2010 - The Year of Growth?

I have blogged before that 'Hope is not a strategy' but it seems the only direction this Government is taking.

We have seen no initiative to cut back spend, no review, no real mention of it and no activity to make any. Yet, by 2014, there is a legal commitment to reduce the budget deficit by half. The only hope is that growth will come back into the economy and it will be enough to eat into our debt mountain. It also assumes that interest rates remain relatively low as the payments to service that debt are already forecast to be at a peak around 2013. So if growth is the plan, where will it come from, and particularly in 2010?

Retailers are still gloomy about the outlook. Households have generally started to rein back on their outlays and focused on starting to reduce their debts. Worryingly, 175% of GDP is held as principal and while interest rates remain low, the servicing is not too much of a problem, but should interest rates start to rise then severe problems will start to occur. The High Street will not be the recipient of big growth next year, that's for sure.

Many researchers say that unemployment has not yet peaked, although there are signs the rate of growth has no slowed. There is a worry here as the Government HAS to make cuts somewhere to try and service the interest on our debt and that will mean job losses in the Public Sector which has largely gone unscathed in this recession. Some predictions have put an extra half million on the current number and that will place a huge drag on benefits and lost tax revenue.

Businesses are generally holding off big investments. That is not always the case as I am working with a firm whose financials have remained good this year and is looking to grow with multiple investment opportunities this year, but their sector is generally down. That is not the general landscape - firms will be cautious about investing and the timing as there is much talk of 'double dips' and false dawns at the tail of this recession. The good news is that there is 'pent up credit' available from banks as firms have cut back on borrowing.

But the state of the inter-company lending is still very depressed. Credit insurance has taken a whipping during the Crunch and recession and overall limits are significantly down which will definitely hinder the rate of growth when the upturn comes. The firm I am working with right now has worked hard with Euler Hermes to keep their overall credit lines much the same but what has helped has been a strong policy on credit which has forced firms to pay to terms. Lengthening those credit days and decreasing cash days is not a policy that firm wants to fall back to in order to stimulate growth.

In general, fund-raising by firms has been very slow with only big banks going for rights issues mainly to boost liquidity and stave off the Asset Protection Scheme. Businesses are still keeping their powder dry.

What it points to is that there is little appetite for investment for growth right now - few companies are being bold enough to predict it is the wise thing to do. Either we are going to get a sudden massive rush for money to grow or the growth that is hoped, even preyed, for will be very slow, cautious and, in the first instance, internally funded.

You can bet your bottom dollar that such slow growth is not built into the Government's forecasts which really argues that the longer they delay making the cuts needed to balance the books, the worse they will have to be. With the Polls now narrowing, the likelihood of a hung Parliament or even a small labour victory is a possibility - given there are no concrete plans for either eventuality in terms of cuts, it may be that our attempts to balance the books will not start until the back end of next year.

That will not impress the credit agencies and it will not look good on our Bonds being as we will not be buying them in the new year with our 'Funny money'. Whichever way you look at it, this is a high risk strategy. Then again, hope is actually not a strategy.

QE(D)

There's a lot of debate as to whether Quantitative Easing (QE) is actually working. The Bank of England recently agreed to increase its use of QE and will spend as much £175bn on the program.

The problem is that down at the street level, the amount of lending is falling short as banks have missed their lending targets, repeatedly. In fact, the desired effects of QE which should be a good deal more credit being offered into the market in terms of new loans, mortgages and the like have been sadly lacking. In fact, there are plenty of accusations that financial institutions are ripping off consumers and business as the cost of business loans and mortgages are several percentage points above the base interest rate of 0.5% which has remained the same for 5 months. In theory, we should have had a bonanza in new credit in the market - the effect has been pretty much the opposite.

However, banks tell us that the reason why loans appear very expensive compared to the base rate is that they have to borrow money to lend on the wholesale money markets where interest rate is a good deal higher, so their profit margins on the apparently high interest rate loans to consumers and business are not as high as we think. This does indicate that QE has not had a great deal of effect. I go back to what QE was supposed to do.

In the past, I have likened QE to champagne glasses stacked three tiers high so that there is one on the top, two on the second tier and three at the bottom. If you pour champagne into the top glass it fills and overflows and starts to fill the two glasses in tier two which subsequently fill and then overflow into the bottom tier. If you imagine that the Bank of England holds the champagne bottle and the champagne is the money they are pouring into the financial system then we see it cascade down from the institutions to banks to the public. That's the basic principle.

