Alistair Darling Scoop

I know that Slugger normally follows the strange old Northern Irish custom of never talking about money- ( after all we used to have a world-class crisis to talk about). But things have come to a pretty pass when it’s news when the Chancellor states the obvious about the whatyemecall it, the turn-down, credit crunch or whatever.

“We are going through a very, very difficult time,” he says in an “exclusive” interview in the Times. “You have the twin effect of the credit crunch and very high oil prices. That means the economic news is going to be difficult for quite some time.
At Christmas most people remained hopeful there would be an improvement by the autumn,” he said. “Most people would now say it’s far more profound. It’s affecting every economy and everybody. I can’t say how long it will last.”

Now there’s a scoop for you! I give it two years, myself. If you want to get down to the real meat, here’s a hot tip for the Slugger Investors’ Portfolio from the Economist, which says, basically, leap in when the FTSE all -share is above gilt yields. And look out for a single digit p/e ratio per share. The rest of you peasants who haven’t got a clue what’s going on can translate the whole thing into Irish.

  • Comrade Stalin

    Despite the situation I think there are still a lot of people around with a lot of money to spend. The FTSE100 over the past number of weeks has seen a few sharp falls, but they have been subsequently follwed by recoveries which suggests that there are people dipping in to snap up cheap shares. If you’re prepared to take the risk, as I have, the banks at the moment are a particularly good bargain. The largest ones have been around for hundreds of years, and people are acting like they’re all going to be swallowed up by the earth, which simply is not true.

    It’s disappointing that the Chancellor is not attempting to seek areas to cut public expenditure. I don’t believe that increasing government borrowing is popular with the general public, whereas the public will generally warm to the government reigning in expenditure during a time of crisis. I would particularly like to see an increase in the upper rate of tax, perhaps up to 42%. Those of us who are higher rate taxpayers, but only just so, will be able to claw most of this back using ISAs and pension contributions, so effectively you improve the tax take by hitting those earning more than £50K who, on balance, are those less likely to have trouble paying the mortgage on their principal residence.

  • If you’re prepared to take the risk, as I have, the banks at the moment are a particularly good bargain. The largest ones have been around for hundreds of years, and people are acting like they’re all going to be swallowed up by the earth, which simply is not true.

    I never took you for a capitalist, Comrade! Investing in the banks?

    No translation necessary, Mr Walker. Peasants like me understand all sorts of languages. It’s the establishment figures such as yourself who have the problems understanding what’s being told to you in plain and simple language……

  • RG Cuan

    The rest of you peasants who haven’t got a clue what’s going on can translate the whole thing into Irish.

    ?

  • Dewi

    Brian – you might just want to take that last sentence out. I’ve no idea on earth why you wrote it.

    Jospeh – be careful – just because banks have been around for hundreds of years doesn’t mean much with the nature of the derivative based speculative liabilities that many have built up. Whilst customers have protection shareholders don’t. Me – I’m waiting 6 months to see what’s left of the Building industry…..

  • PeaceandJustice

    Brian Walker – “I give it two years, myself.”
    At least. The ‘good times’ couldn’t last forever.

    To Dewi – someone with a Welsh connection who doesn’t have a sense of humour. What would Anne Robinson make of it all i.e. “Robinson tells Welsh: you are weakest link”!

  • perry

    In the west we burn 17 barrels of oil each a year. In China (who we’re blaming for commodity competition becuase they’re starting to catch up with us) they burn 2 (less in India?). Unless the total current/near future demand for Oil drops or output is increased I don’t see any reason to expect anything other than more growth in oil prices.

    3/4 of imported oil in the US is used for transport.

    I’d take a look at prices for in demand commondities such as lithium for lithium-ion batteries, and also at the stocks of battery manufacturers.

    On a related point many automotive firms are little more than engine makers, outsourced parts assemblers, marketeers and finance houses. The new electric automotive sector may have very different leaders that the current one – Tesla, Fisker and Pininfarina/Bolloré for a start.

  • Dewi

    “The new electric automotive sector”

    Many false starts there over the years Perry.

  • perry

    “Many false starts”

    True but the economics weren’t as favourable and the batteries were lethal or just didn’t work. Take the shrinkage of the mobile phone. As much to do with battery power as anything. That development was driven just be phone demand – consider the rate of change once automotive invetsment starts going in the same direction.

    And Tesla started shipping last week

    http://www.teslamotors.com/blog2/?p=62

    Who doesn’t want a Lotus Elise that sounds and accelerates like a remote control car?

