Smart Investor: how to plan for the Spending Review 'Black Wednesday'

What melodramatic twaddle.

Well I'll be happy to tighten my belt as I hope most of your readers will too .

Let's face it , we let Labour ruin things and did little about it . We even voted them back in twice . Now is the time to pay for our folly

Robert

How bad does it have to get before you acknowledge the obvious??

The future is BLACK. By stating it remains GREY you are behaving just like the ostriches that got us into this mess!

http://www.accountingweb.co.uk/blogs/jefflcbba/mad-lemming/deleveraging-holiday

John, on what basis do you deem this to be melodramatic twaddle?

Frankly, might have hoped for a bit more insight from this article ..!!??

It doesnt say anything that isnt already pretty apparent....

Suggest shift all equity to Far East, and bonds to Global and UK High Yield.

How does this plan seem to readers? I need guidance!

O.K well let us all into the secret, what are your top ten tips?

I'm struggling to see the point of this article, other than to state the obvious!

Drip feed your money into the market? Does that mean we are liquid now, having sold off? Is that what pension fund managers do? The FTSE is at 5700- so I don't think so. The index has risen from 4800 in July to todays level- nearly 20% up. How many fund managers have achieved this return since July? They will do what they always do and sit on their hands doing nothing and then charge the fund their percentage managementy fee. Easy money!! and a possible second dip will not alter the fact that they will get paid whatever happens.

Hit the nail on the head about private firms taking on redundant public sector workers.

30 years in the NHS & local council committees would not encourage me to take on any of them. Thorough retraining in the private sector will take time too. Any initiative, drive, ambition or sign of responding to a customer will have been totally eliminated by the union apparatchiks.

And the worst thing is the public sector union hardliners will keep their cosy underworked overpaid existences in overheated offices plotting for Red Eds rise when they can again recruit and build empires of redtape on the backs of the clinical staff in the NHS and tax and ratepayers overall.

BTW any sign that the public sector typified by MPs will cease the endless nepotism and family gravy trains as exemplified by the Kinnocks, the Eagle sisters Mr & Mrs Balls and so on down to parish councillors.

No, thought not!

Reduce UK exposure in all sectors unless companies have true global reach.

Fear rules - is there any one of us that is not still suffering to some extent from the way markets imploded? Fear tends to throw logic out the window and replace it with panic - I have never bought and sold so much in my life. I am trying to re-establish some sensible investment practices but it is not easy - I came out of bonds with a tidy profit and am still waiting on the forecast fall.......I have no doubt it will happen but tell me is that really likely with QE2 about to kick in? I have tweaked and sold here and there in expectation of the 'double dip' and it now appears to be less likely.......of course there will be a dip at some point but it seems to be all the logical tipping points that are being churned out? I did very well on gold but sold at the recent peak because most bulls expected a sharpe pull back of around $100 and I believe that may still prove to be the case but gold is one heck of a nervous ride and for sure one day it has the capacity to drop like a stone and without much warning.....I bought Phillip Gibbs Absolute Return fund on launch as a core holding, I added to it in May when everything looked weak and the moneymarkets paid nothing....looking for stability and protection of capital and what a disappointment that has been - Now when a man of his undoubted ability can not get it right what hope for little old you and me?

Did a check this morning and the only things I have not sold at some point in the last few years since the crash are my CF Ruffer Total Return, European O and Pacific funds and I am so grateful for them.

Listen I am not some loser, I am nearly 15% ahead year to date, not the most startling return but let me tell you in current circumstances one I am more than happy with - I just long for things to get back to reality in terms of investing for value over the long term and playing the swings and roundabouts around the edges for a bit of spice!

I'm not an ostrich but surely all the government has to do is take back the money it lent to the banks and suddenly there will be no black hole in the deficit.

These cuts are driven by Tory Idealogical pratts.

Before you do anything - have a look at the following site

http://www.usdebtclock.org/

Once you have noted the US debt levels, click on World Debt (top left) and observe the UK external debt compared to the rest of the World.

Emigrate?!!!!

The signs are not good. We will continue to behave as a great power, and spend money we haven't got on two huge aircraft carriers and Trident. Visit other parts of Europe, France, Germany, Holland, Austria Italy and the difference in the standard of living hits you in the face. What is worse is that the US, another virtually bankrupt state, is urging us not to cut our 'defence' spending.