But what is happening, or at least there is good evidence of it in the accounts of banks, is that banks have a target to get their loans-to-deposit ratios back in order as this was a huge problem for banks like RBS. QE is the process of buying Government gilts and if we assume that most of that new money flows to banks then it is effectively 'new deposits' of the safest kind in the banks. This means that if the banks hold onto the cash then their ratios look a damn site better. If they want to make more loans, then they could get money in off the wholesale markets and theoretically this will not dilute their loans to deposit ratios too much.

It is in fact as if instead of champagne glasses in tier two of our champagne glass pyramid but two buckets which take a long, long time to fill when they are being filled by the overflow of a single glass before they overflow and cascade into the glasses below. Until the banks feel their ratios are in order, then they are not likely to offer a great deal of this new money out in terms of credit - or that's one explanation. It is probable that they would even lend this money out to other banks anyway as that is far safer lending than to the public or business anyway with all these guarantees flying around.

In a daft twist, some of the money raised by institutions in gilt sales may have also been lent to banks in the form of short-term debt securities which means that banks are getting a nice level of subsidised lending from the Government in two forms as all such debt is underwritten. Again, there is little incentive to lend this money out to less safe hands.

Finally, it seems that as the FSA has instructed banks to buy more safe debt like gilts, much of the cash flowing into the banks from QE is actually going to buy gilts again. This helps the banks' liquidity ratio by stacking up on more 'quality' liquid reserves. It provides a great killing if you sell gilts but doesn't do the economy a great deal of good - in fact, as I blogged recently, it seems that new paper money is buying a great deal of our own new debt. I am no genius, but that has to be unhealthy in the long term as you cannot keep buying high value goods with new paper money. I would like to be disproved on that as it feels like a time-bomb to me.

On the face of it, QE seems to have just pumped money into banks who have sat on the cash. It is the reason why Chancellor Alistair Darling gets so cobby with banks when they consistently miss their lending targets which was the PM's and his (along with those clever investment banks advisers) grand plan to rescue the economy. I dare say we are actually better off because of it but there is a real danger that we either put too much in and trigger rampant inflation or we put too little and we get the opposite effect. It is why QE has never been a generally sensible way of controlling an economy as Japan and Argentina found out. It's why the Bank of England has adopted this measure only for the first time in its history.

Because unlike a QED (Quad Erat Demonstratum) proof of a theory, QE is not an exact science at all. It is pure guesswork.

Why We Are Not Economists

The Bank of England did two things this week. First it decided to keep interest rates at 0.5% - good news for mortgages, bad for savings. Second, it extended its practice of Quantitative Easing beyond its agreed limit of £150bn to £175bn, raising the question of will it go further?

The £175bn has been used to buy Gilts, or Government Bonds on future debt which we need to pay to off all our recent extra spending. In fact, in certain sectors of the Gilts market, the bank now owns above 70% of the available issues. On the face of it, this is econo-masterminding on a grand scale to save our economy and we feeble-minded numb skulls watching via the news articles should shut up and let the experts run the show.

You do not have to be a genius to work out this a high risk strategy. Quantitative Easing is in fact creating money out of nothing to purchase valuable things. It would be the same as you and I getting a classy money printing machine, printing off some fresh fivers, tenners, twenties and Fifties and then walking into a jewellers and buying a stack of gold. If anyone stopped us, we could say that are good for the money as we have a some savings in the bank and it is hardly likely that several jewellers would ask us to pay with real money all at the same time. Why, couldn't they just take those notes we have given them and use them to buy whatever they wanted - no one should worry as we are good for the money - and again not all vendors will come to us at the same time asking for the real money or its equivalent.

Quantitative Easing (QE) is really like that. Except of course, that we are no allowed to print our own money. But we have a way of doing so. Many of us have indeed printed new money over the years by taking some of the equity in our houses and creating new money in its place - sadly we have cannot behave like the Bank as we have to repay the loan, the Bank apparently doesn't. Another sad fact is that many of us are in a serious situation where the value of our assets have dipped below the original debt taken to buy them or we have negative equity - some 39% of all Northern Rock customers are in that mire while around 20% of Lloyds customers are.

