Said the joker to the thief
July 8, 2019

Blain's Morning Porridge

"There must be some way out of here, said the joker to the thief..."

Another glorious week of markets in prospect? I started badly jumping on the wrong train! I thought it was the London train because it came at the time the London train should… alas..nope.. It was a London train but stopped everywhere like Basingrad, Wonking and Claammm.. SouthWest Rail is a harsh mistress….

What have we to look forward to this week?

The UK's grovelling sycophancy towards the USA backfired spectacularly after a paper leaked exactly what the UK Ambassador has been telling his bosses about President Donald Trump and his administration.

Trump is not happy. So much for the royal family having to host his recent state visit. The really interesting comment was about the White House's "incoherent" policies – which makes me wonder if Iran is testing Trump as it reveals it's been enhancing more uranium than allowed, but is making overtures to a more open dialogue with Europe.

They are clearly trying to drive a wedge between the US and Europe. If the UK is going to play, then the immediate release of Nazanin Zaghari-Ratcliffe should be non-negotiable.

And then there is Deutsche Bank. Shame, but all bad things come to an end. It sounds like DB is finally giving up. There are a number of critical lessons.

One, they should have pulled the plug sooner to save shareholders: no investment bank will succeed if the staff feel the management's heart is not in it and that's been a problem at DB for years. Two, the ongoing string of regulatory issues shows no sign of slowing. Three, with new Basel IV rules likely to crush the bank with yet more complex capital rules and costs, plus a massive new capital requirement…he question is…why bother?

I'm trying to hook up a bank analyst to talk about Deutsche on my next podcast. But first, the most important stuff this morning. I published a new book over the weekend – The Fifth Horseman. It's a polemic about who to blame for the ongoing destruction of the global economy. Most market histories are awfully dull affairs, so I tried to make this more interesting:

Hell's Top Banker, TJ Wormwood, managed the global crisis of 2007/08. It's been so successful he's looking to extend the programme. His latest "wheeze" to keep up the fear and uncertainty is to introduce a new Fifth Horseman of the Apocalypse – "Financial Meltdown".

As revealed in a series of hacked emails to his boss, Wormwood has orchestrated a whole series of flawed polices and themes including quantitative easing, over-hasty financial regulation, austerity government spending, political weakness and populism. These have triggered all kinds of unintended consequences ranging from a complete rift between the deflationary real economy and the inflated bubbles in financial assets, rising wealth inequality as the rich get phenomenally wealthy while the poor are subjugated under crushing debt and the GIG economy percolating upwards, declining health and social wellbeing, protectionism and the end of free trade – which keeps governments distracted from growing environmental threats.

And all Wormwood has had to do to achieve it is whisper in the right ears…

Even better are some of the new policies he's encouraging, like crypto, Modern Monetary Theory, trade wars and further regulation to crush market liquidity. The plan is doing very well – financial meltdown is on the horizon while fear, uncertainty and instability dominate activity. The only threat is the slender possibility mankind might work out how to stop it… and then he's got an even better plan…

The book is available on Amazon Kindle or I paperback. Bear in mind you get the Porridge for free most days, so for less than the price of a couple of pints The Fifth Horseman will amuse, inform and infuriate you! Please post a review if you buy it – there will be a launch party soon!

Back to Deutsche Bank – 18,000 jobs to go, pulling out of equities and cutting back rates trading, focussing on corporates rather than hedge funds, US$83 billion of "unwanted assets" into a new badder bank. The question is why did it take so long? Did management think the tinkering of the last four reboots in five years would have turned it back into a premier name earlier? If any DB readers want to give me the inside story, then anything you say will be kept in confidence.

Finally, last week we were talking about illiquidity crushing a number of investment firms when they've held deeply illiquid securities. Although these may be money-good, the fact they can't be sold in times of stress – and times of stress include investors discovering a fund holds them – has triggered crisis at GAM last year, and Woodford and H2O this year.

There is a great story on Reuters this morning – Exclusive: Greensill issued false statement on bonds sold by metals tycoon Gupta. This is one of the securities that broke GAM…and it's a complex tale. I'm aware because I was trying to help GAM shift the bonds last year, but there was such a lack of clarity over a promised guarantee and a private call it was impossible.

However, the real story might be one for MPs and the Scottish Parliament to answer: why did Scotland provide a guarantee for the aluminium smelter acquired by the Guptas through a convoluted structure involving linked family firms SIMEC and Liberty, when so few jobs were involved?

It was an awful lot of money that saw a lot of fees paid out on a private deal. And who is the MP for the area? Oh, it's my old childhood chum, Ian Blackford, scourge of the government and leader of the Scottish National Party horde in Whitehall. Someone should be asking questions. Does anyone have Private Eye editor Ian Hislop's email?

Out of time, and back to the day job..

