It is Obvious

Chris Rick has got altogether too much to say

Archive for November, 2012

You can bank on this

Posted by chrisrick13 on November 29, 2012

It is obvious: things are not the same

Any of you goldfish out there remember Bankia?  Have to go all the way back to May for the events I am thinking of.  Bankia was a cracking idea from the Spanish government.  Lump together 7 local savings institutions that were just about bankrupt in July 2010, give them £4.5bn and all will be well.  The new company, Bankia, has £40bn of property loans on its books…at least.  I wonder what they are worth now?  Its total assets are about £330bn.  I’ll put my finger in the air and estimate their current value at £100bn.  This means that if the bank borrowed the money it leant at 3% it is not getting £6bn in income it was expecting each year needed to pay its loans.  The money was probably leant at 3 times that rate..£18bn of income not received.

In May, keep up goldfish, it asked for a bailout.  This was set at £4bn but grew to £20bn.  It also changed its mind about the £300nm profit it made in 2011 and instead called it a £4.3bn loss.  Have the accountants, auditors, or directors gone to jail yet?  The likes of Shaun Richards said it was not the end of the story and the bailout amounts were too low.

Bankia is now going to receive another £18bn and has said it will make a £19bn loss this year.  This makes the estimate I made on the performance of its assets very optimistic.

Based on the above performance it wants you to believe it when it says it will return to profitability next year.

The Spanish government has borrowed money to prop up the banks and take responsibility for the bad debts.  Who stands behind the government to fund those actions: the Spanish population.  I might say Spanish taxpayers, but like Greece they are a dying breed.

France has got itself a left-wing president.  Serves them right.  Do you remember Sarkozy and Merkel almost joined at the hip plotting the future of Europe?  Not seen Hollande with Merkel much.  Partly this is politics.  However mostly this is France rapidly moving into a similar state as that of the PIIGS.  Look at the economic numbers coming out of France then compare them to PIIGS.  The French numbers are bigger but the rate and direction of change is very similar.  Standing alongside Germany as a major contributor to supporting other countries France is in danger of moving to the other side and asking for support for itself.

It can’t go on much longer.

It is obvious: things are not the same but events keep repeating


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Here we go round…

Posted by chrisrick13 on November 27, 2012

It is obvious: I’m dizzy

I am thinking of the great song by Traffic from the film written by Hunter Davies.  The nursery rhyme which that comes from is constantly brought to my mind.

It is commonly accepted that a country enters a debt/default spiral when its debt reaches 80% of GDP (unless you are Japan).  So I do wonder why a target debt of 120% of GDP is being aimed at for Greece.  That target is for 2020.  So what are they planning to do between now and then?  Do they expect anything other than a default which they are trying to prevent today?

Yesterday another tranche of the bailout money was promised to Greece on the 13th of next month.  This process is an interesting one.  It is a continuing theme.  A certain amount of Greek debt is either written off or the interest rate moved to zero with an indefinite payment date (same as a default).  This then triggers part of the bailout loan that is given to Greece which about equals the amount of recent default.  This process continues while the current lenders who can do nothing about it lose their money.  Note that these lenders include your pension companies.  All of this works because the Greek economy is going to be growing by more than 4% a year in a couple of years.  This means that by 2030 the Greek economy will be twice the size it is today.  It will be able to pay off these loans (sic).

Notice that the size of the debt or even the effective size of the debt does not reduce.  The only thing that does reduce is the country’s GDP.  The shrinking GDP means that the debt has to be reduced even further if a percentage target is used.   What does the bailout money do?  It goes into funding infrastructure projects that will enable Greece to grow?  No.  It goes into investment in industry to modernise production that will enable Greece to grow?  No.  It goes into educating a generation, the one after the current generation who can’t get jobs?  No.  It goes to the banks and countries who are lending the bailout money to pay of the debts that Greece has with them that are coming due.

I wonder that the institutions ‘helping’ Greece have thought about these long timelines into fantasy.  A lot of Greek people have stopped earning any money.  A lot of have had their income reduced, especially pensioners.  They are mitigating the effect by not paying taxes any more.  There comes a point when their savings and/or patience runs out.  At that point there is revolution or some extreme party gets into power on a wild promise to default the debt and leave the Euro.  When will the Greek people do something?  It is certainly before 2020 and I think before the end of 2013.

