In this post-xmas Ultraletter:

• Licence Fees: The wrath of JQ befalls another national institution, one common to both the UK and Pakistan
• Rebounding markets: Meanwhile TK has jotted down a few concise cat-notes about current market sentiment.

First up……go on JQ…..Let ‘em have it….!

After spending a great deal of time in both Pakistan and the UK I often find interesting parallels in many facets of life between the two countries. In a previous Ultraletter I mentioned how the scourge of speeding cameras, which are rife in the UK, had also spread to Pakistan in recent years. In this article I shall be focusing on another unwelcome stealth tax which is common to both countries – the Television Licence Fee.

The national broadcasting corporations of both countries, the BBC & PTV, resort to demanding a television fee from almost everyone who has a television. Pakistan does it through adding a nominal supplement of Rs.25 to the electricty bill of each one of its 13.9 million electricity consumer base. Pakistan Television [PTV] started to earn a hefty amount of Rs 4.1 billion annually from 2004 onwards through this method. Prior to this arrangement people had to pay their television fee as a separate tax. This addition to the electricity bill was a hundred per cent jump from what the corporation was earning previously (Rs 2.1 billion from approximately seven million television licence holders in the country.) In the UK the annual licence fee is £139.50 which is paid by more than 25.3 million UK households equating to £3.4 billion of monopoly money for the BBC.

The latest audit report submitted to Dr Shahid Masood, PTV’s Chairman/Managing Director, found some serious irregularities and inefficiencies in the channel’s operations. One serious oversight and missed opportunity was that prime time advertising rates had not been raised since 1999! The comprehensive audit report also pointed out that PTV’s operating cost per employee is Rs 420,000 per annum while revenue per employee is Rs 418,000! Dr Shahid Masood is now being offered other BIG responsibilities elsewhere – perhaps some Pakistani bureaucrat or politician was displeased by his efforts to streamline PTV’s affairs?

As for the UK TV Licence Fee, a recent Ipsos Mori survey asked people whether the licence fee, which raises a total of £3.4 billion a year, was good value for money. A significant 47% thought it was not. Sir Antony Jay the co-creator of classic BBC sitcoms Yes Minister and Yes Prime Minister has asked “what was the point in the BBC spending £200m just to get Formula One away from ITV? How does that benefit the licence fee payer who could watch it on either channel?”.
Is it just me or can you also see the similarities between the BBC & PTV’s affairs, like governmental control, national broadcasters being used as a money making machine and a propaganda tool, heavy involvement of red tape/bureaucracy, inherent inefficiencies etc? The list goes on. Since we are based in the UK I am more dented by the BBC fee so it’s no wonder that the BBC takes most of my attention today.

I strongly believe that paying £6 million per annum for the talents of the likes of Jonathon Ross out of tax payers money just cannot be justified especially during the credit crunch. For those of us immune to his cheeky chappy charms and mundane film reviews £6m p.a. is too much to pay for Jonathan Ross. The fact that a chunk of that fee goes to pay Ross’ sidekicks to laugh at his terrible fortune cookie jokes explains the real reason for those laughs! How can the BBC justify extorting £140 each year from me and 25.3 million others to pay for it?

The BBC is a public service broadcaster funded by a compulsory ransom. In these troubled times why doesn’t the BBC take a 50% pay cut? In the case of Jonathan Ross let’s make a special exception of a 100% cut and release him from his contract to find out if he is as valuable as deemed by the BBC bosses and whether the market holds him in such high regard to be head hunted by another channel for the £6 million salary. The recent Jonathan Ross and Russell Brand affair has tarnished the already tainted BBC reputation by bringing into public focus the ridiculous sums paid to its so called star celebrities. On top of that they could sack a few people keeping in line with all the banks and major UK companies in these tough times and cut out a few obscure channels. Then they would surely be able to halve the license fee or better still get rid of it.

