It feels a bit like the scene in that iconic German film “Das Boot” when the submarine commander orders all the tanks to be blown in a vain effort to try and stop the damaged U-boat from sinking.  One by one all the levers are pulled and one by one their effect is negated by the weight of the sinking vessel.  I am sorry if this is a rather negative analogy to the current situation but with each day that goes by, we hear of yet another initiative from one country or another pulling their economic levers to desperately attempt to fortify the failing strength of their economies.  In the past week, the Chinese, the Americans and the Australians have all been acting but with seemingly little actual effect on events or sentiment.

Now to be fair, such actions rarely have an immediate effect but the flurry of action, whilst encouraging to see, does sometimes smack of desperation as politicians and central bankers rush along pulling every lever available to try and get their economy to start to resurface.  I must add though that in the film, the U-boat does eventually surface and all ends well (for at least that part of the film at any rate).  However, before being able to resurface, the damaged submarine had to spend an inordinate period of time lying motionless on the sea bed.  In economic terms this analogy would therefore stretch to being the period of recession that many countries are facing or have already entered.

The good news is that at least this time the politicians and central bankers have been acting, whereas in Japan during a similar period in the early 1990’s, such action was limited and somewhat tardy – with the result that there was a depression of some magnitude.  So now all the levers of tax cuts, direct investment and support for the financial system are seemingly being pulled – “blow all tanks”!

However, let me also be the purveyor of some more positive comments.  Most recently the ‘world’s most successful investor’, Mr Warren Buffett, provided some much needed fortitude for nervous investors when he said:

“A simple rule dictates my buying: be fearful when others are greedy, and be greedy when others are fearful, and most certainly fear is now widespread, gripping even seasoned investors.”  Sound logic which we should all agree with, but the question is when? To which his answer is:

“I haven’t the faintest idea as to whether stocks will be higher or lower a month, or a year, from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment, or the economy turns up.  So if you wait for the robins, Spring will be over”.

Right, better get the bird feeder out then.

I am often asked can we see a bottom to the market – and the truth is you will never know until it has happened.  All you can tell is that by investing in such periods, we will all likely benefit over the next few years.

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Financial alcoholism is an easy trap to fall into.  Such sufferers of this addiction often start innocently without realising their potential trouble.  Often the excuse will be to support a key company or industry during a period of weakness, then followed by a need to protect jobs in an already weakened area and finally, by the ultimate financial alcoholics, an excuse that it is cheaper to keep them going than to face the economic consequences of sobering up.  Welcome to the US car manufacturing industry.

For too long they have been building the wrong cars for a past era that is never to return.  Protected by politicians trying to save their seats and followed by a desperate attempt to wrap the national flag around them, these are the last flailing efforts of a sad sodden addict desperately seeking another shot of government finance.

In our new world of economic austerity, maybe it is time for a brave move by a new leader to proffer some tough love to these failing corporations and let them seek solace in Chapter 11 bankruptcy.  Perhaps this will finally make them seek to rationalise their outdated business functions, employment and operational practises.  By most people’s measure, the likes of GM and Chrysler are bust.  The US government needs to carefully deploy its restricted finances to areas where it can have real effect and future growth, and not in propping up financial confused alcoholics in quasi state-run enterprises.  In the UK we can only speak from experience where we stood guilty ourselves of such financial inebriation and inaction for many years with fiascos British Leyland and Rover.

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And finally... We may think that economic conditions are tough at the moment, but Berlin is determined to look after its canine population.  An ‘exclusive’ soup kitchen just for dogs has opened in the city. 

This follows on from another service just for pooches launched in September providing a doggy bus service, ferrying the dogs to a doggy day-care centre.  On board, the passengers enjoy air-conditioned cabins and music on the trip, which costs 15 Euros per dog.  They must be three stops short of Dagenham.

Have a good weekend,

Justin

... you are sure of a big surprise."

This week the meeting of the "G20" in Washington on the 15th has the opportunity to be an extremely important event. Although some have tagged it as the opportunity to create a new "Bretton Woods" international agreement for a new financial world order, the reality is going to be considerably less but nonetheless the meeting is still going to be vital. As we fumble our way through this financial fiasco, at least our leaders have realised just how internationally linked and inter-dependent we all are. Thus a meeting of the 20 including the likes of China, India and Russia, is far more realistic than the older cosy club of post WW2 capitalists.

