Dubai Crisis as a Spider

I had to say that when I opened the Times today I was impressed by their spider diagram (this is a link to a PDF) showing the interconnectiveness of businesses to the Dubai World difficulties. Unlike the previous map of islands that they showed, when reporting on the venture at the start up, there is less enthusiasm about the state of some of these islands.

Is Recession Going to Suffocate Earth?

The news that Iberdrola Renewables are to slash their investment in Britain by more than 40 per cent, or £300 million, is possibly a worrying sign that the financial mess we have got into may have more damaging effects to our world than merely in its pocket.

Iberdrola are one of the world's largest investors in wind farms, BP and Shell have also shelved of pulled out of projects in recent months including the Thames Estuary porject. But the economic downturn compounded with problems of access to the grid and planning delays is making the UK a place that the international leaders are shying away from investing in.

Xabier Viteri, chief of Iberdrola Renewables, whose Spanish parent owns ScottishPower, blamed the economic crisis for the move but added that problems in Britain could force his company to consider investing elsewhere.

However, fair play to Ed Milliband in part. The energy minister earlier this week equated opposition to wind farms as "socially unacceptable . . . like not wearing your seatbelt or driving past a zebra crossing". I say only in part as the Minister has picked up the Labour myopia when it comes to renewables and focuses only on wind and not on developing a balanced portfolio of renewable energy sources, both to cover outages and to spread the load. He also tends to look at large micro projects to the disregard or micro generation or small scale projects to assist the effort against climate change.

Eat Start the Economy

Raymond Blanc may only shut down the restaurant of one couple who dream of running one every week on his TV show The Restaurant. But away from the world of reality TV the reality is looking far more harsh. Restaurants are going to be facing their toughest year since 1990 according to a recent survey. With the credit crunch taking a grip eating out is hitting high on people's list of economising.

The end result of course will be that our catering industry is looking likely to follow the retail trade in restaurants no longer being able to keep up with the lose of trade. Considering that retail companies have been going into administration or worse even during the run up to Christmas we can see what can happen. When you look at the names from the High Street from Woolies to Wedgewood you can also see that there may not be any guarantee for either end of the market it merely may come down to the overheads and whether these are met or not.

The sector is now tightening its belt and jobs and eateries across Scotland are starting to disappear and are expected to carry on doing so throughout the year. Maybe Gordon and Alistair should give us all vouchers to eat out at restaurants to give our restaurant owners an economic stimulus on the boil.

Some of the factors that are adding to the misery in Scotland are:

A need to thin out of the overly congested industry especially in Edinburgh.

An exodus of foreign chefs especially as salaries drop in comparison to the Euro wages offered elsewhere.

The reverse that good from Europe will be forcing prices up beyond which the price elasticity of the consumer can stomach.

Two thirds of people already stating they will be dinning out less this year.

Also post Hogmanay a growing number of restaurants are closing for an extended holiday in January and those staying open are not replacing staff lost through attrition.

Now We're On to the Crystal and China

Lock up all your valuables. I read earlier that the Waterford Wedgewood company is the latest to go into administration. These are two very fine crafted luxury goods manufacturers. If they were to disappear the UK and Irish workforce would lose many skilled workers in very refined arts.



Admittedly both companies aim particularly at the high end of the market, while their lower end goods still bear the price tag to match the name. If the almost 100 year presence of Woolworths on our High Streets is hard to take should these other two W's cease to exist an even great piece of our history would be lost forever. Josiah Wedgewood set up his pottery in 1759 and it has long be the epitome of fine china. The Penrose brothers set up their quality crystal factory in Waterford in 1783.



Seeing my mother once won the top prize at the Belfast Music Festival, which was massive Waterford Crystal vase, which barely came out of it's box with us youngsters around, I have fond memories of the company. Indeed one of the beaten finalists, which if I recall were predominantly if not all Frank Capper pupils was Eugene O'Hagan, now topping the classical music charts as one of The Priests.

It's the diversity of businesses, banks, car manufacturer,s retailers and now this that are suffering as a result of this recession. Plus the fact that many are actually quite established names shows just how much bite there is to this downturn.

Nice Cuppa Not Gonna Relieve This Pain

They say that no matter how bad the situation there is nothing better to help you through it than a nice cup of tea. However, I doubt this was the case for the bosses an employees of Whittards who have become the latest High Street victim of the credit crunch as tea is their primary business.

