Tuesday, 16 November 2010

Farage, the Establishment's favourite fantasist! Euro on the ropes.

I make no apology for returning to my theme of yesterday. Nigel Farage is simply an establishment puppet. As someone else wrote,UKIP are not the defenders of British independence and democracy, they are just the stooges and as Lenin said, useful idiots, of the LibLabCon. A safe, neutralising cul de sac where voters can vent their spleen assured of doing no damage whatsoever to our ruling political class or corrupt political system. That is why NF is always given an easy ride by the media especially the BBC and now the Telegraph. That is why he appears 'good' on TV. He gets patsy interviewers who have not done their homework. I think someone should open a voting thread on Butcher's forum on Nigel's favourite porkies and phrases. I vote for the cigarette paper.

Nigel Farage is a fantasist who desperately wants to be a media celeb with his own chat show, a bit like Robert Kilroy Silk was. He was sounding out Andrew Neil on air in Spring 09 pre expenses scandal on this tack. A N gave him the bums rush! NF lacks RKS's brains and talent but as long as he is useful to the Establishment he has a good chance of securing such a TV spot and then who knows he could be on Strictly in a year or two with all these scantily clad female dancers! Wow, there would be no need for Latvian pole dancers then.

Nothing I can see from NF on the serious Eurozone financial problems. Right now the Eurozone is split with conflicting self interests everywhere you look. You could not think of a better scenario for UKIP to make progress. But it has not and will not because Nigel is only interested in Nigel's media career. Ah well that's what the UKIP members voted for so I guess they don't really want out of the EU either.

I listened to the World Tonight on Radio4 yestreen and clearly the Paddies are bitterly resenting being told what to do by the Germans who have recently invaded Dublin after all its only 90 years since they got rid of the Brits. Ah well if you sign up to the Fourth Reich then learn to say Ja Wohl mein Fuerher when asked.

As for the poor old Brits as always we will be asked to pick up our share of the Eurozone tab estimated at £7 bn. Phrases like responsibility without power spring to mind like a Latvian dancer on her pole.

I remember listening to the Dean of the Liverpool Law Faculty answering a question on why he never went abroad. His answer was he did not like abroad and then added you know they don't play cricket there! Well I am off with Mrs E. to Oz for 18 days. She to sail our yacht round the Barrier reef and the Coral Sea and me to try and get a ticket for the Brisbane Test to escape my crewing duties - fat chance! I hope England win. It's time they duffed up the cocky arrogant 'Strines.


I just watched the Daily Politics, guest NF. It was well structured by Andrew Neil, now a closet Europhobe, who gave NF a series of open goals and NF duely put the ball in the net. His only problem came with Neil's female assistant Anita who after a report from Staffs, Steve Povey et al, asked NF why the 5 UKIP councillors hardly mentioned UKIP and all behaved as if they were independents. NF of course had no answer yo that one but I have noticed NF does not impress intelligent well informed ladies like Anita ad before her Jenny Scott. Anita nailed Farage on the Pearson disaster as well.

The truth is there has been a huge amount of unseen door step hard work done in Staffs. Nigel does not do that. The TV studios and bars of Brussels are more to his taste but the Staffs approach is the only way we can get out of the EU.

Monday, 15 November 2010

Which safe Tory seat was offered to Farage?

There is a long flattering piece on Farage, almost a puff, in Saturday's DT TV programme supplement written by one Nigel Farndale. It exhibits the usual Farage traits of self flattering claims for which the only evidence adduced is the word of Nigel Farage. As I have written before I fell out with NF, day one item one at my first NEC meeting when I asked to see what evidence he had to substantiate one his ridiculous statements. I was of course immediately attacked by Denny et al for doubting the word of our great leader. Well looking at the evidence before voting is a prime requirement of any NEC member in my book.

I fear Mr Farndale may not have been so meticulous. He reports the oft told Farage tale that he was once offered a safe Tory seat. I would be eternally grateful if anyone can name this constituency and produce a statement from any member of the constituency committee to support Farage's claim. Its the question Mr Farndale should have asked.