What is happening is that the Greece’s economic problems are not being solved.  They are being delayed to a future where ‘things’ will be ‘better’.  Except that the future is very unlikely to be better and might well be a lot worse.

It is obvious: I’m dizzy and when I stop spinning I’ll fall over

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What’s a Greek Earn

Posted by chrisrick13 on November 26, 2012

It is obvious: the Brothers Grimm were fairy-tale writers
This is a first.  I have copied a picture from elsewhere.  I suppose if I give the Zerohedge website the credit, it is little different to putting a link in.  It does not come from me.  The data is public domain and they have put it in a nice graph with some nice comments.  Good chaps at Zerohedge.

What is this saying?  It is what the IMF/EU/ECB are saying the Greek GDP will be in the future.  As you can see they have not been that good at their forecasts.  They are at least consistent.

Today they put another forecast out.  It goes from today back up at an even steeper angle than the other predictions.

I think that they think that anyone reading it will believe it.


It is obvious: the Brothers Grimm were fairy-tale writers learning their trade from economists and central bankers

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Deja EU…again

Posted by chrisrick13 on November 23, 2012

It is obvious: a goldfish does not have a poor memory

Do you remember?  David Cameron refused to go along with a new EU treaty and vetoed it.  We were sidelined.  The veto caused the other EU states to band together under a common accord that included:

1. a commitment to “balanced budgets” for eurozone countries – defined as a structural deficit no greater than 0.5% of gross domestic product – to be written into national constitutions

2. automatic sanctions for any eurozone country whose deficit exceeds 3% of GDP

3. a requirement to submit their national budgets to the European Commission, which will have the power to request that they be revised

I have to add here that it is difficult to type this as tears of laughter stream down my face.

When was this momentous event decided and vetoed?  9th December 2011.  Nearly a year ago.  Cameron came under heavy criticism.  What has happened since then?  Nothing.  It is as well I think.  Point 2 is particularly interesting.  There are few counties in the EU that do no fall foul of it.  However the biggest transgressors are Greece, Portugal, Italy, Spain, France.  Where are these countries going to get money from to pay their fines?  It is obvious.  They will borrow it!

At least when history is revisited Cameron will stand out as not part of the lunacy.  That he stuck to it shows a measure of resolve I doubted that he had.

Roll forward a year and Cameron is standing out against budget increase in the EU.  This time he is not alone.  There are several countries of the same view.  These are split pretty well on the lines of net contributors and net receivers.  Another amusement is that even though Greece gets £4.9bn net receipts she still has to put money into the central pot and then gets money spent in areas of ‘need’.  This is the same problem as above.  In order to get the net receipt she first has to put money in.  How will she get that money?  Borrow it.  Who is lending it to her?  The EU of course!

As another aside I will mention the EU accounts.  Sit down before reading the next bit.  For 19 years in a row the auditors have refused to sign off the accounts as they are affected by material error!  Simply put the people drawing up the accounts have lied and the auditors have found those lies out.  My question is: has anyone gone to jail for this?  I will leave you to guess the answer.

So Cameron is set to veto the budget increase.  Bear in mind it does not come into affect until after 2013.  This means that the budget goes on to a yearly apportionment and, again I’m losing it as I type, this only needs approving by a majority.  As there are more receivers than givers you can guess what will happen.

Of the countries opposed to the budget I have heard mention of several but Sweden stands out in my mind.  The one that does not stand out is Germany.  Even though the constitutional court demands that the budget not be increased, Merkel had said nothing.  I wonder how many legs that woman has under her skirt for her still to be vertical.  Maybe she is really an octopus?

So I hope that Cameron holds the line.  History will treat him well.  However if he has good advisors, and I’m sure he has, he will know he is on a win-win bet.  The budget he is about to veto does not happen for at least 12 months.  Nobody is brave enough to predict the date of the  crash of the Euro and even the EU but most are happy to put 12 months on it.  This budget will become a total irrelevance long before it is needed.