However, the meeting must not be a waste of time as this crisis has now spread like some hideous cancer to affect even those more stable and well run emerging nations. Now is the time for a clear message of international collaboration and co‐ordination to show that a powerful response can be provided. Extreme risk aversion along with a credit seizure is a terrible combination and only a unified approach can start to rebuild confidence - which will assist some stabilisation and consequently rise in value and, so vitally, confidence.

Action taken already to provide support to the likes of Singapore, South Korea, Brazil and Mexico is a good start but more will need to be done both directly by the Fed and the EU, but also via the IMF who, hopefully, may benefit from further support from the likes of Saudi Arabia. The 1944 agreement at the Mount Washington Hotel in Bretton Woods took months to hammer out, and the G20 cannot emulate that - but it can lay down some clear intentions for their acolytes to act on. The alternative should not be contemplated.

You would have thought that the election of Mr Obama (or Mr O'Bama according to one New York Irish columnist) should have resulted in warm and friendly words from leaders around the globe - and certainly most were in that tone. However, the really quite astonishingly aggressive tone from the Russian President Medvedev came as quite a surprise. The content seemed to reference back to the days of the Cold War when another young President came to the White House. Locating missiles in the Kaliningrad enclave, Russian energy traded in Roubles, and US responsibility for the Caucasus violence seems an aggressive menu for a congratulatory moment. Perhaps this is a strategic ploy to test the President Elect and to test his resolve?

A week after the election, as the bunting and banners are now lying forlornly on the floor, the importance and magnitude of the Obama election is only really beginning sink in. This is not just a change of President but a change of generation and, I believe, a vital turning point in both economic and political conditions. The President Elect has the aspirations of millions weighing on his shoulders and a level of disappointment is bound to be inevitable. I can only hope that he is not seen as the new Prince of Camelot, but rather a fresh face with a team aiming to try and tackle the worst economic situation since the Depression. We must watch with interest who he gathers around him, but the potential addition of Paul Volker (nicknamed the Prince of Darkness) the predecessor of Alan Greenspan at the Fed, may well be seen as a astute selection.

Meanwhile back in Blighty, I had mentioned last week that we could see a 1% cut in the Base Rate but a 1.5% was certainly a welcome move. However, this in itself is no miracle salve. The Government and its acolytes must force the situation further and especially by pressuring banks and certainly those that are state owned or part owned, to pass the cuts through to both companies and clients. LIBOR has continued its steady decline as the healing of the monetary system slowly improves but, unless we can get money flowing faster, then the economy will find it even more difficult to turn around. Friday saw 3 month LIBOR down to 4.5% from 5.56% the previous day - thus showing that the reduction is still not being passed through.

So what could this recession look like?

Resetting company expectations is a painful process as we can see from this season's reporting. Some have certainly been extreme, like Volvo's European third quarter truck orders dropping by 99.79% from last year's 42,000 to just 115, but others may show at least a similar if not quite such a disastrous fall off - but be prepared to be surprised. The market is thus trying to establish what this recession is going to look like and to this end the IMF's World Economic Outlook may be of some help. The key theme that they seem to have identified is that recessions linked to financial, and especially banking crises, seem to last twice as long as those that are not.

Citigroup have written on the earnings issues and expect a potential fall off of some 50% and that so far we have only seen 10%, and thus the damage could be spread for a longer period than just a year as has been mooted, to something that looks more drawn out over a period of three years. The opportunity therefore for a swift turnaround in confidence and markets would seem to be a tad too optimistic. Although equity markets do tend to recover during recessions, if this is an extended recession then we should prepare for a longer, drawn out and lower level of market recovery.

Well apparently the seaweed is curling up and we should all prepare for an early Winter. Obviously the order of the day is to go out and collect your nuts, bury your stash, fill up the sand bags and prime your hurricane lamps. Early Winter storms and tidal surges are being forecast by long term predictors, Weather Action, and we could be in for two "mega storms" which would normally be a 20 year event. Given our current run of financial news I am in no mood to disbelieve them. Perhaps we should follow the actions of my friend Mr John Whiting - sold his business, got his Freedom Pass and gone on a three month trip of the Antipodes.

And finally............another beauty contest has provided us with another vision of loveliness for us all to admire. A quote about the contestants came through as "They are different in terms of beauty, shape and how eye catching they are." Apparently also some of their great attractions include "A distinctive high bridge nose, shaggy hair, with a fine silky quality". Yes in fact these stunners are Saudi Arabian goats from the Najd region. Apparently the winner in the male category had a value of 450,000 Riyals (£76,000). However, there is now some concern as certain Islamic hardliners condemn such beauty contests as evil and say those involved should seek repentance. So I say we should all appreciate our goats while we can.

