31 January, 2009


I am heartily fed up with the recent range of strikes in the oil industry. The unions are saying (wink to the knowing) that it is all unofficial, as if they have had nothing to do with it.

There is one fact to be considered here. The Treaty of Rome requires free movement of labour across the union, and subsequent treaties require free access to contract bidding by European members. Total (why did no one complain when a French company was investing in England, creating jobs for British workers?) has accepted a bid for some new building from an Italian firm which uses Italian and Portuguese labour. From within the EU. EU membership requires us to regard these workers not as foreign but as the same as us.

We now need the head of the TUC, and of the union, Unite, and the Chairman of the Labour Party, to confirm that it is the policy of all these bodies that we should belong to the EU (it is, isn't it?) and that we should conform with the treaties. And that they therefore regard these strikes as nothing other than racist.

For myself I do not believe it is in our interest to remain in the EU, but I still wouldn't stop Total employing whomever they want. I have a strong feeling that our chaps didn't get the contract because they were charging too much.

Racist is a word brought out rather too often for my taste but it will serve here.


The BBC has had two cricket scorers since 1934 and to the great regret of Test Match Special listeners they are now looking for another. Bill Frindall, who has been in the job since 1966, has died from Legionnaires Disease, caught during a recent cricket tour to Dubai where he was both playing and scoring. He was 69.

I always wanted to ask him which batsman was most often out during the break for the shipping forecast (my own guess is Graham Hick).

I hope Frindall has bequeathed his detailed records to the BBC, or the nation. He is all but irreplaceable.

28 January, 2009

More on global warming

From the Corriere della Sera: the CTMA Vacancier, a ship with 300 passengers on board, is stuck in thick ice at the mouth of the St Lawrence river. Even an icebreaker from the Canadian coastguard failed to cut a passage through to the stranded people. Also the steamer Georges-Alexander-Lebel is stuck outside the port of Matane, 600km east of Montreal, which is completely iced in.

‘We’ve not seen a layer of ice this thick at the start of the year for a long time’ commented the general manager of one of the shipowners.

25 January, 2009

Burns Night

Today is the 250th Anniversary of the birth of Robert Burns. We are informed that it will be a celebration of Scottish culture.

Scottish WHAT?

Although seemingly thought by much of the British press to be Jewish, ‘Rabbi’ Burns was in fact a Lowland tax inspector, ratting on his countrymen to glean more money for the English.

My late mother claimed to be Scottish (as Lou Reed said, ‘you can’t always trust your mother’), but there will be no celebration here in Umbria for this turncoat, with morose, self-indulgent Scot-mongrels like me cross dressing, eating lamentable food, drinking spirits during dinner and reciting third rate poetry in a cod Lowland accent. The whole damn thing really ought to stop and be replaced by a celebration of James Watt who at least did something useful.

‘Oh wad some power the giftie gie us
To see oursel's as others see us’

And real men eat offal unadulterated by oatmeal.

Zsa Zsa Gabor

I read that Zsa Zsa Gabor had lost US$ 7m in the Bernie Madoff business. If I hadn't been already impoverished by another conman (Gordon Brown) I'd hold a whip round for the old trout, if only for this:

Q: What do you think of the male contraceptive?

ZZ: Depends what's in it for me, darlink.

Not watching Big Brother

Yesterday’s Alitalia flight AZ784 Rome/Tokyo was missing an air hostess and they took off without her (history does not, alas! record when they took off but we can assume it was as normal, within 2 or 3 hours of the scheduled time). The lady, Daniela Martani, had been in the Big Brother House since 12th January.

Alitalia says that missing her flight could result in her job being at risk.


23 January, 2009

Schoolboy in India

The prattish behaviour in India of the British Foreign Secretary, David Miliband, reminds me of one of his predecessors, the late Robin Cook. He was accompanying HM Queen on her visit to the country and also gave an unsolicited lecture on how he could solve the Kashmir problem. Aside from how we would have acted if an Indian Foreign Minister had arrived and lectured us on Northern Ireland, there is the added problem that in their view we are, at least in part, the cause of the problem.
What must they think of us? Apparently Mandelson has been sent out to repair the damage but the Indian PM is refusing to see him.