It is obvious: a goldfish does not have a poor memory at least not compared to a human being…what did you say (couldn’t resist it)

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Stunned and amazed

Posted by chrisrick13 on November 15, 2012

It is obvious: if I was that bad I’d keep my mouth shut

Just to put this in perspective, the Bank of England forecast growth for next year of 3% then moved to 2% and now 1%.  This is not forecasting.  It is so poor at this that it defeats Rick’s law.  I need a special theory of forecast correcting for the BoE so bad is it.

Inflation was at 250% of the BoE target for a long time and not a word of apology was heard.  Then it started to drop and was confidently predicted to be in range for the future.  Oh dear, it has gone up and is likely to rise further.  The BoE has shot itself in the foot by going to the CPI measure.  Provided you realise it is constantly about 2% below real inflation then it does not matter to you and me.  However as so much stuff has been taken out of it compared to RPI it is very sensitive to changes in the limited number of things it measures.  Alas those sensitive items include food and energy which are going nowhere but up.  There is a strong likelihood that rental costs will reduce so I can easily see CPI overtaking RPI.  Be interesting to see what the BoE says.

The biggest shock of the BoE Inflation Report press conference was that not one reporter attempted to challenge Mervyn King on the appalling forecasting record.  It is important that the BoE gets it right as government policy is based on it.  Why are they not publicly tested on this when the occasions arise?

So how do I correct for BoE figures?  I think move 2% in the bad direction and then apply normal Rick’s law might work.  So GDP next year will be -1% which doubled gives -2%.  I will take that as the BoE working assumption.  Inflation next year?  Oh dear that gives me 8%.  I reckon that if I’m not right I’m closer than the BoE.  At least I’m here to be held to account.

What puzzles me is how they consistently manage to produce fan charts centered so far off target.  Does anyone analyse their data to see where they went wrong?  Why is anybody interested in the predictions?

It is obvious: if I was that bad I’d keep my mouth shut or be honest about it

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Batten the hatches – teacups approaching

Posted by chrisrick13 on November 12, 2012

It is obvious: it is not the events

I listened to a straight-faced presenter on BBC 24-hour news yesterday who said that they had asked the BBC for a comment but nobody was available.  I also listened today to a reporter from the BBC giving the acting head a grilling.  This is a new perspective on ‘getting your own back’.

One of the people involved said with some good insight that we must not forget that this is all about abused children.  I had forgotten.

It is amusing to watch the BBC going through this internal process in the open publicity given by…itself.  I suspect that ITV and Sky feel a little out of it that there is a big news story and the BBC reporters have almost exclusive access to the main participants.

I’ll just step out of the main story to take a look at the Labour party.  They are asking questions about the pay-off to the head of the BBC.  It is pure mischief.  They are also forcing a debate on the increase in fuel tax due in the new year.  They are trying and no doubt will succeed in putting the blame on the government yet it is a tax that the Labour party set in motion nearly 3 years ago.  It is an IED by the roadside.  One could almost believe that a lot of what they did was in the assured knowledge they would not win the election (Gordon guaranteed that) and it would happen during the coalition’s tenure and be blamed on them.  Indeed getting both Conservatives and Liberal Democrats into power at the same time must have seemed like a bonus.

Back to the investigation going on in the BBC.  The story matters, as I said above, but what matters more is the process.  That this happens, eventually, is good that foul deeds are eventually discovered and examined in public.  Can you imagine Huge Ingrowing Toe or Put Your Left Foot In ever subjecting themselves or their cronies to this kind process in view of all the population, even the world?

The BBC has a lot of faults but it still stands above most other news organisations.  Wish that was not the case.  The internet might be the answer though.

It is obvious: it is not the events it is the process and its openness

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Let me have a word

Posted by chrisrick13 on November 9, 2012

It is obvious: 1984 is alive and well 28 years later.


I could not sleep on Wednesday night so watched BBC news for a while.  I was able to watch the dapper leader of that country (Huge Ingrowing Toe) giving a speech to the 18th National Congress of China.  Sometimes know as the PRC (Peoples Republic of China) which by its name meets my conditions for confirming it as an oppressive dictatorship.  Were I making this set of derisive comments in PRC I would come to a sticky end or simply disappear.

