 5 live's election debate from Luton South. There were the usual 3 stooges plus BNP's Simon Darby and Gerard Batten for the last hour of the two hour show. Diplomatically Gerard did not appear until Mr Darby had left. The toothsome Esther was not present. The audience all seemed to hate their former Labour MP Margaret 'Expenses' Moran which makes one wonder why they voted her in three times. Mr Darby was treated like a pantomime baddy with boos abusive interruptions and hisses every time he spoke. All a bit stupid as it stopped people from appreciating how irrelevant he is.

You can listen to it on BBC iplayer by copying this link into your browser address line:

I thought Gerard was good. He was rubbished by the delectable Ms Derbyshire for his idea that illegal immigrants should be made report to police stations but this is no more far fetched than the three stooges crackpot plans for not dealing with immigration. I remember when I used to go to the Sudan I had to register with the Sudanese police within 5 days of entry and this was also checked when I left.

Immigration is simply too hot a potato for LibLabCon who waffle on interminably but like Lord Pearson suddenly become vague when asked for the practical details of their plans. The unpleasant fact is some agency has to find these illegals, take them to the airport handcuffed if necessary, the Americans use leg irons, put them on a plane to their homeland, secure them to their seat if necessary and put guards on the plane to make sure they get back safe and sound. They should then round up whoever has been employing them, prosecute them, cabinet ministers or whoever and press for stiff sentences and public humiliation for them as well. They are simply exploiting and profiting from human misery.

I sailed in Greece last year with an Aussie immigration officer from Darwin in North Australia who told me how they handle their illegal immigrant problem. They have a huge number of Islamic illegal immigrants coming in from Indonesia across the Timor Sea. He told me they round them up off the boats as they come in, stick them in gaol until they have a plane load. That usually takes about a week. Charter a plane and fly them back to Indonesia under guard.

That's what it is going to take to control this problem. Until our politicians are prepared to grasp this nettle we will have a growing illegal immigrant population in the UK. It is at least a more humane solution than that advocated by UKIP's Liga Nord friends and partners in EU EFD group.

The UK is a small country with one of the highest population densities in the world. We do not need, nor can we accommodate more people and have any hope of retaining our British way of life. Let us copy Switzerland in our immigration policies!

Tuesday, 20 April 2010

Are the Greeks playing poker or do they simply not know what to do?

The confusion about EU or IMF or both loans for Greece is now causing the markets to fret. Greek German 10 year bond spreads are now out to an eye watering 4.54%! The Greeks cannot afford to borrow over 10 years at anything like that rate so they are funding themselves at the very shortest end of the market, €1.5 bn in 3 month and 6 month money today and waiting like Mr Micawber, another bankrupt, for something to turn up. Mid May is crunch time with the Greeks needing to refinance €8.5bn. What is clear is that the market has had enough Euro babble. It wants a hard coherent plan of action. Sounds more like the IMF than the EU.

The Greek trade unions have called a fresh strike for Thursday and have made it clear they will not accept EU demands for pension cuts. No one wants Greek debt and the Chinese, who hold over €1000 bn of Eurozone debt, are making ominous noises about Greece being the tip of the iceberg.

There is a rumour that the Greeks are trying to extract better terms by their delaying tactics. The Greek threat is they may opt for a euphemistically entitled debt restructuring with creditors accepting a 50% 'haircut'. That's a default. In plain English we can't pay you the money due to you.

The political stakes continue to rise with the temperature in Greece. Greek polls are showing rising unpopularity for the IMF seen as the high priest of Thatcherism.

One thing is clear. Matters will have to come to a head soon.

An update on my investment advice for our wealthy UKIP MEPs, today's RPI jumped to 4.4%, so index linked National Savings Certificates will pay you 5.4% net. That's a good return for the 40%+ tax payer.

Monday, 19 April 2010

No German rescue for Portugal

Because of the volcanic ash crisis the monetary experts from the EU and the IMF have been unable to get to Athens to deal with the Greek debt crisis. Next up is Portugal. They cocked up the EMU entry, got ticked off by the EU, but took their medicine and were good boys for the next 10 years unlike the spendthrift Greeks but their economy has stubbornly refused to improve. Their public debt is 86% of GDP compared with 123% for Greece but their private debt reached 239% of GDP in 2008 compared with 123% for Greece. Their private debt is estimated to be headed for 300% of GDP this year! Too many expensive villas on the Algarve perhaps.

