Don’t call me Paki, Mac.
Now that we are seeing EU migrants leaving the UK at an ever accelerating rate, the bleating has started – which is a surprise because when the government announced that it wanted foreigners to arrive in ‘tens of thousands’ rather than hundreds of thousands, there was hardly a whimper. Now we have moaning about labour shortages and how vital cheap foreign workers are to our spluttering economy…..but it’s no more that we deserve.
Our government’s style has rarely been proactive. For instance, once the referendum farce had been settled, the government should have affirmed the importance as well as the ‘safety’ of all foreigners already living and working in the UK….but instead, it played its usual ‘wait and see’ game because anything else would have needed a decision!
However, it is not just political incompetence and intransigence which is to blame for the coming exodus. There is a much more sinister undercurrent at play and it is to do with the Brits’ very strong herding instinct whose tendency is to reject rather than to assimilate. Read More
FALLING INFLATION with Rising Prices?
When you are told that inflation is falling, you would naturally expect prices to be falling . That ain’t necessarily so!
Many years ago, when I worked for a very large bank, I sent a team of people into town in order to find out whether the average British adult understood percentages. The answer was a resounding “No!”
MOST of the people we interviewed had NO IDEA about percentages!
Banks, supermarkets and even the government know very well that most people are either thick or at best borderline thick as far as simple arithmetic is concerned and they take full advantage.
Supermarkets “mix and match” their prices, so that you need to have the brain of a Stephen Hawking to decide whether it would be cheaper to buy three bags of crisps for the price of two or perhaps two at a different price with one free or maybe six bags with 10% extra. By the time you’ve made several purchases like this, you can leave a supermarket mentally exhausted.
Banks will be paying you interest at anything from 0 .01% p.a to 3.00% with maybe an introductory offer of three months with an additional 1.5%. Interest on credits is calculated from the day AFETR your deposit but debit interest on withdrawals is applied on the day of the debit. When a bank returns a wrongly applied charge, will it also re-credit the debit interest? If it does – then at what rate? You don’t know? You’re not alone.
The Government will throw statistics at you through the medium of television, delivered by double-first Oxbridge Economics graduates who have absolutely NO idea how to explain economics concepts – except to other economists. Percentage increases in GDP, percentages out of work, percentage decreases in the annual inflation rate. Percentage, percentages and even more percentages!
Which is better? a 10% discount and then VAT added or would you prefer the VAT to be added first and THEN take the 10% discount? If your energy bill tells you that the discount on your Gas is 5% and the discount on the Electricity is 5%, how many percent savings will you me making in total? What is 12% of £60?
Today, we have been told that annual inflation is on the decrease BUT we all know that prices are on the increase. How is this possible?
I am going to try and explain but in very simple terms.
Assume you bought a radio in January 2013 and you paid £95.70. If you then went to the same shop in January 2014 (a year later) and the price of the same radio had increased to £100, the price would have increased or INFLATED by £4.30. which is an increase of 4.5%.
Let’s now go back to February 2013 when the price of the same radio was £100 and assume one year later, in February 2014, the price increased yet again, this time to £104. That means that the radio would have increased in price or INFLATED by £4, which is 4.o%.
So, coming back to this year, between January and February 2014 (in one month), the radio’s price has INCREASED by £4 but at the same time, inflation has DECREASED from 4.5% to 4.0%!
Therefore, we have a rising price but simultaneously, we see falling inflation.
The media are already mumbling something about “falling food prices etc” having caused the present fall in inflation.
It is nothing of the sort : Yes, falling prices do contribute but the way that the calculations are made can be the major contributor to the figure because it is calculated in discontinuous annual slices. Today’s inflation figure depends on what the inflation figure was a year ago.
Having said all that, on this occasion, the CPI has actually decreased in one month
Mind you, as usual, whatever the basis of the inflation calculation, it will still not stop the politicians from claiming all the credit.
(Unless, of course, the inflation rate goes up too drastically, which is when those pesky “external factors out of our control” come into play!
Screw the Interview
Some of you may have read my “How to get to the top with absolutely NO talent” which gives a few tongue-in-cheek pointers as to what NOT to when attending a job interview.
I thought that it might also be useful to tell you a few other pitfalls – especially as more and more of you will be attending interviews over the next few months (years!).
Turning up on time seems like an obvious piece of advice. Turn-up in plenty of time to ask where the loo is so that you can at least straighten your hair and see how you look after the journey. You know how it when you’ve either walked 100 metres from a train station or walked 20 paces from your car – there is always that rogue gust of wind which messes up your hair or that snap rain shower which makes your suit feel like a dishcloth or washes-away your makeup. Arrive with plenty of time to settle down and convince yourself that you look good!
At some stage during the interview, you will be asked whether you have any questions. There are a couple of things which you definitely never ask about. The first rule is that you never, ever ask about salary, overtime, holidays etc. The function of the first interview is to demonstrate how lucky your prospective employer will be if he is wise enough to hire you. The interviewer needs to know what you can do for his company and not to tell you what they can do for you.
Never ask inane questions about the company. “How many employees do you have?” Do your homework. If you are being interviewed in an Agency pre-selection interview , you can get away with a few inane questions but remember that this type of interviewer sees you as no more than a commodity.
When you are asked the ubiquiotous “Where do you see yourself in 5 years’ time?” never reply “In your seat” or any of the other trite replies which the interviewer has heard a million times before. Start your answer with a “Hopefully..” and talk about working hard and progressing. (Every company will lie to you and say that it runs a “meritocracy”).
You want a job. This job. You need to show commitment to the job which you are being hired for.
Another favourite (lazy) interview question is the good old “What are your weaknesses” question. Yes – even now, some interviewers believe that this is an excellent interview question. Although it is a rubbish question, you can put a positive spin on it without appearing too clichéd.
The first rule here is not to give that type of answer which attempts to turn such a ridiculous question into a major positive. You know the sort of thing: ” I tend to be too much of a perfectionist” or ” I put in too many hours” etc etc. The only reaction answers such as these will generate is a yawn.
The correct way to deal with this type of question is to think about skills rather than attributes. For instance , if you need to polish-up your Powerpoint skills or have forgotten a few Excel shortcuts, use those. ” I’m a little bit rusty…..”
In my book, I state quite clearly that you should not lie about qualifications but that things such as GCSEs are rarely checked – so what you say about qualifications is up to you. However do not claim anything that you will not be able to bluff your way through or a qualification which suggests that you will be be able to do the job when you can’t. Lie intelligently. Otherwise you are not-only wasting the interviewers time but your own as well.
Most interviewers realise that you will exaggerate the responsibilities you have in your current and previous jobs – just do not overdo it!
When you are approaching the end of the interview, the interviewer knows that you need to know as soon as possible whether or not you have been successful. The “When?” question is always a pain so don’t ask it. A bad interviewer (and there are lots of those), will sometimes make you believe that you have been successful and too many interviewees spend the interview misinterpreting what the interviewer is saying – especially if at some stage he says “We”, meaning “The Company” and you think that he is including you.
Don’t spend the interview searching for imaginary clues which make you believe that you have the job.
” I need to know as soon as possible because I have other interviews.” is another favourite which practically guarantees that you will not be participating in a second interview or shortlist.
” I really need this job.” or my personal favourite ” I’d do anything to get this job.” do not convey you as a thrusting “go-getter” – just a desperate loser. (I’ve been on the receiving end of both). Avoid!
Finally, I presume that you are wearing a suit (both males and females). If you are, make sure that it is clean and pressed and ladies – do not display your chest – no matter how proud of it you are. It can be an unnecessary distraction and in my experience , does little to enhance your job chances (and I’m a big fan!) – but it is a very common mistake!
Good Luck….and remember the correct mind-set. It is THEY who will be lucky to employ YOU!
50 Predictions for 2013
Last year’s predictions are HERE.
Some were right, some were nearly right whilst others were nowhere near! That’s because most forecasting is a mixture of extrapolation, conjecture, wishful-thinking and luck…………..apart, that is, political and economic divination , which also includes an unhealthy slice of blind optimism.
My interests are mainly political and economic although the list below contains a few random “fun” ones!
I have not included too much of the blindingly obvious, such as the 2013 Eurovision Song Contest in Malmö, where the United Kingdom will be in the bottom THREE and the most likely winner will be Scandinavian.
Wishful thinking has been avoided. For example I do wish that Mo Farah would stop sticking his hands on his head and doing an impression of a demented Pretzel in a vest!
Conjecture, based on past performance suggests that there will NOT be any banking reorganisation because of vested interests and political cowardice. Governments have it within their power to keep that particular pot boiling for years!
All Eurozone Crisis predictions of the last four years vastly underestimated politicians’ capacity for procrastination, ineptitude and political self-interest.
However, I do perceive that European countries with reasonably strong economies will begin to see the advantage of NOT prolonging the Euro agony and once again, striking out on their own, setting their own interest rates and returning to the Lira or Peseta!
These are my predictions:
1. Gold will skyrocket in value.
2. Brazil will finally become THE place to invest(shares and currency)….but see 41 & 42 below.
3. Germany will accelerate the sale of its Bunds, in spite of the fact that it hopes to sell about only about €250 billion Euros’ worth which is lower than in 2012.
4. As predicted last year, Silvio Berlusconi will reappear in Italian Politics – much to Frau Merkel’s chagrin.
5. Pressure will increase on Chancellor George Osborne to be replaced (It’s the ONLY way that the Coalition can move to Plan B without too much loss of face).
6. The banks will continue to rebuild their balance sheets as the value of their assets diminishes, resulting in an increase of non-bank lending. Credit Unions, peer-to-per lending, asset leasing, community finance organisations and invoice finance will all accelerate as the banking system continues its introspection.
7. United Kingdom property prices will fall by 25%.
8. Frau Merkel will be re-elected and continue as Germany’s Chancellor.
9. Italy will talk about leaving the Euro and readopting the Lira…………..and Berlusconi will be accused of blackmailing Europe.
10. People-power will win-out in Greece and it too will (finally) seriously consider leaving the Euro as its austerity programme is given a violent “thumbs down” by its people.
11. The theoretical €30 billion in French tax hikes will have a negligible effect on its tax “take”. High net worth individuals and businesses will continue the exodus which began in late 2012.
12. Greek banks will begin to totter as loan defaults by Greek borrowers (both personal and commercial) continue to accelerate.
13. The “restructuring” of Spanish banks will fail.
14. David Cameron and other members of the UK Coalition Government will continue to add 100,000 to the ” number of new jobs we have created in the Private Sector” every time they make a speech. By mid-2013, the “figure” will have swollen to over 1.5 million. Unfortunately without the associated increase in tax-take which one may be forgiven for having expected.
15. Japan printing money will result in a currency battle, primarily involving the American dollar.
16. Greek Tax authorities (in spite of all those reorganisation noises!) will still fail to collect the taxes.
17. David Cameron will realise that UKIP is a clear and present danger and will begin the fight-back by the only way possible. He will adopt their policies and reinforce that by continuing to spray copious volumes of testosterone in Brussels.
18. Mario Monti will stand for election in Italy in a last-ditch attempt to maintain the stranglehold on European politics by Goldman Sachs old boys.
19. The Euro will make its annual journey “to the brink”.
20. Protests will accelerate across Europe – into the United Kingdom….as voters wake-up to the politicians’ ineptitude, procrastination and complacency. Voting-out incompetent governments and merely replacing them with incompetent outfits of another flavour will no longer be viewed as the solution.
21. In France, Francois Hollande will continue to demonstrate why the French don’t really appreciate Presidents who are Socialist.
22. The ECB’s Mario Draghi will once again tell the world that he will do “all it takes” to keep the Euro intact…..including the ruination of millions of Euro lives.
23. Someone, somewhere will wake up to the fact that the banking system is not working and has morphed into a fat, ever-hungry cash cow which no longer executes the functions which it was designed for (to support individuals, commerce and government).
24. Youth Unemployment in Greece and Spain will approach 60%.
25. By the end of 2013,the Catalans and the Basques will decide on their self-determination.
26. There will be a massive surge in the Spanish anti-Royalist movement and the Spanish Royal family will feel “unloved” as demands are made for the abdication of King Juan-Carlos.
27.The Franco-German Euro Axis will be consigned to the poubelle of history as Frau Merkel finds herself another “favourite”.
28.There will be an exodus of high-earners from France in protest to the Socialist-style “Politics of Envy” taxes on those earning over €1 million.
29. British P.M David Cameron will continue to bang-on about “the mess that Labour left behind” – THREE years after coming to office. That will remind the electorate that in spite of the PR, the Coalition still has no idea about how to deal with the budget deficit, except to adopt the bad part of the Merkel Model.
30. Japan’s money-printing programme will drive up its inflation, to match (and exceed) that of the USA, possibly achieving “hyper” levels. Then, they’ll print some more!
31. USA: There will be no “Fiscal Cliff”. The cracks in policy will be papered over by compromise and political expediency………. as America lurches towards the next crisis.
32. In the UK, the Church of England will continue to fret about sex-related matters such as gays, gay marriage and lady bishops. Hopefully, some of them will find a bit of time for their God and congregation!