QE is the process of conjuring cash from fresh air and buying really valuable items with it - with complete impunity. It works on the principle used by most banks which says if I have £1m in reserves in the bank then I can lend out many multiples of that as not everyone is going to ask for their money back at the same time or create a run on the bank. Meanwhile, the more 'unreal' money you put into circulation, the less the real money is worth. That means that each time you create more unreal money, prices have a tendency to rise as vendors think if there is proportionally more unreal money in circulation, then if they raise their prices they will keep the amount of real money they want for their goods.

It's a hard concept to grasp but if for every £1 in circulation, if 10p is unreal money created by QE, then each shop should raise their prices by 10p to get £1 of real money.

Very quickly, inflation can set in as it is so attractive to print more money to to apparently 'buy' your way out of economic trouble. Countries like Argentina did this and very nearly bankrupted themselves as so much unreal money bought apparently valuable things that the country nearly collapsed as inflation went into hyper-mode to try and compensate. QE, in economic terms, is the last resort of third world countries to save themselves.

Unless of course you are the experts at the Bank of England who think Britain is rich enough to do so. With our wonderful balance of trade heavily pitted against us, our manufacturing base pretty low and our rising debt after the bank bail outs set to almost double Sovereign Debt, QE makes perfect sense. Britain can afford it.

Our Sovereign Debt is based on cashflow, largely our tax receipts to pay the interest and repay the loan at some time. As with our own households, if we leverage our equity, then we have to pay for it, whether our assets rise or fall. In reality, by creating more money to buy our own Sovereign Debt, all we have done is created the need to raise more debt in the future to pay for it, as you have bought the debt with unreal money. It is the start of a very vicious cycle.

I am no genius, and better people than I will put me right, but one thing I know for sure is that you cannot buy anything for nothing. There is always a price to pay. QE is merely a postponement to pay in the future - we buy our own debt with more debt.

Pure genius.

Is It Time To Get Worried?

Yesterday marked an historic moment for Britain. For the first time since 1995, British Sovereign Debt was questioned when the auction to sell Gilts failed, with some saying the lowest interest in our bonds ever.

As Gordon Brown tours the world mustering support for his spending plans to fuel the economy which will rely so very heavily on the country’s ability to raise money via selling its debt, we may well ask is it time to get worried? Our inability to sell our debt is a very clear question by the outside world as to whether Britain has the long term ability to repay.

Government debt in the form of so-called gilt-edged bonds which bear a fixed rate of interest over their term are usually classified as the safest form of investment. As a sophisticated, rich and well developed democracy and having one of the major financial hubs in the world in the City of London, it is not a surprise that many traders have been shocked by yesterday’s failed auction.

Policy Worries

The markets may well have got spooked by Mervyn King’s comments and actions this week when he cautioned Brown over raising too much debt. He also was surprised that inflation had reared its head when everyone thought it would fall, which brought into question the Bank of England’s plans for Quantitative Easing (QE) which involves the Bank creating money to buy Government debt. The markets may well have felt that King’s apparent volte face would reduce the amount of bonds he planned to buy and they copied his lead.

Who knows what the real reasons may be but what is clear is that a sharp warning has been sent to the people at the top that the world is not in agreement with Britain’s policies on how to tackle the failing economy. Confidence in Britain’s future, so much part of the Brown-Mandelson mantra, is not shared beyond the realms of the Cabinet Room.

The long term effects of such a failed auction is that the cost of borrowing may rise as Britain may have to borrow from other countries or the IMF and suffer higher interest rates. Worse still, Britain’s credit rating may well get reduced, which was a rumour circulating a short while ago. The repercussions for taxpayers would be that all this massive borrowing required by Brown to fight the economic maelstrom we are in – which is now set to rise to over £1 trillion by 2013 - is that our personal burdens will rise once more. As unemployment rises, the burden on the welfare state gets heavier while tax revenues actually fall as we have already seen at the last announcement, which means that those in employment will have to shoulder more of the cost of that borrowing in the future.

Confusion

In the midst of all this is the apparent lack of consensus on the way out of the mess. Brown was preaching in the US that in fact King may be right in not borrowing too heavily which comes as some relief but in the same breath he says that the answer lies in QE. Sadly, Mervyn King had started to back track on that idea as the surprise rise in inflation had caused concerns that this tactic could horribly backfire as one of the disastrous side effects of QE can be inflation and, worse still, hyperinflation – the sort of nightmare suffered in 1930’s Germany and, more recently, Argentina.