Whittards had been backed by the Icelandic bank Landsbanki and owner by Icelandic investors Baugur. But following the failed Icelandic bank cutting the companies funding lines so Ernst and Young are prepared to step in as administrators for the company who have been the purveyors of fine teas for 122 years.

500 staff across the chains 130 stores will be going home for Christmas tomorrow with one wish; hoping Ernst and Young find an interested party to buy the company. But with Whittards facing a rent bill on Christmas it may be bailiffs and not father Christmas who is taking drinks for the company founded in Chelsea. As Nick Hood predicted the other day as many as 10 chains may be in imminent danger, as many others are owned or financed by Icelandic money it may be worth looking at the states of their financial positions with regards to the immediate future.

Update: Then again it is always hard to resist a fine cup of tea, or for that matter a whole company. Apparently private equity investor Epic have stepped in to buy Whittards apparently in a deal brokered by former Whittards boss Will Hobhouse.

Not So Prosperous a New Year

Whilst us consumers have been enjoying reductions in prices on the run up to Christmas it is a sign according to Nick Hood, a partner at Begbies Traynor, that 10 or more national or regional chains will follow Woolies and MFI to the wall. PricewaterhouseCoopers where showing that 82% of stores were discounting their products on the weekend before Christmas over the last 2 days.

This discounting to move the Christmas stock at what is normally the profit making time for retailers may lead to many struggling to restock in the new year. pay their VAT bills, and survive through to October 2009 when the Christmas selling season kicks off again. January may well be a very gloomy time on the High Streets as traditionally chains have more cash and less stock so creditors are very likely if they don't expect things to improve to force some into administration to at least get some return on their debt, rather than have the issue that Woolworths have of raising as much capital as possible out of their stock before all their stores close on 7 January.

Mr Hood did not name the chains in question but between 10 and 15 he highlights as being in real danger of not surviving very much longer. Sadly having been around in retail in the early 90s and shutting down several stores of the lowest tier of the business I worked in then. I know that often these decisions are taken in retail with very short notice to the shop floor worker. It may well be that they turn up one day and are told that they are to start backing away any remaining stock and may be lucky to get their notice paid up.

Let's Pull Together Pulled Apart by Mulligan

Whilst the news of latest company in what was once known as "Silicon Glen" to relocate 140 jobs from its Linlithgow base is sad news the motion lodged by Mary Mulligan MSP about Sun Microsystems reeks of partisan politics.

"Parliament notes with deep concern the decision of Sun Microsystems to relocate around 140 jobs from its base in Linlithgow to Oregon in the United States of America; notes that one of the company’s executive vice presidents is Crawford Beveridge, a prominent SNP donor and member of the Council of Economic Advisers; understands that the Council of Economic Advisers exists to bring jobs and
economic growth to Scotland, not take them away, and believes that this is both extremely embarrassing for Alex Salmond MSP and extremely worrying for families
across Linlithgow and West Lothian going into the New Year facing redundancy. "

Only 45 of the 101 words in this motion relate to the situation the remainder are an outright attack on the SNP and there is no constructive action recommendation in what could be done. Basically it is shameful.

You wonder if she has deliberately worded her motion thus so that SNP list MSP and Linlithgow resident Fiona Hyslop cannot possibly lend her support to her motion? If so is this so that she can launch an attack that the local SNP have not supported her over a major employer in the area?

Sadly when Labour in Westminster are telling the other parties of the need to pull together to get through the credit crunch my Labour constituency representative at Holyrood is doing just the reverse. It is two facedness of Labour to call for unity in these hard times in one place yet for such a partisan attack when jobs are at stake in their individual patch.

I also find it quite bizarre that the Prime Minister and Chancellor love to point out that there is a global recession hitting us, that all that is going on is outwith thier remit. However, when parochialism is an effective tool one of their party's local representatives hides behind it being a UK, or in this case Scottish problem, even if the company is a global company with corporate headquarters outside these fair isles of ours.

Hat tip to West World

Update: Interestingly the Edinburgh Evening News has followed up on this story a bit since both me and West World blogged about it. It would appear that Mr Beveridge was a part time director with the company and as Sun Microsystems' spokeswoman has confirmed:

"Crawford Beveridge works part-time with Sun. The decision to close
Linlithgow was a manufacturing decision and Crawford was not involved in that
process.

