Only Republic of Ireland seems to be serious about deficit.

It seems that only the Republic of Ireland is serious about reducing its fiscal deficit. Developed countries like the United States, United Kingdom and Greece are hoping that economic growth will turn up. However, they are allowing their policies to be dictated by the credit rating agencies. In yesterday's Sunday Times, Irwin Stelzer was scathing about the public sector liabilities being built up in the U.S.
Here, in the UK we share problems such as underfunded pensions.
I don't think the Irish actual cut in public sector wages will be replicated in the UK, which seems to want inflation to do the job.
Stelzer's fellow commentator David SmithHe describes UK Chancellor Alistair Darling as a Jekyll and Hyde character, who compared to his pre PBR briefings to journalists, did the actual opposite in the
statement. Public spending and the fiscal deficit will go up rather than down in the medium term.
From filling your car with petrol to running a small business, we are obviously not an under-taxed nation. I think it is implicit in Labour's thinking that difficult issues such as the possible spiral in public sector borrowing will not happen. Or it could be resolved by scrapping Trident and taking a less-demanding role on the world stage.
In today's Daily Telegraph, Roger Bootle, says the UK does have the advantages of a flexible labour market and exchange rate depreciation. This allows us to gain competitiveness without the future years of painful deflation for
Ireland. Although the UK does have the problems of its public sector and state education system.
I think that the Irish might have to admit defeat and pull out of the euro. Depression would endanger the gains made by the country recently. Greece says it will not go down the route of wage cuts but the markets will probably make some kind of decision for it. The smaller economies in the EMU could have handled the single interest rate better but that is in the past.

Gordon Brown launches public sector effiency drive.

British Prime Minister Gordon Brown has promised another public sector efficiency drive just before his Chancellor Alistair Darling unveils the Pre Budget Report (PBR)
aimed at plugging our £175bn government borrowing deficit. In his previous incarnation as Chancellor, Brown used to raise the tax burden after the election was safely out of the way. However, Darling apparently wants to be more candid about the fiscal position. This will need a combination of tax rises and spending cuts. Given the sums required I suppose we will be talking about income tax and VAT as well as spending cuts hitting the big budgets of education and health. Gordon's stealth taxes, such as on pensions
and Conservative-led councils, will not be enough.
The independent think-tank Reform considers that the 6m public sector workers will have to be reduced by 1m. This is probably politically impossible unless the United Kingdom has actually gone bankrupt. Yesterday, Gordon was warbling about the capacity of government to do good while outlining measures to relocate civil servants from the south-east of England. Apparently, this would save on property costs. However, this would just increase the region's mismatch between its tax contribution and what it gets back from the public sector. I suppose Labour would want to relocate English civil service jobs to the devolved regions of Wales and Scotland to shore up its votes (ONS in Newport?).

Alex Salmond launches White Paper for Scottish independence.

Just flicking on the BBC's News Channel, there was SNP leader Alex Salmond launching the White Paper for a referendum next year on Scottish independence. Salmond is an accomplished performer and politely did not draw attention to one benefit of independence, which would be not having to put up with Gordon Brown and Alistair Darling plying their trade in England. Salmond commented that the current arrangement was suitable for the 18th Century but not the 21st Century. It would be interesting if independence could resolve the problems of Scotland's fragile economy and its dependence on English subsidies. Salmond said that money wasted on a replacement for Trident could be spent on hospitals, education etc but he did not address the problem of public sector jobs being relocated to England even if they were nasty defence
ones.
The Scottish opposition parties are anti-independence while opinion polls also show a majority against. However, Salmond does have a vision and he has done exceptionally well to get to this position.

Today's gold price reaches $1,180.50 an ounce.

I suppose this does not worry the UK's prime minister Gordon Brown, who as chancellor
ordered the Bank of England to dispose of half of its gold reserves at around the
new millennium. The proceeds were invested in currencies such as the euro, which has gone up but not as much as the gold price, which was trading at around $252 an ounce
then.
The gold price is telling us that quite a few people are 1) worried about the paper money issued by the countries such as the US and the US or 2) worried about the geopolitical situation (Iran/Pakistan) or a combination of both. Although physical gold does not pay interest and there are storage costs, it benefits from factors such as the huge jewellery demand in India (portability). However, U.S retail customers must be a bit miffed that HSBC wants them to move their physical gold holdings from its vaults in New York so that the global bank can serve its institutional clients.
I remember in the old days that gold mining companies had quaint names such as Val Reefs but might suffer from their South African connections. I have also read about the hedging tactics of Barrick, which affected the gold price. Maybe it is the time for Gordon Brown to shore up the country's international reserves with a bit of gold buying copying the example of India. This country has been buying from the IMF at
top prices.

Do we have the contingency funds for Cumbrian bridges?

The UK seems to have the contingency funds to fight in Iraq and Afghanistan but do
we have the money for Cumbrian bridges? The scenes of Workington and Cockermouth were
horrendous and flood damage is becoming a big problem for us. We have not helped ourselves by building on flood plains and by piecemeal investment on flood defences.
We have to accept that Cockermouth was in the government's view a one-in-a thousand year event following the heaviest recorded rainfall in England. However, the authorities seem to be behind the curve in this area.
The insurance companies estimate claims of £100m while the new bridges will cost quite a bit.
On the news today the clean-up of Cockermouth's Main Street looked amazing after so much debris. This followed people working through the night. It looks like more of this effort will be required to put the town back on its feet.

Poor old Gordon Brown really gets sucked in Afghan mess.

Until recently UK Prime Minister Gordon Brown virtually ignored the Afghan campaign.
He was not too worried about the lack of helicopters or his inability to appoint a defence secretary, who would stay the course. Brown is much happier talking about Africa or reforming the world financial system. He is not a "war leader", few politicians are but his own lack of conviction about the campaign is proving
fatal.
If we are there to defend the security of the United Kingdom, then why are we not attacking Pakistan where most of the terrorist plots come from? Brown had a chance to pull out when he took over from Tony Blair. He would have won domestic plaudits and would have obviously upset the Americans. However, Brown could have gone for an early general election before the voters got to know what he was like.
A withdrawal might have even made it easier for the U.S to pull back. Wars put incredible strains on public finances especially if countries do not want to raise taxes to pay for them. There is also a terrible price to be paid in lost lives. Currently, there is talk of retreating from the northern part of Helmand province. This does not really square with claims from the UK government and military that we are making progress. Attempts to build liberal democracies in Pakistan and Afghanistan are probably insane.

Quite a few UK government policies are not working!

I suppose my views are influenced by the Daily Telegraph but I can't help get the sense that quite a few UK government policies are not working. The tragic deaths of five British soldiers at a checkpoint in Afghanistan yesterday does not seem to be help in any progress towards our objectives there. Any unilateral withdrawal would be difficult since we would experience extraordinary U.S pressure but I think it would be worthwhile. We are not going to settle down for a thirty to forty year
conflict. Prime Minister Gordon Brown says the presence of British troops protects the UK from terrorist attacks but we still have to pay for increased surveillance etc anyway.
The UK educational system seems to be collapsing. Apparently, two out of every five children, who leave primary school, are unable to read and write. Secondary schools are declining according to international surveys. Universities want to charge more in fees for less tuition. We have got Ed Balls and Lord Peter Mandelson presiding over this situation, so I would not expect any improvement.
Home Office secretary Alan Johnson has got himself in a pickle over drugs classification. He does not seem up to a challenge on alcohol misuse, which appears to have led to a rise in unprovoked attacks on people.

London MP Tony McNulty is a very lucky man.

Labour Member of Parliament Tony McNulty is very lucky to get away with a slapped wrist for treating his parents to a rent free house with public expenses. If he had done the same claiming expenses from a company then the likely fate would be the sack. You get the sense from McNulty's protestations that he still feels he has'nt done anything wrong.
Let's hope the new wave of MPs will have more of an awareness of right and wrong given the number of expected departures next year due to the expenses scandal.

Does the ONS like being based in Newport, Wales?

I wonder if the Office of National Statistics (ONS) likes being based in the Welsh town of Newport and as part of its revenge the ONS releases deliberately gloomy figures for UK GDP? The recent ones wrongfooted the economic forecasters and apparently caused deep disappointment at Number 10. Italy now has a bigger economy than us while France and Germany are already out of recession. The ONS figures could be revised upwards at a later date but we seem to be in a state of limbo until the general election in 2010. If I was Gordon Brown, I would have gone for a poll during October. This might have minimised Labour losses and would have given the new government (a coalition one?) a six month start to begin repairing the public sector finances. Gordon might have even won a small
majority.

