Tuesday, 23 December 2008

Madoff is not alone...

Tell me, what's different between Madoff's Ponzi scheme and the money printing scheme being used by our government to 'get us out of recession'?

Thursday, 18 December 2008

'Capitalism' it Ain't

The word coined by (I think) Adam Smith to describe our politico/economic 'system' - capitalism - is, I also think, inadequate. It has been much maligned and misused by the enemies of 'capitalism' as if it were a 'system' created by man, in the manner of Socialism, and was therefore capable of being confounded by argument, as any idea might be. 'Capitalism' is not an -ism, and it is not a system, and it is definitely not anybody's idea. It is just a vast ant hill of individuals making it happen between them, in peace.
I have tried to find a word or phrase to describe this wonderful accidental arrangement more accurately than the single word 'capitalism'. Here follows my most recent iteration:

"Anglo Saxon Libertarian Democratic Judeo Christian free market capitalism all operating under English Common Law with thrift, responsibility and compassion"

That's as good as I can get at the moment, but it is a work in progress.

Saturday, 13 December 2008

Why? Just tell me Why?

I'm tired. I am so bloody tired of it all. Tired of the argument. Tired of the constant battle. Tired of the same old stupidities being visited upon us, time after time. By the same failed lefty political philosophy of tax and spend and State control.
Everywhere you look in all of history, Socialism has failed. Without fail it has destroyed wealth and impoverished people, especially the poor. And yet again and again the same type of megalomaniac idiots get back into power and, cheerfully ignoring all the evidence, try it again. Just one more time. And predictably we end up paying the bills whilst the architects of the failure ride off into the sunset on fat pensions paid for by us. It fair makes you weep.
Right now, all around us, is the evidence of the complete failure of one man's ideas on tax n'spend. Gordon Brown. And yet he carries on carrying on doing the same old stuff, completely without shame. How he can stand looking at himself in the shaving mirror each morning without feeling completely embarrassed defeats me.
And yet I do not see any glimmer of hope that he will be gone any time soon. This is desperate for us, the simple tax paying citizen, as his policies will mire us further and further in financial Armageddon for every day that change does not happen.
I am a peaceable man. I believe absolutely in the rule of law. But recently I found myself seriously contemplating political assassination. This is very worrying as, given that I am entirely peaceable, there will be men out there even more furious than me, with the means and the will to do what I have thought about. But doesn't this just show you how things are when blokes like me are driven to this position by such people as Gordon Brown and his manic, incompetent, arrogant, stupid, corrupt policies?
This is I should think, how some lefties thought about Thatcher. In fact I know this to be the case as my old dad was playing golf with a senior local education officer on the day the Grand Hotel was bombed. When it was announced that Thatcher was OK, the education blokey remarked 'Damn, nearly got her'! (My old dad simply walked out of the game and never played with the education blokey again.)
Clearly people like Brown and Thatcher promote fury in the opposition camp to the same level. But, I am sorry to say, that Thatcher was broadly correct, whilst Brown is almost totally wrong, as freedom and the markets, and history are now showing.

Wednesday, 10 December 2008

RDR For Dummies

This is a first draft. I welcome comments and suggestions but the paper must not exceed two pages of minimum 10pt single spaced!
(For non financial services people RDR = Retail Distribution Review. Which is basically a bureaucratic design of a system for the distribution of financial advice and products. Any of you out there who have even a glimmering of the understanding as to how free economies work will immediately spot the flaw in the RDR)

Sunday, 7 December 2008

My Cedit Crunch Analogy

The banks are the pushers. Gordon Brown is the Colombian Cartel. We are the junkies. The markets are the Drugs Squad.
Brown had a bumper crop of cash (which he also watered down) and sold it to his pushers, the retail banks, at a knocked down price. The pushers got us hooked and we (well, some of us) mainlined on credit.
Unfortunately the Anti Narcotics Police, in the guise of the markets, mounted a successful raid on the Colombian Cartel's drug farms and factories and the supply dried up.
Now comes the cold turkey.

Saturday, 6 December 2008

The Benefits Contract

Found a good quote recently, can't remember where but it runs like this:
The benefits contract.
"We the State will pay you an income if your are female, have some children, make sure you don't ever work and never marry or co-habit with a man or the father of any of your children."
What rational young woman with limited eductation (and consequently prospects) would not go for that one?