33. The winners of the X-factor and Britain’s got Talent will have no discernible…………talent. (That’s my annual, sure-fire, 24-carat banker!)
34. In Europe (as usual), neither Barroso nor Van Rompuy will say anything REMOTELY interesting or pertinent.
35. Europe will continue to TALK of fiscal and political integration………but that’s what it will remain…..TALK. Why? Because one of the by-products would have to be some form of Debt-Mutualisation which so far, remains a deal-breaker.
36. German resistance to European supervision of the banks will result in the smaller banks remaining unsupervised.
37. In Italy, Mario Monti has clearly demonstrated the usefulness of a government of Technocrats: they have pushed through economic reforms and budget cuts which a properly-elected government would have NO CHANCE of implementing. However, the honeymoon appears to be over and Italy will return to a Berlusconi-led coalition.
38. Bundeskanzlerin Merkel will strengthen her position as de facto European leader as other (weaker, male) European leaders (half of who are on their way out – including the UK administration) continue to defer to her.
39. After the German elections, Mrs Merkel’s Christian Democrats will form a new coalition with the Social Democrats.
40. Stagnation, Recession and Depression will continue in Europe. Greece will remain in depression (yes!), as will Spain and Portugal.
41. If you’re an investor, you could do worse than keep an eye on Mongolia’s mining boom which will pick up speed in 2013.
42. If you’re a gambling person, here’s an interesting “double”. Lord Patten to resign as BBC Chair . Then, invest your winnings on anything in Macau whose economy is booked to grow by about 15% in 2013.
43. The “in denial” UK Coalition Government will continue to spout meaningless statistics as the retail trade continues its slow-motion collapse and accelerating volumes of businesses go into administration and bankruptcy.
44. The Protestant Church will begin to turn more to Bible-centred Christianity – away from the airy-fairy, trendy, unleaded and flaccid Christianity of the Rowan Williams era. More “splintering”.
45. Last year I predicted a dismembering of the UK’s Coalition government but now realise that it was just wishful thinking. I underestimated how much Tory crap Nick Clegg could swallow. Last year, his capacity seemed infinite. However, for 2013, I predict that Europe will provide the catalyst for an all-out Coalition Civil War.
46. Unless the Chancellor can sell 5G, 6G and all the other “G” Futures and assuming he collects for 4G, there will be a massive government Welfare Review designed to further butcher Public Spending. ( He has no choice because of his rather stunted economic repertoire). That will finally shake the Libdems from their collective coma and fight the Tories. Otherwise…….Libdem Oblivion.
47. “Dead-tree” journalism will continue to atrophy and die with an announcement that at least one major newspaper is to go exclusively digital. (My money is on the Guardian).
48. Massive Solar storms may envelop the Earth which, according to NASA, could render the above predictions both irrelevant and obsolete. Keep an eye on www.swpc.noaa.gov
49. Andrew Mitchell MP will make a return appearance in the Cabinet after the nonsense of allowing the police to investigate themselves in what is increasingly looking like the fit-up of the year.
50. William Hague and Hillary Clinton will keep-on “condemning” the Syrian Authorities as they continue to murder with impunity. Western powers have learned that when they intervene in the Middle East – only one group ever benefits: The Construction Industry.
So what did the Lords ever do for us?
We may well caricature the Lords as the Westminster Chapter of God’s Waiting Room, populated by trembling, Zimmer-pushing geriatrics who spend their days farting and dozing on red leather whilst listening to each others’ arteries hardening, with only the occasional trip to nursey’s office to have the colostomy bag emptied………… It’s nothing like that.
The very first thing that strikes you is its very “ordinariness”, its informality and its total lack of pomp.
It is certainly NOT full of self-important, puffed-up, swaggering aristos clipping jug-carrying flunkeys around the earhole, screaming “Another tankard of Port, my man !!”
It is a quiet place. It a a place underpinned by mutual respect and the ability to listen.
None of the raucousness and noisome dissonance of the “other place”. None of the name-calling and playground punchups or “Leave him – he’s not worth it” attitude of the Lower House.
These are the “self-actualised”. Those who “have done it”, “seen it” and who know better.
In general, the House of Commons is anti too much reorganisation of the House of Lords. Ever wondered why?
Is it a rabid dislike of the “hereditaries”? Is it an over-developed sense of “democracy” ? Is it the “They should be elected NOT appointed…” group?
It is none of the above.
Most Honourable and Right Honourable Members of Parliament see the Lords as a reward, something to aspire to, a recognition of their years of selfless sacrifice and a final gift from the Establishment. They covet the ultimate status achievable within the United Kingdom. “Yes, My Lord!” ……It is their Gold Watch.
And why not?
They say that age is a price worth paying for wisdom. The average age within in the House of Lords is 65.
The average age in David Cameron’s Commons sand-pit is about 50.
Mind you, it is David Cameron who has done more to lower the “currency” of a Title than any previous Prime Minister. He ennobled 117 individuals within 12 months of coming to office. That told us a lot about his comparative youth, impetuosity plus his demand to impress. No point in complaining that “there are too many of them” (there are 818 voting Lords) after you have just added over 100 to the fire!
He was also aware that one of the major items on the Libdem shopping list was a reform of the House of Lords and that Nick Clegg needed a bone to play with. That is exactly what he was given. No more.
Currently, the Lords is a patchwork of hereditaries, politicians, lawyers, Anglican bishops and various “sundries” from public and commercial life. That is how it should be.
The alternative is an elected bunch of those bred-nurtured-and-educated purely for politics (it’s already happening in the Commons). Soulless and charisma-free Party wonks to whom commerce and normal life are a matter of wonderment and mystery.
On this occasion, let’s once again do what politicians do best. Leave it alone and wait.
Some may be wondering about the timing of Bob Diamond’s decision to “walk” from what is the best-paid and most high-profile banking job in the UK. Some may believe that he was hounded out by the banking establishment.
I reckon that he walked in order to free himself-up ahead of the ridiculous inquisition by the Treasury Select Committee. I sincerely hope that they leave their briefcases on the table in front of them and remember to wear tin hats – because Barclays Bob is going to give them hell. They will be forced to listen to a few home truths about the conduct of not-only Barclays but the entire politico-banking establishment.
Believe me, Bob knows where ALL the bodies are buried and he’s the first guest at the Wake.
As usual, we’ve had the puerile Punch and Judy exchange between the Prime Minister and the Leader of the Opposition. Both have diminished themselves through their conduct over the last wee. (If that was at all possible)
Meanwhile, the media (and I include the Social Media) have seen an outpouring of hysteria by individuals who hadn’t heard of Libor before last Wednesday. Mob hysteria at its worst.
Mind you, that is so typical here in the UK. First we “denounce”, then the Inquisition, followed by the Inquiry and then it’s back to normal as we look for the next victim.
If there have been transactions which have inflated profits, I hope that in their haste, government Ministers have not forgotten that there may be billions in the Exchequer which will have to be repaid if tax has been generated on illicit transactions. Inflated bonuses have also been subject to millions in taxation.
It’s not only the banks who are going to have a lot to unravel – but of course, these days no-one thinks before they act.
Starting with the baying politicians and media, a breathtaking lack of understanding of complex banking processes has clearly been demonstrated. The same lack of understanding which was exhibited by the Directors of Banks prior-to, during and certainly after the last bank crisis.
Make no mistake both the Bank of England as well as the Financial Services Authority have been complicit. Those pre-Lehmans LIBOR deals, probably saved the British Government from having to bail out Barclays and as other banks have also doubtless been guilty of the same misdemeanours, the Government will have saved billions on the 2008 bailouts.
(What I mean to say is that the banks were bailed out – but they weren’t bailed out enough. The last four years of “rebuilding balance sheets”, non-lending etc have clearly demonstrated that as usual, the government only did half of the job)
It is the Bank of England, the Financial Services Authority and the grubby British Bankers Association which should be standing shoulder-to-shoulder in the dock and hopefully after Bob Diamond has said what he really thinks and knows, they’ll be lined up and taken down.
Today, Mr Diamond, I’m on your side.
Show them Hell!
The Older Woman Rocks….
There has been a lot of debate about the “older woman” TV presenter and the comparison between her and the young airhead “Autocutie”.
Thankfully, mature lady presenters are making a major comeback but one cannot help but wonder about the relationship between them and the new TV-types who seem to be mostly can-wearing teenagers with clipboards.
A couple of years ago, I met broadcaster Anna Ford and she was (and still is) a very beautiful lady. Her voice still resonated with the mellifluous lower-register tones of the professional broadcaster and she exuded a velvet steeliness and confidence which I imagine would be frightening to most career-building media hobbits.
So is it about looks? No – but it is about age and what it has brought – and I do not mean wrinkles.
Here are a few reasons why we should appreciate and cherish women who are over 50 and in this list, you will probably find the reasons why these women can frighten younger men:
1. They can run faster – because they tend to wear sensible shoes.
2. If you behave like an arsehole, they will tell you.
3. They no longer have wishy-washy views and will probably have developed proper healthy right-wing attitudes.
4. They are intimidating to young males with low self-esteem and are not impressed by 28 year-olds with Media Studies degrees.
5. For every stunning 60 or 70 year-old woman there are two myopic, balding, beer-gutted males.
6. They are dignified so they will not engage you in a slanging match but will destroy you by sheer force of intellect.
7. Older women have had their fill of “meaningful relationships” and “long-term commitments”. Your professional or personal relationship with them is based on your merit.
8. They often have an undeserved reputation as “ballcrunchers”. Get past that and you’re “in”.
9. They will never accuse you of “using” them. They are using you.
10. Their already off-scale assertiveness is still developing and you will need to have had some serious coaching before you can deal with them satisfactorily.
11. They never announce that they’re pregnant.
So, when we think that the argument is about “ageism” it is not necessarily about a number.
It is more about the time-honed intensity of character and the fear of God that these women can instill in lesser mortals.
Syria: Usually in a Civil War, the model is pretty straightforward: The Good Guys versus the Bad Guys.
In Syria, they appear to have adopted to European Union Organisational model with LOTS of Chiefs and even more confused “Indians”.
These are some of the various flavours of Syrian good and bad guys:
The Assad Government, the Syrian National Council,the National Co-ordination Committee, the Syrian Patriotic Group,the Free Syria Army, the Free Officers Movement, the Syrian Liberation Army, the Military Council, the Shabiha, the Martyr Hisham Brigade, the Ibn Malik Martyrs Brigade, the Maarratt al-Numan Martyrs Brigade, the Salhauddin [Saladin] Brigade, the Fallujah Brigade.
There is only ONE ultimate solution:
Arm the lot of them.
Then, when it REALLY kicks off, send in William Hague to “condemn” and “deplore” them.
As usual, the West has allowed the situation to develop too far, creating yet another insoluble problem.
Cave In Assad!
Νύχτα των Κρυστάλλων ?
“Greeks are lazy, Greeks are corrupt, Greeks are dishonest, Greeks refuse to obey the rules……”
Are they? Do they?
Hearing that certain countries are already thinking about “doing something” about future Greek immigration sent a shiver down my spine.
The Eurozone states and their limp politicians are beginning to treat Greeks like pariahs – in the same way that the Nazis treated the Jews in the 1930s.
What will be the the natural conclusion? Make no mistake – it could be tragic.
Is there going to be the modern equivalent of the 1938 Kristallnacht ?
Will Greek-owned shops and businesses all over Europe be vandalised because of negative anti-Greek Eurozone propaganda?
Kristallnacht was the starting point for intense economic and political persecution of Jews – with the end game being played-out during WW2. No further reminders needed.
Then, as now, it all started with an excuse. In 1938, it was the assassination of German diplomat by a Polish Jew.
The 2012 excuse is nothing more than an anticipated refusal of Greece to comply with over-strict German-inspired ” necessary” austerity rules.
Propaganda is a very powerful device. Let us hope therefore that the gradually amplifying and insidious vilification of the Greek people does not result in yet another European catastrophe.
New Banks for Old!
There is little doubt that a brand new Banking Act is a little overdue. However, instead of spending 5 years on inquiries, commissions, debate and law-writing, why don’t we just “rewind” and “tap-in” to some of the old banking legislation.
Banks HAVE become too big but only as a result of Retail, Institutional, Investment etc arms coming together to produce a Gordian Knot of “impossible to unpick” financial mystery.
This week’s favourite word is “firewall”. All we need is a buffer (or firewall) between a Retail bank and the Investment Bank. THAT’s an accounting exercise. Separate reporting , separate balance sheet, separate shares and separate management.
Once we see distinct organisations, we’ll know who we’re dealing with.
The Retail Bank’s job SHOULD BE to store and look after our money. The Investment Bank is a completely separate playground and is not proper banking at all. It is Stockbroking with additions such as crazy people who believe that they walk on water.
We need to return to the good old days when banks would finance themselves with equity and not with debt. Mind you, there’s absolutely nothing wrong with properly managed debt. In fact, without debt, there is no Capitalism.
Forget the “too big to fail” nonsense. The rationale should be simpler – a smaller institution is easier to control and inspect,with fewer nooks and crannies in which to hide “naughtiness”. Plus a small bank which “goes down”, is not going to bring an economy crashing in the same way as the banking behemoths of today can (and will).
