MAY 2010 - SMASH & GRAB JUNE 22nd

The emergency budget will be on June 22nd. There is speculation about the many methods by which the new coalition will relieve us of our money which is already now being taxed by up to 50%. It is rumoured that Capital Gains Tax will be equalised with income tax rates. It will be important to look at the small print if this happens, as currently there is no CGT on clocks as they are classed as machinery, i.e. a wasting asset. The HMRC interpretation is repeated below:-

"Wasting assets: clocks and watches. Antique clocks and watches, such as `Tompion' clocks, are regarded as machinery for Capital Gains Tax purposes. As such, they are deemed to have a predictable life which does not exceed fifty years and are treated as wasting assets. A disposal of such an asset will only give rise to a chargeable gain if it had been used for business purposes and Capital Allowances were, or could have been, claimed."

Let us hope that the Treasury will be distracted by the recent departure of the Chief Secretary to notice this important exemption and that it will continue.

May is almost over and there was only one tavern clock auctioned in the month; a repainted shield dial with a electric movement was sold in the USA for $4500. The case looked original but not much else so a high price in reality. Signed Abraham Glascock, Epping. In truth all eyes are on June as there are at least three big fairs in London where top quality clocks will be on offer.

The Tavernicus site has two new offerings; Henry Lane of Bristol and Orpheus Sumart of Clerkenwell. Have a look.

APRIL 2010: BEWARE MORAL HAZARD

The Governor of the Bank of England has said that banks should not be rescued from moral hazard. Notwithstanding this fundamental principle, the UK government did just that in the bail-out. Now the leaders behind the Euro-project, Germany & France, find themselves doing the same thing to avert the collapse of the Euro as the Greek political elite have taken their country to the brink by financing a massively bloated state sector with other people's money, "OPM".

Here in the UK the government needs OPM to the tune this year of £165billion. But for the willingness of Others to provide the government with this sum the UK would have to call in the administrators. That is what has happened in Greece. Could it happen here? Surely not?

Tavernicus is not a prophet of doom, merely an observer who spent his professional life dealing with money and big sums. However, the sums involved here are so large that most people cannot get their minds around them. Just how much money is one thousand billion pounds? This unimaginable sum is how much our government owes. That is the total of OPM. Every one percent interest costs £10billion. The Greek borrowing rate in their crisis has gone from about 2% to 15%-- work it out!!

So what does this mean to the clock world?? Tavernicus doesn't have a crystal ball and can only say that if the UK gets entangled in the fall-out from the Greek tragedy then paper assets could suffer irrepairably. Nothing is safe and electronic assets, such as bank balances, pensions, stocks & bonds are all at risk. Why pensions? Pension funds are large providers of OPM to governments. Physical assets will not be immune but they will still be there after the storm.

So Tavernicus is taking his own advice and getting out of money and into physical things. Antiques generally are at a seven year low and many antiques are cheaper now than ten years ago. Fashion is part of the reason but well selected antiques have held their own.

During April there were two tavern clocks on offer, one genuine and one much altered. The former, by Quartermaine of Aylesbury, went for just over £8k and will be a fine clock when restored. The latter price has not been posted yet. The Wm Gass referred to in the last blog has now been seen and a very fine black round dial it is.

So as the election approaches there are few certainties other than if you live off the state, be afraid, and if you have money, the new government will be seeking to relieve you of it.