TODAY’S FAYRE – Wednesday, 28th May 2014

“Love set you going like a fat gold watch.
The midwife slapped your footsoles, and your bald cry
Took its place among the elements.

Our voices echo, magnifying your arrival. New statue.
In a drafty museum, your nakedness
Shadows our safety. We stand round blankly as walls.

I’m no more your mother
Than the cloud that distills a mirror to reflect its own slow
Effacement at the wind’s hand.

All night your moth-breath
Flickers among the flat pink roses. I wake to listen:
A far sea moves in my ear.

One cry, and I stumble from bed, cow-heavy and floral
In my Victorian nightgown.
Your mouth opens clean as a cat’s. The window square

Whitens and swallows its dull stars. And now you try
Your handful of notes;
The clear vowels rise like balloons.

Sylvia Plath – poet – 1932-1963

Political correctness – “Political correctness is a doctrine, fostered by a delusional, illogical minority, and promoted by mainstream media, which holds forth the proposition that it is entirely possible to pick up a piece of excrement by the clean end.” – A student from Bond University in Australia – May 2014

I must confess to being a tremendous admirer of Nigel Farage and the progress UKIP has made in the last 2 years, filling a void the main parties have neglected. If UKIP is to make that quantum leap forward, political banana skins must be avoided at all costs. Adopting Neil Hamilton could be a banana skin! I commend greatly what Neil and Christine Hamilton have achieved; they have paid back all their debts; they have regrouped and are now a brand that is in demand by the public. However for Neil Hamilton to stand as a UKIP MP may just be a bridge too far. Mr Hamilton, after becoming involved in a political scandal known as the ‘Cash-for-questions affairs’, which cost him a great deal of money defending himself, eventually costing him his seat at Tatton. Like it or not this incident suggests a credibility factor. Many believe that Mr Farage should avoid such controversies. At present he intends to ignore the threat of any potential fall-out. We shall see how the media and electorate react.

In the same breath Marine Le Pen from France’s National Front political party has made the biggest swing toward anti-Europe, ahead of even Britain. Le Pen declared victory in European Union elections as voters across Europe backed populist, far-Right and Left-wing parties in a backlash against immigration and the euro’s economic policies and the ‘establishment.’ So much for those people who claim that the Bildebergs control the world.

With great gusto all the ‘good and the great’ in Europe have pushed the panic button with a meeting being convened in short order in Brussels. All of a sudden Chancellor Merkel is not sure that J-C Juncker is the man to take the EU journey forward. There must also be concern that the anti-austerity brigade could really damage the recovery process in the region. From a UK perspective it is becoming increasingly important that PM Cameron declares his hand over the proposed referendum in 2017. If he genuinely is going to hold an ‘in/out’ referendum, he needs to declare that he will take the UK out, if the EU fails to deliver the necessary changes that meets the UK’s criteria. To date he has refused to do so.

Certainly the Rothschild sponsored Inclusive Capitalism Conference attracted plenty of press comment, much of it very controversial. The Prince of Wales, Mme Lagarde and Governor Mark Carney grabbed the opportunity with open arms to get the boot into the bankers and their bloated bonuses – the public were always going to lap it up. There is nothing new about the widening gap between those that have and those that have not! It has been an issue since the Thatcher days of 1984, when income tax levels started to be reduced. It has become progressively worse.

What I found disappointing was that all their comments venture to suggest that no progress has been made since those dark days of 2008. This is palpably not true nor fair. All we hear is vituperative lambasting for increased bonuses of Barclays and Goldman. You hear nothing of the fact that many of these contractual obligations are coming to a finish. You hear nothing of Barclays and RBS winding down their investment banking operation. How many times does the public have to be told that bonuses have a relatively small cash element and that the substantial share incentive schemes are paid at least 3 years in arrears and have a pull back if profit goals are not achieved? Banks are global. London is the leading financial centre. We need the income until our economy is more broad based. If London is to maintain its pre-eminence it needs to pay sensible and competitive bonuses.

Off the cuff comments about bonuses and moral obligations and excessive greed from major luminaries in life on a public platform without the whole picture being painted, is very counterproductive. As for Mme Lagarde, who has made a king’s ransom as senior partner of a leading law firm in Chicago; how can she have the temerity to suggest that income tax needs to be increased with a property tax to be introduced – only a LEETLE BIT! – To narrow the divide in terms of income discrepancies. Please, Madame – on your bike with those socialist principals. Just as we are recovering, the idea of smashing the incentive to work or create wealth and increase employment, on the head with negative legislation of that nature, cuts no ice with entrepreneurs and business people alike.

I agree with the IMF’s CEO that insufficient progress has been made by banks in Europe to become more robust, postponing the need to eradicate the “too big to fail” tag. Governor Mark Carney speech was well thought out on this subject and it is encouraging to hear that the ‘too big to fail’ philosophy will be extinct, maybe as quickly as a year from now. The BOE/FCA have worked tirelessly on this issue and are to be commended for achieving that necessary goal.

These are David Buik personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775

Panmure Gordon & Co

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