CRASH 2: Why it is no longer in doubt

As opportunities shrink, egos expand. Doom is upon us.

I have several pointers I use all the time when trying to judge how and when something financial is going to go wrong, fall over or implode. One of the biggest is national estate agency chains coming to market. Estate agent multiples always buy and sell at the wrong time. When they try to sell themselves to a bourse, you know it’s tits-up time.

The UK’s largest estate agency Countrywide is getting down to the short strokes for a stock market flotation by its US owner, indicating perhaps a vote of confidence in the recovery of the country’s housing market, or more likely a case of tertiary insanity. The American private equity group Oaktree Capital is having serious talks with Goldman Sachs and other suspects about launching an IPO for Countrywide, reckoned to have about 10% of the English domestic properties market.

I wish to encourage them in this venture, because as you know I’ve never liked Estate Agents that much.

Less eccentric (but equally useful in reading the runes) is the fact most Economists expect the Office for National Statistics (ONS) to reveal next Friday that the UK’s GDP contracted by around 0.22% in the three months to December. This will simply confirm that George Osborne’s optimism about the tax income/welfare balance is way off, and that once again the Conservatives have shown they can cut costs but are somewhat remiss when it comes to the creation of replacements for old business sectors. As in, they’ve done diddly-squat about it.

Once more the financial pages are talking about a ‘triple-dip recession’ which is of course a developing depression that would by now be in full swing had not £0.8 trillion of our money been needlessly thrown at pushing back the final waves.

But ignoring the familiar British beach feeling of damp, cold feet last felt significantly by King Canute, Britain’s fifth largest bank Santander is considering a £2bn purchase of  struggling Clydesdale and Yorkshire banks because it wants to beef up High Street presence, and take advantage of their alleged strength in the business sector. It’s obviously the wrong time to be doing this, but rather more pertinent are the parental genes involved here: last May, the bright red high street bank saw an increase in panicky enquiries by worried savers. Customers were worried that the bank would be dragged into the eurozone crisis because it is owned by Spain’s Banco Santander.

This wasn’t idle concern: just a day or so earlier, Banco Santander, its UK subsidiary and 15 other Spanish banks had their credit ratings downgraded due to their exposure to the struggling Spanish economy. The reassuring balm, put out by Spanish treasury minister Inigo Fernandez de Mesa, about there being “little reason for concern as Spanish banks have plenty of liquidity” has since had the shine taken off it slightly by the growing realisation that Spanish banks are on a par with the Gobi desert when it comes to liquidity.

I have the same feeling about this today as I did five years ago about RBS and ABNAmro. It is a disaster waiting to happen.

Anyway, estate agents going to market, Chancellors being proved badly wrong, and hubris-fuelled banks trying to bite off more than they can chew. These are all ominous signs, and there’s no lack of others.

At some point in the not-too-distant future, we will all know finally and for sure that the ECB and the Fed have more debt than anything beyond mass money-printing can fix. Being smaller, the UK might escape notice at that point – although there is no logical reason why it should. Either way, the final clincher for this brief analysis of why belly-up is upon concerns the fact that everyone everywhere is carrying on as normal. When people are planning bullishly for the immediate future, the safety zone behind the sofa beckons.

Thus I see this morning that NHS hospitals are hiring agency nurses at rates of up to £1,800 a day, HMV’s administrators are hopeful of rescuing the doomed chain, RBS, HSBC and Barclays have been lying about the cost of compensating businesses for their previous derivative scams….and so the bill has now doubled to £1.5bn, and last but not least, the big mobile phone companies – O2, EE, Orange, Vodafone and T-Mobile – have created a joint venture to cash in on the Big Bang about to take place in the market for mobile payments in Britain. The venture company will labour under the interesting brand name of Weve, also acting as a one-stop-shop offering services to advertisers.

This idea might well be the future in some areas (especially using phones to activate the coming explosion in automation) but it can’t possibly be the immediate future, for the simple reason that Vodafone and Orange are always wrong about everything. What all the above examples show is an expectation of normality – and from Vesuvius to Lehman Brothers via Hiroshima, all obliteration of normality is always preceded by the certainty of normality’s infinite omnipotence.