Certainly, the British government should be looking at helping to create scores of small independent banks, rather than be held to ransom by a few huge ones.
Mind you, we once had a ready-made structure in place. The Building Societies. Unfortunately, most have now been consigned to the Skip of History. Shame.
The Building Societies would have provided a useful model because they were limited as to where they could invest depositors cash. They used to have a series of “caps” enshrined in legislation.
Today, a cap should be put on the Retail bank’s ability to invest in equities, plus a cap on liabilities as well as a strict limit on leverage.
Currently, Investment “banks” operate in a very highly leveraged way – with very little equity and masses of debt. By no stretch of the imagination is that “banking” as we used to know it. Plus the sheer volume of total bank debt places an unacceptable level of cost and stress on an economy. The current Eurozone crisis is a manifestation and perfect example of that phenomenon.
This is the very simple model we need to rediscover:
The Retail Bank holds deposits which belong to the consumers. The bank is empowered to lend that money to private individuals and small business.
The Investment Bank raises money for commerce through the Stock and Gilt markets.
Historically, there came a time when the banks weren’t happy with those simple arrangements and gradually, through the medium of legislation, government took the brakes off and so began an orgy of leveraging (borrowing) by the banks. Then they overleveraged (overborrowed) with the straw that broke the camel’s back, being the banks’ decision to leverage (borrow against) their sub-prime mortgage assets. Effectively, borrowing against something whose value collapsed because it was bound to collapse.
The surprising thing is that they’re still doing it. Why? Because, they know that there’s no risk to them because standing behind them are tired and bankrupt governments who have foolishly promised to bail them out.
Banks have now completed their journey from being keepers and stewards of community assets to scary insatiable monsters in constant pursuit of profit. Not for the community but for shareholders and executives.
Unfortunately, they are not very good at it – and yet, they are allowed to continue their rampage by uneducated and naive politicians who in truth, should have closed them all down four years ago.
However, there’s another problem. Western communities do NOT save as they used to. That means that there is never enough to lend to consumers from meagre bank deposits. (We spend more than we earn). Is there a solution?
Yes there is.
Retail banks could sell all the debt which private individuals needed. Those debts could be securitised through investment banks. (The concept of loans backed by securities is not a bad one, except when it is abused as it was in the United States.)
The down-side? Banks would never again be as profitable as they are today.
The Investment bank would concentrate on finding capital for companies and controlled speculative trading but without any government-guaranteed bailouts if things went wrong.
We need the traditional (Retail) bank because it is the foundation of an economy and where the entrepreneur goes for money so that he can become a capitalist .
The investment bank is where the capitalist goes to party, with money that has already been earned.
Time to turn back the clock?
Sack the f*****s!!
I heartily endorse Vince Cable (above) and his moan about the government’s latest bit of displacement activity which is that employers can get rid of employees without necessarily having to give good reason.
However, there’s a condition: The law has to be extended to include Members of Parliament.
Don’t these politicians know ANYTHING about commerce and the workplace?
Sorry! Silly question.
Eurozone “plan” – an Oxymoron.
Talk of “firewalls” and “rebuilding” balance sheets and other construction-related metaphors are wearing a bit thin.
So far, they’ve clearly demonstrated that they would have difficulty in planning their way out of a wet paper bag.
Greek Texas Hold ‘Em
The Greek Syriza leader has the measure of the Eurozone sheep.
You may not agree with his politics but Alexis Tsipras is THE ONE that Eurozone leaders do NOT want to negotiate with.
They have been bluffing that they’re “ready” for a Greek Euro exit. It’s all talk!
They are NOT ready and Tsipras KNOWS IT . He also knows that a Greek exit (forced or otherwise ) would not-only create economic and banking havoc but that the after-shocks would be felt all around the world.
He’s willing to call their bluff because he realises that countries such as China & Russia are standing-by and would immediately move in with investment.
German Hypocricy knows no bounds – especially in respect of Greece!
Twice during the 20th Century, Germany left Europe in a mess. Now, in the 21st Century, it is their intransigence rather than their high explosives which may once again create European chaos.
Germany had to pay reparations after WW1. However, after its defeat in WW2, reparation payments were NOT resumed. In addition, there was another outstanding debt comprising of what the German Weimar Republic had been using to pay reparations. They had to borrow to pay.
In 1953, an international conference decided that Germany could could defer some of the debt until East and West Germany were reunified – although because a reunification was though to be unlikely, this was effectively a debt write-off.
By 1980 West Germany had repaid some of the debt although the remainder (according to the 1953 agreement) would be serviced for another 20 years.
The final payment was due on 3 October 2010 which was the the 20th anniversary of German reunification.
Over 10% of this debt, about 20 million euros, has never been paid.
So please Germany, remember that Europe has shown you mercy on more than one occasion.
Time to return the compliment and defer the WHOLE of Greece’s existing debt for – what shall we say? 30 years?
….and YOU can pick up ALL the interest payments.
(THAT, my Greek friends, is how to negotiate with the Germans.)
FCNK – Fur Coat, No Knickers
British politics are cyclical and there are two views as to the nature of the cycle. One is that Labour is in power for a bit and then the Conservatives come along with lots of shovels and clear up the mess. The other view is that it is Labour politicians who wield the shovels after the Conservatives’ turn.
There is another other great political constant , not-only in British politics but worldwide. Ultimately, all party leaders fail – as do their parties. Then the other lot make an attempt. Then the shovels come out etc. etc.
This is an unbreakable cycle. The cycle can only be broken by totalitarianism . However, totalitarian States always have a “sell-by” date because the chaos of the democratic party-based cycle is always waiting in the wings to deliver its own flavour of damage. Totalitarianism often degenerates into tyranny, followed by the chaos of either imposed or self-imposed democracy. Just look at Iraq.
The root cause of chaos in democracy is always created by the impact of political ideology on economics. The latest change in the United Kingdom government is an excellent example.
There is no doubt that the British economy is in chaos and that the Conservatives believe that their policies are the only way to hose away the Labour mess.
Chancellor George Osborne is standing where he started two years ago. In the economic foothills of a great 5-year economic and political climb. Unfortunately, the peak towards which he is guiding us will not remain still and two years after the journey began, the ultimate goal has moved.
If he is a good Chancellor, he will not be afraid to change direction as we travel. Let us hope that he does not repeat Labour’s mistake and refuse to shed the shackles of ideology when the going gets tough. To put it in political terms, there will be times when he will need to think as a Socialist and other times when he will need to be even more right-wing than currently seems healthy.
That is why it is good for him to have a few Liberals in tow – although, ideally a few left wing Labourites may have been preferable.
Adam Smith is his Wealth of Nations (1776) referred to the United Kingdom as “a nation that is governed by shopkeepers“. Subsequently, Napoleon said “‘Angleterre est une nation de boutiquiers.” In typical French fashion, neither original nor accurate but we understand what he meant. He thought that he was being disparaging whereas Adam Smith’s original quotation was more about the Britain expanding its Empire for the sole purpose of establishing new markets of customers for its own economy. Like shopkeepers would.
Had Napoleon foreseen what the British economy was to become in the 21st century, he may have said, “Angleterre est une nation d’administrateurs, fonctionnaires et conseillers en gestion”
England is a country of administrators, Civil Servants and Consultants.”
If there is one good reason for the present change in government, then that is it.
There are jobs which create wealth and there are jobs which are the so-called “Cost Centres” – the jobs which only spend. Administrators, both public and private who don’t actually contribute to production are a drain on an economy. Any organisation which is heavy on administration compromises its ability to generate a surplus – the same applies to a State.
Under New Labour, organisations such as the NHS experienced an massive influx of administrators and there has been a mushrooming of Quangos. More and more inquiries have cost the economy millions, as have the gradually expanding mini-Westminsters that are our Local Authorities. Empire-building has become the Public Sector’s favourite contact sport.
Obviously being politicians, the Conservatives are not able to say that there are too many non-productive civil servants but that is exactly what they do mean when they point out that the so-called Public Sector needs some rationalisation – but the gradual expansion of the administrative classes is nothing new.
My first job many years ago was in the Scientific Civil Service. Our establishment had just over 200 of us researching and more than 400 administrators. We were in prefabricated temporary structures whereas the pen-pushers had a modern office block. The argument was that as we were spending taxpayers’ money, no cost was too great in order to ensure that every single penny spent was controlled and accounted-for. Plus ça change.
Until very recently, there has been a “no expense spared” attitude among both public servants and politicians with little or no incentive for either of them to control expenditure. A case of rampant accelerating Cost Centre growth.
That is why the Chancellor announced a freeze on Public Sector pay and launched a probe into public service pensions and why the budgets of government departments will be cut by 25%. In addition, the Civil List has been frozen at £7.9 million p.a. and the Government will dispose of some of its assets in order to raise cash – notably, the air traffic organisation NATS, the Tote and the student loan book.
However, in spite of the banking system remaining one of the government’s major creditors, it has been “clobbered” with an annual levy which will probably only collect about £2 billion per year. Compare that with the total cost (so far) of rescuing our banking system, which is well-in-excess of £850 billion.
Unfortunately, the government is also committed to hand-outs to a long queue of advisers and consultants. Notably, Slaughter & May, the international law firm will be paid nearly £33 million for commercial legal advice and Pricewaterhouse Coopers over £11 million for its work on asset protection.
The government is also paying Credit Suisse at least £500,00 per month for advice on the asset protection scheme with a similar amount being paid to Deutsche Bank.
Needless to say, there are other government “advisers” on the payroll so the final total cost of the government’s bank rescue activities is far from established because it is open-ended.
In spite of the crippling government (and therefore taxpayer) expenditure on the banks, they are still declaring weirdly high profits, paying themselves bonuses and not delivering the commercial lending agreed with the previous Chancellor.
The government has not been able to fund all this purely from the income that it generates from taxation so it has had to borrow more and more. Hence the huge deficit and the international pressure to do something about it.
That explains the increase in VAT, the quite major changes to the benefits system, the various “tweaks” to personal taxation, the sell-offs and cuts in public expenditure.
That has all had to be counterbalanced by an encouragement for business to produce more, hire more people and thereby generate not-only more tax for the government but also stimulate us all to spend more in order to maintain the “produce-sell-buy-spend” cycle.
The Chancellor has taken a bit of a risk because he is assuming that the “produce” stage of the cycle will ultimately act like a defibrillator applied to a dying patient’s heart. He believes that ultimately it is business which makes an economy function. On the other hand, the Socialists believe that the cycle begins with “spend”. Hence their concept of , for instance spending on roads, railways and other government-driven projects in the hope that “spend” creates employment plus income for the individual, which in turn stimulates demand which drives production. Same principle but a fundamentally different starting point.
It has been shown many times that Cost Centres (mostly support functions) do not generate direct profit. The drivers of any economy are Profit Centres – the ones that make something and then sell it at a profit.
The current debt-ridden economic climate needs the harsh but correct approach favoured by the Chancellor. For the moment, the Profit Centres have it. Although that does NOT mean that the “Austerity Method” cannot be tempered with a bit of good old-fashioned government spending when necessary.
Ideology must never be a bar to sound economic common sense.
Finally, the government has the one major Cost Centre and that is the Benefits System. The system has been abused – of that there is no doubt. As part of its strategy, the last Labour government needed to massage its unemployment statistics. Encouraging more and more individuals to avoid the dole queue by remaining in education is an example of a transparently obvious ploy. The other was an over-generous benefits system especially the blatantly abused Disablities Allowance which cost the taxpayer over £11 billion per year.
The Disabilities Allowance was introduced 20 years ago by a Conservative government when under 1 million people were eligible. In the intervening years, the number of claimants has grown to approximately 3 million which represents a substantial percentage of the working population.
The Chancellor’s approach of proper medical testing for Disabilities Allowance claimants may sound Draconian but absolutely necessary because in spite of the fact that unemployment statistics will doubtless be adversely affected, there will be a corresponding increase in those eligible for work. Once again, an example of Cost Centres being converted into potential Profit Centres.
What of normal productive workers, entrepreneurs and those engaged in support functions which are designed to keep the economy going? Have we escaped intact?
The answer is that we are all subject to collateral damage, either through increased living costs or unemployment. The real unemployment figure has been approaching 3 million for a few years and it is only now that Gordon Brown’s Canute-like posturings have been consigned to the poubelle of history , that an accurate picture has emerged.
The picture is this:
None of us is as well-off as we imagined during the New Labour years of illusory plenty. Many have been screwing the system for too long. It started with the politicians and it is now our turn to realise that the days of “Fur Coat , No Knickers” are well and truly over.
Netherlands political crisis casts cloud on euro zone
(Reuters) – The Netherlands, a core Eurozone member, was drawn into Europe’s debt crisis at the weekend when the government failed to agree on budget cuts, making elections almost unavoidable and casting doubt on its support for future euro zone measures.
Prime Minister Mark Rutte, whose centre-right coalition has been in power since October 2010, said on Saturday that crucial talks on budget cuts had collapsed after his ally Geert Wilders refused to do a deal, and that new elections were inevitable.
