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.