By Martin Skinner

The debate over our recovery from recession continues to rage and provides an amazing insight into the different ways economic facts and figures can be interpreted.  Forecasting is a tough game these days and I will simply express my opinion that we are experiencing a recovery more akin to a craggy[rock]-V than a W or an L for example.  This is based on historical rebounds and the remarkably rapid global response to the credit crunch in the following three key areas:

• Loose fiscal policy through a) reducing taxes and b) increasing spending
• Highly stimulative monetary policy (low interest rate) and
• Vast quantitative easing campaign.

Even with this huge boost and my optimism we are being regularly rocked by shocks.  Last weeks’ Dubai debt crisis for example combined with end-of-year profit taking removed a good chunk of the years stock market gains.  Markets are nervous, investors are nervous, workers are unemployed and it’s going to take time for confidence to build.

So, in this uncertain climate how can investors profit whilst still hedging their bets against the downside risks?  A focus on location, cashflow and occupier demand will help.  Our chosen location is London where occupier demand is assured.  A cashflow boost is possible through servicing the undersupplied student and young professional markets (and multi-letting).  Demand constantly outstrips supply, rents are rising again and the low currency rate is tempting investors to the city.  Other strategies also work and the moral of the story is rather than running for cover each time we get hit by an aftershock we should be looking to adapt to the uncertainty/turbulence and push forward with an effective strategy and subsequently confidence in our abilities.

We will be exploring many of the issues involved in investing in student and young professional accommodation at our next event at the May Fair Hotel in London on the 11th February.  More details closer to the time.

In Other News:
David Smith – Alistair Darling’s balancing act: cut deficit or win votes
John Waples – Bosses’ bonuses will be next under the spotlight
Irwin Stelzer – Now Barack Obama gets down to work on job creation

And some funnies from the Sunday Times:

• One for the naughty step – A masked robber who held up a restaurant at gunpoint was recognised instantly by the manager: she was his mother.  Jason Zacci’s face was covered by a bandanna as he threatened staff with a sawn-off shotgun and tried to grab cash from the till at the Wendy’s restaurant in Dearborn Heights, Michigan.  His mother also recognised the getaway driver, his girlfriend Amanda Yost.  (The Sunday Times)
• To pee or not to pee – The mayor of Delhi has launched a campaign to stop people urinating in the streets.  Kanwar Sain wants to clean up the city’s image before it hosts the Commonwealth Games next year.  Posters have been stuck up around the city urging: “Don’t be Mr Wee-Wee”.
• Trucker chisels DIY tunnel – Ramchandra Das, a lorry driver, used a hammer and chisel to tunnel his way through a mountain just so it would be easier to park his truck.  The 53-year-old from Bihar, India, took 14 years but said it was worth it. “I had to leave my truck miles away, so I decided to do something about it myself,” he explained.
• You may now Tweet the bride – Forget kissing the bride; an American groom, Dana Hanna, had a better idea when the minister declared the couple man and wife.  He whipped out his mobile phone and changed his Facebook status from “in a relationship” to “married”.  He then sent a Twitter message, “Standing at the altar with @TracyPage where just a second ago, she became my wife! Gotta go, time to kiss my bride.”  Before that, however, he handed over her BlackBerry so she could do the same.  Hanna, a software developer from Maryland, said after the service: “This was just done to be funny.  We really don’t Facebook that often.”

The Bank of England will this week be deciding on the quantitative easing commitment for the next three months.

Despite in all likelihood treating the unexpectedly awful GDP result for Q3 with cautious scepticism the bank is likely to be more aggressive with its digital money injection (hopefully £30bn+) than if the figures reported had been better.

If so this is good news for those that own assets because it will add momentum to the recovery and increase chances of both a V-shaped outcome and of earlier inflation.  The flip-side of course is that it increases the probability of overshooting and pumping too much money into the economy.  That is a problem for tomorrow (or 2013+) though and the priority should be avoiding a resumption of the destructive asset price deflation we’ve experienced over the last two years or so.

