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.