Cooky compounded his error by leaving the Queen in the lurch while he flew back to London to see his mistress, while Milly made things worse by calling the venerable Indian Foreign Minister, Pranab Mukherjee, by his first name. Manners are better in India.

Where, where do we get these people?
But granted that we have a schoolboy as Foreign Secretary, where was our Rolls Royce of a civil service to guide him through his trip? I have said it before and I am sure it won't be the last time, the British Foreign Office should be closed down in the public interest, the work contracted out to Switzerland and the enormous cost savings given to the poor.

Quote of the month

Apologies if you have already heard it. From Alan Johnson, the Health Secretary

"David Cameron's task is to turn the Conservative party from a party of Old Etonians and closet homosexuals into a party of homosexuals and closet Old Etonians."

21 January, 2009


I have been at lunch parties in Wiltshire where you expected a couple of people to pass out, but to achieve this at your inaugural luncheon shows a determined start from the new President, after the long, dry Bush administration.

This is what Americans call 'hitting the sidewalk running'.

20 January, 2009

Our turn now

America embarks on a new journey today, buoyed up on hope, inclusiveness, trust. Perhaps wrongly, I am not as optimistic, but I think the world will see that optimism and inclusion are very good things economically and there will be some timely Obama bounces all over the place.

I mentioned in my New Year's forecasts that the spotlight would soon turn to Europe; it is on us now. Ambrose Evans Pritchard in the Telegraph refers us to the social problems in the former Eastern bloc countries on the Baltic and in the East, where their fixed exchange rates to the over strong euro are causing unemployment figures of over 20% and widespread social unrest. It was a condition of their joining the EU that they signed up to the euro and the pre-euro purgatory of fixed exchange rates. And that social unrest will spread. Did you know that over 1,000 cars were torched in Paris alone on just one night - New Year's Eve? The eurozone's fourth largest economy, Spain, has lost its AAA status (the third largest, Italy , was downgraded twice a while back and is down at A+) and Greece, despite being in the euro, is getting down towards junk bond status. The euro will survive in one form or another, but it may well not be the same form within 18 months.

Keep an eye on what German politicians are saying - don't forget that it was Germany's refusal to say anything calming which led to Britain's (most felicitous) departure from the Exchange Rate Mechanism.

16 January, 2009

Jan Palach

Forty years ago today, on 16th January 1969, in protest against the Soviet repression of free speech in Czechoslovakia after the Prague Spring, a young student, Jan Palach, poured petrol over himself on the steps of the National Museum in Prague and lit the fire.

Palach took three days to die, during which time he begged other students not to follow his example, because of the extreme pain.

I was 13 at the time and it impressed me forcibly – it still does – that a man should give his life in such a way to publicise what was happening in his country, that the fight against the State machine could be so brutal, and yet so eloquent.

It was my political awakening and I don’t think he should be forgotten.

Great and the good

I am not a slavish follower of football but I read that Manchester City are hoping to sign Kaka from Berlusconi's team AC Milan, for an absurd sum.

I should have thought he had one problem at Milan - his name sounds like (albeit spelled with a C) the Italian for 'shit'.

It always raises an eyebrow when I read of actress Salma Hayek. Nice to have the surname of a great economist but Salma in Italian means 'corpse'.

14 January, 2009

Royal racism

It's not often in these unhappy times that I get a good laugh from the BBC News, but after the nonsense about Prince Harry calling a fellow cadet 'our Paki friend' I almost fell apart when I heard that Prince Charles has a friend he calls 'Sooty'.

I am sure this has been said before but 'Paki' is the common parlance for Pakistani. Pakistanis refer to themselves as Pakis. Since the name is an acronym for the tribes that live there (Punjabi, Afghani, Khyberi, Sindhi, Baluchistani) it is only really unfair of the person is of Sindhi or Baluchistani origin, having his bit left off.

This term is offensive only to the tiny number of people in the political and media classes, who of course have been having a field day. I look forward to more sombre sociological analysis of 'Sooty'.

Perhaps we could also have a contribution from the Duke of Edinburgh.

13 January, 2009

Ken Clarke

A silly article by Andrew Porter in the Telegraph, a once decent paper which I fear is getting worse and worse. Porter says

'Both Mandelson ..... and Milburn were Europhiles. Brown kept Britain out of the single currency. If Brown can bite the bullet and embrace people he had such fundamental differences with then surely the Tories should decide that they can live with Clarke. They must accept they need some heavier hitters alongside Cameron.'

