Well, are you as unimpressed as IW by the G20 nonsense? The junket seems to have lasted the entire week and there are many prizes to be awarded for moronic remarks and speeches, not only by the participants but also by the journalists covering the thing. But to be honest, it's all just so boring that I can't be bothered. The only outstandingly moronic speech that really DOES need eviscerating was the Obama one's closing remarks anent Broon - "The world owes him an extraordinary debt of gratitude." Barack - could you explain why please? I'm just a simple country boy so maybe I'm missing something here - but isn't Broon the one who proclaimed "the end of boom and bust", who fiddled the UK's "economic cycle" parameters (his own parameters!) to keep borrowing like crazy at government level while not only condoning, but encouraging, the unsustainable excesses of the debt - fuelled consumer boom of the past 12 or so years? What the world owes Broon is a good kick in his ample rear end and a place in the jobseekers' queue. And as for the Grauniad journo who is now claiming that the G20 meeting "marks the death of Anglo - Saxon capitalism" - well, what's the point in bothering to comment on that? What a total wally. My Really Scary Granny's crystal ball is sitting on top of my watch cabinet, and I can hear ominous humming noises that don't seem to be emanating from the wee gizmo in the drawer that keeps the timepieces properly wound. Methinks the RSG's bequest to IW has something to say about the G20 meeting......hang on a moment...................yes - oh dear - it seems that we're all doomed......

Seriously, what IS going to happen next? Broon of course was up to his usual tricks with figures, claiming that "another" $1trn "stimulus" had been agreed - but a lot of that money had already been committed in various ways - it's by no means all "new" money - and indeed not all of it may even become available once the politicians all head home to a reality check. There's a real danger now of protectionist attitudes taking hold, and "generosity towards other countries" may soon be off the voters' agenda. But even if another $10trn were to be pumped in to the world economy, it would make not a jot of difference. The whole "quantitative easing" process has been tried before (try Google with "Operation Twist") and even the US Fed itself admitted at the time, that it hadn't worked. Fiscal stimuli (tax cuts, government spending programmes etc) of course have all failed. Truly, politicians are idiots.

So what is Granny's crystal ball actually getting at here? Simply that there IS going to be a "G20 effect" that is almost certainly going to drive markets upwards. People (aka sheep) WANT to believe that politicians know what they're doing, and they WANT to believe that "everything is going to be OK". More and more of the sheep (which include far too many fund managers in their ranks) are going to come to the view that "things" indeed ARE now OK again. After all, there ARE signs of recovery, aren't there? For example, UK mortgage approvals are on the increase again - better buy that house right now, before prices run away from you again! Seriously, the real point here is that overall throughout the world, people are paying down their debt. They really don't want to borrow any more at the moment. Businesses too are trying to scale back their borrowings, and hence the total amount of money sloshing around is going to DIMINISH, not increase. To use the wee analogy from the manual, that means cart wheels will be exchanged for fewer chickens, and vice versa. And if fewer chickens are needed to acquire a wheel, fewer will be produced, so fewer will be taken to the market - thus fewer carts will be needed to take them there - so fewer cart wheels will be needed as a result. And less corn will need to be grown to feed the chickens, so fewer ploughs will be needed, and chicken herding will become an oversubscribed profession, as will ploughing.......and so it goes on. The result, as so often mentioned in these ramblings, is deflation. The whole economy contracts, and as more jobs are lost, so it contracts even more in a vicious downwards spiral. Politicians can do NOTHING about this - other than prolong the agony by refusing to allow dinosaurs to become extinct and make way for newer, more capable entities. The vast sums pumped into banks would be a good example - sure, one must protect depositors' savings - that is both fair and essential, but why pump billions into trying to keep the entity itself alive? "Job protection" I hear you cry. And Broon certainly claims to feel the pain of every redundancy. Ho ho ho. Nope, Gordy - what you feel is the pain of a potentially lost vote. "Vote protection" is the only game in town - but what is missed is the fact that if (say) RBS had been allowed to collapse with no bailout on the table, a very large number of the lost jobs would be recreated within the same sector when a better bank evolved from the ashes of RBS. Shareholders would be left high and dry, but so what? That has happened anyway! (And it's the risk you take when you invest in anything.) The bank directors would have received the bare minimum redundancy payments to which they're entitled instead of massive, undeserved fat cat payouts, and the taxpayer's total exposure would be quantifiable - the costs of redundancy and ongoing social security to ex employees, plus the nett cost of refunding all savings and current accounts after the sale of all RBS assets. The toxic waste would not figure anywhere in the overall equation, other than that its existence would render the "assets" pretty worthless - but if "someone" were actually to buy them, it would be from choice, not compulsion as has in fact happened. Probably that kind of deal would have cost an awful lot less than the taxpayer's current exposure - and there would have been serious money still available for proper retraining if ex RBS staff wanted a career change. The overall effect would have been a much higher initial level of unemployment, but in due course a stronger economy would have emerged. But it ain't gonna happen like that!