Portugal has been better run financially than the UK for the last 10 years. They have been cutting public sector jobs for a number of years. House prices have been restrained. Its banks did not need bailouts. That is a huge warning to what is going to happen to the UK. Their problem is their export industries cannot compete and their productivity is low probably due to a rigid labour market.

Their budget deficit is 9.3% of GDP. The Brussels solution? More cuts in the public sector! All this to a minority Socialist government. Sounds like more riots to me.

The Germans now realise they have been conned by the EU 'crats into underwriting the Greeks. Once bitten twice shy. They are also reading up on the history of the Latin Monetary Union of 1865. I quote from the Wilkepedia description of this previous European attempt at monetary union.

It was dreamt up by the French, obsessed, as usual, by their declining geopolitical fortunes and monetary prowess. Belgium already adopted the French franc when it became independent in 1830. The LMU was a natural extension of this franc zone and, as the two teamed up with Switzerland in 1848, they encouraged others to join them. Italy followed suit in 1861. When Greece and Bulgaria acceded in 1867, the members established a currency union based on a bimetallic (silver and gold) standard.

The LMU was considered sufficiently serious to be able to flirt with Austria and Spain when its Foundation Treaty was officially signed in 1865 in Paris. This despite the fact that its French-inspired rules seemed often to sacrifice the economic to the politically expedient, or to the grandiose.

Now does that not sound chillingly familiar? It does to Dr Frau Merkel who has developed a sudden recent interest in this bit of monetary policy history.

The central banks of the member countries pledged to freely convert gold and silver to coins and, thus, were forced to maintain a fixed exchange rate between the two metals (15 silver to 1 gold) ignoring fluctuating market prices. A sure recipe for silver smuggling as its price fell below 1/15 of the gold price. The Scandanavian monetary union of the late 19th century eventually fell apart under similar pressures to buy gold at the official price.

The perceived reason for the LMU failure was no central bank. The Brussels 'crats fixed that in the Maastricht Treaty with the ECB but then realised they needed political union as well hence the Lisbon treaty was pushed through against national opposition. Now a central bank and a political union are as we mathematicians say, are necessary but not sufficient conditions for monetary union. A sufficient condition is a unified Treasury which Dr Frau Nerkel knows means handing over control of German wealth to club Med. She can never agree to this and remain in power in Germany so a line in the sand has to be drawn and that line is Portugal.

Sunday, 18 April 2010

For you Fritz the Euro is over

The old WWII time greeting to soldiers on being taken prisoner was used brilliantly by a DT sub editor in Simon Heffer's Saturday article that covers much the same ground as I have in this blog. Dr Frau Merkel has been captured by the 'crats.

There is now a clearly perceived, huge, downside domestic political risk to Merkel from the proposed EU Greek rescue package. Heffer uses the phrase 'political suicide' for Merkel that I completely agree with. He also adds ,'the certainty that it will not be the last of Europe's banana Republics to pass round the hat and expect it to be filled with German gold.'

The IMF already have a team in Athens and J-C Trichet, the ECB chief, has said ECB 'experts will arrive in Greece next week to negotiate a rescue for the embattled country'. Oh to be in Athens now that Spring, the IMF and the ECB are there!

Meanwhile in the markets Greece's proposed US bond offering of $10 bn has been given the thumbs down by the Yanks and would have to be scaled back to $2 bn to have a chance of success and even that might be cancelled.

The BBC report today, Sunday, that the Greeks will make a formal request this week to the EU/ECB for aid but resistance to this is clearly growing within the EU. Add in the uncertainty about the Goldman's fraud allegation by the SEC the knowledge that in the words of the great Warren buffet, there is never just one cockroach in the kitchen so other investment banks may be charged as well. When you have that to handle why give yourself more problems through buying dodgy sovereign debt? As a bank you can do very well on a risk free carry trade buying AAA sovereign credits yielding 3% plus and financing that at repo rates of less than 0.5%. Its a no-brainer. Jeremy Warner in Saturday's DT notes that equities are soaring as cash is cheap or alternatively as Tim Congdon notes insurance companies can invest their hoarded cash in equities at a better return. Its the same argument. Cash is expensive to hold now so buy something better value.

