The Good Old Days
Dec. 18th, 2008 09:23 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksIt hasn't taken long for national interest to take over from a "we are all in this together" mentality, has it? France's BNP Paribas has abandoned its plans to take over Fortis in Belgium after the Brussels court of appeal suspended the transaction for 65 days and ruled that Fortis shareholders be allowed a say in the breakup of the bank and its takeover.
Now, it's actually a fair enough reaction by the Belgian courts -- the breaking-up of Fortis had all the signs of a stitch-up of phenomenal proportions. BNP Paribas got a great deal out of it (including leaving behind two-thirds of the toxic assets in the rump Fortis) mainly because it was, as they say, the only player in town. Now BNP Paribas has decided, perhaps in the light of the fact that its own numbers aren't looking so pretty any more, that it can do without at least two months of legal wrangles.
Whether this will benefit Fortis shareholders is debatable. It could turn out to be a choice between being stitched up and being executed. Hobson is alive and well these days.
But it's a portent. Free trade is one of those fine concepts that politicians agree with when things are going well. Once stuff starts getting a bit iffy (particularly for the domestic workforce) then economic principles don't so much take a back seat as get tossed out of the window.
Any listening to "Today In Parliament" over the past few weeks has been a sad time for anyone with any knowledge of econommics at all. Speech after speech indicates that the guys who are nominally in charge literally have no clue what got us into the mess (there's still some kind of mass illusion that it's only the lenders who were at fault and all the irresponsible borrrowers can't be blamed at all) and even less idea about how to get out of it.
Instead you get the soundbite world of an USDAW spokesman saying that to put 20,000+ workers on the dole two days after Christmas was appalling timing. Well, er, you pay their wages then. Better still, let the workers take over the Woolworth shops and see if they can make a better job of it. Or perhaps USDAW would care to give it a go?
It also transpired that many thousands of pensioners had been overpaid a few hundred quid a year for decades. The announcement that this overpayment would stop was greeted with horror by the recipients. One guy said "why should we pay for the government's mistakes?" A neat soundbite again, and, like many soundbites, one that fails to stand up to more than a nanosecond's analysis. Er, so you have been overpaid for 30 years, which has cost other people (taxpayers) quite a lot of money. And you think that those other people should carry the bill for overpaying you, just because you have got used to the money?
As I look forward to the next four or five years, in macro-economic terms, it looks desperately grim, and the only plus is that the return of inflation at a frightening level (oh, how the 2010 and 2011 numbers will be fun!) now looks more and more certain. The Fed's actions gave a nice boost to my 20-year Index-Linked Treasuries -- now up nearly 10% since I bought them. In the past I've made the mistake of getting out too soon, and I think that we've now got through to around July/August 2009 before the tide turns against gilts.
That. in logical terms, would be the time to start piling into gold, awaiting the $2,000 an ounce number that is bound to come by about 2013. But there is a downside to this, and that is one of renewed dollar weakness. It's frequently missed that there is a strong correlation between gold strength and dollar weakness (and vice-versa), which makes the apparent large shifts in the price per ounce less significant when measured in euros or sterling. The neatest way round this would be to buy gold futures and sell dollar futures. However, there's more comfort in actually owning physical gold, and considerably less risk.
Enough, the joys of Christmas shopping in Lewisham beckon....
____________
Now, it's actually a fair enough reaction by the Belgian courts -- the breaking-up of Fortis had all the signs of a stitch-up of phenomenal proportions. BNP Paribas got a great deal out of it (including leaving behind two-thirds of the toxic assets in the rump Fortis) mainly because it was, as they say, the only player in town. Now BNP Paribas has decided, perhaps in the light of the fact that its own numbers aren't looking so pretty any more, that it can do without at least two months of legal wrangles.
Whether this will benefit Fortis shareholders is debatable. It could turn out to be a choice between being stitched up and being executed. Hobson is alive and well these days.
But it's a portent. Free trade is one of those fine concepts that politicians agree with when things are going well. Once stuff starts getting a bit iffy (particularly for the domestic workforce) then economic principles don't so much take a back seat as get tossed out of the window.
Any listening to "Today In Parliament" over the past few weeks has been a sad time for anyone with any knowledge of econommics at all. Speech after speech indicates that the guys who are nominally in charge literally have no clue what got us into the mess (there's still some kind of mass illusion that it's only the lenders who were at fault and all the irresponsible borrrowers can't be blamed at all) and even less idea about how to get out of it.
Instead you get the soundbite world of an USDAW spokesman saying that to put 20,000+ workers on the dole two days after Christmas was appalling timing. Well, er, you pay their wages then. Better still, let the workers take over the Woolworth shops and see if they can make a better job of it. Or perhaps USDAW would care to give it a go?
It also transpired that many thousands of pensioners had been overpaid a few hundred quid a year for decades. The announcement that this overpayment would stop was greeted with horror by the recipients. One guy said "why should we pay for the government's mistakes?" A neat soundbite again, and, like many soundbites, one that fails to stand up to more than a nanosecond's analysis. Er, so you have been overpaid for 30 years, which has cost other people (taxpayers) quite a lot of money. And you think that those other people should carry the bill for overpaying you, just because you have got used to the money?
As I look forward to the next four or five years, in macro-economic terms, it looks desperately grim, and the only plus is that the return of inflation at a frightening level (oh, how the 2010 and 2011 numbers will be fun!) now looks more and more certain. The Fed's actions gave a nice boost to my 20-year Index-Linked Treasuries -- now up nearly 10% since I bought them. In the past I've made the mistake of getting out too soon, and I think that we've now got through to around July/August 2009 before the tide turns against gilts.
That. in logical terms, would be the time to start piling into gold, awaiting the $2,000 an ounce number that is bound to come by about 2013. But there is a downside to this, and that is one of renewed dollar weakness. It's frequently missed that there is a strong correlation between gold strength and dollar weakness (and vice-versa), which makes the apparent large shifts in the price per ounce less significant when measured in euros or sterling. The neatest way round this would be to buy gold futures and sell dollar futures. However, there's more comfort in actually owning physical gold, and considerably less risk.
Enough, the joys of Christmas shopping in Lewisham beckon....
____________
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
Not sure that BNP Paribas has given up on Fortis
Date: 2008-12-18 06:11 pm (UTC)I'm based in Paris and work at the bank you mention as an external supplier, I can tell you that there is no talk at Bnp's end of giving up on the Fortis buyout. What's happened is that the process has got held up in Belgium due to actions by minority shareholders. BNP will have to move forward on its commitments and put cash on the table before year-end in order to get the deal moving forward (although it can still be vetoed by Belgian parliamentarians or held up by suspensive conditions). Despite this the will is there to do the deal and I'd say it's a cert that it will go ahead.
Best,
no subject
Date: 2008-12-19 09:42 am (UTC)the GovernmentRBS for enough of an increased mortgage facility. I retain fond memories of my 1983-vintage mortgage being inflated to approximately zilch a couple of decades back.