The police, and the state, are out of control

By Philip Stephens of the FT
Published: December 1 2008 19:21

The police are out of control. So is the government. We can only conjecture as to what possessed the senior officers who raided the homes and parliamentary office of Damian Green, the Conservative immigration spokesman. Yet their disdain for political process spoke eloquently to the authoritarian culture of our times.

In this respect, regardless of whether ministers played a direct role in Mr Green’s arrest, the blame rests squarely with the government. The police must be held to account for their heavy-handed intimidation, but ministers nurtured the climate in which such madness flourishes.

The absurdities of the incident are self-evident. A score of officers from the Metropolitan police’s “special operations directorate” barged into Mr Green’s London and constituency homes, hauled him off to the cells and stripped his office of computers and files. The alleged offence? To have put into the public domain leaked information that embarrassed Jacqui Smith, the home secretary.

There is not a hint here of any breach of national security. Mr Green exposed the incompetence that has long described the conduct of affairs at the home office. The official alleged to have leaked the information has already been arrested.

It is all but impossible to imagine a jury convicting Mr Green. Disseminating leaked information has been embedded in the custom of politics since time immemorial. Rightly so, given the stiflingly secretive British state. When he was in opposition, Gordon Brown used to boast of his skilful exploitation of such material. Can we expect the “special operations directorate” to be hammering next on the door of Number 10 to seize Mr Brown’s BlackBerry?

Mr Green was arrested under a part of the common law that proscribes “misconduct in a public office”. The police say (off the record, of course) that the MP was not a passive recipient of documents, but conspired with the official. They hint they have evidence enough to charge Mr Green.

We shall see. The purpose of this 18th-century law is to deal with corrupt public officials including, dare one say it, police officers. To deploy it in this fashion against elected members of parliament is to show, at very best, blithe ignorance of the democratic process. MPs are not above the law, but the police have no place in politics.

We have been here before. During the final year of Tony Blair’s premiership, a team of officers conducted a long, expensive and fruitless inquiry into allegations that the then prime minister had sold peerages in return for party donations. Once again the staged drama – dawn raids and off-the-record smearing of those under investigation – was in inverse proportion to the possibility of any prosecution.

Needless to say, no one was ever brought before a court. But it seems the police are still ready to trample over the line that separates legitimate investigation from the, albeit sometimes grubby, practice of politics.

You could say, though, that Mr Blair should not have been surprised. If the police think they can discard due process, they have been taking their cue from the government.

For more than a decade, first Mr Blair, and latterly Mr Brown, have rolled forward the boundaries of the state at the expense of civil liberties. The consistent opposition of the Liberal Democrats and, latterly, even of the Conservatives to this insouciant disregard for ancient freedoms has been brushed aside as the hand-wringing of feeble liberals.

Some measures have been explicable and justifiable in the face of the threat from violent Islamist extremists. The first duty of any government is to guard the security of its citizens. I have more sympathy than many with the view that the intelligence agencies and the police must be given sufficient means to thwart the terrorists.

But the powers of the state have advanced well beyond that. The present government sees no distinction between the rule of law and whatever piece of legislation it can force through parliament.

In the criminal justice system, the fragile balance between the rights of police, prosecutors and accused has been overturned. The presumption of innocence is scorned. Successive home secretaries, including Ms Smith, have mouthed the mantra that the police are always right.

Ministers have likewise greatly extended the state’s surveillance of law-abiding citizens. The pretence that it is all about al-Qaeda has been exploded by widespread use of anti-terrorism laws by local authorities and other public bodies. Parents suspected of “gaming” school admission systems have become the victims of elaborate surveillance operations by local councils. Almost anyone and everyone in public authority can now call up private telephone and e-mail records. We must suppose they will have equal access to the government’s Orwellian National Identity Register.

Little wonder the police seem to think they can abuse their power. The senior ranks of the Metropolitan police are overdue a serious clear-out. No one should be in any doubt, though, that the real culprit is the government.

More columns at www.ft.com/philipstephens
philip.stephens@ft.com

Western Banking Sells Out?