Mr Farndale then goes on to state NF, went into the City to 'make his fortune' in 20 years commodity trading. Does anyone know how much money NF made in the City? I have known a few successful commodity traders and after 20 years or so they generally had villas on the Algarve, a large country house plus a slick London flat and usually a yacht in the Med. I remember the story told by Fred Shwed in his book on Wall Street entitled, " Where are the customers yachts?" The title refers to a story about a visitor to New York who admired the yachts of the bankers and brokers. Naively, he asked where all the customers’ yachts were? Of course, none of the brokers customers could afford yachts.

So where is your yacht Mr Farage? How much money have you given to UKIP in the last 10 years?

The Farage quote, ' When I was in the City I always thought the next trade would be the big one' is not the mind set of a successful trader or yacht owner but it was the mindset of Mr Micawber always waiting for something to turn up.

Then there is the reported claim that NF gets on OK with David, aka Dave, Cameron. We joined parliament at the same time says Farage. Really Mr Farndale, as Nigel Molesworth would say, any fule do kno Farage has never been elected to Parliament! But Mr Farage does hope for preferment to the red leather one day possibly from Dave.

There is the trademark smear attacks on former UKIP members, founder Alan Sked and Kilroy Silk who was crucial in UKIP's breakthrough in the 2004 European elections.

Farage will carry on giving the media a good laugh attacking Rumpy and Frumpy but not advancing the UKIP cause one iota. It is nevertheless disappointing to find such unquestioning acceptance of unsupported statements by a journalist writing for a serious newspaper. A good job Andrew Neil is not his editor.

Saturday, 13 November 2010

UK has been banrupted by its profligate poltical class

I am grateful to Major Warry for sending this link to an outstanding Channel 4 documentary that went out on Thursday on the dire financial state of the UK. It lasts almost 90 minutes but is a must watch for anyone who cares for the future of our country. It covers a huge amount of material but the fact that C4 commissioned and paid for this high grade documentary illustrates why we need to rebalance our economy in favour of the private sector. The bloated, overpaid, smug and self satisfied BBC has never made anything half as good!

The programme showed up the complete ignorance of our MPs about the size of the UK National Debt, the official figure and the much larger figure of £4.2 trillion that includes public sector pension liabilities. Most MPs arrogantly confused the National Debt with the Budget deficit!

More worrying was that we now have an inbuilt payroll vote in the UK that ensures we will wade further into bankruptcy. Shades of France before the French Revolution. Revolution is the only way out of this political bind we are now in and which consigns us to worse and worse services from our public sector monopolies principally the NHS and Education.

One man, John Cowperthwaite managed to set up a small state economy. He did it when he was Financial Secretary of Hong Kong in the 1960s. Hong Kong has now a bigger per capita income than the UK and 20% income tax. We have the EU MEPs demanding more and more tax to fund a bigger and bigger state. Unless something changes soon we are as John Laurie used to say, doomed!

I switched on the BBC News tonight to hear Ireland has asked for EU help in the 50bn € range just like Greece. So all the denials were as usual untrue. Yet still the EU MEPs demand more money to fund their lavish life style and Frumpy's new and unecessary Foreign Service. We will see blood in the streets soon.

Thursday, 11 November 2010

Now its Ireland's turn

As a small economy Ireland has not yet attracted the same attention as Greece but it is now looking in an even worse plight. The terms of the EU/IMF Greek bailout ensure that holders of Greek bonds maturing in the next 3 years, mainly Sarkozy's French banks will be paid out in full if Greece runs out of Euros. No problem there then thanks to the three Musketeers, Sarky (France), Trichet (ECB) and Strauss-Kahn (IMF). All for one and one for all in la belle France.

Holders of Paddy bonds, and that includes many British banks, have no such EU/IMF guarantee. Dr Frau Merkel has put her jackboot down. Paddy bond holders must share the pain. That does not of course affect the Franco Prussian banks only the despised and craven Anglo Saxons headed by Old Etonian  bum licker Cameron.