And we need it – after a nice bounce back from the brink people seem a little more nervous again with talk of a double-dip, W-shape recovery etc etc.

David Smith’s article is (as always) a well balanced review of the situation and well worth a good read.

I’m going to start with a few long words so I sound like I REALLY know all about economics and then you can tell me how impressed you are … ok, ready?  Go!
   
Traditional economic forecasts and econometric models said it couldn’t happen.  But it did happen and it might happen again.

 … as a self-professed free marketeer and ‘liberal capitalist’ I guess I became a little overconfident and dare I whisper it lazy in my thinking in 2007/2008.  A fairly predictably supply/demand imbalance would dictate further house price and/or rental rises; the Conservatives would eventually  get elected and stop the powers that be from constantly meddling with our taxes; and The UK because of its strong property rights, focus on high-value services especially financial services and its near perfect geographic positioning as a bridge between the US and Europe was positioned to succeed. 

I didn’t have the global financial meltdown in my personal business plan tho’ – missed that bit somewhere.  And I wasn’t the only one.  This isn’t to say all the positive things mentioned above aren’t going to happen; far from it, I for one am sure they are still going to happen again and probably to a greater extent as a result of the credit crunch … I just missed the whole damn crash bang wallop bit in the middle somehow … and ouch! it really hurt … still hurts.

Many economic commentators have analysed the factors behind the events of the last two years and of course long-term factors such as excess spending in the West and excess saving in the East is a key reason; excess and irresponsible lending by banks is one of the reasons; an asset price bubble in property is another and so too was the Lehman error (and don’t tell me it wasn’t a mistake – they had to support the bankers afterwards anyway, just on a much larger scale). 

A vital factor that generally gets passed over however is the economic establishment.  The strict rules around financial modelling and the confidence that comes with having been right for 20 years meant that most financial models and economic forecasts were based on 10% here, 20% there, worst case a 30% drop.  Brains employed by the likes of Merrill Lynch were tutored by the finest economists on the planet and they were trained not to lose money as well as to make it.  And then like a flash it was all gone.

So is it any wonder economics is set to evolve?  It turns out most of the great economists of the last golden age of economics didn’t use models and mathematics to anywhere near the degree to which their findings have been subsequently applied.  Could it really be that authors like Malcolm Gladwell (Tipping Point, Blink, Outliers), Stephen D. Levitt (Freakonomics, Super Freakonomics) and Tim Harford (The Undercover Economist) are more like the great economists (Smith/Keynes etc) of old?

Well the new Institute for New Economic Thought (INET) which has been backed by George Soros to the tune of $50m is going to be employing new mathematical techniques like chaos theory and will build on work by sociologists, psychiatrists etc – much as the authors above have done.  They are likely to accept that the world is often unpredictable and inconsistent.  We live in ‘interesting times’.

For more information I highly recommend you read and follow Anatole Kaletsky – an excellent, forward thinking economist and commentator.

MP Wife Swaps
Some 200 MP’s affected by the ban on employing their wives are considering defying the ruling by employing each others’ wives.  Eve Burt said “We have had the conversation about swapping jobs endlessly, they are water-cooler conversations.  It would be an option.  We did work out a very complicated ‘giant wife swap’ where you all move one husband along.  It would be an option.“  What a fantastically bonkers idea; who said politics was boring !

Recession
The unexpected, dare I say shock, -0.4% GDP growth figures for Q3 2009 showing the UK is still in recession against average expectations of +0.2% has led to an interesting mix of disbelief from some quarters, calls for desperate measures from others and in some areas (including here at Inspired) comfort that this is likely to lead to a stronger and more sustainable recovery in time.  It should in fact increase the chances of a V-shaped recovery.