But uncertainty over the makeup of a new government, and waning voter support for bailouts and austerity measures, raised questions over Dutch backing for a fiscal responsibility pact seen as crucial to helping Europe cope with its debt crisis.
The catalyst for the crisis was Wilders, who refused to agree to 14-to-16 billion euros ($18.5-$21.1 billion) of budget cuts needed to bring a bloated budget deficit under control.
Now the euro-sceptic, anti-immigration politician has threatened to fight his campaign on a European battleground.
“The Freedom Party benches are unanimously against Brussels diktats and the attack on our elderly,” Wilders tweeted on Sunday, later telling Dutch news agency ANP that Europe would be in “sharp focus” during any coming election campaign.
Wilders most recently has lobbied to jettison the euro and return to the guilder, the old Dutch currency, and he is against immigration not only of Muslims but also of Poles and other central and eastern European members of the EU – views that strike a chord with his supporters.
His Freedom Party had a pact to support Rutte’s minority government in parliament, giving it the majority to pass legislation, but after seven weeks of budget talks, Wilders suddenly backed out just when a deal appeared close.
His supporters are against budget cuts, particularly cuts in welfare, health and unemployment benefits.
“This was a package that would damage our economy over coming years and increase unemployment. And all that to meet a demand made by Brussels, accepted by the Liberals, of reaching a 3 percent deficit in 2013,” he said on Saturday.
FRAGMENTED POLITICAL FIELD
An opinion poll published on Sunday showed the Netherlands remains highly fragmented politically, suggesting that it could prove difficult to form a new coalition quickly and that Wilders’s chances of forming a new government were slim.
The Maurice de Hond poll, conducted after the budget talks collapsed, showed that no single party would have a majority if elections were held now, though Rutte’s Liberal Party has strengthened its lead, followed closely by two leftist parties.
The poll also showed that a majority favour smaller budget cuts than those stipulated by the European Union, a further sign that the notoriously frugal Dutch are suffering from “bailout fatigue” and resent the high cost of rescuing profligate peripheral euro zone countries.
“Voters from different parties share the same view – disgust or disappointment over the political action and the political parties,” De Hond said in a statement, adding that two thirds of those polled agreed with the statement: “I’m tired of all the party politics”.
Asked whether the Netherlands should cut less than the European Union wants, 57 percent of respondents agreed. Supporters of the populist Freedom Party and of the leftist Socialist Party were particularly set against cuts.
The poll showed the Dutch were most strongly opposed to spending cuts that would have a direct impact on standards of living, 56 percent of respondents opposing the introduction of a new, modest prescription charge, and 47 percent opposing an increase in value added tax.
The cabinet is set to meet on Monday to discuss what it should do next to agree a budget and whether to resign. The Queen could accept its resignation, paving the way for elections, or ask the prime minister to form a new coalition.
If elections are called, Rutte’s Liberals would win 33 seats in the 150-seat parliament, up from 31 now, the poll showed, followed by the eurosceptic Socialist Party with 30 seats and the pro-Europe Labour Party with 24 seats.
Rutte’s coalition partner, the Christian Democrats, and the Freedom Party, until Saturday his main ally, have both slipped in the polls and would win 11 and 19 seats respectively.
Rutte and Finance Minister Jan Kees de Jager – who flew back from IMF talks in Washington when the crisis broke – are among the euro zone’s harshest critics of “budget sinners” like Greece and Portugal, and the Netherlands is seen as close to Germany in calling for tough austerity measures.
That is about to change.
“The Netherlands can no longer be a role model to others. There may be a reaction in other countries: ‘If they don’t do it, why should we?’ This risk exists, which is unpleasant,” said Jaap Koelewijn, an economist and professor of corporate finance.
The annual budget cuts Wilders has balked at are needed for the Netherlands to meet European Commission targets. Without them, its public deficit is forecast to hit 4.6 percent of GDP in 2013, well above the 3 percent agreed with the Commission.
If the Netherlands does not cut spending and breaks EU budget rules, it is likely to lose its coveted triple-A credit rating, leading to higher borrowing costs.
The level of state debt rose to 65.2 percent of GDP at the end of 2011 from 62.9 percent in 2010, Statistics Netherlands said last month.
Ratings agency Fitch recently warned the Netherlands it must get its finances in order or risk a ratings downgrade, while in a report last month, Citibank went as far as to say it no longer deserved to be considered a core member of the euro zone because of its fiscal woes.
The uncertainty over budget cuts and reforms, and the time it takes to organise elections, will probably lead to higher interest rates and higher yields on Dutch government bonds.
“The cost of finance for the Netherlands will go up slightly compared to Germany, but our debt is mostly long-term. The Netherlands doesn’t have high refinancing needs in the next few years,” said economist Sweder van Wijnbergen.
($1 = 0.7571 euros)
(Additional reporting by Gilbert Kreijger and Anthony Deutsch; Editing by Michael Roddy)
The Labour-Liberal Coalition is just about managing to cope with the constant rioting but at least immigration has been halted. No-one wants to move here anymore.
Head Minister Yvette wishes that she hadn’t defeated David Miliband because her life with the 30-stone Ed Balls ended as soon as he had been defeated in the Leadership election by the elder Miliband. She had felt honour-bound to avenge her former husband’s humiliation and to everyone’s surprise, she had won!
Within two days had been texted by the Leader and asked to either form a government or go into exile to Melton Mowbray in the Mid-Shires.
No-one knows where the younger Miliband is at the moment. Rumour is that he is teaching English somewhere near Beijing – but these days – who knows.
Anyway, it was no joke having to go everywhere totally surrounded by large sweaty Security Guards in too-tight suits. Yvette hated that nearly as much as the Kevlar jacket which she seemed to take off only at bedtime . Even that wasn’t much fun any more.
She was soon to meet the rather wizened President of France. She briefly thought of President Lagarde in those good old days when she had been Head of the now defunct International Monetary Fund. The whereabouts of the money continues to be a mystery – but there are still lingering suspicions as to how well Germany (which used to be known as Europe) is doing.
As she climbed into the human-drawn bullet-proof rickshaw (the Ministerial Jags had been scrapped soon after the Petrol Wars) , out of the corner of her eye, she caught sight of what appeared to be a familiar face. The features were still smooth – even after THAT prison sentence – but the Buller Boy confidence now looked a little deflated and the sandwich board was not sitting comfortably on the 30 year-old hand-made suit. Sometimes, she thought that the post-incarceration humiliation phase of a prison sentence was a bit unnecessary but it did seem to teach some humility to those who were believed to need it.
The House of Parliament used to be called Phoenix House and she was once again reminded of the historical episode thirty years ago when someone called Rupert Murdoch had a custard pie thrown in his face within these very walls! The incident had led to the destruction of the entire newspaper industry – Pre-Digi – and was commemorated by a sculpture fixed to the pavement outside.
She looked at the trio of figures. Maxwell, his wife Wendy Deng and pie-thrower Jonathan May-Bowles were depicted in life-sized splendour. Well….that wasn’t strictly true. The “sculpture” was by the Gunther von Hagens studios and rumoured to be no more than the plastinated remains of the three participants. However the bomb-proof glass case in which the sculpture was sealed made analysis impossible – plus there had been rumours that two of the figures depicted had been spotted in various locations – just like Arkle, Lord Lucan and Gordon Brown. Mind you, she mused, without any reliable news….who knows?
When she was awakened by the scream of a knocked-over tourist just outside the main entrance to the Virgin Westminster Palace of Fun, she shouted to the rickshaw pulling-team to stop. She noticed quite a few people wandering about amongst the potholes. They were all wearing those ill-fitting but mandatory jackets with “TOURIST” emblazoned on the back – although many of them were English and from only 30 or 40 miles away.
She decided to take a risk and see whether the person her team had knocked over was OK and stepped rather gingerly onto the pavement. She reached into her gun-case for a handheld pot-pourri, as the stench of the open street was something to which she was no longer acclimatised.
A few years ago, this would have been what used to be called “an iOpportunity”. A digital image would have been taken of the Head Minister cradling an injured citizen to her Spanx-Kevlar bodice and the image would have been transmitted to everyone who still had an iDevice.
Unfortunately. Electronic signals were a thing of the past and citizens only wore “ the iBox” around their neck or waist for decoration.
However, it was soon apparent that the Tourist had a broken leg. Yvette turned and re-entered the Ministerial Carry-pod. “Deal with it, “ she snapped to one of her guards.
As the door hissed shut and she felt the shudder of the rickshaw slowly gathering speed, she fancied that she heard a single gunshot….. in fact, as she proceeded, she noticed that there were lots of gunshots……
To be continued/
Budget 2012 – so you don’t have to….
- The 50p tax rate will be reduced to 45p in April 2013
- The point at which people start paying income tax will be raised to £9,205 from April 2013; it is currently £7,475 and will go up to £8,105 in April 2012
- Only those with income over £60,000 to lose all child benefits
- Will be phased out when someone in a household has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000
FUEL, CIGARETTE AND ALCOHOL DUTIES
- Extra 37p on packet of cigarettes from 6pm tonight
- No change to existing plans on alcohol duty
- No change to existing plans on fuel duty
- A single tier pension, at a minimum of £140, to be introduced
- Automatic review of state pension age to be introduced
- UK economy is forecast to grow 0.8% in 2012
- The forecast for 2013 is 2%, for 2014 is 2.7%, and for both 2015 and 2016 is 3%
- Inflation is forecast to fall to 2.8% in 2012, and to 1.9% in 2013
- Stamp duty on properties worth over £2 million to increase to 7% from midnight
- Any such homes bought through companies will pay 15%
JOBS AND EMPLOYMENT
- Sunday trading laws to be relaxed for eight weekends beginning 22 July
- Independent Pay Review bodies to look at introducing regional pay for public sector
BUSINESS AND INDUSTRY
- Corporation tax will be cut to 24% from April 2012, falling to 22% by 2014
- Tax relief for the video games, animation and high-end television production sectors
- Government to consider enterprise loans for young people to start their own business
- Extra funding for ultra-fast broadband and wifi in 10 of UK’s largest cities
- Investment in railways in north-west England to be increased
- Airport expansion options to be outlined later this summer, including review of south-east airport capacity
- Government borrowing this year to be £126bn – £1bn less than forecast
- Forecast to fall to £21bn by 2016-17
Holding Bank Shares? Think again.
Another week, another bank rip-off…
The Payment Protection Insurance (PPI) mis-selling scandal has only just come to a head. Banks are facing compensation claims of as much as £6bn from customers duped into buying insurance they didn’t need.
And now big UK banks will be all over the papers again – this time for mis-selling another sort of insurance, this time to small businesses.
Here’s how it works…
You’re a small business and you take out a loan with a bank. And just like with PPI, the bank wants to hit you with some “insurance”. Making interest on a loan isn’t enough for these guys. They want to optimise !!!
With a small business, banks cannot sell critical illness or redundancy insurance. So they have to be a little more imaginative.
The idea went a little like this: “Hey, that loan you’re taking… Now you’d be a fool not to want to protect your business against interest rate moves. Look, we’ll put together an interest rate swap contract. Basically, if rates move against you, this contract will pay out…”
But what many business owners didn’t realise was that if interest rates moved down (which of course they did) then they’d be on the hook for potentially hundreds and thousands of pounds.
And you can bet the banks were keen on shifting these policies. This from the Sunday Telegraph:
“The case of Adcocks (a small electronics retailer) highlights just how much of an edge the banks had. Following 12 months of what Mr Adcock describes as “encouragement” from his local Barclays relationship manager, the company in February 2007 took out an interest rate hedge on its £970,000 of borrowings from the bank. Unbeknownst to Mr Adcock, on the day he signed the agreement, Barclays Capital, the bank’s investment banking arm that structured the deal, is likely to have booked a profit of as much as £100,000 from the sale of the hedge.”
These interest rates swaps have driven some businesses into administration. The banks have been siphoning cash straight out of business accounts as a result of ‘adverse moves’ in the interest swap.
Professor Michael Dempster of the University of Cambridge’s Centre for Financial Research said: “I liken it to going to bet on a horse race having fixed the result. You’re not guaranteed to win, but you have a heck of an edge on the punters.”
All this could mean more huge claims against the banks. Prof. Dempster said “I think this could be at least the same size as PPI.”
So it’s clearly another savage blow for the UK’s retail banks. If you aren’t already out of the banking sector, then these sorts of shenanigans ought to make you think twice about holding bank shares.
HSBC – 2011 – $22billion.
Steve Slater (Reuters) 5:19 a.m. EST, February 27, 2012
HSBC Holdings, Europe’s biggest bank, predicted growth in Asia and other emerging markets would outweigh sluggish European economies this year as it posted a $21.9 billion profit for 2011, the best outturn by a western bank so far.
HSBC added, however, that success in emerging markets was becoming increasingly expensive, with costs rising 10 percent, or $3.9 billion – a third of that due to higher pay.
Banks across Europe have been posting billions of dollars of losses as the euro zone sovereign debt crisis has eroded the value of their government bond holdings and hit their trading operations, and as they strive to meet tough new rules aimed at preventing a repeat of the 2007-09 banking crisis.
