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And Now to Work - Justin Urquhart Stewart Commentary

May 05, 2010

And Now to Work
So as from this Friday the limp bunting can be torn down and the faded posters finally ripped up. Now is the time to end the pontificating and politicking - now to start the ‘doing.’ The question is, though - what exactly? After all the debates and interviews, as far as I am concerned none of the parties have laid out a credible or realistic set of policies for the restructuring of the economy – including either managing the debt or rebuilding for growth. At the risk of missing out on another invitation to a round of limp canapés and warm white wine, I can’t see a
statesman or stateswoman amongst any of them. However, the electorate will have voted and we will have to deal with what we have been given, but please spare me the toe curling quotes and platitudes on the steps of No 10. We are in the poo – so get on with it.
 

There was a delightful BBC reporter who added to the oft quoted phrase “the elephant in the room” that had been ignored in the campaign, by saying that it had in fact become so relaxed that it had now made itself quite comfortable being ignored and was now sitting happily on the sofa having a cup of tea and tucking into the digestive biscuits. Well now is the time to disturb the somnolent beast called ‘Deficit’ and devise a plan to try and get it out of the room - and eventually out of the house.
 

They won’t be able to just shoot the beast as it will make far too much mess, and for heaven’s sake don’t frighten it, or it will trample everything it its sight. No, we need a careful plan to cajole it out of the room and down the corridor. However, we are probably going to have to knock down some walls and lose some of our treasured possessions in doing so. Only then will we be clear of this unfortunate animal - but it is going to take some time for it to be achieved and to see it finally trumpeting off down the street onto the economic savannah.
 

Actually I am not sure I can stretch that analogy much further, but I hope you get my gist.

I must apologise if I find myself repeating comments on certain subjects, but the frustration at the continuous incompetence of some of the authorities never ceases to amaze me. I am a proud Scot, Brit and European but have issues with all three. The latter element is behaving in the most astonishing way. I have written for months about the forthcoming currency storm around the Euro and to the astonishment of many, the authorities still don’t seem to realise quite how stupid they are looking in the face of markets questioning the effectiveness of their
actions and decisions.
 

Last week we found out that ‘swift action’ in Brussels about the currency meant in fact two weeks. We saw the amazement of some that sovereign debt questions would spread to other weaker nations, and we saw the usual trite excuse that this was all the fault of currency speculators. Wake up Eurozone! Your currency has been generally a success and is held as a greater reserve currency amongst governments than Sterling, but you should recognise that there is a design fault which could have all the impact of a Toyota safety feature.
 

A decade ago I wrote questioning just what would happen if you asked the Germans if they wouldn’t mind paying out for the profligacy of less responsible nations. The answer was clearly no then and it is the same today.
 

It is time for the Euro equivalent of the Diet of Worms, which in 1521 looked to address the religious fissure that was created by the tracts of Martin Luther. The Euro has some greatstrengths and has provided some significant benefits, but unless these fundamental flaws are addressed then it surely will continue to be pushed towards financial failure and go against one of the key reasons that the EU was formed in the first place, which was primarily to create greater political and financial harmony and strength between the historically bickering European
fiefdoms.

As well as an election this week, there are some key sets of data which may well give that last nudge for the electorate in one direction or another. On Tuesday we have the Nationwide Consumer Confidence Index which will reflect the temperature of the population and I think for many the feeling of some economic recovery is already being tempered by a nervous view that we are inevitably in for some bad news to come regarding domestic spending and taxation. Also
we have on the same day the Purchasing Managers Index for Manufacturing, and the previous day the same measure for Construction. These are generally forward looking indicators and again will provide a theme for where the economy is going over the next few months.
 

Internationally though, it will be Friday that will have the data of the week with US
Unemployment being announced (currently at 9.7%) and the important Non Farm Payroll numbers, which will show just how much re-hiring is really going on. If the recovery is to continue then Jo Shmo in the States is going to have to get a job.

And finally.............Loo paper has not figured especially often in my thoughts when it comes to business or even security, on the basis that its function and use is fairly obvious. Thus the headline from Lincoln Journal Star in Nebraska did attract my attention.
 

‘Police say man wrapped in toilet paper robs store.’

It was thus inevitable that I had to read on....”LINCOLN, Neb. A man who concealed his face by wrapping his head with toilet paper robbed a Lincoln convenience store. Police said the man was armed with a knife when he robbed the store around 10:30 on Saturday night. He escaped on
foot with an undisclosed amount of money from the safe. Capt. David Beggs said that no one was injured.”
 

Now from this I presume one can deduce that this must have been soft roll rather traditional shiny single sheets and presumably only single ply given the time of night of the robbery. I also assume that this plan could have gone seriously awry with any light shower or even a slight breeze. I will now hold it in far higher regard than before.
 

This article represents a personal and lighthearted view from Director, Justin Urquhart Stewart of Seven Investment Management Limited, and is based
on current financial news and events around the world. Its content should not be used for investment purposes and you should contact an independent financial adviser before making any investment or financial decision. Seven Investment Management Limited is authorised and regulated by the Financial Services Authority. Member of the London Stock Exchange. Head office: 125 Old Broad Street, London EC2N 1AR. Telephone 020 7760 8777. Registered in England and Wales number 4092911. Registered office: 3 More London Riverside, London SE1 2AQ