"Had his participation been required, given his ongoing work with the
Scottish Government – in particular, the Council of Economic Advisers – he
would, of course, have had to remove himself from the decision making process
given the conflict of interest."

So heaven knows even more now just what Mary was seeking to achieve with this rant. Although she must now be wiping the egg from her face.

Nothing to Pay to 2010: Darling

Well it appears that Alistair Darling isn't going to start to attempt to pay off the latest borrowings on the country's credit card until 2010. It will also be the year after 13 years of Labour reducing the tax burden on the rich while increasing it on the poor that some sort of sorting out of the order of things and some fairness will be returned.

Yes once again after umming and ahing over what to do another plank of the Lib Dem proposals to make the rich take up their more than capable share on their highest level of earnings . Of course yet again Labour will be deferring this, rather that doing it to match the reductions it is proposing at the lower end and in VAT.

Whatever happened to dear Prudence? It appears that Darling has been given permission by Prudence's greatest suitor to leave her out in the cold, when the lack of her (from some quarters) helped to get us into this fine mess in the first place.

Fact Check for Gordon...

...oh and Yousuf.

There is a Channel 4 Factcheck brilliamtly unearthed my Lib Dem blogger of the year Alix Mortimer that should be essential reading for Gordon Brown, Havering Yousuf and all other Socialist Labour politicos before they start/carry on [delete as applicable] of misrepresenting the truth, because they know they're unto a loser.

Darling Informed that Barnsley Now Part of Yorkshire

Now before any of my well informed readers run to correct my statement on geographic grounds about the town of Parky, I'd like to state I'm talking fiscally. As the Yorkshire Building Society has taken over the Barnsley Building Society to protect it from the possible loss of up to £10m that was invested by the BBS in Icelandic Banks.

However, it does take us back to the term used by the Chancellor at the start of the Icelandic banking implosion. Then he referred to councils as "informed investors" and therefore was going to exclude them from any protection.

What definition is a building society that had deposits in Iceland, Darling? Surely if even such informed investors as those involved in the financial sector have money tied up in Iceland, how much information does Mr Darling assume that councils had to make them so informed?

Is Darling as informed about this whole crisis as he should be? Before he ruled out protecting "informed investors" had he checked out information on their deposit deals?

We insist that you should inform us Darling.

Senate Says Yes

Well the amended, adjusted Bail Out plan has now been approved 74-25 in the US Senate it is now heading off to congress to see if they will accept the latest amendments including tax breaks for families and businesses. Both Senators McCain and Obama returned to Washington again to cast their votes in favour.

The vote had neglible effect on the Asian and Australian markets overnight that are probably now waiting to see if the sceptics in the House of Representatives can be won over with these further concessions.

Non-Partisan Call to Follow the Irish

Following the Irish Government's move yesterday to guarantee all deposits in banks for the next two years, Nick Clegg and Alex Salmond have called on Gordon Brown to go further than his promise to raise the guarantee level to the first £50,000 deposited.

Following on from what was seen as some partisan politics stateside and a failure to recognise the knock on effect to ordinary bank customers of the crisis facing Wall Street is it a sense of reality here in the UK. Gordon has yet to to promise more than the £50k limit but pointed out that the government has yet to let any UK depositor down. That conditional 'yet' is what the calls are for to add further guarantees and stop people with substantial savings having to diversify their accounts across multiple savings accounts. Sadly it appears that Gordon is content with his proposal deeming it to be able to cover "whatever is necessary" to help the British economy.

David Cameron has called for the legislation to further protect savings to be brought forward to next week when the House of Commons reconvenes. However, the Tory leader's emergency statement to his party conference yesterday does not make it clear whether that is merely 'accelerating' the proposed Brown upping the level of guarantee or something more far reaching. Although there may well have been a hint of doing more when he said:

"We are doing everything we can to help you keep your job, your savings, your
pension, your mortgage safe"

It looks like all UK parties are have turned to the same hymn sheet, we'll just wait and see what harmony they settle on to work together.

Can You Name 10 Famous Belgians?

Probably not, but by the end of this week you may well be able to name 10 Belgian businesses. Following on from Fortis being helped out by the Benelux governments on Sunday, today is the turn of Dexia.

Dexia is one of the world's largest lenders to local governments, but has run up significant losses in its US operations. It is now partially nationalised by the Belgian, Luxembourg and French governments, to the sum of an investment of 3bn, 400m and 3bn Euros respectively. Its Financial Security Assistance unit which dealt in US bond insurance posted a 2nd quarter loss of $330m and has subsequently been hit by the collapse of Lehman Brothers.

