25 September, 2012

Beer and booze

Useful work from The Economist and from the bank UBS which, having nearly blown my modest pension away investing in dodgy securities and paying fines in America, has produced a table showing how long you have to work to earn half a litre of beer.

Of the European countries Britain is the worst, requiring nearly 15 minutes. Britain also has the highest average price for beer, nearly double the price in Germany.

Beer is expensive, wine is expensive, spirits are expensive and the media are overflowing with busybodies telling you about the dangers of our overly cheap alcohol.

22 September, 2012


I was speaking to a German friend last night who has come to Italy every year for the last 30, but remains astonished at the level of corruption. There are currently major corruption scandals in Campania (which incluides Naples) and Lazio (which includes Rome).

We asked an Italian friend who said the general view was simply that they hadn't got round to investigating the other regions yet.

It is so blatant that regional assistance money from the taxpayers sometimes goes straight into the bank accounts of the ruling caste.

Of course, my German friend suggested, this must stop. I suggested it was highly uinlikely to, and they should have thought about this before getting into an irreversible union with countries which had a very different moral structure.

And that is the fundamental difference here: supporters of the project say that a united Europe is so important that anything can be overcome; opponents (me) say that people are different and it just can't be done.

Incidentally, for the foreign press who leaped on the fact that Lazio is run by Berlusconi's party, the PdL, and this is 'extreme right', they should know that Berluscon''s highest official in the region, the President of Lazio, Renata Polverini, was a trade union leader in her previous job, and the foremost campaigner for women's rights.

USA: the difference

Willard 'Mitt' Romney, in an attempt to rescue what can only be described as a disastrous presidential campaign, has released his tax return.

This shows that on an income of around $14 million he and his wife paid around $2 million in tax, an effective rate of 14%.

What is astonishing for us in Europe is that this has been deemed OK - he has done the right thing.

Here higher income tax levels of 40-55% click in at incomes as low as $50,000 equivalent.

I know the comparison is not exact because there is health and welfare insurance, but it is easy to see how in America there is at least the incentive to work - you get to keep a fair bit of what you have worked for.

20 September, 2012

Not an apology

An unusual occurrence in British politics which deserves a bit of consideration: one of them has just apologised. Of course Mr. Cameron apologises regularly, but only for things which were clearly someone else's fault: the 'Bloody Sunday' massacre in N.Ireland which happened when he was still in short trousers, and after the recent report on the Hillsborough Stadium disaster which took place before he was elected.

But Nick Clegg, Deputy Prime Minister and leader of the Liberal Democrat party in the governing coalition, has apologised in relation to the charging of university fees. You may remember that before the election, when there was no hint of a coalition, the Liberal Democrats were united against tuition fees, which are now £9,000 a year. If you voted LibDem because of this you were shafted when they went into office.

However, Clegg has apologised for adopting the policy against tuition fees in the first place. He has not apologised for joining a coalition which went against one of the fundamental planks of his campaign. He has not apologised for being so drunk at the prospect of power that he went against his word and let down his supporters.

Not really an apology at all.

19 September, 2012

Money and mythology

Jens Weidmann, president if the Bundesbank, is against the bond purchase scheme of Mario Draghi, head of the European Central Bank.

Weidmann, in a recent speech in Frankfurt, reminds his German audience of Part 2 of Goethe's Faust, where Mephistopheles persuades the Holy Roman Emperor to make things happier for the people by printing paper money against gold which has not yet been mined (see any parallels here?). Of course it ends in misery, as it was to do in the real Germany within 100 years of Goethe's work.

Frankfurt is the birthplace of Goethe, as well as the home of the European Central Bank.

Here is food for thought: whereas in the English version of the Faust myth, written by Christopher Marlowe some 200 years earlier, Faust, at the end of his pact with the devil, is carried off screaming to Hell, in Goethe's version he is forgiven at the last minute by God, who declares that continual hard work, as Faust had demonstrated in his thirst for knowledge, is enough to get you to Heaven.