The Monetary Policy Committee (MPC) is unlikely to be able to argue against increasing the quantitative easing program now and the Pound is likely to continue to plumb the currency exchange depths needed to boost exports, economic activity and eventually some inflation.

It is also likely that the figures will be revised up as more detailed and accurate data arrives at the Office for National Statistics (ONS) – by then the average Joe in the street is unlikely to notice.

City Strength
According to headhunters ‘every bank is hiring’ again.  Where bonuses are under scrutiny salaries have been increased.  Morgan Stanley has raised basic pay by 50% for its middle managers and similar moves have been seen by Bank of America Merrill Lynch, UBS and Citigroup.  Bankers are demanding much higher salaries in compensation for the reduced bonuses on offer.  And estate agents are finding city buyers are back in the market with a vengeance.  Knight Frank have seen the number of City buyers as a proportion of applicants has risen to 38%.

Observers may see this as unfair considering the harm caused to the economy by the banking collapse.  Rightly or wrongly however our economy is highly dependent on the financial sector and to see it expanding again can only be a good thing in the long term.

Public Finances
Karen Ward, UK economist at HSBC, has reviewed the assumptions made by the treasury in their last forecast (in March) and has concluded that cumulative borrowing from 09/10 through to 13/14 will be £131 billion less than expected.  This is because unemployment has not been as bad as expected and share & oil prices have recovered.  Her forecast is still for £153bn borrowing this year though so it’s still pretty grim – nowhere near as grim as another great depression however so we should be counting our lucky stars.

On the subject of real cuts in spending everyone and their dog seems to have a list of ways of bringing costs down.  In my view activity should be focused on:

• of assets (privatizations) where monopolies & inefficiencies exist, particularly in healthcare – with a view to correcting the faults
• tearing up dubious regulations and quango’s – HMO licensing and HIPS for example
• cutting back guaranteed benefits for public sector staff – where the equivalent to guaranteed bonuses in the banking sector are much broader based
• simplifying benefits & tax credits – to make it easier for people to see & benefit from a link between productive activity and income
• reforming employment legislation – the nanny state’s gone way too far and it makes employing staff too risky & expensive

The Dollar
Currency commentators and US economists are still vigorously considering the threat of a declining Dollar to its position as the worlds reserve currency.  With vast deficits forecast to continue for another 10 years under Obama’s guidance and expensive new healthcare reforms and green energy bills the currency is likely to continue to weaken considerably in the next few years.  A resumption of strong growth (annualized 3% recently reported for Q3 2009) seems to be the only hope for stability here.  A burst of inflation to erode government borrowing would probably be quietly welcomed.  Steps do need to be made in the US to reduce spending however and until that happens the Dollar is likely to fall further.

Industrial Disputes
The three day Royal Mail postal workers strike led by the TUC union is due to go ahead next week if last ditch talks fail tomorrow.  It’s just one of a number of impending strikes.  Thousands of drivers with FirstGroup (bus & rail) go on strike tomorrow.   Swissport staff (Stansted) and British Airways staff are both represented by the GMB union and are balloting members next week about strike action.  Bin men in Leeds also represented by the same GMB union are now eight weeks into their strike.  The RMT union is balloting 10,000 workers over Christmas strike action on the London Underground and may take similar steps at Network Rail.

At a time of recession these unions can only damage the businesses that pay their members incomes.  ‘Job for life’ doesn’t exist any longer and particularly in cases like such as the Royal Mail customers will switch to alternative technologies and competitors – and quickly.  At the same time a number of union leaders have been receiving discounted loans to buy houses.