This is about collective cabinet responsibility. Labour's position on Europe is that we carry on accepting what's thrown at us, and as regards the single currency we go in when the time is right (but Brown decides when the time is right). A committed europhile such as Mandelson or Milburn would have no problem with this. The Conservative position, by contrast, is that we would never join the single currency and would, indeed, repatriate powers from Brussels. Is Clarke going to stand up and say he has changed his mind and now agrees with this? My guess is not.

So that means that the Conservative position has changed.

It's one or the other.

Alitalia: same old story

Tuesday 13th January, and we know what that means, don't we? YES... it's the day that Alitalia finally gets going. You will remember that after a couple of false starts last year the CAI consortium finally took over Alitalia on Monday 12th, but had to spend its first day on the ground while the pointy heads checked the planes. So, today it's all GO!!!

Er... no, in fact. All the takeoffs from Linate and Malpensa (Milan and some distance away from Milan) have been suspended because the staff don't like the choice of Air France as partner.

Air France, which was a pretty dreadful airline even before this, is going to regret its dalliance with the Italian unions.

10 January, 2009

The intellectuals

To the ordinary man in the street who, alas!
Is a keen observer of life
The word ‘intellectual’ invariably means
A man who’s untrue to his wife

Thus Hilaire Belloc (from memory). The British have always been anti-intellectual, whereas in France you cannot become a serious public figure unless you have written a turgid self-indulgent book on philosophy and I remember once having to explain to a confused Swiss what ‘too clever by half’ meant.

Prospect Magazine has for a second year running held a poll for who was the ‘public’ intellectual of 2008. The three shortlisted are General David Petraeus for his Iraq plan, Thaler and Sunstein for ‘Nudge’ (the theory that it is better to point the way to correct behaviour and let the citizen make the choice, rather than to penalise bad behaviour) and Nouriel Roubini, the economics professor who forecast the crunch a year before.

There is only one thing these people have in common, pretty obvious, you might think, and that is that they were right and not stupidly wrong. You can have a maths professor who can’t buy a bus ticket but not one who confuses algorithms with logarithms. The professor who thought the boom would go on forever might well have been well read and clever but he is not going to win a prize for the public intellectual of 2008.

The reason I mention this rather basic point is that last year one of the 100 on the long list was Gordon Brown. This is a man who put it out that he was the progenitor of some new economic paradigm but who in fact did nothing more than embrace 1950s statism: ‘the man in Whitehall really does know best’, with the interesting twist that he would permit enough low regulation capitalism to pay for it. His policy, such as it is, consists of a confused mishmash of half understood theory, unconsidered morality and self-aggrandisement and it was glaringly, ear-trumpetingly obvious that it was wrong. I began to think that Prospect, whose editor David Goodhart is himself something of an intellectual, had taken leave of its senses to try replacing the New Statesman as the rag de choix among the Fabian diaspora, and I confess I still don’t really trust it.

Anyway Brown wasn’t on it this year. Petraeus won, even though Prospect opposed the Gulf War. Good stuff.

08 January, 2009

Letter from Italy (Epiphany)

The working year begins after Epiphany, 6th January, except for this who will take the ponte (bridge) of Wednesday – Monday in which case it begins on Monday 13th. Befana, a corruption of the word Epiphany, is portrayed as a witch and at the Befana fair in the Piazza Navona brightly dressed ugly-faced dolls are for sale along with cribs and Christmas tat. Many children receive their presents on Befana.

The economic feeling in Italy is confused. The country suffered badly from high commodity prices – principally oil, also grain for pasta and bread - and now these have come down there is more money about, just as the Italians are reading how bad things are. The shops were packed at Christmas, and there were queues to get into some of the upmarket establishments on the via dei Condotti. The widely mistrusted official inflation rate for 2008 as a whole was, at 3.3%, the highest in 12 years although it has since tumbled and the year on year monthly rate is 2.2%, down from 2.7% in November. This resulted in some papers announcing record high and record low inflation rates on the same page. Italians shrug their shoulders a lot.