Worse, its now becoming a sure bet in the markets to short Paddy bonds. The price goes down, the yield goes up, 8%+, and as Werner von Braun that other fine Prussian used to say, who cares where they come down, its not my department! Hence the LCH that clears inter-bank repo trades is now demanding a whopping 15% margin on Irish bond repo to protect the LCH from an Irish default. This of course just encourages the dumping of Irish bonds and  increases the Irish bond yields. Ireland will be effectively shut out of the capital markets and will have to rely on Trichet at the ECB for cash.

Not only is the Irish economy in a mess but their banks are on their third or fourth bail out and are complete basket cases. This is worse than in Greece where thanks to naked French self interest Greek banks are OK for the next three years. The Greek economy is however in a similar state to Ireland's, F***ed you might say.

Reuters report today RBS who through their Ulster bank subsidiary are exposed to the Irish economy fell 2.5% today. Irish bank shares also fell sharply, reflecting renewed jitters about their exposure to the country's wrecked property market, with Allied Irish Banks (ALBK.I) shedding 7 percent and Bank of Ireland (BKIR.I) off 8.4 percent.

The EU said it was ready to act should the humbled former "Celtic Tiger" require a rescue from its euro partners. The Irish government following its many austerity packages is deeply unpopular. It will need rescue so get paddling Barroso.

Doug Dawson sent me a link to a clip on our rioting students. The interesting EU bit is right at the end and comes from the media person who had been talking to some of the students. Click here Today the Irish tomorrow the UK and more than windows will be broken.

Maybe the cost of EU membership is creeping onto the UK public radar. Meanwhile our useless MEPs have been rubber stamping another EU commission proposal for more financial regulation of hedge funds. Buy Zurich office space now!

Wednesday, 10 November 2010

EU prepares to skewer the City

Last month, Xavier Rolet, the CEO of the London Stock Exchange warned that the City was at risk from 'jealous' EU regulators. I have been warning about this since I started writing this blog two years ago. M Michel Barnier, EU Commisioner for internal markets has been making comments about 'crazy'  traders, 'People taking crazy risks linked to crazy rewards have to be brought to their senses'. This is code to regulate the City business out of London to Frankfurt and Paris. Now that really is a crazy idea! The hedge funds, private equity and risk capital houses will migrate to Zurich and Geneva where they will be received with open arms and light touch regulation.

Our elected MPS of the august Treasury Select Committee have invited M Barnier to appear before them to explain his 'reforms' of financial market regulation to the TSC. M Barnier has declined their invite as his diary is already full and proposes to send one of his officials instead. Andrew Tyrie the TSC chairman has written an open letter to Barnier's boss Barroso saying it is 'essential' Barnier appears before them to answer their questions. At last a real conflict between our elected Parliament and the unelected EU Commission! Things however dont look good for the City.

Short London and buy Zurich is my advice!

I mentioned yesterday an interview Otto Pohl, former head of the Bundesbank, gave in May to Der Spiegel on the Greek debt crisis and the reasons behind the EU's bail out. I reproduce it in full below as an outstanding critique of the Euro zone.

Ex-Bundesbank Chief Says Greece Will Never Repay Debt, Says Bailout All About "Rescuing Banks And Rich Greeks"