Barclays faces vote on £7bn stake sale

By Jane Croft and Kate Burgess of the FT

Published: November 23 2008 23:59 | Last updated: November 23 2008 23:59

Investors will today confront Barclays executives at a potentially stormy meeting called to approve a controversial £7bn capital raising that will result in Middle Eastern investors controlling about a third of the bank.

Barclays is holding an extraordinary meeting in London at which it hopes to gain approval to raise capital from the Qatar Investment Authority and Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi’s royal family.

However, the encounter promises to be one of the most contentious votes of the year because existing investors are furious that the bank did not observe pre-emption rights to allow them to participate in the capital raising and offered preferential terms to the two Gulf investors.

In addition, Barclays has faced mounting criticism that it is paying more for its capital infusion than if it had accepted help from the UK government to raise the money. The government, which is helping recapitalise banks including RBS and Lloyds TSB, has insisted that its involvement comes with strings attached such as limits on executive pay and bonuses.

Full article at the FT

Shopping Beats Working?

In case you hadn’t noticed, Chancellor Alistair Darling’s giving a bit of a speech this afternoon.

He’ll be laying out the Government’s plans for saving the economy from an even worse recession than it’s already facing.

It’s quite a clever way to sell it. Regardless of how bad things get in the future, you can always say: “Well, it would have been even worse had it not been for the quick-thinking actions of the dynamic Brown Government.” That’ll be the spin anyway.

But can the pre-Budget Report really make much difference to our economic plight? Of course it can. It can make things a lot worse…

This government encourages shopping and discourages working

The main thrust of the pre-Budget Report seems likely to be a 2.5 percentage point cut in VAT, which will fall to 15%. There’s plenty of other stuff being mulled over by the papers, and no doubt a few nasty surprises as well. But we’ll find out what he’s really got in store for us in a few hours, so no point running through all the eventualities here.

Let’s just focus on this VAT cut. I’m not going to complain about tax cuts. Lord knows, we’ve seen too few of them in the past decade. But it’s interesting to have a look at the thought process behind what’s being done here.

VAT is a tax on consumption. As taxes go, it’s not the worst one. It treats everyone equally and fairly - you pay according to the quantity of resources you consume. You could even describe it as a green tax.

Income tax, on the other hand, is a tax on production. The harder you work, the more you earn. The more you earn, the more the state takes out of your pay packet. And oddly enough, this effect is felt most strongly among the least-well off in British society. Because of the way the ridiculous tax credits system works, certain workers face a marginal tax rate of 70% once they earn above a certain amount. In other words, there’s a point at which they only end up getting an extra 30p for every £1-worth of work they do. For an apparently dour Presbyterian, Mr Brown sure doesn’t believe in encouraging the work ethic.

So effectively, the Government heavily favours consumers over producers. And the pre-Budget Report makes this very clear. Because it’s tomorrow’s producers who will pay for today’s consumer boost. According to The Daily Telegraph this morning, Labour plans to introduce a 45% tax rate on those earning above £150,000 after the next election.

Yet Britain’s big problem is that we’ve been doing too much consuming and not enough producing. How does encouraging more consumption, and discouraging production, help us get any further forward? The answer is simple enough. It doesn’t.

A recession is nature’s way of telling you that your economy is heading down the wrong path. A depression is nature’s way of saying the same thing – only a lot louder.

Britain needs a new set of economic props

As a nation, we’ve become too dependent on three things, all of which have been fuelled by the credit bubble. First there’s the financial sector. The finance sector is meant to allocate capital efficiently. It gets money from the people who have it, to the people who need it, with a minimum of fuss. That’s the nature of the value that it adds to the economy. But it’s not performed that role anywhere near as efficiently as we’d like to pretend. Were all those new-build buy-to-let properties an efficient use of capital? No, I don’t think so either.

The financial system’s ability to allocate capital efficiently has been badly undermined by central banks making it much harder to gauge risk clearly – more on that in the future. In any case, the end of the credit bubble also spells the end for the consumption bubble.