HSBC has been relatively unscathed because it makes more than three quarters of its profits outside Europe and north America. It remained upbeat on Monday about prospects for emerging markets despite fears that some are overheating and could see an abrupt slowdown in growth this year.
“We remain comfortable with the emerging markets (outlook) and are confident that GDP growth in emerging markets will be positive and China will have a soft landing,” Chief Executive Stuart Gulliver told reporters on a conference call.
“We think there’s some recent buoyancy in the U.S., so the real issue of negative focus is how the euro zone plays about,” he added, predicting the euro zone economy would flatline this year, with “marked recessions” in some southern countries.
HSBC, with around 7,200 offices in 80 countries, said pretax profit rose 15 percent to $21.9 billion in 2011, just below analysts’ average forecast of $22.2 billion in a Reuters poll.
The figure fell short of the group’s record profit of $24.2 billion in 2007, but beat all other western banks that have reported so far for last year, including U.S. rival J.P.Morgan which made a $19 billion profit.
The world’s most profitable banks in recent years have been China’s ICBC , which made $32 billion in 2010, and China Construction Bank , which made $26.4 billion.
HSBC’s profits were boosted by a $3.9 billion accounting gain on the value of its debt. Stripping that out, underlying pretax profit fell 6 percent to $17.7 billion, due in part to rising wages in emerging markets and to restructuring costs.
CUTS AND BONUSES
Gulliver, who is reshaping HSBC to cut annual costs by $3.5 billion, lift profitability and sharpen its focus on Asia, said he would step up his plan this year.
He said HSBC would continue to pay higher wages in emerging markets, where there is strong competition for bankers among international and local rivals, adding higher revenue from those areas showed the investment was worthwhile.
At 0945 GMT, HSBC shares in London were down 1.5 percent at 566.1 pence, lagging a 0.7 percent decline in the UK’s benchmark FTSE 100 index . The shares have beaten the STOXX Europe 600 banking index by 15 percent over the past year.
“They’ve had a good run so I can’t get too enthusiastic, but they’re (HSBC) going in the right direction and it’s a good bet in a difficult sector,” said Brown Shipley fund manager John Smith, who holds HSBC shares in his portfolio.
HSBC said profits at its investment bank fell 24 percent to $7 billion, hurt as the euro zone debt crisis slowed capital markets activity in the second half of last year.
Loan impairment charges and other credit risk-related provisions, however, fell $1.9 billion to $12.1 billion.
The group said it paid out $4.2 billion in bonuses, down 2 percent on 2010. Banks are coming under intense pressure from politicians and the public to rein in pay awards because of the role of the sector in the world’s economic problems.
HSBC said it paid one of its bankers, whom it declined to name, 8 million pounds ($12.7 million) last year. Gulliver was the second-highest paid employee, getting 7.2 million pounds — including a 2.2 million bonus — down from 8.4 million in 2010 when he ran the investment bank.
($1 = 0.6306 British pounds)
(Additional reporting by Sarah White and Sudip Kar-Gupta; Writing by Mark Potter; Editing by David Holmes)
Copyright © 2012, Reuters
It was Gordon Gekko who said that “Greed is good” and currently it is that greed which is popularly believed to be the root cause of the current economic downturn. But who was it that said that “Change is Good”? What if the real root cause of the crisis is poor governance , jump-started and caused by the new Change mantra?
Nowadays, the word “Change” appears on a very high percentage of job descriptions. There are “Change Gurus”, “Change Agents”, “Change Trainers”, “Change Management” and a hundred other delicious flavours of Change.
“Change” has become synonymous with progress but very often the consequence of constant change is a company which never quite achieves stability or Steady State. It has been believed for nearly thirty years that a company which does not change, risks being “left behind”. However, there may be certain industries which should embrace the Steady State Theory and not the constant-change environment. Change not-only appears to feed progress but during transitional periods, it also provides opportunities for corporate mistakes to be buried. Because a constantly-changing company never achieves Steady State, management errors and holes in accounts are always regarded as just temporary.
A mere thirty years ago, there were four columns supporting the Financial Services Industry: Banking, Insurance and the Building Societies were the highly visible threesome and their City cousin was the Stockbroker. He was the mysterious one who spoke in a strange tongue and dealt in financial mysteries and abstracts. The sort of stuff that Bankers did not understand.
A few predicted that these four venerable institutions would, one day become indistinguishable from each other. And so it has come to pass.
Thirty years ago, Banks lent short-term unsecured money, issued chequebooks and most branches had a manager who was accessible both to the private individual as well as the local businessman. It was a “people business”. Eventually, Change decreed that Bank Managers were not skilled enough to recognise the subtle shades of risk hidden in propositions which landed on their desks. “Systems” were created. Decision-making was taken from the branches and handed to the system. Credit Scoring was the way forward.
Did credit-scoring work? Yes, but only when it was applied.
Building Societies were still true to their 19th Century roots. They lent money which enabled private individuals to buy a home after they had accumulated a deposit. There were only two types of mortgage. Gross of Tax and Net of Tax. There were savings accounts which were called Paid-up share accounts and there were only two types of these – the only difference being that you could either add interest annually of half-yearly. There were also deposit accounts which paid slightly less interest but allowed the depositor first crack at the funds in the unlikely event of a run on the Society’s funds. The products were simple.
The in the late 80s when MIRAS ( Mortgage Interest Relief At Source) was removed and the green light was given to all sorts of strange hybrid mortgages and accounts. New systems meant that even the most complicated and incomprehensible products could be administered.
Originally, Insurance companies sold peace of mind and would pay either a lump sum or an income to a family in the event of the breadwinner’s death. The first inkling of change was in the mid-seventies when the Royal Insurance Group introduced the first low-cost endowment plan – the G-plan. It sold like hotcakes. In the long term, these contracts produced hundreds of thousands of unhappy mortgagors and many red-faced Actuaries.
Stockbrokers lived in large (sometimes condemned) buildings in the City and they practiced their dark arts without too much interference from anyone.
In the good old days, the lending of money to an individual had never been a profession – it was more of a “trade” because it was simple. Consequently, the money-lending business (nowadays it is called “banking”) was run by ordinary honest folk who could gradually work their way to the top of their organisation. Not a Degree or MBA in sight. The same applied to the Building Societies and Insurance companies.
The Directors would make sure that they kept the bank or building society on an even keel and well within the liquidity rules plus they would vary interest rates when instructed by the Bank of England and they NEVER went bust because it was nigh on impossible to go bust. There was one occasion many years ago when the Chelsea Building Society was forced to revalue its assets in order to comply with liquidity rules but otherwise – no problems.
There were no executive bonuses because the word “profit” was not in their dictionary – but they would strive to make a small surplus. Likewise, there were no golf days, conventions or any other executive freebies.
But dark clouds were already gathering. Even 25 years ago, the Banks wanted to become Building Societies, the Building Societies thought that it would be a good idea to become Banks and the big Insurance Companies wished that they too could become all things to all people.
The high priests of Change were beginning to take a foothold.
Then, in the 1980s, laws were changed and the “suits” came.
Until then, Directors of lending institutions used to be a crustily venerable lot and tended to be unqualified businessmen who strangely enough, were more entrepreneurial than the MBAs that are running the show these days. Typically, they were senior partners in Accountancy Companies, Estate Agencies or Solicitors. They were men in their 50s and 60s who were REAL businessmen who had created their own wealth.
That is where the seeds of destruction were planted – in the panelled boardrooms of provincial England. The Old met the New and were dazzled by the following: (perm any two from six) MBA, Oxford, Cambridge, Harvard, Degree, University.
The pipe-smoking unqualified old duffers were dazzled and seduced by the shiny new boys with MBAs and incomprehensible management jive talk. They all wanted one!
Once laws had been changed and the new boys were let loose, Building Societies issued chequebooks, Insurance Companies bought Estate Agents, banks bought Stockbroking firms, Insurance Companies introduced savings accounts dressed-up as life assurance (remember Unit-lined whole-of life policies?), Stockbrokers morphed into Investment Banks, Banks bought Estate Agents – in fact, everyone bought (and sold) Estate Agents.
Foreign banks arrived in the UK and began buying-up bits and pieces. It was all about Change through acquisition and the ugly phrases “client-bank optimisation” and “cross-selling” were born.
The price that the industry paid for all this change was an imperceptibly gradual loss of management control and increasingly lengthening reporting lines. That in turn, resulted in two things: A sudden growth in regulation (SIB, LAUTRO, FSA) and the emergence of dictatorial and “entrepreneurial” management.
It was in 80s USA that the cult of the “corporate entrepreneur” had been born and transplanted rather uncomfortably into the gut of the UK’s financial industry.
A corporate entrepreneur is a man who takes risks with other peoples’ money and is rewarded for his “entrepreneurship” through the medium of the profit-related bonus.
The Financial Services industry became a testosterone-fuelled orgy of Change, Acquisition, Growth and an accelerating race towards more and more profit. Several CEOs would not have looked out-of-place in a James Bond villain’s lair.
The charismatic, dictatorial Chief Executive with a Messiah complex had arrived. This type of individual was comfortable in the company of millionaires and billionaires and his word was always final.
Many real entrepreneurs took advantage and high-level CEO-administered Vanity Lending was born.
Thirty years of change have created a Financial Services Industry which has become a Frankenstein and our Government is keeping very busy patching it up here and there.
Currently, there is little else that can be done but thirty years of increasingly accelerating change may eventually need radical solutions and perhaps a return to the old ways. Simple products for what is essentially a simple process.
The Change Experiment has not been successful because current economics now owes more to the Chaos rather than the Keynes theory.
Is it time to go Back to the Future?
Today’s EU letter to Van Rompuy & Barroso
The letter reproduced below is signed by 11 European leaders. It is addressed to Herman van Rompuy and José Manuel Barroso, although the real audience is the entire European Union.
As I’ve pointed out before, in Euroland, there has been a noticeable increase in the use of a very strange new language . It has been used by European leaders during their various pronouncements over the last couple of years.
The rhetoric adopted by current Euroean Commissars is frighteningly similar to the Soviet-style nonsense spouted by dead-eyed Party apparatchiks of the 1960s. It is the empty “old-school” Party-designed exhortatory language of the now-extinct Soviet official.
In common with the good old Berlin Wall days, these pre-written Euro-statements appear to promise much but actually, say nothing.
It is a very long statement of the obvious and in keeping with EU tradition , there is overuse of the word “must” rather than the word “will”.
This looks very much like a preamble to many , many meetings but it is noticeable that neither Germany nor France has signed it.
Herman van Rompuy
President of the European Council
José Manuel Barroso
President of the European Commission
20 February 2012
A PLAN FOR GROWTH IN EUROPE
We meet in Brussels at a perilous moment for economies across Europe. Growth has stalled. Unemployment is rising. Citizens and businesses are facing their toughest conditions for years. As many of our major competitor economies grow steadily out of the gloom of the recent global crisis, financial market turbulence and the burden of debt renders the path to recovery in Europe much harder to climb.
Europe has many fundamental economic assets. But the crisis we are facing is also a crisis of growth. The efforts that each of us are taking to put our national finances on a sustainable footing are essential. Without them, we will not lay the foundations for strong and lasting economic recovery. But action is also needed to modernise our economies, build greater competitiveness and correct macroeconomic imbalances. We need to restore confidence, among citizens, businesses and financial markets, in Europe’s ability to grow strongly and sustainably in the future and to maintain its share of global prosperity.
We discussed these issues when we last met. It is right that we discuss them again. Building on the conclusions we have previously reached, it is now time to show leadership and take bold decisions which will deliver the results that our people are demanding. We welcome the steps being taken, nationally and at the European level, to address this challenge and look forward to agreeing further concrete steps at our next meeting, with action focused on eight clear priorities to strengthen growth.
First, we must bring the single market to its next stage of development, by reinforcing governance and raising standards of implementation. The Commission’s report to the June European Council should set out clear and detailed actions needed to enhance implementation and strengthen enforcement.
Action should start in the services sector. Services now account for almost four fifths of our economy and yet there is much that needs to be done to open up services markets on the scale that is needed. We must act with urgency, nationally and at the European level, to remove the restrictions that hinder access and competition and to raise standards of implementation and enforcement to achieve mutual recognition across the single market. We look forward to the Commission report on the outcome of sectoral performance checks and call on the Commission to fulfil its obligation under the services directive to report comprehensively on efforts to open up services markets and to make recommendations for additional measures, if necessary in legislation, to fulfil the internal market in services.
Second, we must step up our efforts to create a truly digital single market by 2015. The digital economy is expanding rapidly but cross-border trade remains low and creativity is stifled by a complex web of differing national copyright regimes. Action is needed at the EU level to provide businesses and consumers with the means and the confidence to trade on-line, by simplifying licensing, building an efficient framework for copyright, providing a secure and affordable system for cross-border on-line payments, establishing on-line dispute resolution mechanisms for cross-border on-line transactions and amending the EU framework for digital signatures. We should build on the recent proposals of the Commission, without reopening the e-commerce directive, to create a system that balances the interests of consumers, businesses and rights holders, and spurs innovation, creative activity and growth. We must also continue our efforts to build modern infrastructure to provide better broadband coverage and take-up and extend and promote e-government services to simplify the start up and running of businesses and aid the mobility of workers.