More detail tomorrow (hopefully) on how the elite is still bidding to avoid window-jumping, lamplight ropes, being hacked to death by Islamists in Africa, and a nuclear war in Asia.

Earlier at The Slog: names being pulled out of the paedophile hat at Elm House

63 thoughts on “CRASH 2: Why it is no longer in doubt

  1. ‘we will all know finally and for sure that the ECB and the Fed have more debt than anything beyond mass money-printing can fix.’
    And how will they remedy this? By printing shed loads of money and then shed loads more, and if needed shed loads more. Zimbabwe hear we come…

  2. Totally of this topic but, is it me or coincidence that all the Europhiles voicing concern over our EU membership are the one’s whose names have been cropping up over the last few weeks on different lists circulating the internet? Portillo has just joined the throng of those panicking about the supposed referendum.

  3. I’m sure the Quisling Portillo is worried we might kick him and other Spanish passport holders out after successful referendum. Sweet thought! lol!

  4. But the elite should be hacked to death by Islamists. They have been responsible for the mess we find ourselves in. Perhaps sharia law could be introduced just for them and every week one would be beheaded in front of the mosque before Friday prayers. Talk about setting an example!

  5. Labour / Cons just want power. They have to woo the boomers to do this. Large inflation erodes pensions. The govt have only had a few policies they have stuck to:
    1. Maintain high house prices at all costs
    2. Any discussion of cuts to pensioners is “off the table” even for discussion
    3. Maintain the status quo

    Which demographic does this fit? Who decides who stays in power?

    Inflation would be good for the young. Wage inflation would follow. Student debts would be eroded. House prices would drop in real terms.

    They will fight hard to avoid inflation. Any inflation we have had so far has been:

    1. 2008 GBP crash as world realised UK was a joke written by Gordon Brown
    2. Rising commodities prices
    3. Marginal QE impact – necessary evil to avoid complete implosion

    The only inflation we have had has been external or the bare minimum required to keep the boomers happy.

    With our demographics big inflation would mean the implosion of the welfare state.

    ps I think it’s going to implode anyway

  6. The connection goes all the way back to ‘Sailor Boy’ (or Boy Sailor) Ted Heath taking us into the EEC in the first place – nothing changes.

  7. Your point on estate agent timing is generally right. The exception is probably Jon Hunt. It seems to me that his exit from Foxtons was timed perfectly.

  8. My mother-in-law has just turned 70. She is fairly well off but doesnt even own a cheque book. Even she says “everything is going to go pop” soon.

    Meanwhile, Thomas Cooks shares are up to 56p, so their 1.2billion of debt obviously doesn’t matter too much. Think I’ll book another holiday before the 4 horsemen ride.

  9. The hurried construction of many a large underground military complex in recent years hasn’t gone entirely unnoticed. It isn’t just the BBC that has built itself a large underground bunker at our expense, the elite of all nations have theirs too.

    The 300 American FEMA detention camps with attendant rail carriages complete with internal shackles, perhaps gives a clear indication of the elite’s plans for us when shit and fan do eventually collide.

    I think many as yet are in denial, but some expect no better from Cameron and the Euro fascists.

  10. Hyperinflation is the only route they will take………… they should write off debts and tell the banks to stick it up their off sheet balances.

    But they will not do this…….. they will inflate the debts away………. leaving millions of people stranded (having their boomer wealth stolen by the back door.) Private pension provision will likewise be stolen (nicely done after making it compulsary) and every state provided ‘service’ will have its front line abilities cut back………… whilst ensuring that the unemployable ‘voter base’ back office, box ticker, empire grower is generally unaffected…. until of course the starving and homeless decide that dying by bullet is quicker (and probably in terms of long drawn out suffering) less painful than a starvation enduced demise.