These public finances do not have to be repaired all in one go but if there was a judicious mixture of tax rises and spending cuts, then perhaps the budget deficit would not have to rise so sharply. Economic policy seems to be soley in the hands of Bank of England governor Mervyn King, who is going to have to reverse the policies of low interest rates and the consequent loss of purchasing value of the pound some time. We need these stimuli for now. The UK is starting to increase exports and is benefitting from a better balance in tourism spending.

UK Chancellor Alistair Darling seems to be showing a bit of independence from his Prime Minister but he will have his work cut out to go down in posterity as a successful occupant of Number 11.

Gordon Brown wants to save the planet again.

British prime minister Gordon Brown wants to save the planet again. However, the Labour administration has squandered various opportunities to convert the UK into a low carbon economy. Energy policy has stagnated since 1997 with the government seemingly committed not to build new power stations in the UK. The takeover of British Energy by French power group EDF might have seemed a smart idea at the time but it means our nuclear power policy is mainly up to the whims of an overseas company.
I suppose we will have the worse of both worlds: black and brown outs combined with a not very environmentally friendly energy industry. The recent report from UK energy regulator Ofgem was surprising for being non-positive from a government agency.
Apparently, British families will be facing energy bills of £2,000 a year to pay for all the nuclear power and renewable energies, which will be needed to reach the low carbon targets.

How did the Tories get into euro quagmire again?

With the Republic of Ireland approving the Lisbon Treaty, how did the Tories get into the euro referendum quagmire again? If we husbanded our oil and fish stocks like the Norwegians, then we might have made a more convincing case for independence, but like it or not we have to be pitching into the European game as there is no other one in town. Conservative eurosceptics can't turn the clock back while europhiles can't ignore the European Union's damaging policies for farming and fishing.
Conservative leader David Cameron just needs a form of words to patch over the divisions. You would have thought the Tories would be more interested in replacing Labour and putting into place their policies over education, defence, the West Lothian question etc, which could be far more reaching than worrying about European Union policies.
It would be a wonder for the EU to have policies on education, which we could use. In Sweden, there is a voucher system, which has attracted the interest of the Tories while the public systems in many European countries are suffering various stresses.

Lib Dems attack Shadow Chancellor Osborne.

Liberal Democrat Treasury spokesman Lord Oakeshott has attacked the Conservative
Shadow Chancellor George Osborne. Apparently, in the City there is the feeling that Osborne is not interested in financial services and comes to meetings unprepared. Oakeshott was talking at his party's conference in Bournemouth. This is reported in the latest edition of Money Marketing.

Of course, Osborne is seen as a good friend of Tory leader David Cameron, which is probably viewed as something that will be tested in the future.

Defined benefit pension schemes are on their last legs.

In a recent Money Marketing edition, Paul Farrow, of the Daily Telegraph, notes that
"the baby boomer generation is going to be the last to have the luxury of a decent pension." He also says that just three companies of the British FTSE index now offer final salary pension schemes to new recruits following the changes at Barclays, BP and Morrisons. These schemes add 20 pct to payroll costs.
Farrow writes that the removal of tax relief on dividend income has cost pension funds £150bn according to experts.

The 1997 tax change was sanctioned by the then Chancellor Gordon Brown.
www.searchaccountant.co.uk
www.searchifa.co.uk
I have got a deferred pension scheme and I am worried about the pension fund deficits
reported by the big UK companies.

Is the world economy choking on American dollars?

In the Sunday Telegraph Liam Halligan writes a perceptive article on the imbalances of the world economy.
With cheap American dollars used to buy cheap Chinese exports there is now the problem of the "carry trade" with people borrowing the low yielding greenback to buy
higher yielding assets. This is sowing the seeds of the next world crisis.

On the same page Ambrose Evans-Pritchard notes that Germany is hiding its bank losses
while countries are willing to bankrupt themselves buying Asian goods. Also, Ambrose-Pritchard notes that the main deficit countries are the United States with $628bn, Spain with $109bn, Italy with $62bn, France with $58bn, United Kingdom with $53bn and Greece with $42bn.

The Chinese are unhappy accumulating depreciating dollars but don't seem to want a free floating yuan or to turn away from exports and expand their domestic
economy.

With the U.S banking industry in a pretty bad way and healthcare reform dividing the country, the new Obama administration seems to have lost a lot of goodwill very quickly. When a million people attend an anti-Obama rally in Washington that is quite something.

Irish leader Brian Cowen trousers US$341,000.

The Times has recently reported a list of the top ten politicians in the world according to their pay. I was surprised to see the Irish Prime Minister Brian Cowen getting the equivalent of US$341,000, which is quite a bit above our Gordon Brown with the equivalent of US$279,000. The Republic of Ireland is in pretty dire straits financially while we in the UK have yet to confront the reality of our problems. It does not look like that Cowen and Brown are on any type of performance related pay, which is a shame.
www.searchaccountant.co.uk
According to official UK government figures the Eastern European migration is reversing, which reflects the slow-down of the economy. The lower pound does make Britain a less attractive place for incomers. This migration helped boost the Irish and UK economies initially but I don't think there was much provision for extra school and hospital places. In Ireland they are cutting teachers and something is going to have to give in the UK because massive educational expenditure is not producing the desired results in terms of a well-educated workforce. The "neets" (the existence of which helps fuel the need for Eastern Europeans) are a massive problem and a blot on the premiership of Gordon Brown.

Will British buy-to-let investors be able to refinance?

According to the British mortgage body CML, buy-to-let investors agreed just 7,790 mortgages in the second quarter of 2009. This compares with 36,130 in the same period
during 2008. Quite a few deals are coming to their end and it will be interesting to see of buy-to-let investors can roll over or refinance at advantageous interest rates. Lloyds Bank has introduced a maximum of nine properties for individual landlords over its various brands.
The UK banks could really kill off the buy-to-let market in their move to re-price risk. Investors have used the equity built up in earlier residential purchases to finance the acquisition of their later buys.
Commentators consider in any event that the Bank of England will start lifting rates in June 2010. VAT could be restored to more than 17.5 pct and tax and national
increases will be taking effect.
www.searchaccountant.co.uk
The burgeoning buy-to-let sector has been partly a response to the poor value the UK pension system has given to its contributors. The pension system is so complex with annual changes that letting out a flat or house seems quite a simple affair.

Apparently we are having falling high street prices.

In the United Kingdom (UK) we are apparently having falling high steet prices. We are experiencing food price deflation and we are just not buying as much as we have been due to recession. It all depends if people start deferring purchases and then retailers respond with price wars etc.
Ways of fighting deflation, which has plagued the Japanese economy for many years, include the Bank of England's quantitative easing (QE) programme. This has meant the
"Old Lady of Threadneedle Street" buying gilts from foreigners, which was not the plan, so that banks could lend more. There are talks about have negative interest rates for banks. This would involve paying the Bank of England for holding deposits at the British central bank and thereby stop the banks hoarding cash.
Unfortunately, the banks, mortgage providers and building societies have overlent on a grand scale and probably need time to work out who are going to repay their loans
and who are not. They are trying to minimise reposessions, which is a better performance than what occurred in the early 1990s.

One big deflation area is the residential housing market. There has been inflation in the number of indices tracking the market but sometimes it is not clear if prices are rising or falling. There are many regional variations in the UK and the market
for £1m plus houses is very rarified and not really reliant on mortgage finance. So, you could be gently deflating in the north-east of England and nicely inflating in West London.

I was going to discuss deflation but I will waffle on about Brown.

Mary Riddell is a good writer on the opinion columns of the Daily Telegraph and has always been a cheerleader for British Premier Gordon Brown but even she seems to be close to despair and says "There is no replay of the defiance shown by Tory grandees to John Major. We are seeing, instead, the muddle and disarray facing any government opting for evasion in an age of scrutiny."
This is from today's Daily Telegraph
http://www.telegraph.co.uk/comment/columnists/maryriddell/6151994/Gordon-Brown-the-Nowhere-Man-can-still-hit-back---but-he-cant-just-let-it-be.html
Labour left winger Jon Cruddas bemoans the fact that they are not laying a glove on the Tories at the moment. I would be more worried that Labour looks like going completely under with the Libyan affair. Fancy the fact pf Her Majesty's Government being called immoral by Gadaffi's son!! I also get the impression that the touchy-feely Obama administration is extremely annoyed with us. In fact, Gordon Brown has pulled off the incredible feat of annoying everybody. As for his moral compass, he is having a laugh.