In Other News
Weird but wonderful, The Sunday Times:

• Mohammad Al Fayed has declared his ambition to become the first president of an independent Scottish nation.  He’s urging his “fellow Scots” to detach themselves from “the English and their terrible politicians”.  He recovery, city strength, every bank is hiring, public finances, the dollar, industrial claims to share his ancestry with the Scots based upon a medieval legend that suggests Scotland’s founders journeyed from Egypt and hopes to be offered citizenship if a planned independence referendum next year leads to the breakup of the United Kingdom (Mark Horne, The Sunday Times).
• Dimwit of the week.  A suspected shoplifter called in for questioning by police stopped off on his way to the station to commit a robbery with an associate.  Police, who had detailed descriptions of two men who held up a supermarket in Blomberg, Germany, were surprised to find one of them in their waiting room.
• Hopping mad.  A town has been forced to cancel its annual rabbit-throwing contest after a campaign by animal lovers.  The contest normally takes place in Waiau, New Zealand, to mark the town’s annual pig hunt.  Children see how far they can throw a dead rabbit.  The RNZSPCA, the animal welfare group, said the event sent the wrong message: “Do you throw your dead grandmother around for a joke at her funeral?”.  Jo Moriarty, the organiser of the pig hunt, said the decision was political correctness gone mad.
• Foiled fraud attempt.  Two conmen got away with A$160,000 (£90,000) after convincing businessmen they could double the value of money by soaking it in special chemicals – a mixture that later proved to be nothing more than bleach, baby powder and hairspray.  The business men, from Melbourne, Australia, handed over cash and later received pieces of paper wrapped in aluminium foil.  They were told to leave their “money” wrapped for 24 hours while the chemicals worked.  Two men were arrested when one victim became suspicious and opened the packet.
• Parking ticket?  Oh XXXXXXX!  A driver with the registration number XXXXXXX has run up $19,000 (£11,000) in parking fines in Birmingham, Alabama – even though he has been there only once and left without a ticket.  Traffic wardens in the city enter seven XXXXXXXs on their forms when they issue tickets to cars without numberplates.  Scottie Robertson, 38, of nearby Huntsville, chose the vanity plate to mark his days building custom cars, when his nickname was Racer X.

Another year another British winner of the F1 World Championship – amazing considering the talent there is in the sport already & the global pool of drivers competing just to enter it.  And can you think of a more exciting year of F1?  I can’t.  Just amazing – teams & drivers pushing themselves to an extraordinary degree.  Of course that’s the point of F1 but it just seems to have been on a higher plain this year. 

A claim to fame of mine (and now braggable) is having met Button very briefly at a drivers party in Barcelona where I ‘humourously’ asked him to stop copying my beard – he was very patient and polite despite my weak sense of humour and I was left with an impression of a genuinely very nice guy.  If anything perhaps a little too nice to win the most competetive motor-sport championship in the world.  He seems to have worked a lot harder and looked more focused & confident this year.  Despite being a bit edgy in the second half of the season he clearly deserves this and having it under his belt should make him less nervy in future seasons.  

Button and Hamilton now both know they’ve got what it takes to be the best.  Pity Hamilton hasn’t quite had the machine to be right up there with Button this year but he does seem to have worked his way to regular podium positions despite this so next year will be another interesting one.

Now to Ross Brawn – what a legend.  He’s the Mourinho of motor-sport.  An extraordinary leader and strategist who seems able get the very best out of his team and to place his cars with razor sharp accuracy ahead of the competition after every pit stop.  And all that under extraordinary financial pressure.  To win F1 in the first season of team ownership and after having to make so many redundancies is truly incredible.  I look forward to his book.

Quantitative Easing
The newest member, Adam Posen, of the Bank of England’s (BoE) Monetary Policy Committee (MPC) has come out in favour of increasing the banks £175bn easing program.  Growth in the economy next year is likely to be weak (c1%) even with it next year (after a c4.5% drop this year) and with inflation being much less of a risk these days it would seem silly not to keep the policy running.  

Moreover when the money is created banks lever it up to about 4.5x the initial money injected so it will make a big difference to liquidity.  However while households and businesses are paying down their debts the reverse is true.  So unless enough money is injected to offset this and the increased capital requirements we will suffer falling credit & investment … and GDP growth and the tax take would be greatly reduced potentially to the point where would could fall back into a deep recession.