Bill Blain





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Blain's Morning Porridge

"There must be some way out of here, said the joker to the thief..."

Another glorious week of markets in prospect? I started badly jumping on the wrong train! I thought it was the London train because it came at the time the London train should… alas..nope.. It was a London train but stopped everywhere like Basingrad, Wonking and Claammm.. SouthWest Rail is a harsh mistress….

What have we to look forward to this week?

The UK's grovelling sycophancy towards the USA backfired spectacularly after a paper leaked exactly what the UK Ambassador has been telling his bosses about President Donald Trump and his administration.

Trump is not happy. So much for the royal family having to host his recent state visit. The really interesting comment was about the White House's "incoherent" policies – which makes me wonder if Iran is testing Trump as it reveals it's been enhancing more uranium than allowed, but is making overtures to a more open dialogue with Europe.

They are clearly trying to drive a wedge between the US and Europe. If the UK is going to play, then the immediate release of Nazanin Zaghari-Ratcliffe should be non-negotiable.

And then there is Deutsche Bank. Shame, but all bad things come to an end. It sounds like DB is finally giving up. There are a number of critical lessons.

One, they should have pulled the plug sooner to save shareholders: no investment bank will succeed if the staff feel the management's heart is not in it and that's been a problem at DB for years. Two, the ongoing string of regulatory issues shows no sign of slowing. Three, with new Basel IV rules likely to crush the bank with yet more complex capital rules and costs, plus a massive new capital requirement…he question is…why bother?

I'm trying to hook up a bank analyst to talk about Deutsche on my next podcast. But first, the most important stuff this morning. I published a new book over the weekend – The Fifth Horseman. It's a polemic about who to blame for the ongoing destruction of the global economy. Most market histories are awfully dull affairs, so I tried to make this more interesting:

Hell's Top Banker, TJ Wormwood, managed the global crisis of 2007/08. It's been so successful he's looking to extend the programme. His latest "wheeze" to keep up the fear and uncertainty is to introduce a new Fifth Horseman of the Apocalypse – "Financial Meltdown".

As revealed in a series of hacked emails to his boss, Wormwood has orchestrated a whole series of flawed polices and themes including quantitative easing, over-hasty financial regulation, austerity government spending, political weakness and populism. These have triggered all kinds of unintended consequences ranging from a complete rift between the deflationary real economy and the inflated bubbles in financial assets, rising wealth inequality as the rich get phenomenally wealthy while the poor are subjugated under crushing debt and the GIG economy percolating upwards, declining health and social wellbeing, protectionism and the end of free trade – which keeps governments distracted from growing environmental threats.

And all Wormwood has had to do to achieve it is whisper in the right ears…

Even better are some of the new policies he's encouraging, like crypto, Modern Monetary Theory, trade wars and further regulation to crush market liquidity. The plan is doing very well – financial meltdown is on the horizon while fear, uncertainty and instability dominate activity. The only threat is the slender possibility mankind might work out how to stop it… and then he's got an even better plan…

The book is available on Amazon Kindle or I paperback. Bear in mind you get the Porridge for free most days, so for less than the price of a couple of pints The Fifth Horseman will amuse, inform and infuriate you! Please post a review if you buy it – there will be a launch party soon!

Back to Deutsche Bank – 18,000 jobs to go, pulling out of equities and cutting back rates trading, focussing on corporates rather than hedge funds, US$83 billion of "unwanted assets" into a new badder bank. The question is why did it take so long? Did management think the tinkering of the last four reboots in five years would have turned it back into a premier name earlier? If any DB readers want to give me the inside story, then anything you say will be kept in confidence.

Finally, last week we were talking about illiquidity crushing a number of investment firms when they've held deeply illiquid securities. Although these may be money-good, the fact they can't be sold in times of stress – and times of stress include investors discovering a fund holds them – has triggered crisis at GAM last year, and Woodford and H2O this year.

There is a great story on Reuters this morning – Exclusive: Greensill issued false statement on bonds sold by metals tycoon Gupta. This is one of the securities that broke GAM…and it's a complex tale. I'm aware because I was trying to help GAM shift the bonds last year, but there was such a lack of clarity over a promised guarantee and a private call it was impossible.

However, the real story might be one for MPs and the Scottish Parliament to answer: why did Scotland provide a guarantee for the aluminium smelter acquired by the Guptas through a convoluted structure involving linked family firms SIMEC and Liberty, when so few jobs were involved?

It was an awful lot of money that saw a lot of fees paid out on a private deal. And who is the MP for the area? Oh, it's my old childhood chum, Ian Blackford, scourge of the government and leader of the Scottish National Party horde in Whitehall. Someone should be asking questions. Does anyone have Private Eye editor Ian Hislop's email?

Out of time, and back to the day job..

Bill Blain



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