I was going to discuss Ambrose Evans-Pritchard's article in yesterday's Daily Telegraph about the worldwide threat of deflation. Consumer prices are falling in countries such as Bolivia and Ecuador. The recent 2.2 pct monthly drop in Japan was a record. I suppose the Japanese can have more than one lost decade.

I can't see deflation happening here in the United Kingdom because of so many prices are being administered by the UK government, such as petrol and alcohol, and by the devaluation of the pound, which makes imports dearer. We should be trying to benefit as much as possible from the low level of sterling in terms of manufacturing, tourism etc because Bank of England governor Mervyn King will have to stop quantitative easing and to start lifting British interest rates quite
soon.

Apparently, the U.S Federal Reserve under Ben Bernanke is very concerned about deflation but can't do much about it at the moment since various parties such as the Chinese are complaining about their devaluing positions in U.S Treasury bonds because of the American printing presses. China is going to have to increase imports and to have a more balanced trade position with the U.S. But opening up like this would probably be difficult for the Red Army.

Benedict Brogan opines on the invisible Mr Brown.

In today's Daily Telegraph Benedict Brogran opines on the invisibility of UK Premier
Mr Gordon Brown in the fall-out of the Lockerbie affair.http://www.telegraph.co.uk/comment/columnists/benedict-brogan/6128163/David-Camerons-lesson-in-leadership-for-a-Prime-Minister-in-retreat.html
Other Labour ministers have gone missing with the exception of Lord Peter Mandelson.
Apparently, the British Prime Minister is cautious and cannot reply to a straight question with a direct answer. Quite a few people in the Labour Party harboured suspicions about the capability of Mr Brown (was'nt he a landscape specialist?) but did not bother to share them with the UK electorate. This was when he was elected by his party in a Stalinist style vote. Even the North Koreans would have been proud of the vote recieved by Mr Brown in the Labour leadership election, although it was called a "coronation". I bet some Labour MPs in English marginals are regretting the coronation now.
Changing tbe subject today has seen the publication of a McKinsey management consultants report advising the elimination of one in ten jobs in the National Health Service (NHS), which has been much maligned in the United States recently with the Republican attacks on the Obama health reforms. I think something is going to give. However, if you do have job cuts the NHS bureaucrats will protect themselves while the number of doctors and nurses will be reduced.
However, normal rules do not seem to apply to the NHS with its high sickie rates, although it is a relatively cheap way in terms of percentage of GDP to provide health care for a country. I suppose both the UK and US health systems need reforming
and it will be interesting to see what will happen. Eliminating jobs and positions would be a quick way of saving money for the NHS but it would be very disruptive in the long term.

It looks like Gordon Brown is in the mucky stuff again!!

It is always fun when British politicians are found out to be less than full and frank over dealings. This has emerged in the Libyan affair where UK Premier and major Scottish politician Gordon Brown seems to be in the mucky stuff again. It just
was happenstance that the release of the Libyan official, who took the can for mass murder, helps further the interests of UK oil multinational British Petroleum (BP PLC).
I have to declare an interest since I am the holder of 266 shares in
BP.
In yesterday's Daily Mail there is an excellent article by Stephen Robinson on the Devil's Gold, where any connection with oil leads to corruption. Robinson highlights the example of Equitorial Guinea, which could have the per capita living standards of Spain, if the oil wealth was properly distributed.
http://www.dailymail.co.uk/debate/article-1210360/STEPHEN-ROBINSON-The-curse-devils-gold--Libya-deal-proves-oil-corrupts-touch-it.html
The Devil's Excrement was a description for the black stuff made by a Venezuelan minister, who was one of the early founders of the oil cartel OPEC.

I am surprised that Prime Minister Brown is on holiday.

It is a wonder that British Premier Gordon Brown is taking a holiday and a good long one considering the pressure he puts himself under. Apparently, Lord Peter Mandelson has had a spell of bossing the UK from his holiday in Corfu. This entails "working the phones". I remember once there was a political flare-up during the holiday season and the then Labour leader Neil Kinnock had to make his views known through a poor phone connection. Nowadays, the media technology is much
better.
Let's hope we don't have the same Mandelson/Osborne media relations disaster of last year with a cast including the Russian oligarch Oleg Depriaska.
I take the view that the holidays should be a break for the politicians from cluttering our airwaves. There used to be a "silly season" during August but we are being made afraid by government announcements over swine flu and the possible use of tamiflu.

So more quantitative easing but it is not the same as...

The Bank of England does not think we are out of the woods yet and it is doing some more quantitative easing. It is technically not the same as printing money but it could still debase the currency (Zimbabwe anybody!!). It is going to be painful when the central bank does attempt to raise interest rates. The Bank of England would not want to do this just before the coming general election. Governor Mervyn King must be hoping that his boss Gordon Brown goes for a poll in October. Waiting until May 2010 when the unemployment figures could be pretty bad does not seem the sensible option.

One of my favourite publicatons is Money Marketing especially the articles by Brian Tora. He considers that Ireland is teetering on the brink of bankruptcy and 7,000 teachers will be sacked combined with the closure of many rural schools. Is this was to happen in the UK, the equivalent of 250,000 teachers would go. It is not going to take place but it is nice dreaming about it. In Great Britain we are churning out quite a few kids, who have not benefited from the education process at all, the so-called neets.

Argos really knows how to get the price increases in!!

British retailer Argos really knows how to get the price increases in!! With its latest catalogue, the company lifted the price of its cheapest, plastic pedometer from £2.89 each to £2.99. I thought the UK economy was suffering from deflation!!
Unfortunately, I soon broke the pedometer by getting something out of my left pocket forgetting that I had put the damn thing on.
Argos.co.uk
UK petrol prices are going up a clip. I suppose this is due to the U.S dollar denominated commodity being affected by the collapse of sterling. The Bank of England must be worried about the price increases washing through the UK economy.
I think we could see a change in interest rate policy soon with a 0.25 pct rise soon especially if the British stock market is getting ahead of itself. With the country counting the days until the May 2010 election (could it be October), the British central bank would want to get non-political interest increases in soon. Perhaps, we are really ahead of the curve!!

Sorry to go off-piste as it were but here is a BBC reply.

For my Dear Blog readers, sorry to go off-piste as it were but I thought I might copy
to this forum a BBC reply to a complaint of mine on unsuitable material broadcast to
young children. I was quite surprised by the Beeb's arrogance. They will never admit they are wrong.

Dear Mr *******

Thanks for your e-mail regarding 'Horrible Histories' broadcast on 23 July 2009.

I understand that you felt a number of scenes in the programme were inappropriate
for broadcast on children's television and it was it insensitive for the programme
to feature corpses during this episode which looked at the reign of Henry VIII.

The series aims to introduce history to children by taking an irreverent look at
various historical events. It's certainly not intended to shock or cause offence,
merely to bring a fresh approach to introducing history to younger viewers.

Having said this, I understand that you were left unimpressed the show and to that
end I would like to assure you that we have registered your feelings on our audience
log.

This is the internal report of audience feedback which we compile daily for all
programme makers and commissioning executives within the BBC, and also their senior
management. It ensures that your points, and all other comments we receive, are
circulated and considered across the BBC.

Thank you once again for taking the trouble to share your views with us.

Regards

Gerald McCusker
BBC Complaints
____________________________
www.bbc.co.uk/complaints

-----Original Message-----

I want to complain about the graphic scenes on the kids programme discussing the
reign of Henry VIII. The idea of having heads sowed back on deathly white bodies
defies comprehension. What are you guys on? I thought that could be an X rating.
Those responsible for the programme should be sacked forwith. Yours, ******

(Sorry to retain anonymity but I don't want to be a celeb in celebrity mad Britain).

Sir Richard Dannatt lays a few blows on the British Government.

The head of the British Army, Sir Richard Dannatt, is laying a few blows on Her Majesty's Government over the lack of resources (helicopters etc) in Afghanistan
to help our troops. Apparently, New Labour sources are muttering about possibly Sir Richard being "political". I suppose there is a fine line between "fighting your corner" and being openly disloyal.
UK Premier Gordon Brown looked absolutely awful yesterday in front of the Defence Select Committee by trying to avoid giving a direct answer. Apparently, Defence Minister
Bob Ainsworth is 21 out of 23 Labour portfolio holders and gives mediocrity a bad name according to Jeff Randall in today's Daily Telegraph. There have been five defence secretaries since 2005.
If I was Brown, I would have blamed the NATO allies for not stumping up combat troops
such as the Germans just to divert attention.