  11. No – I think it should be televised………. a ‘reality’ TV show we can all support !

    It could be called…..”Not Big Brother !” or “Was Skating on thin ice” or even “I was a traitor….get me out of here !”…. maybe “Dangling with the Stars !” :)

  12. I met a sub 40 yo fellow on Friday, top public school/Cambridge/good regiment (sadly no longer)/management consultancy/redundancy last year. He said that over the last 3-4 years he had felt increasingly uncomfortable when meeting new clients and their employees as everybody knew that when he was finished the workforce would be at least 25% smaller. He explained that nearly all the big corporates have had to confront the fact that there is now no way to increase income, leaving them with the only option – to cut costs. Now working as a teacher, independent school so no PGCE needed, and sleeps better.. for the time being.. until the rude awakening.. Oh, and he said: “It’s all your generation’s fault”, although when challenged did accept that it was quite a big generalisation. Like many others here, I have a deep and instinctive conviction that we are in the death spiral of a whole way of life; you can only hotwire reality for so long before it finds you out.

    And my fiat is still parked in the garage, some of it in the big red one, waiting for the next government scrappage scheme.. The question is whether to drive it a bit before it runs out of fuel, or sell it and buy something else..

  13. One thing puzzles me about all this doom and gloom – When exactly is the sh.. going to hit the fan?. I’ve been reading blogs and posts like this for years, and the status quo still prevails, more or less. Perhaps the road down which the can is being kicked is an endless circle..

    Anyone care to predict timescales ?

  14. It makes you wonder. It’s difficult to explain the positions of many of our leading politicians on the EU without wondering whether blackmail is involved. What we do know for a fact is that many senior politicians are obliged to promote the EU if they are to receive their pensions. We also know that the media are funded to promote the EU – and, I would surmise, this probably explains why no mainstream journalist openly supports UKIP, even though, apparently, at least a tenth of voters do.
    Our membership of the EU is built on a lie. We need to go back to the drawing board and kick out the politicians who haven’t been honest with us. We cannot really move on as a nation in any way until this situation is sorted out.

  15. Sadly, the quality of UK political leadership, encompassing vision and decision making is appalling. Look at them all – Cameron, Osborne, Milliband and so on. I wouldn’t employ any of them even at a junior level.
    Only Farage has the qualities, but many don’t take him seriously, nor do they have a better candidate in mind.
    The future is bleak for most of us.

  16. Good piece. It’s stupid that we talk about double and triple-dips when it’s been obvious for a long time we’re bumping along the bottom of a depression. Technology, global industrialisation and a shortage of raw materials and fuel supplies are bringing a permanent levelling down for developed countries.
    I disagree about Osborne – our problems are structural and global, and there is very little he can do about them, except give us a soft landing. Estate agents and business leaders talk a good game (that’s why they are where they are) but the truth is fairly clear to most of us.

  17. Pingback: John Ward – Crash 2 : Why It Is No Longer In Doubt – 20 January 2013 | Lucas 2012 Infos

  18. I’m early 40’s, went to a top public school, ex-army officer (another armoured corps regiment recently sent to the wall) and lost my job in the corporate t’Interweb industry a few years back.

    After a year or two beard farming I now farm bees. Much healthier for the mind, if not a little tough on the pocket.

    Buy gold and silver.

  19. i thought that was all you had left back there;question marks. Why oh why, an expression that I detest,is a national sport, is it not?

    Why oh why.;;possibly something to do with decisions taken and responsability for the decision never even remotely accepted. Sounds like flukin politicos.

  20. My oh my, so much doom and gloom. I’m afraid I cannot offer any cheer because I agree with almost every word.
    However, what about the end game? Will we follow the FEMA dictatorship route, will Osborn and Miliband see the light, default and do an Iceland, will we be given a war to depopulate and reset the banks, or will we successfully inflate all our troubles away?

    I’ll go for number three, a nice juicy war. Not that I want one, you understand, I just cannot see any other viable alternative that will promise preservation of the elites, and willing sacrifice from the sleeping buffoons.