The Icelandic volcanic ash cloud is the icing on the cake. If it continues the Greek and every other club Med tourist trade economy will collapse. No charter flights means no tourists means economic and political meltdown. I declare an interest that we are due to go to Corfu in early May but if the volcano continues belching out enough smoke to rival Nigel Farage outside a Buckingham pub then only the oligarchs on their yachts will be there.

The UK CPI and RPI inflation figures are due out this week and I expect them to have risen. For those wealthy UKIP MEPs reading this blog I advise buying RPI index linked National Savings certificates They are tax free and an excellent low risk investment for the rich.

Friday, 16 April 2010

Germans may leave Eurozone

The effect of the quiet devaluation by the ECB of its eligible collateral rules is starting to be noticed. It sets a bad precedent for the other little PIGS and creates domestic problems for the Dr Frau whose electorate can see their hard earned cash flowing South in ever greater volumes. The proposed bail out, which is probably illegal, is just a quick fix and sows the seeds for future problems.

For weak states leaving the Eurozone would lead to higher interest rates and a hard sell for their bonds. For Germany the opposite would apply, lower rates and a huge demand for their bonds. That is the problem when you mix strong economies and weak ones in a fixed parity monetary union.

Greece is not the only state in a mess. Outside the Eurozone the UK looks increasingly a basket case weighed down by its huge public sector pension liabilities. Who of Dave, Gordon and Nick have even nodded at this problem let alone proposed a solution? Clegover's good debating performance last night or if you like Cameron's poor performance was greeted by a sharp fall in Sterling today.

Wage and pension devaluations are inevitable. Meanwhile the IMF are now officially in Athens sharpening the axe. Greek bond interest rates are near 7.5%. Goldman Sachs, former advisor to the Greek government have today been charged with fraud by the SEC.

I lost a fair chunk of money on Northern Rock shares because I believed their published figure that their repossessions rate and hence mortgage arrears was below the average for UK mortgage lenders. Following the conviction and fining this week of two Northern Rock executives we now know this was untrue and the mortgage arrears were well above the average. This is what worries me, Dr Frau Merkel and the IMF about the Greek situation. The true position may be much worse than reported.

Thursday, 15 April 2010

German Professors give Greeks a kicking

Four German law profs are preparing to submit a challenge in the German constitutional court to the EU Greek rescue plan on the grounds it breaches the no bail out clauses in EU treaties. German sources are now putting the bail out bill at three times as high as thought pushing the EU share up to €90 bn. The Germans were badly burned in two currency melt downs in 1928 and 1945 and are still paying to sort out East Germany. They can see a bottomless money pit opening up in club Med PIGS. There is now open talk of Portugal having a bad dose of the Greek disease.

To put it in everyday terms hard working Germans retire at 67. Nobody seems to know what the Greek retirement age is! Best estimates put it at 58 to 61. So say the Germans why should we pay for idle Greeks to retire early? Quite. Its pure political suicide on the Ruhr for Merkel in the May 9th German elections.

The legal case will hinge on the hidden rate subsidy in the rescue. Also the breach by the ECB of its own rules on eligible collateral in its Repo operations so it can continue to lend against Greek bonds as security. J-C Trichet claimed the ECB decusion to accept bonds with a BBB- rating had nothing to do with Greece. Unfortunately the flying Dutchman ECB board member Wellink said yesterday 'of course the decision was linked to Greece'. I think Alastair Campbell is available for a fee to sort this sort of situation out.

The Profs will ask the aid package to be frozen pending the court decision. One of their leading economists Dr Hankel said it would be risky politically to transfer German funds to Greece. He then went on rference the German Court, "This is a political court that will look for a way out by shifting responsibility to the Bundesstag. Our purpose is to stir up public opinion and put the government in extreme difficulty. Aid for Greece requires an extra budget; that will be very unpopular". Just what the Dr Frau could do without, a shit stirring know all economist. The phrase hoist with her own petard comes to mind.

Wednesday, 14 April 2010

Thanks to Greece Eurzone is a no-go area

As a result of the Greek crisis most fund managers are now underweight in Eurozone bonds and equities and overweight in Asia. The general feeling is the Greek 'rescue' wont work. The Greeks raise €1.6 bn yesterday in 6 and 12 month T bills which wiil need refinancing in 6 months time. Postponing the inevitable! They paid 4.85% for 12 month money, an eye watering 4.3% above German rates.

