About

My name is Shaun Richards and I regularly analyse economic events and developments on both Share Radio in the UK and Tip TV Finance. You may also have heard me on Bloomberg Radio in the mornings or seen my comments and articles in newspapers such as City-AM and the Business live section of the Guardian. I also write economics reports for groups such as Woodford Investment Management.

I am an independent economist who studied at the London School of Economics. My speciality was (and remains) monetary economics. I worked in the City of London for several investment banks and then on my own account over a period of 15 years. After initially working in the government bond department at Phillips and Drew Ltd. I moved on into the derivatives arena with options of all types being a speciality. I never lost my specialisation in UK interest rates and also traded as a local on the London International Financial Futures Exchange where I mostly traded futures and options on future and present UK interest rates. So with my specialisations of monetary economics and knowledge of derivatives I have plenty of expertise to deploy on the financial and economic crisis which has unfolded in recent years.

I have also worked in Tokyo Japan again in the derivatives sphere and the Japanese “lost decade” made me think about what I would do if it spread,which is ever more relevant as so many places show signs of “Turning Japanese”.

If you wish to contact me please use the contact details on this website or via twitter and @notayesmansecon.

 

22 thoughts on “About

  1. Refreshing to see some honest analysis, keep up the good work.

    I have two related questions that worry me greatly:

    What do you think will happen to the UK Government debt when QE ends?

    Is it true that the BoE is the only net purchaser of UK gilts together with UK pension funds that have a legal obligation to buy them, and that other investors that can choose are choosing not to buy?

    • Hi Charlemagne and thank you for the compliment.

      As to your questions I think that they are interrelated. My understanding is that in the current year then the Bank of England’s asset purchases as part of QE have in fact exceeded the level of gilt sales by the Debt Management Office by some £10 billion. This plainly cannot go on for ever as we rely on overseas investors and so we are unlike Japan in this respect. Whilst pension funds are often natural gilt buyers it is true that in recent times rule changes may have made them more likely to be gilt buyers and the changes in rules around bank regulation and capitalisation have done the same with them. Unless our authorities wish to get the genral public to invest in gilts with a recession version of War Loan then this game is virtually up!

      Overseas investors held around 36% of UK Gilts when QE started and now own about 30%, so they have taken the opportunity to take cash out which considering the prices paid is likely to have been profitable. So who will buy gilts when QE ends? Here is a problem I think. Initially investment funds may well buy as they did on Monday in Greece’s debt auction but this year is going to involve a lot of government bond issuance around the world as well as the UK. So it may start slowly but there will be upward pressure on yields in my view. In the short term equity market falls like the one which has happened in the last few days may make the gilt market rally but in the end we will have to keep issuing gilts. So a genuine depression or an equity market collapse are in my view the main hopes for gilts which is hardly appealing. Apart from that yields are likely to rise and prices fall.

  2. Came across your work after following a link on one of the comments on Stephanie Flander’s blog on the BBC.

    I have been following the Greek economic crisis on http://www.ekathimerini.com and on the Athens Plus weekly site. Your analysis is excellent and very well informed.

    Interestingly enough I have also been posting some parallels between the Greek economic crisis and the situation the UK is finding itself in on a site I maintain with some friends mainly for banter http://www.peeque.com . My efforts now feel very inadequate !

    Reading your comments I am guessing you see sovereign debt as the next key part of the global economic crisis. Can I ask you for your predictions for 2010 and in particular :
    how quickly will events now move and how do you see Greece emerging from the economic crisis ?
    which other countries will suffer similar crises this year ?
    where do you see the situation evolving in the UK and US ?

    Thanks and keep up the good work

    • Hi third uncle

      Thank you for your kind words. I will take a look at your website and pages. As to your questions then I feel the following. The timetable for Greece is now as much political as it is economic. In terms of Greek bond yields then at levels of 7% or so there will be international bond funds who are likely to be buyers. It looks as though some of this happened on Friday. The politics I feel will be driven by the European “federal project” and I feel that they will not want a man overboard. So Greece will be helped and as this will be politically based there are many different routes and fudges possible.Remember these things go in phases even what are thought of as sharp falls in retrospect actually during them have rallies and lulls. Greece will also have to get her own house more in order and hope no more dominos fall! If she does so then there can be an advantage in acting before other countries but will she act decisively? I hope so but do not know so.It will take 3/5 years for an improvement if she acts decisively.

