Polar bear trading

I don't know what the bid-offer spread would be, but I suspect the nicotine-yellow bastards wouldn't be happy about it.

Today's Metro (p30, can't find it online) has an article called 'Polar bear trade ban is rejected'. A UN meeting in Qatar rejected a proposal to ban trade of polar bear skins, claws and teeth.

All of the bleeding-heart eco-worriers, talking about how global warming is harming polar bears, seem to have missed a few facts. Polar bears are not endangered, they are not 'losing their habitats', they are not 'sad' or 'unhappy' or cuddly, they don't care if you drive a Prius, they are huge vicious predators who will gleefully kill and eat you for being in the wrong place at the wrong time. Polar bears can (and do) swim to shore through arctic waters when they're finished playing on icebergs - they don't drown if they fall in, no matter what inaccurate films you watch.

The proposed ban was backed by the US and all sorts of sunny places, and opposed by Canada, Greenland and Norway who actually have to live with the growing numbers of these things. Funny that.

Polar bears are not your friends.

- KoW

Don't Cry For Me...

Today's Metro also has another story about the escalating tensions over the Falklands. Argentina is threatening to ban companies associated with the drilling for oil. As the article notes, this includes Barclays, who are shareholders in Desire Petroleum.

HMS Sceptre, the last of the Swiftsure class, and due to be decommissioned in December, has been sent to keep things under control. Presumably that means there's also a very small chance that she will follow HMS Conqueror's lead in returning home flying a Jolly Roger - this is presumable the last 'opportunity' for the Swiftsures to do so before being consigned to history. It seems (thankfully) extremely unlikely, though.

HMS York is there, as is a large RFA vessel (RFA Wave Ruler - 31,500 tons displacement, about six times the size of a destroyer), providing a visible deterrent. The Falklands are much better protected than they were in 1982: a permanent garrison of around 500 troops, air defences including four Typhoons (1435 flight) and Rapier FSC SAMs.

Enough to deter scrap-metal merchants from raising a flag, certainly.

The Argentinians would have to launch a full-scale attack to gain control of the islands, not just turn up and wait to be kicked out, which would not sit well with the Americans. It may work, it may not, but it would be a huge gamble and the attempt would likely result in significant Argentinian casualties, making it political suicide for Cristina Fernandez de Kirchner.

So, her only real option is trade sanctions. How effective are those likely to be? No idea, to be honest, but I don't think Barclays makes a particularly large proportion of their money from Argentina...

- KoW

February Snippets

A400M Saved

EADS has agreed a plan with European governments to save the A400M. This is a good thing as, even though C-17s are lovely and carry huge amounts (~170,000lbs), we can't afford more than half a dozen of them... which means that our air bridge might have lots of capacity, but not enough actual planes to use it. The A400M is half the size (~82,000lbs capacity) and half the price of the C-17, so the capacity is less "lumpy" - rather useful with our diverse commitments. We need something to replace the clapped-out C-130Ks and C-130Js - the Hercules was a fine aircraft, but the oddly-shaped cargo space and now rather small carrying ability means it's well past its sell-by date. The A400M will fill that role nicely, giving more lift into the bargain.

Plus, of course, keeping the ability to build large cargo transports is useful if we don't want to have to rely on the US.


Iceland bankruptcy

The Icelandic negotiators have walked away from meetings with the British and Dutch, refusing to pay anything above LIBOR on the €4bn Icesave debt. Since LIBOR measures short-term rates (various components from overnight to 1 year), Iceland is demanding long-term repayments below the yield curve - i.e. they want to turn their defaulted debt into a loan at below normal market rates.

Iceland is unable to access IMF cash until it reaches an agreement on repaying its debts, and - as the CityAM article notes - this walk-out is likely to result in their sovereign debt being downgraded by the ratings agencies. After all, if someone has just walked out on one obligation, wouldn't you want to charge a bigger risk premium to deal with them?


UK General Election

With Q4 GDP now revised to being +0.3% on Q3, and Labour closing the poll gap despite Bullygate, there is a lot of talk about whether the election will be called this weekend. This has to be at least 17 working days in advance, and a visit to the palace this weekend would mean a March 25th General Election.

I've got a bet on this, doubled since the GDP revision was announced, but we shall see. There are good reasons for a snap election - avoiding the Chilcot inquiry (and hence questions about how he slashed defence budgets and vetoed helicopter purchases), no need to present a Budget, the Q2 GDP figures (likely to show a double-dip from the VAT rise and snow hitting sales) won't be out until late April, and the tax rises on April 5th announced previously still won't have kicked in - but the Labour party is still skint and has to fight local elections on May 6th no matter when the general election happens. Plus there's Gordon Brown's personality - he "bottled" the 2007 election, and I don't think he's in any hurry to face the electorate. Could go either way.

My head says that it'll still be May 6th, but my heart says the election will be called this weekend.

- KoW

Iceland Strategy

A quarter of the population of Iceland have signed a petition asking to be let off for the country's debts.

They didn't seem to mind when the billions in cash were flowing into Iceland, but now they've pissed it all away they don't want to give any back. Hmm. Pretty sure that's not how it works.

Since the debt is in Euros, Iceland can't just devalue its currency and inflate away the debt (and its assets). Iceland can, of course, default on its debts - but as an isolated volcano in the North Atlantic that's not going to help much, as tariffs on (needed) trade will just claw the debt back another way. There's the option that everyone the UK and Holland would like: paying up (over a couple of decades).

Or there's a fourth option: prostitution. Get someone else to pay the debt for you, in return for... services. There are three candidates I can see there: the US, the UK, and Russia.

The UK, despite overwhelming naval superiority, lost the Cod Wars - the expansion of Icelandic fishing rights from 4nm in 1958 to 200nm in 1976. We could take that back, write off our portion of the debt, and revitalise the northern ports - Hull (Alan Johnson and John Prescott), Grimsby (Austin Mitchell since 1977) and Fleetwood. A Labour government so profligate with tax money should easily be able to afford a bung to its heartlands, and might even be able to turn a profit if fishing rights were negotiated well.

Russia doesn't have much access to the Atlantic for shipping, and its submarines are tracked by the sea-bed sonar across the GIUK Gap. Strategically and commercially, Iceland is in a prime location for access to the West. It is also a good source of geothermal power, if the Russian oil/gas oligarchs want to broaden their remits. Of course, the Russian ambassador has publicly refused to get involved.

The US, until 2006, maintained an airbase at Keflavik as Iceland was recognised as strategically important in the Cold War. Given the still-endemic fear of "commies" in the US, if Russia were to show an interest in Iceland then it would be easy to find the money to reopen the base and thereby pump enough money into the economy to pay off the debts. If there's no Russian interest, the US has already shown its intentions by closing NAS Keflavik.

I can't see the EU being interested - too many internal squabbles and no real interest. The most likely involvement would be on trade tariffs if Iceland should default on her debts. China would probably love to help, to be owed a favour, but is literally too far away.

Of course, nice though it would be for the UK to get involved and get some fish to go with our chips, we have already shot ourselves in the foot by invoking anti-terrorist legislation to seize Landsbanki assets when the problems started. So that's about as hostile a relationship as you're going to find anywhere outside of a divorce court.

I think Iceland are screwed.

- KoW