We Are All Doomed…..Maybe, and More Green Washing from Up Global

The media reports on COP27 suggest we are all doomed as it is unlikely that we will keep to the target of 1.5 degrees of global warming. This is an unduly pessimistic outcome. A rise in temperature can actually be beneficial in many parts of the world, if damaging in others.

It is certainly sensible to try and reduce carbon emissions in the long-term but there needs to be a cost/benefit justification and a focus on countries that are the biggest carbon emitters – namely China, India, USA, and Russia. For the UK to aim for net zero makes no economic sense.

Meanwhile the UK Government has committed £11.6 billion to a “climate fund” to support a mix of energy transition, climate financing and forest and nature preservation measures. Some of these may be worthy objects but can the country really afford many billions on such projects when our own population is suffering from shortages of food and heating?

There is also a demand for “reparations” for the damage that has been caused by high carbon emissions that has resulted in floods and droughts. That is debateable to begin with and it ignores the benefits brought to the world by the cheap energy available from oil and gas. That has increased food production and enabled the world population to increase to a level that would otherwise have starved. See the book “How the World Really Works” by Prof. Vaclav Smil for the evidence on this subject. Reparations should certainly therefore be rejected.

I am certainly not supportive of the Just Stop Oil campaigners who are simply irrational and I will continue to invest in oil/gas companies but not in coal mining companies while I have been investing in alternative energy funds. Burning coal is a bad option in comparison with generating electricity from wind farms, hydro-electric schemes, solar arrays and other projects.

But we do need to reduce the world’s population if we are to improve the environment which is an objective most of the climate campaigners simply ignore.

Companies are of course jumping on the bandwagon of “green-washing” by issuing policy statements that support ESG policies. The latest example in my stock market portfolio is from Up Global Sourcing (UPGS) who announced today their ESG strategy. This includes a commitment to net zero Scope 1 and 2 and emissions by 2040 and net zero Scope 3 emissions by 2050. Other commitments are:

  • 50% less plastic packaging by 2025 (compared to a 2019 baseline), with the remaining plastic packaging to contain an average of 30% recycled content and be 100% recyclable or reusable.
  • Gender balance in leadership roles by 2030.
  • 40% of Board representation to be female by 2025.
  • 20% of UK workforce to be made up of ethnic minorities by 2030.
  • 60% of UK workforce to be recruited from the local community by 2030, versus 47.2% % today.

Simon Showman, Chief Executive of the company commented: “Striving to do the right thing has always been core to everything that Ultimate Products does”. Surely we can do without such platitudes. As regards the stated objectives it’s worth bearing in mind that the directors making such commitments will likely be long gone by the dates promised. Am I a cynic or just a realist?

Meanwhile the company is part of the global economy with production of the products it sells in the Far East (87% from China) and being shipped thousands of miles via polluting ocean-going vessels burning oil.

If that makes economic sense then I am happy for them to carry on but we could do without the “holier than thou” commitments.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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The Economy, Politics and Financial Fraud

With not a lot happening in my stock market portfolio today, I have some time to comment on wider issues. With the USA Federal Reserve raising interest rates and the Bank of England doing likewise, there is clearly a commitment to tackle inflation aggressively. This will undoubtedly put a damper on the economy in due course and lead to a recession in the UK as has been widely forecast anyway.

Is raising interest rates wise at this time? I think it is because the era of cheap money (i.e. when it was possible to borrow money at less than the rate of inflation) should never have been permitted.

We still have very low unemployment rates from a historic perspective while the Government is still handing out money in the form of energy support cash which it has to borrow to fund. The Government also remains committed to the “triple-lock” on state pensions to protect the elderly such as me which I find simply unjustifiable when the rest of the population have no such protection from a rising cost of living.  

The concept of a “balanced budget” where taxation matches Government expenditure has been forgotten and the excuse of keeping the economy afloat in the face of the Covid epidemic has been used to justify excessive spending.

Meanwhile the cost of asylum seekers and illegal immigrants is enormous with as many as 1 million illegal immigrants in the UK. Nearly £1.3 billion per year is now being spent housing asylum seekers, with costs likely increasing as dinghy arrivals rocketed over the summer

The rise in small boat crossings in the English Channel is driving the migration figures with at least 40,000 arriving that way in the current year and claiming asylum. A large proportion are young men from Albania who are economic migrants. See this BBC analysis for the data: https://www.bbc.co.uk/news/explainers-53734793

The Government seems incapable of stopping this “invasion” as the Home Secretary recently called it despite the UK having historically a strong navy. In reality the UK navy has spent billions of pounds on large aircraft carriers (£7.6 billion for two) which are white elephants in modern warfare while it has insufficient border patrol vessels or is unable to use them effectively.

