short selling

I remember the old guideline for corporate (and other) logos was to use an absolute maximum of three block colours. It was partly so that the logo could transfer easily to varied media and surfaces. I get it that with modern media and emoticons there is some scope for relaxation, but I still worry when I see overly fancy graphics for the logo.

Carillion were in the ornate category. The companies they took over all had fairly plain 'no nonsense' building company type logos, but the resultant frippery used by carillion was only one character away from setting bells ringing.

I'm sure lengthy investigations will unpeel some of the horrible situation, but here's another example of some well remunerated captains of industry driving a company onto the ice.

At initial glance it seems strange that a company winning bids for huge government contracts could find itself in this position. Here's the organisation that had a significant hand in the building of the Tate extension, the Channel Tunnel, has won extensive HS2 contracts, bids to build schools, is the biggest manager of UK Ministry of Defence bases...the list goes on.

There's talk now of the extra government contract awards to Carillion after their July 2017 profit warnings. My custom chart via the FT illustrates the situation, and I've thrown in a linear regression to doubly make the point.

It makes me wonder what the Government guidelines on Management of Risk (M_o_R) are actually used for? It would be handy to know how to spot a downward trend and maybe to have some remediations. Of course, the smart hedge funds could see the situation back in July. They made Carillion the biggest UK shorted stock - itself a cause for some alarm. Blackrock (that employer of consultant George Osborne) was amongst the top shorters, in effect betting that the share price will fall so that they can make a profit.

Popular gossip was that Carillion was underbidding for some of its contracts , in other words 'buying the business'. I don't know about that, but I do know that there has been a fairly unremitting increase in category management advisory services, which should provide all around advice to purchasers of services. The advisors' magic trick is to zero in on 'savings' which effectively pushes down the rates that suppliers can charge. It is okay up to a point, but when the supplier is no longer able to function with a sensible profitability than it jeopardises the whole situation.

I don't know whether that was happening with Government procurement of Carillion services and a labyrinthine middle tier structure doesn't help to make things any clearer. That's because Carillion itself sub-contracted, via similar category management, to other lower level suppliers. Wheels within wheels.

There seems to be around £5 billion in play with the entirety of the Carillion situation, plus more than half a billion linked to pension scheme deficits. Now that the first-to-get-paid advisors like PWC have moved in, there will discussions about who will get anything from the situation and where the shortfall money will be parked.

What is already noticeable is that early positioning is drifting the deficit towards the smaller people - suppliers to Carillion, retail shareholders, people in the pension system.

Yet the big chiefs guiding all of this have done okay. Just like chief executive Richard Howson who earned £1.5m in 2016, including £591,000 in bonuses. For some that would be a lifetime's earnings. But wait - although he has already stepped down, he was due to stay on the payroll to pick up another £660,000 salary and £28,000 benefits through to October 2018. He wasn't the only one on that HS gravy train.

Does it seem strange that a business with an almost never-ending supply of UK Government contracts could find itself in this position? Maybe it was enforced low margins? Perhaps it was an over bloated middle management? Perhaps it was a lack of risk management? Maybe the whole value chain was tainted in some way? Behind the headlines there's the 20,000 UK employees affected, plus a similar number on overseas projects.

But by now Blackrock and the other hedge funds have moved on. Other heavily shorted stocks at the moment include Mitie, Marks and Spence and Ocado.

Watch out.

red dot

A couple of days ago I completed that Fire and Fury book about Trump. I've already commented that it felt like the book was going out of date faster than I could read it. The narrative finished sometime in October, so there's the last few missing months, weeks and days.

Usually I pay attention to the 'long waves', which tend to iron out the buzzy moves of a 24 hour news cycle. It's far more difficult with Trump, because of the sheer volume of interference frequencies that operate all of the time.

It was similar with this book. Noisy in its own right, it was also looking in a certain direction. Although wide-angled, it showed certain major interests, such as Jarvanka and Bannon. As an example, when there was an inference of a link to, say, Russia, or to, say, organised crime, this book would deal more with how the inference was handled rather than what the inference was actually about. I suppose the author had to draw lines in order to get something published.