The Slippery Slope

It seems we have teetered past that edge of the precipice that we had reached and are just beginning to scramble for footing at the downslope. The next few months, possibly weeks, could determine whether we lose our balance and start to slide without control or regain our composure. The problem is that having got to this horrific situation through uncontrolled greed, we have plotted a strategy that tries to get us back to the point where it all went wrong. For this, an incredible amount of money has been consumed and pledged in order to shore up the failed system. In reality, we cannot get back to the point we are aiming for as the system failed so badly that it needs to be completely remodelled and then restarted at a lower point – we must endure the punishment of decrease in the economy before we can move it forward again, and that will take time.

The first major mistake was to step in to rescue Northern Rock by taking it into public ownership instead of taking the time to look at alternatives and form a cohesive plan to fight the crash. It triggered a succession of similar knee jerk reactions which have cost us dearly and got us nowhere.

The reactions have been followed by management of the poorest quality by the Government and their army of advisers realised by a shameful attention to detail as to how the enormous mountain of money has been spent. Fiasco after fiasco surrounding bonuses, pension payments, consultancy fees show us how failure in execution of the plan stemmed from the lack planning and foresight by the people who devised it.

I am reminded, having stepped through it this morning, of the incredible lack of planning and execution showed by an inept British Airways (BA) and BAA in the Terminal 5 launch. Bad management is endemic in business and Government and it leads to poor execution which wastes money. Fortunately for BA and BAA they recovered to have a well functioning Terminal. After 12 years of incompetence, I do not have the confidence that this Government has the ability to get out of this mess. The clearest indicator that the same view is held by the wider world came at yesterday’s failed bond auction.

The reality may have dawned that the apparent success of the New Labour Project was built as a house of cards. Fine words and clever spin have been the key factors in creating the vision of a ‘Cool Britannia’, the stuff of dreams. Reality has proved that it was only a dream. But it could have been attained if as much attention to creating the plan and vision had been given to executing it.

For that, we will all pay a very high price as we bear the cost of their failure - every single penny of it plus interest.

Out of Thin Air

Quantitative Easing is a funny old thing. It's effectively creating money out of thin air and it is currently seen as the method to rescue the global economies. It's such a great idea, it's a wonder that we don't do it ourselves - individuals that is.

But we have. More of that later.

The US Announcement

The theory goes that money, like matter, cannot be created or destroyed.

That's not entirely true. Today, the US Federal Reserve announced a package of $1.2trillion of Quantitative Easing in proposing to buy Government debt (Gilts or Treasuries) and mortgage backed securities over the coming months. It is effectively printing more money or creating more dollars in the economy out of nothing.

You see, the Fed does not have these dollars.

What it has is a Reserve of money or deposits and at any time it can use something known as Fractional Reserve Banking to say that at any one time not everyone will want access to that Reserve. In fact, so confident of this fact are banks, that they then create multiples of this Reserve as an amount of dollars or pounds to lend out to people. As long as they don't breach a certain ratio of circulated dollars to the Reserve then they can issue as many as they want. And this is what the Fed has done, as has the Bank of England.

Like my pyramid of champagne glasses analogy, the new money created cascades from the banks that hold the debts the Fed is buying, down to businesses and then onto consumers - and the one thing they then bet on is that like idiots we will spend this new money. We will receive it via greater lines of credit and lending from businesses and banks in the form of loans, mortgages and credit cards in the main.

Problem solved.

Not Quite

Of course, if you create more money, effectively you are reducing the value of money already in circulation and that is why the dollar took a sharp pasting from a range of foreign currencies in response to this. But it also has the effect of decreasing the yields on gilts (National Debt if you like) and again the US markets saw the sharpest ever drop on gilts yields in response. This has a big knock on effect for all people who are saving and wanting to retire as pension funds and annuities are very dependent on gilts - their value and their yields. As the Gilts market decreases, there is a large shortfall in pension funds created and in end salary pensions, the deficits sharply increase.

Quantitative Easing, just like increased long term Government borrowing, has a profound effect on the future earnings of individuals - and this time not just in tax payments but in actual retirement income. It is a short term fix which has a profound effect on the future of each and everyone of us and it is why it is a method of tackling the economy which smacks of deep desperation.