People used easy money and grossly inflated house prices to boost their consumption of everything from household furniture to shoes to computer games. That in turn meant more jobs in the services sector. But now that economic prop is being kicked away too.

The third prop has been rampant government spending. Fuelled by cheap borrowing and extremely healthy tax revenues, the government has splashed our money all over the public sector. But it’s not been spent on useful jobs, but on increasing the range of administrative and management roles in health, policing and education.

What will replace finance as our 'specialism'?

What can we do about all this? We need to consider what will replace the financial sector as our ‘specialism’. If we want to maintain a developed world standard of living, we need to contribute something to the global economy that can sustainably generate high-paying jobs. That means we need to have well-educated, skilled employees. But given the Government’s propensity to view any institution that promotes academic excellence with suspicion and hostility, the chances of turning around our education system any time soon is a major challenge.

And right now, this is a debate for another day, argues the “something must be done!” brigade. So will the VAT cut be effective? Well, it’ll make goods in the shops cheaper. But then, so will deflation. Shops are already slashing prices ahead of what they fear will be a miserable Christmas. And consumers are – rightly - already in ‘cut-back’ mode. It’ll take a lot more than a couple of percentage points off prices to make them blow their budgets this year.

So Mr Darling will have to have a lot more in his box of tricks if he wants to make a dent in this recession. We’ll find out soon enough – and give you the reaction on the MoneyWeek website later this afternoon.

Big Thank you to John Stepek

Lower Interst Rates and Recession - Time for Gold

In its quarterly Inflation Report, the Bank forecast that national income could shrink by one to two percentage points over the next few quarters and growth would probably be flat by the end of next year. Consumer price inflation, which at its last reading registered an annualised rate of 5.2 per cent, will fall to its target rate of 2 per cent by the middle of 2009.

In remarks at a press briefing Mervyn King, Bank of England governor, said interest rates could fall much lower than their current 3 per cent and declined to rule out cutting rates to zero.

“We are certainly prepared to cut Bank rates again if that proves necessary,” Mr King said.

The Enemy of the State - You and Me!

Great article in Money Week

Governments love capitalism. As long as asset prices are rising, that is.

When prices are rising, governments will do anything to keep them up there. You want free money? We’ll keep interest rates low. You want light-touch regulation? We’ll give you off-balance sheet finance.

The deal between banks and governments in the past decade or so has been simple. “You lot keep the voters happy and feeling rich,” says the government. “And we’ll give you a nice cosy, risk-free world to play in.” Of course, capitalism without risk, is not capitalism at all. What we’ve had is sugar-daddy socialism, with the financial industry frolicking freely, safe in the knowledge that there’s always a bail-out around the corner.

But you can’t buck the market forever. And even though there have been plenty of bail-outs, prices just keep on falling. Yet governments don’t seem to learn…



Chaos in emerging markets

Yesterday I pointed out how Hank Paulson’s U-turn on the Tarp highlighted the dangers of government interference in the markets (to read about this click here: The pound has nowhere to go but down) . But you can get a much clearer idea of how the state can make a bad situation worse by looking at the havoc in emerging markets.

Like Western investors, investors in emerging markets came to believe that asset prices could only ever go up. And so when they fall, they start looking around for someone to blame.

That’s why Kuwait’s stock market (which has fallen by more than 40% since late June) was shut down yesterday. According to The Telegraph, an investor had filed a claim “over the heavy losses he had suffered on the exchange.” So the court stopped it from trading until Monday, finding that “the bourse management failed to take any measures to boost a flagging market.”

I imagine that the management didn’t realise that this was part of their remit, any more than the owner of a fruit and veg stall’s pitch would expect to have to keep the price of apples high.

The dangers of too much government intervention

But the plight of Russia probably demonstrates best the dangers of too much government intervention. The Russian Micex market has been the worst performing in the second half of this year so far, reports The Telegraph. Stocks have fallen by 75% since May.

A key problem for Russia is that it is massively dependent on oil. Its 2009 budget only balances if oil is trading at an average $95 a barrel. I can’t see that happening. So its markets, and the rouble, have come under pressure with falling oil prices. And of course, as an emerging market, it has taken a hit as investors pull their money out and repatriate it to the “safe haven” of the US.

