Stansted passport queues set to return

UPDATE:  18th November.  Unfortunately the predicted long queues at Stansted passport control are indeed starting to become reality.

I have come through twice in the last week and both times there were large queues.  Each time was late at night and the queues, while not long enough to get in the newspapers like earlier in the year, were extensive (and annoying) for a quiet day in November (hardly peak season).

Last night there were not that many passengers but still long queues because they only had two desks open which confirms the suspicion that they are cutting back on staff numbers.

On a final note of discontent, I tried to use the automatic passport control gates and, on both occasions, something went wrong with the machine reader and I had to go through the manned controls.   Lots of other people seemed to be having the same problem with this technology which is presumably "the future" for passport control.

Original article:

I regularly pass through Stansted, coming back and forth from Spain, and this Summer have been pleasantly surprised by the lack of serious queues at passport control.

But enjoy the speedy passage through immigration while you can - it may not last.

According to a chatty immigration officer I spoke with last week the queues are set to return as early as this month.

She explained that the Summer's surprisingly short queues were down to extra staff being drafted in by the UK Border Force when things got out of hand in the Spring and made some awkward headlines:  Long passport queues unacceptable.

The extra staff, some of which were drafted in from other parts of the UK Border Force, are said to be reassigned back to their normal roles which will leave the queues to mushroom again.  I hope not as I have a lot of flights planned including a return through Stansted on Sunday night.  We'll see.

Similar reports of forthcoming queues at Heathrow:

http://www.workpermit.com/news/2012-09-10/uk-immigration-insider-predicts-more-queues-at-heathrow

From our website:  Spanish Tax Services

Spanish pound shops need to raise their game

Britain's pound shops are much better than the Spanish equivalents - the equally ubiquitous but drab and uninspiring "Chino" supermarkets.

This matters because the sector is one of the retail sectors' rare growth sectors in tough economic times.  Spain's consumers and the Spanish economy generally could benefit from a revolution in the cheap and cheerful sector.

The UK pound shop sector has been revolutionised in the recent past with the rise of chains like Poundland and 99p Store. The  additional buying power they have has enabled them to expand their ranges and especially to offer more branded products.

Crucially the big manufacturers have been encouraged to make lines especially for the sector so you get Head and Shoulders shampoo for a pound albeit in slightly smaller bottles.

They are also very dynamic, always looking for new offerings so customers never quite know what to expect.  You often end up going in to buy one thing and coming out with half a dozen bargains.  On my last trip - to stock up on sweets for the kids (honest) - I was delighted to also walk out with two DVDs of the original Spiderman TV series which my kids love and which cost 5 times as much on Amazon.

Even celebs go to Poundland these days according to news reports.  Hard to imagine Spanish celebs going to their local chinese bazaar.  These never have anything branded or different and the presentation is woeful - like the contents of a Chinese container vessel have just been dumped into a cavernous warehouse.  Not everything is that cheap either.

Before the euro came along there were "100 centime" shops (about 60 c) which stuck mostly to the pound shop model, allowing for inflation.  The "hypermarkets" we now get in Spain charge pretty random prices with some of knick-knacks costing 60 or 70 cents but some going up to €1,80 or €2.

The bigger ticket items (like big Christmas present toys or electrical goods) are risky purchases even when the price does seem right as the quality is so variable and there are no guarantees.

I could be way out of touch here and maybe there are Poundland equivalents in parts of Spain that I don't know about.  But in the areas I know Spain is being badly served and needs a bargain-retailing revolution.

From our website:  Taxation of rental properties in Spain

Trough oil?

After decades of "Peak Oil" talk and warnings about  a global energy crisis, it has become fashionable to claim the opposite: we are awash with the stuff and a  supply crunch has been postponed indefinitely.

This is especially interesting to me as an investor because I largely bought into the Peak Oil theory.  Permanently high oil prices and the knock-on effects of depleting oil supplies have been something of a cornerstone of my thinking about the economic future.  It's why I made what has so far turned out to be a great call on Shell shares last year - How to ease the pain of high fuel prices.

Roughly speaking the Peak Oilers claimed that oil production would peak at 85 million barrels a day (bpd) around the middle of the last decade as production rates from big fields declined.

There is no shortage of oil left in the ground but most of the big easy discoveries have been exploited and it would be increasingly hard and expensive to keep up production levels.  With demand from the developing world, especially China, growing fast a crunch loomed and prices would sky rocket.

As we all know this happened to some extent.  Chinese consumption alone rose by 4 mbd in the 2000s and the world's oil producers struggled to keep up which culminated in $147 a barrel oil in 2008 and $100+ prices most of the time since despite the economic crisis.