With his other 8 members of the ruling committee on the stage they look like a set of figures all stamped out of the same mold.  All Chinese look the same don’t they?  I note with some amusement that for a bunch of 9 men in their 60’s and 70’s there is not a single grey hair among them.  I’d love to have the Grecian 2000 contract for the central committee.

I note that he called in his speech for an end to corruption.  I saw a while ago that he and his family had managed to accumulate $1.4bn and the researchers intimated that they were in iceberg country.  It is bizarre.  I think that it is all about ‘face’.  The Japanese suffer from this and so, it seems, do the Chinese.  You can do what you damn well please as long as the public image is satisfactory…and stuff the people.

The speech was preposterous, ponderous, and pompous.  The assembled had to listen to it for 90 minutes.  Fortunately BBC news did not make me suffer that long.  I cast my mind back to try to remember when I last heard such a ridiculous speech.  That would be Tuesday in Chicago.

It is obvious: 1984 is alive and well 28 years later and looks set for a long and happy life

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There be dragons

Posted by chrisrick13 on November 7, 2012

It is obvious: it is still ‘when’ not ‘if’

I can’t keep quiet any more.  The whole world (and I’ll explain in a moment) has very similar problems.  I’ll ignore Greece which lies about its economic state all the time.  I’ll ignore China…which lies about its economic state all the time.  The problems are that a lot of debt has been built up which can only be repaid out of growth, exponential growth.  We have entered a world where that is no longer possible.  Therefore the debts have to be defaulted on by a refusal to pay or high inflation.

All the efforts of central banks so far have been to stop a default predicated on future growth solving the problem.  It won’t.  At some point someone is going to default.  It becomes a whole world problem because insurance against default (CDSs) has been taken out.  Many people are holding that insurance liability and don’t realise or won’t tell that they have it.  Indeed there are many instances of insurance being bought by one part of a financial institution that is ultimately covered by another part of the institution.  Cheaper just to carry the risk!  The only shame is that I’m not one of the middle-men.

All that will happen on a single default is not a domino effect but the same effect as when you pull out the bottom floor of a block of flats.  The dust settles quickly and a few buildings nearby are affected to some greater or lesser extent.  Life goes on much as before.  At least this is my Armageddon view.  The cellar-of-food-shotgun-and-barbedwire brigade have a much more pessimistic outlook.  I think the probability of that happening is increasing daily but is still unlikely in this country.

I have said that a small bank somewhere will start things, but have not been able to put a time on it.  Predicting the moment is not important unless you are a gambler.  Being ready and prepared to act is important.

If you are a pension holder be it with a company or the government then you should be concerned.  With high inflation your pension quickly becomes worthless even though it continues to repay.  With a default reset then the bonds your pension is invested in become worthless and it stops paying.  If you are smug on a pension then you should have a good think about your options.

If you mainly control all your own assets then you have a different problem.  I have put much thought to what to do.  My best conclusion at the moment is to keep cash to hand that I think I can get to quite quickly even should there be a reset.  Then there should be a reset or inflation will take off.  This means there is a window between what will result in a stock market crash of some sort and money being worth something so that the shares of strong surviving companies can be purchased.  These seem to me to be the best place for value protecting assets.

I have seen much good news in recent times, not only of the UK economy, but elsewhere.  However a little deeper digging shows that there is much more bad news around.  For Europe, Ireland, Portugal and Greece are problems that can be delayed for some time waiting for growth to come riding over the horizon.  Spain is a problem that cannot be handled and there is nobody lurking over the horizon.  I think that I have another team member for The Horsemen of the Apocalypse (1st XV): Growth.  He is that team member that never makes it in time for the start of the game turning up when the opposition have already scored 6 tries or never finding the ground at all.  So I think that Spain is the place to look for the trigger.  Even so the trigger event might happen in Spain while the realisation might is in another country.  It does not matter.  Look at Spain all the time, but don’t worry.  Provided you are prepared there will be time.

It is obvious: it is still ‘when’ not ‘if’ – will it be a gnat bite or something bigger for you?

