Franchising news this morning

[Nearholmer]

39 minutes ago, adb968008 said:

At the back of my mind, I suspect we will be bailed out and subservient to the US as that lead. That rescue will be the price paid for the trade deal. Perhaps even on the USD as currency, black or white market, the UK economy is way behind many other countries, even before covid. If that happens, it will be on their rules, which are less social and more capitalist than ours.

 

OK, agree that is a substantial risk too.

 

We put ourselves at great risk of being subsumed by the US the moment we decided to cast ourselves adrift from Europe, and Covid simply increases that risk

[rockershovel]

... we seem to be entering the realm of what is sometimes referred to as “magical thinking” in which the government is unable to envisage or articulate any workable solution, but remains incapable of envisaging any outcome in which they will be swept away by unfolding events. 

 

 

 

[rockershovel]

23 minutes ago, Nearholmer said:

 

OK, agree that is a substantial risk too.

 

We put ourselves at great risk of being subsumed by the US the moment we decided to cast ourselves adrift from Europe, and Covid simply increases that risk

 

I think that’s been the principal alternative for a very long time, now. De Gaulle spelled this out, quite clearly and in considerable detail, in his veto of the original British application to join the then-EEC.

 

With the notable exception of the communitarian attitudes of the British to social care, the British are much closer to the American way of thinking. The phrase flows easily in English, but I know of no European equivalent to “no taxation without representation”. 

 

[Nearholmer]

Given that the US is very divided in terms of outlook, and given the confounding affect of language, I think it is really very hard to tell whether the centre of gravity of UK-thinking is closer to that of Europeans or Americans. Social care is, as you say, one point of difference, but there are a lot more, religion for one, as well as lots of points of similarity.

 

Funny time to get tangled-up with the American Bandwagon, though, now that the American Century is so very clearly over. We could end-up like two past-it old ex-colonials, propping one another up at the bar in fast-fading seaside hotel, complaining impotently about the way (Far Eastern) youngsters behave these days.

[mdvle]

1 hour ago, adb968008 said:

We are oversold on the £, over printed in circulation, and capital flight started with Brexit and has rumbled on since, the sell off of stocks for £’s was considerable in March, if Brexit goes south were ripe for a huge run on the £ to add to that covid bill.

 

If that economic damage is greater than the survivors ability to pay.. then thats it, your bankrupt.

 

Hard to go bankrupt when you control your own money.

 

But while the UK certainly does have some unique issues currently most of the world is running the virtual printing presses creating more money at the moment so there is nowhere for those who dislike it to flee to.

 

1 hour ago, adb968008 said:

 

I suspect santa doesn't have enough presents in his sack to pay for all the children this time, so as in the 1920’s an economic hard time is coming, which will need to be shared across all, not just the top..You need high earners to bank roll the weaker. Without a head to lead, the herd will wither anyway.

 

The current situation can't be compared to the 1920s - at that time the UK was on the gold standard, which severely limited the ability to respond to the situation.

 

The UK, like the rest of the world, no longer bases it's currency on gold.

 

1 hour ago, adb968008 said:

At the back of my mind, I suspect we will be bailed out and subservient to the US as that lead. That rescue will be the price paid for the trade deal. Perhaps even on the USD as currency, black or white market, the UK economy is way behind many other countries, even before covid. If that happens, it will be on their rules, which are less social and more capitalist than ours.

 

Unlikely.

 

Any bailout would require both parts of Congress and there is no way the Democrats go for such a thing given the UK is currently annoying them considerably over the Good Friday Agreement.  Even the Republicans are unlikely to want to do it given they have spent the last 4+ years on the US good, everyone else bad theory that their base have enthusiastically endorsed.

[mdvle]

21 hours ago, Nearholmer said:

People whose earning-ability is reduced or stripped-away altogether struggle to pay their debts, even at current low interest rates and with capital repayment forever deferred.

 

House-prices always rise to the limit of affordability, so when interest rates are very low house prices rise until at that low prevailing interest rate they are barely affordable again - that’s why house prices have shot-up in recent years. Reduce or eliminate a persons earning-ability and what was barely affordable becomes unaffordable. Some people will find themselves unable to

pay their mortgage, some people will find themselves unable to pay their car PCP.

