Heidi is more reliable than Elizabeth

In the UK the train was usually my last and reluctant choice, though the UK performance isn’t too bad, after all, 90% of British trains arrive on time.

In Switzerland the equivalent is 98% of trains.

But that 8% difference !

Considering a trip from Lindenpark, Zug, to Basel?

 The journey time by train is one hour and thirty-six minutes.  Although this is eighteen minutes longer than the average Zug/Basel journey by car, me and Heidi would always take the train.










Reise mit




Baar Lindenpark



Mo, 07.12.09


ab 10:17

an 10:19





S1 22141


S-Bahn Linie 1





ab 10:29

an 10:49





IR 2325


InterRegio ,  



Basel SBB


ab 10:54

an 11:53





IR 2170


InterRegio ,    R  


Check out the risky connection intervals.

There are only 10 minutes between the arrival of the Zug train at 10.19, and the departure of the Luzern connection 10.29.

…and  just 5 minutes between the arrival of the 10.49 Luzern train and the departure of the Basel train. Yikes!

But even gaps of 2 0r 3 minutes are comfy to the Swiss. You may not be able to set your watch to the trains in Heidiland anymore, but that’s only because the electronic watches are now more accurate than the traditional spring driven instruments 

In the UK this margin would rule out rail travel as an option compared with the car. You would have to build so much safety margin of into the schedule (at least 45 minutes between scheduled  arrivals and scheduled departures), that  the car would be a better bet.

Provided your journey didn’t include the M25, or the M1, or it was on a Sunday morning before 7 am perhaps…..

Lex needs a new calculator

“In the UK interest rate cuts since the start of the crisis have delivered the average £103,000 floating rate mortgage holder an annual saving of £4,635.Against that the government estimates the net cost of bailing out the financial system at £10bn or £400 per household.”  Lex in the Financial Times today.

There are 26m households in the UK.

But only 11.1m of households have a mortgage and of those, only 55%, or 6 million, are on variable rates.

In other words 100% of households paid £400, but only 23% received savings of £4,635.

Plus all households shared (via pension and other indirect and direct holdings), in the loss of £5bn of dividend income from Royal Bank of Scotland (£3bn dividends in 2007, nil in 2009) and Lloyds (£2bn dividends in 2007, nil in 2009) = £192 per household.

All households via pension other indirect and direct holdings, shared in the loss of billions of market value of the UK quoted bank sector. The £30bn loss of market value of Royal Bank of Scotland alone amounted to £1,150 for every household.

So without really trying I am already up to £1,742 for every household.

Is Lex spinning or being economical with the truth?

Who gains from the gross misrepresentation of the facts?

Follow the money?

Lex, care to calculate what the total reduction in the value of UK bank shares was, divided by households? Who do you think bore that cost? Maybe you need new batteries for your calculator?

Bun rating – Zero,  too much smoke and too many mirrors to see if there is a pattie

Lex – who is being stuffed?

Lex writes about the proposed Lloyds capital raising –  the world’s largest – but misses the opportunity for deserved excoriating criticism on behalf of the poor bloody individuals who are the being plucked and stuffed by the fund managers gifting  their savings.

Here is a quote from yesterday’s “HM Treasury – Government Announcement on Banks. Implementation of Financial Stability Measures for Lloyds Banking Group and Royal Bank of Scotland”:

 “The remaining risks are better shared with private sector shareholders – for Lloyds, the private sector will provide £15bn of capital and for RBS, the first loss on the remaining £282bn of contingent liabilities has increased to £60bn. “

But the ‘private sector’ in this instance comprises mainly the same taxpayers who will now take on additional Lloyds liabilities via their pension and savings products which will be stuffed by their managers with unwanted bank shares. You can be certain that the individual pension and savings participants will not be asked if they want to support the capital raising, and if they were,  it isn’t difficult to imagine the answer.

Why would a rational investor buy new Lloyd’s bank shares?  There is no visible or certain investment return. On any criterion the rights issue from Lloyds would normally be considered a high risk investment.

The truth is the rights issue is an indictment of the present financial system, whereby a minority of savings controllers can misrepresent the interests of the majority participant investors , the disenfranchised suppliers of capital, to acheive their own narrowly profitable ends. See also https://fabooks.wordpress.com/2009/09/01/the-disenfranchisement-of-capital-%e2%80%93-how-the-city-stole-your-vote/

Bun rating: 100% the world’s largest stuffed bun


Lex – once rumoured to be authoritative

Alexander Justham of the FSA’s markets division has  said: “Spreading false or misleading rumours about companies, particularly in volatile or fragile market conditions, can be a very damaging form of market abuse. While we pursue individual cases of rumour-mongering, it is of equal concern to us that market practitioners handle rumours properly and avoid giving credibility to false stories.”