This morning shares in the European markets have been hit by the US congress decision not to approve the bail out plan yesterday, following losses on the Asian markets overnight. However, after early losses many have rallied just in time for the New York Stock Exchange to open.

Republicans' Darwinist Theory of Economics

They be creationist over wealth but last yesterday's vote against the, heavily amended by congress, bail out plan shows that House Republicans have a Darwinist "survival of the fittest" approach to the financial sector. Two thirds of Republicans votes against and as the roll call carried on more Democrats took a cautious approach ending with 40% not supporting the plan.

So yesterday while the US's 4th largest Bank Wachovia was bought over by Citigroup, the BeNeLux nations bailed out Fortis, Iceland nationalised its third largest bank Glitnir, and German lender Hypo Real Estate was loaned 35bn Euros from the German Banking sector, American legislators continued to procrastinate leading to overnight loses in the Asian markets.

There are fears for other UK banks including the Royal Bank of Scotland, who at one point yesterday were down 20% in value, and Lloyds-TSB who are in the process of rescuing HBOS. James Eden of Exane BNP Paribas said:

"I'm trying to be open-minded about other surprises there might be. Can you imagine Lloyds walking away from HBOS? The share price is telling you there is a chance of that happening."

So while they fiddle on the hill as Wall Street and the wider financial world burn, how can these legislators who fought for major concessions from the original plan then vote against what they fought for? Leaders on both sides of the aisle had negotiated through the weekend a complex deal of bi-partisan compromise. Don't forget this deal stemmed from the Republican Treasury Secretary, was backed by a Democratic House who wanted to have Republican support which was why the details were hashed out in what was allegedly a shouting match at times. Yet when it came to it some were smug enough to say the bankers have got what they deserve.

There's just one problem with that. At the moment the bankers are scared to lend among themselves, let alone anyone else, as none of them are certain what tomorrow may bring their way. Therefore the circulation of money is slowing up. The knock on effect of the bankers freezing up their lending could knock down to businesses heavily and from there to the workers and the electors on the street. One does wonder how many of the Representatives who voted no may well have many electors facing a tougher time come election day as a result of yesterday's vote.

Bradford, Bingley and Brown

So Santander, already owners of Abbey and Alliance & Leicester, come in to help out the Government by taking over the profitable parts of Bradford and Bingley ie the braches, retail banking and savings. Leaving us the taxpayer with more nationalised mortages and loans in the Brown Building Society, aka Northern Rock poc (publically owned company) for it does appear increasingly that the governemnt may soon be owning a huge proportion of the nation's mortgages.

Sr Bradford: Hola, Senor Bingley.

Sr Bingley: Hola, Senor Bradford. Que t' al?

Sr Bradford: All the better for consolidating our bad debts with Senor Brown and the Northern Rock UK Ltd.

Sr Brown: Senors Bradford and Bingley I will be prudent in looking after the mortgages and will bring sunshine to your branches with a little Spanish flair.

Sr Bingley: Well that's better than some Scottish dross then.

McCain What Is He Good For...

Having spent the morning doing multiple tasks concurrently I decided to look at the focus of one task that Senator John McCain seems to want to have today. When he suspended his campaign on Wednesday he said:

"I am calling on the President to convene a meeting with the leadership from both
houses of Congress, including Senator Obama and myself. It is time for both
parties to come together to solve this problem. "

However, that's all well and good but when the President is on your side but it's your own party that is the stumbling block you're supposed to lead. So his credentials to govern one of the most powerful and complex countries in the world are surely taking a knock if he can't get his own party to fall in line especially if you do not feel that "the plan on the table will pass as it currently stands - and we are running out of time." If it were a Democrat in the White House coming up with this plan McCain would be the sole leader of his party at this time. Guess the Republicans in Washington are as sheep like as those from Alaska.

Here's hoping McCain doesn't suddenly get a resolution sorted out just in time to catch a plane to Mississippi for tonight's debate, or like Iain Gray we'll all know he's using this crisis for politics instead of as he insisted putting politics aside to get through this mess.

Are Lloyds-TSB Labour's Policy Wonks?

Just what was new Nu-Labour Scottish MSPs leader Iain Gray implying when he said that a Scottish Local Income Tax would affect Scottish jobs with HBOS?

