Friday, 29 June 2012

City of London own goal gives EU victory

Libor fixing is a horrendous own goal by the City that hands the EU the reason it needs to regulate the finance business out of London and across to Paris and Frankfurt. Listening to the Question Time discussion yesterday it was obvious 4 of the panelists did not understand how Libor rates are calculated. The one who did, Terry Smith wisely kept stumm. There is no point in trying to debate with the ignorant.

Libor rates are set by a panel of 16 banks who supply rates to the BBA at which they will lend to unsecured to other banks in size, say £500mn. The top and bottom 4 rates are discarded and the average of the middle 8 rates published as the Libor rate for that currency for tenors ranging from over night to one year. Sound fair?

The snags are that this is an unweighted average of indicative rates many from small banks who only lend in small amounts. These small fry are easy for the big boys to fix to get rates set which generate the highest profit over all the big boy's positions in various instruments they trade in eg swaps. Most banks in the City were therefore involved but the big boys made the big bucks out of rate fixing.. 

When I was doing MPC briefings I never used Libor. I used OIS swap rates. The OIS is a weighted average of the actual traded rates between the roughly 6 biggest banks operating on the London money markets.

Listening to Mervyn King tonight I doubt he even noticed. What went wrong with the banks occurred on his watch. His comments on the extending time frame to fix the crisis I found staggering. When Lehmans went belly up I was asked by various people how long the crisis would last. I replied that the historic average to recover from bank crises was 14 years. I find it incredible King was unaware of this simple and well known statistic. He wanted a second term as Governor however.

The EU is going to take over all control of banking regulation and this Libor fiasco gives them carte blanche to screw the City of London into the ground and they will do it.

King's comments on the RBS IT screw up are equally incredible. I have one word to say to King, Globus.

Tuesday, 26 June 2012

The EU is already a sovereign state in US eyes

I am thinking about applying for a football pundit job following the success of my little PIGS success prediction. Three out of four correct is good fishing!

I was struck tat at the G8 meeting there were 10 attendees. The extra two were Barroso, I will take no lessons from anyone on democracy and Farage's bank clerk friend von Rumpy Pumpy. As Mr Farage asked of Rumpy, 'Who voted for you?'

It got worse at the G20 when Frumpy was added to the EU state delegation and Barroso lost his cool like a Biggle's dago.

This is happening because the US since Kissinger have always wanted a Europe state to deal with. It makes things so much easier for the US administration. Barroso, Frumpy and Rumpy are happy to oblige the US in this matter although both Barroso and Rumpy hate the US for its democratic processes and habeus corpus based legal system. But did any of UKIP's MEPs pick up on this? Of course not.

There is a good piece by Jeremy Warner in today's DT questioning the justification for the BoE's frenetic money printing euphemistically called quantitative easing. It is of course driven by a desire to be seen to be doing something helped of course by Paul  Tucker's fanatical desire to be next Governor which he hopes to achieve by pleasing those in who have the post of big G in their gift ie Dave and wee George.

QE money printing benefits the feckless especially the government hugely by buying up loads of gilts at diminishing interest rates. Who loses? Pensioners mainly and the other thrifty with building societies.

What should the BoE be doing? Well nothing as Warner points out  as does Terry Leahy in his book. To do nothing takes courage so we won't be seeing that from our politicos.

I predict a Germany Spain final. A pity about England especially for Steve Gerrard 

Friday, 22 June 2012

German Greek previous football match

As I predicted the first little PIG won last night thanks to the brilliant Ronaldo and woeful Czechs.

Following on this success I recommend clicking on link to see what happened the last time these teams met. Both teams had their all time stars out with Karl Marx unable to get a place in the German starting line up although he did come on as a substitute. Socrates played a blinder for Greece.

The Greeks obviously have the hardest task of the four little PIGS. Dr Frau Merkel has her team well drilled so its German efficiency against Greek tax evasion guile and cunning. I hope the Greeks win. I more confident about Spain and Italy wining this weekend with their stars El Greco and Leonardo in top form.  

Thursday, 21 June 2012

PIGS likely to win Euro football

The likely semi finalists are Portugal, Italy, Spain and Greece who must have a huge incentive to duff up the Krauts. Its all the work they don't do leaves them plenty of time to practise their footie. Sorry Roy but I think the Wops will prove a match too far for your boys!

Monday, 18 June 2012

Greek lessons for the UK EU imposed austerity

The Greeks have voted the 'right way'. New Democracy has just enough seats with their former enemies PASOK to form a coalition government, a bit like a LabCon coalition in the UK, but will it be able to run and reform Greece. I doubt it.There will be a relief rally in the Euro markets and warm words from the EU for the Greek people but nothing has changed. The Greek cartoon showing the fork in the road with one path leading to the graveyard and the other into a unknown black cloud sums it up.