According to figures obtained under the freedom of information request by the Lib Dems last year £10.4m was spent by the BBC on flights, out of which £3.1m went on business or first class tickets. The BBC’s own guidelines say that flying business class should only happen in ‘exceptional circumstances’. Party transport spokesman Norman Baker said the costs were “staggering” and money should not be “splashed around”. Mr Baker also said “It is hard to believe that there can be £3m worth of exceptional circumstances in a single year”. The BBC spent just under £5m on train tickets last year, about £520,000 of which went on first class travel. This total for 2006/07 was £4.8m. So why is it so important sending a bunch of reporters to foreign countries for reporting the same news from multiple locations in the same country? Surely one person would be enough! It just seems like the BBC enjoys squandering our money.

This just in… surprise surprise! Yet another example of the constantly falling standards at the British Broadcasting Corporation. The below findings conclude Ofcom’s investigations of audience participation in the BBC programmes broadcast up to and including 2007:

[Thu, 18 Dec 2008 10:36] Ofcom has today fined the BBC a total of £95,000 for breaches of Ofcom’s Broadcasting Code (“the Code”) in respect of its services Radio 2 and BBC London 94.9FM. The fines have been imposed for the unfair conduct of competitions. Ofcom has found the BBC in breach of Rule 2.11 of the Code (“Competitions should be conducted fairly…”) for inviting listeners to enter competitions in pre-recorded programmes that were broadcast ‘as live’.

Ofcom considered that these breaches of the Code were serious. The investigation found that BBC had repeatedly taken pre-meditated and deliberate decisions to include audience competitions in pre-recorded programmes. The BBC invited listeners to enter these competitions at the time of the broadcasts, in the full knowledge that the audience stood no chance of either entering or winning.

The full adjudications are available on the Ofcom website here

Perhaps if you didn’t actually think it was okay to force an entire country to subsidise the viewing habits of a decreasing BBC fan club this would not be happening. Next is the issue of compulsion of payment. People are given no choice about whether or not to pay for the BBC. If they have a TV they must purchase a licence. That to me and all of the people who signed this petition at www.petitions.number10.gov.uk/FairpayTV/ is unacceptable. This petition which was submitted by David Cormack at the Number 10 Downing Street website asking the Prime Minister to “Abolish the UK TV licence and permit advertising and other means of finance generation to the BBC” had this response from the government:

“During the latest review of the BBC’s Royal Charter (completed in 2006), the Government considered whether the television licence was still the best way to fund the Corporation. We also sought the views of members of the public on this and other BBC issues as part of the Charter Review consultations. When compared with the alternatives, the television licence fee was widely considered to be the best way to pay for the BBC for the period of the new Charter that is to say until 2016. None of the alternative funding options would enable the BBC to continue to provide its full range of public services while safeguarding the Corporation’s independence. It was therefore agreed that no changes would be made. We intend to review the scope for alternative funding mechanisms once we have the conclusions of Ofcom’s review of public service broadcasting (due to be completed in 2009). This will take in account the final costs of switchover and the outcome of the wider review of Public Service Broadcasting (PSB) funding to which the Government committed in the Charter Review White Paper”.

John Lloyd writes in the Financial Times in his article The Shadow of Prison Bars on TV Screens :
This ad which was put out by consortium of companies contracted by the BBC TV Licensing is a disaster. You may have seen the posters of a huge memory chip which, vastly magnified, looks like a cityscape. Beneath it are written the words: ‘Every unlicensed address is in our database. Evasion is not an option’ (look on my database, ye viewers, and obey!). What are they thinking of those who collect our TV licence money? It reminds us that if we have a television we must support the corporation on pain of criminalisation (licence fee evasion accounts for more than half the criminal convictions among women.) It does so by giving substance to a “surveillance society” as mentioned in the George Orwell novel Nineteen Eighty Four where Big Brother spies on the population through telescreens.