The Corriere della Sera reminds us of the interesting, and very Italian, story of Salerno Airport (at the eastern end of the Amalfi coast, S.E. of Naples). There had been a private airport there for years but it was only in August 2008 that it was used for commercial flights, the principal routes being to Malpensa (the airport near Lake Como which describes itself as Milan), Sardinia and Spain. And it was reasonably successful, 33 flights a week on the 100 seat planes (the runway is too short for anything bigger) moving 20,000 passengers until the end of the year. Now however all flights have been suspended due to ‘disagreements with local politicians’. You can guess. Naturally the EU has thrown money at it, €49m at the last count. The airport is spacious, clean, brightly lit and completely deserted, the latest addition to the ‘Cathedrals in the desert’ which include motorways not connected to any other roads and football stadia nowhere near human habitation.

The Vatican has announced that it will no longer incorporate Italian laws automatically on to its statute book, as has been the case since 1929. This is because there are too many laws in Italy and some are contradictory. I should have thought this was a golden opportunity to make itself a tax haven.

Alitalia will become a new airline next week! Already! The new consortium takes over officially on 12th January, but will immediately close down for a day while the aviation department checks the planes. They will discover that all the clocks are at least an hour slow. There will have to be some alliance with another airline, and whilst the obvious one is with Air France/KLM, the Northern League are pushing for Lufthansa because it is more likely to keep open the slots at Malpensa Airport (the one near Lake Como 45 minutes from Milan, unlike the real Milan airport which is called Linate). This project is unlikely to be viable until it stops becoming a political football, which itself is about as likely as the planes suddenly taking off on time.

Snow has been falling in the North, closing Milan’s airports and blocking motorways. Russia has closed the gas off. People are worried about global warming.

The Equal Opportunities Ministry has been advertising for clowns to work in children’s hospitals. 2m euros has been set aside for the project. I hear the money will be paid directly to Alitalia.

07 January, 2009

Arctic Ice

A couple of people have asked where I got the news that the Arctic ice had returned to 1979 levels. It was reported by Bill Chapman, researcher at The Arctic Climate Research Centre, University of Illinois.

06 January, 2009

It's your money

The EU spent €2.4bn on publicity last year.

That's spending your money to tell you what fine fellows they are...er... in spending so much of your money.

Just what you want to hear in a recession.

An inconvenient truth

The Arctic ice has returned to the levels of 1979.

Oddly enough I have not seen this story on the BBC, which was excellent at reporting ice levels when they were diminishing.

L'esprit communautaire

Having told us how essential it is to have the Lisbon Treaty with its common foreign policy, President Sarkozy has launched his own embassy to the Middle East, bypassing the common European one led by the Czech presidency, saying only large countries were capable of this. It might be pleasing to have one of my New Year's forecasts come true within a couple of days, but this is a salutary lesson to small countries on how they are going to be treated, Ireland take note.

And just as an indication of how much power the French constitution gives this diminutive busybody, he has just made a unilateral ruling on adverts on French State Television. Imagine Gordon Brown trying that kind of interference!

Something you probably won't see on French TV is that Rachida Dati the cabinet minister has given birth to a son. She refused to name the father but Sarkozy's brother was one of the first to visit her and the child in hospital.

03 January, 2009

This year

What might be

I think it’s too early for any firm economic predictions, but here is a thought. What is it like when an economy is coming out of recession? How do you spot the signs? I think it is a bit like the end of a battle. Bad news flies around like bullets, every day something worse. Then, almost imperceptibly the bullets seem to be less frequent; the noise abates; after a period in which no one has been shot you feel able to put your head cautiously above the parapet. I believe that this warmer feeling may come at the end of this year. Not, as Alistair Darling said that the recession will be over, that will I think be for 2010, but there will be gradual signs of it bottoming out and consumers nervously going back to the shops, perhaps moving house.

The government can, in my view, do little to bring this about, but there is much they could do to prevent the recovery. Unfortunately they have to guess when the lavish expenditure stops and when Prudence should name the day. They seem uniquely ill-equipped for this decision.

This year the economic spotlight may turn its focus to Europe. Some respite will be given the exchange rate as the dollar makes up for its fall, but a long period of a high euro will expose holes in the economic apparat. The PIGS (Portugal, Italy, Greece, Spain) and perhaps Ireland and Denmark will look very uncomfortable in the Euro but I believe, to my regret, that the line will hold. However the euro/£ rate will improve for us expats: 1.25-1.30.