The opposition politicians in Athens have noticed this. They are calling it usury and demanding a debt restructuring i.e. a default. The ruling PA-SOK party is expected to split over this issue. The Brussels 'crats cannot afford to countenance a default and the Greeks cannot do without a default. The irresistible force meets the immovable object!

The fact is those who bought Greek bonds earlier are now nursing large losses so its once bitten twice shy. Greece needs €11 bn by end of May so the Eurozone countries are going to be asked to put their money where their politicians mouths are.

Tuesday, 13 April 2010

Germn anger at Greek rescue package - nothing new there

Following the usual pattern, the day the latest rescue package is announced the Euro roars up and the day after, when the market realises it is just more Euro babble the market falls back. Euro politicos are used to getting away with saying one thing in Brussels and something different domestically. It obviously works with their largely uninformed electorate but with well informed financial markets it just makes things worse. They have cried wolf once to often and nobody now will take them seriously.

As I noted yesterday and as a Berlin spokesman pointed out today, "Help is not automatic and cannot be activated if any state objects" Also the plan is clearly a subsidy as pointed out by a member of the Dr Frau's coalition who then added, "We're on very thin ice legally.

There are things Brussels wants and things it must have and the Euro is one of the latter. Allowing Greece to effectively default and exit the Euro would signal the end of the Euro and the great European project with it. The Brussels elite will do anything irrespective of its legality to stop Greece leaving the Euro.

The German taxpayers are not happy with Merkel's perceived caving in to Brussels pressure and one of their leading economists, Prof Ellard Wenger said, "the aid for Greece was another step on the slippery slope downwards. All rational economic rules are being thrown out the window. This is a bottomless pit. In the short run this may calm things but within 10 years the eurozone is not going to exist any more in its current form.

The IMF are much clearer about the only possible solution for Greece in the Eurozone is deflation, a debt restructuring, ie a de facto default. Easy for the IMF to say from Washington but on the streets of Athens there would be major civil unrest. Bad news for Greek politicos.

Things will stagger on a bit longer but sooner or later the money will run out.

Monday, 12 April 2010

Another day, another Greek rescue package

Announced to another great fanfare yesterday by the Eurozone countries a €30 bn 3 year contingency loan at 5% for the Greeks if they need it with the Germans pencilled in for €6.3 bn! Plus a secret possible top up by the IMF rumoured to be €15 bn at 2.7%. All very fine, the Euro rose strongly on the Forex market this fine Monday morning by over one per cent against the dollar and sterling. But will it stick? As always the devil is in the detail and the politics.

First for Greece to draw down any of this money requires the unanimous agreement of all 16 Eurozone states. Second some of these states, the residual PIGS are in almost as bad a state as Greece and where will they get the money from. If they have to borrow it in the market they could well end up subsidising the Greeks something that is verboten under EU rules but of course J-C Juncker, chairman of the Eurogroup insisted their package does not breach the rules. Ho hum!

Well the other PIGS might just see it as useful to do this so that when their turn comes the precedent has been set.

The German contribution looks small to me. I estimate the German GDP at 25%+ of the total Eurozone GDP so they should be stumping up another €1.2 bn. Dr Frau Merkel however has a problem with important German local elections coming at roughly the same time as ours and bailing out these profligate Greeks won't play well with the house fraus. The Landesbanks were enthusiastic buyers of all American bond crap and consequently have a big hole in their balance sheets if this toxic debt ever got valued properly. Their are also a number of troublesome German economists and possibly even the Bundesbank that might say the loan was improper and take it to the German constitutional court. The Dr Frau might even tip them a wink to do this! It would save her a lot of money.

The real difficulty is its really a whole Eurozone problem. The Greeks with their €391 bn of debt, 163% of their GDP are just first up. If they are allowed to go then so goes the Euro. The Brussels 'crats will pull out all the stops to save the great project but as I noted before they then will collide with national political interests. There will be riots and protests in the cities of Greece this summer as the EU/IMF medicine is swallowed. I doubt the Greek government can survive this and then what? Don't cry for me Argentina. That was an IMF success in 2001 but had smaller debts, 62% of GDP, than Greece and devalued its currency.

