"So We Adopted."

Via: Boulton & Co.

Peston "Fisks" Marrs Brown Interview

The BBC’s business editor Robert Peston, currently the object of the frustrations of a substantial number of City fund managers who think he should be done for creating a false market in HBOS, has fisked yesterday’s Marr interview with Gordon.
Implicitly critical of Marr for letting Gordon off the hook, Peston makes some good points:-
  • Gordon said it is the right time for the government to borrow – as if he had a choice – the PSBR could reach £100 billion. Double the budget estimate.
  • Gordon took the credit for the FSA’s banning of short selling. Does he take the credit for the FSA’s failure to monitor Northern Rock’s liquidity problems as well?
  • Brown blamed global problems and everyone else, as if he was blameless.
  • He misrepresented the real reason for Bank of England’s flood of liquidity.
Brown rightly resisted EU regulation of London’s financial services, he now says he wants international regulation. Gordon says Britain’s regulation was better than America’s regulation. The FSA allowed Northern Rock to lend 125% against the asset to borrowers. Was that best practice? Peston, Gordon’s biographer, says he is exhausted by the twisting of Brown.

Scottish Labour Facing Annihilation

The SNP is looking at a 14.5% swing towards them in Scotland on the basis of the YouGov / PolitcsHome super-poll of the marginals. That will wipe Scottish Labour out. Gordon will achieve the annihilation of the Labour Party in his homeland for a generation. Could that be why Luke Akehurst’s We Don’t Want a Labour Leadership Election Facebook group had a flood of non-Labour Party applicants? Luke has revoked Guido’s membership and blocked new members, spoilsport…

Market Mayhem Watch: Fear and Greed

Guido can’t resist and is now actively trading once again in financial markets, attracted by the blood on the streets of New York and London. The approach is old fashioned, none of that quantitative analysis using super-computers that you need to lose billions. Just two or three positions on the go at any one time, mainly restricted to financial futures, foreign exchange and commodities rather than individual stocks. Have an aversion to trading stocks because insiders (or friends of Robert Peston) can kill you if you are leveraged – given portfolio leverage varies from none to 20 times – it is essential to employ stop losses. Will report how the portfolio is doing in percentage terms (in the right hand column) as of Tokyo market opening this morning. Because of the leverage employed swings of 20% are not unheard of – unfortunately that is usually on a bad day. Mark to market since this morning’s open is +4% largely on the back of another FTSE short .

Will probably keep the reporting going until this period of extreme disequilibrum in the markets is over or the portfolio is down 50% or up 100%. It will be an interesting experiment to keep a public trading diary.

Rich & Mark’s Monday Morning View

Marr Does the Usual

“Is it fair to say that the country…..and the economy have been let down by people in the city?” “So why is that if you’ve made the right decisions and the Tories have made the wrong decisions do the polls not reflect this?” …. and so on and so on. Even when Brown told complete lies like “we have reduced debts”, Marr remains mute.

Jeff Randall on Sky really laid into Brown this week when he tried to pull his usual line in “Brownies”, not that it made much difference, Brown just stuck to his lines. The viewer was able to make up their mind who to believe. Marr really should stick to reporting, his interviews are pathetic.

Gordon seemed to be testing out a new line, that he had been telling all the other finance ministers (who were not as brilliant and as far-seeing as him) that we need a global regulator for years. One that would allow 125% mortgages, not monitor liquidity and wrench the central bank away from the government debt markets. If only the Americans had listened to him…

Work at Sky, Want a Guido T-shirt?

If the video of David Miliband laughing at getting the number of victims of the Pakistan terror attack wrong should fall into Guido’s hands / inbox, there could be more than a T-shirt in it for you.

No questions asked…

Since You Asked….

Yes, Guido’s FTSE short got whacked. Had a stop-loss at 5200, so the pain ended some 250 points after the Mother of All Bail-Outs was announced by Comrade Paulson. Don’t shed too many tears for Guido, the short was put on at higher levels the Monday after the weekend Alistair Darling told us we were doomed and was traded in and out of (unproductively). The gold long is good, the EUR against GBP trade is flat.

Who really expected the wholesale bailing out of Wall Street? The Sovietisation of the Street by Paulson, the former Goldman Sachs CEO, means that never again will the U.S. be able to preach the advance of free markets to developing countries with authority. These extraordinary times have seen Treasuries bonds with zero-yield, effectively you might as well put the money under the bed.

Anyone familiar with Ayn Rand’s novel Atlas Shrugged will be able to see the coming consequences, the end of free capital markets. The voters forget at their peril how and who finances the billion-dollar chip manufacturing plants, the satellites, the billion dollar pills from high risk bio-technology that will cure disease, the multi-billion dollar networks that make us such an inter-connected globe. There will be new regulations galore, the taxpayers will be raped as they have never been raped before, it seems this is the price the U.S. authorities think has to be paid to stave off financial meltdown and a recession that could turn into a depression. The latter prospect seems a product of panic rather than reason.

The investment banking model since the 1990s was flawed not by lack of regulation, it was flawed because of poor governance. Traders and management were incentivised to take risk for reward with minimal personal downside. Bank shareholders have lost money hand over fist whilst their hired employees have been paid hundreds of millions. The complex derivative structures that underpinned sub-prime lending were opaque to the point of incomprehensibility.

The banning of short sellers is a side show, it is merely populist politicking. It will make conservative hedging very difficult, it raises the cost of capital to corporates and it will not change the underlying fundamentals. It will also create liquidity problems and a whole host of technical difficulties.

Are banks safer because it is illegal to short them? Has liquidity returned to the money markets? Are mortgage assets recovering? No, no, no. Unless Paulson announces a plan to put U.S. taxpayers on the hook for billions of dollars in risky sub-prime mortgages this weekend, this stock rally will come completely unstuck… and Guido will be short stocks again.

Gordon Brown’s Sky interview, where he blamed investment bank’s off-balance-sheet liabilities for the credit crunch, was an unconsciously revealing moment. What is the trillion pounds of debt in PFI contracts and unfunded state pensions if not Gordon’s very own off-balance-sheet liability? Gordon and Ed Balls designed the world’s biggest off-balance-sheet structure to massage the PSBR, it will have to be paid down by generations to come. Brown’s legacy will be that British children, and their children also, will be paying off Gordon’s debt bubble.

Friday Caption Contest

[…]

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That LabourHome Poll

There seems to be a concerted attempt to shoot the messenger. Tom Watson, live and direct from the bunker, is trying to rubbish the poll and menace LabourHome’s editor Alex Hilton. Luke Akehurst, the Weber Shandwick spinner for arms dealers

[…]

+ READ MORE +

See If Gordon’s Sums Add Up

Give it a go here.

[…]

+ READ MORE +

54% of LabourHome Readers Want Gordon to Go

A survey of Labour supporters by LabourHome for the Indy tomorrow finds 54% want Gordon to go before the next General Election with 46% wanting him to stay. 57% believe there should be a leadership vote at party conference and

[…]

+ READ MORE +



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