In A Galaxy Far, Far Away

Star Wars director George Lucas has lost in his attempt to try to prevent British prop artist Andrew Ainsworth from selling replica Stormtrooper helmets from his studio in Twickenham, south-west London:

Star Wars may have been a cinematic blockbuster, but its costumes were never high art – a view now confirmed by the supreme court, which has ruled that an imperial stormtrooper's helmet from the movie is not a piece of "sculpture".

The decision opens the way for Andrew Ainsworth, an English prop designer, to carry on selling outfits for up to £1,800 each to customers in Britain but it exposes him – and other UK manufacturers – for the first time to claims of infringement of foreign copyrights in British courts.

Not being a work of art means that any enforceable UK design right in the helmets expired after 15 years.

It's nice to know that the Supreme Court gave careful consideration to this case, with much inside knowledge (page 17, my emphasis):

43. This is quite a puzzling point. The Star Wars films are set in an imaginary, science-fiction world of the future. War films set in the past (Paths of Glory, for instance, depicting the French army in the first world war, or Atonement depicting the British Expeditionary Force at Dunkirk) are at least based on historical realities.

Set...in the future? Er...no:

A Lingering Death

The EU's latest 'rescue' of the Euro last Thursday hasn't even managed to appease the markets for a week:

The wave of relief in European markets that accompanied a new rescue plan for embattled euro zone governments appears to have mostly run its course, suggesting that investors are becoming more skeptical about the plan’s prospects for success.

But as investors examine the details of the package, too many questions remain unresolved, Martin van Vliet, an economist at ING Bank in Amsterdam, said.

The bailout package “was a huge leap for European politicians,” he said. “But it was a small step for the market.”

Unfortunately (for them) and rather predictably that 'huge political leap' is causing problems for Merkel:

GERMAN Chancellor Angela Merkel is facing a storm of protest at home after yielding to European Union calls for radical action to shore up Spain and Italy, raising doubts over her ability to implement the package.

The finance chair for the Free Democrats in the ruling coalition, Frank Schaffler, said the summit deal threatened ''the castration of Germany's Parliament'' by shifting budget power to Europe.

In the meantime Spanish and Italian bonds, are showing a negative market sentiment, as they continue to rise:

Fears that the Greek financial bailout could come unstuck and the eurozone crisis spread further across southern Europe rattled markets again on Tuesday.

Spain and Italy were forced to pay a higher price to sell short-term debt amid concerns that last week's Greek bailout had failed to solve the problems in the eurozone. Spain's short-term cost of borrowing hit three-year highs and demand fell at its Treasury bills auction, while yields at a sale of six-month Italian paper hit their highest since November 2008.

In short the rescue package is just delaying the inevitable, but instead of months or even a year, it now can't even do that. The Telegraph reports that all the rescue package has achieved is to buy enough time for Europe's officials to go on holiday during August:

The new Greek bail-out has bought Europe's officials a breathing space to go on holiday, but it won't last long beyond August argues Martin Vander Weyer.

"Well, at least they've all secured their August holidays," observed Sir John Gieve, the former deputy governor of the Bank of England on the Today programme.

It's very likely that the Euro crisis will be back with a vengeance in September and October and we'll have to go through the whole 'bailout' charade again. The Euro is finished but first we must suffer the long and lingering process of its demise.

Banned.

I was just trawling through the Independent's list of the most controversial films - the tagline being:

"Take some needless violence, a religious satire and a dash of incest - and you've got yourself a collection of films too shocking for cinema".

It includes of course the usual suspects - A Clockwork Orange, The Exorcist and Last House on the Left to name but a few (Interestingly the Independent leaves out The Battleship Potemkin which had one of the longest running bans in British film history). Then at number 17 up pops this (click to enlarge):

It's official, the 'No Pressure' film is on a list that includes such notorious gems as Salo, I Spit On Your Grave and Cannibal Holocaust.

Franny Armstrong must be right proud.

Priorities

From the Times:

EU Bill Receives Royal Assent

On the 19th July Cameron's much lauded (by himself) 'referendum lock' bill became law. Hague says:

For the first time it gives real control to Parliament and every voter in the country over the most important decisions a government can make in the EU.

"This is good news for our democracy and will significantly strengthen it.

"For the first time it gives real control to Parliament and every voter in the country over the most important decisions a government can make in the EU.

So now, of course, we can expect copious referendums on the transfer of power to Brussels as promised. Can't we?

Euro Fudge

Zerohedge has a list of draft proposals for the Euro crisis - 'leaked to Reuters' - here, and the Telegraph have reported that it was deliberately leaked to support the Euro:

Speculation here in Brussels that draft eurozone proposals were deliberately leaked to Reuters to stop the euro plunging on the markets.