But the directionality means that (for example) the Christopher Steele dossier (pp 37-39, 92-93, 102, 151, 156) and the Glenn Simpson data digging (not listed) can still seem somewhat underplayed. Maybe the ongoing Mueller investigation will have more to say about it, assuming Trump doesn't find a reason to remove him.

Trump's pseudo-monopoly power gives him so many strings to pull. It means on a matter involving his personal integrity he believes he owns all of the 'get out of jail cards'.

Presidential privilege, a fistful of lawyers, a massive genius bigger-than-big tilt button (the biggest) to press whenever he likes, even the recent resurrection of a 24 year old Espy case. He can do what he likes to avoid having to stand up to proper questioning about any of his curious past or as he calls it the 'Democrat hoax'.

Today's US Embassy in London excuse is another example. He suspects it wouldn't be a popular visit. For starters, he wouldn't be rewarded with full pomp and shiny-shiny, so he incorrectly blames the previous president for the selection of Nine Elms as siting for the new embassy, away from the prior Mayfair.


But before we've had a chance to visit the embassy construction site to pose next to the Madame Tussauds waxwork figure, he's already moved on to racially slurring a range of countries (which he now denies). And so it goes on.

What did come through clearly in the book was that the narcissistic sun-god man-child doesn't like to be confused by facts and uses a simple red dot approach to clearing out people he doesn't like. Nothing subtle, just a straight line to the target.

And that target can be anyone who could make him look secondary.

nihil profici patientia nisi ut graviora tamquam ex facili tolerantibus imperentur

"All we get by patience is that heavier demands are exacted from us, as from men who will readily submit."

Not new thinking exactly, it's from ancient days when Britons dwelt upon the miseries of subjugation.

Back around AD60-ish, Tacitus wrote of Britain in ways similar to Douglas Adams in the Hitchikers Guide describing Earth. Not 'mostly harmless', but instead that 'Their sky is obscured by continual rain and cloud. Severity of cold is unknown.'

As well as climate commentary, Tacitus noted that the Brits could be easily divided.

"They were once ruled by kings, but are now divided under chieftains into factions and parties. Our greatest (Roman) advantage in coping with tribes ... is that they do not act in concert. Seldom is it that two or three states meet together to ward off a common danger. Thus, while they fight singly, all are conquered."

And so was the means by which Boudicea was defeated, similar to that new TV show set in a slightly earlier time, with different tribes, similar divisions and a different female leader.

Considering this was around 2,000 years ago, there's still some similarities.

The Brits may be protesting their place in the European Union and ostensibly planning exit. We still don't seem to have a united plan. Even one of the chief agitators, that awful ashtray and claret man, is suggesting a second referendum, secure in his 49% leave: 37% stay: 13% don't know knowledge that the Brexiteers would still prevail. And our leader is inconsequentially shuffling her tribal leaders and avoiding any brexecutions.

Meanwhile we get complicated ceremonies and charts, but still lack real content to make it interesting.

No wonder the EU27 don't offer anything constructive. As an example, a three tier system of membership (Gold, Silver, Bronze) could probably have solved many of the EU questions a long time ago. Gold for the hardcore members (France, Germany and so on), Silver for a less convinced ring (some of the Balkan states etc). Then fold partial members into a Bronze membership (Switzerland, Norway, Great Britain). Everyone pays something to be in the club, but - guess what- the Gold members get more from it than the Bronze.

Each to his own, albeit with less individual power. So that can't be, can it? Not a chance.

As Tacitus observed, "Lust of absolute power is more burning than all the passions"

distant weather

We've been keeping a watch on the terrible weather in Southern California.

It's an area we enjoy visiting and last time we were there just over year ago we stayed for several days in Montecito, which is just along the coast from Santa Barbara.

Both towns are usually sun drenched, although last time we also saw some of the forest fires in the surrounding area. There were fire tenders all the way along the coast from around Santa Barbara right into the back of Los Angeles, where we also saw those planes that bomb the flames with water.

The last few days has seen the weather switch as heavy rain has hit the area, creating huge lethal mud slides, including right to the very Inn where we stayed.

Here's the 'now' picture showing the terrible mud which has flooded the hotel.