Surely the man who is leader of only 45 other people isn't implying that a bank should be setting policy in Scotland? Last time I checked the board of Lloyds-TSB were not members of the Scottish Parliament. Also last time I checked Sarah Gordon Brown wasn't chief executive of Lloyds-TSB-Halifax-Bank of Scotland. So just what is Gray up to? Is he using a crisis for political gain? Scaremongering on a new tack with the same old refrain but with a new menace lurking in his wake?

The warnings from the CBI that Scotland's stalled economy would fail to grow once the crunch is over and that a consensus (when 46% of the people are actually in favour of LIT) are running on empty Iain. We've all seen that the wealthy are really only in it to keep as much of their own wealth to themselves and bugger fairness to those on the lowest incomes, very much like Labour policy. Ordinary people are looking for progressive not regressive taxation at the moment as they are struggling to make ends met. That way the hard working on lower incomes can spent theirs on what they need to spend it on rather than having a bulky flat rate tax set for something which in not reflective of their ability to pay.

Of course Gray did hint that Council Tax may have runs its course during his leadership election but has nothing concrete to bring to the table to replace it. We'll wait and see just how many of the same people also attack those proposals if and when they appear. Strangely people will always complain about their taxes and then always find the faults in any replacement system rather than weighing up the pros versus cons.

Just What Central Bank Alex?

As long ago as at least 2001 the whole banking policy of the SNP was set in stone. I don't think I've heard a dramatic change in it yet. Basically the Governor of the Bank of England would continue to oversee banking in Scotland until the time was right for an independent Scotland to enter into the Euro.

Now neither the Bank of England nor the European Central Bank would have responded directly to the First Minister of Scotland calling for a £100m fund to save the Bank of Scotland. Indeed with several European banks currently setting up their own contingency fund of £70bn the ECB would probably have got them to buy up HBOS and the Bank of Enlgand would have encouraged other banks under its authority to act as a lifeboat which would probably have led to an English pay, say Lloyds-TSB, buying up HBOS to keep them afloat. Of course if the BOS had only been an investment bank instead of a commercial bank the American approach to Lehman Brothers may have been taken, i.e. let the market decide.

Short selling may have in the last hours accelerated the takeover, concentrating the minds but like all banks suffering at the moment it is the kick on effect from the sub prime mortgage exposure that had been making HBOS vulnerable. Salmond calls that branch of his former profession "spivs and speculators" one wonders how much advise over what to short sell a former economist at the Bank of Scotland may have given in the past.

Further to my comments about Alex Neil's general assembly of the Scottish banking kirk elders it is interesting that in 2001 he seemed short sighted enough to say:

"There is no point in us jumping out of the British frying pan of sterling into
a federal European fire of the euro."

Further claiming that joining the euro would limit the degree to which Scotland could be independent within Europe. In light of the interdependence of Scotland's economy with that or the UK, Europe and the World I don't see this sort of independence in all things, at any cost the attitude I'd want from someone overseeing fiscal autonomy in our interdependent world. As Bernard Salmon added it all reeks of symbolism for the sake of acting tough enough to be able to handle independence, which personally I'm glad of as most intelligent people will see we cannot be independent and isolationist at the same time.

Name of Old Bank Disappears - Or Does it?

In the 17th Century the oldest Bank in what is now the UK, it was also the only surviving commercial enterprise created by the Parliament for the Kingdom of Scots to survive. However, yesterday when HBOS merged with Lloyds-TSB the name of the Bank of Scotland disappeared apart from the notes in your pockets. At least that is what early reports in the national media indicated that the name would be come Lloyds-Halifax, however it appears that only the TSB bit is being lost in what is now becoming Lloyds-HBOS.

One reason for this may be the Bank Notes (Scotland) Act 1846 which means that for a bank to print its own banknotes in Scotland it must maintain a head office north of the border. So HBOS's Scottish HQ on the mound will continue to operate and AGMs will continue to be held.

Meanwhile while insurance company AIG were effectively nationalised in the States the Government now owning 80% investment banks Morgan Stanley and Goldman Sachs are next in the firing line according to experts. However, considering that many of these companies are being bailed out by a country with a national debt of $9.6 trillion one does wonder just what happens should the lender of last resort of mortgage, insurance or banking companies, the US Government, have to file for Bankruptcy at any point.