But the state’s attempts to prevent the crisis with brute force, have only made things worse. The central bank has already had to spend $120bn of its reserves on defending the rouble, which analysts reckon is now 30% over-valued. This is just a waste of money. When a country, particularly a politically risky country like Russia, starts defending its currency, it’s a sure sign to the market that said currency is over-valued. No central bank in the world has enough reserves to defend against a forex market set on helping a currency to find its “real” worth.

Let's hope our governments learn to accept falling prices

The state is also making the stock market plunge worse than it has to be. They keep shutting the market because it keeps falling so hard. But a big part of the reason that it keeps falling so hard is because every time they open it, investors think “Quick! Let’s sell before they shut it again!”

If you limit the trading that can be done, you increase the liquidity risk. Anyone who is scared they might need cash at short notice, isn’t going to be happy to hold stocks that can only be easily traded as and when the government says it’s OK to do so.

All these measures rattle investor confidence further, and make it even harder to price genuine risk. At some point, most assets of any real value at all will reach a price at which fundamentals suggest they are worth buying. But if you have to worry about the government’s random reactions to such falls as well, it becomes impossible to make any kind of judgement based on these fundamentals.

So we’d better get used to falling prices – and let’s hope our governments learn to accept them as well.

Should we Bail out the Banks or Have a Recession?

As the Banks sit there wringing their hands in anguish at the problems they are in, let's step back to see what they are actually causing in the rest of the economy.

First we have to understand about the "paradox of thrift", the concept introduced by that great British economist John Maynard Keynes, who has been very much misrepresented over the years. This concept states that if we all start saving too much, then we are not spending. This will then causes a slow down in the economy as goods and services are not being purchased in the same volumes.

Now lets consider what the banks are doing right now in their misguided attempts to correct the real problems that they have caused and with their desperate need for refinancing from Governments and Sovereign Wealth Funds. Yes, they are taking money out of the production cycle for debt re-financing. And as they are reducing the amount of lending, they are deflating global economies.

Are they mad? They are only concerned with their own survival, but it seems at the expense of the rest of the economy. Because they have got everybody's bank accounts online they are now indispensable/compulsory [just try to do without one, your tax office will go ape]. Worst luck. We need an alternative to bank accounts. An alternative that will not try and gear up your money to fund their profits and then pocket your cash when they screw up. How else can we interpret their actions.

At best a bank is only a marginal business. How can it possibly make money from holding our money? They do it by using our money for their own gain. But when their assumptions and their miscalculations mean that they have lost our money, its only natural that we the customers are going to feel a bit angry. No wonder there are "runs on the bank". No bank can survive a loss of confidence in the system. That's why we have problems now - we have lost confidence in "the system".

The only solution is to re-build that confidence, hence massive inter-governmental support, or to come up with alternatives. Well Governments are doing their bit but....

So lets as responsible business folk with creative minds come up with some alternatives to the traditional banks.

First is the internet concept of ZORPA

Next is anybody's best guess. Please lets come up with some solutions.

Over to you.


John Burke, Ecadamist, and International Worrier!

BOE Cuts Rates by 1.50%

After one of the most hotly debated rate decisions in recent times, the Bank of England delivered its largest interest rate cut in 15 years today, slashing the UK base rate by a full 1.50% to 3.00%, in an effort to shield the ailing British economy from the fallout of the global credit crisis. The move follows on from last month’s coordinated 0.50% cut with other major Central Banks, as the credit crisis increased its stranglehold on the global economy.

Faced with mounting evidence that the UK economy is headed for recession, the Monetary Policy Committee has come under increased pressure to take more decisive action. Earlier this week Britain’s service sector, the backbone of the UK economy, was seen contracting at its sharpest rate on record while factory output posted its longest decline since the 1980’s recession, heralding further job losses. However, the most influential of recent developments was the sharp contraction in third quarter GDP, confirming the UK economy is on the brink of a recession, sharply reducing consumer and business confidence for the coming year.