Gordon Brown is taking a few blows to his body.

Estimed British Prime Minister Gordon Brown seems to be a sitting duck for the criticism of past and serving UK military officers. His bright idea of appointing experts to his government, such as Lord Darzi and Lord Malloch-Brown, has fizzled out as they are leaving the sinking ship. Former minister and ex-CBI luminary Digby Jones appears to be a one-man opposition party as he vigorously takes on the fight to New Labour.
The British unemployment figures are just awful and give testimony to the recent negative forecasts of over 3m for 2010. The Chief Medical Officer looks uncomfortable on breakfast TV as the BBC presenter does not believe a word he says.
I supposes this follows the World Health Organisation (WHO) contradicting the British government on the future availability of a vaccine for swine flu.
http://www.searchaccountant.co.uk/Accountants/Accountants-In-Dundee.html

Gordon Brown is having a poor war in Afghanistan.

Folllowing the recent dreadful casualties suffered by the British Army, Gordon Brown is having a poor war in Afghanistan. In a trenchant article in the Independent, Bruce Anderson accuses the UK premier of corporate manslaughter. Brown has not spent the money required on helicopters and armoured vehicles. Anderson argues, however, if the West pulls out then the Taleban would regain control.
I remember reading that UK forces would sometimes pass by Victorian memorials to earlier campaigns in Afghanistan.
In the Times Matthew Parris simply says we will not win. The tribal politics are too complicated for a start.

I suppose the Afghanistan campaign has suffered from mission creep. The initial plan from what I gather was to kill Bin Laden and wipe out as much as the Taleban as possible. Then, the objectives have been expanded to introducing development and Western-style democracy. These are very expensive. Now, another objective is to protect Pakistan through our presence in Afghanistan.

Fighting wars (and not paying for them) is not very good for currencies, interest rates etc. The UK will probably run out of money to fund its involvement in Afghanistan.

Liam Halligan is a bit concerned about the UK printing presses.

Writing in the Sunday Telegraph economist Liam Halligan has expressed his concern about the quantitative easing (QE) being carried out by the Bank of England. This has not led to a lowering of UK gilt yields and will increase inflation. Halligan says the banks are keeping the QE cash themselves, on reserve or lending to their off-balance sheet vehicles.

Are we experiencing the green shoots of recovery?

In the United Kingdom are we experiencing the green shoots of recovery? www.searchaccountant.co.uk The housing market seems to be stabilising but there is the danger that the Bank of England will raise interest rates too early. Despite the 0.5 pct base rate mortgage lenders are still demanding high deposits and quite a few commentators consider that the British housing market is still too expensive. The relatively painless adjustment would be a few years of sideway movement combined with a rise in general prices. However, the more painful adjustment would involve increasing repossessions and general
deflation.
You don't get the sense that UK Chancellor Alistair Darling is on the top of his brief. He is not pushing through help for the British housing sector and he seems to be stalling on help for the car industry in Britain.
However, he showed dogged determination in seeing off Prime Minister Gordon Brown, who wanted the job to go to close friend and ally Ed Balls. Darling is going to have to navigate a spending statement in the winter. This will be quite tricky
and he might regret not being pushed out. Normally, when the relationship between a chancellor and a prime minister breaks down, the PM remembers he is the First Lord of the Treasury. Apparently, Darling was saved when the cabinet staged a revolt against the promotion of Balls, so we are living in extraordinary political times.

I think it is a shame that Hazel Blears is not in the cabinet.

I wonder who else thinks it is a shame that feisty northern MP Hazel Blears is not in the Brown cabinet. Politicians spend years climbing up the greasy pole and then in a fit of madness (Youtube if you want to) and it is gone. Blears must have felt more confident of her position when she directly criticised UK Prime Minister Gordon Brown. Her recent abject apology about her resignation was toe-curlingly bad.
It is a shame because Blears would take to the airwaves fighting her government's cause, especially when there seemed to be a deafening silence coming from No.10.
www.searchaccountant.co.uk
We do have Lord Mandelson in the cabinet. A former foe of Brown, the peer has been credited with the prime minister's survival. However, Mandelson faces tough problems trying to help out the British car industry. LDV has been allowed to crash and the fate of Vauxhall looks very uncertain. Mandelson will be hard-pressed to maintain his current high reputation. However, he seems to benefit from unlimited energy and does not shirk the challenge of appearing on the news channels.

It looks like the tax master does not like paying tax.

It seems that UK Chancellor Alistair Darling likes to raise tax but does not particularly like paying tax himself with his constant "flipping". I bet HM Revenue and Customs (HMRC) would be itching to investigate his affairs.
The chatter is that Ed Balls is being lined up to become the new chancellor. So Mr Darling is fighting on all fronts.
www.searchacountant.co.uk
Mr Balls did actually pay capital gains tax, which helps his cause, although he is not liked by the Blairites. He is probably finding the Children's brief a vale of tears and would like to be out of it. Even though he is not chancellor, Balls is forever making speeches about the economy.

Are there green shoots out there or not?

I suppose that the famous green shoots are out there in the UK economy but don't tell
anybody in the car industry. However, retail sales are doing well and house prices have not collapsed, although there is not the same size of market. British house prices are still discouraging the first-time buyer and mortgage lenders still want outsize deposits but physical assets retain their allure, if there is going to be major inflation.
Commentators say that the UK banks have stabilised but the spotlight has fallen on the state of the building societies with the West Brom considered to be in trouble. Then, there is the UK property sector, which is in a dire state. Apparently, the banks don't want to pull the plug and make the situation worse. The wheels have fallen off at Brixton Estate and there are mutterings about
Land Securities.
The Bank of England governor Mervyn King is not very upbeat about the short-term outlook to the consternation of the Brown regime. However, the medicine of low interest rates, a weak currency could be helped further if there was a sense of political stability.

I feel quite sorry for Gordon Brown, battered British Premier.

I thought I would never have to say this. But I am feeling quite sorry for Gordon Brown, the battered premier of Great Britain and Northern Ireland. He seems unable to
sack a pint-sized Mancunian from his cabinet, even though she has been disloyal and seems to have spent quite a bit of time playing the capital gains system. The story is that is if Gordon Brown sacks Hazel Blears, then he would have to sack Hoon, Purnell
etc.

Hazel Blears looks like she is walking the plank.

British Communities minister Hazel Blears, who is vertically challenged, recently took a pop at her boss UK Prime Minister Gordon Brown. This act of bravery looks like political suicide, when Blears was found to have been "flipping" her second residences and decided to cough up over £13,000 in capital gains tax. What is quite sad is that Blears' political career is over when she was one of the cabinet's few interesting characters.
Brown himself blames the "system" but not everyone played it to their advantage. The government is quite happy to let loose the police and HM Revenue & Customs on the population. I suppose it is too much to hope that the politicians will receive the
tender treatment from these forces of control. From what I remember the old Inland Revenue used to be very particular about expenses.

PS: It looks like I was completely wrong and that Ms Blears is still going to soldier on in the cabinet together with Purnell and Hoon.

FSA failed savers, claims ex-Singer boss.

That was one of the headlines in the business section of the Daily Telegraph published yesterday. The former chief executive of UK bank Singer and Friedlander ,Tony Shearer said, that the Financial Services Authority (FSA), one of the creations of our great leader Gordon Brown, ignored his concerns about the competence of the Icelandic buyers Kaupthing. Shearer said the Icelandic businessmen were not fit and proper, which is quite an insult in the staid (??) world of banking.

I suppose everyone understands that the FSA really made a horlicks in the supervision of the British banking sector but it is still in denial. In the case of Singer and Friedlander, Kaupthing acquired the British bank in 2005. This followed the strategic need for a new customer base for deposits, since the Icelandic group had run out of savers amongst its domestic population. This amounts to 300,000 people, a similar number to the population of Coventry.
In hindsight the FSA could have been less welcoming to the Icelandic raiders. Perhaps the Bank of England could have done better and it looks like it is making a pitch for future regulation of banks.

Sorry for the recent break in blogs!! Gordon Brown!

Dear Gordon Brown, sorry for the recent break in the blogs. I know you enjoy being Prime Minister of England but I think you should resign our to patriotic duty. You had to jettison your really big pal Damian McBride and you might have to let go your old mucker Alistair Darling. Having to release Pakistani nationals after you described them as participating in a major terrorist plot seems to show that you have forgotten the first rules of dealing with the police and with the Home Office (Jacqui Smith!!). Namely, be very careful because of their stunning incompetence.