In any table of national economies the UK GDP per head is about 14th or worse. Because we were on the winning side in 1945 we are one of the five permanent members of the Security Council - we were bankrupt then and survived only on a loan from the US. Today we survive on a vastly larger loan from many sources richer than ourselves. We are paying £40 bn a year in interest.They are buying our companies, our football teams, and expect to take the the profits. A Chinese company has taken over London power from EDF a French company.

CHina has officially stated that it sees no need to have an aircraft carrier - yet we are building two. No-one has yet explained the strategic need for such extravagance; for several years all discussion was banned in the press or other media. Has any reader heard or read a serious,informed discussion of these monsters?

Does anyone know what aircraft they are to carry?

Are you aware that their tactical role was decided by the US navy?

Do you realise that it will cost £1.5 mn to fill one with oil (at today's prices)?

Do you realise that they will need two large tankers to keep them refuelled?

DO you realise that to spread the work round the country they are being built in sections that will have to be assembled?

When I put all this to the Green MP she declined to do anything because her constituency is in Portsmouth.

Goerge Monbiot didn't even answer and did nothing.

Yet we are going to be impoverished to pay for these follies.

Could someone explain why Germany, Italy, SPain, Holland, Belgium, Denmark, Sweden, Austria etc see no need for such extravagance? I read the

English versions of their press on the web. The subject of a nuclear threat is never mentioned.

If they feel sheltered by the nuclear umbrellas in France and the UK, perhaps we shoúld ask for a subscription.

When will there be a sane, objective discussion of this absurd situation?.

Stating the bleedin obvious ?

I was hoping the article would tell us what actions to take before wednesday.

"When I put all this to the Green MP she declined to do anything because her constituency is in Portsmouth."

Brighton, you mean. And it isn't a naval base.

In answer to Bernard, despite UK Defence spending being the third highest in the world, its cost only accounts for 2% of GPD. As an island nation we must defend our merchant shipping, which still carry 92% of our international trade. Russian bombers are still frequently testing our air defences, and their submarines probe the Firth of Clyde. That is why we still need Eurofighter Typhoons, aircraft carriers and the new Joint Strike Fighters to fly from them. At 2% of GDP our defences are a bargain by historical standards. Our forces in Afghanistan must receive proper support until that mission is complete. But it is the "unknown unknown" conflicts for which we need to plan ahead.

What has happened to this country;are we at a eating and drinking pessimism orgy? Sure there's been a god almighty cock-up in the last couple of decades,but in the long term it doesn't amount to a hill of beans.Britain has a very good basic infrastructure compared to other countries, with excellent roads, trains ,airports,communications,etc.etc.Most people are honest and hard working ;I could go on and on-suffice to say we will emerge from this despond as a brave new peoples, albeit with a more realistic and pragmatic outlook,just keep supporting the Coalition;its the way to go.

When I was in correspondence with Caroline Lucas she was MEP for the South-eastern region and seemed to have an office in Portsmouth. She was elected MP for a Brighton constituency in May 2010.

Considering the poverty of our industrial bass, and our straitened accounts, it is absurd that UK defence spending should be the 3rd highest in the world.

Why is it that the countries that I mentioned - notably Germany - seem unconcerned about the dangers that have been listed. Generals notoriously fight battles with the tactics of the previous conflict. I am old enough to remember the terrible naval losses of the 39-45 war. I was in the Japanese section at Bletchley Park from 43 - 45. From 45-47 I was in army intelligence based in Kure, the main naval dockyard of the Japanese navy, where the greatYamato was built., It was never in active service - the recoil from its huge guns would have sunk it. And I seem to remember that considerable damage was inflicted on a US naval vessel by very simple tactics.

I hear an echo of the late US defence secretary - the problem is what we don't know that we don't know. It is clear that there is greater danger from individual suicide bombers with primitive nuclear weapons obtained via :Pakistan or even Iran. Water supply could be poisoned.

The total cost of the QE2 carriers by their commissioning in 2014 or 15 will almost certainly approach £10 bn and more when the planes and electronic equipment yet to be designed are added. Who can tell what the cost of oil will be? The main US carriers are nuclear powered. I fail to understand how oil-based carriers with supporting tankers will be able to take the tactical position proposed by the US navy. If they are expected to have an operational life of say 20 years - what will be the cost and availablity of the oil? They will be obsolete. Military planes too, for technical reasons have long gestation but short lives - just consider the catastrophic over-runs of previous designs.