Contrast with the 'then' picture of the hotel when we stayed in more normal conditions:

same as it ever was same as it ever was same as it ever was same as it ever was

And you may find yourself
Living in a shotgun shack
And you may find yourself
In another part of the world
And you may find yourself
Behind the wheel of a large automobile

The government's so-called reshuffle seems less of a big event than advertised.
We get a new horse-racing enthusiast to take over Culture, Media and Sport.

Then there's a couple of bodged replacements - including a refusal to budge and an unexpected resignation. We get some not completely new back-fills as a result of 'alleged' sleaze. So let's take a look at the top of the list for changes.

And you may ask yourself, well
How did I get here?

Sure, there's a couple of tweaks, with Justice and Education. International Development and Defence 'changes' since 2016 are really the result of rogue operation repair and rogue behaviour repair. So somewhat like the two steps backward election, we have a leader demonstrating a lack of resolve from her sulky compatriots. It reduces the effect of the change by not really offering anything new, but instead presenting the same old same old with hasty coffee cup adjustments.
Yes, we all spotted the first outing of the sustainable tie-matching plastic cup that the Environment secretary sported in an attempt at damage limitation.

The secretive wraps around covefe are finally removed. It's all about Goveffee, also used to pantomime effect again on the way out of number 10.

I have a feeling that the disposable to re-usable metaphor might even recur. But, as Talking Heads might say:

Same as it ever was
Same as it ever was
Same as it ever was
Same as it ever was

its like a real smart stable genius discourse particle innit

A weird thing about reading that Fire and Fury book is the realtime rate of change.

A kind of dx/dt where the rate of page turning and passing of time destroy this brand new content in just a few days. "Best before".

• Thursday (Day 1) : I read some previews and take them at face value as a mixed bag of truth and rumours.
• Friday (Day 2) : A copy of the book arrives in my in tray. I start to read, but the press is already all over it leaking sections and looking for reactions.
• Friday (Day 2 evening): Mr Trump starts his stable genius dismissal of the content. No sloppy schoolboy behaviour here. No valley-speak. Move along.
• Saturday (Day 3) : Everyone gets lawyered up. Trump has a picture showing him with about 6-7 legal representatives.
• Saturday (Day 3 later) : The first denials about the content trickle in. Could the author have been mistaken?
• Sunday (Day 4): Even Mr Bannon starts to issue denials. I'm still only 2/3 of the way through.
• Monday (Day 5): Maybe I'll finish it today. I could treat it as a work of fiction using real names, but I can't help thinking there's an awful lot of truth within.

Meanwhile, Trumpism continues to make new moves. After that rich person benefit tax relief, the middle east interventions, the shut down of the voting probe, this book must surely be a great smokescreen for the bandit business as usual?

Better call Saul.

my current favourite Barry Blitt cartoon

I don't very often recycle cartoons or memes, but this one did make me both chuckle and sad at the same time.

silent Bob is no longer silent

I was mistaken when I thought that the intel bug that is in the news isn't all that recent. I thought it was announced back in May last year as part of that Active Management Technology 'silent Bob' blooper. Hands up all the that still have ports 16992, 16993, and 623 active?

I also remember having a Thinkpad where some Intel management technology was quietly discontinued - at least two years ago,

They were examples of where the computer's management system could provide a more serious security exploit than the systems it is protecting. Much like the way that Bruce Willis et al will shoot the security lock on the wall of the citadel in order to spark the wires to get in.

It turns out that the recently named spectre and meltdown exploits have an even older origin. In ye olden days of computing, a way to do something tricksy was to embed the 'machine code' into the data string of a high level language and then to deliberately overrun the normal length of the embedded data to, in effect, execute the data as if it was machine instructions.

Huh? I hear you say. Mumbo jumbo?

It used to be a way to very efficiently execute something that might otherwise have not been practical. To put some raw machine code into the middle of a high level program (nowadays an App).

There even used to be reserved words for it, typically 'code' followed by a data string. Of course in those days, it was done for wholesome performance reasons.

Nowadays it is more likely to be prefaced as something like "arbitrary code execution via unrestricted deserialization" and be the source of a menacing attack.