It brings the dystopian vision of the few Brits arriving in Paradise to find the seats covered with German towels.

And Mario Draghi? He has a slightly Mephistophelean smile, and there has still been no explanation of how all this money will be mopped up when it has done its job.

The hero of the piece could well turn out to be Weidmann (and of course the great soldier, statesman, scientist and poet  J.W.von Goethe).

18 September, 2012


Surely one of the great bugbears of the modern age is the flood of opinion sought and offered from sources which make that opinion automatically irrelevant. One of my favourites was Rolling Stones guitarist Keith Richards being asked about the death of Princess Diana. About as far as is possible from being an effete playboy sucking up to royalty Keef replied 'I never even knew the chick'. Others include any opinion of George Clooney except on acting, or of Bono except on singing.

My new favourite is 'Brian May (former guitarist of Queen): why I oppose the badger cull'.

Challenge for the White House

Willard 'Mitt' Romney has just set the presidential race alight; for..er..Obama.

This great tribune of the people has been filmed saying that 47% of Americans are dependent on the state. 'My job', he said, 'is not to worry about these people.'

With two months to go, we may just have to consider the possibility that Romney is working for the other side.

17 September, 2012

More retsina, per favor

Ah yes, the euro. You will remember that the Germans have said they won't bail out the southern periphery unless they start making the required fiscal changes, install a bit of discipline. However when it began to look as if they would have to bail out Spain's banks as well as its government, this was applied to banks, too. There would have to be eurozone-wide regulation of the banks, a banking union.

That is why eurozone leaders are having lunch a meeting in Nicosia, capital of Southern Cyprus, which holds the rotating presidency.

Just in case they can't see through the fog of retsina, here is the problem. The centralised regulator in Frankfurt says that a particular bank in, say, Spain is insolvent and either needs an injection of capital or to be closed down. The Spanish don't like the idea of it being closed down, particularly by Germans, because it is a regional bank in an important political area. So: rescue. But neither the regulator, nor his bosses at the ECB, has access to a rescue fund: there isn't one, countries are expected to rescue their own banks. But Spain hasn't got any money; could it have some from the rescue fund for governments, the ESM, to give to its banks? Wass? Nein nein nein, the condition of the rescue is that you let the banks go bust, dumkopf.

It isn't going to work unless there is a rescue fund for banks, of perhaps half a trillion euros, centred in Frankfurt; but that would mean giving them money without discipline, which the Constitutional Court won't agree....


The case of the topless photographs of the Duchess of Cambridge seem to have brought out the worst in the press. The tabloid top-seller The Sun, prevented from running this due to an agreement it had made, declared that the magazine Closer, which first published the photos, was mercenary, just doing it for profit; a bit like receiving a lesson on chastity from a middle aged hooker.

The editor of the Italian stablemate of Closer, Chi, felt he was doing us a favour: 'No other situation has revived the English (sic) monarchy, with its obligations and rigid protocols, more than this.'

Actually the British monarchy is quite good at reviving and renewing itself, and it isn't too much of a guess that it will be in business long ofter Chi has ceased to exist.

16 September, 2012

Black Wednesday

Well, well, well. It was 16th September, 1992, twenty years ago today. The UK had joined the Exchange Rate Mechanism, whereby the exchange rate against a basket of European currencies was fixed. The markets decided to test the rate, sold sterling until the Bank of England couldn't buy any more, and we crashed out.

Typically of Euro-loonies, John Major and his government had decided the principle was more important than the facts as they affected little people. The rate was too high - DM2.95 - due to high German interest rates following reunification. Britain with its inflation and its deficits and its trade with the US (the $ was also under pressure) couldn't keep up. It was the most humiliating defeat imaginable for what was the central plank of government policy.

I had stood in the elections in April 1992 on an anti-EU ticket. I had been roundly defeated, of course. I remember walking into a pub on the Thursday after the crash to hear someone say 'What's happened is exactly what Tim Hedges said would happen'.