 

Yes, some will struggle.  But when 80% to 90% are still employed that indicates that most of the market will remain okay.

 

Further, as noted in the BBC article I linked to of that worst case 13% or so unemployment a large part of that is the 18 to 26 year old segment - and they are unlikely to have a mortgage anyway so nothing to default on.  Yes, they may lose their car, but compared to real estate that is small and won't have a significant impact on things.

[rockershovel]

American influence in this country has been predominant for many years. 

[adb968008]

55 minutes ago, mdvle said:

 

Hard to go bankrupt when you control your own money.

 

Money is a measure of confidence.

if people don't believe in it, then it loses value.

There is a cliff edge, where wobbles in confidence lead to all out panic and cutting losses at any cost.

At that point it risks being worthless, and unless you have something else to offer.. you are done.
 

You can only print & borrow so much before value declines.

A lot of countries have held £ as a reserve, but have seen its value almost halve in the last 10 years.
A lot of banks, funds etc have invested in UK markets, to see values decline.

And if confidence in the governments future ability to pay, the countries ability to produce falter, and the countries debts look too high.. that cliff edge comes closer.

if confidence is lost, people cash out and capital flight happens, which further runs risk of declining its value further...given how many £’s are out there.. thats a big pile of paper that could be handed back to the bank traded for $¥€ or XAU until they run out... and you are bankrupt holding toilet roll with £ signs on.
 

As you say, we aren't backed by gold (we lost those mines in South Africa, Australia with retreating empire, then we borrowed against what we had In ww2 , before selling our reserves of it in 2001) , were not backed by the dollar or even profitable government entities (except the NHS)

We have nothing other than a promise of being British and being honest at paying debts. ... but that confidence was tarnished in 2016 (AAA rating lost), we are printing our way through 2020 and dont have much promise to offer in 2021. At some point were going to promise to pay someone a lot of debts occured in 2020..and people will have to wonder how good that promise is, and what risk (interest) they attach to it... i’m not sure saying “oh we’ll just tap up a few millionaires to pay for it”, will cut it.. especially when some of them will be the ones judging how good that promise is, and many more overseas will be looking back at the last 15 years, and looking at what they expect going forwards, and comparing it to other countries whom may have better prospects to offer.

 

Edited September 26, 2020 by adb968008

[Northmoor]

14 minutes ago, rockershovel said:

American influence in this country has been predominant for many years. 

By that you must mean politically, because it certainly isn't in social attitudes.  The British display an anti-American snobbishness that would be considered extremely unpleasant if Americans were a race rather than a nationality.  The Left, leading up to the the last election, seemed to be quite attractive to a swathe of young people, with a pretty clear policy that all abuse and discrimination was unacceptable, unless those targeted were Tories or Americans.

[adb968008]

1 hour ago, mdvle said:

Any bailout would require both parts of Congress and there is no way the Democrats go for such a thing given the UK is currently annoying them considerably over the Good Friday Agreement.  Even the Republicans are unlikely to want to do it given they have spent the last 4+ years on the US good, everyone else bad theory that their base have enthusiastically endorsed.

Its all theatre, which is designed to unstable the UK negotiation further. The weaker our position with Europe, the stronger it is for other wealthier countries in negotiations with us as we’ll become more desparate.. Canada rightly called that and said they’d take a backseat in negotiations and see what everyone else gets, figuring we’d descend lower, rather than upper.

 

The UK shot itself in the foot with even going down the “violating international law route”, and any politician globally cant loose by grand standing on it.. We basically said “knock 20% off the price” of what ever were doing.

 

At the end of the day money talks, if Boris served the country on a plate for the lowest bidder, even our worst enemies wont resist a bid. Right now were not becoming more attractive.

Edited September 26, 2020 by adb968008

[Nearholmer]

ADB

 

while I agree that we’ve put ourselves in a very vulnerable position in terms of negotiating future trade, and might find ourselves overly dependent upon the US as a result, two questions:

- is the UK finding it difficult to borrow (sell bonds)?

 

- is the UK having to offer significantly higher returns than other countries to achieve bond sales?

