Operations were cancelled as hospitals plunged into darkness… people got stuck in lifts, panicking as they waited hours to be rescued… traffic lights failed causing chaos on city centre roads.

We are not talking about some far-away developing nation stumbling into the 21st Century. Embarrassingly, this was actually the UK… and it happened yesterday.

Cleveland, Cheshire, Lincolnshire and parts of London were left in the dark as a mysterious outage crippled the network. This was no minor local event – and no-one who knows what went on is prepared to speak about it.

The cuts escalated as the day progressed and the National Grid was forced to issue its second-most serious warning: demand control imminent!

Two entirely unrelated power stations (one coal, one nuclear – one in Suffolk, one in Fife) suddenly shut down within minutes of each another… the cascade continued with nine “generating units” also going dark… four other power stations also suffered failures to varying extents.

This caused the price of wholesale electricity prices to jump 35% to £95 per megawatt.

Secrets fill me with rancour…

Mysteriously, both British Energy and E.On said that they could not reveal the source of the problem. They won’t even say when the power stations are expected to be fully back on line, because of the effect this will have the wholesale electricity market.

David Hunter an analyst at independent energy consultancy McKinnon & Clarke summed it up nicely. He told The Times:

“The Government’s inability to make long-term energy security decisions over the last decade is coming home to roost. Since the ‘dash for gas’ in the 1990s, the lack of political will to make tough decisions has left Britain short of power.”

So, there is a massive question mark over the future of the UK. Tony Blair is responsible for this… and so is Greenpeace.

Blair didn’t have the balls to make essential decisions that would have secured our energy future. He was too busy fighting someone else’s oil war. He did not have the guts to take on the greens – and this was a mistake.

He should have set us on the track to nuclear power a decade ago – and made sure everyone knew that coal would have to fill the gap.

Instead he dithered and fretted over what to do. Policymakers even listened to the type of people that love to be in “focus groups,” so men with beards and women in comfortable shoes had their say. There was delay after delay after delay.

Greenpeace made everything worse…

When the government actually did something about getting our nuclear strategy on track, it got it so utterly wrong that Greenpeace took it to court on a technicality! This caused another year-long delay.

We must all consider the following pertinent facts.

Our North Sea oil is running out and oil imports are becoming more and more expensive. Russia is sewing up the European gas market (and we do not want to beholden to the Putins of this world for our future energy security).

Biofuels are an expensive con and burning food is stupid. Wind and solar power are unlikely to be able to provide all the energy for the 75 million people that are expected to be living in this country by the middle of the century.

The solution is blindingly obvious. We need to build new nuclear powers stations – and accept we will have to burn coal in the interim.

If we don’t do this, we could easily find ourselves suffering from energy poverty in the future. We will then have to hand over all our wealth to Russia in order to buy their gas.

Energy poverty will lead to economic poverty and then personal poverty if we let it… and the blame for this can be laid firmly at the door of Tony Blair and Greenpeace.

I worry yesterday’s blackouts could be a mere taster of what we have in store in the future. I reckon you should be worried too.

Regards,

Garry White
Editor
Smart Commodities UK

P.S: If you like what I’ve got to say, you can become a subscriber to my Smart Commodities email and enjoy all the benefits of my regular readers…

Source: Panic, Pestilence and a Nation In Crisis: Welcome to Blackout Britain

There was a time when these meetings were sufficiently rare for the President’s authority to reinforce that of the Prime Minister. Harold Macmillan had a successful meeting with President Eisenhower, which helped him to win the General Election of 1959. But the coinage of summit meetings has been debased. I do not read any comment, or meet anyone, to make me think that Gordon Brown’s Washington visit, or his speech at the Kennedy Centre, have strengthened or consolidated the Prime Minister’s position.

Indeed, the Prime Minister’s loss of public support seems to have continued since his return. It is the Labour Party which seems most disillusioned. Conservatives are rather surprised at the sudden decline of a Prime Minister whom they were accustomed to respect when he was a long serving Chancellor of the Exchequer. No doubt Conservative voters share the disillusion of the electorate as a whole, but they are not affected by the internal stresses and disputes of the Labour Party. Labour supporters are shocked by the suddenness of the swing in the polls, where Conservative voters are pleasantly surprised.

Certainly the Conservative Front Bench expected Gordon Brown to have a much longer honeymoon after he became Prime Minister, and feared that he would call a snap election, to win a fourth Parliamentary term for Labour. In the event, Gordon Brown decided not to hold a General Election in September or October of last year, though the Conservatives had feared that he would hold such an election and win it.