Strangely enough some call it White Wednesday now. Sterling fell by about 20%, pricing our exports into the market, and with the Labour reforms carried out by Mrs Thatcher British industry surged. By 1996 the economy was healthy, but it was too late for the Conservative Party which lost the election in May 1997, tainted with the disgrace of Black Wednesday. The Chancellor, Norman (now Lord!) Lamont resigned but John Major, who had stated that membership of the ERM was the main plank of his government's policy, did not. I had little respect for him before, even less afterwards. Incidentally he has started to make speeches again and write articles for newspapers: he must be treated with contempt, for being not just a fool but a dishonourable fool.

The lessons?

Exchange rates should be determined by the market, not by governments; in any case they will be decided by the markets eventually.

Don't let dogma cloud your assessment of what is going on.

Devaluation is a successful tool as long as you have flexible labour markets.

The euro (the ERM was its predecessor) is a political construct, not an economic one.

Always listen to Tim Hedges.

15 September, 2012

Silvio, of course

It now turns out that both the French magazine which has published topless photos of the Duchess of Cambridge while on a private holiday, and the Italian magazine which also intends to publish them, are the property of Silvio Berlusconi.

Silvio has been sucking up to the Establishment for years. This is the time to refuse publication and earn some credibility.

Letter to a Loser

Dear Mr Cameron,

'We need a 'Kill Cameron' strategy' - Nadine Dorries, MP (Con)

'Boris Johnson Britain's most popular politician'

'Tories more popular after Black Wednesday than now'

'The start of a new Tory war?'

These are the headlines that the British have been waking up to for some time now. It is not, let's face it, either good or even normal. A very weak Labour opposition leader is sustaining, not reaching but sustaining, substantial opinion poll leads; the Chancellor is the subject of jokes:

'Why was George Osborne jeered by 80,000 people at the Olympics?'

'That's as many as the stadium could hold.'

So how did it come to this? It's not George Osborne's fault; it's yours.

You were voted a young leader of the Conservative Party in 2005, elected as a moderate, modern, refreshing change. You spent five years telling your party how it had to change, modernise, embrace the Green Revolution. Then you lost the easiest ever election in 2010, missing a wide open goal, against an unpopular, unpleasant and demonstrably incompetent Labour leader. Almost anyone could have won that.

The mistakes of your early years are easy to see. A political party consists of thousands of activists, unpaid and dedicated, giving up their days and evenings canvassing, filling meeting halls and flying the flag. You seem to have felt they were beneath you and insulted them, presenting yourself as modern at their expense. They felt hurt, mocked, and many did not bother to help at the election.

Instead of trying to run a minority government until the autumn of 2010, and, as was the tradition, holding fresh elections to confirm your mandate, you panicked and went into partnership with a party your supporters had been opposing at the election, thereby making them feel foolish and humiliated. You placed your career above your party and your country.

The Lib Dems had achieved some temporary popularity, almost entirely because of your idiot decision to allow them into the pre-election debates. It was ephemeral popularity but, negotiating at your weakest, you let them have dozens of ministerial positions on the back of it. Their popularity waned and they are having the last laugh. As you have made yourself increasingly unpopular, these equally unpopular intruders become increasingly indispensable.

And the LibDems acted as a brake on your government and on Tory beliefs. Your party thought it knew how to solve the economic crisis but couldn't put its policies into practice. And the newly elected MPs, natural Cameron supporters, found there were no government jobs for them because so many had to be given to the LibDems.

So now it looks as if you are going to lose the next election, even if you make it that far as Leader, condemning the country to another five years if the people who got us into this mess (Ed Milliband was a Treasury minister, Ed Balls was Gordon Brown's economic adviser).

Is there anything that can be done?