London Stands Alone
A recent Knight Frank forecast demonstrates very clearly the North/South divide where House Price Inflation (HPI) is concerned and London’s unique strength.  The forecast for London is to rise by 38% by 2014 while nationally the figure stands at just 19%.  I’m sure you can draw your own conclusions as to where the best place for investment property is.

Shrink the Big Banks
Adam Posen was interviewed in The Sunday Times and suggested breaking up Britain’s biggest banks, particularly those owned by the government.  I agree – big corporations tend to be able to manipulate markets because of their size.  They also tend to use excess regulation to defend their monopolies (small business can’t afford to keep up with the lobbying & paperwork) which also moves against economic flexibility and will hold back market recovery.

Unemployment
Research into the reasons for divergence into the two main measures of unemployment have brought some good news.  The two measures are the claimant count which shows 1.5m unemployed & the Labour Force Survey which now shows 2.5m.  At least 250k of the LBS figures relate to full time students looking for part-time work.  A substantial further number relate to 16-17 year olds in full time education looking for part-time/Saturday work.  The monthly increases in the claimant count is also trending down from almost 100k per month to just over 20k last month.  There is even a faint possibility that unemployment has started falling.

This is a remarkable result for the UK where a 5.6% drop in GDP has led to only a 1.6% increase in unemployment as compared with the US where a drop of less than 4% in GDP has resulted in an increase of 5% or more in unemployment.  This is most likely to be as a result of the flexibility in our labour market – workers have typically accepted pay freezes and cuts in working hours.  Additionally nearly £5bn has been invested in training and help to get the unemployed back to work.

Future cuts in public sector employment won’t help but they’re unlikely to make it as bad as many are forcasting.

In other news
Weird but wonderful, The Sunday Times:
  -  The bottom line.  A student who flashed his buttocks at a parting train is lucky to be alive after his trousers became caught in a carriage door.  The 22-year-old man had been thrown off the train in Lauenbruck, Germany, for travelling without a ticket.  In response, he pushed his naked backside against the train window.  He was dragged for 200 yards until a passenger pulled the emergency brake.  Services were disrupted for an hour.  The student, who suffered minor injuries, has been charged with interference in rail transport and insulting staff.  A police spokesman said: “He has advised others not to try the same thing.”
-  The scales of justice.  A man who beat his former girlfriend, then stabbed her pet fish, leaving it impaled in her flat, has been sentenced to two years’ probation and psychological testing.  Donald Earl Fite III of Portland, Oregan, told police: “If she can’t have me, then she can’t have the fish.”  A judge turned down a request from the woman, Sarah Harris, for financial restitution.  She wants the money to pay for a memorial tattoo of the fish.
-  Bunny Boilers.  Rabbits culled from parks in Stockholm, the Swedish capital, are being used as an innovative biofuel.  The rabbits are frozen and later burnt at a bioenergy plant to provide heat for the Varmland area of Sweden.  A large number of tame rabbits, abandoned by their owners, live in the city’s parks.  In autumn, pest controllers shoot the creatures – 6,000 last year – as they peek out of their holes.

Ratings agency Fitch released a depressing forecast for house prices this week and it has significant negative consequences (at least in the short term) for wholesale mortgage finance (RMBS’s or Residential Mortgage Backed Securities).  It got a lot of coverage in the press and has got a lot of discussion going.  My view (shared by a number of very rational economists) is that house prices will not suffer another big drop next year – why would they if the economy continues to recover as forecast?  A tapering off or rises and continued instability in the market (presenting great buying opportunities) is a much more likely scenario.  Central bankers eventually responded well to the banking shock and they’re extremely unlikely to allow a similar financial earthquake to occur again so soon (and that’s what it would take to send house prices down by a further 17%).  Clearly this is an important subject so a lot of this weeks news review will be centered on it and related matters.

