Blain’s Morning Porridge, submitted by Bill Blain

Points Failure Special

“But instead it just kept on raining, a veil of tears for the virgin’s birth”

This morning is going to be a rant about accountability and responsibility… and yes.. it will eventually feature Brexit and consequences. I could present all kinds of scenario analysis to explain possible outcomes and consequences for Brexit - but, I really don’t have a clue about how its all going to play out. I shall simply say… UK is very volatile at present. Volatility = opportunity. I think the end result will be better than worst case - and it feels the market is pricing to the worst case. At some point… buying boots on!

Instead…. I am going to digress with a little parable about why we are in such a f****** mess. You see, this morning’s very late Morning Porridge comes to you from Hamble, my home down on the Solent, courtesy of “Points Failure at Woking”.

I left the house this morning around 6 am to catch the train up to London. It was cancelled. We waited for the next one - which was packed. It made it as far as Winchester - where it was also cancelled. We received no explanation of why, and staff had no idea when trains might run again, or any knowledge of contingency plans to get passengers to London. We were advised it might take hours and told a train back to Southampton airport would shortly be available. About 40 mins later it turned up. Myself and a chum decided to work from home - I got back here about 9 ish.

That is 3 hours of my life I will never get back. Let’s assume about 50k other people were similarly affected - squandering 17.14 man years. My solution is simple. Someone is responsible and should be held to account. Let’s make it a criminal offence to so inconvenience so many people. Stick the responsible person in Jail for 17 years, and give the job to someone who can do it. And lets stop accepting ministerial excuses and sack these fatherless bairns who think its fair to hike our fares 3% when the service deteriorates on a daily basis.

I was fortunate to be with my mate Nick this morning. He has a properly responsible job running the estate of a major institution in London. He understands all about Infrastructure management. He explained why things like London’s Crossrail have crashed overbudget, and why the mainline train services are going so badly wrong.

In the case of the railways its' multiple failures of political direction and management. Managers are told how important it is to stick to risk control and compliance guidelines to avoid “Never” events - events which should Never Ever happen. When they do, they become projects for compliance and risk management to rule upon, oversee and ensure they Never happen again. Meanwhile, costs have to be cut - diminishing resources are being pumped into every more cash-consuming compliance and risk management functions, while day to day management and operations are slashed to the bone.

Senior executives understand their tenure is about being seen to comply - so they slash planning and maintenance budgets (on the basis they’ll be receiving their big fat pensions by the time it fails), and feed the compliance and risk management functions. Thus, points fail with increasing regularity because no one is properly planning how preventative replacement and overhaul of signally could avoid crisis.

As a result of this morning’s points failure in Woking, Notwork Rail will spend a couple of million hiring project consultants to look into compliance issues, and to analyse the risk management assessment methodology used to determine responses to points failure. And tomorrow and tomorrow they will fail again.

Meanwhile, train failure becomes a metaphor for the unsolvable Brexit Crisis. (Proper planning would have prevented the piss poor performance and confusion we’re seeing now…!)

What the f**k were we thinking when asked a Yes/No question on Europe? Brexit was never binary. Compromise is not an option. The politics of Brexit have become impossible:

1% of voters are EU spies put here by Juncker to “frame the argument”

4% of people want complete political unity with Europe and everyone to learn French, German, Spanish, Italian or whatever…

10% of the population think closer political union with Europe is jolly good after Tarquin and Amber had such a marvellous time on their school exchange programmes..

27% of the electorate are keen to retain a squishy kind of political unity with Europe that allows us to be simultaneously British and European: 8% of this group say European first, 9% say British first, and the remaining 10%, (mostly Scots and Welsh), want to define themselves as anything but English, and only voted remain because it would upset London. (But they probably hate Brussels just as much…)

8% of Brits say we should probably remain in Europe but don’t think its worth arguing about

7% of ballot castors think we should probably exit Europe because of the Euro, but lets not get in a tizz about it

15% of folk think we should exit Europe politically but remain inside a customs union.

8% of the polity think we should exit Europe and agree selective trade agreements with selective European countries (mainly Merc drivers)

12% of gammons think Europe is essentially evil because Poles have taken all their jobs and run off with their wives, but because Brits are fundamentally better than Europeans we should exit everything.

8% of nutters think England should not only leave, but give Europe the Welsh, Scots and Irish to..

2% of the gentlefolk want to align with the Minister for the 18th Century and step back in time..

But about 20% of Brits think the Euro is a “not very good idea”, 40% think its a “very bad idea”, and 30% think its probably going to “be a disastrous idea”. Even more Brits want their bananas to be curved.

Unfortunately, Europe is not a pick and choose…

Parliament is even more fractured. No one has a clue what they want.. Except it probably isn’t Theresa May. And since that’s something we all agree on, its likely she will stay in Power.. See how that works? It kind of makes sense…

Actually… while everyone is saying how steadfast she is… she’s really not made any good decisions with this Prime Minister thingy has she?

So yesterdays no vote decision, and the likelihood Europe is not going to give us any change to the current agreement, and Derivative Contracts to be settled in 90 days time will need somewhere to settle… and its clear we’re in a horrible mess.

EXCELLENT!

No idea where we go from here - except to say UK assets are now glaringly cheap - pricing in a worst case that is still highly unlikely to happen. So if I was to say we’re getting close to the moment for buying sterling bonds, UK property, UK domestic stocks, and sterling, its because its time to be contrarian.