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Gizzajob (2.1)

Posted by chrisrick13 on November 4, 2012

It is obvious: I don’t have a job

I decided to play the unemployed game.  I did not want the government unemployment figures to be out by one so I signed on.  I actually signed up for Jobseekers allowance.  I will never get any of the other benefits as I’m rich (sic).  It turns out that I won’t get Jobseekers allowance as the rules are set against me.  However if I persist there might come a time when I will get it.  Though it is a long hard road.  At least for every week I am signed on I get NIC credits towards my state pension.  I think I am there but it does not hurt to have a few more going in.  If I were to get Jobseekers allowance it would represent an hourly rate of about £100 so it is worth having from that respect.  At the moment I am working for free.

I applied on-line and got a very quick response (in the post) telling me I was not going to get any money.  You have to have made enough NIC contributions over the last 2 years to qualify.  If you are working that is fine but if you are not then you have to have signed on in the gap.  I did not manage that for all the time.  I went on holiday so they signed me off.

I went to the Jobcentre+.  It used to be called the Jobcentre but has now gained a ‘+’.  Much as in my earlier comments on my last foray the only job element is that it employs a lot of people.  Beyond that it has nothing to do with jobs.

The treatment of applicants (supplicants) is as shoddy as last time.  I handed a form in and stood at a desk waiting to know what I should do.  A woman came to the desk and asked the person sitting there, who I had given the form to, what I was doing.  He said to the woman that he had told me to sit down.  I leant over him and asked him if he had thought why I had not moved.  I was considering a stand-up argument but instead settled for turning round and going to the waiting area just as he started talking to me.

The form I had filled in listed the top 10 job categories and asked me to mark which ones I wanted to be considered for.  Three typical ones were: retail sales, delivery driver, warehouseman.  I put ‘none of these’.  I did describe what I did.

I was called for my interview quite quickly.  The first problem was that they needed to classify my job against a list they had.  I rejected all the categories as being dangerously inaccurate.  She said that she had to enter something.  I suggested that she create a new category.  Alas, that was not allowed.  So I asked if she had to put something down or something accurate down.  She simply repeated that she had to put something down.  So I suggested Brain Surgeon.  She said that I had to treat this process seriously to which I replied that I would if she would.  I then did the silent close on her and it worked a treat: she filled the void and asked me if I had any suggestions.  I tried ‘Mercenary’ which I often describe myself as.  She did the silent close on me and I said what about ‘Other’.  She found it and clicked on it and the age of miracles is not past, up popped a box asking for a description.  We put one in.

She had by now taken to turning the screen to me so that I could help her with my bizarre answers.  I noticed that on many fields when she hit return a box popped up that said something inane and had an ‘OK’ button that she had to click.  I pointed out to her that instead of torturing her as she had to take her hand off the key board and move the mouse to the pop-up it ought to put the mouse over the ‘OK’ button or allow her to hit return.  We then had an enlightening discussion on-screen design and ergonomics.  She said after that she understood what I did for a living – no she didn’t.

Then we came to jobs and my refusal to be a warehouseman.  I thought this a little ironic as the person being interviewed at the desk next to me was a warehouseman who had just lost his job and was being pointed at anything other than warehouseman jobs.  I said that I didn’t have the necessary skills.  At this point we really did enter a surreal world.  She asked me what skills I didn’t have.  To which I replied that never having been one I didn’t know any.  She then asked me how I could say that I didn’t have the skills when I didn’t know what they were!  I said if she would tell me what they were I would confirm if I had them or not.  You can guess what she replied: I don’t know what those skills are.  We finished off that little roundabout with me asking her how she expected me to know what warehouseman skills were.

Then we moved on to delivery driver.  I said I was not allowed to.  To which she responded that I said I had a clean driving licence.   I confirmed that I had.  She said that I could drive a van then.  I replied that I was not allowed to.  She came to it then and asked me why.  I said I had medical condition.  Of course she had to ask what it was.  I stood up: let’s go to a private office to discuss medical condition.  She said we couldn’t do that.  I sat down and said that if she’d tell me her medical conditions I’d tell her mine.

She showed me an example of how to keep a job-seeking log, and how not to, bundled up a load of papers, told me my appointment was at 15:45 with Gareth on Tuesday got up from her desk and walked off.  Can’t wait.

It is obvious: I don’t have a job – still keeping busy though.

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