Quantitative Easing For Us

It is not quite the same but effectively in the last 10 years we, as individuals, have behaved like banks. We have leveraged our own 'reserves' which could be our property asset values, and raised more money to go and spend on other assets, lifestyle changes, holidays or consumables. As the yield on our own 'sovereign debt' was low in terms of interest, borrowing against our assets was relatively cheap and despite our own household disposal income actually shrinking over the same period, we actually made ourselves a good deal richer by releasing far more money to spend. In the wider economy this created a fantastic boost to GDP and corporate profitability and as long as our asset values remained high then there was no end to the cycle of getting more money.

The problem, of course, is that unlike the Fed our reserves were not deposits but variable value assets and their value had been artificially inflated due to the very process of releasing the locked up equity in them. The more we released, the greater their value became and the more we could release. It could not possibly be sustained - and there is a simple reason for it. The complex reasons which everyone had used to suggest it could never change was that even if there was a recession or downturn and the ability of people to repay the debt was changed, this could be accommodated for as things like unemployment could be less impactful while lots of incentives and creative lending practices could be used to keep first time buyers get in the game as someone had to be at the end of every chain.

But the simple reason was that the whole system was built on greed and that made sure that it got riddled with bad practice.

Criteria for loans went out of the window, which Gordon Brown points out was the cause or sub-prime, but it was not the primary cause as it was merely a symptom. The cause was the fact that banks were trading in debts many times over to create more profit and provide an endless supply of cash to lend for the next debt. It was the very system used to create the lending that was the problem, sub-prime became just a peripherary result that showed why the system was unsustainable. Banks had used the system of debt trading to access cash way above their own reserves which fuelled their profits and more lending and this became the principle method for growth and funding their business.

Sub-prime highlighted the folly and the availability of cash dried up immediately (The Credit Crunch) as no one had any idea who owned what asset and how much it was worth. In the UK some banks had lent 125% of asset value, some had increased earnings multiple criteria to 5 or 6 times earnings and included variable bonuses in it, some had taken external guarantees from parents or relatives, some had taken shares as security, then some had lent stupidly on the corporate market, on property - the fact was that each new loan they made had a fantastic, almost unbelievable return and this is waht produced a 162% rise in property value ove rthe 10 years.

And sure enough the whole thing collapsed.

For us, as mortgage holders who had leveraged the excess equity in our homes, the bottom quite literally fell out our world. Our money making machines - our homes - started to plummet in value and in conjunction with a lack of available credit to renegotiate the loans and a recession to threaten our abilities to repay, we saw the equity we had released turn into a massive loan with no security.

Our own version of Quantitative Easing had backfired on us spectacularly.

The Future

Real Quantitative Easing is different to how individuals raise their money but the principle of creating extra cash from thin air has real parallels. There are risks associated with Quantitative Easing as it can trigger higher inflation or even hyperinflation as Argentina has seen in its not too distant past. The Bank of Japan has used it in recent times in conjunction with zero percent interest rates to try to stimulate its economy - it has had no real tangible effect as Japan remains in a relative trough which has lasted for some years. The theory says that if this is done by Central Banks as opposed to Governments just printing money then the risks are less.

Tell that to the people who save and who are wanting to retire. They are shouldering all the burden right now to compensate for the greed of a few who could not help themselves and a set of Governments and Regulators who did not have the intelligence, gumption, fortitide and appetite to stop it.

Mervyn's Day At The Casino

In The Bank of England's incredible 315 year history no Governor has ever tried it, not even in very bad times before. Today Mervyn King will become the first man in British banking history to use the Fiscal Policy known as Quantitative Easing - for those of us who have not swallowed the Economics textbook it simply means to print more money.

Quantitative Easing (QE) - The Idiot's Guide

Imagine a pyramid made up of three layers of champagne glasses. QE is much like pouring in liquid into the glass at the top so that it overfills and cascades into the glasses below it which in turn fill and then overflow into the glasses at the lower level which also eventually fill and overflow. If you think of the top glass as the banks, the middle layer as business and the bottom layer of glasses as consumers, then what you see is pretty much the process of QE.

It's the idea that if you print a load more money, pour it into the banks, they will want to lend more to businesses who in turn offer us, the consumers, more credit.