Throughout your leadership of the Conservative Party you have stifled debate on Europe. It is one of the main topics of discontent in your party and you risk losing votes to the UK Independence Party. Now you have been thrown a lifeline by the unlikely figure of José Manuel Barroso, head of the European Commission.

The only time as PM that you have been popular, Mr Cameron, has been when you vetoed a European treaty. You lost that popularity as soon as it was clear you didn't mean it and whilst initially vetoing the Eurozone's use of EU resources (such as civil servants) let them go ahead.

Barroso, in what he grandly calls a 'State of the Union address' has demanded new treaties, more Europe to counteract the problem of a failing Europe. It is stuff the UK cannot possibly agree to, and your supporters are waiting for some strong language from you. Incredibly, they are nervous that your response will not be robust. You must show, even at this late stage, that you have some sort of backbone.

Now is the time to renegotiate our entire relationship with Europe, from the absurdly expensive Common Agricultural Policy to the Working Time Directive which prevents the British working longer hours than the Greeks. There are rafts of directives, sub-treaties, accords and Brussels bluster that we want out of, and you need to renegotiate firmly and lead us into the next election with a vision; you need to show the country it has a future.

If you're not up to the job, someone else will do it.

14 September, 2012


Years ago the absurd European Bank for Reconstruction and Development, a sort of soup-kitchen for worthless infrastructure projects all over the continent, opened its doors in London. And very nice doors they were too. The head of this was a Frenchman called Jacques Attali, and when the British Press got on to the fact he had spent £750,000 on marble decoration and the rest of it wasn't..er..too tight a ship, he rushed into the Home Office and demanded that they stop publication of these articles. Attali was astounded when he heard that the British Government had no power to do so. The French, you see, have privacy laws, especially when it comes to the political class.

So it was a bit surprising to hear that a French magazine was going to publish pictures of the Duchess of Cambridge sunbathing topless on a private holiday. She should have been a bank director.

There is going to be more of this, and I rather think the Duchess' topless sunbathing days, like Prince Harry's strip billiards days, should be declared over.


If you were to be contacted by someone called Harlem Désir, which profession would you assume he or she followed?

Nope, not that. It is M. Désir and he is the new leader of the ruling French Socialist Party, the first coloured party leader in Europe.

13 September, 2012

Hong Kong

This week elections took place in Hong Kong. Only 40 of the 70 seats were on offer (the others are voted by special interest groups chosen by a neighbouring power) and the democrats managed to take 27 of them. This is enough for a blocking minority.

The election is following attempts by the Chinese to hold indoctrination classes in the schools (now abandoned) and you would have thought democrats would have done better.

In the run-up to the handover in 1997 soundings were taken about democracy and about going it alone (it is only the New Territories which were on lease from China: Hong Kong itself was British until we handed it over). But hardly anyone was interested. The majority didn't much like democracy, thinking it a distraction from making money. It seems they're still not enthusiastic.

A good week

It's been a good week for the euro. Yesterday the Bundesverfassungsgericht, the German Constitutional Court, ruled that it was not unconstitutional to go ahead with the ESM rescue fund. And today we learn that the party of Dutch Prime Minister Mark Rutte, an ally of Angela Merkel, is the largest after the election, gaining 41 seats out of 150, against 39 for the centre-left.

The rumours in Holland were that the Far Right party of Geert Wilders, which had turned its fire from immigration to Europe, and the Far Left anti-bailout party, would form a serious bloc. In the end the voters went for centre-right and centre-left. Polls showed that there was popular discontent with the bailouts but rocking the boat was too much for the Dutch.

Of the Constitutional Court decision, one of the German papers said it was a bad day for Eurosceptics. This is to misunderstand. Eurosceptics do not want financial disaster in Europe - it will benefit no-one. It comes as neither a surprise nor a setback that the ESM is regarded as legal rather than otherwise. I only point out that it is not necessarily a good thing.