Politically, I have one suggestion, I hesitate to call it a forecast, which I have seen nowhere else. There is much talk about when the election will be (it has to be before late Spring 2010). It seems that if Gordon called it now he would lose, but conventional wisdom says the Tories have everything to gain by him delaying (and things are going to be bad this year, I feel quite safe with that forecast). Why not duck the issue completely? He doesn’t want to be seen as the Gerald Ford of Britain, never elected or electable (and at least Ford didn’t engineer the departure of his predecessor). We get to the end of 2009 and Gordon retires, citing ill health (he tried to prepare us for this earlier in the year), an exhausted public servant, a martyr for his people, having steered them through the most difficult time in their history ‘We..’, I think he’ll use the Royal we..'We have laid down the direction, we have shown the path and navigated the storm, now it is for a younger generation to take the helm….sunlit uplands (if I may mix metaphors), building on our work…blah blah’. He accepts the Garter and the OM and retires to write his rather dull books. He could hardly do this with the election date staring him in the face so would probably choose Christmas 2009.

Other political forecasts: the eurosceptics’ hope, that Czech President Vaclav Klaus as the new president of Europe will provide some shake-up or at least defence against further EU integration, will be dashed. The powers that be have been preparing for this for some time and at best they will slow down for 6 months, effectively bypassing him. They seem to have persuaded the Irish to hold a second referendum, essential in case the Tories win in Britain, and the Yes vote will probably win it, unless the recession is dreadful and the No-ers can pin the blame on the euro. Unlikely, I think.

President Obama will have some frantic back-pedalling and expectations management to do, and rather than hitting the sidewalk running I think early in his term he will be advised to be the president that never was, emerging occasionally with some brilliant rhetoric to keep people’s confidence but letting Hillary dominate the headlines. By November 2012 he will need to have weathered the economic storm, gained a reputation for prudent economic management and made America look like a moral, if not a military leader. 2012 will be seen as a good one to win, and his efforts to that end will begin this month.

What won’t be

The Middle East, despite being touched by the magic hand of Obama, will be much the same as it has been since 1948.

In my view 2009 should be the year in which HM The Queen abdicated in favour of Charles, Britain left the EU, The Church of England disestablished itself and the BBC was halved in size becoming a self financing trust. But I predict that none of these will happen.

I wish you all a prosperous 2009, knowing that won’t happen either. Happiness is more important, as is a glass of Chianti.

Last year...

I think one thing we can all agree on is that 2008 was not a good year for forecasters.

At the end of 2007 / early 2008 I thought we were in for a contraction which would be mitigated by interest rate reductions and lower commodity prices: I believed the year would be one of gradual decline. What in fact happened was just that for the first three quarters followed by a massive contraction in the last.

Four month periods
Oil 100 112 (150) 110 40

FTSE 6500 6000 5500 4300

I thought the FTSE would decline gradually and then rally. It fell out of bed.

The oil price peaked in June at almost double my year end estimate of $75 or less. Many thought it would go to $200 but I stuck to my estimate. The reason was oil futures had clearly been a proxy for shorting the dollar, and as positions unwound, and the recession caused a flight to quality, the growth in the oil price would be reversed. Oil ended at around $40, and whilst most people wouldn’t celebrate a forecast that was double the actual outcome, I am reasonably pleased with that.

I predicted that a major American bank and a car firm would go bust but be rescued. Again, I seriously underestimated the problem.

Perhaps the pivotal factor was the demise of Lehmann Brothers. There was a case for allowing it to go under, on the grounds that it was not a retail bank and that it was not the State’s job to bail out companies with a bad business plan. However the underlying weakness in the banking sector meant it was simply a warning to banks that it could happen to anyone, prompting a further loss in confidence.

To all you gold bugs out there, an investment in gold on 1st Jan 2008 would now be showing a gain of 4%, about the same as a cash deposit.

It has been a bad year for forecasters everywhere. It turned out the banks didn’t know what they had invested in, and, not knowing what the others had invested in, wouldn’t lend to each other. The credit markets almost collapsed. It has not been pretty.

Politically, I predicted that Giuliani would beat Hillary in the presidential race: it may however turn out to be a good one in which to have come second.