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shireblogger

Listed below are comments made by shireblogger between Friday, 20th November 2009 and Wednesday, 25th November 2009 (18 Hours Ago) .

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Banks: The world is weary of the past, but boy, was it exciting! 5:03pm on 25 Nov 2009 Paul, what I dont quite understand is this : if I recall correctly the Bank Recapitalisation Fund was a fund set up for banks eligible under the Credit Guarantee Scheme to raise their Tier One up to a level to qualify for the Credit Guarantee Scheme - the FSA had done some stress tests which werent published I think ; banks were free to subscribe or go to the markets as Barclays did, for example. What we are now being told is that, in fact, the BoE had provided Emergency Funding as a bridging loan to these two banks pending government recapitalisation - as if the government recapitalisation had been the predetermined course? The share subscriptions were then underwritten. Was the Credit Guarantee Scheme then used to raise debt on the markets to pay back the Emergency Loans?
UK still technically in recession 12:00pm on 25 Nov 2009 Whilst I understand why people are holding their breath for crumbs of good news on 0.1% growth here or there, Mervyn King yesterday made the point forcibly that you need to look at the deep fall in total output ( peak/trough) which could be lost permanently. He reckons this is the big picture rather than looking at rates of growth.He couldnt say what size of spare capacity would be taken up before real growth materialises. Lord Myners glibly says that Mr King is paid to be cautious. I see sincerity in Mr King's analysis.
Why did Bank of England keep shtoom? 9:28pm on 24 Nov 2009 Welcome back. Mervyn told the Treasury Committee today that this covert loan was a bridge loan pending government recapitalisation. Wouldnt the problem have been that recapitalisation itself could have been impaired by the disclosure of the loan.If the recapitalisation was put at risk, the loan was at risk? Perhaps here the shareholders of Lloyds ( Buying HBOS ) could have a gripe.I am fascinated by the BoE's keeness to point out that the loan was repaid quickly - by whom? The taxpayer, ofcourse.Difference being that BoE earned interest and defrayed risk with collateral ( not best for their balance sheet) whereas the taxpayer took risk capital and shouldered the risk full-on.
A healthy squeeze? 6:51pm on 24 Nov 2009 No-one pretends that these are easy judgments. Its a question of which medicine to apply and when/how to take the patient off life-support.

If it were me I would start at first base. The CBI and business are planning for weak government and consumer demand going forward held constant by the need to deleverage balance sheets.Both are supported by existing high credit levels. Lack of new bank credit will create a serious headwinds to growth. No-one argues that the deficit should not be brought back to balance. Exports could deliver good news. My view: encourage exports, business investment/trade/ and fix credit gaps/dont over tax spending/dont over tax the average consumer but make targeted tax rises planned - QE has failed and stop denying it ; start reducing government debt/spending cuts at the same time as the former comes on stream ; if inflation ticks up raise interest rates but sell QE gilts very sensitively over a long period of time - long burn on QE unwinding.
Information: Have you ever paid for it? 10:30am on 24 Nov 2009 I'm a similar if not slightly younger demographic! Re : music, I use Spotify and buy the odd CD if inclined. I use TimesOnline as my central source of news because it offers a wide breadth of news information across areas of interest.Reuters UK online is good for business, but I get led there from Google Finance usually. I buy paper copies on the weekend for differing opinions on the news ( not just for 'news')and to get some downtime ( cant see paper copies disappearing for the leisure read for my generation or others except the current younger cyber-generation). I like opinions as well as having the facts, hence I read your blog. I tap into district news providers online and for business I have a multitude of online bulletins to keep me savvy in my sectors, or others of topical interest. Dont pay for anything. If I trawl an important issue for me in a headline pay-for-view specialist bulletin, I usually find the same information elsewhere for free.

Books, tickets etc. I'm like you.

See it differently from you. If I was to have to pay for an online news source I would only chose a comprehensive and generally trustworthy organisation. If news portals were to charge, they would have to up their game and excel to attract my dosh.
Rare earth: The New Great Game 8:21pm on 22 Nov 2009 The Chinese Eleventh Five Year Plan puts it in a nutshell for Baroness Ashton, Digby Jones, Lord Mandelson and Uncle Tom Cobley :

" The draft outline proposes to adjust and optimize industrial structure, corporate structuring and industrial arrangement with increasing independent innovation as the core link so as to increase overall technological level and improve competitiveness of industry.

It requires the extension of high-tech industries from processing and assembling to independent research and development and advancement of independent innovation commercialization; a series of leading industries with core competence should be formed; a group of industrial bases with concentration effect and a batch of transnational high-tech companies should be established and a raft of brand names of proprietary rights should be raised.