Other parts of the UK economy are in a parlous state with the transport network being horribly congested while as much as £45 billion is being spent on Phase 1 of HS2 alone – another expensive white elephant. At the same time terrorist organisations aiming to achieve their objectives by undemocratic means such as “Just Stop Oil” are allowed to disrupt the transport network and divert police operations at enormous cost.

The NHS is at breaking point with costs rising but simply having enough staff, hospital beds and ambulances seems to be incapable of being provided.

The level of fraud and crime in general is rising and it’s worth reading the recent report of the Parliament Justice Committee on fraud in the UK. Here are some brief extracts:

“Justice response inadequate to meet scale of fraud epidemic. Prioritising traditional forms of crime has left the justice system ill-equipped to deal with continuing rise in fraud, the Justice Committee has found.  

The Committee finds that the level of focus from policing is inadequate to deal with the scale, complexity and evolving nature of fraud. Only 2% of police funding is dedicated to combatting fraud despite it accounting for 40% of reported crime. Lines of accountability are confused with responsibility split between local and national forces. Action Fraud has proven itself unfit for purpose and while a replacement reporting system is expected in 2024, victims should not have to wait this long to see improvements in the service they receive.  

In addition to a lack of investigation of fraud crimes, there is also a lack of prosecution. The ONS estimates that there are an estimated 4.6 million fraud offences each year, but in the year ending September 2021 just 7,609 defendants were prosecuted for fraud and forgery as the principal offence by the CPS.  

Chair of the Justice Committee, Sir Bob Neill MP said:

Fraud currently accounts for 40% of crime and the figure is growing. People are losing their life savings and suffering lasting emotional and psychological harm. But the level of concern from law enforcement falls short of what is required.

We need the criminal justice system to have the resources and focus to be able to adapt to new technologies and emerging trends. The current sense of inertia cannot continue, we need meaningful action now.”

There is currently an epidemic of fraud in England and Wales. The number of cases has grown steadily over the past decade and accelerated rapidly to unprecedented levels during the pandemic. This trend has shown no sign of abating as the country returns to normal life. Around 875,000 cases are reported each year, however the Office for National Statistics has estimated that the real number could be as high as 4.6 million. 40% of recorded crime is now fraud and is calculated to cost society £4.7 billion a year”.   

It’s altogether a quite depressing picture of the UK economy, and of our legal and democratic systems that seem unable to respond to these problems in any reasonable timescale. Meanwhile UK politicians seem happy to focus on trivia such as woke issues.

Even the weather has turned bleak and life is thoroughly downbeat.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Financial Stability with Sunak?

It looks like Rishi Sunak has a good chance of becoming Prime Minister after Boris Johnson withdrew his challenge with a judicious and well phrased statement. I welcome Sunak who I always thought was the best candidate and his financial background should at least mean that he understands how to manage the economy and stabilise markets – the same cannot be said for Penny Mordaunt.

Liz Truss and her Chancellor did not seem to comprehend that the UK cannot plough ahead with massive tax cuts and increases in Government borrowing without considering the international reaction from the IMF and those who would need to finance the borrowing.

Neither they nor the advisors in the Treasury and the Bank of England seem to have learned from history. Back in 1974 after a boom generated by Barber the Conservatives lost an election to Labour but by 1976 Harold Wilson had resigned and James Callaghan faced a run on the pound, The UK Government had to go to the IMF for a massive loan obtained with promises of budget cuts.

The moral is that the UK cannot make financial decisions about the economy and Government debt without taking into account the reaction of lenders. The Prime Minister and Chancellor might have thought they were masters of their own destiny but they were grossly mistaken about the real world we now live in.

Barber’s tax-cutting boom also generated high inflation so you can understand why the international financial community ran scared in the face of another similar result. That raised the spectre of falling gilt prices and higher gilt yields thus destabilising both gilt and equity markets. Pension funds were badly affected because of the LDI investment strategies used by pension funds which caused them to dump property funds.

Liz Truss does not seem to have realised that the UK is a small player in international financial markets. The UK cannot act regardless of the opinion of others however attractive it might be to play to the home crowd by pushing for a “growth” policy.