Oh yes and just one more point that annoyed me..........seemingly some local councils, including the enlightened officers in Bournemouth, have announced that they are going to ban the use of Latin terms and words as some poor unfortunate citizens might not understand what they mean. Apparently the term "via" could be confusing - well yes, presumably if you don't know where you are going. Additionally, the Plain English Campaign feels that banning Latin might stop people confusing the term "e.g." with the word egg. Brilliant - yes, that has been such a problem. Streuth!

Have a good week,

Justin

In 1605 Guy Fawkes wanted to destroy most of the English establishment and its parliament along with its new Scottish King, James VI, with some good old fashioned gunpowder. Several centuries later Mr Fawkes should have been an investment banker because he could potentially have achieved the same (apart from the Regicide) without the need of a flickering taper in a dark cellar but rather just with the sale of a toxic bond or two. In comparison gunpowder seems rather tame - when watching fireworks explode this week try not to make too many comparisons with the global economy.

The recent events week by week are quite astonishing in both their number and significance. It is therefore quite understandable for people to be mesmerised by the news and to completely lose track of what actually is going on. If I may be as clear as possible - the UK economy is in recession and the question is now about whether it develops into a slump rather than just an unpleasant recession. The global economy is slowing down and again it is the quantum of worries that will determine its depth and length. On current reading, the augurs do not read well, but this has not been for want of trying by various authorities.

Last week saw another round of interest rate cuts led by the US and with Asia seeing Hong Kong and Taiwan also taking action and even the Peoples' Republic of China cutting another 0.27% down to a rather worrying number of 6.66%. For those of a nervous disposition, bringing in the number of Satan must add little to their confidence. Additionally the Japanese have just cut their rate from a diminutive 0.5% to 0.3% ‐ their first cut in seven years. Some may recall that they did this before in order to encourage economic progress, but sadly to little effect. This then is the rub - cutting rates on its own does not guarantee any recovery - as consumer and corporate sentiment is so low, just cutting rates will not solve the problem.

Additionally cutting rates does not necessarily cut the cost of money - for most companies and for those on mortgage trackers, it is likely to be the 3 month LIBOR rate that will be more important. Although there has been some movement here to around 5.91% this is still well above the current Base Rate of 4.5%. With UK rates due to fall this week (if they have not already done so by the time you are reading this) by potentially even a whole 1%, further pressure must be applied to get the LIBOR logjam broken to have any real effect.

So what else can be done apart from rate cutting, to try to ameliorate this difficult situation and to prevent a recession becoming a longer term slump? Firstly, encourage people to carry out at least some spending and not just to stop dead in their tracks as seems to be occurring in some areas of the retail market. This may beencouraged through lower interest costs and even potentially tax cuts as well. That could be too far for our Government - but probably a necessary and needed action.

Secondly, where the banks are reluctant to lend to companies, the Government could bypass them completely, as we have seen in the US, and provide direct financial support to the corporate sector via their bonds. It is amazing - we have recapitalised the banks, given them extra facilities and even swapped some of their rubbish debt for gilts and still they don't want to lend. To be colloquial - damn them - just bypass them.

Thirdly, we must encourage those countries that now have the surpluses to encourage its circulation - that is to say encourage expenditure. It is only through increased demand that the global economy will start to move.

There was actually an encouraging and important sign I noted and that was the US providing facilities to some of the emerging economies who have been hardest hit. The world, and especially the US, cannot afford to turn its back on these nations at this time and repeat the damage we saw back in the 1990's when the likes of the Indonesian and Thai economies were decimated by an earlier currency crisis.

You cannot say that action is not being taken - the question is will it work? The fuse has been lit, the taper is burning - but will the Catherine Wheel go off?

I suppose I should add a note about my new local shopping centre in West London. Westfield is apparently one of Europe's largest shopping centres and is shortly, I suspect, to become Europe's largest white elephant. Although an excellent development on the old bomb site of White City and the Anglo French Exhibition of 1908, it has been completed with all the unfortunate timing of an inopportune North Atlantic iceberg encounter.

I must just add a personal note of congratulations to a dear friend of mine Tjalke Boersma, who despite all logic and against all financial headwinds has managed to not only raise half a million pounds of capital for his business but also able to float it last week. To achieve this in the teeth of a financial catastrophe is nothing short of remarkable. I wish both him and his colleagues at Bright Futures Group every success.