But as we've all got anti-virus and other security software, it should be okay?

Just because Barclays stopped offering free Kaspersky software to customers as a "precautionary decision" shouldn't mean that the Russian-based software isn't fine to use. Nor should the (British) National Cyber Security Centre decision to write to all government departments to suggest they don't use the that particular brand of Russian anti-virus software be seen as anything worrisome.

And I suppose if it is difficult to revise the firmware code on all the Intel and AMD cpus produced since 2008, imagine what it will be like when the Internet of Things really gets going.

larceny, mind loss and misdirection (with buttons)

I've been reading some of the preview sections of that Michael Wolff book about Trump. It's been in the news, particularly because of the Bannon quotes, although it doesn't officially get published until next week.

It's an entertaining read, because however accurate it is (or not), there's interesting moments, like the whole expectation within the Trump camp that they would lose and that the electioneering was really a way to propel other media agendas.

Then we get the top-up money required from Trump to run his campaign. Bannon asks for $50m and Trump provides $10m, which he is insistent and quick to recoup once the funds have been raised.

Wolff compares the early days of the presidency with the well-known movie The Producers. Make something bad but then be wrong-footed when it is successful.

There's some great one liners too. "Twinkle in his eye, larceny in his soul". Ann Coulter telling him, "You can't just hire your children."

Then there's the efficient but perplexed Katie Walsh as deputy chief of staff at a White House devoid of an up-and-down structure. A childish figure at the top and everyone else scrambling for his attention. Not task-based so much as response-oriented, to whatever the boss was currently thinking about - often whimsically from the 6am Fox broadcasts.

That's where this book rings true. Trump doesn't process information in any conventional sense. He appears not to read. Not even skim. Some believe him to be no more than semi-­literate.

Some say he gathers most of his information from television, but then they also say he eats a lot of fast food and worries about being poisoned via his toothpaste. There's a lot to unscramble. And through it all his ego uncompromisingly trusts his own expertise ­— no matter how paltry or irrelevant.

Maybe it explains his lashing out with gut instincts, often starting with policy announced on twitter? Yet despite a reduced linguistic sophistication, and impaired impulse control, there's still a snake oil salesman in there somewhere. A 'Don the Con' use of misdirection, to hide something else. Today's disbanding of the voter fraud investigation is a case in point.

No doubt the book will be derided as fake news or trashy tabloid and maybe lawyers will get involved. The author may have exaggerated too. We won't know, although the narrative I've seen seems to fit rather well against broad perceptions of what has been happening.

pass the Almas for another episode of McMafia(c)

I’ve been watching that new McMafia series. The one with the frequent jump-cuts around the world of high-end corruption. Trafficking, drugs, laundering, floating casinos the list goes on. All overlaid with bursts of sudden violence.

I read Misha Glenny’s McMafia book some years ago. His original book deals with the same themes, but is quite different from the fictional story presented in the TV show.

For me, the book put many encounters into place, like finding the picture for a jigsaw puzzle. I’d travelled around and run into the edges of things explained in the book.

An example was in the streets of Bari and Naples, where young kids would run up clutching 10 packs of cigarettes. 200 cigarettes to sell for a few dollars. There were too many packs and too many brands for it to be a random truck heist. No, I realised this was organised, but had no real sense of the scale. Glenny’s book describes this, complete with the (alleged) involvement of the manufacturers, the manoeuvring of the untaxed bonded goods, the speedboat dash from Montenegro to Bari. And then suddenly the goods become presentable as good value. And everyone in the chain has made some money.

A similar scheme when I worked around Moscow. There it was gasoline being sold in plastic containers from paste tables. Not just one or two, but again a whole industry. This relied upon smuggled fuel, and routes had been set up from the Balkan states to get the fuel across the border in organised shipments. It could be an ostensible NATO convoy of 100 tankers, topped and tailed with a NATO vehicle. It could be a convoy of smaller adapted cars, each of which could take up to 500 gallons of fuel.

These schemes and the ones that shipped caviar at 10,000x margins were part of a much bigger web of corruption. Get the small money and turn it into big money. A complex web of transactions but always with a net flow of cash upwards.