      As regards Greece and the UK there are both differences and similarities. The contagion that hit Greece last week could yet come to the UK but all I see is complacency (actually this is true of so many countries). In many ways the sovereign debt crisis is a symptom of problems rather than being a cause. If we take the UK we have low growth, inflation which in the circumstances is too high,high fiscal deficits and considerable unemployment. Our political elite has in many respect lost control of events. Just to give one example look at the public spending debate in the UK, neither of the parties that may be elected have any sort of systematic plan that I can see. Yet the fact is that cuts will have to be made. As to timing then unless another Greece or Dubai pops up then post election seems likely for an acceleration in the UK. One day we will have to face up to the implications of Quantitative Easing and the problems it has already brought and the others it may bring.

      I believe Japan is already in crisis but her circumstances are hiding it for now. Sooner or later it will have to have an impact. The nature of Japan can hide things because of her savings culture and insular nature but that is changing. As to when it will happen it is like when water is starting to swamp a dam, for ages it looks like nothing is happening then suddenly the dam breaks.

      For the US there is always the fact that when they face up to things, the Americans are capable of a lot of energy and invention. They will need it but are capable of reinventing themselves. As to whether it will be enough I am afraid events will have to unfold a little more first.

    • Hi Steve and welcome to my blog.
      The problem with peak oil theory is that it has had several incarnations and not happened andso it has ended up a little like the boy who cried wolf. However there was a report from the US military who is the worlds biggest user I believe saying that issues could arise in 2012. So it is difficult to know and I do not pretend any specialist knowledge.
      However mankind is often very inventive so I expect there to be ways of us using less oil and new alternatives. I expect these to come from the private-sector and maybe some surprising sources. Whereas I expect the public-sector to spend a lot of money on various green-badged plans and mainly waste it.
      We in the UK have been rather remiss in our energy policy and need to get our act together as we will be very reliant on oil and gas soon. As there are issues with wind turbines when there is no wind I feel that we probably have no choice but to build some more nukes and maybe look at using coal (which we do have stocks of) more efficiently in terms of the environment etc.
      When supplies start to run down the price mechanism will help but that may be literally cold comfort to those who cannot afford it. So in the UK we need in my view to start planning for as many alternatives as possible as these things have long lead times.

    • Heres something from earlier this year from US Forces Joint Command
      “A severe energy crunch is inevitable without a massive expansion of production and refining capacity.
      While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall
      might produce, it surely would reduce the prospects for growth in both the developing and developed
      worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and
      failing states further down the path toward collapse, and perhaps have serious economic impact on
      both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent
      conservation measures, investments in alternative energy production, and efforts to expand petroleum
      production from tar sands and shale would mitigate such a period of adjustment is difficult to predict.
      One should not forget that the Great Depression spawned a number of totalitarian regimes that sought
      economic prosperity for their nations by ruthless conquest”

  3. I’m flattered that you have followed First Night History – thank you. I am interested in the economic situation for Greece as we recently moved from London to Crete. Frying pan into fire? Who knows! But the people smile ‘with hope in their hearts’, as one told me, and that’s much better to be around than the misery in the UK. I can assure you.

  4. That was an interesting read on the 1%. I have thought the same thing over the past few years. But, I have no formal or even informal background on this topic. Just a passing curiosity. A few years ago, I thought it would be interesting to take the taxable gains (Pay checks and other sources that get taxed) of every worker in the US and divide them equally among all the people that actually worked and paid into those taxes. I used data from 2011, as that was the most complete source that I could find. I am not sure if I did it right. But once it averaged out, it was at $90k for each person working if distributed equally. Of course, this didn’t take into account the non working folks. But that comes from the taxes any ways, so not much would change. Actually, if I had to guess, if everyone made the same (Just what if, not in reality, that would be dumb), that would actually increase tax revenue. But again, I am just simple and don’t know the game enough to say anything for a fact. Whats your take on the global version of this? If you were to take every penny that is taxed and distribute it equally among all taxed people, how would it look? What about equally among all, taxed or not?

