Well, here we are at another weekend already, and the Broon one still hasn't saved the world economy. What a slacker. It's all probably just a Christmas shopping trip to New York, at the taxpayers' expense as usual of course. Back in Blighty, the shadow chancellor is in trouble - even with his own lot, for suggesting there's "a risk of a run on sterling" if Broon gets away with his plans for a massive borrowing increase. George - in case you hadn't noticed while you were on the grouse moor - sterling has been running downhill pretty sharpish for the past several months - so your astute observation (as with everything that emanates from the mouths of politicians of course) is just a tad outdated. But nae worries - for every job lost in the real world, another ten will be created in the totally unproductive (in fact - "anti productive") area of "the public sector" when Broon gets his way and UK Plc gets saddled with a debt burden that will never, ever, be repayable. So when there's again "full employment", Britain will boom once more and all these nasty wee foreigners who have dared remove their poonds sterling, will rush to put them all back in UK banks and all will be just fine again.......or maybe not.

The thing is, "moving money around" WITHIN a country's economy, is NOT productive. It's a "scale" thing. To understand my point, think back to the example in the TTEW manual where we spoke about chickens and cart wheels. Let's consider the village where the chicken farmer and the cart wheel maker live. What value is added to its economy from the transaction mentioned in the manual? "None at all" is the correct answer IF both protagonists live in the same village. But suppose the chicken farmer lives elsewhere - if that's the case, then the cart wheel maker has added something to the economy of HIS village. He has made something that he has exported, and in return he has acquired a few chooks that might then produce even more chooks if they don't all get eaten straight away. Then, the surplus chickens/eggs might be available to sell/exchange elsewhere, or even if an ongoing surplus is eaten in the village, that means less other food needs to be "imported" from other vilages - hence a saving of some kind of cost. And in turn, the guy who acquired the wheel might be using it (better with two wheels though!) to move "stuff" to somewhere else, in return for something else. And so it goes on. Now in such a simple wee example above, it's not hard to grasp the concept - the problem comes when we consider an entire modern economy. We lose sight of the basics because everything seems so complex. After all, it's obvious that if RBS sacks 3000 people, then the local Edinburgh economy will suffer because there will be fewer trips to cinemas, shops, restaurants etc etc and less money spent around Princes Street. But what is NOT obvious is that taking the country as a whole, the ONLY way those 3000 jobs would have been "productive" in the first place, would be if they had been earning money from ELSEWHERE. Otherwise, money is simply being shuffled around within a country, and "value" is NOT being added overall. ONLY exports enrich an economy. It matters not whether these "exports" are of goods, or of services/contracts/intellectual property - just as long as their sale or hire brings dosh into a country from outwith the borders of that country. If (taking an example from a recent video) Hiscox insures a company based in Belgium, then it is exporting a service and earning sterling, to the benefit of the UK. By the same token, if it insures a company based in the UK, that transaction contributes nothing overall, UNLESS the insured company needs the cover provided by Hiscox in order to earn money from its own overseas venture. I told you it got more complicated at "country" level! Everything is intertwined - even the playground facilitator contributes to an extent by looking after wee Johnny while Daddy and Mummy run their widget export business. But the bottom line is simple enough - "Export or go bust" to misquote a famous saying. And the UK has systematically destroyed its ability to export, for far too many years. If anyone thinks Broon and co can change that fact all of a sudden, they are truly living in a different world. Even Mr Micawber understood all about spending more than you earn - and that's what politicians everywhere have been doing for rather too long - the Broon one being just as guilty as all the rest, if not even more so. And if Mrs Broon is currently buying her festive season presents in Bloomingdale's on Third Avenue then she is a) helping the US economy and b) damaging that of the UK. Which reminds me - John Lewis' sales were down again last week (8th week in a row) and this time the excuse is "grim weather." I'm waiting for the "wrong kind of snow" to be trotted out.

Anyway, on to a few other bits and pieces - and first, the Lehman auditors seem to be doing pretty well in sorting things out after the bankruptcy. It seems they have already "found" about $5.5bn of assets. Not bad - were it not for the fact that they have still to find the remaining $550bn or so......and the credit insurance is expected to pay out less than nine cents on the dollar. The ex head honcho's art collection was up for auction the other day... Ah, maybe THAT's why the Broon one went to New York a couple of days early? Hmm - probably doubtful - his cultural aspirations probably extend to reading Oor Wullie in the Sunday Post.

Deutsche Post (German Post Office) has closed down its DHL operations in the USA, with the loss of 9500 jobs. I guess at least one more job will also go - back in Germany, when they find the guy who posted a convict out of jail, in a cardboard box. And now it seems that particular parcel has gone missing. You just can't get staff.

9500 jobs lost is a lot (ONE job lost is "a lot" if it's YOUR job of course!) but methinks the figure will pale into insignificance once the true scale of US auto industry trouble becomes fully known. An analyst at Deutsche Bank has just suggested that GM stock is a "sell, target price zero." What price Pendragon and Inchcape in the UK then?

And speaking of such, what price Taylor Wimpey stock? (Try the WICS search engine for more on that particular disaster) How about £1? No, that's not "£1 per share" - it's £1 for the entire company. Has IW gone totally mad? We'll see - but with its land bank being devalued by the day, its debts mounting (over £100m) and coming up for "renegotiation" in January, its sales non existent, and a current market capitalisation that's less than its debt, what would you reckon it's worth? These big mergers hardly ever (never?) work out to the benefit of shareholders and the marriage of Taylor Woodrow and Wimpey has proved to be no exception.

Next, we see that the Competition Commission wants to ban the sale of PPI. (Try the WICS search engine anent that particularly scurrilous scam). The Association of British Insurers and the banks are suggesting (naturally!) that the CC's proposal is "crazy" and "irresponsible" at a time when people are losing their jobs left right and centre and need "all the protection they can get". Ho ho ho. Maybe the banks should try offering a product that actually covers more than a handful of the millions who have been "advised" to buy PPI? Anyway, you can rest assured that if banks now struggle to force people to take on PPI, they will simply invent yet another way to part you from your dosh. Best solution? Spend less than you earn, pay down debt, take on no fresh debt, become debt free.......or is that all just too boring? (And yes, Broon - try that same idea at UK level, on behalf of your suffering taxpayers and prudent savers....as if.)

Anyway, on to a couple of charts - but first, here's an email from one of you with a very good question and my response thereto - it's always necessary to look along charts for the overall picture before coming to any decisions about such matters.

From: Jeremy

To: Ian Williams

Sent: Thursday, November 13, 2008 10:21 PM

Subject: Northumbrian Water

Dear Ian,

Having reread the manual am I right in thinking that this share is too choppy to trade as even a 75/95 DMA is frequently breached?

Best regards,

Jeremy

My reply was:

"Not necessarily. You need to look back along the chart for times when there was a definite trend & see what those times look like re DMAs. You also need to consider how it might all look again, IF a fresh trend develops. Just because it has been messy for a while doesn't mean it will always be so, or has always been so."

On that note, let's take a look at choosing potential DMA lengths, using Jeremy's Northumbrian Water example above, followed by a similar exercise on the Mapeley chart (a stock that has been mentioned more than once in the search engine if you care to look - try 27th April this year - and in the odd video too.) Finally we'll look at the 20/40 DMA pairing on the Russian index - a chart we have never before examined.

And that's that for this weekend - I need to go now and have a search for my (again!) missing Tractors CD.......did I maybe play it a bit often during the week? Oh well, it will turn up again in a year or two if I'm a good boy........

All the best till next weekend.

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'.