Recent comments by Governor Mervyn King stating that “it now seems likely that the UK economy is entering a recession” signals further monetary easing is in the pipeline.

Major Interest Rates


Major Interest Rates
US Fed Fund Rate 1.00% 29th Oct 2008
EU Min. Bid Rate 3.75% 8th Oct 2008
UK Base Rate 3.00% 6th Nov 2008

Source: HIFX Financial Services Ltd

More Financial Worries

Lehman shares slide on fears over results

By Ben White in New York

Published: August 19 2008 18:42 | Last updated: August 20 2008 07:14

Shares in Lehman Brothers continued their steep decline on Tuesday, falling more than 13 per cent amid fresh predictions of significant third-quarter writedowns.

The decline also came after reports that the troubled investment bank may sell all or part of its asset management arm, Neuberger Berman, a move it has long resisted.

Lehman shares dropped 13.04 per cent, or $1.96, to close at $13.07 in New York, reducing the market value of the investment bank to around $9.1bn. That is less than the estimated $10bn standalone value of Neuberger, which Lehman bought for $2.6bn in 2003.

Lehman shares are off nearly 80 per cent this year following large writedowns on the bank’s troubled mortgage portfolios. Lehman was among the leading underwriters of mortgage-backed securities and was left with large holdings after the subprime crisis curtailed investor appetite for the fixed-income products.

Tuesday’s share price drop came after analysts at JPMorgan Chase said in a report that Lehman would post another $4bn in credit-related writedowns in its fiscal third quarter, which closes at the end of August.

Lehman has already posted over $8bn in writedowns and has been scrambling to raise capital to shore up its balance sheet. Lehman declined to comment on the JPMorgan report. Lehman has been selling some mortgage assets but still has about $61bn in exposure, JPMorgan said.

Lehman raised $6bn in the spring from a group of mostly US-based institutional investors following an embarrassing $2.8bn second-quarter loss, the first in its 14-year history as a public company.

Lehman had hoped to make a deal with a strategic Asian partner as part of the capital raising but talks failed to progress. Investors in the last capital-raising are sitting on significant losses so it is not likely that Lehman could sell more shares to raise fresh capital.

People close to the matter said Monday that Lehman was involved in exploratory talks with several private equity and strategic bidders for all or part of Neuberger Berman.

However, the JPMorgan analysts said they did not believe the business would be sold because it is a reliable cash generator.

Copyright The Financial Times Limited 2008

Google Adwords COSTLY for the Misinformed

Free Google Adwords Strategy Report

Get Out of PAPER MONEY

Barclays dismisses San Marino lawsuit

Barclays Capital will fight vigorously a lawsuit filed against it in London’s High Court by a banking client Cassa di Risparmio di San Marino, which alleges misrepresentation by the UK investment bank in the sale of complex debt products.

The San Marino-based bank is seeking damages of at least €170m (£134m) in losses and lost income related to five complex credit-linked notes bought by CRSM for €450m in 2004 and 2005.

It is also seeking unspecified damages related to the restructuring of three other complex notes in June 2005.

“The legal action has no merit and we will contest it vigorously,” Barclays said on Tuesday.

The suit is part of an increasing number of actions faced by banks over their complex credit products since the market turmoil that began last year led to widespread losses in the financial industry.

Lawyers said that many disgruntled clients are pursuing the banks that had arranged complex debt products, but that claims are mostly settled well before they near a court filing, which is seen very much as a last resort, particularly in Europe.

Barclays has faced a number of similar lawsuits over collateralised debt obligations it has structured and sold.

In 2005 it settled a $151m claim brought by HSH Nordbank of Germany.

HSH is also currently suing UBS, the Swiss bank, over alleged mismanagement of a $500m portfolio of collateralised debt obligations to London. The case, which is set to be heard in New York, was among the first to be filed over subprime mortgage losses in the wake of the credit crunch.

Barclays, meanwhile, is also named in a lawsuit filed this month by Oddo Asset Management of France in New York, which relates to two investment funds known as “SIV-lites”.