  5. (response to another on-line economist that you might find interesting , he was arguing our debt is manageable because of our debt levels during the war years)

    Keynesian socialism then seems to drag us into war , if war increases GDP ,with full employment , and boosts demand whilst keeping consumption down , perhaps increases savings rates (war bonds) and also historically it rids us of excess consumers , mostly men , it seems to be a fiat dreamland.
    The Keynesian idea of digging holes and filling them in again is made real by war , building bombs and tanks and planes and then blowing them all up makes for a great debt based economy. My point was partially that under these conditions human productivity is increased because they fear becoming part of someone elses empire , if GDP goes up in this circumstance then is GDP what we want ? You say that empires are not necessarily good for the economy of the emperor country and that even if they were then the oppression of other nations is morally wrong. But wars are fought for empires , in both WW1 and 2 all the belligerents wanted empires , perhaps France and Russia to a lesser degree in ww1 , but Germany was an industrial and economic superpower before both wars and the UK could not have won either war without it’s colonial armies , in el alamain it was the Indians , the aussies and the kiwis that proved decisive
    If you as an economist draw a moral line at empires , perhaps you should consider what is required for empire…… a large military presence, and also understand that wars tend to kick off when someone has a satisfactorily large military to kick it off. Remember also income tax started in 1914.
    If our modern debt situation is understood as manageable because of the war years , and to make wars possible there has to be a significant build-up of military hardware prior to hostilities , then , we have to ask ourselves whether war is the historic result of deficit spending not the cause. If you take a moral position on empires but do not take one on the funding and equipping of aggressive armies that is contradictory because it was getting an army up the Khyber pass that secured india , having the biggest fleet got South Africa and Australia.
    It is viewed as an anomaly that Germany and Japan fared well economically after the war but think of it like this , during the war both sides incentivised by fear and hope of peace increased productivity (without increasing income) , the victors and the vanquished all had economic growth after the war but the victors wanted better living standards , whilst the vanquished were perhaps satisfied with survival and had a continued embattled war psychology of sacrifice.
    Millions of people sacrificed their lives for those debts to be manageable then.
    You cannot pretend that both wars were not decided by the application of US manufacturing might , we had a situation where the axis and the allies destroyed each other’s facilities and equipment , and personnel, this is an answer to over-supply and the ‘workers’ desire for increased living standards. The US was dragged from a quite agricultural economy to an industrial one by the wars , it would have happened anyway but , if as you say the depression after ww1 was a result of foolishly sticking to the gold standard , I can see wars , in the Keynesian paradigm as just intensified business cycles, suggesting that it is not free market capitalism that drives a technologically expanding economy but the socialism of the common goal of national survival in conflict;
    it reduces the cost of an expanded monetary base in terms of living standards. Japan and Germany continued working flat out without an explosion of the American dream and pop culture which reduced the post-war allies bottom line productivity.
    Wars and Empires go hand in hand , they make each other, the Versailles treaty and why not throw the Sykes-Picot treaty in there as a kicker , taxed and/or dampened German productivity but within 20 years the war was back on. The allies in ww1 got an empire and Hitler brought about a dreamworld of national sacrifice , the nazi’s brought full employment and prosperity in an attempt to liberate Germany from that empire . Empires are not necessarily profitable because of the war which is a productivity clash between the subdued and the (higher living standard required) nations of hegemony.
    So what are we doing if we excuse our existing debt to gdp by pointing out war figures if we are not saying war helps this economic system. The day before hostilities , when the industrialised nations started destroying each other’s hardware , filling in keynes’s holes , they had empires annexed with that military might (NB US today) , if this subjugation is not economically productive as you suggest , why did the wars happen? Was it all pride with lessened income , like a new HQ for megacorp that was not required and reduced dividends ….Palmerston and Hitler’s aim of conquest as economically unsound , but the struggle for it’s attainment satisfied the bottom line.