 There are a deluge of rumours in the financial press recently concerning the actual size, or existence of a potential Lloyds Group “arrangement fee” to exit from participation in the government’s Asset Protection Scheme. Lloyds Group have made no statement about the possible amout of an arrangement fee, so all comment must surely be rumour?

The FT’s report in today’s main paper states that

 ‘one person familiar with the government’s stance on the issue said a £1bn fee, which would be in lieu of the support that has already been provided to Lloyds was “definitely the floor”

and later in the same report:

“one person close to the government” described reports that the fee could be as high as £2bn as “understandable”

For some reason though, Lex in the same FT edition, quotes Bloomberg as the source of the rumour that “the Treasury may be eying as much as £2bn”.

As so often, I have been unable to find any substance in the Lex commentary. But since the actual amount, if any, of the ‘arrangement fee’, if there is one,  for Lloyds exiting, if it does,  the ASP,  is acutely material to the market value of Lloyds shares, this is one area where facts, not more speculation by once respected commentators are required.

Bun rating:  One person close to the kitchen is reported to have suggested that the bun, if there is one,  may contain 1% meat.

Lex – embedded in the new Pravda?

The military have learned to exert some control over media reports of their operations by ‘embedding’ journalists into operational units. Embedded journalists are not free to choose where they go and what they see, instead they have to remain with the unit they are embedded into and to the extent that they identify with the culture of the unit they are in, they lose a critical measure of objectivity.

Currently, the crisis of the financial establishment is largely reported in the financial press and financial columns by journalists effectively embedded in the financial establishment. This is exemplified clearly in the extent to which the Lex column has itself, become embedded in the financial establishment. Who benefits from the absence of  robust criticism of a rotten system?

Is The Financial Times is an example of a newspaper dependant upon the financial establishment for sources of news.  Is the F.T. the new  Pravda* ?

Today, Lex writes about the revival of the ‘carry trade’. The borrowing of low-yielding currencies to buy in a higher yielding one. After a rambling account of the current revival Lex concludes without an explanation. But Lex comes close to stumbling on the only rational explanation when he states:

“For the truth is that carry trade opportunities should not exist at all: the whole point of flexible exchange rates is to rebalance things when interest rates get out of whack”

There is only one explanation which fits and that is for one significant investing class, the carry trade is a penalty free trade.

A carry trade by a fund whose managers would keep 20% of any profit but would bear no personal losses if it became loss making.

It’s called a hedge fund stupid!

 *Pravda (Russian: Правда, “Truth”) was a leading newspaper of the Soviet Union and an official organ of the Central Committee of the Communist Party between 1912 and 1991

Bun rating, 10% meat but no gut is embedded in the steak.

Lex, let Wittgenstein be your guide: “Whereof one cannot speak, thereof one must be silent.”

 This is Lex on the 24th September:

“But the frightening reality is that bank lending is contracting faster than the Fed is buying assets from the non-bank private sector, as part of its efforts to lower yields and revive failed markets. No matter how much the Fed seems to do, banks are not extending loans. US consumer credit, for example, fell at an annualised 10 per cent in July. Total debt outstanding is where it was a year ago.

Some wonder about the wisdom of attempting to mend the wreckage of a debt bubble with yet more debt. Even so, the economic consequences of shrivelling broad money do not bear thinking about – the long-term growth rate of M2, for example, is normally about 10 per cent per year. So forget about inflation. Goldman Sachs notes that inflation has the highest correlation to broader measures of money supply. Best ask for that pay rise now.”

Is Lex saying deflation is coming? I think so, but how can anyone know?

What I know is that there will be deflation, inflation or something in between, and that we will make heroes of the lucky pundits, economists, or punters who guessed right.

Bun rating: 99% bun from the harvest of 2012, if there is one.

Lex it’s the capital stupid!

Lex writes today about ‘Executive compensation’.   But ‘Executive compensation’ is to income, what Harry Potter is to literature.

Traditionally and in most people’s minds, income is earned from employment to fund current consumption, though some may be deferred (savings).

Anyone fortunate enough to have experienced a steady ascent from average income to say, ten times average income, will have discovered that income has limitations.  Each increase results in a diminishing pool of useful spending options.  But the main limitation of income is that you have to keep clocking in to get it.

The acquisition of and ownership of capital opens up many more possibilities.  Capital is necessary to live comfortably and be free of work. Capital buys status. Capital buys power and influence. Capital buys security.