Third, we must deliver on our commitment to establish a genuine, efficient and effective internal market in energy by 2014. All member States should implement fully the Third Energy Package, swiftly and in recognition of agreed deadlines. Energy interconnection should be enhanced to help underpin security of supply. Urgent action is also needed, nationally and where appropriate collectively, to remove planning and regulatory barriers to investment in infrastructure to release the potential of the single market and support green growth and a low-emissions economy. We look forward to the Commission’s forthcoming communication on the functioning of the internal market, which should include an assessment of the degree of liberalisation and energy market opening in member States. We also commit to making concrete progress towards the development of a Single European Transport Area and establishing the Connecting Europe Facility.
Fourth, we must redouble our commitment to innovation by establishing the European Research Area, creating the best possible environment for entrepreneurs and innovators to commercialise their ideas and create jobs, and putting demand-led innovation at the heart of Europe’s research and development strategy. We must also act decisively to improve investment opportunities for innovative start-ups, fast-growing companies and small businesses, by creating an effective EU-wide venture capital regime which allows venture capital funds to operate on a pan-European basis, assessing a proposal for an EU venture capital scheme building on the EIF and other financial institutions in cooperation with national operators, and agreeing a new EU-wide programme, modelled on the Small Business Innovation Research scheme, to promote more effective use of pre-commercial public procurement to support innovative and high tech businesses. Reforms to create an effective and business-friendly system of intellectual property protection remain a very high priority.
Fifth, we need decisive action to deliver open global markets. This year we should conclude free trade agreements with India, Canada, countries of the Eastern neighbourhood and a number of ASEAN partners. We should also reinforce trade relations with countries in the southern neighbourhood. Fresh impetus should be given to trade negotiations with strategic partners such as Mercosur and Japan, with negotiations with Japan launched before the summer, provided there is progress on the scope and ambition of a free trade agreement. The deals that are currently on the table could add €90 billion to EU GDP.
But we must go further too. We need to inject political momentum into deepening economic integration with the US, examining all options including that of a free trade agreement; seek to deepen trade and investment relations with Russia, following its accession to the WTO; and launch a strategic consideration of our trade and investment relationship with China, with a view to strengthening our economic ties and reinforcing commitment to rules-based trade. Recognising the benefits that open markets bring, we should continue our efforts to strengthen the multilateral system, including through the Doha Development Agenda, strive for multilateral and plurilateral agreements in priority areas and sectors, and resist protectionism and seek greater market access for our businesses in third countries. Above all, we must reject the temptation to seek self-defeating protectionism in our trade relations.
Sixth, we need to sustain and make more ambitious our programme to reduce the burden of EU regulation. We welcome the commitments made by the institutions to reduce burdens on small businesses but urge further and faster progress across the EU institutions while maintaining the integrity of the single market and the Union’s wider objectives. We should assess the scope for ambitious new EU sectoral targets and agree new steps to bring tangible benefits to industry. We should also make a very clear and visible statement of our intention to support micro-enterprises and ask the Commission to present detailed proposals to achieve this, including possible amendments to existing legislation. We also ask the Commission to publish an annual statement identifying and explaining the total net cost to business of regulatory proposals issued in the preceding year.
Seventh, we must act nationally and, respecting national competences, collectively to promote well functioning labour markets which deliver employment opportunities and, crucially, promote higher levels of labour market participation among young people, women and older workers. Special attention should also be given to vulnerable groups that have been absent from the labour market for long periods. We should foster labour mobility to create a more integrated and open European labour market, for example by advancing the acquisition and preservation of supplementary pension rights for migrating workers, while respecting the role of the social partners. We should also take further action to reduce the number of regulated professions in Europe, through the introduction of a tough new proportionality test set out in legislation. In this context, we ask the Commission to convene without delay a new forum for the mutual evaluation of national practices to help identify and bring down unjustified regulatory barriers, examine alternatives to regulation which ensure high professional standards and assess the scope for further alignment of standards to facilitate mutual recognition of professional qualifications.
Finally, we must take steps to build a robust, dynamic and competitive financial services sector that creates jobs and provides vital support to citizens and businesses. Implicit guarantees to always rescue banks, which distort the single market, should be reduced. Banks, not taxpayers, should be responsible for bearing the costs of the risks they take. While pursuing a level playing field globally, we should commit irrevocably to international binding standards for capital, liquidity and leverage with no dilution, ensuring that EU legislation adheres to Basel 3 standards to ensure financial stability and meet the financing needs of our economies. Banks should be required to hold appropriate levels and forms of capital in line with international criteria, without discrimination between private and public equities. We also call for rigorous implementation of the G20 principles on banking sector remuneration in line with existing EU legislation.
Each of us recognises that the plan we propose requires leadership and tough political decisions. But the stakes are high and action in many of these areas is long overdue. With bold and effective action and strong political will we can recover Europe’s dynamism and put our economies back on the path to economic recovery. We urge you and the European Council to answer our peoples’ call for reform and to help restore their confidence in Europe’s ability to deliver strong and sustainable growth.
We are copying this letter to colleagues on the European Council.
David Cameron, Prime Minister of the United Kingdom
Mark Rutte, Prime Minister of the Netherlands
Mario Monti, Prime Minister of Italy
Andrus Ansip, Prime Minister of Estonia
Valdis Dombrovskis, Prime Minister of Latvia
Jyrki Katainen, Prime Minister of Finland
Enda Kenny, Taoiseach, Republic of Ireland
Petr Nečas, Prime Minister of the Czech Republic
Iveta Radičová, Prime Minister of Slovakia
Mariano Rajoy, Prime Minister of Spain
Fredrik Reinfeldt, Prime Minister of Sweden
Donald Tusk, Prime Minister of Poland
Greece and the Moneylenders
Today, there appears to be a general sigh of relief in Europe. Stock Markets are climbing , driven by a new banker confidence. Positive noises are beginning to emanate from Eurozone Ministers. They are all looking forward to the approval of the latest Greek bailout. Will Monday 20th February 2012 really be the first day of the rest of our Euro lives?
Is it all over? Are we now scaling a slightly easier cliff to the upper plateau of Euro-prosperity? Will disaffected and now disenfranchised Greek people stay indoors and patiently wait 10 or 15 years while their “Neu” European Masters make things better?
Even Germany’s Finance Minister Wolfgang Schauble who finally came came blinking into the daylight a few days ago, appears to have been temporarily muzzled.
Politics are an illusion. The difficulty is in discriminating between the headlines, the expected conclusion and the most likely outcomes.
Today, it looks as if all that Greece has to do is meet the conditions imposed by Germany, Holland and Finland for its latest bailout package to be approved. Furthermore, it also looks as if they may be able to manage to agree both the bond exchange programme as well as Greece’s debt reduction in one fell swoop.
That has been the real progress. During the last week, there was talk of a two-stage approval, beginning with the most important “victims” – the bankers and hedge fund managers being dealt-with first, followed by the Greek people. Most appear to be in agreement that both aspects can now be dealt with together.
However, Germany (one imagines with the full support of the government and Angela Merkel) continues to make those unpleasant macho Teutonic noises.
For instance, Steffen Kampeter the German Deputy Finance Minister: “This coming Monday, we will see whether Greece delivers or whether we will be forced to decide on another course of action, one that is not desired.”
Despite the posturing , the rhetoric and the barely-concealed German instinct to rule Europe, the 14.5 billion euro Greek bond redemption will take place on March 20th. It was always going to take place – whether the entire Greek bailout package was approved or not. Even if it meant the cap being passed round the Eurozone – and we’d probably even find the United States and others making a contribution. Not giving money to the hedge fund managers and bankers was never an issue.
The real issue and rather alarmingly, the one which appears to have become the least important to the Eurozone High Command is the welfare of the Greek people. The Euro rulers have already showed the world that they would be quite happy to destroy Greece if they decided that it was expedient to do so.
Eurozone ministers spooked themselves last week on hearing that Greece would miss its debt-reduction goals.
Last year, Greece’s debt was 160% of Gross Domestic Product. This year , after being told to butcher its economy, Greece will probably deliver a reduced debt run-rate (by 2020) of only 129% of GDP. That is quite an achievement – bearing in mind the collateral damage.
However, Euro Ministers are experiencing the vapours because the set target was 120% of GDP by 2020. So what is the answer? You’ve guessed it. More Austerity.
The other unsavoury aspect of the Greek situation is that in spite of the whole arrangement being presented as a process of great charity, profits are being made. Profits are being generated from Greece’s misery.
The first 110 billion bailout in May 2010 was charged at an average rate of 5% per annum. That’s 5 billion euros! Even that was unsustainable because just like the door-to-door moneylender, Greece would be forced to borrow more, just to repay the interest…..and so on. That rate has now been reduced to 4% per annum – but even so, it seems extortionate.
Euro moneylending is more Shylock than Mother Theresa – plus they do want their pound of flesh – unless of course, they are called Germany , Holland or Finland. They want several kilos of of the stuff.
What European Central Banks should do is simply return their ill-gotten Greek profits or at least direct them at Europe’s crisis programme. This should not be viewed as a profit opportunity.
Too many bankers and fund managers still view Greece only a profit centre.
In keeping with the Eurozone’s habit of creating rules “on the hoof”, there are discussions to fund an escrow account to guarantee that any bailout money goes to where Euroministers decide, thereby removing all management responsibility from Greece and its politicians.
There is one major issue which has not yet been ironed out – the Aladdin Solution – the “New Bonds for Old” proposal.
There are bondholders still resisting a debt-swap , so on February 21st 2012, Greece may be forced to legislate thus forcing those errant bondholders to accept a “new-for-old” arrangement.
What started a year ago as a simple bailout has now taken an unpleasant politico-bureaucratic aspect which becomes more and more complicated with time.
The Greek people are quite rightly embarrassed by the way that they have been portrayed in the word’s media but one thing which they should always remember is that in spite of the fact that all their Eurozone friends have convinced the world that they want to help Greece – they really only want to help themselves.
They are the greedy moneylenders gathering round a desperate family – having seen an excellent opportunity for profit.
I have a feeling that the happy ending will belong to Greece.
Greek party leaders seek deal as bankruptcy looms
By NICHOLAS PAPHITIS
ATHENS, Greece (AP) — Greek party leaders on Tuesday will seek a long-delayed agreement on harsh cutbacks demanded to avoid looming bankruptcy, amid intense pressure from its bailout creditors to reach a deal, a general strike disrupting public services and thousands of protesters taking to the streets of Athens.
Heads of the three parties backing the interim government will confer with Prime Minister Lucas Papademos on new income cuts and job losses, which Greece’s eurozone partners and the International Monetary Fund are demanding to keep the country’s vital rescue loans flowing.
A general strike against the impending cutbacks stopped train and ferry services nationwide, while many schools and banks were closed and state hospitals worked on skeleton staff.
Police said up to 14,000 people took part in two peaceful anti-austerity demonstrations in Athens. The separate marches were to converge on central Syntagma Square, outside Parliament, which has been the focus of demonstrations over the past two years of economic pain.
On Monday, Prime Minister Lucas Papademos’ government caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, out of a total 750,000. The decision breaks a major taboo, as state jobs had been protected for more than a century to prevent political purges by governments seeking to appoint their supporters.
Athens must placate its creditors to clinch a euro130 billion ($170 billion) bailout deal from the eurozone and the IMF and avoid a March default on its bond repayments.
Among the measures the EU and IMF are pressing Greece for is a cut in the euro750 ($979) minimum wage to help boost the country’s competitiveness. This reduction would have a knock-on effect in the private sector – because private companies also base their salaries on the minimum wage – and even unemployment benefits. Unions and employers’ federations alike have deplored the measure as unfair and unnecessary.
“It is clear that there is a lot of pressure being put on the country. A lot of pressure is being placed on the Greek people,” Finance Minister Evangelos Venizelos said during a break in talks with EU-IMF debt inspectors late Monday.
He called on coalition parties to work more closely together.
“To save Greece … will involve a huge social cost and sacrifices,” Venizelos said. “On the other hand, if the negotiations fail, bankruptcy will lead to even greater sacrifices.”
“No one is as strong as Hercules on his own to face the Lernaean Hydra,” a swamp monster in Greek mythology, he said. “We must all, together, fight this battle, without petty party motives and slick moves.”
A disorderly bankruptcy by Greece would likely lead to its exit from the eurozone, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal.
But on Tuesday, the EU commissioner Neelie Kroes, in charge of the bloc’s digital policies, said Greece’s exit wouldn’t be a disaster.
Kroes told Dutch newspaper De Volkskrant that “It’s always said: if you let one nation go, or ask one to leave, the entire structure will collapse. But that is just not true.”
Greece has been kept solvent since May 2010 by payments from a euro110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.
As well as the austerity measures, the bailout also depends on separate talks with banks and other private bondholders to forgive euro100 billion ($131.6 billion) in Greek debt. The private investors have been locked in negotiations over swapping their current debt for a cash payment and new bonds worth 50 percent less than the original face value, with longer repayment terms and a lower interest rate.