Friday, 5 December 2008

Friedrich A Hayek (Alfred Nobel Memorial Lecture 11/12/74)

Copied from a Mises Daily Article email:

"If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants. There is danger in the exuberant feeling of ever-growing power which the advance of the physical sciences has engendered and which tempts man to try, "dizzy with success," to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society — a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals."

Well Mr Brown, are you doing more harm than good?

Thursday, 4 December 2008

Debt for Equity Swap Rescues New Star...

From the Citywire news feed today:

"New Star's creditors have taken control of 75% of the business in a debt for equity swap aimed at securing the future of the business..." (From an
article written by Charlie Parker).

Well, Well. What a clever idea. Shame no-one in Government seems to have heard of it. Might have saved us all a shed load of cash in buying up / bailing out the Banks.

Saturday, 29 November 2008

Financial Services Authority Does it Again...Not

The FSA has issued its latest design brief for the FS 'market', called the Retail Distribution Review - 'RDR' for short.
It's flawed. Why? Because it is impossible to design a free market. The RDR is just the latest iteration of the FSA's (the Government's poodle / attack dog) manual for more nationalisation lite.
Anyway, if you want to 'reform' distribution of product it can be set out on one side of A4. Tabulate the differences between those distributors who are the agents of the client and those who aren't. This will mean that all IFA's will be on one side and everyone else (Banks, Building Societies, Insurance and Investment companies etc) on the other.
Make it clear to everyone that IFA's sell advice, not product, and that products will occasionally be supplied as part of that advice. Secondly make it equally clear that every other market participant is selling product and that buyers should beware - caveat emptor applies. Thirdly make it compulsory to disclose the true full costs of distribution and commission on all product sales.
The essential message is that every product seller who is not the client's agent is not to be trusted and their product recommendations should be viewed with suspicion.
I mean, how hard can it be?

Monday, 24 November 2008

Brown to "Cut Taxes to Boost Economy"

Headlines today; 'Brown to cut taxes to Boost Economy.'

Excellent. An admission that taxation reduces the economy.

Next step. Cut State sepnding.

I mean, 'how hard can it be'?

Wednesday, 19 November 2008

More Regulatory Ranting...

We work with the 'regulator' of financial services and it is becoming more dysfunctional by the day. I think it thinks (knows?) the game is up for the Brown regulatory system.

In the last 12 months I have met FSA representatives twice, in open meetings, and challenged them on their proposals for Treating Customers Fairly (TCF) and the upcoming Retail Distribution Review. Both of these are unworkable since, for the former it depends on who defines what is 'fair' - impossible to do fairly (!) - and the latter 'designs' the market for retail financial services, also impossible. When challenged on these arguments the FSA people could not produce a sound philosophical rationale to support their proposals. They knew they were flawed, but as relatively junior people they no doubt do not have the power to do anything about it.

Ultimately the FSA rule book operates as a form of 'nationalisation lite' which goes a long way to explaining why it will, and has, failed.
It therefore does not surprise me at all that it is now carrying conflicting actions in regards to retail banking.

The trouble with the Brown type of overweening regulation is that it encourages the regulated to abandon common sense and abrogate responsibility by slavishly relying on the regulatory rules to run their businesses rather that adopting sound business practices. If some financial product passes the compliance check it must be OK. The fact that these bad rules are enforced by a Draconian and unaccountable and arbitrary fining process just reinforces the surrender of management responsibility because even if you put right an honest error you will get castigated.

So a key part of getting the banks working again is to wholesale reform the Brown inspired FS regulatory system

Saturday, 8 November 2008

The Blogging Party is Here! (UK Version)

The Launch of the Blogging Party
I hereby officially launch a new force in UK politics, The Blogging Party. This is in direct response the asinine statements of that fanciable fathead Hazel Blears on the nihilistic politics of bloggers.
The party's political stance can best be described as Anglo Saxon Mixed Race Non Internationally Interventionist Libertarian Democratic Judeo Christian free market socially just, thrifty and responsible with compassion and with a firm commitment to the rule of English Common and Commercial Law and the sovereignty of Parliament. It will also by definition have a very highly developed sense of the ridiculous and be able to laugh at itself. It has no ambition for power, holding to the Spike Milligan view that anyone who wants power (or a handgun) is constitutionally disqualified from having it (or owning one).
Membership is free. Donations will be sought in due course to field candidates. The first of these should be by rights in HB's constituency of Salford.
If anyone can be remotely arsed in getting involved - because I am having difficulty retaining my enthusiasm even as I type this - can comment below.