Perhaps she was badly advised by those too young to remember past events in history. But Rishi Sunak had a different plan which we will no doubt now fall back on.

Some people have called for a general election at this point in time but the last thing we need is several months of political knock-about theatre. That would not inspire international confidence. Sunak should help to stablise markets even if he has some tough problems to cope with such as the ongoing energy crisis, war in Ukraine and high inflation. But my view is that a Sunak premiership should be good for the UK stock market.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Financial Stability It Ain’t

With the appointment of Jeremy Hunt as Chancellor, we have now had four different Chancellors in a matter of a few months. What will overseas investors who dominate the markets make of this?

It will surely not instil confidence in the stability of the UK and its financial management. Liz Truss has not helped by apparently backing tax cuts and then now back-tracking on those commitments. Corporation tax will now rise as originally planned making the UK a less attractive place to invest. The Truss “high growth” strategy is floundering.

The gilt market is gyrating as the Bank of England planned to halt further QE and then changed its mind to stabilise the market while the FCA has allowed pension funds to pursue risky investment strategies which led them into panic selling of property funds and other assets.

Let us hope Mr Hunt can halt this merry-go-round. But what future is there for Ms Truss as Prime Minister? Not a long one in my view. She has not demonstrated confident leadership and her public statements have been quite dire. In a few months I think she will be gone.

I have decided to join the Conservative Party so I might get some say in who will lead the Party in future. I have supported the Party in the past – for example I helped Boris Johnson become Mayor of London although that turned out to be a questionable decision after London became the cycling capital of the world and the road network was severely damaged. But I never joined as a Member.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Woke Inc and the Corruption of Capitalism

I have been reading the book Woke, Inc. by Vivek Ramaswamy. It’s not a very good book in my opinion so I will not do a detailed review but it does highlight how corporate profits are being diverted to social causes, good and bad, in the USA. It enables directors of public companies to espouse their favourite causes and signal their virtues while shareholders pay the cost of this munificence.

This largesse is also spreading to the UK. Recently Shell UK announced that “British Cycling has signed a long-term partnership that will bring wide-ranging support and investment from Shell UK as a new Official Partner. The agreement starts this month and runs to the end of 2030. This new partnership will see a shared commitment to; supporting Great Britain’s cyclists and para-cyclists through the sharing of world-class innovation and expertise; accelerating British Cycling’s path to net zero…..”. David Bunch, Shell UK Country Chair, said:  “The partnership reflects the shared ambitions of Shell UK and British Cycling to get to net zero in the UK as well as encouraging low and zero-carbon forms of transport such as cycling and electric vehicles”.

Some cyclists promptly accused the company of “greenwashing”, i.e. offsetting their oil/gas pollution by pretending that their profits are going to good causes. But as a shareholder in Shell I object to them redirecting their profits which should go to shareholders to other purposes. Particularly when the clear objective seems to be to reduce consumption of the company’s products.

But companies are now also interfering in politics. So Paypal has been closing the accounts of people and organisations that hold dissident political views. They even closed the account of a UK group that campaigns for free speech. They closed the account without warning, and companies such as Facebook and Twitter have been censoring users who espouse unpopular political views.  

The author of the aforementioned book has even launched two ETFs that explicitly aim to pressure companies to drop efforts to diversify their workforces and their focus on climate change according to an article in the FT. That’s contrary to the stance of many institutional investors such as Blackrock. Ramaswamy says: “In reality, companies like Blackrock, and in particular their leaders, are using social causes as a way of assuming their place in a moral pantheon. And in the process, they’re quietly dropping hints to consumers to take the bait and make purchasing decisions on the basis of moral quality rather than product attributes alone…. Woke consumerism is born when woke companies prey on the insecurities and vulnerabilities of their customers…..”.

Ramaswamy argues that capitalism is being corrupted and companies are abusing their public trust.

Businesses have now gone far beyond the promotion of the interests of stakeholders as well as shareholders (reference Section 172 of the Companies Act). Racing cyclists (the main focus of British Cycling) are hardly a stakeholder in Shell.

Yes they are “greenwashing” and they should not be wasting my money on such trivia.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Preparing for Power Cuts

The Government seems to think we will be able to muddle through in the same old British fashion but I am getting prepared by thinking ahead. It’s not going to be as easy as it was 50 years ago when miners were striking in the 1970s as so much now depends on electricity.