Greek government officials say they expect private investors to take losses of an estimated 70 percent on the value of their bonds.
The EU-IMF bailout will also provide an estimated euro40 billion ($52 billion) to protect Greek banks from immediate collapse. Domestic lenders and pension funds hold some 34 percent of the country’s privately-owned debt.
However, the bailout has to be secured for the deal with private investors to go ahead as about euro30 billion from the bailout will be used as the cash payment in the bond swap deal.
Greece’s coalition party leaders held a first key meeting on the austerity measures on Sunday, and postponed a second round of talks by a day so Papademos could complete negotiations with EU-IMF debt inspectors that ended early Tuesday.
The leaders have already agreed to cut 2012 spending by 1.5 percent of gross domestic product – about euro3.3 billion ($4.3 billion) – improve competitiveness by slashing wages and non-wage costs, and re-capitalize banks without nationalizing them. But the details remain to be worked out.
Creditors are also demanding spending cuts in defense, health and social security.
European Commission spokesman Amadeu Altafaj Tardio said Monday that Greece was already “beyond the deadline” to end the talks.
Also Monday German Chancellor Angela Merkel warned that “time is pressing,” and “something has to happen quickly.”
While Greece remains cut off from international bond markets – where it would have to pay interest of about 35 percent to sell 10-year issues – it maintains a market presence through regular short-term debt sales.
On Tuesday, the public debt management agency said Greek borrowing costs dropped slightly as the country raised euro812 million ($1.06 billion) in an auction of 26-week treasury bills. The coupon was 4.86 percent, compared to 4.90 percent in a similar auction last month, while the auction was 2.72 times oversubscribed.
Derek Gatopoulos in Athens and Gabriele Steinhauser in Brussels contributed to this report.
Quaintness pervades British Society – from our cute little village tea rooms, the genetically coded-in inferiority complex of the working classes, Barristers’ wigs to the way we run our Parliament and economy. We wear 21st century clothes which disguise 18th and 19th century thinking.
For instance, India has a Space programme, nuclear bombs and an industrial infrastructure which will leave our economy standing in a couple of years. Yet we still see ourselves as “England Sahib” and attempt to dispense Colonial munificence to the natives by insisting that they accept our charity. They are embarrassed, they don’t want it but we feel that they ought to accept the £200 million-odd per year.
Remember how we felt in 1974 ago when the mad Idi Amin of Uganda launched his “Bananas for Britain” campaign because he’d heard that we were starving ? Mind you, at the time, the UK was in a spot of bother. The oil crisis had sent the economy into freefall, unemployment was rising and industrial strife was worsening. (Sound familiar?).
The following Amin telegram was received in Whitehall:
“In the past months the people of Uganda have been following with sorrow the alarming economic crisis befalling on Britain. The sad fact is that it is the ordinary British citizen who is suffering most. I am today appealing to all the people of Uganda who have all along been traditional friends of the British people to come forward and help their former colonial masters. The people of Kigezi District donated one lorry load of vegetables and wheat – send an aircraft to collect this donation urgently before it goes bad .”
The politicians and Civil Servants both greeted the message with embarrassment and derision.
That is exactly how those millionaire and billionaire Indians feel about the “peanuts donations” (their words) that we keep forcing on them.
But that is the very essence of our collective quaintness. We are oblivious because in our minds, we are still “KING OF THE WORLD!” We appear to be oblivious to the fact that since 1845 (never mind 1945!), the world has changed.
We’re still like a maiden aunt handing a 5/- Postal Order to the nephew with an iPhone.
“But English is the world’s main-language” is the oft-repeated Mantra. Yes, because hundreds of years ago, we could sail boats. That meant that we could travel and steal lots from the natives! Then we’d force-feed them God but more importantly – we taught them the English Language.
We weren’t “quaint” in those days. We were thieving and murdering conquerors with attitude. We used to have balls!
Now we are like the wheezy old duffer draped over a worn-out leather club chair, who likes to reminisce about the “good old days” and when being British “meant something”.
Great Britain consists of 6,289 damp little islands in the North Sea – and only 803 of those have what can be loosely described as a coastline. The rest are rocks sticking out of the sea.
It used to be said that the sun never set on the British Empire – but IT DOES NOW and like a rheumy-eyed old-timer, we should wake up and smell the Earl Grey!
There is one word which we treasure above all other : “TRADITION”. Our mentality dictates thas as soon as we have done something once, it has to become “tradition”.
Everything from the Christmas Turkey to the Changing of the Guard at Buckingham Palace are “tradition”.
Why is there a ribbon on every MPS coat-hook ? “It’s for his sword, Dumbo! It’s TRADITION!”
“We vote Labour in this house -it’s tradition !!”
“You have to drink 10 pints and then be violently sick because…………” You’ve guessed it!!
I am listening to three Royal Commentators being interviewed on the subject of the Queen’s Jubilee. A great demonstration of synchronised obsequiousness borne of our love of tradition. ” The Queen does not see herself as a celebrity, she is far more than that….did you see those new photos of her….she wasn’t just “Hollywood”…. she was….Majestic!!!”
The Brits absolutely worship the Royal family because……it’s TRADITION. It’s tradition personified.
No-one is suggesting that we should start , as the French did, by trashing the Royals. The French are almost as traditionally-minded as the Brits . That is why Monsieur le Président de la République is expected to behave like a king and why he lives in a palace.
Yet, the French have taken that important one step forward from tradition and appear more modern and sophisticated than the Brits. They are NOT quaint. They have struck the right balance between modernity and tradition.
Why do we feel so uncomfortable in Europe? Why do we come across as outsiders? Geography is often blamed. “We’re an island…that’s what it is. We’re British!!”
Geography is to blame but it is not physical Geography. It is our mental, attitudinal Geography.
“We’re BRITISH, for God’s sake!”
Yes – we are British but we continue to treat Britishness as a virtue whilst we sit passively as the world around us grows and changes.
The government is ruled by the Conservatives (yes, even when the Labour Party is running things). They (the Conservatives) are VERY traditional. They are the Establishment.
Her Majesty’s Labour Opposition (see what I did there?) is ruled by the unions who are more conservative than the Conservatives.
Even those vast expanses of white nylon shirt displayed by overweight union leaders have become “tradition”. Their antipathy to any government has become traditional and in its own way…..quaint.
We are all drowning in a sea of tradition and quaintness – but there’s a surprising answer.
The Liberal Democrats are the United Kingdom’s newest and least-traditional bunch of politicians. But traditionally , they are constantly squeezed from the Left as well as from the Right
Liberal Democrats do not make enough of their “Democratic” credentials because they prefer the more traditional (and quaint) “Liberal” – which actually doesn’t mean anything to the average voter.
Liberal has two sets of meanings: Progressive, forward-looking, reformist, radical, libertarian, free-thinking, modern.
The second set of definitions or synonyms is the one with which the Liberals have been traditionally associated: Tolerant, indulgent, unbiased, broad, disinterested, unopinionated.
However, they do have one great advantage. They are neither in the hands of the traditionally quaint Establishment nor the quaintly traditional Unions.
That’s where our answer could be. Not necessarily in the hands of the traditional Liberal-Democrats but maybe in a new fired-up Democratic-Liberal Party ?
The quaintness has to go.
EU official: Greece needs extra $20 billion
BRUSSELS (AP) — Greece needs about an extra euro15 billion ($20 billion) to get its debt down to manageable levels — and the rest of 17-country eurozone is being asked to help foot the bill.
Debt-ridden Greece is close to a deal with private investors to reduce its debt burden by about euro100 billion and that — plus an agreement to enact deep spending cuts — could pave the way for a euro130 billion bailout from its European partners and the International Monetary Fund. But on Thursday a European Union official said this plan was not enough to help fix Greece’s problems, which are getting worse as the effects of the recession take hold.
In order to bring Greece’s debt burden to a sustainable level — 120 per cent of its economic output in eight years’ time — the country’s international debt inspectors calculate that Greece needs an additional euro15 billion — a shortfall it believes should be made up by the rest of the 17-country eurozone, the European official. The official spoke on condition of anonymity because of the sensitivity of the matter
The extra money, in theory, could come either from the other euro countries or by having the European Central bank, its national counterparts and state-owned banks like France’s Caisse de Depots taking a loss on their Greek bond holdings, the official said. Analysts estimate that the European Central Bank holds euro50 billion to euro55 billion in Greek bonds by face value but it can’t simply write them down without breaking the EU treaty, which prohibits the bank from financing governments. Writing off a debt would be, in effect, transferring money directly to a government.
The new push for Greece’s public and government creditors to take a cut on their investments — dubbed the official sector involvement, or OSI — is a new front in the battle to save the country from a potentially devastating default. So far the eurozone and the International Monetary Fund have given billions in bailout loans to the struggling country, but they haven’t been asked to take losses.
It is also an acknowledgment that Greece’s economy is in such a dire state that the country’s debt inspectors — the so-called troika of the Commission, the European Central Bank and the IMF — are having a hard time finding more ways in which Athens can save money.
Greece has been at the heart of Europe’s debt crisis since it revealed in 2009 that its debt was far larger than its official estimates. It piled on the debt during a decade in which the government overspent and its economy was growing. Those fortunes turned when the world went into recession in 2008.
The challenge now is reducing the debt at a time when the economy is shrinking. Spending cuts, tax increases and the general uncertainty of the crisis have already pushed Greece into a deep recession, which in turn has eliminated many of the gains from the austerity measures.
Asking private creditors like banks and investment funds to share the burden of saving Greece was the first reaction to this problem; getting the public sector creditors involved is the next.
The official said a deal with private creditors to take losses on their holdings will have to be announced before the end of the week to make sure it can be implemented before Athens has to pay back euro14.5 billion in bonds on March 20.
Experts from national finance ministries will examine the details of the deal on the so-called private sector involvement — or PSI — on Friday, and will likely also discuss how the euro15 billion gap can be closed, the official said.
People familiar with the tentative deal have said it would see investors take losses of more than 70 percent of their holdings. On top of having to accept a 50 percent cut in the face value of their bonds, investors will also receive lower interest rates of between 3.5 per cent and 4.5 per cent and give Greece 30 years to pay back the debt.
If agreed, the deal would end negotiations with bondholders that started this summer and have become increasingly tenuous in recent weeks.
Getting public creditors like central banks or sovereign wealth funds to take a hit may be even more controversial, since any losses or foregone profits ultimately come out of taxpayers’ pockets. Germany, the strongest economy in the eurozone, is also one of the strongest opponents of OSI.
Germany’s finance minister, Wolfgang Schaeuble, said on n-tv television Thursday that he didn’t see the need for “any extra contributions from the public sector; we’re carrying everything anyway.”
Schaeuble didn’t address the issue of the euro15 billion funding gap.
The majority of the ECB’s Greek bonds were bought at a discount in the summer of 2010, when the central bank was trying to stabilize their prices. Even though it is bound by the rules of the EU treaty, it could find a way to give up the substantial profit it would earn by holding the bonds to maturity. It could do that by selling the bonds to the eurozone bailout fund or to Greece at the knockdown prices it bought them for.
However, the ECB has so far given no indication that it is willing to do so, with some of its governing board members saying that giving up on profits would clash with the bank’s ban.
Alternatively, eurozone states could boost their bailout loans beyond the promised euro130 billion, or provide some, more-limited, relief by further lowering interest rates on these loans.
Analyst Carsten Brzeski at ING in Brussels said the ECB and President Mario Draghi might be open to giving up the profits on the bonds. But the bank will wait to take action so it does not appear to be acting at the request of politicians.
The bank is legally independent and the EU treaty forbids it to take instructions from government officials.
“I think Draghi could live with it, but they will not bow very easily,” said Brzeski. “It has to look like it is their own idea, their own initiative.”
While officials have stressed the need for Greece’s financing to be set before the bailout goes through, the main players have been flexible before and “it’s not as hardball as it looks.”
On the official side, “someone will have to bite the bullet, or everyone,” he said. European officials are trying “to have everyone take part in the burden sharing and thereby get the ECB involved.”
The euro130 billion second bailout package also still depends on labor market reforms that the EU and IMF are asking Greece to implement. Unions and employers resumed talks on Thursday over troika demands to lower wage costs in the private sector and possibly lower the minimum wage.
AP Business Writer David McHugh contributed from Frankfurt.
Copyright © 2012 The Associated Press. All rights reserved.
Action points should be very much more than vague statements of unspecific intent. Proper action points should contain elements such as amount or time.
In addition, there has been a noticeable increase in the use of a very strange new language . It has been used by Eurozone leaders during their various pronouncements over the last (many) months.
The rhetoric adopted by current Eurozone Commissars is frighteningly similar to the Soviet-style nonsense spouted by dead-eyed Party apparatchiks of the 1960s. It is the empty “old-school” Party-designed exhortatory language of the minor government Soviet official.
In common with the good old Berlin Wall days, these pre-written Euro-statements appear to promise much but actually, say nothing. They have a smell about them. It is the smell of long-demolished East German Trade Mission offices – a mixture of damp buff-coloured pocket folders, dusty Party rubber stamps, wax floor polish, wet mops and lever-filled fountain pens.