I am concerned that when our chance comes in the now inevitable referendum the UK electorate will buckle under the same pro EU pressure and vote for the graveyard. At least the Greeks had a decently led left wing opposition to the EU austerity which we don't have in the UK.

I can remember the last UK EU referendum of 1975 in which the whole political establishment, LibLabCon, the CBI, the TUC and of course the BBC lined up to back a lets stay in the EU vote. The stay in also had a huge financial advantageover the leave campaigners which were portrayed as extremists, populists or any other derogatory term the political elite could think of. I expect it will be the same next time with Shirl etc making dire warnings of job losses and 50% or is it 60%+ of our trade is with the EU. Faced with the certainty of the graveyard and the uncertain outside the EU brave new world I have no doubt the British electorate will be terrified into walking to the graveyard.

Is there any hope of the outs winning our referendum ? Well British business is clearly unhappy with the increasing dollops of EU Socialist regulation as is the City, a different constituency, with EU financial regulation. Farage is a godsend to the pro EU vote. He is so easy to portray as a reactionary extremist as is his unsavoury supporting Cabal. The press have a very thick file of their so far unreported activities which they will trot out at the right time.

We need a Referendum movement outside party politics financed and led by etc business people, lawyers, academics, ie, people who have proper jobs and a real stake in the UK. Farage and UKIP must be consigned to the sterile wasteland of UK party politics kept out of the Out campaign. Imagine what the media will do to Farage, Nuttall, the Hamiltons plus a few bimbos in a serious campaign.

Monday, 11 June 2012

So Spain needs a bail out after all

After the usual repeated denials of the inevitable Spain asks for a bail out of 100bn€. The markets have an initial bounce but there are however a number of unanswered questions and problems with this bail out and as with all the previous bailouts I expect it will rapidly unravel when the details are scrutinised

First, the obvious question, where does the money come from? Well the Brussels has not announced whether it will be the temporary EFSF, European Stability Facility, or its permanent replacement, the ESM , the European Stability Mechanism. Either way like IMF loans other Eurozone members will be tapped for the cash. Only Germany has spare cash and it will push indebted Italy further into the mire. Oh dear!

Worse if it is done via the ESM then that like IMF loans will be the first to be repaid in event of a default with existing commercial loans subordinate to ESM loans. Now would you want to buy ordinary Spanish bonds under these conditions? Obviously not. Spanish ordinary bond yields will rise and bond prices fall and it will be the same as a Greek haircut. Spain will be locked out of commercial capital markets and totally dependent on ECB and EU finance which means other Eurozone countries.

So the Eurozone will have a rising number of borrowers and a diminishing number of depositors. Its a bit like the UK benefits and tax system.

Politically its been rushed through before the coming Greek elections can cause further instability. This is typical EU unsmart thinking. The have handed a superb stick to those Greek parties that oppose their bail out with all its horrible austerity requirements to say me too. Ireland most of all will want the nrew austerity lite loan and quite right too!

The Spanish have been conned by their bankers as we were. Independent estimates of their bad property loans are in the rang 350bn to 450 bn€. So Don Juan will be back for more very soon.

In Spain its the poor that are paying for the rich bankers but without our generous social security system they will suffer much more. There are no jobs in Spain. You cannot sell a house or flat to cover your mortgage loan. Its melt down.

These mortgage bank, cajas in Spanish, should have been allowed to go bust but that would be the end for all the Spanish political elite's careers. We went through the same thing with our mortgage bank, Northern Rock. That should have been allowed to go bust. I had shares in NRock as did all its pensioners and employees but it would have been the best and cleanest solution. Death is not nice but its clean and inevitable. Attempts to avoid the inevitable end in disaster.

The least pain solution that keeps the Euro is for Germany to leave the Euro but it will end like Hitler at Stalingrad and Napoleon in Russia.

Friday, 8 June 2012

The EU's conceit is fatal for us ordinary people

Allister Heath edits  City AM a news sheet that is widely read in the city. He is worth reading and his well founded opinions makes him one of Andrew Neil's favourite and frequent interviewees. He has written an excellent piece today, click on link to read it. The piece is entitled 'Our fatally conceited elites are being confronted with reality'. Its a good title and sums up his piece but as I say in my title its the ordinary people who will do the dying not Rumpy, Frumpy, Barroso and Farage.

Thursday, 7 June 2012

Crunch time for the EU

Things are converging to the mother of all crises in Euroland. My biggest mistake has been to underestimate the insanity and selfishness of the ruling EU political class. They will now push for a full federal state using every dirty trick and scare story they can muster. They have already turned Greece into a third world state and destroyed democracy in Italy but still they push on with their idiotic policies.

They have plenty of previous in this area. The great French hero Napoleon lost half a million men in his Russian campaign yet still he is regarded as a national hero! A century and a half later Hitler repeated the error. He lost 250000 men at Stalingrad refusing every request from the commander on the ground to try and break out. The British of course have their great General Haig whose obstinacy cost hundreds of thousands of British soldiers their lives in WWI.