The 90s when oil went down as low as $10 and rarely exceeded $10 seem like another era and one that will never be repeated.

But crucially producers have responded and oil production has increased. The high prices have attracted trillions of dollars in investment in traditional oil producing countries (Saudi Arabia is producing record amounts), new frontiers (e.g. in Africa),  and in deepwater drilling.

Throw in a recovery in production from Iraq, which recently became the second biggest producer in OPEC, increased production of "non-conventional" oil extracted from tar sands and new techniques to  increase recovery rates from old fields and you can see why production has continued to increase.

A lot of the "trough oil" talk has been driven by the view from the US where exploitation of shale gas and oil has been something of a game-changer.  US oil production peaked at 10 mbd in the early 70s and had been in steady decline to about 5mbd until recently when output started growing again.  Imports have been reduced by a third and there is talk of the US being self-sufficient in a few years.

But supply is only one side of the price equation; what of demand and especially this insatiable demand from the developing world?  Even on this front optimists see trends that could make oil abundant and cheap again.

I have even seen one article in the New Scientist predicting that, by 2020, oil production will start to fall not because of a lack of accessible reserves but because demand will be declining.  That's a radical claim: an oil crunch will be avoided not because we will find new sources of supply but because the world will - in their words - "dump the pump".

Two reasons are offered:  increasingly fuel-efficient cars, either because of regulations or through consumer choice, and the rise of the electric car.

Developed world oil demand has started falling already including in the US.  Partly that is due to the economic crisis but a trend towards fuel efficiency is a factor and is set to become even more significant as new laws take effect.

Consider US CAFE standards which mandate the average fuel efficiency of cars sold as measured by miles per gallon (mpg).  When CAFE first came in during the 70s the requirement was 18 mpg and this was increased gradually to 27.5 mpg by the 2000s although Bush refused to raise this not very demanding target higher.

Obama has not been so lenient on the car industry and the next target (due 2016) is 35.5 mpg.  Even stricter CAFE laws will bite from 2017 leading to cars with an average 54.5 mpg and a forecast decline of 11% in US oil demand.  The EU has passed similar laws focused on average CO2 emissions across manufacturers' fleets.

So that's how Peak Oil could become Trough Oil - multiple increases in supply meets dwindling demand.  Well that's the theory.  But should we buy into it and, for example, sell oil stocks which would surely tank in a world of Trough Oil?  While there are some undeniably interesting facets of the argument I am sceptical but I'll set out the reasons why in another post.

From our website:  Spanish non resident tax

Mining stocks and China's hard landing

A quick update on some comments I made about China's economy in June: China and the miners - place your bets.

It was a time when the argument over China's faltering economy was finely balanced: would growth rates dip and quickly recover (soft landing) or could China be on the cusp of something more serious?  I suggested that buying mining shares rather than China funds - like Glencore and Anglo Pacific - was a good way to go if you were feeling bullish.

Events since, including lower than expected industrial output, export and inward investment numbers, have pushed the debate decisively in the direction of the China bears.

So have mining stocks declined?  Not really.  Glencore and BHP are up 20% and 15% respectively since my article at the end of June.  Anglo American is down but there are special factors including a disputed copper mine in Chile. Anglo Pacific is up 8%.  Iron ore, coal, oil and copper prices are all up sharply.

So in the short term it looks like the correlation between poor Chinese economic data and mining assets doesn't hold.  However stock markets are forward looking and much of the China bad news had been factored in by the time of my article.

The latest rises represent bounces from previous setbacks not renewed optimism.  The bounce has been attributed to a belief that the Chinese government will ease policy to keep growth rates up and especially sanction another slew of infrastructure projects which are resource intensive.  Another factor is a growing belief that the ECB is prepared to act decisively to head-off the crisis in the Eurozone probably by buying Spanish and Italian sovereign debt.

Where now?  In the medium term it's hard to be wildly optimistic about the Euro situation whatever the ECB does.  As for the bigger question of how long can China keep growing at 8% plus it seems that the authorities will pull all the levers necessary even if that means maintaining the economy's hideous imbalances in particular the bias towards wasteful investment (nearly 50% of GDP) in property and infrastructure.

Meanwhile the big miners are scaling back on some of their expansion plans to reduce the threat of oversupply.  Share price meltdown averted?  For now maybe although it doesn't feel like the right time to pile into resource stocks particularly after recent gains.

From our website:  A guide to Spain's autonomo system

Spanish savers: government to the rescue?

Last week I wrote about the Spanish savers who are set to lose everything because they were sold preference shares in their banks which have subsequently gone bust - New fears over Spanish bank accounts.