I am sure MPs such as Frank Field and the Milibands are sharpening their knives. Even Alan Johnson must think that he can't be any worse than you as a prime minister.
Do you want to give them the credit, just resign. Quite a few of the Labour Party think you are off your head anyway. Gordon, you have gone global but you have forgotten to go local. There was a BBC news clip this week about the dreadful situation in Merthyr. I thought New Labour was going to sort this out. You have managed to abandon your party's heartlands.

Gordon, you have killed the economic goose of England. We could never afford Scotland and Wales (never mind Northern Ireland, perhaps the most subsidised place in the world) even in the good times. So those future public expenditure cuts might mean Trident. However, more likely they will be the much vaunted Scottish university financing system and the massive local councils in Wales. These areas could easily be
pruned.

So to conclude, dear Gordon, you had your chance. Your unique selling point was that you were going to run the economy so competently so that there would be no problem in financing extra expenditure on schools and hospitals (all those PFI hospitals in
Merseyside!!) Now, to keep the show on the road you are expecting Johnny Foreigner to buy shed loads of gilts. Dream on!!

Are we experiencing a bear market rally?

Suddenly, the stock markets either side of the pond have perked up. There might be some of those green shoots of recovery but are we experiencing a bear market rally? The UK property market seems a bit perkier in terms of anecdotal evidence and of the Nationwide Building Society positive numbers for the month of
March.
The Bank of England governor Mervyn King seems to be in a bit of a quandary about quantitative easing and after using it to buy a few gilts. The governor has acknowledged that inflation is too high. In his column in the Sunday Telegraph, pundit Liam Halligan notes the Bank of England's own pension scheme is 70 pct invested in index-linked instruments compared with the previous 25 pct.
The British government still has to rescue the car industry, which means giving money to foreign manufacturers. This compares with the rise in car sales in Germany helped by the country's scrappage incentives. The British government has been traditionally anti the motorist and seemssto want cars to be sold from the forecourt so they could sit on the drive.

Enough of the doom and gloom, let's praise the top corporates!!

My dear readers, I know that I moan on about the state of the British economy and the uselessness of UK Premier Gordon Brown. A slight diversion on the new powers being assumed by HMRC from April Fool's Day, aaggrrhh!! Why does the Revenue needs draconian search powers? I recommend retail investors (although I should not because the blog is not an advice page) to put as much moolah in tax-efficient schemes such as pensions, ISAs and even National Savings
(such as humble premium bonds, if there is deflation).

But today I am going to extol the virtues of Sky.Com. I like the easy-to-use satellite television service and its broadband internet service is quite robust. It always seems to work and does not have the connection problems of Virgin Media.

I read in last week's Sunday Telegraph a profile of the head of the Tesco
retail services group Andy Higginson but I am just amazed by tesco.com. I recently got some car insurance for an old banger, so that the nipper can do some driving practice and it came up with the Irish insurance company Quinn Direct. It also getting me interested in Tesco's offers and promotions.

Another top corporate is Manchester United. I recently went to see them play at home to Liverpool and whereas the match was more of a disaster than the sinking of the Titanic, I was seriously impressed by how well they organised the mass corporate hospitality. It was a shame that a lot of Man Utd fans did not stay to the end to support (in the real meaning of the word) their team through thick and thin. I expect some Man Utd fans are just satiated with success. I remember watching them in the season they went down and the fans still cheered although it was pretty dire stuff.

The final corporate in my list is JD Wetherspoon and I frequent their hostelries in Enfield and Potters Bar. I am very attracted by their promotions.

Bank of England governor shows two fingers to Gordon Brown.

It looks like the governor of the Bank of England, Mervyn King, has shown two fingers to UK Prime Minister Gordon Brown. King has said there should not be another fiscal expansion in the forthcoming budget for the British economy. Then, it looks like the governor repeated the message in a visit to the Queen, possibly saying how bad the financial situation is.
There is going to be a wave of gilt issuance and I don't think the foreign investors will have much of an appetite for UK government paper. Perhaps it will have to be marketed to domestic investors. Retail ones are not major buyers of gilts but they could be if the bonds could be easily bought in the Post Office for example.
We talk of deflation but then we are in an academic pickle with the consumer price index (CPI), which goes up from 3 pct to 3.2 pct. The price of imported foods has been shooting up and it would be nice for the pound to rise a bit, just when I am planning to go to France in the summer.
Bank of England monetary committee member David Blanchflower has made trenchant comments in favour of major public works to offset the growing rise in unemployment.
Having a coherent roads programme would help and we have already got the Olympics with quite a few jobs going to foreigners.

Is RBS bust and they are not telling us? Part two

Today I thought I try and concentrate on a more positive picture of Royal Bank of Scotland (RBS). First, the British economy is going to need a counterweight to the new domestic banking giant Lloyds Banking Group. A diminished or disappeared RBS is not what we want in competition terms.
RBS still has some massive assets. For instance, I have been a NatWest customer since student days and I have been impressed how cheery the Potters Bar branch has been despite the uncertainty.
The bank's foreign assets, especially the U.S ones, should be kept. I thought it was a mistake to sell the Chinese interests just because cash could be easily raised. The original deal made a lot of sense.
The RBS brand is well-known. I know scorn has been poured on Fred the Shred's sports sponsorship activities but again these made sense, if the aim was to become a global bank.
RBS chairman Stephen Hester has been here before. I suppose he did not personally sort out the aircraft leases of Abbey National but a lot of work was expended in sorting out the mortgage bank. He delivered up the bank to Banco Santander, which was possibly not in the national interest, but it did sort out the problem.

I think RBS is bust but nobody is telling us.

In the old days the Bank of England used to take its time sorting out a collapsed bank such as Johnson Matthey and in some cases it would make a profit. The official
scheme is for Royal Bank of Scotland (RBS) to keep on lending, sort out the toxic stuff, make profits and then reduce the British state holding in the bank to a more reasonable level. However, it might be that RBS is bust and would need the tender treatment of the Bank of England reserved for collapsed banks of yore.
For instance, if we are wondering about the future of the City of London, then we might have to let Edinburgh as a financial centre look after itself. I think it could survive the wounding up of RBS.
Would New Labour and the Scottish National Party (SNP) allow the dismantling of RBS, which is about to take a £500m hit on Cattle's according to the Sunday Telegraph, just to save a few billion? Obviously not but if it is £100bn, then there might not
be much choice. Perhaps, the regulator Financial Services Authority (FSA) could fudge
the issue for a few years.

If we think we've got problems with Fred the Shred!!

In the United States there is the ticklish $165m problem of retention bonuses for AIG, we have the smaller problem of the pension pot of Fred the Shred, who built and then destroyed Royal Bank of Scotland (RBS) with the help of a few others on the way. I am not that interested in the size of the pension pot but in the fact that business mogul and now new Labour minister Lord Myners ending up holding the pension pot baby.
I have read many an article extolling the gifts of Lord Myners and I remember seeing him in the City of London holding two enormous briefcases followed by a PA holding more stuff. That is how important he was. Now, Lord Myners has been left holding the baby and that is something British civil servants are there to prevent. However, in these rarified circles, everyone has amazing pensions, Fred the Shred, Lord Myners and especially the civil servants.
Lord Myners has found out the hard way about politics. He has to take the can for a relatively minor detail in the scheme of things while his political bosses can escape more major indiscretions. Lord Myners will have found he has a raft of political enemies and quite a few are probably located in the Treasury.

We need a bit of economic stability.

I think that we need a bit of economic stability for the UK. However, every Monday I look forward to the Roger Bootle article in the Daily Telegraph. This puts forward a possible eurozone disaster and points out the parlous state of some of the eurozone countries such as Spain and Italy. I personally think that Germany could bail out these two countries economically but would be unable to rescue the Spanish and Italian political classes, which have invested so much in the euro project. It would also be a shock to the German political class.
I would wonder if any euro calamity would affect the level of sterling, which is downward anyway but I suppose Spaniards and Italians could start buying Swiss Francs and U.S dollars as a safe haven.
However, whatever economic nasties happen, Spain and Italy would still have fantastic cuisines. I used to love going to an Italian restaurant and wonder after counting out the lire whether the meal was cheap or not. With euros and working tills actually in operation, this is less of a problem now.

It all looks a bit gloomy for the good ship Britain.