I remember a discussion I had with Trevor Colman some years ago on the Euro crisis where I opined the crunch would come when Spain started to crumple. That time has now arrived and the crisis is upon us. The politicians clearly don't know what to do other than have another meeting which achieves nothing.

The Eurocrats however do know what they will do. For them its a beneficial crisis and the solution is more of the same medicine increasing their power, salaries and influence. Watch Cameron & Merkel tonight on TV to see how bad things are. Merkel thinks Cameron's position is laughable. The Eurocrats will win because there is no effective opposition. The Britsh FCO will not push for radical reforms. That would be "irresponsible" in their view. The FCO clearly sees its responsibilities lie with supporting their fellow bureaucrats not the British people who pay their salaries.

There is now a gathering momentum for some sort of EU referendum in the UK. This will of course be fixed to get the result the EU wants by the wording of the question(s) and the weight of media coverage. What is the EUKIP leader Mr Farage doing to prepare for this referendum ? Ordering another round in Murphy's bar I bet.

Wednesday, 6 June 2012

Nailing the EU trade lie

John Redwood has a brilliant mind. You don't get elected a fellow of All Souls at 21 without being one of the brightest of your generation. But besides that John Redwood is an outstanding communicator. I reproduce below an email he sent out on the EU trade lie which he entitled, 

I reproduce it below.

The main argument that advocates of our current EU relationship advance is that we do more than half our trade with the EU so we have to maintain full membership to keep all those jobs. It is the most stupid argument in current UK politics. It is extraordinary that it has been trotted out uncritically for more than fortty years, and still many in the media fall for it.
It is often based on the lie that more than half our trade is with the rest of the EU. This figure ignores our very profitable trade in services, where well over half is with non EU countries. It ignores the Rotterdam and Amsterdam entrepot effect, where trade with the rest of the world passes through these large ports and is counted as EU trade when it is with places further away.  It fails to take into account that our trade with the rest of the EU is in heavy deficit, whilst our trade with the rest of the world is in good surplus.
Worse still, it assumes if we tried to change our relationship or if the UK electors voted to leave, that trade would be lost. Are they seriously suggesting Germany would no longer sell us BMWs and Mercedes? Do they think we could not manage by buying cars we make here, if they will no longer sell us cars they make over there?
Do they not grasp that EU countries are signatories to international agreements on trade which would prevent any such interference in trade with the UK?  Why do they wish to bind us into close union with countries which they think have such ill intent towards us that they would seek to damage trade with us as revenge for our wanting more independence?
It is all absurd. The rest of the EU has too much to lose from its lucrative UK trade to want to damage it, and would be restrained anyway by the legal requirements of the international trading system.
They sometimes go on to argue that we need to be inside to have influence over the rules and regulations that apply to goods and services we supply to the rest of the EU. We have no such influence over the rules and regulations imposed by the US or China on our trade with them, but they never argue we should join some type of political union with these countries to sort this out. The problem with belonging to the EU is that we need to apply EU rules not just to goods and services we supply to other EU countries, but they also  make us apply them to products we want to sell to third countries. As often the UK ends up with more rules and regulations than it wants or needs, this can make it more difficult to sell outside Europe.

It's a strong well presented argument that I can't improve on. Its a pity EUKIP have no one of similar intellect and skills

Tuesday, 5 June 2012

How EUKIP is as undemocratic as the EU

I do not call Mr Fartage Cabbage's cult EUKIP without good reason. The similarities are considerable and the differences few. Both are ruled by a self perpetuating elite. Both claim to be democratic but as Goebels said if you are going to tell a lie tell a big one. In fact the EU is more democratic than EUKIP in the sense it allows the idiotic Cabbage air time to slag off Barroso, Van Rumpy, Frumpy etc. No one is ever given platform time at an EUKIP event to criticise the ruling cabal. Useful idiots are of course frequent platform speakers at EUKIP events and welcomed.

EUKIP's Fartage controlled NEC plays an exactly similar role to the European Parliament. Both are powerless organisations whose function is to rubber stamp decisions made elsewhere and hence give the rulers the imprimatur of democracy.

EUKIP's so called democratic MEP  representatives will now be solely chosen by Mr Fartage. Even the Tories do not allow Dave to control their choice of MP candidates. That's why Warsi had to be sent to the Lords. No constituency would have her. She was unelectable.

EUKIP has no such problems. Its branches, that match parliamentary constituencies, thanks to voting through the latest Fartage  'modernising' changes to the EUKIP rule book they have given away their powers just like the ruling UK elite gave away our country to the EU. Yet these are the people who claim they were conned by Heath. Can they not see that they are being conned even more by Fartage?