Whatever his reasons, Gordon Brown made the worst of this situation. He postponed the election to 2009 or 2010, and found public opinion moving against him. His early honeymoon was exceptionally brief; there was a surge in Labour polling figures which lasted for three months, after which the Conservatives went back into a lead which they have retained for the last six months. Current opinion polls suggest that the Conservatives would win a General Election outright.

The Labour Party is in disarray, just as the Conservatives had been in the 1990s. Gordon Brown as Prime Minister is a much less impressive Minister than he was as Chancellor. His whole mental apparatus seems to be less suited to the Prime Ministerial role. The public eventually came to lose confidence in Tony Blair, but Blair was an impressive Prime Minister in his early years. If he had not joined in the invasion of Iraq, Blair might not have lost his popularity. Even with Iraq, Blair was still able to win the General Election of 2005, if by a reduced majority. In 1997 and 2001, Blair had won by a landslide.

It does not now look as though Gordon Brown has the ability to lead Labour to a fourth General Election victory. He lacks the leadership qualities. Gordon Brown certainly does have personal advantages when compared to Tony Blair; he understands economic and financial policies much better; he has a better grasp of detail; he is a less superficial personality; he probably has a better understanding of his briefs. As against those advantages, Blair is a much better speaker. Brown can do the hard-slogging detailed parliament debate, but his big public speeches, particularly those he has given to Labour Party Conferences, are dreary and monotonous lectures, whereas Blair – and indeed David Cameron – give attractive theatrical performances. Brown is perhaps the master of the small print, where Blair is the master of the headlines, and the sound bite.

Unexpectedly, it is Gordon Brown’s greatest strengths which are now giving him the greatest trouble. For 10 years, Brown burnished his reputation as a prudent and successful Chancellor. In the last nine months that reputation has largely been destroyed by the world banking crisis, and by Labour Party resentment of the abolition of the 10p tax band. Labour Prime Ministers are not expected to concentrate on taxing the poor. There is no room now left for cutting taxes or for increasing social expenditure. There is a global threat of recession. Gordon Brown as Chancellor dominated government economic policy. Now he is a Prime Minister on the defensive. The next two years may be as difficult for him as the last two years of the Conservative Government were for John Major. The voters increasingly think it is time for a change.

Regards,

William Rees-Mogg
For The Daily Reckoning

Editor’s note: Former Editor of The Times and adviser to Margaret Thatcher, William Rees-Mogg now sits as an independent peer in the House of Lords. This was first published in The Fleet Street Letter

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Who stated last Sunday that Tony Blair is convinced that Brown can’t possibly beat David Cameron in a General Election.

Or maybe he’s put out by the fact that he’s having to promise concessions to all the people who are going to suffer from the abolition of the 10p tax.

Either way… as Brown staggers around the country putting all his efforts into convincing us he’s not a wounded animal… who’s looking into fixing the crippled economy?

Alistair Darling? He doesn’t operate without Brown standing right behind him… does he?

It’s all very well for Brown to come out and say he’s not going to concentrate on: “gossip and rumour.” But it seems to me that this is all he has been doing lately.

What is the point of all these publicity stunts and safe facing exercises when we have real problems to solve? A cynic might say it’s to detract attention from what you’re actually doing… i.e. NOTHING…

Well I think that fixing our problems is a better avenue to attempt to win a General Election on… as opposed to publicity and spin.

The finance sector makes up one third of our economic output, contributes £20 billion to the trade balance… and accounted for nearly HALF of UK GDP growth in 2007.

There are now more finance sector workers in Britain than there are construction workers, farmers and factory workers combined.

And they are in trouble!

What’s being done to fix our problems – other than our Leader touring the country to let people know he’s still got a job? Nothing that’s what!

And before anyone points to a £50 billion bail-out…

WE’RE THE ONE’S PAYING FOR THAT BAIL-OUT… YOU AND I… OUT OF OUR OWN POCKETS…

It’s not a bail-out… it’s us shoring up things that are failing – so they fail a bit more slowly…

Even the City is saying that this won’t solve a thing. One investment banker we know said:

“The terms of the Bank of England facility are pretty rubbish, I doubt many banks will use it, you can get better terms privately through the Repo market. I think it’s just a fig leaf to cover the Bank’s total inaction on the sub-prime crisis.”