Now the real dummies amongst us may point out that a great many transactions today do not use money and that therefore the process of printing more money will have far less relevance today than say in the period known as The Great Depression in the 1930s when the theory was honed.

All I can say is that the intelligent people who came up with this idea have pulled their heads out of the theory book, written all those years ago, and noticed that fact and have, of course, taken it into account. I think.

These intelligent people are the ones who have presided over the collapse of 5 major UK banks and pumped a great deal of money into the banking system already without any great effect but, keep quiet cynics, because now it's Mervyn King's turn - and he has kept a discrete distance from the fiasco to date, adding a few acidic words about policy every now and then. To a large extent, he has kept his credibility alive by doing so.

But today marks the start of his big gamble - one unprecedented in modern times. Let's all hope 'Big Merv' is right.

How Does It Work In Practice?

At midday today - as such is the pageantry of big banking business - an imaginary gong will go and the Bank will start to use its £75bn of new money it has printed to offer to buy £2bn of Government debt in the form of bonds from institutions.

It's some convenience to just go and print a load of new money and that's based on the concept of a 'Fractional Reserve'. This is vaguely about the notion that at any time The Bank of England has, say, £100bn in its coffers but it may print up to, say, £600bn of bank notes to go into circulation - remembering each bank note comes with a promise to pay the bearer the amount on the note its value should the bearer present it at The Bank. Fractional Reserve tells us that in practice no one ever does and certainly not at the same time - so we can print vastly more notes to go into circulation than their total promissory value held in the Bank's vaults. Quite how the Bank would pay these days as it no longer has any gold is another discussion entirely - but don't worry, our PM has thought of everything.

So the first of these bond auctions will start today and The Bank of England will be buying these £2bn batches of Government debt or Gilts. Two hours later, there will be a second stage when the institutions and banks will be allowed to participate in these reverse auctions - and similar activities will carry on twice weekly until all the new cash printed is consumed.

Gilt prices have risen sharply in the last few days as the financial system salivates at the prospect of more money being created out of thin air and being spent - it's just like a sucker walking into the East End with a wadge of new notes wanting to buy a car from Arthur Daley, there is not a chance in hell these Gilts will be a 'good deal'.

The top champagne glass is being filled starting today. The one snag in my analogy which is reflected in real life is that nobody knows how much the champagne glasses hold and so how long and how much money will it take to fill them all.

Deflation

This amazing gamble comes after The Bank has dropped interest rates to 0.5%, the lowest rate in history. This kind of Fiscal Stimulus goes into a new area known to some (i.e. me) as Fiscal Defibrillation - a series of very sharp and big jolts to the heart of the financial system to stimulate it into life. QE is the second major jolt, if you discount the meagre £1.3 trillion of bank bail outs, loans and guarantees on offer to the UK banking system. The disease that The Bank is trying to avoid is 'Deflation', the banking equivalent of 'MRSA' which is what the injured financial system may catch after its major surgery and tries to recover.

Thankfully, the financial system is not being treated by the NHS but by clever people like Mervyn King, Alistair Darling, Gordon Brown, Yvette Cooper and a host of really brainy, intellectual and incredibly greedy bankers. So our economy is in fine hands, as it has been for the last 10 years.

Deflation is a bit of a killer disease itself - it's the concept that just as the financial system is recovering then prices to start to fall rapidly - just as in the fire sales we have been seeing in shops. Consumers, of course, those irrelevant carriers of wealth that rich people would like to have, like lower prices - but we are not the important ones here. If bankers cannot make huge profits, where is the fun of loaning us money?

The perverse logic of deflation is that textbooks say that we, the evil consumer, will delay spending the cash given to us via our champagne glasses, in anticipation of yet lower prices - the concept that I will not go to the East End and buy that car off the nice man in the sheepskin coat and trilby this week as he will have a lower price next week. This of course has the effect of increasing the effect of the downturn.

When A Science Is Not Exact

The financial process of treatment and recovery is sadly not an exact science as we have seen so far from the vast bank bail outs across the globe, estimated at around $5 trillion and rising. Mervyn King grimly warns that he does not have any idea how long he has to keep printing money and how much will be needed to get us to spend again. All he knows, or should I say, thinks, is that eventually it will work.

That's why no one has ever tried it before. I don't know about you, but that really fills me with confidence.