Inflation & Interest Rates
The Centre for Economic and Business Research (CEBR) is about to release some research backing up the view that the inevitable fiscal squeeze will mean that inflation and interest rates will remain very low until well into 2014 (0.5% into 2011 & less than 2% into 2014).  David Smith notes firmly (and fairly) that ‘world recessions are not followed by galloping inflation’.  Click here for more information.

House Prices
Halifax of course reported a rise of 1.6% in September.  This is likely to be as a result of thin trading (much as it was on the way down) and part of the rebound after financial Armageddon thankfully failed to materialize.  Expectations are of a positive result for 2009 as a whole and a slow year in 2010 with most commentators (Fitch aside) expecting a modest rise or a modest fall before above trend growth (due to undersupply) sets in for at least a few years and that’s a view I share.  Click here for more info.  Additionally The Sunday Times featured a two page spread with a number of commentators views on the market – generally quite negative on the market as a whole but sensibly backing London as set to perform well regardless of the wider market.  Click here for the full article.  I disagree with Seema Shah in particular – Capital Economics forecast a 25% fall this year and couldn’t have been much wider of the mark.  They were also incorrecly predicted a crash every year from around 2000 onwards.  The market has of course risen by more than 100% in that time.  The fact she mentions in the article considering becoming a first time buyer says it all (she has no experience of residential property investment).  Long-term structural supply/demand imbalance will continue to give the market upward encouragement.  Additionally “with prices stabilising and recently increasing we expect mortgage availability to increase as lenders see diminishing lending risks and competition returns to the UK mortgage market” (Carl Gough, Cazenove).

Gold
Gold prices record levels of more than $1,050 an ounce this week and some expect it to keep rising.  This looks like an obvious bubble brewing and with speculators using it as a hedge against inflation, rather a silly one.

The Dollar & Oil
Discussion has picked up again around the Dollar being dropped as the worlds’ reserve currency for oil.  The report that sparked the speculation mentions a target date of 2018 however so whatever happens it won’t change for a long time.  The Dollar is likely to progressively weaken for some time however if trade imbalances between the US & China in particular are to continue correcting themselves.  Click here for more info.

London’s Financial Strength
Believe it or not the UK has just overtaken America to hit the top spot in a list of leading financial centres compiled by the World Economic Forum.  Wherever the big firms choose to domicile themselves it’s likely that much of the advisory work will continue to take place in London.  London’s liquidity and profile still sets it apart from the competition while Sarbanes-Oxley continues to detract from the US offering.  This is not guaranteed to last forever and the threat of companies moving abroad must be taken seriously.  It’s noteworthy however that 75% of Fortune 500 companies have London offices and 40% of the city workforce are employed by foreign firms – ‘the pools of capital are as deep as the pools of talent.’ (James Ashton, The Sunday Times).

General Business Highlights:
  -  John Waples once again picks out the 50% tax rate for high earners as a threat to the retaining UK’s top talent – why cause so much upset and risk losing so many great people abroad for a tax that will raise negligible sums.  I’m sure most if not all of the take will be lost in administrative costs anyway.
  -  After numerous strikes already this year workers at the Royal Mail are threatening a walkout in the run up to Christmas.  This will only encourage more customers to move to competitors and compound a vicious cycle.  Postal unions have got it horribly wrong and the statistic showing they account for almost half of all days lost to industrial action in Britain underlines this.
  -  Intel have commented on the consumer now taking the lead in setting the pace in the computing industry and a great quote is that “we are still at the Model-T [Ford] stage of computing, that really is true if you think how computing has impacted on our lives in the last 50 years verses the next 50.  It is going to be a lot more pervasive.”
An elite group of women in senior positions at hedge funds have just had a charity fundraising awards night.  Women are known to be less aggressive and be more suited to mitigating risk (surely what hedge funds are all about) than men so it makes a lot of sense to promote their benefits in a an industry they are heavily under-represented in (women control just £7.6 billion out of £166 billion in 800 London hedge funds). 