Tyler Durden's picture

Finally someone speaks the truth. In an interview with Spiegel Magazine, former Bundesbank chief Karl Otto Pohl, says it how it is: "Without a "haircut," a partial debt waiver, [Greece] cannot and will not ever [repay its debt]. So why not immediately? That would have been one alternative. The European Union should have declared half a year ago -- or even earlier -- that Greek debt needed restructuring." As for the reason for the bailout, Pohl's observation will not be a surprise to our readers "It was about protecting German banks, but especially the French banks, from debt write offs." Is there any hope for Europe now? It appears no, as the right decision was to let Greece go bankrupt: "Investors would quickly have seen that Greece could get a handle on its debt problems. And for that reason, trust would quickly have been restored. But that moment has passed. Now we have this mess." Amusingly, when asked if banks used "speculators" as a straw man to break all EU Rules and especially the Lisbon treaty:"Of course that's possible. In fact, it's even plausible." We can't wait until the German population realizes just how massively it has been scammed. Last week's Nordrhein-Westphalia Merkel loss will seem like a walk in the park once the mobilized German society decides to fix things on its own.  Oh, and look for the EU and the euro to be a thing of the past.
Key items from the Spiegel interview:
SPIEGEL: The German government has said that there was no alternative to the rescue package for Greece, nor to that for other debt-laden countries.
Pöhl: I don't believe that. Of course there were alternatives. For instance, never having allowed Greece to become part of the euro zone in the first place.
SPIEGEL: That may be true. But that was a mistake made years ago.
Pöhl: All the same, it was a mistake. That much is completely clear. I would also have expected the (European) Commission and the ECB to intervene far earlier. They must have realized that a small, indeed a tiny, country like Greece, one with no industrial base, would never be in a position to pay back €300 billion worth of debt.
SPIEGEL: According to the rescue plan, it's actually €350 billion ...
Pöhl: ... which that country has even less chance of paying back. Without a "haircut," a partial debt waiver, it cannot and will not ever happen. So why not immediately? That would have been one alternative. The European Union should have declared half a year ago -- or even earlier -- that Greek debt needed restructuring.
SPIEGEL: But according to Chancellor Angela Merkel, that would have led to a domino effect, with repercussions for other European states facing debt crises of their own.
Pöhl: I do not believe that. I think it was about something altogether different.
SPIEGEL: Such as?
Pöhl: It was about protecting German banks, but especially the French banks, from debt write offs. On the day that the rescue package was agreed on, shares of French banks rose by up to 24 percent. Looking at that, you can see what this was really about -- namely, rescuing the banks and the rich Greeks.
SPIEGEL: In the current crisis situation, and with all the turbulence in the markets, has there really been any opportunity to share the costs of the rescue plan with creditors?
Pöhl: I believe so. They could have slashed the debts by one-third. The banks would then have had to write off a third of their securities.
SPIEGEL: There was fear that investors would not have touched Greek government bonds for years, nor would they have touched the bonds of any other southern European countries.
Pöhl: I believe the opposite would have happened. Investors would quickly have seen that Greece could get a handle on its debt problems. And for that reason, trust would quickly have been restored. But that moment has passed. Now we have this mess.
SPIEGEL: How is it possible that the foundation of the euro was abandoned, essentially overnight?
Pöhl: It did indeed happen with the stroke of a pen -- in the German parliament as well. Everyone was busy complaining about speculators and all of a sudden, anything seems possible.

SPIEGEL: You don't believe in the oft-mentioned attacks allegedly perpetrated by currency gamblers, fortune hunters and speculators?
Pöhl: No. A lot of those involved are completely honorable institutes -- such as banks, but also insurance companies and investment- and pension funds -- which are simply taking advantage of the situation. That's totally obvious. That's what the market is there for.
SPIEGEL: With the exception that speculators are now carrying no risk at all because euro-zone members have agreed to guarantee Greek debt.
Pöhl: Yes, and that is harmful. It means that the basic balancing mechanism in the market economy is out of sync.
SPIEGEL: Is it possible that politicians invented the specter of rampant speculation to legitimize a break with the Lisbon Treaty and with the ECB's rules?
Pöhl: Of course that's possible. In fact, it's even plausible.
SPIEGEL: What will be the political consequences of this crisis?
Pöhl: The whole mechanism of the European community will change. The EU is a federation of nations, not a federal republic. But now the European Commission will have a lot more power and more authority as well as the potential to interfere in national budget law. That, however, is constitutionally problematic in Germany.
SPIEGEL: But this could also be construed as a positive development. For a long time, critics have been saying that before we can have a genuine currency union we need common fiscal and economic policy. Surely this crisis has brought the EU closer to that goal.
Pöhl: Yes, that is the logical next step of our union, but we must bear the burden. You only have to look at what it is going to cost us Germans. I would have preferred that things hadn't gone quite this far.
SPIEGEL: If you were president of the Bundesbank today, would you be ordering the printing of German marks just in case they became necessary?
Pöhl: No, no, we have not gone that far quite yet. In my opinion, the euro is in no danger. Perhaps one of the smaller countries will have to leave the currency union.
SPIEGEL: How should that work?
Pöhl: It would involve Greece, if we stick with the case we were discussing, reintroducing the drachma.
SPIEGEL: But Greece doesn't seem to have any interest in doing that -- and it would be against European agreements to force Athens to leave the currency union.
Pöhl: That is correct. As long as a country receives such massive support, it would, of course, have no interest in turning its back on the euro.
SPIEGEL: You think that could change?
Pöhl: On the mid and long term, I wouldn't rule it out.