And finally........................one of the more unlikely occurrences on a train has come to light when a passenger on the TGV to Paris managed to lose his mobile phone down the loo. A shame, but not the end of the world. However, his attempts to get it back resulted in his arm being hermetically sealed by the suction system down the loo pipe itself. He was later stretchered away from the train with the toilet bowl still attached to him, following which it was finally cut off. So it is not just your mobile phone that gets cut off on trains.

Have a good weekend,

Justin

It's been getting darker - not just because of the UK changes over to Winter timing but rather because last week was when those in power finally admitted to the inevitable; that we are in for a recession, and probably quite a prolonged one at that. If you read my comments on a regular basis then this should come as no surprise and in fact could almost be one of those Basil Fawlty moments where these revelations have been no more than an amazing announcement of the stunningly obvious. To add to this, the Pound lurched downwards against the Dollar, underlining the lack of confidence that others have in themanagement of our economy.

Again unsurprisingly, this has brought out the usual wails from the Jeremiahs around the media,forecasting scenarios of horror that have all the appeal of a short break with Dante at his Inferno Weekend Lodge. In fact there was nothing especially surprising or unexpected in the news, but it was a week for the pessimists and resultant market nerves. These times are of course worrying and I don't want to make lightof them, but they are a period we have to go through. This will include deranged and erratic markets,made worse by hedge fund managers selling out to cover margin calls, as well as others just giving up and running back to cash. So, with Halloween coming up, perhaps we should ask some of those commentators to stop terrifying everyone and take off their scary masks and behave more responsibly.

There is, of course, no magic potion which can save us all but rather like a rotten cold (or flu, as I call it), it just takes time with all the remedies just providing remedial succour rather than an outright cure. What the governments have provided is significant, but on their own are little more than a financial 'Lemsip Max' - they can ease the symptoms but the cure has to run its course over time.

So in this backdrop of apparent unremitting gloom, let me remind you of some flickering lights that may not be the light at the end of the tunnel, but at least some light to show us the path.

1 - The cost of money in the UK will come down further. Very slowly the LIBOR rates are easing, but they are still abnormally high - however they are moving in the right direction. Mervyn King in his speech last week seemed to imply a further interest rate cut to come and hopefully a significant one. If this is passed
on to borrowers, and LIBOR continues to ease and the banks start lending more, then this won't solve the issue but will certainly soothe some of the pain.

2 - Sterling's fall from grace may be ruining our overseas holiday plans, but overseas investments and income will certainly benefit. Although we may not be the metal bashing exporter of days gone by, we are still a valuable exporter of technology and intellectual property. Additionally, all those with a higher proportion of overseas investments (that we at 7IM have been promulgating) will be seeing that benefit as
well.

Perhaps that may at last help stop our fixation with yet more imported consumer goods - they just got more expensive and we can't afford them anyway. One figure often overlooked in the daily maelstrom of economic data is our Trade Deficit. My colleague, Alex Scott, has pointed out to me the latest figure published the other day was a record level of £8.2 billion for August - the worst figure since records began
in 1697 - I am sure Queen Anne would not be amused.

3 - From a record of $147 only a few months ago, the price of crude oil has plummeted to around $66. This of course, is causing huge pain to the producers, and especially those who have ramped up their expenditure on the rising price - notably Russia and Venezuela, and OPEC's moves to cut production may do little in the face of falling demand. Nonetheless such a drop will be beneficial, especially next year in laying the foundations for a slowly recovering economy. Perhaps this could be one of the most important elements in stabilising inflation and manufacturers' costs?

Last Friday saw figures confirm what has been apparent to some of us for some time, that we are in a downturn, as the UK's GDP contracted by about 2.0% annualised in the third quarter. This is the first fall in GDP since Q2 1992. The rest of the world may have sneezed, but we seem certainly to have caught the flu,let's hope it is not pneumonia. We have enjoyed 16 years of growth and rude health, and perhaps in the
last few years we have burned the candle at both ends, fuelled by excess borrowing on our credit cards or by equity release. Now we are going to have some time for recuperation as we all pay off our credit card bills and regain our health.

And finally....... News from the US, that must come as a great relief to the Almighty, where it seems that an action against God has failed. Apparently as no address could be provided, the Summons papers could not be served. I thought our local church was the house of God? Yes that might be true, but he is probably not on the Electoral Roll.