The outline proposes to make breakthrough in core technologies, increase the level of development and design of key technologies and equipment, localization of core components, the manufacture and system integration. A stable, economical, clean and safe energy supply system must be built."
Rare earth: The New Great Game 3:41pm on 22 Nov 2009 Jericoa @ 34

I am with you on the thrust of your frustration but lets look at some sobering realities. I am not quite sure whether your vision is to be implemented by the State or private business. If it is the former, unfortunately it will be spending the next decade paying off its debts and balancing the books. Mandelson's current vision for the UK Government is one of an enabler for that reason I suspect. He says we are now in a new global economy and we must find our comparative competitive advantages which can sustain our exports of good and services to the rest of the world into the long term. He has targeted Low carbon technology, Ultra low carbon vehicle technology,digitalised Britain,life sciences and pharmaceuticals,advanced manufacturing in aerospace / non metal composites, biotechnology and plastic electronics,professional and financial services (!),engineering construction and services to ageing populations. So, Government gives individuals and businesses the skills, training to innovate and compete in global markets utilising the global supply chains ( say, in China / India). In a way he looks to corporate Britain like the old trading companies to trade us to Utopia.

The increasingly large social state then thrives on corporate profits and home consumerism ( which is going to retract)and pan european cross subsidy.

Regarding the home market and its infrastructure he doesnt say a great amount but says that government spending and schemes can be used to lever global investment inwards. Again, Government sets the strategy of balance between nuclear, renewables and other sustainable methods of UK self-sufficiency/security of supply in energy. I understand we are producing food at a surplus to our needs.

He knows well we are entering a more brutally cut-throat and competitive world where other emerging economies will catch up with our developed economies and will themselves level the field.

Where does your vision take us either toward or away from this analysis?Do you want us to issue more gilts to sponsor a home infrastructural renewal by Government and/or do you want this funded from growth and taxes?
Rare earth: The New Great Game 11:45am on 21 Nov 2009 Just one more comment on these important issues. I have read Baroness Ashton's various biographies and some of her limited trade speeches. The one issue that stood out was her belief that the EU economy is a sophisticated "transformation" economy as opposed to China etc. I've heard simlar nonsense coming from Digby Jones. In essence, the belief is that China etc. can act as the world's widget makers but we here in Western europe are the ones who cleverly add value and transform widgets and manufactured goods into high tech products. Who are they kidding? It is paying the Chinese disrespect to believe that they will confine themselves to the role of world widget-maker. It is also strategic nonsense and dangerously misguided and arrogant to assume that the Chinese and others can be dealt with on this basis.

Congratulations to Baroness Ashton on her elevation. I see she has extensive experience starting with her sociology degree and then running health authorities, negotiating pan-european legislation, protecting the rights of minorities / women and the vulnerable in business.I see also she was a management consultant at one point. I do believe she could benefit from reading these blogs however to get an angle on reality. By contrast I see Vice Premier Wang has come through the Chinese Agricultural and Construction Banks and communes to get his grounding in what counts.

All smiles and handshaking will be early awaited at Nanjing on 30 November....
Rare earth: The New Great Game 10:25am on 21 Nov 2009 Jericoa
" Meanwhile in China when they see something is needed for strategic national importance they just do it!!"

This is at the heart of it..strategic action in this country can never respond as fast as the Chinese. First you would have consultations with interested parties ; they, in turn, would have access to planning systems and courts to hold up action and argue the science; running parallel you would need to consult with national and european quangos to gain technical agreement ; european directives would need to be satisfied on environmental and social protections ; parliamentary debates and press investigations would need to run their course to argue the case for and against ; assuming you get to a point of 'consent' you would then need to "procure" construcion contracts according to european legislation - more red tape to ensure the fitness of contractors, their financial standing, health and safety plans,making sure every contractor in Europe gets a fair chance, free and fair competition, habitat protection plans and zero carbon goals set out for achievement.

Meanwhile the Peoples Republic of China Grand Council pass down an order and the state apparatus ensures delivery!
Rare earth: The New Great Game 1:48pm on 20 Nov 2009 It occurs to me that we all are now living in a post-Lisbon Treaty world where what the UK cares or wants is subsumed into a pan-european agenda. Paul, the 5th EU China Business Summit is being held in Nanjing on 30 November. Baroness Ashton, the former EU Trade Commissioner and now special EU foreign ambassador,has been conducting the EU China High Level Economic and Trade Dialogue with Vice Premier Wang Qishan of the PRC. Why dont you, Paul, put your very important points to Baroness Ashton. She is bound to be aware to the REE debate and could tell you where on the agenda it has or will be raised. Could you let us know what she says.

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