TV Licence Evaders Beware - Big Brother is watching

A spokesman for TV Licensing said: “If you only watch the iPlayer and watch or record no live programmes, you don’t need a television licence, although very few people are likely to do that.” What that spokesman forgot to mention is that more than 700,000 viewers are downloading BBC programmes every day through the iPlayer service. Launched at the beginning of this year it is expected to have one million daily users by Christmas and can be watched without a licence fee!

Mark Thompson, the Director-General of the BBC, spelt out the limits of the current system when he told MPs on the Culture Select Committee that “if you watch live television through a mains powered device, you have to pay a licence fee” and that “live content is the key point in the current definition”. Most content on the iPlayer has been transmitted previously so the service is not classified as live. Don Foster, the Liberal Democrats’ culture spokesman said: “It does look like the BBC have shot themselves in the foot a little by creating this licence fee loophole with the iPlayer.”

The BBC is funded by TV License fees paid by anyone in the UK who watches television. They don’t have to watch the BBC but have to pay this license fee in any case. Although it is called a “fee”, since you have to pay it regardless of whether you receive the service it is actually a tax and was recently officially acknowledged as a tax. So by calling it a “fee” are they not misrepresenting something that is a tax?

Looking at this TV tax deeply with the help of ultranomics spectacles you will find that it’s not just that it’s a nuisance for TV viewers of all denominations, whether BBC watchers or not, it also has far reaching implications like forcing poor families, especially women, into criminality as mentioned above. According to the Daily Express of 24th November 2008, last year the BBC prosecuted more than 150,000 people for licence evasion. It is claimed women are much more likely to be caught because they are more often at home during office hours when the TV inspectors usually call. In the The Howard Journal of Criminal Justice Christina Pantazis & David Gordon have stated that “The purpose of this paper is to identify and address important gaps in criminology regarding the extent and nature of female criminality. A neglected area of academic interest is investigated namely offences relating to television licence evasion”.

The BBC should find a way to place their usage taxes on the signal and not the device itself. Why can they not make it a pay as you go subscription service which is technically possible and practiced by Sky premium movie channels and many Asian channels like Geo TV, Sony ARY Digital etc. or better still abolish the fee altogether like Australia and many other countries did and make it free by resorting to advertising and by selling BBC “quality” programmes internationally. It’s just not fair to keep demanding ever increasing TV tax from people who feel the BBC does not suit their tastes and who have a lot of alternatives to watch instead. Maybe a zero tolerance approach to government bureaucracy might work as mentioned in this edition of The Daily Reckoning.

For PTV I would say it should now be privatised because gone are the days when we used to have quality comedy programmes like fifty fifty or dramas like waaris which had a cross border fan following and had the actual effect of bringing traffic to a standstill whilst live on-air. School children bought each episode in small pocket size story books [I was one of those kids]. With the advent of private channels and the Indian media invasion PTV now stands for Purana [old] Tele Vision rather than what it used to be i.e. Pakistan Television.

For the BBC I would like to quote an excerpt of an article written by Emily Bell of The Guardian newspaper “We are still no nearer to deciding what exactly the BBC is, given that it is now much more than a broadcaster”.

jq@ultranomics.com

False hope and bouncing cats?………..TK elaborates……..

Are you sick to death yet of the credit crunch/subprime crisis/global meltdown/worldwide recession ? Have we missed any of the Armageddon terminology being used these days? Probably – so please, email us with your suggestions and we will publish a full list in the next Ultraletter.

The thing is, the current situation unfolding across the world is the worst of its kind for a generation. This one is the big one – a recessionary storm of tsunami-scale proportions. Yet tell us, dear dedicated readers, does it feel that way to you? Deep within are you feeling the fear and the panic? Do you lie awake at night and feel sick through the day?

For those currently threatened with repossession or job loss, the answer to this question will undoubtedly be yes. Yet for the vast majority of us, we suspect that it still feels like just another scary news story, albeit one that has been going on for longer than most now. We know something bad has happened and we can see that prices of houses in our street have fallen a bit. But nausea and panic? …..Not really.