This was a wild and ill-considered policy, perhaps a political gesture comparable to the building of the Queen Mary in the 30s - lots of work for unemployed shipyards - so easy in a period of boom without any thought of a bust.

The vote -catching plan of splitting up construction to different areas adds to the cost and is an unknown.

I repeat that serious discussion was gagged. I reca.,ll an embarrassing moment in the BBC programme Question Time. During a discussion by members of the audience on another matter, a man stood up and posed the problemof the aircraft carriers. DImbleby was for a moment embarrassed but pointedly managed to talk his team round without mentioning aircraft carriers at all.

If the explanation is so straighforward - why has trhere never, to my ears or eyes, any serious discussion of their future been permitted? Don't doubt the gag - letters were unanswered, comments were censored out, the BBC never accepted comments on Radio 4, although my name was known as a former member of the Any Answers team on three occasions.

Two points arising from my last post, written late at night.

I was a member of the Any Questions panel on three occasions,not Any Answers.

WIth the development of guided missiles and drones, carrier-based aircraft are already obsolescent. If a carrier were assigned to the Mediterranean it could be destroyed by one nuclear drone from Iran. In any case missiles from Israel could wipe out Iran's nuclear capability. What other theatre is contemplated - the China sea? Impossible. China would never allow North Korea to disturb that area with wild nuclear weaponry.

The South Atlantic to protect the Falklands? Wholly impractical and not welcome to the US.

Against Somali pirates? Costly and without formal declaration of war impossible, for they represent no sovereign state - not welcome to international law without UN resolutions.

The QE2 carriers would be the largest warships ever built in this country - what significance is there in such size? Vast maintenance costs and limited movement. Remember what happened to battleships.

No-one has divulged whose idea they were - one must assume Blair, in response to his friend in the White House. That would go down very well with the public.

They are part of an outdated fantasy world of warfare.

In his posts regarding the two nuclear powered aircraft carriers, Bernard has hit several nails right on the head. The aircraft that will fly from them in 2018, is the American VTOL F35. However, listening to George Osbourne this morning on the Andrew Marr programe, I noted a subtle but specific comment by the chancellor when he said - (parahrasing)that the outcome of the discussions on the carriers resulted in a decision that would meet our needs. Which said to me that either the build programme will be slowed down and or their design will be changed for a much cheaper version - possibly a modern type of the 'flat top'the Janpanese used in their attack on Pearl Harbour.

It matters not what the costs of the carriers are in terms of a percentage of the defence budget(which will shrink regardless), but whether we really need them in the first place. Talk of project the UK military capability across the oceans is absolutely twaddle, given that we have few strategic possessions which can be very effectively be protected and far more cheaply by other navy ships - namely our attack submarines equiped with cruise missiles and torpedoes. As for defending ships that supply us with food and goods, what flag are the vast majority of ships flying, not British I'll wager. Let those countries whose flags they fly pay for their defence.

It was more than interesting to note Hilary Clinton expressing concern over UK cuts in defence, nothing to do with our reducing the orders for American aircraft. The fact of the matter is that despite NATO, the UK with its highest calibre armed forces, is the only country America can rely on(Israel already fully committed in the Middle East). On the more sinister side America wields enormous commercial power on the UK. Where are the continental Europeans in all this, why aren't these other members of NATO collectively contributing 30-40,000 troops to Afhanistan? Germany, the richest and largest exporter of them all could afford its own aircraft carrier to protects its goods being delivered across the world. Having said all that, the real question is who is going to attack all these supposedly vulnerable assets that need to be protected by two £15bn carriers with is own flotilla of ships to protect it? If the answer, is we don't know, or, who can tell what lies in the future, my answer is what if the sky should fall in?

Bernard mentioned drones, in the context of carriers. I would rather see lethal drones outlawed, but since they aren't I agree with Bernard, as there's no point the UK going it alone with expensive vulnerable traditional carriers.

