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Tales from the Front Line

Charlie Ellingworth

The English countryside is at its jewel-like best at the end of May – leaves still fresh, wildflowers on the roadside banks and hawthorn blossom in every hedgerow.

Where I live in Somerset it is dairy country – small fields and hedgerows interspersed with woods, many of which are recently planted. Looking at it from the hill above our house I reflected that this is a landscape in transition and one that will look very different for our grandchildren than it did for our grandparents. For them, pre-war, it was a vale of hedgerows thick with trees – one every ten yards or so, mainly elms. Now the hedgerows remain, protected by law, but now largely denuded of trees. Elm disease cut the first swathe. The second has been more gradual but no less destructive: the mechanical hedge-cutter.

In our grandparents’ day hedges were cut by hand. They were allowed to grow out for a few years and were then cut and laid in the winter with thorn shoots growing up to form a stock-proof fence every bit as impenetrable as barb-wire. As the hedge-layer picked his way along and came across shoots of ash, oak or elm he would leave it be – to grow ultimately into the mature trees that we now see but which are at the end of their lives. The problem is that as they die they are no longer replaced. Instead the hedge-trimmer, the driver in a sap-spattered cab paid by the metre, simply flails the hedge into a uniform shape taking no account of the saplings fighting to get up and out. The result? Lots of hedges – but no trees in them. Instead plenty of new woodland planted in fields once considered to valuable for woodland. The countryside is being shaped differently - but at a pace that is too slow to be noticed in a lifetime, though if our grandparents returned they would surely remark on it.

What can you do if you own a mature hedgerow? I have found that a scaffolding pole placed vertically next to a potential oak or ash tree works wonders - elms only do twenty years or so before succumbing to elm disease again. Flails and scaffold poles don’t mix. Warn the contractor beforehand and you will see the fruits of your efforts in a handful of years.

Charlie Ellingworth

So now we know. After years of talk and consultation (with whom I’m not certain) the revamp of the area round South Kensington station is now unveiled. This is probably the most visited place in London by millions of tourists drawn to the one of the greatest collections of museums in the world – so whatever they come up with is certainly public.

First the good bit. Despite moans about traffic flows, the pedestrian space is a vast improvement and instead of a traffic island, there are now wide spaces rather than narrow pavements. But that’s it.

The execution and the finish are breathtakingly awful – with an inspiration clearly drawn from the Soviet Union’s more brutalist architectural achievements. Has nobody told those charged with street-lighting that this part of London is a hundred and fifty years old and that lighting that might be appropriate for floodlighting the Watford Gap service station is not going to look or feel right? Health and Safety will be pleased anyway. What about trees or plants and flowers? Even the spaces around the bunkers of the South Bank now have trees to provide shade and greenery.

Grim, soulless, thoughtless, grey and bleak. How sad…and how typical of London’s unerring ability to achieve the bland and second rate in its modern public places.

Charlie Ellingworth

themoneyillusion.jpgWe are very busy across the whole of our business. It’s spring after all and even in the areas dominated by second-home buyers (Devon and Cornwall) things are happening. In London we have nearly a full book of clients. All back to normal? Not by a long stretch unfortunately as we are very busy in London chasing our tails. There are simply no sellers of anything decent at a remotely sensible price at all levels of the market. In the middle of a recession that, we are told, is the worst for a generation, this doesn’t feel right….

The reason surely is the current low levels of interest rates which are designed to produce no pain – and none is being felt unless you’ve lost your job. Someone once said about the Faure Requiem that it was a Requiem without a Last Judgement. At the moment this recession in London seems to be a downturn without a downside – certainly nothing like the brutal squeeze between interest rates at 15% and falling asset prices and employment that we saw in the early 1990s.

There is the ominous thunder on the horizon though in the form of the bond market which, as Bill Clinton’s advisor famously quipped, intimidates everyone. Once long-term bond yields start to move decisively upwards, then governments become merely the skier behind the boat. The rumbling seems to signal that the monstrous deficits on both sides of the Atlantic are not going to be financed at circa 3% going forward and if that is the case, then pain and motivated sellers may be closer than we think.

Charlie Ellingworth

Sometimes one is left open-mouthed at the recurrent stupidity of those that really should know better. The last two years have given us some spectacular examples but none more egregious than the lending that has gone on in Eastern Europe by mainly Western European banks.

The complexity and opacity of the now familiar alphabet soup of derivatives that, in retrospect, no-one really understood, has holed the world financial system pretty comprehensively. Everyone thought it was making the financial world a safer place by diversifying risk – but we now know it was doing the opposite. This at least is understandable – and even excusable – as it was a new experiment that just happened to go appallingly wrong.

Not so foreign currency loans.

Bankers, and anyone with eyes to see, saw what could happen only ten years ago in Asia. There, particularly in Indonesia and Thailand, domestic borrowers thought it was a wizard idea to borrow in US Dollars at a much lower rate of interest than was currently available in their own currency. When it all blew up, and the local currency tanked, borrowers were left with loans of double, or more, than they started with. Banks, individuals and whole economies were nearly bust as a result.

Yet, only five years later, the script was dusted off and the whole scenario replayed in Eastern Europe with the same result. This was beyond stupid. Beyond belief really -unless you think that humans learn nothing. There is the excuse of ignorance for the unsophisticated man/woman-in-the-street. But for the management and institutional shareholders of the banks involved?

Charlie Ellingworth

The news from the Nationwide that property prices had risen last month was greeted as if it was a finger pointing in the direction of the promised land of a booming property market.

There are a few problems with this.

The first is that they are the only index that is suggesting this. Everyone else shows a market that is still going down – albeit at a slower rate – or broadly flat. The second is that up-months in a falling property market (no different from the stock market really) are perfectly normal. In the recession of the early nineties there were many months that showed an increase within a secular bear market that went on (outside the prime markets of London and the country house market that recovered first) for over five years. The third is that the Spring is a great time for activity – it certainly is in the market that we operate in – but, as the saying goes, ‘one swallow does not a Summer make’.

In the mainstream market of the Nationwide, credit is key: how much you can borrow, what loan to value you can get, what deposit is required and whether indeed anyone wants to lend anything at all. There are signs of a thaw – but it still feels like Winter rather than Spring.

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