Take for example the stock market. After spending the first half of 2008 well above the 12000 mark, the Dow Jones Index fell to a low point of 7552 on Nov 20th. Yet since then there has been somewhat of a retracing and the Dow Jones ended the last week at just over 8400. Overall this was a positive week for the stock market, despite President Bush (fresh from dicing with the deadly dinner shoes) agreeing a multi-billion bailout for the obviously terminally-ill american car industry, and in spite of the desperate rate cutting by the Fed to a record low of 0.25% with the promise to print as much money as needed to bailout the nation, prosaically called ‘Quantitative Easing’.

a misleading stock market indicator

There is no doubt that if my pet cat was thrown from the top of the Empire State Building and then observed to spring back up off the pavement (sidewalk) – there would be a truly heartfelt impulse to believe that the pet had survived the fall. Yet one’s intellect would still be the best judge and we would realise, if we were sane people, that more than likely the moggy is indeed dead.

Unfortunately, the share traders and financial pundits out there are still listening to their hearts right now. They are hoping against the odds that tiddles the cat is still alive and has merely sprained a cat-ankle which is already on its way to getting better after a few shakes of the leg.

We on the other hand, remain with yellow pages in hand, looking for the number of the nearest pet cemetery.

You too should be very wary of this bounce. This is danger territory friends – a classic post bubble bounce. Much of it is down to technical traders trying for some short term gains. There are also short sellers in there, covering their trades. But also, average people still have hope left in them. They still remember the good times. Something in them thinks that the good days have just taken a breather and no doubt will be back again some moment soon. There are those who are counting on Obama doing a magic trick in early 2009 and lifting the economy with his bailout initiatives. The recent decline has not been internalised. People still view it all as some phenomenon that is in major part affecting those other than themselves. They look pitifully at their poorer neighbours who are obviously feeling the pinch. So the fall becomes a ‘buying opportunity’. The financial pundits are complicit – they tell us that stocks always go up in the long run. While this is no doubt true, it still doesn’t mean this is the time to pile in nor does it inform us as to how long the long term might be. The element of ‘risk’ is perhaps still being misunderstood at this juncture.

These ’sucker rallies’ happen in bear markets, we all know that. We are still too hopeful and curiously watching the show, chatting about it, considering whether or not to make a ‘play’ or sit it out some more. We see the daily doom, the companies in strife, the unemployment levels rising and the repossession levels growing. But still the worldwide indices are holding their nerve. We would humbly suggest that weighing things up in total, it is not worth taking upwards bets at this point, even though there may be some sorely tempting rallies in the next 6 months.

If you really believe in buying and holding, and do not mind the long term being more than a decade then we are sure that buying into high quality best-of-breed companies will work out well over that time frame. However if you are aiming for an investment span of 5 to 10 years, then be exceedingly careful with your selections.

When your neighbours look like this, time to buy shares again!

tk@ultranomics.com

23rd November 2008, TK

With America in the throes of its worst slump since the 1930s and the rest of the world not far behind, Americans have been keen to latch on to any glimmer of hope they can find – Barack Obama’s recent election being a case in point. Hopes and expectations are riding high on the new president elect and a wave of optimism could be felt washing over the country during the recent elections. The public turned out in record numbers to vote, in fact it was the highest turnout since 1960, when JFK beat Richard Nixon to take over from the outgoing Dwight Eisenhower. JFK promised “to get America moving again” after claims that the Republicans had allowed America to fall behind the Soviet Union in the Cold War, militarily and economically. He managed to win the election, albeit closely, despite widespread prejudice against his Roman Catholic faith, with people fearing he would be taking orders from the Pope. A case of hope and optimism winning over prejudice and fear? We’d like to think so. In any case, some interesting parallels with Obama. No doubt in both cases, the film star personas also helped to win over the celebrity-loving US denizens.