Have a good week,

Justin

The land of the free and the stalwart of the capitalist system, America stands as the bulwark against socialism and as the advocate of the free economy. Well, that is the usual mantra but of course not everything is quite as it seems.

Over the past week we have heard some of the leading US politicians railing against creeping socialism (that would be those reds under the beds again I suppose) and the threat posed by nationalising the main banks in the US. Hyperbole, of course, tends to take over at such moments, as no‐one is actually anticipating (yet) taking over the banks, but rather taking strategic stakes in them with some specific strings attached. Given the risks to the very structure of the capitalist system, this is almost the last resort and despite the negative comments from pre-election grandstanding politicians, a very necessary one.

There were also some interesting side comments at the attitude of the Europeans being obviously a bunch of
"pinkos", but it is time for our cousins to take a bit of a check on their own structure. Take a look at the giant US
mortgage guarantee companies, Freddie Mac and Fannie Mae which account for about half of the $12 trillion US mortgage book. Although always operating in the grey world of a government "sponsored" organisation, both have now been taken over and their liabilities now seem to rest quite firmly with Washington.

This may be seen as the exception because of the housing and economic crisis, but in fact state support and
intervention is very much an American economic and political trait. For example, the direct and indirect support
provided to key industries is well known and results in a significant amount of friction with other trading partners. For many years the Americans have argued about the level of state support for the Airbus project which could have never got off the ground (in both ways) without contributions from the key consortium member states. However, the support both direct and indirect for Boeing is rarely cited as being equally reprehensible.

Now let's see if this spreads further? How about the steel industry, the ship building industry and then the ailing domestic car manufacturing industry all of which are the beneficiaries of various levels of state and federal support. In our own country and industry we well remember such state intervention and some may recall its effects as well as costs, but we have learnt our lessons there I believe. I dare not mention farming issues as that is a constant sore between the EU and the USA where both are probably equally at fault in protectionist policies - mostly at the expense of the desperate emerging market farmers.

From a European perspective, this would be seen as being, if not normal, then at least not unusual. In the US there appears to be denial that the state is not only influencing, but further intruding and even owning in some
circumstances.

Possibly the largest area of national expenditure is that of the health service where Medicaid and Medicare are now huge financial operations drawing ever increasing sums from the already stretched government budget. With an ageing population and a weakened economy, this cannot be sustainable. However, in an election year, which politician could ever stand up to announce such cuts and reductions? We know this domestically with the trials and tribulations of funding our own NHS.

In fact when added up, the American government appears far more interventionist than one would expect as the capital of the free market and in financial terms far more than that other apparently socialist den of iniquity - Britain.

Now with the banking system coming under effective government control, one wonders actually what is left?

***

And so the maelstrom moves on. Although the banks are still feeling the effect of the storm, the path of its damage is now heading for the insurance companies. This week we will see further effects falling out of the Lehman Brothers insurance liabilities emanating from their Credit Default Swaps (CDS) exposure. This will ripple through the insurers creating concerns about some of the weaker players. The FSA has already announced that it has been looking at the area, but there is probably little they can do now except to flag up any major areas of distress and try and rally support. However, I have been concerned at various industry meetings that many in the insurance world seem either supremely confident - or is it just blasé and complacent - about the potential risks. The fall out, though, may not immediately surface with the insurers as much as certain over‐exposed hedge funds that may fail and thus cause further ructions.

Last week finally saw the recognition in the markets that Wall Street's woes were now in Main Street as the Dow lurched down again, pulling the global markets down with it. Remember consumer spending accounts for 68% of the US GDP and that is roughly 20% of global GDP - so realisation of the inevitable has finally come, though that demand will be lower and that will flow back to effect both China and Japan directly.

Again all of this is to be expected, so I would ask everyone to remember that this is a cycle and the effects are quite predictable - what are not are the actions or inactions of the politicians.

However, let me proffer some good news. Oil is down and so are pump prices (eventually), other soft and metal commodities are down as well as the Baltic shipping rates I referred to recently. This is all encouraging for the passing of this inflationary bubble and next year will aid any attempt at an economic recovery - albeit a weakened one.

This will also lead the way for further interest cuts especially here in the UK as last week's 0.5% is unlikely to have had any material effect. There is also one other small whiff of improvement with the slightest sign that the LIBOR logjam has allowed a small trickle through and the rates have come down - a bit - actually a very little bit - but better than nothing.