A carrier with drone aircraft would have savings. The aircraft are lighter without the pilot, ejector seat and human interface, and need less fuel. Being lighter, the carrier can be smaller, with some fuel saving and a smaller target. If a drone landing goes wrong the pilot is not endangered, there is less damage to the carrier if a drone hits the ship as it is lighter and carries less fuel. Even if there is one 'pilot' per drone that is actually attacking, maybe when a drone is shot down the 'pilot' can take over another drone. It might be possible for drones to return automatically and a second wave launched, with 'pilots' in control.

It might take several years to implement that from scratch, but what could happen is that we finally get expensive conventional carriers with planes on just before the whole thing is obselete. Or to make a historical comparison, it's like buying battleships just before Dreadnoughts.

I have no expertise in this area, just saying what seems reasonable to me.

I see that you were in "army intelligence", Bernard: that's a bit of oxymoron and evidently not an experience that has done anything to cure your sea blindness, a disability that effects you badly. You wallow in ignoratio elenchi and show a defeatism that sells this country short. Old age is not all beer and skittles, as I know, but the outgoing generation owes those that follow something better than your miserable cynicism.

Well said John Coles, Bernard get yourself up to date, for goodness sake and avoid the sweeping generalisations.

We are not now chasing the Scharnhorst or the Terpitz.

There are dozens of uses for carrier style ships and some of them entirely peaceful,not least in the context of £60Billion assigned overseas aid.

Would that the last two contributors had some solid arguments to match their spite. Bernard asks some eminently reasonable questions. I can see no defeatism, cynicism nor ignoratio elenchi in his contributions, but rather in those of his accusers. He, and we, deserve some serious answers rather than playground-style abuse.

Perhaps Messrs Coles and Knott would like to tell us if they have any vested interests in seeing these vessels built.

I'd just like to point out that the two carriers are not nuclear- but oil-powered. Each needs 8600 tonnes of oil. At the present price of $81 per barrel this would cost over £3 mn for one fill-up. I leave the cost in pollution to the environmentalists.

On active service they would need an escort not only for defence but also tankers to keep them sea-worthy.

Are there more admirals than ships? This was predicted by Cyril Northcote Parkinson, who's book 'Parkinson's Law' contains the gem: 'work expands to fill the time available for its completion'. This link assesses the admirals-per-ship situation in 2008:

http://www.forcesreunited.org.uk/forum/displaytopic.asp?T=17456

Response to Kenpen: I am not sure i could claim a vested interest since I am retired, but I do know about that of which I speak.

I landed in the Falklands war and ran the Beachead. I also landed in East Africa to subdue a possible coup and rescued the local Brit nationals - and some locals too. I was in the rescue force that helped in the Pakistan floods. I was fairly high up in the Royal Marines and served in some 8 different carriers (some helicopter carriers and some hastily converted so-called 'strike' carriers) over 28 years.

Athough there are valid points, above, about fuelling (if non-nuc) and defence vessels required, they are an immensely flexible tool in many different roles, many peaceful - and with the added advantage that they can float off, in international waters, until required.

I can see a role for a vessel similar to a carrier, but relevant to present and future armaments and strategy. The failure in the last few years was the absence of any public debate of the proposal. It is sickening to see long articles in the press focussed on these ships from people that didn't mutter a word when it mattered before the contract was signed. I believe that this was because there was a D notice forbidding comment or discussion.

Two years ago during BBC TV Question time there was a discussion with comments from the audience about taxation and so on, when a man stood up and said we could save money by not committing the country to building these two carriers. There was a moment's consternation on the platform, but after a few seconds with strong looks from Dimbleby, he took the discussion on without the word carrier passing his or any other member's lips.

Did any one ever see or hear any comment at all, before the last few weeks?

The three companies jointly building the carriers are Babcock, BAE Systems and Thales, a huge French conglomerate that was once a French government outfit. Their main international rival in this field is BAE systems. I can't for a moment imagine that their work style would match - will they exchange secrets, match bribe costs? Just consider the fuss the French are making about German high-speed trains on THEIR lnes.

Whose idea was it that since there would be no British planes available the carriers could have French ones landing. Add to this another notion that Britain and France should combine to form a joint 'defence' arrangement.

And meanwhile Germany, with none of these expensive toys, no Trident, no carriers, seems quite unconcerned and just carries on being the second largest exporter after China and the richest country in Europe.

This might as well be science fiction - where is there any application of reason or considered policy. There is one blessing - the EU hasn't stepped in - yet.