  21. Here’s a bit more economic evidence:
    Just back from the Boat Show at London’s Excel (owner: Abu Dhabi National Exhibitions Company). The show was almost exactly 50% smaller than last year’s. Same admission price, though.

  22. I think it’s fair to say that our ‘official figures’ have ‘benefited’ from being so frequently massaged that significant weight loss has been the inevitable, intended, result. I realise that viewpoint is somewhat controversial and inflammatory, of course..

  23. They only get to positions of power due to their previous despicable practices. TPB have enough on all these crooks to promote them and control them once they put them in place. Why else would we have such a bunch of arseholes constantly coming out on top. Someone is clearly controlling the process.

  24. It’s that normalcy bias thing again, like when you decide not to bother with that seat belt ‘cos you’re only going a quarter mile to the shops, only to get shunted from behind by an 18 wheeler.

  25. Maintain LONDON house prices at all costs. Did you notice that other areas are not exactly buoyant? But you are right, the re-election imperative is dominant. See A Merkel, M Rajoy, F Hollande etc. Not that Cameron was elected last time, but that’s a modest complication. And don’t be taken in by the published inflation stats. They are, put simply, rubbish.

  26. Re HMV. Given that the stores are the problem, why would anyone want to take over anything except the brand? Yes, the brand clearly has value, especially to somewhat deaf canines. But all those stores, whose business model belongs to the last century and simply cannot be revived? I think not.

  27. Our dozy government finally discovered that the last scrappage scheme only benefited the UK distribution network, as we import almost all the small cheap cars that those attracted by such schemes tend to buy. The car dealers, of course, were ecstatic. However, the plan was not to support them as far as I know.

  28. We could introduce a new iPad app for those wishing to simulate a bloodless execution, being a little too squeamish to join the tricoteuses but wishing to enjoy the process in a sanitised 21st C way.

  29. To the people of Britain are the views of Nigel Farage taking a solid foothold? and what is the general consensus?

  30. Quite so, and the forthcoming currency scrappage scheme is unlikely to result in ecstasy for anyone at all.

  31. The consensus from this address is leave your Farage in the garage and walk. Good style, but doubts about the content – notwithstanding that I would dearly love to believe otherwise and see myself proved wrong.

  32. You could be right. Didn’t Camoron just today state we face decades of war in Africa and it should be a global response.

  33. Back in the day, Portillo and Hague were amongst the fervent eurosceptics, addressing many “fringe” gatherings on the many reasons why they could not support the EU ………what happened? Who got to them? What were they offered? Though everyone has the right to change their mind on an issue, it ‘s not particularly reassuring when the views of aspiring political leaders are seen to be either not deeply felt/established, or are ‘sensitive’ to pressure to reverse them.

  34. Certainly Nigel Farage has a strong following in the Netherlands.
    We down to earth people think that he talks a lot of sense, and that he could set an example to the whole EU electorate.
    *via ipad at Schiphol

  35. Empires in collapse,push their home territory inflation onto others.Unfortunately for us we here in the UK are the “others”along with Europe and Asia and as the empire of the USA struggles we will be thrown to the inflation wolf to save the dollar.Some special relationship!

  36. The elite of New York are fearful.They view the Fema camps as internment camps for the likes of Occupy and the FBI(I know I was surprised as well).Some of the New York elite are trying to reach out and avoid the slaughter in later generations.
    I fear that the camps will be used against the people at first,then the elite will be holidaying there indefinitely.When or what will trigger this,probably a stupid incident in which innocent will be killed and the resultant vidoe goes viral – just a thought!

  37. Yeah, decades of war to defeat terrorists when he really means decades of war to keep the Chinese from grabbing all of “our” resources.

  38. While the view from my window sees a means to an end in Farage. At the very least he’s a man to rid the others of their complacency, and at best someone who, given the chance, may well prove our best politician of the age.

  39. ‘Means to an end’ is the right position – UKIP has no substance beyond Farage, but we need it as a rallying standard to achieve the exit objective. Once that’s done, we can get back to UK politics.

  40. Pingback: From the Archives | The Slog. 3-D bollocks deconstruction

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