With bank stocks falling and the pound dropping, it all looks a bit gloomy for the good ship Britain. Some members of the cabinet want Premier Gordon Brown to confess his sins concerning the slow motion economic collapse. He is not going to but Brown could be soon overwhelmed by events. There is the economic collapse, the military situations in Northern Ireland and in Afghanistan and the need to get an European-wide consensus about the recovery. Since the prime minister has not bothered to form alliances and friendships in Europe, things are looking bleak. Brown should spend more time gladhanding with our European partners. However, quite a few are not members of G20 and this does not help this basic Anglo-Saxon split with the Europeans.

Zombie banks!! Don't you just love them.

There seems to be more alarm over the Zombie banks in the United Kingdom than about the paying of RBS pensions to Fred the Shred and Lord Myners etc. It was thought that one of the main factors of the deflation or lost decade in Japan was the failure to clean up the balance sheets of the prinicipal banks. These were stuffed full of bad debts and stopped the Japanese institutions lending to businesses.
The situations are not strictly comparable in the sense that the Japanese property bubble was so big.
However, in the UK there is a marked reluctance of the main banks to confess to the full range of lending horrors. Negotiations between the UK Treasury and Lloyds Banking Group have stalled. The CEO of the British bank, Eric Daniels, is apparently trying to keep the state's shareholding at below 50 pct. He does not want to suffer the fate of Royal Bank of Scotland (RBS), which will be 95 pct owned by the UK Treasury.

What is the European Central Bank up to?

The European Central Bank (ECB) is currently carrying out a stately progress. Commentators say that it will implement eventually the dreaded quantative easing (printing money). However, this is a bit late compared with the U.S Federal Reserve and our very own, the one only Bank of England, in association with the UK Treasury. At each stage of this monetary cycle the ECB has been dragged kicking to act.
It also shows a natural bias of supporting the requirements of Germany rather than the Mediterranean members of the Eurozone, Spain, Italy, Portugal and Greece. The Frankfurt-based institution would probably prefer a hard Euro and would love to be the world's reserve currency.
The European Union's economic and monetary affairs commissioner Joaquin Almunia has stated that no member country will leave the Eurozone and noted that other countries wanted to join. However, Almunia has been unable to protect Ireland, for example, where the euro exchange rate has given its significant trade partner the UK a major advantage.

Can you take HSBC seriously?

I have to declare an interest and I have a few shares in one of the world's biggest banks, HSBC. I have sold some shares when it became obvious (despite the vehement denials) that it was going to have a rights issue (capital raising operation)and that the U.S interests were going to be severely pruned. It looks like the dissident shareholders based around Knight Vinke were right all
along.
www.searchaccountant.co.uk
Unfortunately, there seems to be no mea culpa over the troubled purchase of Household International. I suppose the bank's customers could not be expected to cough up for this acquisition indefinitely. One rationale was that it gave HSBC access to emerging customers (Hispanics) in the United States. I suppose the American operation was just engulfed by the subprime mortgage disaster.
The world's local bank must be scratching its head about operations in Mexico, which is suffering badly economically and socially. A past Citigroup president famously said countries did not go bust. He forgot to mention places like Argentina, which seem to go bust all the time. Or at least really hit the buffers. It might be a close run thing for the United Kingdom.

It is all over for Gordon bar the shouting?

I suppose Tony Blair was alot brighter and intelligent than people gave credit for. He stood down from the British premiership when his reputation was still intact, bar Iraq, and he will go down in history as electorally the most successful Labour leader
in their history. He will outstrip Gordon Brown, who will go down as a Labour leader
who never won a general election. Blair attracted disaffected Conservative voters in a way Brown will never be able to since he has tried to tax them into the ground.
(Sorry, I am just thinking about my shredded defined benefit pension plan.)

www.searchaccountant.co.uk

I always thought Gordon Brown's economic skills were poor and in 1997 he benefitted from the strong position left by the then Tory chancellor Kenneth Clarke. Now, we can
see the UK prime minister has poor political skills as well. I bet he regrets supporting Harriet Harman in the election for Labour deputy leader. To gain plaudits with the Labour Left, Brown was unnecessarily insulting to George W. Bush, who was still President of the United States at the time. I don't think Gordon is top of the Christmas card list for the guys at the Pentagon following the disaster at Basra.

The British national press are coming out with reports that cabinet discipline has broken down and that nobody in Labour, with the exception of Gordon Brown, believes that they will win the next election. Leaving the general election until 2010 was a decision, which showed that the Prime Minister was less confident in his own abilities. It is better to narrowly lose an election than get wiped out (like John Major, who at least won a general election). If British unemployment is going to reach 3m, it takes absolute ages to get it down again. If I was Gordon I would go for a May election and to try and get a creditable result.

One journalist quoted a cabinet minister, who said that all politicians make enemies but Gordon has proportionally made too many. Both Margaret Thatcher and Tony Blair
attracted massive support, both politically and personally. So, Gordon can go on about "deglobalisation" to his heart's content but that does not really play well with the voters. Apparently, in the past 18 months he has not made a single speech about crime. Is that rational behaviour for a voter? And in this important area Gordon appointed the venal Jacqui Smith as Home Secretary. Goodbye Gordon!

Paul Moore and Jacqui Smith, hero and villain!

It is very difficult to see what famous people are really like. We hope that British Prime Minister Gordon Brown is not as bad as the press makes out. But sometimes we can see through the spin and find out what people, especially politicians, are like.

The credit crunch has produced the unlikely hero in Paul Moore, the whistleblower at
Halifax (HBOS). The Prime Minister tried to diminish him by pointing to the independent report carried out by KPMG. However, it is unlikely that the accountant giant was objective on Mr Moore, since he was a former partner of KPMG. Also, the accountancy firm KPMG obtained major income from Halifax (HBOS) and would hope that this happy situation would continue. Gordon kept on going on about the independence of the report but how could it be independent?

Following the departure of Mr Moore, Halifax appointed a sales person as the head of group risk. If New Labour acolytes got peerages then Mr Moore deserves a dukedom for what he has done. The spin has been that nobody warned about the credit crunch but with Mr Moore, we do have an example of an internal warning at a major bank.

Declaration of interest: I used to be a shareholder of Halifax but had to sell at about four quid since we were broke. It has caused me sadness that such as a fine institution as the Halifax, which was founded in the Cock Inn in the 19th century,
has crashed. It is going to be carnage for Halifax and Bank of Scotland employees.
Lloyds is going to either give the bank to HM Government or carry out a major restructuring. The upside for Lloyds is that it has knocked out a major competitor.

www.searchaccountant.co.uk

For our villain, perhaps she is a pantomime one, step this way the venal Ms Jacqui Smith. An article in the Sunday Times says that she has even discredited herself amongst her own Labour supporters with the £116,000 of house expenses.
Her neighbours have called her a liar over the Smith claims of how long
she stays at the South London address. The Tory party have started making personal attacks while the Tory shadow home secretary Chris Grayling says she looks completely out of her depth. Some civil servants prefer Ms Smith's former deputy Mr Tony McNulty. Apparently, Ms Smith fears the sack in any cabinet
reshuffle.

What is with it with these Labour Home Secretaries? Why are they completely useless?
There was old Blunkett and the use of the train pass by his bit of fluff, which was
dishonest.

Here goes "British jobs for British workers!"

I try and avoid any mention of race, ethnic origin, immigration and migration because
you bound to put peoples' backs up. But the debate over "British jobs for British workers" raises quite a few issues. To state my own ethnic orign, I am white, born and living in London. I subscribe to the OneWorldWeek mantra, 5.7bn people but one humanity.

When it comes to the crunch HM Government is only responsible for its own citizens. If all the UK jobs are being taken by foreigners, then of course the government will impose restrictions on entry even if they are EU citizens. I think the Irish government was recently close to imposing restrictions on
Eastern Europeans.

This leads to the possibility that the current social composition of the United Kingdom is not helping us to cope with the economic downturn. If more indigenous workers are losing their jobs than foreign workers this will cause resentment.
Until recently we have had a pretty good run economically and despite this certain groups of foreign people are already unpopular with the
local population.

There is the mantra that immigration helps the economy grow but HM government carefully avoids doing studies on such a contentious area. MigrationWatch and the Economist have done studies, which point to a negligible contribution after the
inclusion of social costs. There have been studies about the Mexican wave in the United States but the scale of remittances makes it difficult to assess the level of economic contribution.

Foreign workers bring drive and enthusiasm. They keep the NHS afloat. We live in a global world and benefit from the trade links they bring. I don't think we could survive without Indian restaurants. Hard-working Eastern Europeans keep farms working throughout the United Kingdom. It is a very competitive world out there and companies, football clubs and businesses have long moved to getting the best people in. Glaxo appointed a Frenchman to live in the United States to manage a flagship UK business. It possibly did not work out in this case but we still need foreign talent to compete.