Tuesday, 9 November 2010

Eurozone problems & political lies

There is an historic cultural difference between Dr Frau Merkel and the other so called political leaders of the free world, she believes in sound money! The Germans saw their currency trashed twice within a generation in 1928 and 1945 and they don't want it to happen a third time. Hence the Germans deep mistrust of the ECB and their desire to have the Mark back with the BU running monetary policy.

Debasing the currency has been the easy fix for politicians in economic trouble since the days of Julius Caesar. The current exponents are Ben Bernanke at the Fed and Mervyn King at the BoE. Both these so called independent central banks are of course acting as the poodles of their political masters Obama and Dave and have invented a wonderful new term redolent of laxatives for the process, Quantitative Easing. The good old Bundesbank was a rarity, a genuinely independent central bank.

I well remember when we were kicked out of the ERM, a great result for the UK, John and Norma went to the then German Chancellor Kohl and asked him to commit German reserves to support Sterling against the speculators. Kohl told them this was not in his power. Only the Bundesbank governor Otto Pohl could make this decision. Pohl said No. The UK left the ERM and the UK recovery started.

Interestingly Herr Pohl, retired from the Bundesbank, has recently been opining on the Greek debt problem click here to read a great article. The upright Herr Pohl makes the point that Greece can never recover without a huge 'restructuring' of their debt and leaving the Euro. Herr Pohl dislikes the Euro and the whole EU.  Even worse he makes the point that the EU bail out of Greece organised by the three French Musketeers, Sarkozy, Trichet and Strauss Kahn was to save French banks from huge losses on their holdings of Greek debt if the correct, Pohl endorsed, policy of a Greek default had been followed. No wonder Merkel is furious. If her voters realise how they have been conned she is toast! One could say the same thing about Farage and UKIP voters but love is blind as they say.

The other debased currency is that of political debate. Mr Woolas has been found guilty by an electoral court of telling misleading lies during the election. The Labour political class are in open rebellion against poor Hattie who suspended Phil from the Labour party on the grounds that this sort of thing, punishing lies, might be catching. Sacre Bleu, it might even spread to UKIP currently holed up in the Brussels bunker.

Sunday, 7 November 2010

Farage wins leadership. Quo Vadis?

I congratulate Mr Farage on his comprehensive win in the leadership election and I look forward to reading his strategy and plans to get us out of the EU. Several sources have told me the party is in poor condition financially but I am sure Mr Farage, as he indicated at the hustings, will rectify that very quickly from his many large donors and be able to then concentrate on getting us out of the EU.

Why do I keep on thinking of the line from  Yes Minister, "You know the PM's motto – in defeat, malice; in victory, revenge". Jim Hacker: "? Wait and see!

Strategy is sometimes quite easy, do the thing your opponents don't want you to do or its corollary don't do the thing your opponents want you to do. The EU wants MEPs to join Pan European parties and thus become good Europeans. UKIP's strategy is simple, don't join! Wait and see what the Mr Farage does.

Mr Woolas and his crew have been found guilty of telling porkies about his opponents. A warning to all UKIP politicians and their cerebrally challenged apparatchiks especially as Nikki is not averse to pursuing her grievances through the courts.

I found Hattie Harman's statement on this morning's AM show very encouraging. Mr Woolas will be brought before a Labour party disciplinary hearing where he will be able to put his case presumably with legal representation. A lesson for UKIP there.

Wednesday, 3 November 2010

US Mid Terms shows how democracy should work

I have always been a great admirer of the men who wrote the US constitution. Their farsightedness, perspicacity and ability to construct a system that would nurture democracy for hundreds of years in the future puts our political leaders to shame. They separated their judiciary, legislature and executive to avoid the mish-mash of the UK parliamentary system that these founding fathers of the US had fought  and won against. Either the Senate or the House can block the will of the executive.They have an elected President.