National Grid have warned that power cuts may have to be imposed this winter for periods of hours because of a shortage of gas which is the largest source of electricity generation. If there is a very cold spell, supplies of gas are cut off from Russia which is already happening, and a combination of other negative factors occurs then we will be facing a bleak mid-winter.

You might have gas central heating but your boiler won’t operate without an electricity supply. Are you working from home? Forget it because your PC or laptop will shut down along with your wifi router. Even your 4G phone signal may fail as phone masts only have a few hours back-up battery supply.

I have checked out our two old oil lamps (photo of one above which I have polished) to see if they still worked and they do, with some oil remaining in them. Can be lit with a few matches.

We also have a gas fire in our living room that can be lit manually with a match which will suffice – it’s rare for a domestic gas supply to be cut off because, so far as I recall, to do so creates problems when the supply is reconnected requiring a visit to every household in case a pilot light needs lighting. Industrial users would no doubt be cut off first.

But I probably should not have thrown out a paraffin room heater a few years ago – however they are still available and cheap.

As regards electronic communication, my broadband supplier (BT) provides auto switchover to a 4G connection if the broadband goes down but I don’t think that will help if the router loses power. I had a quick look at UPS systems but these are mainly of help in providing a gentle power-down. They typically only provide a few minutes battery time unless you spend a large amount of money. If you want hours of back-up you need a diesel generator. I doubt the expense of that is worthwhile.

A mobile phone like my iPhone 13PRO will operate for two days without a recharge so that should cope with lengthy power cuts. But if your phone has a shorter life then you need a “powerbank” which can give you many hours of power. They are readily available and not expensive. It could also support notepads as well as phones but laptops and PCs are another matter.

In extremis I could power my laptop in my car because I have a converter that plugs into the car auxiliary socket and supplies a 230-volt normal 3 pin socket. I can then probably tether my laptop to a 4G signal via my phone.

This might enable me to continue trading my stock market portfolio one way or another but will the stockbroking platforms and the LSE continue to function? I have no idea. I hope they are thinking ahead at the moment on how they can operate if power cuts are widespread.

A diesel or petrol car can supply many days of power but those folks who have bought plug-in electric vehicles might have difficulties if there are lengthy power cuts.

The above covers my personal “resilience” on power supply but nationally we seem to be in a really dangerous position. The Nord Stream gas pipeline was apparently easily damaged by some malicious act – probably Russian, but electricity interconnectors which we rely on for power from the continent are vulnerable. Similarly internet/phone cables could be easily damaged (as happened in January to a link from Norway to Svalbard).  In the modern world we are extremely open to all kinds of malicious acts from foreign powers and Russia now seems intent on using its capabilities to cause mischief on a global scale. All off-shore installations are vulnerable in essence so we need to crack-on with fracking.

It’s a far cry from when my father ran a coal-fired power station in the 2nd world war – he never ran out of coal. The Government has clearly got to take a good look at energy security in the UK. Even if the hot war in Ukraine cools down we might have an energy cold war for some years. It’s going to be long time before anyone trusts Russia again and certainly not while Putin is in power.

I have also been adapting my stock market portfolio to the new world of energy insecurity in the last few weeks by buying shares in oil//gas companies such as BP, Shell, Serica Energy and Woodside Energy. The dividend yields on such companies are now sufficient to offset the capital risks. I am normally prejudiced against commodity stocks but when times change I decided it was time to reconsider. But I still will not be looking at small exploration oil companies.

I have also been buying alternative energy suppliers such as Gore St Energy Storage, Greencoat UK Wind, Gresham House Energy Storage, Octopus Renewables Infrastructure and The Renewables Infrastructure Group although even those have dipped recently after a good run up since the start of the year. Whether this is due to the general stock market malaise or doubts about the new regulatory regime for electricity is not clear. As in any bear market, there is nowhere to hide as everything falls.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )You can “follow” this blog by entering your email address below. You will then receive an email alerting you to new posts as they are added

Interest Rate Sanity and Chancellor’s Announcements

The Bank of England’s announcement of an increase in base rate to 2.25% was just one step in a return to sanity. With inflation nearing 10% why would any idiot lend money at 5% or less as many mortgage providers have been doing. In reality the last few years have seen lower interest rates than have been available for the last 5,000 years.