In conclusion, I believe in 5.7bn people and one humanity. I hope I have'nt annoyed my readers too much. We need a resumption of economic growth to mask/hide/resolve the tensions in the population. The benefits of immigration are probably overplayed (we are having a major economic downturn despite our high level of immigration?).

www.searchaccountant.co.uk
PS. Nobody is afraid of Gordon Brown anymore. The head of the statistics body ONS has just released some damaging statistics for HM Government on the number of foreign workers in the UK. Apparently, Labour MP Keith Vaz, who had some colourful finances, was fulminating against the release of these
statistics.

The Chinese curse - "May you live in difficult times!"

I have read a series of excellent articles recently. For instance, in the Guardian there is yesterday's hatchet job against Labour minister Hazel Blears by George Monbiot. Today, you can read in the Daily Mail an article by Peter Oborne drawing from the comments by Labour minister Ed Balls that we will suffer in the UK the worst recession in a hundred years. Then, in the Daily Telegraph the American pundit
Irwin Stelzer opines today about the possible future of the UK and its choices in store.
For instance, can we afford a special relationship with the United States if we don't
invest in the military? Will there be a choice between an independent nuclear deterrent or pensioner care?
I think the underlying connection between Monbiot, Oborne and Stelzer, (besides being talented columnists) is that we have reached a watershed. We (or the politicians) are going to make some hard choices. They could fudge but this would probably lead to domestic unrest.
Monbiot savages Blears but she is not the only incompetent politician in the cabinet (the venal Jacqui Smith step this way). Oborne notes that the provincial solicitor background of Alistair Blair does not prepare him for the role of national finance chief in crisis. Stelzer cites Gordon Brown's doleful performance in Basra, which has questioned our reliability as an U.S ally.
So if the situation is so bad and we don't need incompetent ministers, then would Brown or Cameron appoint Vince Cable as Chancellor of the Exchequer? It might help confidence. If the British economy is possibly going to fall by 4 pct according to Bank of England governor Mervyn King (another friend of Brown?), is there going to be measures to promote small businesses and employment? This might go against the grain for Brown, who has just wanted to raise more and more taxes from the British economy. (A rise in national insurance anyone!).
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So Gordon Brown looks part of the problem rather than part of the solution. I don't think we can avoid taking an axe against public sector expenditure. The Irish government is already cutting public sector pay and I expect we will have to do the same (obviously not before the election).
Commentators say we are going to have to make defence cuts and they look at the savings if we scrap our nuclear deterrent, which faces a costly upgrade. I doubt this will happen given the number of countries joining the nuclear bomb club. We might also have to invest in the conventional armed forces just for defensive purposes rather than to operate in far-flung areas such as Afghanistan and Iraq. However, there might have to be some tough choices on the future of the
RAF.
Labour has invested heavily in welfare, health and education. It would probably want
to cut spending over time by inflation. I would try and use the benefits paid to young people by getting them into some type of education, training and voluntary service. I don't think we can afford to give housing benefit to foreigners. Unfortunately, the NHS is going to have to charge A*E users, if they are there due to
their own culpability. These are old chestnuts but they don't go away. Why pay tax credits to people living in Poland?
We are going to have to review our relationship with the European Union. Letting our
currency collapse to block off imports was not very EU friendly and drew complaints
especially from France. The EU has not worked well in a crisis with some monumental bickering. However, either we are going to have to be fully committed, which will probably mean joining the euro or completely out of it. If we are going to be a poor nation then there is no point making ourselves poorer contributing to French
farmers.
Despite sending lots of money and bureaucrats to Brussels, the bail-outs of the European banking and car industries have followed national lines. The French want to rescue Renault but not its plant in the Czech republic. This contrasts with the various banking negotiations here with the Spanish banking group Banco Santander treated as a domestic institution.
In many respects our decision to stay or leave the European Union will be swayed by the decisions of France and Germany. Will Paris and Berlin pull out the stops to rescue countries such as Ireland, Spain and Italy? If they do, then in a few years I will think the main political parties will support a referendum calling for the United Kingdom to replace the pound with the euro. Membership or not has not prevented mass unemployment in Spain and in the UK but sheltering under the protection of a possible reserve currency might prove too attractive.

I was probably a bit harsh on Gordon in last post.

Re-reading my last post I realise I was probably a bit harsh on Gordon Brown, British Prime Minister. In many ways he has been quite successful. Wealth has been redistributed to different parts of the population and richer council areas have subsidised poorer ones. Devolution was introduced to give more jobs to the Labour Party. Gordon has antagonised our European partners, which I suppose is a plus but not if you need their help. Apparently, he can be extremely difficult to work with, which I thinks makes him quite interesting in a human kind of way.
However, Gordon has an inability to admit that he has been wrong. It would be helpful to do that since it might, might have avoided Sarkozy laying into him about the VAT cut. If Gordon had discussed this move beforehand with the retailers, then it would have helped to have some consensus.
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On the bank rescue plan Gordon pretty much circumvented parliamentary discussion at the time but discussion might have resolved the issue of bonuses. It looks like an oversight not to get strings attached to the rescue packages. Some bankers would probably get bonuses for sacking people.

Perhaps Darling is preparing for post Brown era?

In the last post I was extolling the performance of UK chancellor Alistair Darling, when I read a piece wondering why he had not turned up to the Davos forum but did find time to give an interview to a left wing magazine. Perhaps Darling is preparing for the post Gordon Brown era. In any event when the Chancellor warned about the possible severity of the recession last year he was stamped on by the Prime
Minister.
It is Darling, who is having to put in the donkey work on the British bank rescue plans. Brown is trying to avoid admitting any blame for the current predicament, which makes him look a not very sympathetic character. "No boom and bust" and "British jobs for British workers" now just look crass. Sucking up to the Chinese, what was that all about? It would be nice if they were interested in democracy as in free trade. I hoped that Brown told the Chinese to stop trying to hack into UK government sites.
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The snow chaos and the loss of output make us look us third rate. The foreigners holed up at Heathrow must wonder if they are lost in a parallel universe. Obviously,
Gordon Brown is not responsible for the weather but it is another event, which shows
the UK off in a poor light. You get the impression is that the touchy-feely policies of the past few years have brought the country close to collapse. Councils say they can't spend the money on preparing for weather conditions that normally happen once in every 18 years but Westminster Council performed very well what about the
others?
I apologise for sounding like Victor Meldrew but when Gordon Brown says we are well-prepared to ride out the recession because corporate debt is low he is obviously not thinking of pub companies and housebuilders. I think he is off his head.

I should not be too pessimistic about UK bail-out

In recent posts I might have been overly acerbic about the non-elected Lords and Ladies, who are leading the bailout of the British economy and its banks by
HM Government. On reflection I would have to say Lord Myners, Lord Turner and Baroness Vadera know what the problems are and are working hard to resolve them. However, I must admit that I have changed my mind about the UK Chancellor Alistair Darling. Originally, I thought he was just a stooge of Prime Minister Gordon Brown but he has worked hard on the rescue packages. Apparently, Darling has earned a grudging respect from the business sector.
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I also thought for a long time that Bank of England governor Mervyn King should have been sacked. Crimes include being an Aston Villa fan and letting Gordon Brown cronies infiltrate the monetary policy committee. However, King has eschewed the normal delphic comments of central bankers and has said it as it is. He warned about possible bank nationalisation, which has virtually happened at the Royal Bank of Scotland (RBS). He also exercised the power, rarely exercised, of central bankers to talk down the currency. Probably, this was useful in terms of reviving the economy, since it will take time to produce effects.

Reasons to be cheerful - one, two, three.

I have realised that I have been grinding on the about the economic situation and Gordon Brown. So, I have decided to share with you, Dear Blogreader, reasons to be cheerful - one, two, three.
1) Paris Hilton is in London and Britney Spears is coming soon.
2) Today, Liverpool are 8 to 1 to win the League. The odds from bookies are notoriously stingy. True odds would probably be around 5 to 1 but the inference is that Rafa Benitez is not going to catch Fergie up.
3) If you are culturally inclined, the Byzantium exhibition at the Royal Academy in London is amazing.
4) Arsenal are not in the market for top players.
5) You can get a pint of IPA for ninety nine pence from JD Wetherspoon.
6) The lotto syndicate won £115 last week and this sum will be cautiously re-invested over the forthcoming weeks.
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UK car rescue is a bit of a damp squib.

