"I don't think that any regulatory system could have picked up the problems that contributed to the recession...."

Who uttered that hugely insightful remark during last week? a) the cook from the Muppet Show, b) Robert Mugabe, or c) the Broon one? Gosh, Williams - can't you make your questions a bit easier? That's a hard one.......and the answer is...the cook. As in "cook the economy." Broon's above pronouncement came during his "hugely successful" wee American junket - he was responding to a journalist who was quite reasonably asking him to accept at least some blame for the current mess. Ever in denial, the Broon one responded accordingly. And what about "The Speech" then? Sickening, or just sick? He can have 100% for his "delivery" (to just about the only audience that might be gullible enough to believe that kind of stuff anyway), but a nice round 0% for worthwhile content. Broon has frequently suggested to UK audiences that the true roots of the world depression can be found in America's "irresponsible approach to sub prime mortgage lending". Did he tell that to the Yanks last week? a) yes, b) no. Another hard IW question - I'll be hosting University Challenge next.... It's pretty clear that Gordon has achieved 99th Dan (at the very least) in the ancient economic art of NoKanDoo.

And speaking of "cooking", it seems the other loudmouthed Gordon's empire too is in a mess - Gordon Ramsay's company is looking a wee bit shaky.

Moving along, but still on a Scottish theme, it seems the Edinburgh parliament is launching an enquiry into the banking sector. Gosh, that will have a few directors really quaking in their posh green wellies then. And tell me, Mr Salmond, just how do you propose to pay for your fancy new bridge over the Forth estuary?

The other "Scottish thing" today is the rather strange logic shown by the so - called "Scottish secretary" when he responded to the announcement that Tesco Finance is hiring an extra 200 people and locating them in Edinburgh. Remind me please, how many jobs have gone/are about to go in the Edinburgh banking etc sectors? Would it be a few more than 200? So would these "new jobs" actually be NEW jobs? Anyway, Mr S. Secretary's words were "This is a timely reminder to some, that Scotland remains a leader in the world of finance." Yeah, right - leading the charge of the banking brigade into the valley of debt.....

Speaking of debt, it's certainly the case that Lloyds' Bank has got itself into a terrible hole after its crazy "absorption" of HBOS. No need to go into all the sordid detail here, but the Blank one (the aptly named chairman of Lloyds') clearly coveted a Lordhood, what with all the schmoozing he conducted with Broon beforehand, to ensure the Competition Commission would be kept out of the loop. And of course the "merger" suited the Broon one just fine, because he is still in thrall to the City types - thinking of his own future no doubt. Why else has the UK taxpayer been forced to stump up so much in (largely failed) "bank bailouts"? According to the IMF, the UK has used up just a whisker shy of 20% of its GDP in handouts to impoverished bankers so far - a lot more than any other country. Anent the Lloyds' fiasco, their chief exec won't be too popular now with Broon, having openly admitted that "We carried out three to five times less due diligence (than normal) when deciding the takeover terms." I'm not entirely sure how you quantify "three to five times less" but I guess it's just typical banker - speak for "We carried out NO checks on anything because Broon and Blank agreed the whole thing over drinkies - and what does it matter anyway, because the taxpayer will pick up the tab?"

Next, in the USA it seems that the FDIC (the US government body that insures depositors against loss when a bank goes bust) is.......bust. If it doesn't receive a major bailout soon, it won't have the funds to pay out as required. Hmm. Citigroup is bust in all but name now, after massive government bailouts - the same as AIG in fact. And the derivatives that people buy to insure US government bonds against default, are now costing over twelve times what they did less than a year ago. What if the derivative insurers themselves go bust....? There is an awful lot more smelly stuff still to surface, of that we may be sure. In fact, we spoke briefly about "bonds" here last weekend - there have been several emails asking for a wee bit more about these beasties so there's exactly that somewhere below.

But first, some "bits and pieces". It appears we can add another job category to those where there are current vacancies - mention has been made here of whistleblowers and scapegoats - now we can add "spies". GCHQ (British spy setup) has announced it is to recruit another 1500 "people". Ho hum. Installers of even more surveillance apparatus can certainly also be added to the "positions vacant" list then.