This has been possible because of Quantitative Easing (QE) to keep the economy afloat. A misguided policy that has resulted in horrendous side effects. It has resulted in property price bubbles and stock market bubbles. When you can borrow money at 2% and use it to buy houses which have been rising in price at 8% or more (as they have done in 2022), people will buy houses as an investment – and the bigger the better. This is one key reason why house prices have been rising to levels that make them unaffordable to those not yet on the bandwagon.

Yes it will mean the cost of mortgages will rise thus making some people poorer for a while. But it is a necessary step to return the UK economy to a rational position.

It is still some distance from enabling savings rates to return to a situation where savers can obtain a real return. This has encouraged speculation in alternative investments that might promise a higher return. This was one reason why small cap AIM shares have been popular in the last few years. But that bubble is now bursting – the AIM index is down 31% so far this year.

In summary, I welcome the rise in bank rate and it should preferably go further to match inflation rates or more.

Chancellor’s Announcements

Kwasi Kwarteng has today announced a number of things including tax cuts.

The 45% top rate of income tax is scrapped and base rate reduced by 1% earlier than planned. The planned increase in National Insurance is scrapped and stamp duty reduced, while the planned increase in Corporation Tax is also cancelled.

The chancellor confirmed that the scheme to protect households and businesses from rising energy prices is expected to cost £60bn for the first six months. With the aforementioned tax cuts, the resulting likely increase in Government debt has caused a sharp drop in the price of gilts (and rise in their yield).  

It has also meant a falling pound which will not help the cost of living but will help exporting companies and those with revenues in dollars. By making imports more expensive it should stimulate UK production – for example of food and make us less reliant on imports.

A surprise announcement is the winding down of the Office of Tax Simplification (OTS) and revision of the IR35 rules. These are sensible moves as the OTS has been totally ineffective in simplifying the tax system which is horribly complex while IR35 rules have been incomprehensible and impractical to apply in the real world without adding massively to bureaucracy.

More reforms to planning laws are promised to stimulate infrastructure building and aid the Government’s growth agenda but we have heard that before. Unfortunately planners just love complex regulations as they generate work for planners and there will be resistance from nimbies so I expect this will see major objections and delays.

There will be new anti-strike laws for essential services and there will be encouragement for 120,000 people on universal credit benefits to “take active steps to take more active work or face having their benefits reduced” (the number of inactive people in the workforce has been rising while jobs go unfilled).

In summary, my personal opinion is that that these are positive moves on the whole. In the short-term, we might all be poorer but some of these reforms were well overdue.  

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Queen Elizabeth, Energy Caps, Verici DX, Equals and Paypoint

The sad death of Queen Elizabeth reminds me of my own mother’s death at the age of 100. They looked similar in later life. Both managed to die in their own home which is the best place from which to leave. Will Charles III make a good king? We will have to wait and see but his name is not propitious bearing in mind the track record of the previous two. As I am not a monarchist I will say no more.

It was interesting to see an open coal fire in use in the photographs of Liz Truss with the Queen. Balmoral does not have central heating apparently while Buckingham Palace does have a CHP plant. But the bill to run the later was about half a million pounds per annum before the projected price increases. So King Charles might welcome Truss’s announcement to cap the maximum price of gas and electricity.

This is a cap on prices, not on overall cost so people with big houses with large gas consumption will still pay more. But at least it will replace the OFGEM price cap which was an irrational policy that would not encourage people to reduce energy consumption. Fracking is also being permitted to boost local gas production.

Truss did not give in to calls for this largess to be funded through a windfall tax. She said this would undermine the national interest by discouraging the very investment we need to secure home-grown energy supplies. You can’t tax your way to growth she said. So it will be funded by more Government debt in essence.

Is this wise? I believe it is the lesser of evils as it will help to bring inflation under control which is essential to keep the economy healthy and avoid a severe recession. These decisions by Truss and her new cabinet are positive in my view and should help the stock market.

But she is still committed to net zero by 2050 which is simply an unrealistic and unachievable objective.

I attended a couple of interesting results webinars this week. The first was from Verici DX (VRCI) who provide pre and post diagnostic technology for kidney transplants to avoid rejection. This is a subject in which I have a strong interest as a transplant patient and I do hold the shares which were acquired free as a scrip dividend when they spun off from EKF. The company is making progress but revenue is some way off and profits impossible to forecast so I would not purchase the shares at this time.