But hey – slip a sly supposed bail-out in to the mix, whilst getting publicity with one of the world’s most beautiful people – AND MAYBE NOBODY WILL NOTICE THAT THIS £50 BILLION SOLUTION IS A LOAD OF RUBBISH.

WELL GUESS WHAT… WE’VE NOTICED… AND WE’RE PRETTY DARN RILED AT THE CHEEK OF IT ALL.

Let me ask you something dear reader…

What do you think’s going to happen to the domestic economy… and to YOUR savings and investments… if Britain’s ‘Miracle Money Machine’ has its output slashed by one tenth… one third… or even half?

Well – as the pound sinks to a record low against the Euro and investment banks brace themselves for further fallout… it’s time to batten down the hatches, because you’re about to find out.

Below you’ll find the link to a brand new Crisis Report published by The Fleet Street Letter. They’ve also identified three stocks poised to benefit from the finance sector-led recession they believe has to kick off in 2008.

Click here to find out more.

Not only is the most dramatic asset bubble of modern times clearly over… not only are the recent falls in real estate and equities just a taste of what’s to come… but a sector that accounts for nearly one third of Britain’s entire economy is about to get hammered!

If City activity dries up, so does growth, says Damian Reece in The Daily Telegraph. “The entire southeast, from house prices to employment, is a geared play on global financial markets.”

According to its analysts this could be one of the biggest challenges to face the British economy in The Fleet Street Letter’s entire 70-year history.

And it’s hurtling towards your savings and investments like a freight train even as you read this.

And if you’re not ready yet, you’ll want to be soon.

The Fleet Street Letter has been helping its readers prepare their portfolios for the coming crisis since October 2005.

With the situation deteriorating daily, they’ve decided to issue some advice to you today.

Specifically, the team have identified three “gloom loving” stocks they believe will thrive during the finance sector-led recession.

This could be the most important investment advice you read this year.

For the full briefing, click here.

Erin and Isabel
Editors
The Miner Diaries

PS: The Fleet Street Letter says: “If you want to keep your hand in the stock market, these are the simplest ways I know to position yourself to potentially grow wealthier from a likely recession in 2008 and 2009. One 5 minute call to your broker and you’re done.”

Go here for the full report.

It was the spare ribs last night… a favourite, but demanding in terms of mastication. So there I was happily munching away when suddenly… crunch! Perhaps ‘crack’ would be more accurate, as an upper molar succumbed to the pressure. At times like these it’s fortunate to have the necessary help close at hand, which is why I’m grateful my dentist lives three doors down.

Talking of dentists makes me think of something I was reading by Nassim Nicholas Taleb (a personal hero now, after only a few pages!) in his book The Black Swan. He recounts begin advised at Wharton Business School to do something scalable in his work. ‘Scalable’ meaning you could generate more income without commensurately more effort unlike, say, some professions such as dentistry. Their earnings are limited by the amount of people they can see who have broken teeth. He dismissed the advice, but wound up in an investment bank on Wall Street anyway. An investment bank must be hard to beat as a scalable business. As Taleb says, it takes as little effort to buy 100,000 shares as it does to buy 100.

But I digress. What happened this week? Well, it was something of a week where ‘past performance is not necessarily an accurate guide to future results’. UK employment levels have never been higher, yet job cuts in retail and the City are starting to mount. In the City 1,300 jobs will go from UBS and Merrill Lynch, and late on Friday Citigroup announced cuts of 9,000 staff worldwide. Home catalogue and educational supplies business Findel plc had a record year last year, but dished out a profits warning on Thursday and duly saw its shares punished.

Prime Minister Gordon Brown has been in the US. His visit coincided unfortunately with that of the Pope and he’s not Tony Blair, so he was ignored to some degree according to press reports. He’s been talking to the investment banks and asking for transparency so we can all know the worst and get on with our financially-squeezed lives. Around $250bn in subprime related losses has been disclosed, to date, from a total estimated by the IMF and others to be in the region of $1trn.

The unfolding impact of the credit squeeze has seen three-quarters of the mortgage deals available last summer withdrawn, according to the Daily Mail, though mortgage lending rose 5% in March over February. It is also expected to see a huge rights issue announced next week from Britain’s second largest bank, RBS. It is thought £10bn will be asked of shareholders. A sum approaching a third of its market value.

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It’s a secret those in-the-know call the “Invisible Stock Market’.

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But this guy tells you three specific ‘invisible market’ stocks that he believes will soar in the months ahead… even as panic and uncertainty grips the financial industry.