***

And finally.....who said and when...... "I believe that banking institutions are more dangerous to our liberties than standing armies"? Well it was Thomas Jefferson in 1816 - it is good to know that some things just don't change.

So will it work? The truthful answer is that it has to. There is no “plan B”. The rescue package was certainly bold and the internationally coordinated interest rate cut a welcome surprise, but will it be enough to start to clear the log jam?

The banking system is supposed to be a fast flowing river of financial liquidity, capable of providing enough resources for all to draw their water from, whether for direct investment or just day to day financing and cash flow its uses are various and vital. Now this river has changed. It hasn’t dried up, as there is still lots of money and finance around, but it has been jammed and dammed by the detritus of financial losses and loans acting just as much as a barrier as any real logjam.  So as the river can’t flow, its users cannot draw from it and function properly and when that happens, all will suffer.

By the start of last week, there were already real fears of banks running out of cash even for such mundane requirements as salary payments and other short term requirements.  So action to try to bust the log jam moved from being a necessary action to a vital need. Hence then our dear Chancellor’s package being presented, with no doubt the more knowledgeable and experienced hand of Mervyn King being involved.

The measure of this logjam can be seen with the LIBOR (London Interbank Offered Rate) which is set each day and gives an indication of what a group of bankers think that the prevailing lending rates are.  Normally, this rate hovers around the base rate, but more recently it has been over 1.25% higher which is an indication that in effect, the interbank lending market has become stagnant.

The mission thus for Darling and King was clear – blow the logjam with “whatever it takes” (Darling’s and Brown’s phrase) with some financial dynamite to get it moving again. In effect the dynamite consisted of three bundles of explosives the first of which is to inject new capital into the banks;  the second is to allow banks to swap poor quality assets for cash and finally, guaranteeing all bank liabilities.

Certainly a bold plan, with some considerable strength behind it – and certainly a welcome action after the ineptitude of the European authorities at being unable to proffer any form of coordinated response to Hank Paulson’s request following his own proposals.  Frankly we saw all the coordinated behaviour by the European central bankers of fighting cats in a sack. Political naivety and parochialism of the worst kind – and especially at such a potentially dangerous and sensitive moment.

So now it has been announced, the fuse has been lit and we can hear it fizzing as it burns towards the explosives; however, only time will tell whether it will go off like a damp squib, or blast the logs apart.  Personally, I think it might be more British to behave like a Barnes Wallis dam busting bouncing bomb and slowly weaken the dam such that it breaks under its own weight.

The coordinated action on interest rates was also welcome, but the fixation with a half percent around the globe seems a little too simple to me. After all half a percent off the US rate at 2% is proportionately a lot more than half a percent of our 5% equivalent. Frankly a whole 1% would have had a more dramatic impact not just on markets, but on hard pressed consumers and the business world. It would not have recreated a boom, but could at least have provided a more tangible benefit for all suffering the rising costs of utility bills, especially as we move into winter.  Perhaps they could revisit that one please.

So why after all these efforts did the markets just “blow a raspberry and wave two fingers” at all this initiative and endeavour? Well firstly the markets will believe it when it sees it – in a bear market, remember the worst is believed until the opposite is finally proven.  Also, there is the other key matter of the slowing global economy, and the dark and depressing report from the IMF about the threat of a global recession was enough to dampen any limp enthusiasm. So the markets fell away – not unknown in October.

Friday has seen a further lurch down as investors seem to get closer to that somewhat overused term of “capitulation”. However with the US Dow down some 40% from its all time high last year, you can understand their attitude. So this year we won’t have to hunt for Red October – it found us.

Perhaps I can hold out a glimmer of light, the sooner we get through the falls then the sooner we can find a base and maybe start a recovery.  On a five year view there will be a good time to buy back in – in fact good discipline means that we should all carry on our “pound cost averaging” – but across all key asset classes and not just on a shivering equity market.

---------------------------

And finally...you may recall that a clever individual invented a clock to count the total US debt in order to highlight its level and to hopefully embarrass the political leaders into forcing them to reduce it and have the clock count it down. It started in 1989 and showed the outstanding debt at being $2.7 trillion. Unfortunately, they have had a slight technical hitch. As the debt has not reduced but in fact increased, the clock now doesn’t have enough digits so that it has had to be rebuilt in order to reach such an appallingly high level of number and debt. What could the number be now ? How about $11 trillion. Never did like digital clocks.