And Eurotunnel has paid its first dividend in 22 years, of 4 cents a share. Wow - how much is that, annualised?

Finally before a word about bonds, it appears the State of Illinois has decided that Pluto is still a planet. That will come as a bit of a surprise to all the Yanks who believe it to be a dog. (For more, try "Pluto" in the search engine - if you can be remotely bothered!)

Anyway, onward to a wee explanation of how bonds work - the issue for one or two of you seems to surround the matter of the interest rates thereon - and I understand the reason for the confusion.

Basically, a bond is an IOU (as mentioned here last weekend). It tends to be denominated in "100s" - eg £100, €100 or $100. Conventionally the interest rate is calculated on that "100" figure - hence "3% Treasury Stock" etc. What that means is (and here's where the confusion creeps in) that you get "3" of whichever currency, for each bond you own. So when you buy "3% Treasuries" you get $3/£3/€3 return on each one you own, for each year you own it. But suppose you feel that "3% Treasuries" are a truly safe place to store your dosh, and suppose that loads of people feel the same way? There is meantime a limited supply, and you know (or should know!) from the "chickens and wheels" example in the TTEW manual, what happens when a limited supply meets extra demand. That's right - the price goes up! You can see that effect right now with UK gilts - the Bank of England in its infinite wisdom and ability, has begun what it calls "quantitative easing" whereby on behalf of the ever uncomplaining UK taxpayer, it is buying up gilts from banks and other institutions. That effect causes many, many sheep to flock into gilts - which drives the price up. After all, they're as safe as the Bank of England...........Anyway, you might find that to buy a "3% Treasury stock" you need to pay £150, not the nominal value of £100, because so many people want them and bid the price up - ie "normal market action". BUT, whatever you have paid, you still receive the same £3 a year on each one. (Please don't pick me up on exact current values - this is simply an example to try to help in understanding this stuff.) So you get £3 on £150, which of course is LESS than 3%. But you're happy to accept that lower return because it's "safety" you seek. The opposite is also the case - if The Broken Piston Motor Corporation issues bonds - and ALL big companies have some kind of IOU system operating - you might decide that THEIR offering of "7% stock" might need a bit better return than that. So you refuse to pay £100, and wait till the price is driven down - again via normal market action - to (say) £50 - and you still get the £7, which now equates to a 14% return. And so it goes on. How to get a massive % return? Buy a "7% bond" for £1........oops - maybe that's just throwing £1 away, when Broken Piston Corp becomes Pistonbroke.....? And with some of Uncle Sam's bonds already struggling to get insured as mentioned above, what happens when the sheep lose confidence in the ability even of the UK to repay all of its incredibly massive (and we ain't seen nothin' yet...) debts? The £150 valuation of a nominally £100 gilt might well become £80 or even less - what might that do to the capital worth of many punters, when people decide that 2% (or whatever) just ain't enough return to match the perceived risk? Anyway, we'll see - and to all those who believe that this current BOE "easing" policy will lead to massive inflation, my Really Scary Granny's infamous crystal ball is suggesting that the policy simply won't work and that the forces of deflation will continue inexorably until the end of this depression - ie a few years yet. After that however, it's fair to bet on a good old dose of inflation as governments everywhere renege on their responsibilities to lenders!

OK - on to a few charts, but just before we look at some - I have to mention the "Liverpool Hope University" (of which I had never heard) and its masters' degree on the subject of....the Beatles. Well then, that's a good use of academic funding. Better to rename the place the "Nae Hope" university methinks.

The first chart tonight is that of Renishaw - a similar triangle formation perhaps, to that of Daily Mail as discussed in video clip 2223? Would it be a sell below the very clear support around 300, or better to let it fall below the earlier drop that's within the overall triangle? Then there's W S Atkins, where there was a nice channel that got probed to 600 before a (smallish) retrace followed by a drop to current support. Will it keep falling? We'll see. Next we'll revisit Forth Ports - last looked at here on 22nd February this year. It's still sideways but heading towards a possible probe of the downtrend. Finally there's an update of the Carnival chart last featured in video clip 2028 - and before that in WICS last November - try the search engine.

And that's that for this weekend - four feet of fresh snow has given way to blue skies, so a wee bit of outdoor recreation is now called for!

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'.