“During the Depression, when the spirit of the people is lower than at any other time, it is a splendid thing that for just 15 cents an American can go to a movie and look at the smiling face of a baby and forget his troubles.”
-President Franklin Roosevelt

Hope and optimism also manifest in films directly during times of economic strife. The era of musicals in the 1930s, during the last Great Depression, gave rise to hits such as Gold Diggers of 1933, 42nd Street, and Footlight Parade, which all portrayed the possibility of ‘making it through’ with hard work and perseverence. The Wizard of Oz provided escapism and fascinated audiences in 1939, following Dorothy as she was whisked away from black and white Kansas to the far off and beautiful, ‘Technicolor’, Oz, yet asked that in the end the audience believe that “there’s no place like home”.

   

Film Posters: 42nd Street (1933), Footlight Parade (1933), The Wizard of Oz (1939), Star Trek (2009)

Coming up to date then, what of the next couple of years? Perhaps we should be looking forward to some spirit-lifting Hollywood movies for some years to come? The wane of the Horror slashers and Vampire Slayers then?……Perhaps.

In fact only yesterday I was watching a trailer for the new Star Trek movie, due out in May 09. As an aside, it seems there is a current fashion with film franchises of “returning to the beginning” or doing prequels, with recent examples such as the Bond and the Batman films (both superbly done in our humble opinion). And so it is with Star Trek – J.J. Abrams, the creator of LOST, is going back to the beginning and giving a new edge to Kirk and Spock (I wonder if he considered renaming it ‘Lost in Space’??) At first look it appears to be one movie worth waiting for. But I would say that, having been a bit of a Trekky in my time.

Star Trek is known for its utopian view of the future. A future where all of humanity has reconciled its differences and the entire planet is at peace. There is no hunger and no poverty. Maybe because in the Star Trek 23rd century, neither is there any longer such a thing as money! Everyone has whatever they could need, and instead we pursue higher goals such as self advancement and exploring space. So, perfect escapism from the current world, the new Great Depression of the 21st century, and the rampant warring across the globe.

A world where those pesky somali pirates are still holding on to their loot over in the Gulf of Aden, the Saudi ‘Sirius Star’ with its 25 crew and 2 million barrels of oil. They don’t want much in ransom either, only $25mill in return for the $100mill cargo. What an insane world, where pirates are still able to do roaring business. This year alone they’ve managed to attack 95 ships, hijack 39 of them and collect $50mill in ransom. Not bad work for those with serious disabilities such as one eye or a missing leg. Abu Hamza could get on to a nice earner if he got bored of the preaching.

What with the ever present Israel-Palestine issue, no end in sight in Iraq or Afghanistan and now bombings all over Pakistan, the world is about as dangerous a place as I can remember. Not that I want to do the work of the NeoCons for them, but that’s just the way it will always be while people quibble over finite commodities, whether it be land, oil, water or food.

Perhaps one day the Americans will finally colonise the moon and mars, begin asteroid mining, and manage to harness direct solar energy and beam it all around the world for free. And maybe one day the guys at CERN in Geneva will manage to capture enough antimatter and in partnership with the Russians build a stable containment system for it. And perhaps, just perhaps, some brilliant Pakistani and Indian mathematicians will do some out of the box thinking and instead of VAT fraud, they will engineer the world’s first prototype Warp Engine. Then maybe the Chinese and Japanese will do a joint venture (for a fraction of the cost and twice as fast as the Americans) to build the first Galaxy Class Space Ship, with the whole venture under the watchful eye of Richard Branson no doubt.

Will we ever really make it to that utopian 23rd Star Trek century we wonder? Well as pakistanis, indians, chinese etc. we had better be trying extra hard. As nations of the Asian subcontinent if only we could realise the futility and wastefulness of our quarrels and wars, maybe our efforts could be directed to peaceful coexistence, partnership and mutual advancement. After all, Star Trek must be proved incorrect in one way, and that is that there will indeed be a pakistani on board the Enterprise one day. You bet!