 

If, as I understand, the answer to both questions is currently “no”, then the ‘smart money’ disagrees with your hypothesis that we are about to go off a cliff ........ the ‘smart money’ believes that, however hard the populace has to graft to achieve it, the UK will cough-up.

 

That isn’t to say there is no trouble ahead, but it is to say that immediate panic probably isn’t merited.

 

K

 

[rockershovel]

1 hour ago, Northmoor said:

By that you must mean politically, because it certainly isn't in social attitudes.  The British display an anti-American snobbishness that would be considered extremely unpleasant if Americans were a race rather than a nationality.  The Left, leading up to the the last election, seemed to be quite attractive to a swathe of young people, with a pretty clear policy that all abuse and discrimination was unacceptable, unless those targeted were Tories or Americans.

 

So attractive that the Conservatives achieved a majority of 86? 

 

I’d disagree strongly with your comment about “anti-American snobbishness”, that certainly isn’t my experience. 

[rockershovel]

29 minutes ago, Nearholmer said:

ADB

 

while I agree that we’ve put ourselves in a very vulnerable position in terms of negotiating future trade, and might find ourselves overly dependent upon the US as a result, two questions:

- is the UK finding it difficult to borrow (sell bonds)?

 

- is the UK having to offer significantly higher returns than other countries to achieve bond sales?

 

If, as I understand, the answer to both questions is currently “no”, then the ‘smart money’ disagrees with your hypothesis that we are about to go off a cliff ........ the ‘smart money’ believes that, however hard the populace has to graft to achieve it, the UK will cough-up.

 

That isn’t to say there is no trouble ahead, but it is to say that immediate panic probably isn’t merited.

 

K

 

 

The U.K. has a strong law of contract and ownership, well-established civil rights under law and, as has been shown over the EU WA issue and now the Brady Amendment, a Parliament which intends to keep it that way. The PM isn’t the President, Lord Protector or even the Ruler Of The Queen’s Navee, and that’s important. That’s what the “smart money” are buying. 

Edited September 26, 2020 by rockershovel

[melmerby]

Franchising Agreements anybody?

[Nearholmer]

They only served as a point of departure for this wide-rambling discussion.

 

They were Paddington; we are now down several different branch lines simultaneously, all the way across the West Country, regulator wide open, and hurtling towards the buffers.

 

 

Edited September 26, 2020 by Nearholmer

[melmerby]

1 minute ago, Nearholmer said:

They only served as a point of departure for this wide-rambling discussion.

 

They were Paddington; we are now down several different branch lines simultaneously, all the way across the West Country.

I thought we had disappeared down a tunnel!

[Northmoor]

Not just because I've had my say - I actually find the debate about economics very interesting - can we please return the discussion to the subject of Rail Franchising?  Start a new economics thread in Wheeltappers to continue this one.....

[adb968008]

2 hours ago, Nearholmer said:

the ‘smart money’ believes that, however hard the populace has to graft to achieve it, the UK will cough-up.

 

That isn’t to say there is no trouble ahead, but it is to say that immediate panic probably isn’t merited.

No one can predict when the cliff edge is reached, you can only react once you've gone over it.

But anyway.. back to topic.

Edited September 26, 2020 by adb968008

[rockershovel]

As was established either earlier in this thread, or in the previous thread on this topic, the various rail contracts aren’t “franchise agreements” in any generally understood sense of the term. They are the legacy of a government which, facing the (fully justified) prospect of electoral failure, rushed through the introduction of an ideological project which it did not understand, and successive governments have struggled with the consequences ever since. 

 

The overall conclusion can only be that the privatisation of railways by a process of Balkanisation, in the expectation that all the fragments will thereby make a profit, is simply not feasible or viable, and no amount of “magical thinking” or political manoeuvring can make it so. 

 

European governments typically operate their passenger rail networks as integrated structures in which the State retains overall control, usually in the form of some sort of casting vote. The Americans have simply abandoned the attempt to operate profitable passenger services, and have a Federal agency which does this, leaving the profitable business of hauling bulk freight over vast distances in private hands. 

 

We appear to be in the paradoxical position of embarking upon the largest rail construction project of modern times, without being able to define how it is to be operated successfully. I’m unable to follow the logic, here. 