Environmental Breakthrough
Stephen Levitt and Stephen Dubner authors of the bestselling Freakonomics (a great book by the way) report on a team of world renowned scientists arguing that CO2 (dimming the sun) is far from our greatest threat.  In fact water vapour is the most threatening of greenhouse gases.  “transportation is just not that big a sector (Jeremy Clarkson will be ecstatic)”, “cap and trade agreements are too late” because the existing carbon dioxide will remain in the atmosphere for several generations, solar panels “contribute to global warming” because they’re black and create heat.  For $250 million Intellectual Ventures (IV) are confident that if necessary they could hose Sulphur Dioxide 18 miles straight up into the upper atmosphere and counteract global warming (if the worst climate predictions are correct).  More importantly the knowledge alone could save poorly thought out and expensive anti-carbon schemes from going ahead – billions of poor people could be brought into first-world standards of living instead. 

Self Learners
The world’s best universities are putting their lectures online for free through iTunes U and You Tube EDU and they’ve ‘gone viral’ at light speed.  One example is a lecture from Marianne Talbot at Oxford called ‘A romp through the history of philosophy from the Pre-Socratics to the present day’ that’s attracting 5,000 downloads a week.  Open educational resources (OER) have been accessed by more than 845,000 people around the world in little more than a year of their existence.  In the past month downloads have averaged 400,000 per week.  One study from the University of Fredonia claims that downloading a lecture (by podcast) can be more effective than attending one in person.  Possibly because a podcast allows you to replay difficult parts as and when you want.

I in effect did this, without realizing, for the first time earlier today when I made notes on the ‘Here comes everybody lecture’.  In my opinion this is the crux of the benefit offered by social media – people can teach each other things and pass on new learning at an incredible pace and it will lead to a golden age of progress for humanity.  Just consider for a second how much faster problems can now be solved – no waiting for papers to be published (just watch it online) or to attend lectures (people will direct you to the best ones) and reduce time wasted duplicating work that’s already been done (just search for the latest breakthrough and take it from there).  Phenomenal stuff.  Click here for more info.

In other news
Weird but wonderful, The Sunday Times:
  -  Handbags at brawn.  Two late-night drunks attacked a pair of cross-dressing men, but got more than they bargained for when their victims turned out to be professional cage fighters on their way to a fancy dress party.  Daniel “Lionheart” Lerwell, 23, and James “Lights Out” Lilley, 22, were walking through Swansea late at night when they faced taunts of “Nice dress, gay boy!” from two men.  One then threw a punch at James, who was wearing a pink wig and hot pants.  James and Daniel, wearing a short black dress, suspenders and stockings, felled the attackers.  After retrieving their handbags, the cage fighters left the culprits dazed on the ground.  Daniel, 13 stone and a trained plumber, said he’d been particularly proud of his appearance as his mum had helped him put on his make-up.  “It is a sorry state of affairs when a guy can’t safely walk down the street in a mini-skirt and make-up without getting grief from some idiot”.
  -  Does Ronaldo need the magic sponge?  Two sorcerers claim they are fighting a black magic duel over Cristiano Ronaldo, the former Manchester United footballer.  One of the magicians, named Pepe, said he was paid 15,000Euros to end Ronaldo’s carrer by a “rich, foreign woman who was betrayed”.  Ronaldo who now plays for Real Madrid, has recently been suffering from an ankle injury.  Pepe, clutching a wax doll of the player, says he is responsible for the injury.  “She paid me to end Ronaldo’s career and I’m doing that,” he explained.  A second sorcerer, known as Fafe claimed he had been called in to defend Ronaldo against Pepe’s spells.  He dismissed his rival’s powers, but said he’d burnt candles next to a picture of Ronaldo just in case.  “I have nothing against Ronaldo personally, “ Pepe told Portugal’s Correio de Manha newspaper. “It’s a job.”
  -  How not to prevent leaks … A secret dossier of guidelines has been drawn up by the Ministry of Defence to help officials maintain security and prevent leaks.  The Joint Services Protocol 440 warns of the dangers of journalists, foreign intelligence services, criminals, terrorist groups and disaffected staff.  And the details were secret right up until last week, when they appeared on the WikiLeaks website.