I did attend a two-hour seminar at Guys Hospital recently for pre-transplant patients as I need another. It was apparent that transplant procedures have not changed much in the last 25 years. Back then there was hope of xeno-transplantation but that faded away. More recently a bioartificial kidney has been developed (see  https://pharm.ucsf.edu/kidney ) but that could be years away from clinical use.

The other webinar I attended was that of Equals Group (EQLS) which I have held in the past. Financial figures are improving and a focus on the SME sector has clearly helped. It’s a complex payment business though and the webinar only helped in some degree to understand it. It might be another UK technology business vulnerable to being acquired by a trade buyer who understands the technology and regulatory environment. The company has been tipped recently by Simon Thompson in Investors Chronicle.

One company I do hold which is also looking cheap in the payments world is Paypoint (PAY) – probably because it operates in the retail sector and has been around a long time. There is a good write-up on the company in the latest Techinvest newsletter. But like Equals it is a complex business providing a number of different services. Both Equals and Paypoint could do with better communications on their business activities.

All of Verici DX, Equals and Paypoint have one advantage – they are not affected by the price of energy except very indirectly!

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Truss Victory – But Do We Trust Her to Deliver?

Liz Truss has won the election for Conservative Party Leader and therefore will be our next Prime Minister. She won by the expected large majority although she would not have been my personal choice. Lacks charisma. Her acceptance speech was a lacklustre bunch of pedantic soundbites.

She has promised to cut taxes and tackle the energy crisis. But how is she going to control energy prices? It’s easy to impose price controls or subsidise consumption but who is going to pay for it and where is the money coming from are the key questions. She has promised quick answers to those questions but do we trust her to deliver?

Having a surname that is a homophone of trust should have helped her political career but now she faces real problems in the UK economy and social unrest over the cost of living. This will not be helped by the latest news that Russia has turned off the Nord Stream gas pipeline and has no intention of reopening it while sanctions persist. This will drive gas prices even higher.

It was a good morning to release negative news. Abrdn UK Smaller Companies Growth Trust (AUSC) which I hold announced that long-serving manager Harry Nimmo is to retire at the end of the year. This has long been expected and after 19 years of service is probably overdue. There comes a time when even the most respected managers need to be refreshed.

It’s bad news for staff of the FRC after the FT reported that a decision has been made to locate the new ARGA body which will take over their role in Birmingham. Well at least they might find cheaper housing and shorter commutes so they might view it as a positive move.

The new ARGA body is sorely required as the FT reports yet another “brazen $400mn accounting fraud” in a Chinese biotech company (China Medical Technologies). KPMG is being sued in a Hong Kong court for $830 million. The report says that four audit firm failed to ask “obvious” questions that would have “easily” exposed the fraud. These included not questioning a large related-party transaction by the group in 2006, when it acquired a Chinese diagnostics business worth $155,000 for $176mn, according to the liquidator.

These kinds of events are way too common all over the world including the UK. Implementing ARGA is taking way too long but I suspect that it will not be one of Truss’s priorities.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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The Productivity Puzzle and Fixing the Energy Crisis

There was an interesting article by Arthur Sants in last weeks Investors Chronicle. He highlighted the productivity problem in the big tech companies such as Apple, Meta, Alphabet and Microsoft. Part of the reason is that their workforces have been increasing and revenue per employee has been falling.

It is suggested that part of the problem is that to develop new products and services requires a lot of staff hacking code. Automation of manufacturing processes is relatively simple in comparison with developing programs that can write other programs – they are an order of magnitude more difficult to create.

This has been the Achilles heel of the software industry for the last 50 years. It remains a very labour-intensive industry when it need not be. The technology of software development has changed little since my era when I was involved in it – there are still too many people writing code.

Is this one reason why productivity in the UK and other developed countries has not been improving as it should have been? It’s been too easy to hire bright young things to write code because labour has been cheap. We need to make it more expensive to ensure tools to automate their work are developed with a concentration on the development of standards to assist. Teaching children to write code in schools is not the answer.

Richard Tice on the Energy Crisis

I watched a webinar presented by Richard Tice of the Reform Party this morning. He pointed out the energy crisis the country is facing and what his Party would do about it. He argues that this is not a short-term problem but that we face a long-term global energy war so vigorous action is required – in effect putting our energy economy on a wartime basis.

He presented some interesting data to support his arguments and made more sense than many politicians on the issue in my view.

You can watch in on the Reform Party’s Facebook page: https://www.facebook.com/TheReformPartyUK

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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