I am proud of the part my country Scotland played 450 years previously in this process in the Declaration of Arbroath, 1320, which established the principle that a government could only rule with the consent of the people and served as the basis for the US founding fathers.

Consider the structure these founding fathers set up. They set up a Senate with 2 elected representatives per state so the large states could not force their wishes on the small states. They set up the House of Representatives with members elected from equal sized constituencies in population terms every two years.

Do you imagine our lick spittle MPs would have been as eager to vote through EU diktats if they knew they would be facing elections in two years. Look at what has happened to the great black hope Obama. He was voted in on a huge popular vote but as soon as the US voters saw his real agenda they wanted rid of him. Would that we could do the same!

Look what happened today with the  Lib Dems ditching their written promise signed by everyone of their MPs not to raise student fees. The difference is we can do nothing about it. The Yanks can and have.

Do the citizens of the EU or UK have such vetoes on their executive. They do not!

Until we change our political system we will be continue to be ruled by a self serving political elite. Let us have none of the nonsense that our system has worked for hundreds of years so why change it. It has served the Old Etonians and party apparatchiks very well not the people. The great Reform Act which increased the adult franchise was only passed under threat of Civil War in the North of England. The political class however ensured the parliamentary system stayed to serve the members of their class as it has done so ever since!

I watched Andrew Neil's programme on Monday on the US TEA party movement. What came out time after time was the view that, 'we do not want to be ruled by professional politicians in Washington' who know nothing of us and care less. We need such a grass roots movement now but we are handicapped by our history and subservience to the class system and perceived betters. Look how Mr Farage worships titles! There is always some idiot who in Question Time type programs make statements like, "We pay our MPs to make decisions for Us". Wrong, wrong wrong! They make decisions to favour themselves and their class.

Why do we have an unelected second chamber populated by 1000 expensive has-beens? The US, a country with 5 times our population gets by with 100 elected Senators! Why do we need 70 odd MEPs? Why do we need a proposed 600 MPs when the US gets by with 435 elected members in the House?

But the biggest difference is that in the US when push comes to shove Senators and Congressmen represent their voters irrespective of their party label. You will now see Democrat Senators voting with Republican Senators to defeat Obama. They are genuine representatives of their voters. Our lot represent their party first and last. If they don't they are delselected.They are not elected in their own right or because of their abilities. Do you wonder then that our system is undemocratic and corrupt?

I want to join a British TEA party. Is there anyone else who feels the same? If so please leave a comment and contact details on this blog.

Monday, 1 November 2010

Merkel ditches the PIIGS

Time to write on serious matters. Dr Frau Merkel has had enough of ill disciplined PIIGS. Her 'plan' is to revert to the tried and tested IMF recipe of default, haircuts and debt holidays so bond holders will not get all their money back and in the meantime will get no interest payments. This the Dr Frau argues will shift the risk from Germany to the bond holders. Clearly the Germans have had enough of underwriting Greek debt especially as the Greek economy seems to be going from bad to worse. Merkel is clearly driven by internal German politics but she is playing a dangerous game.

For years the market have included a significant risk premium on PIIGS debt as historically these countries have a long history of defaulting on their debt. In the last year this risk premium has blown out to over 8% for Greece. Merkel's solution institutionalises this risk premium and invites the market to only finance PIIGS debt at high rates of interest.  This undermines the whole Euro project as it leads to a two tier Euro debt market.

It is reported in the second quarter of this year foreign ownership of PIIGS debt has reduced by 5% ad by 14% for Greece. The main buyers of this debt are the national banks of the PIIGs who can use these bonds as collateral to borrow Euros from the ECB.

This is a very lucrative carry trade for these banks but leads to an increasing concentration of risk in these countries.  As always political convenient short term solutions have a long term down side. Eurozone states have to borrow €900 bn next year. Investors will be happy to buy German debt but after that not even strike torn France looks safe.

This is the real game that could destroy the EU.