By Martin Skinner

A quick rundown of the weekends news for you …

Force jobless to work
Brilliant idea and about time it got implemented – those out of work are currently easily tempted to stay out of work by excess support and centrally planned get-to-work schemes.  As government spending has to contract this is a good place to start.  Abuse of the current system is endemic and leads to long-term community damage.  It’s also good for peoples self esteem to get out and do something productive rather than just sitting at home waiting for their support cheques to arrive.  For more info on this Tory initiative click here…

Tory economic plans
Pressure is building on the Tories to explain what they will do if/when they take power in the next election.  It’s probably been sensible to keep things close to their chests to-date but they now need to demonstrate they’re actually capable of running the country.  Things look pretty good so far on this front (with ideas like the one above) - they do need to move quickly from critical (of Labour plans) to confident and constructive tho’.  Depression-averted now’s the time for some positive thinking.  More info here …

Capitalism defies critics
Many commentators said the over-leveraged Anglo-Saxon economies of the West caused the crash and it would lead to a great depression and the end of Capitalism and free market economies as we once knew them; with new forms of socialism rising to take their place.  However, for the most part, the reverse seems to be happening.  Governments are having to cut back their own overheads and reduce the amount they interfere in their economies.  Those with the free-est markets are adapting fastest to the current environment and driving towards growth again.  Of course there is always a place for good government however the more focussed it’s role and the less it meddles the better.  I don’t entirely agree with his view of the UK (I believe we’ll recover quicker & stronger than he seems to suggest) however Inwin Steltzer has his highly competent say on the subject here ..

Nationwide building society’s report
Nationwide’s numbers this month showed that house prices are back at the levels of a year ago – a remarkable result considering the carnage in the commercial property markets and the fact that they could take 10 years to recover their 2008 levels.  This just proves that investors should focus intently on supply and demand and not just go for the easiest assets to manage.  For a more detailed analysis click here …

General business highlights
 - Taylor Wimpey is considering selling off its huge US operation for around £560m net – would likely provide a good boost to the share price if they did.
 - Begbies Traynor has predicted Christmas ‘hell for high street’.  Retail companies experiencing critical problems were up 37% from August.  I believe internet purchases and consumers re-balancing their spending towards saving (even if only progressively) many high street operators and landlords will suffer.

In other news
 - Vettel won the Japanese Grand Prix while Button managed to stay comfortably ahead in the championship with a point from 8th place.  Rubens Barrichello came 7th and Hamilton came 3rd.  More info here …
 - a pub landlord has turned the tables on council chiefs who removed one of his signs.  He’s taken some of theirs in return.  Neil “Chaz” Charlton, landlord of the Clifton hotel, was told by Weymouth and Portland borough council that it had removed his advertising A-board.  “They told me they had taken it, so I said fine and I went out the back of their yard and piled their signs into my car.  They said they’ll do me for theft so I said I’ll do them for theft.”  Dorset Echo
 - diehard football fan Frazer Boyle, 20, has shocked his family by changing his name to Motherwell Football Club.  Frazer’s mother, Hazel, said: “I was ready to give him a clip round the ear, but he has already been to France and Wales in the past year to watch Motherwell, I think that is punishment enough.” BBC Scotland Online
 - Teacher Nick Hanna was left dumbfounded when a deli counter assistant told him she couldn’t open a brown sauce sachet for him – in case some of the sachet got in his sandwich.  The assistant said if a piece of the sachet went onto the sandwich and he ate it, the store would be liable. Shropshire Star