 

[rockershovel]

On 26/09/2020 at 18:34, Northmoor said:

Not just because I've had my say - I actually find the debate about economics very interesting - can we please return the discussion to the subject of Rail Franchising?  Start a new economics thread in Wheeltappers to continue this one.....

 

... but they are inextricably linked. The core problem of rail franchising appears to be, that those responsible for its implementation lack a coherent, overall view of what they are seeking to achieve. 

 

Re-nationalisation in a de-facto, ad-hoc fashion, by allowing the various contracts to expire and default to the State, is a case in point. What if the State does something of the sort? Either it must re-employ the staff (without which the railway cannot function), or it delegates them to some sort of Management Service Company. However this brings its own problems, because a sizeable swathe of the electorate don’t regard the consequences of privatisation, as expressed in the form of conditions of employment, as being in their best interests. “We have re-nationalised the railways, but kept the casualised, gig-economy employment model” doesn’t sound like much of an election platform; “you will still be subject to changes of employer every few years, for reasons you have no stake in” isn’t much better. 

 

No, the government needs to define a coherent policy, in the expectation that it will (a) work sufficiently well (b) be retained to a sufficient extent by its successor. Otherwise we simply continue along the present path. 

 

 

[Nearholmer]

14 minutes ago, rockershovel said:

We appear to be in the paradoxical position of embarking upon the largest rail construction project of modern times, without being able to define how it is to be operated successfully. I’m unable to follow the logic, here.

That’s a bit of a leap from your preceding  three paragraphs (which I agree with FWIW).

 

It is essential to create a ‘shadow operator’ function very early in such a project, and I believe HS2 has one, but there is currently time enough to decide who exactly the operator should be and what form of relationship they will have with the treasury, which will presumably need to fill the gap between revenue and costs.

[melmerby]

1 minute ago, Nearholmer said:

That’s a bit of a leap from your preceding  three paragraphs (which I agree with FWIW).

 

It is essential to create a ‘shadow operator’ function very early in such a project, and I believe HS2 has one, but there is currently time enough to decide who exactly the operator should be and what form of relationship they will have with the treasury, which will presumably need to fill the gap between revenue and costs.

IIRC the current operator of the WCML (at the time HS2 phase 1 opens) will be the operator of HS2 as it is effectively a direct replacement for long distance WCML services.

[rockershovel]

33 minutes ago, Nearholmer said:

That’s a bit of a leap from your preceding  three paragraphs (which I agree with FWIW).

 

It is essential to create a ‘shadow operator’ function very early in such a project, and I believe HS2 has one, but there is currently time enough to decide who exactly the operator should be and what form of relationship they will have with the treasury, which will presumably need to fill the gap between revenue and costs.

 

... well, it is, but the original draft was too long already! 

 

Taking your post in conjunction with the following one (melmerby) this seems to illustrate the point clearly. HS2 is not the national network, but it will surely inherit the same problems, for the same reasons. 

 

Horse, cart. 

[Nearholmer]

I genuinely don't understand what you are driving at.

 

What Melmerby says is news to me, but given that somebody, public or private sector, will presumably be operating WCML intercity services, and that, unless we are all very unlucky, they will be a competent railway operator*, what is the issue?

 

Sure, there are several other options, for example give it to the HS1 operator, create a new, nationally-owned joint infrastructure-controller & operator, etc etc, but I can't quite see how/why giving it to the incumbent WCML operator is a pima facie disaster.

 

Is your concern that the DfT as currently constituted are incompetent to set terms for any operator?

 

*There have been one or two operationally incompetent TOCs, but most are competent operators, even those that are ensnared in bonkers contractual conditions of joint TOC/DfT creation that drive them to behave in ways that imply otherwise.

[lmsforever]

Perhaps the time has come to put several franchises that are adjacent into one ie  the rail companies in the south east are ideal.The DFT has to have its attitude changed as well they seem to be hellbent on micro management and they should award the deal and then keep a watching brief stepping in if things go wrong .Maybe the origanal idea of four companies could benefit us travellers also maybe costs could be cut and resources targeted were needed.Well thats my idea it might not work but it did in the past lets discuss it.