That suit also seeks damages from Solent, a London-based hedge fund that managed one of the investment funds, and from McGraw-Hill, the owner of Standard & Poor’s, the rating agency.

Bankers said Italy was beginning to discover the depths of its problems with structured products. Marco Elser, senior manager in Rome at Advicorp, an independent investment banking group, said: “Half of Italian banks don’t know what they have in their accounts, because the derivatives around which the structured products were sold are so complex that it would take an Einstein to figure it out.”

Additional reporting by Guy Dinmore in Rome
By Paul J Davies

Published: July 29 2008 19:05 | Last updated: July 29 2008 19:06
Copyright The Financial Times Limited 2008

The action above could be the first in an avalanche of law suits filed by investors who could feel a little hoodwinked by the avaricious banks and their rush to sell "products" to their clients in the headlong desire to make ever increasing profits from a "business" that should only be marginal at best.

When you run a business that has its hands in your pockets, the tendency is for it to help itself.

John Burke

Technorati Link

Technorati Profile

Its all about cross networking and interconnections!

Or is it just to get Technorati up the google rankings by inward links? So to balance things here are a list of my blog and web interests with lots of great partners and projects: No particular order.

G8way
Jamie Lawrence Football Academy
JLFA Blog
Refill Food
Cherrie Box Media
Emerging Markets Investor Services Ltd
Watersons Marketing Group
Inspirational Seminars Ltd
Inspirational Seminars Blog
Sylvia Modu
Faye Klein Lingerie
DMR Ltd
Bevin Fagan (who sadly died in April 2008)
Gold Investments
Property Investment and Credit Crunch
Business Start Ups
Yorkshire Network
Gold Bullion Trading
Click4Marketing
Affordable Seminars
Barbur Realty
Canal Craft
Management Resource
Unique Sounds

Plus a whole load of ongoing projects in Africa to build Solar Tower Power Stations, renewable energy systems and exploding the myth of global warming and the great carbon tax con.

I am also very keen on lean government along the lines that Hong Kong adopted and not the over-bloated British Model!

Paper Money Madness and Political Bragging

From the Desk of Adrian Ash from Bullion Vault

Dear BullionVault user,

BLAME FOR THE credit crunch has landed squarely on the big Western banks, with government and the monetary authorities leading the finger-pointing.

This seems a bit rich. Government and central banks were the chief architects of the current difficulties. And as usual, their reaction to this crisis is just as wrong-headed as their reaction to the last crisis.

It's also certain to make the next crisis worse still.

Unfortunately for the US and Britain, the authorities remain too convinced of their own powers to see the truth of this. There they sit, Canute-like before a sea of economic reality. They truly believe they can command the tide.

After all, this was how they responded from 2001-2005, force-feeding money to the big banks and mortgage lenders at very low rates of interest.

Thus did Alan Greenspan and Ben Bernanke switch the Tech Stock Bubble for today's Subprime Crisis. Thus did Gordon Brown here in London encourage all those "unbroken years of growth" that he still loves to brag about. To perpetuate the feel-good factor, Brown continued pumping the UK economy with cheap money while preaching sanctimoniously about prudence.

And my, how he bragged! During the good times, Britain's unbroken growth all came down to Gordon's brilliance.

Funny, isn't it, how the downturn is now somebody else's fault?

But in economics, as in life, the hangover reflects the party. Creating artificial demand is sure to create exactly the situation we're in today.

So let's spell it out and see if Gordon and Ben can get it, before they and their wretched textbooks destroy the wealth of cautious savers and their children once more.

Whenever and wherever you find a surfeit of money, bankers will face a choice:

#1. Take the money and lend it; or
#2. Refuse the money and lose out.

The problem for banks – as for all financial companies during a bubble in money – is keeping up with the game. If they don't take the cheap money on offer, they will under-perform their competitors, and that will end in a take-over.

Another bank – making bigger profits by taking the cheap money – will buy out the laggard. That's how cautious banks caught playing it safe, rather than joining the fun, are dragged to the party regardless. Their kicking and screaming is drowned out by the clamor for "total shareholder returns".

