Bear Sterns - The shit hits the fan

Three articles from today's UK papers provide a good insight into the catastrophic mess we've been led into be greedy bankers and idiot/self-aggrandising politicians and clueless central bankers:

1. Ambrose Evans-Pritchard (Daily Telegraph) - Foreign investors veto Fed rescue.

How foreigners have stopped buying US Treasury bonds.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/17/ccview117.xml

2. Larry Elliott (The Guardian) - America was conned - who will pay?

How Wall Street types should be hung from the nearest lamp post!

http://www.guardian.co.uk/business/2008/mar/17/economics.useconomy

3. Iain Martin (Daily Telegraph) on the political fallout below.

I think his three points at the end hit the nail on the head.

Credit crisis: the political fall out
Posted by Iain Martin on 17 Mar 2008 at 12:17

This is one of those moments when our leaders can only look on, open mouthed and with fingers crossed, at the spectacle of mighty markets on the move. The second stage of the credit crunch is being played out, with emergency rate cuts from the Fed, a knock down sale of the fifth largest bank on Wall Street and tumbling share prices. Traders can only sit and watch as markets plummet

On this side of the Atlantic it is starting to dawn on those who thought this would have no impact in the 'real economy' that they were mistaken. The rising cost of mortgages is about to hit millions of Britons as the era of easy money unwinds. Last week's budget now seems to belong to another world.

On the crisis Ambrose Evans-Pritchard is invaluable, even more so than usual today. If you haven't read his take, here it is.

And Larry Elliott in the Guardian produces a blistering column saying Americans were conned by Wall Street and will want those bankers and institutions who profited from a bubble to pay.

We have become used to living with certain so-called truths about politics and economics. Barring a miracle the world will look quite different very soon, so here are a few widely held assumptions about to be upended as the global economic climate changes.

1) Alan Greenspan was/is a genius worthy of courting by world leaders, such as Gordon Brown. "You don't solve the problems of a collapsing bubble by blowing up another, which is what Greeenspan did after the dotcom fiasco - the most irresponsible behaviour of any central banker in living memory," says Larry Elliott. This will become a prevailing view amongst policy makers and analysts.

2) George Bush's presidency couldn't get any worse. Oh yes it could. He was a disaster mainly abroad? Wrong, he was a disaster domestically too.

3) Gordon Brown was a prudent custodian of our nation's finances.

UK Election petition

If you want to sign up for the election petition that Gordon Brown mentioned in PMQs today, it's at:

http://petitions.pm.gov.uk/Election-year/

It now has rather more than the 26 signatures that he mocked!

Canada rethinks foreign takeovers

I saw this article on the BBC website today. The Canadian government is to subject foreign takeovers of domestic companies to a "national security test" to protect Canada's national interest. A rash of recent takeovers - to get hold of Canada's natural resources - and concerns over the potential for market distortion by state-owned foreign enterprises were behind the move.

As Canada's Industry Minister said - Canada is open for business but it is not for sale. British government please take note.

Hill-Wood says "We do not want Usmanov here"

Well, I think that pretty much sums it up. Read the Guardian article here.

More on Usmanov

The murk deepens on Mr Usmanov - the Russian/Uzbeki who is trying to get his hands on Arsenal football club.

Craig Murray, Britain's former ambassador to Uzbekistan, has accused Mr Usmanov of various crimes (in a most un-ambassadorial way) and of having acquired his fortune in dubious circumstances. Details can be found by typing "Craig Murray censored" to bring up numerous sites that have mirrored the original blog by Craig Murray.

In response Mr Usmanov had his lawyers lean on Fasthosts, the UK company hosting the servers running Craig Murray's website, and they promptly shut down the servers. This caused collateral damage to a number of other entirely unrelated websites including that of Boris Johnson MP and would-be London major. The story has become a cause celebre in the blogosphere and is now beginning to feed into the mainstream media:

The Times

The Guardian

Channel 4 News

Daily Telegraph Online here and another here

Let's hope that this scares Usmanov away. David Dein must be wondering what on earth he has done (one would hope!).

Arsenal - Financial results

Arsenal Holdings Plc, the owners of Arsenal Football Club released their results today. A detailed press release can be found here.

Highlights are:

• Turnover increased to £200.8m - the highest of any English football club.
• Operating profits (before player trading and depreciation) was £51.2m - up from £13.7m.
• Arsenal generating over £3m revenue per game at the Emirates - double that of Highbury.
  
• Arsenal sitting on £73.9m in cash.

The following passage in the release addresses the recent stakes acquired by Kronke and Usmanov and I wholeheartedly support the board's view and their leadership of the club over the last few years:

"Such is the appeal of the Arsenal brand that we now have two new major shareholders.
Their arrival has, unfortunately, brought some degree of speculation about the future of the
Club.

I think it worthwhile, therefore, to once again lay out our philosophy as a Board as to the
guiding principles which underpin our management of the Club. Firstly, I would like to
emphasise our dual role both as fans and custodians of the Club, but to note that we never
allow our support of the Club as fans to put at risk the long term health of Arsenal Football
Club. We believe in being bold in the development of the Club and in taking managed risks;
this is best evidenced by the development of Emirates Stadium. At the same time we
remain committed to the principle of developing the long-term stability of the Club through
maintaining a business that pays its own way. This financial prudence has been a hallmark
of the way in which the Club has been run over many years and has sown the seeds of the
success we enjoy today. We believe it is important to continue this philosophy so that future
generations of Arsenal shareholders and supporters can continue to enjoy the success of
the Club long into the future.

The year saw the departure of vice chairman, David Dein and, once again, I would like to
express our thanks to him for his many years of service."

Gold on the rise?

The price of gold has risen strongly this week off the back of the US Federal Reserve's half point interest rate cut to reach 27 year highs. Ambrose Evans-Pritchard has produced another interesting piece in the Daily Telegraph and quotes analysts who say that there is clear blue sky above the current price right up to the all time high at US$850.