    This brings me to these questions , does our economic system work without blowing all our stuff up regularly ?
    If GDP does not bring us prosperity during war , and after the war we pay off the debts , with interest, as monetary expansion , are wars not just a rationale for debt, are wars possible without debt (see Napoleonic BofE creation) , are wars a pre-requisite of Keynesian economics.
    Do cold wars, wars on drugs , and wars on terror attempt the same thing but miss out the vital component of blowing stuff up and killing lots of people.
    If you concede at all that debt, however fiat, must be lessened in creditworthiness by a reduced resource base , and that wars inevitably eat up vast amounts of resources otherwise available for the future , we are left imagining what would the economy of the world have looked like if in 1914 we chose peace
    Could the central powers and the british empire have traded and developed themselves and the world as competing ‘empires’ , instead of building tanks building tractors with the debt finance system. . Could we have all owned our own personal mini-zeppelin radio station, there were a lot of hungry people in 1914…. and there is today.
    I don’t think you can use war years as an economic perspective, to argue that our existing debt is manageable, without taking on it’s socio-economic and moral component, those debts were manageable because there were so many dead people.
    You might as well look at a famine in Africa and compare it to a previous famine and say it’s not that bad, we can tolerate it. The obliteration and the death on the western front, and then at home in ww1 and 2 forced the British empire to finance the US industrialization which left intact, brought about the allied prosperity from 1950 to 1970. Germany and Japan suffered no ill-effects and achieved in the post war growth period because of lower expectations and the victors stimulus. The undeveloped world stagnated and was exploited by the now hugely advance military of the west.
    In 1970 , the US and Russia should have had a war, but nuclear weapons ruined it……..so another question is , however horrible radiation and nuclear winter , does our economy need a nuclear war ?
    Does Keynesian fiat socialism always end us up in war , and is a gold standard however painful to the growth figures the greatest supporter of peace and a rational and slow free-market use of resources,
    Does the concept of a national debt allows wars to happen, it’s interesting what happened with Iran-Contra-Dark alliance when congress refused to fund a covert war in Nicauragua For our economic model more Vietnams should have kicked off in central America and the middle east in the 80’s but congress refused, so a billion dollar drug industry financing destruction in latin and urban America was born. Houses stacked to the ceiling with cash were annexed by the occult nations.
    Are national debts , perceived today as manageable by our comparison to the war years actually being paid still by the poor in undeveloped countries as an opportunity cost , a lost century of resource application to those places. If war was avoided in 1914 and then not engaged in again, if it was morally ruled out , but we kept the monetary expansion debt system would that investment have to have gone into improving the lives of the millions in poverty, we blew our own stuff up so we could build more with our labour, rather than building stuff and selling it / giving it away to the ‘new’ world.
    Not much of our existing philosophy of eco-“no,no,no,no”-nomics stands up to scrutiny for me.

  6. hi, saw you on TipTV ,thank you for your blog.
    I maybe being thick but could you add a subscribe widget, so we can get updates when you post. cheers,

  7. Hi I enjoyed the blog.
    If you are interested in 20-30% PA profit generating investments check out my blog – http://www.deepvalueinvestments.wordpress.com

    I was wondering if you could offer a suggestion as to what the world will look like in 20-30 years time if current trends continue and how best a youngish person should position themselves.

    Right now I have little to no debt and live in a modest house. This feels right to me. However, given the government’s debt burden and very low interest rates I suspect the smart thing to do is to borrow, buy real assets (probably property) then pay back in inflated pounds.

    I wonder if you have any perspective on this, on the other hand property does look stretched.

    Although I studied Economics at University and economic history I can’t find any parallels for the times in which we live so am somewhat rudderless as a result.

    Any views or further reading would be appreciated.

  8. Hi Shaun,

    Would you be interested in doing a guest blog for EU Property Solutions? We like your style of writing and have been following you for sometime now. We noticed a while back that you had mentioned EU Property Solutions in one of your blogs before, which is much appreciated. Click on the link to check out the EU Property Solutions website.

    Best wishes

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