Don’t waste any time. Click here for the full report

Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares; never risk more than you can afford to lose. Please seek independent financial advice if necessary. Fleet Street Publications Ltd. Customer Services: 0207 633 3600.

Gold remains popular as a hedge against bubbling global cost-push inflation driven by ever higher commodity prices and dollar weakness. It traded at $935 late on Friday. Food shortages continue amid panic breaking out among importing nations such as the Philippines and Bangladesh who are struggling to secure necessary supplies. One in the eye for Ricardian economics of specialisation and competitive advantage. These nations if they have any sense will want to be self-sufficient in future. Rice hit a record $1,000 a tonne. Wheat, maize (corn), soybean etc. are similar stories of higher prices. With maize (corn) it has US biofuel demand helping it along.

On the currency markets, the dollar is weak and so is the pound, except against the dollar. The euro continues to strengthen and inflation ticking up to 3.6% will dampen hopes for an interest rate cut and do little to weaken it in the short term.

Finally, there is no sermon from Peter this week as he is away on a well-earned break. Okay, gotta run. The dentist’s chair awaits. Oh joy.

Enjoy your week-end.

Regards,

Rob Mackrill
The Daily Reckoning

Now another homegrown superstar is hoping to break
America – a plucky young performer from Kircaldy by the
name of Gordon Brown. Brown’s hobbies include rugby,
selling gold and being the Prime Minister of Britain.

Brown, as you’ll be aware, is currently holed up in
Washington, eating hamburgers lovingly prepared for him
by Chef George Bush, who also does a sideline as the
43rd President of the United States.

When not sampling Pennsylvania Avenue’s finest cuisine,
Brown has been doing a passable impression of an
important man. He’s had meetings with Bush, and he’s
played the beauty contest judge, glad handing and eyeing
up the three Presidential hopefuls, McCain, Obama and
Clinton 2.

Back home his own party doesn’t appear to particularly
miss him. Labour peer Lord Desai has made unfavourable
comparisons between Brown and his predecessor, saying
Tony Blair was like “champagne and caviar”, while Gordon
“is more like porridge or Haggis. Very solid, very
nourishing but not exciting.”

Small wonder, then, that Brown plundered the Blair
lexicon when asked about the state of the “special
relationship”. Brown says he stands “shoulder to
shoulder” with Bush, in an alliance that is “stronger
than ever”.

But the “special relationship” has looked one-way for a
long time now. And something tells me PM Brown is
unlikely to be the man to reverse this trend.

Of course, I could be wrong. In two years’ time,
bedrooms across America could be adorned with Gordon
Brown posters, while fans queue overnight to get their
hands on gig tickets, where they’ll hear Brown, and his
equally charismatic support act Alistair Darling, bang
out classic hits like “Financial Stability”, “How The
Government Has Ensured Financial Stability”, and “The
Need For Financial Stability”.

Or maybe we should just put Leona Lewis in charge.

———————————-

RBS prepares for rights issue, but
shares not affected… for now
———————————-

Skint bank the Royal Bank of Scotland (RBS) is going on
the scrounge. Like most banks right now, RBS is a bit
strapped for cash. So it’s preparing a rights issue.

The credit crunch aside, RBS’s capital reserves took a
battering last year when, after a drawn out tussle with
Barclays, it paid top whack for Dutch firm ABN-Amro.
Now UBS (more on them in just a sec) reckons it needs
about £9 billion to bring its capital ratios in line
with other banks. Estimates of how much RBS is after
range from £5 billion to £12 billion.

But RBS won’t be going bust – and the market has
recognised this, with RBS shares, at the time of
writing, trading around where they opened.

“What will be interesting,” says colleague Garry White,
“is how heavily they discount the rights issue – which
could be a third of the bank’s market cap”.

So, it’s ‘Watch this space’ for now.

Meanwhile there are fresh fears of job losses in the
Square Mile. Merrill Lynch has announced 4,000 jobs
will go worldwide – up to 400 of those could go in
London. Citigroup has said it’s on a cost-cutting
mission (that means jobs), while UBS are preparing to
eliminate 900 positions in London.

Our sister publication, the Fleet Street Letter, has
compiled a report on how these City job losses will hit
the wider economy. It makes for very interesting
reading – and identifies three defensive shares that
could protect your portfolio. I urge you to read it
here:

http://click.fspeletters.com/t/16624/1632470/156673/0/

Your capital is at risk when you invest in shares, never
risk more than you can afford to lose. Please seek
independent financial advice if necessary. Fleet Street
Publications Ltd. Customer Services: 0207 633 3600.