So the reason the banks you now see around you all look like incautious buffoons is that, between 2001 and 2005, the US and European authorities created conditions in which only the incautious could prosper. Government killed off the cautious by pouring cheap money down the throats of the most aggressive banks.

Socialists and central planners just don't understand that you cannot command an economy onto such an unnatural path without later paying the price. Cheap money destroys caution and nurtures speculation. When the world is awash with it, banks must take ever bigger and bigger risks, or they will wither and die – it's as
simple as that.

The irony of the Bear Stearns' rescue seems lost on the media. Yet it was Bear Stearns that first signaled the start of today's crisis last June, when its "enhanced leverage" funds went bust. And if Britain's new banking bail-out works this time (and let's hope it doesn't) then no British bank will fail either.

The message will then echo round the City of London – as on Wall Street – that you simply must take all the cheap money on offer and punt it straight out to consumers and business.

By 2012 if not before, we could find the Bank of England effectively bankrupt, sitting on a pile of "quality" mortgages as collateral as house prices tumble from even higher peaks than last summer's top.

And the big investment banks? They will be pitching for a fresh rescue from their next over-priced speculation.

Wind-swept farmland? Ocean-floor mining? High-orbit solar panels...? Who knows what fresh nonsense the banks will be forced to finance in the government's scramble for un-ending growth. Who can guess at how much the banks – and then us - will lose as a
result. Such a slow-motion disaster, however, is baked in the crust when those in power subvert the economy to their own over-inflated egos.

Witness Argentina, Turkey and Zimbabwe already this decade. Now thanks to Gordon Brown's self-belief in his personal, hands-on management of the economy, the UK is thoroughly addicted to monetary stimulants.

The United States, of course, is strung out on Ben Bernanke's junk, first peddled by Alan Greenspan when Bill Clinton's White House proclaimed "It's the economy, stupid!" As in the UK, breaking this habit will hurt; the banks themselves warn of outright depression if taxpayers don't front up today.

But cold turkey, according to Keith Richards at least, is just five days of climbing the walls. (And the Stones' guitarist should know!) Whereas, if we stick with our habit, then it could soon be our turn to queue in the streets bearing armfuls of cash, fighting over the last loaf of bread in the shop.

The great private antidote to the Browns and Bernankes of this world remains gold. Those people owning it over the last couple of years now stand unaffected by the losses sweeping through financial markets.

Yes, it's come a little off the boil since mid-March, but the fundamentals remain stacked in gold's favor.

** Flat-to-falling production worldwide;
** Money creation still running amok;
** Growing investment demand from a very low base (particularly in the Far East);
** Rising inflation in your cost of living;
** Control-freaks running government; yes-men in charge of monetary policy.

It's always painful, of course, to buy something at twice the price it was just two and a half years ago. But markets – like gold mines – don't easily give up their riches.

What's hardest to do can often prove the best course.

This current lull in the gold price might just be your best chance.

Regards,
Adrian Ash
Research, BullionVault

Anglo Gold Bullish

AngloGold Ashanti (NYSE: AU) revises up first quarter outlook.

Following the stabilisation of Eskom power supply to South African operations during the quarter, AngloGold Ashanti is forecasting first quarter production of approximately 1.19 million ounces.

The revised production outlook is around 8% above guidance provided at the fourth quarter results presentation. The company has also fully delivered into maturing hedge contracts during the quarter.

Commenting on the revised outlook, CEO Mark Cutifani said, "Our first quarter performance will speak to the superb job that our South African operating team, in partnership with the unions and Eskom, has done in managing through a difficult situation. We are successfully implementing a 4% energy saving target, which will enable us to get back towards our 100% production objective, even though we are working with a reduced power supply."

The company will revise guidance for 2008 with the first quarter results, which will be released on 6 May 2008.

Latest Gold Prices and the Drivers to Its Price

By Atul Prakash
LONDON, April 4 (Reuters)

- Gold drifted higher on light investor buying on Friday after trading in a narrow band ahead of U.S. jobs data that could set market direction.