Anyway, that's a wee bit of a rant but hopefully it's food for thought - and certainly the sheep are going to "buy" the idea that the G20 meeting has saved the world.....for a time. The crystal ball suggests a really strong bear market rally into the autumn, but after that, it's "back to square one and below" as it becomes evident that things are actually far worse than politicians/bankers dare to admit. For example, UK banks have seen a nett $1trn withdrawn from them between March 2008 and the start of this year. Where has it gone? Who knows - and it matters not a jot. The fact is that UK banks are under extreme pressure and for sure, the British taxpayer is going to be saddled with a whole lot more of the toxic stuff than currently is the case - massive though the "saddle" might seem at the moment. And last week's failed gilt auction suggests an awful lot of trouble ahead, because clearly, investors in UK Plc are starting to look for a higher yield to compensate for their perception of higher risk. Trust my RSG's crystal ball - we ain't seen nothin' yet folks!

Oops - scrub all the above doom and gloom: a headline this morning says "OECD Names and Shames Tax Havens". That's going to save the world economy then. (Try "tax havens" in the search engine for more - and indeed if you're new to this stuff, a big "welcome" and a suggestion too that you try all sorts of words/phrases in the search engine, like "pessimist" - because it does become a bit tedious answering emails from those who still think that word properly describes me.)

Finally on matters economic, it appears that the IMF has made a biggish loan to Romania. Funny, I always thought the word "loan" implied the money was going to be repaid. Germany refused a Hungarian request for a $230bn "loan" the other day - selfish of them, or sensible? You decide! And the RBS pay deal was "voted down" by shareholders at a recent meeting. Gosh, that's going to make a real difference. Time for another "Ho ho ho" methinks.

OK, on to another totally unrelated rant, preceded by a joke formulated (in adversity) yesterday morning by daughter No 1: "What's the only difference between a lager lout and a snowboarder with one brain cell?" The answer of course is that a lager lout generally needs to be pretty drunk before he keeps falling over. And of course there would be rather few of the snowboarding fraternity who possess even the one brain cell, in the opinion of the Williams family. Daughter was standing in a (tiny) queue with Dad yesterday morning, waiting to go up on a chairlift, when she was mown down from behind by one of these morons, who was facing backwards (the usual position for boarders) and wearing some kind of stereo thingie that meant he was even more oblivious than usual - if that is possible. Being a Brit, he probably got the gist of the ensuing IW words, and he certainly will need some insulating tape and pliers to fix the MP pod thing or whatever it was called. Daughter received a couple of extremely nasty bruises across the back of her legs that needed immediate attention and ended our day on the slopes - and that have probably ended her season three weeks early. Why are snowboarders so unbelievably useless? (No answer is required!)

Anyway, that's not entirely relevant to TTEW but what the heck - it makes me feel better! (although daughter No 3, who works in the City, tells me that "an awful lot" of City types seem to think snowboarding is "cool" so it's possible that there IS in fact a correlation between boarding and financial loss-making on a grand scale - a theme for some research project perhaps?)

On to a chart or two then, and tonight we'll look first at Homeserve, which we discussed here last weekend. Did it become a "windfall situation" during the ensuing few days? (Type "windfall" into the search engine for more.) Then we'll update the chart of Forth Ports, last featured here on March 8th this year. The trendline has been probed and there has been a bit of a retrace too. Is there now a horizontal channel also forming? Finally, we'll examine the German DAX index seeing we mentioned that country earlier. Will it push to the top of the current channel before the next big drop begins?

That's all for this weekend then - so all the best till next Sunday as usual.

Ian.

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.