I said that it was worrying that the government was not prepared to step in and help despite the fact that the policies were blatantly missold to the vast majority of retail investors who thought they were just deposits with lock in periods.

It seems like I may have jumped the gun and surprisingly underestimated the Spanish government on this one.  According to an article in the FT they are going to ensure that most small savers are repaid in some form.

The concession is complicated by the Memorandum of Understanding the Spanish government signed with the EU prior to receiving access to up to €100bn of bail out money for their financial institutions.  This envisages bank preference shareholders taking their losses in full and there are restrictions on what can be repaid e.g. no more than 10% more than the current market value of the shares.

Some of these shares trade at below 50% of face value so saver could still be taking a big hit.  However the outlook has definitely brightened for them and it slightly increases general confidence that the government will protect the retail depositor more generally whatever happens.  If it can afford to.

From the website:  Spanish tax form 210

New fears over Spanish bank accounts

A little while I wrote about the security of Spanish bank accounts in the midst of the rapidly worsening economic situation in Spain: Are Spanish Bank Accounts Safe?

The gist of the article was that although there are government guarantees for deposits up to €100,000 I wouldn't be too confident because, in a worse case scenario, the government might fail to honour the guarantee or even pay up in devalued pesetas.

The latest twist in the tail concerns savers who have lost their savings without any recourse to the government deposit insurance, because they have been sold preference shares in their bank.

These were sold as if they were just deposits with especially good rates of interest but they have turned out in fact to be risky securities which would not pay out at all if the bank went under.  That's exactly what has happened in some cases, especially the giant Bankia which had to be bailed out last month leaving "preferential shareholders", mostly innocent savers, wiped out.

I have read that there hundreds of thousands of these preference shares in private hands.  But if your money is in a proper bank account then you should still be able to claim on the government deposit insurance if your bank goes to the wall.

There has been no suggestion that the government will step into help preferential shareholders which does rather support my view that Spanish government bank deposit guarantees might not be honoured if things get really bad.  No wonder it is said that tens of billions have already been shipped out of the country.


From our website:  Changes to Spanish tax form 210

Oh no, Brown and Osborne have morphed into Geordon

They reportedly hate each other but the current and former Chancellor are increasingly merging into one.

No one was more fiercely critical of Brown as Chancellor than me and that was in the boom years as well as the the recession which followed.

I hoped George Osborne would draw a line under the Brown years and set Britain on the right course.  But increasingly it seems there is little to choose between the current Tory economic policies and the Labour ones that left the UK in ruins.

Read these five criticisms of recent Treasury policy and decide who they apply to, George or Gordon:

Out of control public sending - The Chancellor has allowed public sector spending to rise remorselessly as a % of GDP to the point where half of the UK economy is taken up by government spending, 20% of that financed by borrowing which never seems to come down, making a mockery of the "austerity" or "iron" Chancellor reputations.

Blame the foreigners - once it was the US for the sub - prime crisis which had the temerity to burst the UK's bubble and now it's the Eurozone for slowing demand for British exports.  Convenient scapegoats for a disastrous performance by the UK economy and its chancellors.

Laissez faire monetary policy - The decision to farm out responsibility for monetary policy to the Bank of England was widely-praised but it looks to me like an abrogation of responsibility.  How can you claim to be running the economy when the most important policy decisions (QE, interest rates) are made elsewhere?      The B of E has a government set inflation-target of course but this is deeply flawed and takes insufficient account of asset bubbles, money supply, the exchange rate and absolute levels of indebtedness.  The unspoken rule of the Chancellor seems to be that the B of E is free to adopt whatever monetary policy it likes . . . as long as it is loose.

Tricks and wheezes  -  There used to be a time when Chancellors announced programs which changed the face of the country - think Lawson's tax reforms in the late 80s and Healey's change of course in the late 70s.  Now we get short term fiddling and little games to try and "wrong foot" the opposition.  Lots of knockabout political point scoring and short term initiatives, nothing substantial for the long term.

As a footnote there are two members of the government who ARE making important reforms with long term economic ramifications  they are just not in No 11 (Gove - Education, Duncan Smith - Welfare).

Off balance sheet finance - why raise money transparently and honestly through the tax system when you can finance pet projects on the never never via dubious PFI schemes, Infrastructure Banks?  These schemes look like they are giving the taxpayer something for nothing but, as we are finding out with PFI-financed hospitals, they will come back to bite us in the end.

Can't decide which criticism belongs to whom?  It's because increasingly they  apply to both equally. Brown and Osborne have morphed into one terrifying being.  Heaven help us.

From our website:  Starting a business in Spain