Add in the drug cartel inputs and it is easy to see how the streets of Moscow were filled with armoured Mercedes, top flight Porsche and convoys of dark-tinted Hummers.

The Glenny book covers a lot more of the way the businesses worked and describes some of the major centres, such as the Balkans. I also spent time in the old Yugoslavia, on the cusp of its split. Despite the League of Communist rule, a walk around Belgrade showed a divided city. Both the well-heeled and poor farmers jostled together, ahead of the extremes of Slobodan Milošević’s Serbia. Glenny’s book (I suspect more overtly than the TV show) talks about some Serbians and their use of violence as enforcers for the various crime syndicates.

Another suspicious area was Bulgaria. I’d visited via the comedy of Plovdiv International, where the baggage handling was literally a chain of men who threw the luggage between one another to get it into the terminal. Stark, cyrillic communist posters were the main form of advertising, yet the street rates for currency exchange were ten times the official ones. As westerners we could live very well for pennies. Contrast it now with the shiny modern terminal at Sofia, although still raise an eyebrow towards the many bonded warehouses positioned around the borders.

And so it continues today, with the upper money washed and filtered via London's Global Laundromat into empty apartments and mansions (money at rest) with the bulk of it tucked away into neat British Virgin Island brass plate shells with the small change providing funding to support hard-done-by politicians.

Revealing to me is the robustness of the systems used. Their resilience to changes of government or regime, and the way they can operate so flagrantly in the public eye. The TV show illustrates a part, but it is also salutary to think that most of the ultra-rich extras in the well-heeled crowd scenes have equivalencies of the main story being told.

We can only wait for the stories of money laundering around –ahem- 5th Avenue to finally break.

meitu worlds collide with added HoneyCC, meipai and a few quiet hacks

We had our little get-together at the end of 2017 and even took some photos. We were rank amateurs compared with the full-on selfie generation, we even had someone extra holding the phone to take some of the pictures.

At least it was on an iPhone X, so we could claim to be up-to-date. Or were we? We Brits don't get the same exposure to technology as some parts of the world. Back before the iPhone 6 came out, I ordered a GooPhone from China, for about $50. It was a functional iPhone 6 body clone, running on Android re-skinned to look like iOS. And it was before Apple released the real thing.

Of course, I only did it for entertainment, although the now several years old phone does still work and even has a PAYG simm inside and a proper phone number. The headphones were rubbish, but the iPhone compatible charger and cables would have cost about as much as the phone if bought in an Apple store.

Anyway, back to our little 'do' with our Chinese contingent present. We briefly talked about the latest Chinese gadgetry, which nowadays decides into 'proper' and 'knock-off'. In the proper category are those Meitu phones, which seem to be a big deal in Shanghai. They are the ones designed to take selfies and have a whole raft of facilities to make the subject of the photo look good. The picture below shows one of the latest sought-after phone models, clearly aimed at a specific market.


The selfie stick is an integral part of the design and can be wielded like a kind of sword for maximum effect.

Protocol says that a combined selfie (ie a +1) should only be released to the world after extensive editing to make everything look wonderful. It's become a mini industry in its own right and the latest Chinese phones include both super duper lenses and also photo editing software to help the whole process. A leading proponent of the cause is HoneyCC, who is as well-known in China as, say, Lady Gaga. That's her at the top of this post, at the Mercedes Showroom in Shanghai for the 2017 Victoria's Secrets show. Note the glamour glow, catchlights, bokeh and skin-toning.

But here we are with the aspirational part of the Chinese economy. The fuerdai trust funders. Rural China might pull in $1.2K over year. A factory worker in a big city could earn around $3k-4k and an office worker around $5k. Then there's the enormous gap to the well-heeled who can buy the German cars, French perfumes and the fancy phones.

Some of it might be the 'wild east'. There's all kind of nefarious hacks in the coding of this photo software. Blend the GPS co-ordinates, take a riffle through the user browser history, some recent shopping locations, maybe? It could all be fair game, like those hidden browser hacks that probe stored password libraries to see which things you might use or own.

It reminds me. I'll need to stay off the candy for 2018.

Happy New Year

Let's have a good 'un.