Lord Mandelson's rescue of the UK car industry was unveiled yesterday. Amounting to only a couple of billion, it did not seem to include any incentives for the Great British Public to go out and buy a car. On BBC Breakfast this morning economist Ruth Lea dropped her microphone but could still be clearly heard stating that the plan did not address the lack of credit faced by potential buyers of cars.
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The government could launch incentives to scrap old cars and replace them "greener" ones similar to the programmes in Germany and Spain.
You have to feel sorry for the car industry given the largesse thrown at the banking sector. I suppose the government feels that there are other industries in the queue.

Am I just being hysterical over national bankruptcy?

Today Lord Mandelson is saving the foreign-owned car industry in the United Kingdom.
Long-term the car industry would always relocate to where the customers are and that is basically China and the Far East. Unfortunately, you don't want the industry to relocate now given its ability to create direct and indirect jobs. I am sure Tata would prefer to make Jaguars in India and that was the original plan behind the acquisition of the UK manufacturer from U.S auto group Ford.
So am I just being hysterical over Albion going bankrupt, if long-term the country is not going to have a car industry with all of its exports and R&D?
I read a brilliant article by Roger Bootle in the Daily Telegraph rebutting UK bankruptcy but if you read economic commentators around the world they are arguing that major economic shifts are happening. For instance, Western living standards are going to decline and savings rates will return to normal levels, even in the United States. Things are serious when President Obama's Treasury Secretary is unpleasant to China about exchange rates.
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I suppose Lord Mandelson, Lord Myners, Lady Vadera and Lord Turner are working hard to prevent UK bankruptcy. However,we are all hostage to how long the recession will last. Chancellor Alistair Darling has predicted a recovery in the second half of 2009 but if the recession lasts for longer then the pound could take some serious damage. I know it sounds suicidal but I would increase taxes now, which would ease the pain later on. This might lift sterling but to expect a manufacturing renaissance on lower exchange rates is just a delusion. I would try and encourage the retail buying of UK government bonds and gilts.

Well the UK has not gone bankrupt today.

I get the impression that the UK government is being overwhelmed by events. There seems to be a concerted attempt by junior ministers to talk things up (the green shoots of Ms Vadera) but then shot down by FSA boss Mr Turner, who predicts that the economic recovery will not take place until 2011.
The Frogs are complaining about the collapse of the pound so hopefully it is doing us some good. Further declines in the pound are on the way when interest rates hit zero and when the Bank of England starts printing money. And we are so critical of
Robert Mugabe!
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Has "Fred the Shred" bankrupted Britain?

On a day when thousands of Britons are downgrading their foreign holidays for 2009
(less time away, non-Euro location, or not at all), we must be wondering if Sir Fred Goodwin, former chief executive of Royal Bank of Scotland, has bankrupted Britain. The nationalisation of RBS looks inevitable but quite a few observers consider that the UK will have trouble handling the bank's foreign liabilities.
What will bankruptcy be like? Hopefully, the Brown government will reach a deal before then with the IMF or with the European Union or with both. The IMF tried and tested formula (which probably does not work very well) is to have public sector cuts. In the 1930s teachers suffered pay cuts and obviously I don't think the Labour government would like to attack one of its natural constituencies but it might be
considered.
Ireland is trying to negotiate a pay deal with the unions over the public sector. Its economy is being hit by factors such as the euro interest rate and by the euro exchange rate (depreciation in sterling), which is affecting its exports. If it was not for possible deflation, both Ireland and UK could get away with a pay restraint deal involving below-inflation rises. It looks like the pay freezes and zero bonuses of the private sector will be transferred to the public sector.
Back to Fred the Shred, a former darling of New Labour. I bet Gordon Brown wished he had never met him. RBS has admitted that it overpaid by £15bn to £20bn for Dutch bank ABN Amro but Fred the Shred just ignored the criticism of the deal at the time. He just had to get one over Barclays. It is not hindsight. Quite a few people said the deal was pants but the RBS board and shareholders, the FSA, the Bank of England, the government did not feel it was up to them to do anything about it.
What will bankruptcy feel like? I suppose there could be a Latin American rush to the banks and building societies by people to convert their savings into dollars. There might be emergency exchange controls to prevent people taking foreign exchange out. And Gordon Brown will still be there talking about fairness, enterprise etc while the Queen is approving the establishment of a National coalition government.
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Probably all of a pipe dream. Although Gordon Brown is being found out by events I want him to succeed in the bank rescue. However, he has got to give himself a chance. Last weekend rather than trying to lead the UK government in this deadly serious financial/economic crisis he was in Egypt discussing Gaza. This might be good for the ego but looks like he is shirking domestic problems.

I wonder where the Heathrow 3rd runway will be built?

I had thought that UK premier Gordon Brown would do anything to win the next general election. However, I have been proved wrong. His government's decision to give a go-ahead to the third runway at Heathrow sacrifices a lot of votes in West London. The possible forthcoming Tory government under David Cameron says that it will cancel the project.
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The imposition of supposed "green" flights and the previous dissension of ministers such as H. Benn and E. Miliband undermines the approval package. I had hoped that the two ministers would resign over the go-ahead but I expect they like their ministerial cars etc. Resignations would improve their standings. Gordon Brown won't be with us forever.
The go-ahead was sweetened with possible rail projects. These should be planned for
airports such as Stansted and Gatwick, which probably could do with a new runway each. Possibly, the UK is not very good at airport planning. In 2008 traffic was down at these two airports so the current economic case for new runways does not stack up.

The low pound is not making a dent in trade figures.

Looking back at my posts I realise that I might both have praised and condemned the British government's engineered fall in sterling. The main factor in favour of the lower pound is that it would help make exports cheaper and imports more expensive. However, the low pound is not making a dent in UK trade figures. On an anecdotal basis it is making West End stores and restaurants busy. The low pound is also diverting UK tourists to non-euro destinations such as Turkey
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However, low sterling contradicts the previous policy of the Bank of England to use the exchange rate of keeping a lid on inflation. There are worries that inflation will soar when the central bank takes too long to raise interest rates when the economy recovers. Another factor would the lack of government approval for tightening. Over the last year there is the sense that the Bank of England lost control of monetary events and lost its supposed independence.
On balance, I don't like a cheap pound but I think that having your own exchange rate is a great shock absorber when the government has made a complete horlicks of economic policy. It is probably not appreciated by our Eurozone neighbours, who want to sell into Britain (Treasure Island).

I am breaking one of my New Year resolutions!!

I can't believe Manchester City seriously want to pay a ton of money to get Kaka from AC Milan. With their record they should be buying to improve their defence and midfield. They have got enough Brazilians there why do they want any more?
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Flo and Elano are exceptionally talented players but in any team you need the good, the bad and the ugly. Flo and Elano are not committed enough in a league, where there are no easy games. Obviously, I am breaking one New Year resolution already by going on about Man City.
You have to build from the defence up. I know the Arsenal fans did not like Gilberto, another Brazilian!!, but he did protect the defence and is sorely missed.
A few years ago Kaka blew Man Utd out of the European Cup. But if he costs £91m or £100m whatever there will never be an economic return on the transfer since it could take two or three years to get into the money-spinning European Cup. He would also have to be handled by a top manager, such as Luiz Felipe Scolari, who is used to dealing with the top players.
Clubs such as Real Madrid have tried the "galatico" policy before and they might have sold a few more shirts in Asia but they have not really succeeded on the
pitch.
Meanwhile, if you are interested in an accountancy firm based in Gloucester there is
Robert Powell with the email address robert@robert-powell.co.uk

My New Year resolutions for this blog in 2009.

Dear Readers, I have decided to have a few resolutions for this blog during 2009. One is to have less stories on football in general and on Manchester City in particular. I think the decision has already been made that a world class team will be assembled but without Mark Hughes. For all sorts of reasons it has not worked out.
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The second resolution is not to go on too much about Gordon Brown, our flawed beloved leader, who is making us poorer. The engineered decline of the pound might help our diminished manufacturing sector and lift our trade figures by making imports more expensive. However, it will increase inflation and prevent UK citizens from trying to escape. I am not shedding a tear for the property market in the Spanish costas. For years we have had a strong pound policy with high interest rates and now we have a weak pound with zero interest rates. Thanks a lot Gordon.

The third resolution is to be more optimistic. 2009 will be tough but we will just have to get through it. Personally, I will try and fight the flab. I also want to score more goals playing six a side.