It’s a long way to real-ee-tee
It’s a long way to go
It’s a long way to real-ee-tee
for a stupid so-and-so
Syrian President Bashar al-Assad gave what the media called ‘a rare speech’ yesterday. Mainly it was rarified: a droning stream of accusation that was as long in duration as it was short on reality. The audience cheered, clapped, stood up, and sat down on cue. Afterwards, it would be a good odds-on bet that most of them prepared for a fast escape to somewhere – anywhere – as it was abundantly clear the leader had finally gone tonto. Like a praying mantis – but with less chin – Assad gave off an air of John Cleese trying to make Alchemy seem the best way to knit sausages.
The truth is that Bashar is surrounded by NATO, drowning in Muslim brotherly love, and unlucky in his choice of allies: Russia has backed off, Iran is broke (thanks to the US) while China is 12,000 miles away preoccupied with Nippon hatred. The end of totalitarian regimes always looks like this. Very few people understand just how nasty the new regime is going to be. But then, most media observers of the Syrian situation are almost as uninformed and deluded as Bashar Assad.
It’s not much different in the field of global economics and finance this morning. The Babel Committee on Bank Supervision (Prop. M. King) cut the banks some slack, announcing they’d only need to have 60% of the necessary short-term funding in place when the rules become effective in three years’ time – and would have until 2019 to fully implement the regulations.
To summarise for those who are new in Wonderland, what the Borrowers of Basel are saying is that (a) we know you’re broke and don’t care about what we recommended in the first place anyway, and (b) you have six years to sort out your defences against the Tsunami, which by the way may well happen around June 2013. Reeling out a longer straw to a man drowning on Victoria Falls is unlikely to work, but it reads well for those convinced things aren’t so bad really.
And there is no shortage of such people. A survey of 171 industry executives by the EEF manufacturers’ organisation found that those expecting improved conditions in manufacturing matched those expecting a deterioration. A year ago, almost everyone was expecting dire rather than deteriorating, so this is an improvement. Actually it isn’t really, because it’s just another of those ‘sentiment’ surveys that become meaningless when the opinion-leaders turn out to be talking tosh. Indices of confidence are notoriously unreliable because they involve speculation not empiricism; what particularly worries me about this EEF fieldwork is that the organisation itself has more than halved its forecast for manufacturing output growth this year from 1.5 to 0.7%. So if the EEF doesn’t know WTF’s going on, and the EEF did the survey showing that their members know even less about WTF’s going on, we aren’t left with much. To go on, as it were.
The same contradictory cacophony of crypto-confidence emerged from Deloittes this morning. The consultancy says that Britain’s biggest companies enter 2013 more confident than a year ago, but aren’t keen on investing because of an uncertain economic outlook. Right. So how exactly is their bearly bullish mood going to translate into action? ‘Their priorities are reducing costs and increasing cash flow’, says Deloittes, ‘they do not plan a return to aggressive expansion.’
I reckon that’s pretty much how things stand here at Slogger’s Roost: I too am loathe to expand aggressively, rather more of me sitting in the eat less, turn to casual crime and pull up the drawbridge camp. The frightening thing about this report is that a lot of mugs out there paid for it. A large driver of my tentative attitude to engaging in any form of spending spree is that my bank doesn’t seem keen to lend me any money: the new bank lending guidelines err rather more on the side of rich and big than small and broke.
There’s nothing new in this (it’s partly why we’re here on Mayfair with nine hotels) and the trend is given statistical validity by the nearly 5% rise in the value of UK mergers and acquisitions in 2012. More £1bn-plus “mega deals” were done here last year than at any time since 2008, according to information services group Experian. In fact, as a result of this, Britain outperformed the averages for the rest of Europe, Asia and the US, all of which recorded declines in this sort of nonsense whereby companies get bigger, wages get lower, and unemployment rates go higher. In 2011, only a quarter of all mega-merger insanity was over the £1bn plus level; in 2012 it was nearly 40%. It made £128bn for somebody, while the banks involved in underwriting them were pleading poverty….and lapping up £243bn worth of QE liquidity from Mervyn King.
It doesn’t add up, but the clowns in charge care nothing for this, because they know the overwhelming majority of the electorate see a mega-deal as six pork pies for the price of two at Morrisons. Dave himself shows more interest in gay church marriage than banks taking the piss, while George Osborne’s reality consists of ignoring £400bn spent on QE in favour of £18bn saved in welfare cuts. The idea on these cuts is laudable enough (persuade people to work) but as the new Resolution Foundation analysis shows, 60% of the chancellor’s benefit squeeze hits working households. The struggling so-called strivers are bearing the brunt of the cuts: OFFICIAL. We may all be in the same boat, but only the bankers are armed. They can still eat us all one by one, which is worrying given the lack of any rescue task force in sight.
It’s Monday, folks: another day, another outbreak of delusional episodes.
Earlier at The Slog: From TGIF to TGOF in the markets
The Slog 