The Court's full judgment contains a few caveats: Germany's liablity is capped at 27% of €700 billion which means the fund cannot be increased without the approval of parliament (and if they have blown all that, MPs are going to ask where it has gone before stocking the fund up with more).

The ESM cannot get a banking licence and borrow more from the ECB. This may be important, and is something Italy's Mario Monti described as crucial. It does not have 'unlimited firepower'.

And of course the idea of joint liability for Europe's debts, by way of eurobonds or anything else, is dead in the water.

So if Spain applies for help. and this tips Italy into proffering the begging bowl, €700 billion, of which €200 billion has already been blown, may not be enough: Germany can't lend Italy more money to pay its share of the bailout of Spain and vice versa.

The markets will look closely at this, and look at the terms which will be applied to any bailouts. They will wonder if these limits are worth testing.

10 September, 2012

Strange days

Belgium was invented in 1830 in a post-Napoleonic reorganisation of the continent, to act as a buffer between the UK, France and Germany. It is almost inseparably divided into two peoples and two languages and is the butt of several jokes (although the list of famous Belgians is longer than you might think). The most likely outcome for it is to become two separate regions of the EU.

The idea that anyone, as a free decision, should decide to take Belgian nationality, is an extraordinary one, but that is what Bernard Arnault, Europe's richest man, has decided to do. He is worth around €40bn, and France, the country of his nationality, where he was born and bred, has just imposed a 75% tax on incomes over €1 million. To put this into perspective, if he expects a modest return of 2% p.a. on his fortune, a tax increase from 50% to 75%  would involve paying an extra €200 million in tax.

Will all this now go to the happy Belgian tax collector? My guess is Arnault will relocate to Monaco, where there is no tax but French citizens are not allowed to take advantage of it.

It is a lesson for M. Hollande. The rich are flexible and do not like to be seen as something to be milked at will. It is a lesson other countries should learn as well.

03 September, 2012

The Draghi Put

It has a mysterious, rather sinister sound: perhaps a remote Indian shanty town, where 19th century British Soldiers were earmarked for murder in the Mutiny by a chapati being left on their doorsteps.

It is in fact an option - no perhaps just a boast - to shore up the weaker Eurozone economies with money created by the European Central Bank.

Mario Draghi is the President of the ECB and today is his 65th birthday.

I am not sure he has much to celebrate, though. First Angela Merkel put her oar in, insisting that countries in receipt of this largesse first apply to one or both of the bailout schemes (the EFSF and the ESM) and conditions will be attached to their rescue. Then last week Jens Weidmann, head of the Bundesbank, threatened to resign if there were limitless credit on offer (it is, of course, the Germans who have to pay).

The ESM has not been fully ratified yet (the German Constitutional Court has not yet spoken) and Spain and Italy, fearful of conditions being applied to them, have not applied for help.

So right now Draghi's promise to do everything in his power to save the euro just looks like whistling in the dark

'I will do such things - what they are, yet I know not: but they shall be the terrors of the earth!'
(King Lear)

02 September, 2012

Princess by another name

A doubly comforting tale reaches us from Wales, where the Duchess of Cambridge (Kate Middleton as was, and I still don't understand why she isn't a princess, being married to a prince) tried to buy a wetsuit. She asked if she could reserve it and the man in the shop asked for her name, which she gave as Mrs. Cambridge. Strange name, he said (everyone in those parts is called Jones, Jenkins or Price).

This blog salutes a man who, confronted with one of the most photographed women in the world, has no idea who she is; and we salute the Duchess, who is now so integrated into the Royal Family that she went out not realising she had neither money nor credit card.

01 September, 2012


Alex Salmond, of the Scottish National Party, declares a couple of years ago that he intends to pursue full independence and that he will hold a referendum. The politicians huff and puff but the Royal Family, saying nothing, holds a Royal Wedding, Diamond Jubilee celebrations and plays host at the Olympic Games.

Quietly, Scottish independence has gone off the boil.

As they say in cricket, form is temporary, class is permanent.