Finally the great unknown is China that correctly perceive Greece as the tip of an iceberg. They have huge holdings of sovereign Eurobonds. What happens if the decide to sell? Well Eurozone interest rates start to rise. Already the Greek yield curve has started to invert i.e. short term rates are above long term rates, a sure sign of a coming recession. Hold on to your seats.

Friday, 9 April 2010

Bundesbank Panzers invade Greece

The hard men of the Bundesbank gave a devastating critique of the Merkel bail out plan for the Greeks. A plan cobbled together without consulting the national central banks which would lead to the monetisation of debt. That is central bank speak for printing money! It brings problems in respect to stability policy that should not be ubderestimated is a BU quote.

The BU is a genuinely independent central bank. Can you see Mervyn King criticising a Gordon plan so trenchantly? The so called BoE independence was another Gordon deceit par excellence. He appoints the Governor, the Deputy Governors, the external MPC members and has to approve the other two internal Bank nominees on the MPC. No Gordon controls the BoE but the myth of independence comes in useful when blame has to be dished out elsewhere which is a Gordon trademark.

The BU is independent because following two horrendous melt downs in 1928 and 1945 leaving the German currency worthless the German people simply do not trust politicians with their currency. The BU was set up to resist political pressure and has done so in the past. When sterling got kicked out of the EMU in 1992 John Major asked the German Chancellor to support sterling with German reserves. The then German chancellor pointed out to JM it was not in his gift, that would be a BU decision! The BoE is simply a fig leaf to disguise Gordon's embarrassment and has, and will, cave in to the UK PM when required as he is the man who makes the top BoE appointments. Ambitious men are the easiest to manipulate as my old civil service mentor said!

The BU will take no prisoners or any Trojan horse from the Greeks. They will call the shots on this not Dr Frau Merkel.

Thursday, 8 April 2010

IMF arrive in Athens, London next?

The market is starting to fret over a possible Greek debt default and the FTSE dropped 1% today as a result. The spreads on Greek bonds are now 400+ bps above bunds. The Greeks are still waiting for the EU cavalry to ride to their rescue but its starting to look like Stalingrad. Wealthy Greeks have already shifted €10 bn abroad in the first two months of 2010. The IMF have seen this all before most recently in Argentina. Greek banks have just received a €17 bn aid package from their government but the other Eurozone banks are cutting Greek bank credit lines a sure sign a default is on the cards.

Greece wants an admission that it is all the fault of the 'crats beloved EMU but that is not going to come. There are lots of conflicting stories coming out of Athens particularly about what role if any the IMF play. Thank God its not a shooting war or we would all be dead whilst Brussels considers its navel.

The BIS, the central banks central bank, based in Basel has just published a report saying the sovereign debt crisis is at boiling point. They are best placed to know. All central banks have accounts with the BIS. Guess which country the BIS fingers as having the highest structural deficit in the G20 and therefore the biggest long term debt problem? No its not the Greeks its the good old UK. So which party will get us out of this jam, well none of them. They are all in imminent election induced denial.

I see a return to the hyper inflation we suffered in the 70s as the only way out. Interest rates will soar but we will be able to repay Johnny Foreigner with devalued pounds like we did before. Otherwise we will have a severe slump and civil unrest. Politicians don't like civil unrest in their own countries. There is too much danger they might be lynched by a rightfully enraged populace. Much safe to inflate than end up dead.

Wednesday, 7 April 2010

When Greek meets Greek

This was some sort of Latin quip which I apply not to Greek bonds, more of that later, but to the Bucks contest between Bercow and Farage. Both have much in common . In particular both claim to be anti-sleaze but have a lot of questions to answer on the sleazy and vexed subject of their past expenses. Both are blatant unscrupulous political careerists and as such very suitable candidates for a seat once held by Robert Maxwell for Labour, a man who was better at emptying other peoples pension funds than even Gordon Brown. Sadly Mr Maxwell went overboard one night en route to the loo for a pee. Be very careful Messrs Bercow and Farage that a similar fate does not befall either of you. So if an attractive young lady appears offering either of you a freebie on a luxury yacht please realise it may not be good for your health and she is almost certainly from the Sunday Times and has a hidden video camera in her handbag. Stick to whipping up apathy on the Bucks hustings. Its so much safer!