    With our sea battered, windy island and relatively short journey distances Ireland could/should be scenario planning for drastic reductions in oil use.

  • Dewi

    Interesting Perry. This, from the Economist, seems fairly encouraging also.

    Electric Car survey

  • Rory

    I shall simply continue to buy bread and meat and potatoes and beer and tobacco….at least for as long funds last.

  • billie-Joe Remarkable

    Perhaps Darling feels the need to state the obvious to counter the Daily Mail/George Osborne world view that everything is the fault of Labour and will be corrected by “nudging”, the political philosophy du jour for some around here. Just a thought. As for the Irish language remark – I’m sure you thought it hilarious and ironic. You’ll take the following remark in a similar vein, then: dick!

  • runciter

    Comrade Stalin – the banks are in real trouble. Not all of them will go bust, but some will. Needless to say, long-lived institutions can go out of business too.

    Now is not the time for high-risk investments.

    I’d like Brian Walker (or Mick) to explain the “humour” in the peasants remark above. On the face of it, it looks like old-fashioned bigotry.

  • DC

    Mick can translate it into Irish then!

  • joeCanuck

    Put your spare cash in various balanced funds and forget about it. No sense in worrying about something you, as an individual, can not affect.

  • dewi

    Or maybe under the pillow for 6 months Joe….

  • Mark McGregor

    And look out for a single digit p/e ratio per share. The rest of you peasants who haven’t got a clue what’s going on can translate the whole thing into Irish.

    Focáil leat.

  • Peat Blog
  • Eddie

    No,it’s not two years — you’re talking about the guts of a decade here. We’ve been there before. We’ll survive ok, with a bit of belt-tightening and an end to the “I want it now” syndrome, not exactly darning socks and mending shoes, but certainly a period when the art of practising delayed gratification becomes a must. (Good for the soul that) – then, eventually, bluer skies again.

    But stay away from banks – there’s more to come.
    Stick any spare cash into index-linked inflation-proofed National Savings bonds; or even Northern Rock, the only building society or bank in the country where ALL savings are guaranteed by the Government!

    As for Mister Walker’s “peasants” remark – that’s what the guy’s like; but clever and amusing too, and not averse to receiving insults, I’m told

  • Brian Walker

    Eddie, Thanks for the backhanded compliment. As for the others who reacted badly to the “peasants” pay-off, come on guys, don’t overindulge your delicate sensibilities. It was a small joke. If you can’t smile, get over it.

  • Brian, the peasants ‘pay off’ was in poor taste. And for you to come on claiming it was an example of your humour goes to show what an undeveloped sense of humour you have yourself. If you make a bad joke and it goes down like a lead balloon have the good grace to shut up about it. [If you have to remind people it’s a joke, by definition, it’s a bad joke]

  • Comrade Stalin

    Could we please fix Peat Blog’s comments ? As a result of his mistake with the URLs, it’s really hard to read everyone’s contributions.

    Concubar, I’m not a capitalist. I favour “socialism with Chinese characteristics”. There are, of course, some corrupt bourgeois lackeys of Western imperialism who counter that this is the same thing, but as soon as the onward march of socialism has been completed we’ll send them to Siberia.

    Dewi, you’re right in saying that the fact that banks are old does not mean they are inherently invulnerable to any given economic situation. In truth my assessment is based on the my opinion that the books at the larger institutions are basically sound. They are not likely to be so profitable for a couple of years, but they’re not going to die. Derivatives, far from being some kind of exotic stunt, are a fact of daily life for financial institutions and other large businesses such as airlines and utilities.

    runciter, I don’t do high risk investments, and I don’t think there’s ever a good time to do them, taking high risks is tantamount to gambling. Recessions always result in winners and losers. My cards are on the table, so everyone can have a good old laugh at me if any of the Big Five banks, whose shares are very cheap right now, collapse. I do not believe that a recovery in the housing market will be a prerequisite to a healthy economy; in fact I think it is a byproduct. If people aren’t sticking their cash into paying off big mortgages on overpriced houses, they will have more disposable income.

  • Peat Blog

    Sorry. Please don’t send me to Siberia.

  • DK

    “My cards are on the table, so everyone can have a good old laugh at me if any of the Big Five banks, whose shares are very cheap right now, collapse.”

    Or, not collapse but have a rights issue. Avoid Bradford and Bingley.