The figures, due at 1230 GMT, is likely to show that the economy shed jobs in March for a third straight month.

The report will be scrutinised for clues about U.S. interest rate moves. Lower rates tend to lift gold's appeal as an alternative investment.

Gold rose as high as $907.55 an ounce and was quoted at $907.30/908.20 at 1029 GMT, against $903.40/904.20 late in New York on Thursday, when it gained more than $5.

"U.S. non-farm payrolls data are important for the market, especially after yesterday's jobless numbers," said Simon Weeks, managing director of precious metals at Bank of Nova Scotia.
"Gold still has room for more correction, but may stabilise if the dollar remains weak," he said.
The market got support from the dollar, which ticked lower versus other major currencies in technically-led trade ahead of the jobs report.

Signals for non-farm payrolls have been mixed, with a surprise gain in private sector jobs in March offset by news that first-time applications for U.S. jobless benefits rose last week to a 2-1/2 year high.

But overall, investor sentiment has improved in recent sessions, and markets are now only expecting a 25 basis point rate cut from the Federal Reserve this month.

"The U.S. labour market data leads often to the widest swings in financial markets, which would also have a strong impact on gold and other precious metals," Dresdner Kleinwort said in a daily market report.

"Gold is expected to profit from a higher-than-predicted fall of payrolls."

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

OIL PRICES HELP
The bullion market also got support from oil, which rose above $104 a barrel, bouncing back from losses in the previous session as the market focused back on the weakening U.S. dollar and the U.S. economic outlook.

Gold hit a two-month low of $872.90 an ounce on Tuesday on fund selling before staging a modest rebound. It was still 12 percent lower than last month's lifetime high of $1,030.80 and dealers said jewellers showed buying interest at the lows.

U.S. gold futures for June delivery GCM8 rose $1.10 to $910.70 an ounce in electronic trade.
"In the coming days, gold should trade in a wide range between $850-$950 an ounce. Whether gold will test the upper end of this range will depend on it going through and holding gains above the $ 910-$920 level," said Wolfgang Wrzesniok-Rossbach, head of sales at German precious metals trading group Heraeus.

Platinum fell to $1,980/1,990 from $1,985/1,995 an ounce, having risen more than 2 percent in New York on worries that South Africa's state utility could not meet electricity demand from precious metals miners.

South Africa's power crisis may last many years unless there is a sustained drop in electricity demand in Africa's largest economy, state power utility Eskom [ESCJ.UL] said this week.

Supply worries, caused by mining disruption in main producer South Africa, sparked speculative buying and propelled the price to record high of $2,290 an ounce on March 4.

Spot silver rose to $17.48/17.53 from $17.36/17.41 an ounce, but palladium was flat at $436/441 an ounce. (Reporting by Atul Prakash; editing by Elizabeth Piper)

Gold and Platinum Peaks

By Pratima Desai

LONDON, March 4 (Reuters) - Platinum hit record highs on Tuesday as speculators bought on worries over supplies, while gold consolidated recent gains before making a stab at the key $1,000 an ounce level.

Spot platinum hit a session high of $2,275 an ounce and was at $2,270/2,275 by 1115 GMT, compared with $2,230/2,237 late in New York on Monday.

Platinum, used in jewellery and auto catalysts to clean exhaust fumes, has risen by more than 40 percent this year as a power crisis which has disrupted mining in main producer South Africa sparked supply fears.

"Platinum is very strong, inventories are low, fundamentals are very supportive," said Suki Cooper, analyst at Barclays Capital. She added that the global deficit this year could be up to 600,000 ounces.
"Given the strength of investment demand this year, the platinum deficit could be greater than that."

Gold hit a bid high of $987 a troy ounce and was at $984.70/985.60, up from $981.20/982.00 late on Monday when it touched a record high of $989.30.

"$1,000 seems likely in the near term, with global inflation expectations being fuelled by the current commodity bull run," Standard Bank said in a note.

The precious metal has gained nearly 50 percent since the credit market crisis triggered buying from investors looking for a haven from financial market uncertainty.