Greece would like to sell another bond denominated in US$ this time but unfortunately the market in Greek bonds is a bit saturated so around $3 bn is the most they can hope to get away. Everyone wants to sell and no one wants to buy Greek paper. Worse they will have to deal with the hated Anglo Saxon hedge funds and even worse than that they will be paying near 8% to these nasty types. Oh Napoleon and Frau Dr Bismark where are you now? Sentiment is not helped by the super wealthy Greeks shifting their money to Switzerland as fast as possible. Well nobody ever stayed rich propping up the Greek government.

Tuesday, 6 April 2010

Greek ship is sailing towards the Northern Rocks

It is reported today that wealthy Greek depositors are withdrawing their Euros from Greek banks and depositing them offshore with HSBC & SocGen the immediate beneficiaries but the super rich Greeks worried about punitive tax measures are moving their funds to accounts in Switzerland with the Swiss banks. HSBC private banking in London is also reported as picking up a lot of this Greek business.

This is a big problem for the Greek banks because no one else , ie the wholesale money markets, is going to lend them money right now as they are worried the Greeks might go bust. No deposits means no money to lend means economic contraction. Shades of Northern Rock! People just want their money out of Greece because of the economic situation and likely punitive taxes arriving with the IMF.

Meanwhile on the sovereign markets supposedly bailed out by the EU our EU friends are arguing about what interest rate to charge the Greeks for their emergency loans. The Huns want 6% to 6.5% but the others who see they may soon be in the same boat want 4% to 4.5%. That's why the Germans want 6% plus!

This story like the UKIP Agnew Pearson Bannerman tale has legs and will run and run!

Monday, 5 April 2010

UKIP keep OLAF busy

Incompetence rules OK in UKIP. Pearson manages to out UKIP's secret donor Patrick Barbour by opening his big mouth but more significantly Agnew will generate another OLAF investigation into a UKIP MEP with Labour MEP Richard Howitt calling for a full investigation. Add this to Mote, Wise and current ongoing investigations into other UKIP MEPs and Farage's claims to be that UKIP is the clean party is shot to ribbons.

Mean while the UKIP Septic Croucher Denny etc spin machine is trying to pretend no one has noticed. Well nobody except the National Daily press and the local Eastern region press. They will start digging and there are lots of skeletons to find in the Eastern region. I also know Labour have some very damaging material on UKIP which they may now choose to use. My heart bleeds for the decent ordinary UKIP members let down by this incompetent, self seeking, bum licking leadership.

Nikki is kicked out for her principled stand against being associated with racist neo Nazis in Farage's EFD but Pearson and Agnew who both may have to face serious charges from the Electoral Commission for this public humiliation stay. I do not see how UKIP can run any sort of credible General Election campaign in these circumstances.

Sunday, 4 April 2010

UKIP Cabals incompetence exposed.

No economics news over the holiday so as its the silly season I write on UKIP, now well ensconced as the rivalling the Monster Raving Loonies for stupidity. It beggars belief that two weeks after Byers, Hoon, Hewitt and Butterfill were caught in a Sunday Times sting UKIP's Pearson and Agnew were caught in the same trap. As Andrew Neil pointed out one week ago at the start of his Thursday night programme, speaking very slowly he warned politicians if an attractive young woman approaches you offering third party money its a Sunday Times sting. They have used it around a dozen times and it never fails to reel in some dim witted, self seeking, greedy politicians.

The run up to a General Election is high season for this sting. Its the time our third rate politicians are at their greediest and is as predictable as a salmon run to use a simile Pearson might understand. The damage it has done to UKIP is immense. Its a god send for the BBC's Paxman and Humphrys. Every time UKIP wheel out Farage it will come up. As if UKIP was not in enough trouble with the Electoral Commission, their leader and an MEP are filmed advising on how to get round electoral law on declaration of the source of political donations. It makes Farage's claim that UKIP is the clean party publicly laughable. Previously only those of us who have had to try and work with Farage's Cabal knew the full extent of their self seeking idiocy but now it is plain for the world to see. Bercow will rightly crucify Farage with this in Bucks.