Tuesday, 28 October 2008

New Labour Newspeak.

Investment = Spending
Key Workers = New Labour client state
Global Problem = Our Problem
Unfunded Tax cuts = Unfunded spending commitments
Hard working families = New Labour client state
Long term = Short term political gain
Stability = Do as your told
No more boom and bust = ?
'Let me be clear' = I am now going to either (a) lie through my teeth or (b) make no sense.
Tory Tax Cuts = Tory Tax Cuts (!)
'I am a pretty straight kind of guy' = 'I am a lying deceitful git'
Any statistic quoted by Brown = Total bollocks
'We are making available new money...' = It's the same money as before and it's your money.
'I have commissioned a full review' = 'I have kicked it into the long grass'.
'We will do what ever it takes' = '...to keep us in power/from getting found out'.
'Business friendly' = 'Business UNfriendly'

To be continued...

Wednesday, 6 August 2008

Norther Rock and Financial Regulation

Northern Rock

Northern rock’s problems have their roots entirely in New Labour’s Ponzi economy. As follows:-

Economic Management and the Transfer to the Bank of England for the Responsibility for Inflation.

The FSMA 2000 brought in Brown’s tripartite regulatory system. By now you will all have realized that this is a disaster. The division of responsibility never works. But the major (deliberate?) error was to target inflation to the entirely flawed CPI. This lead to rampant asset price inflation because the price of money was too low for too long. No account was taken of money supply or house prices. Hence we have a bubble and a huge amount of home equity withdrawal funding current spending. Marks out ten? 0.

Financial Regulation.

Enter the comedy that is the Financial Services Authority. Here we have the classic clueless Quango. In my view its political purpose was to (a) put all financial services problems at one remove from the Treasury and No10 and (b) to provide a type of ‘nationalisation lite’. Its powers are extensive and its rulebook prescriptive. And being as how it operates in a free market it is doomed to fail. Hence Northern Rock. Marks out of ten for Brown? 0.

The Hidden Effect of Over-Regulation.

If you over-regulate the over-regulated abrogate responsibility to the regulations. Box ticking to satisfy the regulators replaces the application of common sense. Consider Northern Rock. As a financial adviser one component of what I do is to seek out and arrange mortgages for clients. I admit it, I get them into debt. Now, I have been around in this business some time. When looking at house purchase for first time buyers Northern Rock offered some eye watering deals at up to 125% of current valuation. It does not take a genius to realise that if the housing market collapses both the lender and the borrower are in trouble. With house prices at levels never before experienced we have been advising against buying a house – especially if you are a FTB – for about the last four or five years. And we have never advised any client to do so with a 125% mortgage, always insisting that they had at least a 5% and preferably 10% deposit. Clearly we were in a minority.

Personally I have never given a stuff about the regulations or regulators. My view is that if you do the job right you will automatically comply. Doing the job right really means applying some common sense.

So we judged that Northern Rock was doomed. This is despite all the regulatory assurances that it was a sound company who knew what it was doing and was well financed. We are a micro business based in the provinces. What makes us so clever? Well, I do not think we are. What I think is that the pseudo confidence given by the strap line on all regulated businesses – ‘Authorised and Regulated by the Financial Services Authority’ – leads most people to abandon their own judgement. Hence they join the merry go round. Regulation is therefore the source of its own inflation. More and more regulation leads more and more people to stop thinking.

This lack of thinking applies in spades to most politicians of most colours but especially to Socialists. The answer of course is to severely reduce regulation and make caveat emptor apply. People will then think before they act and my peer group will not be so ready to steer clients to dodgy businesses just because they have regulatory approval.

Friday, 25 July 2008

Opposition. What Opposition?