As Jamshaid steps onto the Bridge he gives his Salaam to the Crew

as jq ponders on his next car……


Speed Cameras – Big Brother’s Ever Grazing Cash Cows

23rd November 2008, JQ (co-editor)

Ever had a feeling of being watched? Well I did today as Specs3 stood still watching with his peering eyes waiting for one wrong move, my hands were stiff, my knuckles went white due to my tight steering grip, my eyes were aching due to the constant monitoring of speedometer and traffic, my right foot was trembling for fear of pushing too hard on the accelerator and getting caught by the dreaded average speed camera and I had only done about 500 meters out of a 5 mile stretch at 40mph limit! I would be over the edge any second now.

The Specs 3 gatso

Can anyone hear the climatic horror movie music when the dude is about to get it? Ching ching ching AAAAH. Well ching ching ching was the cash clocking music to the ears of the British Government and guess who gets stabbed countless times everyday? The poor British motorist that’s who!

The Association of British Drivers, which campaigns against speed cameras also made an interesting point about the Specs3 as they would make, “People put the car in cruise control and the mind in neutral. It’s so boring driving through these sections at a constant slow speed that people are going to drop off.”

Maybe I’m missing something here, but why does the UK government allow cars to be sold that are capable of achieving almost twice the 70mph speed limit which was set back in 1977 when the Ford Anglia had a stopping distance of 2 miles or so. If according to their laws no cars should ever go over 70mph why don’t they simply force the car manufacturers to install speed limiters in every new model and fit one in every existing car during the yearly MOT? The simple answer is that they don’t want to because the UK government would make less cash from the car industry & less cash from the speed fines.

Every UK driver has to go through the stringent British road test which tests the drivers to their limit. Oppressive tactics by the police like constant detection and dictation are an insult to their intelligence and road manners. The new average speed cameras known as Specs3 will appear in clusters of 50 working in a network and will monitor “every” driver’s average speed as they travel. Not only that but an ‘eye in the sky’ helicopter targeting speeding motorists in Essex at a cost of £1,000 an hour is adding misery to the once enjoyable driving.

This recent Canadian report (Review and Analysis of Posted Speed Limits and Speed Limit Setting Practices in British Columbia) has a clear view of the role of speed limits and speed enforcement.

It includes such straightforward common sense items as:
• The majority of motorists drive at a speed they consider reasonable, and safe for road, traffic, and environmental conditions. Posted limits which are set higher or lower than dictated by roadway and traffic conditions are ignored by the majority of motorists.
• The normally careful and competent actions of a reasonable person should be considered legal.
• A speed limit should be set so that the majority of motorists observe it voluntarily and enforcement can be directed to the minority of offenders.

Ready for another eye opener, this time from the Australian police! Apparently a recent survey by the Herald Sun has found that more than 70 per cent of Victorian police believe speed and red light cameras are more about revenue-raising than preserving road safety. A point every motorist [or majority of] has tried so very hard to get across.

The politicians will keep on preaching that speed cameras are there to promote safety and the high fines associated with them are just to slow people down, well this is a baseless argument because the truth about this hypocrisy is coming out. The UK Department for Transport first funded and then suppressed a study that shows a 55 percent increase in injury accidents when speed cameras are used on highway work zones and a 31 percent increase when used on freeways [or non freeways as I would like to think] without construction projects. According to the Transport Research Laboratory, the “non-works [personal injury accident] rate is significantly higher for the sites with speed cameras than the rate for sites without.” You can see the full report here.

Sher Shah Suri turns in his grave wondering why he didn't think of Speeding fines

So what should the regular Joe think about BBC Topgear now when he sees the likes of Jeremy Clarkson, Richard Hammond and James May blast their gravity busting 500bhp+ monster machines? Is this entertainment or fact based “drama”? Where are those roads where they drive at a million miles an hour without the fear of any Specs3, gatso or speed camera ever passing them by? Why is it that the average Joe is now under the £1000 an hour surveillance eye in the sky?