The open goalpost financial culture has led to a new shadow industry.  This industry’s objective is the application of entrepreneurship by employees to find increasingly inventive ways  to extract capital from it for their personal use.

Lex suggests that shareholders can vote for change.  Lex : ‘it is helpful to establish principles on which shareholders can act, especially on dubious practices like golden parachutes, tax gross-ups, and personal perks’

But shareholders, in the real world Lex, are effectively disenfranchised (see my thoughts on this at  https://fabooks.wordpress.com/2009/09/01/the-disenfranchisement-of-capital-%e2%80%93-how-the-city-stole-your-vote/

We really need you to sharpen up – we private shareholders, who own most of quoted UK PLC – need a champion, not a lackey.

Bun rating, 95% dough, meat extracted 5%

Is Lex a lawyer?

Expressing an opinion can be risky, events may prove you wrong.  However. this can be avoided if you include most of the available opinion options in a commentary.

Welcome to the “no comment” commentary or:  “We might not always be right, but we are never wrong”

Here is my commentary on today’s Lex piece on Baidu. I have italicised the tentative interpretation of events, the sum of which is zero.

 “In the wake of the storm over “trading huddles”, there are new mutterings of investment bank tip-offs to preferred research clients. Consider Baidu, the $14bn Chinese search specialist listed on NASDAQ. The stock had an uneventful summer, beginning July at $301 and ending August at $330. At about 10am on Friday September 4, it suddenly surged against a flattish benchmark. By 1pm, the stock was up 5 per cent. Over the next three trading days, it continued to rise. On September 11, Goldman Sachs upgraded earnings estimates, with a higher target price – $475 – than any of the 23 brokers on the street. On Wednesday, Baidu broke through $400.

Other factors than a trading huddle might explain Baidu’s ascent. After the market close on September 3, Dow Jones Indexes announced that, as of September 18, Baidu would be one of three stocks promoted to its Bric 50 Index. On the morning of September 4, Google – Baidu’s big rival – also said its president of Chinese operations was stepping down.

Neither event provides wholly satisfactory explanations. The two other stocks attracting new demand from tracker funds, Brazil’s OGX and India’s Jindal Steel & Power, jumped less on September 4, and have since risen half as much. And while investors may be extrapolating gains for competitors at Google’s expense, China’s other leading US-listed portals, such as Sohu and Sina, have been left in Baidu’s dust.

Stock price moves, alone, are inconclusive. More decisively, Goldman says it had no “huddle” on September 4, when Baidu began to rise. Still, as the least blemished institution throughout the crisis, it remains an obvious target for grievances over some of the shady practices that fomented it. The vampire squid will be harpooned for a good while yet.”

 Bun rating – 98% dough, 1% meat, 1% grease.

The inflated elephant in Lex’s room

I do not believe there is an active conspiracy, but I do think that the collective power of the large and amorphous city establishment (this includes the Financial Times), consciously and unconsciously limits the agenda for discussion, to one which is survival friendly for the tribe.

The FT depends upon financial advertising and as a consequence, must align itself with the culture and interests of its City-centric readers otherwise they would stop buying it. You are no more likely to find a serious analysis of the disaster caused by the shadow banking system, together with an argument for its dissolution in the FT, than an article in the Meat Trades Journal promoting vegetarianism.

This year Britain’s central bank has set UK’s lowest central bank interest rate for 315 years. As a consequence, since March, asset prices have commenced a new spectacular inflation.  This phenomenon and the tsunami of central bank created credit accompanying it, has rendered any conventional analysis of variable such as earnings per share and profit ratios (see Lex most days), irrelevant.

That is the news Lex!

No bun rating today, the elephant ate it.

Lex – more bun than burger again this morning

Financial Times  subscribers deserve more analysis and reflection from the paper’s lead commentator than another sterile discussion about the level of the S&P .  Today Lex states that the S&P is too high. “valuations look toppy indeed”.  

The column supports this view with references to the current S&P constituents average percentage profit levels, which at about 35% are high compared with the 29% historic average since 1947.

But it is glaringly obvious that as all the major stock markets have moved up and down in unison, an analysis of the ‘value’ level of a particular market by reference to its domestic history is inadequate

Whatever is driving the S&P is the same as that driving the SMI, FTSE, DAX etc – see the chart below.


The markets cannot be explained in terms value variables because the world markets are driven by something else.

What drives all markets together? Try, credit, price of credit, availability of credit, liquidity.

 Capital asset market prices are driven by liquidity, its pointless in pretending any longer that their prices are determined by value.

I award Lex, 70% bun rating for this piece, and 30% meat.