Just to clarify my gloating position on New Labour I’d like to make it clear that I do not really have a major anti Socialism position. Socialism in itself is not intrinsically bad, I mean the whole point is to make life better. Totally flawed of course, but well meaning. No, what really gets up my nose is the deceit and hypocrisy which always accompanies it. I think this comes about because in their heart of hearts Socialists know that no-one with an ounce of common sense is going to buy into Socialism. The punters know, without necessarily being able to articulate exactly why, that it is flawed and will lead them into being made worse off in some way. Or if they do vote for it is because it’s tribal or because they see advantage, and that usually means power or benefits.

Since Labour tacitly accepted that Socialism was entirely flawed and abandoned Cl4.4.they have not been left with any coherent philosophy. All that is left is some woolly stuff about eradicating poverty and redistribution. Plus of course regulation, which has now become a sort of nationalisation lite. (You can take nationalisation out of the Socialist Manifesto but you can’t take it out of Socialists). This leads them inexorably to Big Government and Big Spending.

So now the party lines have become well defined not by an overall difference in ideology but by a simple choice. Big Spenders vs Little Spenders. Put like that who do you honestly think is ever going to get the most votes, especially as they are both going to be spending your money? Quite. And if put like that what chance will these latent Socialists ever have of getting into power unless they deceive you as to their true purpose? Quite again.

Enter the Great Deceiver and his sidekick. Bliar (the best and most appropriate mis-spelling opportunity ever) and McBean. The trouble is for Gordon that Bliar was a super salesman with charisma. Brown is just a great deceiver. The Voter is now just about finding out exactly what New Labour is. It’s a great big tax and spend machine. And that is why its poll position is so dire.

All this is very sad and rather worrying. Personally I do not want a one party state. Without a coherent opposition (witness the last 11 years) ruling parties get entirely carried away. A strong opposition is critical to a functioning and vibrant democracy. So once New Labour implodes on its tsunami of debt and deceit just where will this opposition come from?

We were let down by the Tories in 1997 when they imploded in sleaze now we are going to be let down by New Labour who are imploding with deceit and debt

Thursday, 19 June 2008

Our business is in retail financial services. We have traded since 1995 and the business was set up from outset as fee charging and consultative. That is a completely new model to the commission earning product sales businesses that predominated at that time. Our customers were charged for what we know and can do, not for what we could sell them. Our product is 'advice'.

This of course reinforces the client' agent relationship enjoyed by independent advisers everywhere.

So what you may ask. What's the point of this? Lots of firms now do this. Even my bank says its a financial planner now.

Well he beef is that in those 13 plus years only a small number of retail financial services businesses (in which I include all providers including banks) have gone this way. That is genuinely trying to offer a client value for money in a transparent way.

Well, you say the Governmint should sort them out. Ho bloody Ho Ho. is my reply. We have had under Nuliebor and its Great Leader the most comprehensive, and useless regulators you could ever imagine.

In those 13 plus years we have seen shed loads of initiatives and new ideas and reports and consultation papers and discussion documents and what have you and we are now just about getting back to where we, our firm, came in in 1995 (it was actually 1990 when I had the idea and I was actually trading in my way from then - but this business was only formed in 1995).

The latest 'idea' is CAR. Customer Agreed Remuneration. Or to put it simply we give the client an estimate. Erm, what! This is supposed to be new? Do me a favour. Every single independent adviser of any reasonable quality that I know has been doing this for the last 13 years.

And we've also got TCF - treating Customers Fairly. This is a nonsense as how can any business survive in a competitive market if it treats its customers unfairly? It's just another regulatory job creation scheme.

At the root of the problem is the politics and the 'free market'. Broadly the 'free market' is an anathema to control tendency politco's like nuliebour. They just cannot believe that they are not clever enough to devise a 'fairer' system. (We'll come onto 'fair' in a minute). So their sub-contract apparatchiks in the Financial Services Authority - FSA - try and devise a universal rules manual to cover everything and every eventuality. And of course it fails. So they move to a principles based manual which has no legal certainty but is enforced by the FSA as law.

So where does that leave the poor bloody adviser? Well, basically liable to be stuffed by the whim of a bureaucrat. And with less rights than a terrorist.

Brown's tripartite regulation is useless if judged by my experience of one third of it.