David, Del and I argued long and hard on the UKIP NEC for sticking to the rules and the law of the land. We were vilified for this by the Cabal who were mostly interested in feathering their own nest and portrayed the three of us to ordinary UKIP members as traitors to UKIP's cause. This was the exact opposite of the truth. We three cared, and still care deeply for UKIP's cause and knew it would be best served by being squeeky clean and sticking scrupulously to the rules to make us clearly different to the LibLabCon. However, all Farage was interested in was shouting BNP, BNP, BNP like a demented parrot. Well, Pearson and Agnew's actions will certainly give the BNP plenty of ammo!

As a result of the ST sting UKIP will now find itself in trouble with the EU for self admitted blatant mis-use of EU funds and I would imagine an OLAF investigation is bound to follow. I fear what has been revealed is only the tip of the iceberg.

David, Del and I were not dewy eyed idealists. Del in particular has a very acute political sense. The Junius story that the Farage controlled UKIP NEC contemptuously refused an offer to join the Alliance for Democracy group of English Democrats, The Jury Team, George Hargreaves' Christian party and Veritas to avoid splitting the anti-EU vote shows what political idiots comprise the current UKIP NEC. The only chance we have of getting out of the EU is to unite the Eurosceptic vote. This is the last thing Farage and Pearson want. They are both Tory sympathisers and want to help the Tories as much as possible. Pearson because he is a dyed in the wool Tory. Farage because he believes he will get favour and preferment from Cameron. UKIP members are being conned.

Friday, 2 April 2010

Integrity of the poll is crucial for democracy - Farage please note

I listened to Bob Crow, the RMT rail union leader, demolish John Humphrys, the scourge of our sordid politicians, on Radio 4 this morning. Humphrys first alleged the ballot was unfair, then backtracked to it raised suspicions the ballot was rigged. Crow then nailed Humphrys on his improper use of the word rigged. Crow then pointed out the ballot was conducted by the Electoral Reform Society and that the ballot papers went direct to the member's home address, was then returned to the ERS who counted the votes and returned their scrutineers report to the Union.

Humphrys then tried it was only a small majority of only the members who voted and that undermined its democratic legitimacy. A pathetic effort by a man who is the BBC's most feared interviewer! As Crow pointed out the result of the General Election will be decided by tiny majorities in marginal constituencies so will Humprhys be calling for a rerun of that vote as well. Collapse of stout Humphrys.

It was a masterclass in how someone who knows the facts and has done things properly can demolish the media gods like Humprhys. Its well worth listening to, Click on link below to listen to it. Crowe used no Farage type rant just facts and reasoned argument but then Bob Crow is a real talented political operator.


It took me back to my time on the NEC regarding UKIP MEP regional selection votes by the members to order candidates on the UKIP slate when I argued strongly with David and Del's support that this ballot should be carried out by the ERS, as the RMT poll was, so no questions could ever be raised concerning the integrity or probity of the UKIP MEP selection process. Using the ERS had already been approved by the SWCC for use in the South West something Farage and the Cabal subsequently countermanded. I had obtained a quote from the ERS to carry out this ballot, implement the UKIP vote weighting system and produce and sign off the final results and return their report to the NEC. Their quote to carry out this work was just less than one pound per member.

Farage and the Cabal could not accept this. Farage stated that the ERS would only do single transferable vote ballots. He had personally investigated this! Enough said. Whittaker said he had also contacted the ERS and supported Farage's statement on the STV issue. They either both misled the NEC or were both incompetent in this matter. They were both 100% wrong and not for the first time. The ballot went ahead run by Lexdrum house. The late Piers Merchant was the returning officer and reported on his significant misgivings particularly about the Eastern region result.

Given what had happened with Ashley Mote and Tom Wise I was shocked the Cabal, and in particular Clarke and Bannerman, were so vehemently opposed to using the ERS.

I was gratified to see the latest UKIP leadership ballot was carried out by the ERS paid for I believe by a UKIP member not UKIP. The probity and conduct of this poll cannot be questioned. Other parts of the leadership election, in particular Farage's disgraceful denigration of the non-Pearson candidates on national TV, were absolutely disgraceful and straight out of the Cabal's smear tactics manual. The non-appearance on UKIP web sites of one of Pearson's bumbling, rambling, hustings speeches is another Cabal sourced mystery. The last NEC elections did not use the ERS. I hope the next mysteriously delayed NEC elections will use the ERS. Eat Crow pie Mr Farage, it might improve UKIP's health.