However (my emphasis):

The markets wanted to hear about measures such as using the eurozone's €440bn EFSF bailout to give loans to non-programme countries (Italy and Spain) for bank recapitalisation or allowing it to "intervene on a precautionary basis".

All well and good except that these proposals could well require a change to the EFSF rules, the fund is supposed to be last resort for example, and changes must be agreed in parliaments.

Germany does not want that battle as German voters revolt against even more of their money flowing south. The Finns and Dutch don't like it either.

Markets have now firmed up. Will that message be passed on to Chancellor Merkel in a bid to twist her arm?

Your voters might not like it but the markets need it.

Zerohedge has his doubts this can be achieved (i.e. it's EU fudge):

So far all the news out of Europe is based on changes to EFSF. Greece will be able to borrow for 15 years at 3.5%. French bonds with a 15 year maturity trade at 3.8%. So the EFSF will have to pay more on its debt than it receives? Interesting. Have the rating agencies signed up to rate the new EFSF as AAA? From deals I've worked on, things that always hurt ratings were:

1. extending maturity,
2. including banks in addition to sovereigns,
3. allowing trading,
4. vague rules as opposed to written rules.

The headlines all indicate the new EFSF has all of these components. I am sure the agencies have been involved in these discussions, but I remain dubious how happy the market will be to finance the EFSF at rates that are remotely in line with the rates the EFSF plans to provide financing at.

And even if the proposals are correct, then it's inevitable that Portugal and Ireland will use this Greek precedent to force better terms as well. The crisis is not over yet by a long way.

Oxy'Moron' Quote Of The Day

"...this morning, the talk is turning towards a selective default, with Dutch finance minister, Jan Kees de Jager, saying it is "potentially inevitable".

Greece To Default

Details are beginning to emerge from the Franco-German agreement, though they remain piecemeal measures rather than an overall coherent strategy. The key measure so far is Greece will be allowed to partially default by effectively extending the maturity of existing bonds:

The deal paves the way for a German-backed initiative for more direct measures to get private holders of Greek bonds to help pay for the bail-out. According to a version of the plan circulated by the European Commission on Wednesday evening, all owners of Greek bonds that come due in the next eight years will be urged to swap their holdings for new bonds that do not mature for another 30 years.

The FTSE slides on the Greece partial default by 48 points.

Euro's Last Legs?

Today's momentous crisis meeting over the Euro and bailout of Greece could well be disastrous for the future of both the Euro and the EU - although if you watched BBC Breakfast this morning, you would be unaware of the possible consequences of it all going wrong today. Apparently, in a brief piece at 08:00, "EU leaders are meeting to discuss a bailout of Greece". In other words move along nothing to see here.

Despite the heavy responsibility of today's meeting, no-one in Brussels has the first idea how to respond to this crisis effectively. The obvious solution - of an orderly break-up of the currency - is a non-starter for them. So what remains are fundamental and seemingly insurmountable differences between the Germans, French and the European Central Bank over the bailout terms of Greece.

My guess is that what will result will be the classic EU fudge, a bewilderingly complex plan that pretends to fix the problem (and allows Greece to partially default but in such a way that it is not made specific) in order to buy more time. Already apparently there is a deal but no details yet are forthcoming.

Whether the markets buy it is another matter; they are clearly losing patience with the whole charade and tomorrow could be Black Friday. But the proponents of the Euro won’t go down without a fight, all the time it will try to buy more time and buy more time. Last November the FT published this article which compared the Euro crisis with the 1960s Sterling devaluation crisis:

To some who went through the unsuccessful struggle from 1961 to 1967 to stave off sterling devaluation, the series of crises surrounding the euro will be drearily familiar. First there is a surprise loss of confidence. Then there is a series of rescue operations, usually taking the form of international guarantees of one kind or another. These are backed up by domestic restrictive measures leading to a domestic recession of sorts. In time the financial pressures ease and near-normality is seen to return. But then, when few are looking, there is another crisis, another set of international rescues and another set of domestic restrictions. And so on. Eventually the struggle is abandoned, and political and financial leaders work to pick up the pieces.

During the period when sterling devaluation was known as “the great unmentionable” a tiny band of Treasury officials kept “a war book” on how to deal with the unmentionable if it nevertheless happened. Harold Wilson, the prime minister, ordered that the “war book” be physically burned, which it was of course not. It is difficult to believe that such a manual does not exist in Athens, Frankfurt and perhaps other European centres.

While Euro-federalists will fight tooth and nail to prevent a disintegration of the eurozone, the simple fact is if something is unsustainable it can not be sustained for ever - however it can still be kept going for quite a long time.

Everyone knows the Euro is seriously screwed but, I suspect after today, being screwed will have to wait just a little bit longer.

Quote Of The Day

"We are approaching the endgame for this part of the European sovereign crises: the number of cans that now need kicking down the road would challenge the left foot of Lionel Messi,"

said Gary Jenkins from Evolution Securities.