With modern technology there are better ways of keeping drivers to the speed limit. Unfortunately none puts money in the government’s, council’s or police authorities’ pockets. It would be perfectly possible to install a GPS based device, not dissimilar to a SatNav, in every car, telling the driver what the speed limit is for that stretch of road. The signal would automatically change when the car entered the next speed zone. Should the car be speeding (easily assessed from either a gps signal or directly from the speedometer) an alarm in the vehicle would sound, alerting the driver to the fact he is going too fast similar to the ones installed in BMW cars. The only way of silencing the alarm being to get the speed back under the speed limit. This ensures the driver’s attention is fixed on the road and it’s hazards, not constantly watching the speedometer. Attention to the actual driving is increased and therefore the roads made safer. No need for [you should have gone to] Specsavers Speksy3 and other gizmos – but I don’t see that happening because how then would the UK government milk its cash cows?

But there is still hope for the joy of driving as long as good Samaritans like Swindon councillor Peter Greenhalgh are taking the common sense approach. It is after he objected to the central Government receiving all the cash from fines while Swindon council paid £320,000 a year for the cameras’ upkeep that the Swindon Borough Council became the first to ditch the yellow boxes. Now towns all over the country are joining the rush to get rid of fixed speed cameras. Portsmouth, Walsall and Birmingham may copy Swindon in ripping out the hated cameras, and others are expected to follow suit.

jq@ultranomics.com

…..continues below……

lastly, some more down-to-earth economic dishes, served cold by tk…….

Here in the UK on Friday, the Council of Mortgage Lenders revealed that the number of properties repossessed rose by 12% to 11,300 in the third quarter of 2008. The number of borrowers in arrears went up by 8% compared with the previous quarter, to 168,000. Watch out readers, those of you with cash in your pockets and iron-clad hearts will have ever increasing casualties of the crunch to pick over in the coming months. We expect a yet larger wave of repos in the next few months, as the earliest defaulters (those who went backrupt a year ago) come to the end of their 12 month grace period which they were given if they had a wife or kids (or both). A Charles Dickens christmas is forecast across much of the country.

In the US on Thursday, Detroit car makers went up Capitol Hill to fetch a pail of money. Unfortunately they came tumbling down without a crown! Boo hoo. The silly sods went with begging cap in hand, yet when asked by congressional leaders how much they wanted and what for, they sat there scratching their heads like Stan Laurel (you remember Laurel & Hardy don’t you??). The Californian Democrat, Nancy Pelosi, who is the Speaker of the House of Representatives, said that the 3 Amigos, the bosses of General Motors, Ford Motor and Chrysler LLC have 12 days in which to come back with a viable plan of what they need and how they’re gonna spend it. Can you imagine going to see your bank manager and asking for a loan, then telling him he can give you as much as possible although you’re not sure what you want to spend it on yet. What a hoot!

As well as record levels of idiocy and farce, it seems the US is setting records daily across the board. The share price of General Motors hit $1.27, the lowest since 1938 ( a year before The Wizard of Oz). The US unemployment claims have hit 4 million – the highest since 1982 and factory output is now the lowest since 1990. Oil closed at $49.62 (the first time its been below $50 since 2003). Furthermore it seems that the cost of living in the US is falling at its fastest rate since records began in 1947. That might be much worse than it sounds. The same thing happened in Japan in the 1990s where the domino effect of dropping prices meant consumers wouldn’t buy large items since they’d be able to get them cheaper if they waited, leading to catastrophic demand slump and hence further price falls. Already in the US, retailers have begun to go out of business literally overnight. The double-edged sword of deflation might appear great for the consumer, but is in fact a guillotine to the neck of the economy. More detailed commentary on the deflation issue is promised for a future Ultraletter…..

Have a great week readers and we promise to catch up with you again soon.

tk@ultranomics.com