Until very recently, apparatchik-speak was a dead language.
There is ONE significant word which appears to be “de rigeur” because it implies a level of forcefulness and “doing” which is designed to suggest imminent action.
So far, it has fooled most of the people – especially those who plunder the Stock Markets. They crave warm words.
The words are empty but they provide hope – just like the old Soviet insistence on increased wheat production quotas – last transmitted on Short Wave from Radio Moscow.
These are actual extracts from recent Eurozone communiqués and statements:
“Our action must be determined…”
“We must do more…”
“We must modernise our economies and strengthen our competitiveness … This is essential to create jobs and preserve our social models …”
“These efforts must be made in close cooperation with the social partners.”
“The March European Council must pay due attention…”
“EU legislation… must be rapidly and fully implemented…”
“National supervisors and the EBA must ensure that bank recapitalisation does not lead to deleveraging…”
This strange almost admonitory style, detached from any real analysis of the problems has a quaint nostalgia, which those of us who are used to modern management or political idiom do find both unsettling and hollow.
…and the band plays on.
Fred Goodwin in good company!!
Fred Goodwin has never been convicted of anything, he has not been censured by any regulator, yet the very obscure and to most of us, hitherto unknown Forfeiture Committee has recommended to the Queen that he be stripped of his knighthood. This committee (apparently) is non-political and consists of several high ranking civil servants as well as the head Treasury lawyer.
But what motivated this cruel and unusual punishment? Why exactly was Fred Goodwin stripped of his Knighthood?
In the absence of concrete reasons, it seems that Fred Goodwin was tenderised by the media, before being served up to the baying mob. A sacrificial lamb with our howling political leaders elbowing themselves to the front of the queue.
Deputy Conservative Chairman,Michael Fallon says, “Ministers don’t control the timings of the forfeiture committee, this is an entirely independent committee of civil servants.”
So why did these independent free spirits make the decision? What motivated them? Why wait THREE years?
We may well agree that Fred Goodwin is an odious little man who had been promoted to well above his personal level of incompetence but that is nothing unusual within the Financial Services Industry. He was merely one among the many.
He was Chief Executive of a huge bank which was chaired by Sir Tom McKillop – a chemist. Goodwin himself was no more than an accountant who was nowhere near ready to run an international bank. He was not a banker – yet at the time, EVERYONE had decided that he was as close to a banking deity as was possible.
The laughs in this financial farce are amplified by the names of some other Sir Knights who have been unfortunate enough to be stripped of their knighthoods: Robert Mugabe, Nicolae Ceaucescu and Benito Mussolini are just three. Then you add “Fred Goodwin” to the list and suddenly realise that it just doesn’t scan!
In December 2011, the Financial Services Authority produced a report into the RBS failure. There was one section which Fred Goodwin’s lawyers asked to be removed from that report.
It was the bit which criticised his lack of banking experience.
Here is the 450-page FSA report into the RBS collapse. If you scroll down to Page 223, you will see that it is The RBS Board which has been found to be lacking and NOT just Fred Goodwin: http://www.fsa.gov.uk/static/pubs/other/rbs.pdf
There is a very simple rule in management which always applies, especially to the Board of a company: ” If you hired the wrong man and he screwed up, it’s YOUR fault. If you hired the right man and he screwed up, it’s DEFINITELY your fault.”
It is the RBS Board of Directors which ought to be standing shoulder-to-shoulder in the dock and being stripped of honours. NOT their overpromoted hireling.
So why was Fred Goodwin stripped of his Knighthood?
Petty Political Revenge.
German Chancellor Angela Merkel is one of the Euro leaders who appears to be slightly too relaxed about the fact that the Greek government has not yet finalised an agreement with creditors in respect of its Sovereign Debt. Now there is the rumour of a German Government memo indicating that Eurozone Banks are just about ready and able to cope with a Greek default. If that is the case then it would seem that the Greeks have been “played” while Euro reorganisation has been taking place behind their backs. The latest wheeze is the IMF expressing dissatisfaction about Greece’s progress in implementing those draconian austerity measures. That means that Greece’s next tranche of bailout money is nowhere near being agreed. It is now possible that even if Greece does capitulate and agree to everything that the IIF demands, it is still not guaranteed a bailout. Tempus Fugit.
It’s Different Attitudes……….
American father to his son: ” See that man son? That’s Stephen Hester. He’s Chief Executive of the Royal Bank of Scotland. That’s a VERY big bank and the British government hired Mr Hester to put things right after it was left in a bit of a mess. He’s very successful and if YOU study and work hard, perhaps one day you can be as successful and as well-known as Mr Hester.”
English father to his son: “See that man son? That’s Stephen Hester. He’s a fat greedy capitalist bastard who thinks he’s better than us. It’s hard-working people like me who pay his wages. We work and he just sits behind a big shiny desk and gets millions. Make sure that you don’t turn out like him.”
Central Bankers – The Fifth Estate.
Nowadays, the bank to government to Central Bank and back to bank cross-border flows of money (both real and imaginary), the constant borrowing and re-borrowing , the bond auctions etc. appear to be behaving as if controlled by a separate, non-governmental , non-economic entity.
Sovereign bond auctions have now become a weekly sport, generating the sort of interest formerly reserved only for TV soap operas.
European banks gather around the European Central Bank like pigeons at feeding time.
Rather worryingly, this new pseudo-economic essence behaves as if it is more-or-less dislocated from what we call “the Global Economy”.
It is the Macro Banking System. The FIFTH ESTATE.**
It is behaving as a totally separate, self-perpetuating, high-level mutant economy which exists for its own sake and is presided over by senior bankers and financiers with politicians merely fetching and carrying.
One of the symptoms which we are currently witnessing is the demise of democratically-elected officials. Their status seems to be diminishing day-by-day, to the extent that their job is simply to row the boat according to the drumbeat set by very senior bankers – the New Rulers.
The very people who created this financial crisis four years ago have gradually created a brand-new debt-fuelled edifice which has become anchored both in the economy as well as in our collective psyche. We have come to see the Debt Mountain as our Saviour with Central Bankers in the role of its High Priests.
The concept has become so embedded, that we have grown to believe that only they (the High Priests) can save us.
This new entity appears divorced from the old-fashioned concepts of growth, production and distribution and now only needs sovereign economies to feed it occasionally.
This gradual power-shift has only occurred in the last year-or-so and so, imperceptibly, we have entered an age where politicians have finally become subservient to the bankers.
The jury is still out as to whether the development of this new ruling financial class is good or bad or even sinister. The Conspiracy Theorists have notions of Bilderbergers, a New World Order and all sorts of other conspiracies – I do NOT subscribe to that view.
Politicians have shown that they do not have the intellectual or technical capacities to deal with a multi-causal, multi-faceted, vastly complicated economic crisis, borne more out of greed-conceived chaos, rather than the usual rules of Keynesian economics.
We have to take a leaf out of the politicians’ book.
Heads bowed, we wait.
** First Estate – Clergy. Second Estate – Nobility. Third Estate – Commoners. Fourth Estate – the Press.
In January 2011, French President Nicolas Sarkozy proclaimed that by the end of the year, France was ready to implement a financial transactions tax (FTT) to help poor countries. The German Chancellor, Angela Merkel, also expressed her support.
Sarkozy promised: “My conviction has always been that the FTT is the best form of innovative financing…. France is prepared to implement innovative financing mechanisms even if other countries should choose not to join. Because there is a moment in time where you have to go from discourse to setting an example.”
But, surprisingly, no agreement has yet been reached.
It’s urgent that France and Germany take concrete action to drive this joint proposal forward and to ensure that the revenues will be used to help reach the Millennium Development Goals.
France’s and Germany’s generosity is to be admired and we should do all we can to encourage this initiative, especially in the wake of such momentous upheavals within the Eurozone.
One trusts that our Prime Minister takes the time to gently remind the French and the Germans of this more-than-generous gesture.
The petition is here: http://www.thepetitionsite.com/takeaction/825/474/357/
John Terry – white c***
Apologies if you find what I’ve written below offensive but I find both racism and moronic soccer players offensive.
John Terry allegedly called Anton Ferdinand, brother of Rio Ferdinand who replaced Terry as England captain, after Terry been shagging someone’s wife, a “fucking b***k cunt”.
Of course, Terry claims that he has never aimed a racist remark at any b***k cunt but nevertheless still finds himself in deep water.
However, if he finds himself in real trouble, perhaps he can ask Wayne Bridge for a character reference.
The alleged phrase which Terry aimed at Ferdinand has only one unacceptable word (B***K).
Neither Anton nor Rio appear to object to the other two words used by Terry, possibly on the grounds of accuracy.
Bizarrely, had he omitted the colour reference, Terry would probably be in the clear and the whole episode would have been considered no more than normal footballer banter – even though the phrase would have blown at least 25% of Terry’s vocabulary in one instant.
Furthermore, on consulting the Dulux colour chart, it seems that Terry’s assertion was chromatologically inaccurate anyway!
Hopefully, if found guilty, Terry will be stripped of both captaincies and sentenced to several days in a sun-bed.
Kim Jong Ill-judged?
Kim Jong Il’s death in North Korea will inevitably shift the focus of Western disdain to his son and president “elect”, Kim Jong Un. Here in the West, his PR will very soon become as colourfully sneering as that enjoyed by his dead father.
Through no fault of ours, we have never really understood either the dead dictator or his people but, the North Korean cult of uber hero-worship appears to be so infused into Korean Society as to look totally genuine.
To us, Kim Jong with his bouffant hair and pigeon posture was a comedy figure but to his people, he was a god. Did EVERYONE really love and revere him? Was he REALLY, like the Catholic Pope Ratz – an infallible near-deity?
We may well have mocked the small man with the big ego whose pronouncements were sacrosanct – but was he really any different to the Man from the Vatican with his pointy hat, red slippers and gold dresses? Was he any more ridiculous or ridiculed? Was he any less dangerous?
At least he didn’t claim to have a hotline to God or to perform miracles or accept the ramblings of the feeble-minded who believed that by simply being touched , they had been cured.
We would argue that you cannot fool ALL of the people ALL of the time but the fact remains that we do all need our heroes and the North Koreans’ hero was their leader.
Some may say that he was a “manufactured” hero – but doesn’t that apply to MOST heroes? Our own heroes are sportspeople and singers – in fact anyone who can have the word “celebrity” appended – no matter how tentatively.
Kim Jong was a political and spiritual celebrity. He gave his people focus.
OK, so he had bought into his own image and had travelled the well-worn celebrity route of believing his own publicity but so what?
Was the publicity of his making?
The sad fact is that he presided over a beaten-down, brainwashed nation where dissent results in Stalinist-type reprisals. The Gulag Culture is alive and well.
Perhaps the comparison with the Vatican was NOT altogether fair. After all , the Vatican does not have Nuclear weapons. North Korea is now a potentially unstable country with REAL weapons of mass destruction and the ability to deliver them. Even its neighbour China will be hoping that the North Korean Generals can return their country to comatose and malnourished stability as soon as possible.
There has always been some suspicion that Kim Jong Il’s personality cult was mere window dressing for a sinister totalitarian military administration – just as Iran’s Ahmandinejad is the fluff and window-dressing for spiritually malevolent turbaned puppet masters of his own.
Today, there was footage of North Koreans wailing in their “grief” for their lost leader. Two things were very striking – there were no real tears and every single frame contained at least two military people in uniform, apparently standing about to ensure acceptably adequate grief.
Here’s a fine example of Korean “sincero-grieving” as practiced by the Korean Central News Agency:
Pyongyang, December 19 (KCNA) — Leader Kim Jong Il, the great father of the Korean people, passed away too suddenly.
The DPRK is overcome with bitter sorrow at the demise of the father of the nation who had energetically worked day and night for prosperity of the socialist homeland and the happiness of people all his life.
Its army and people’s loyalty and sense of obligation to him are now growing higher than ever before.
They are resolutely rising up to change their sorrow into great strength and courage with the noble sense of moral obligation and immovable faith and will to hold Kim Jong Il in high esteem forever and glorify his feats for all ages.
The hearts of all servicepersons and people are replete with the pledge to hold in high esteem the great Kim Jong Il forever and make neither concession nor delay on the road of the Juche revolution, the Songun revolution true to his behests.
The Korean people have suffered the great loss but are decisively rising up as they have Kim Jong Un, great successor to the revolutionary cause of Juche and prominent leader of the party and the army and people of the DPRK who is standing in the van of the Korean revolution.
He is another great person produced by Korea who is identical to Kim Jong Il.
Quote Source: Korean Central News Agency: http://www.kcna.kp/goHome.do?lang=eng
The Merkozy Love-in.
This week sees yet another meeting of Eurozone leaders. On previous form, I would bet that the only outcome will be a series of half-measures and promises which will be primarily designed to reassure fund managers, investors and to placate the banks. The fate of the Euro will yet again, be postponed as millions of Europeans continue to stand in the fast-growing unemployment queue.
Theoretically, Euroleaders (or should I say Frau Merkel) will be deciding not-only the fate of the Euro but the fate of every economy in what used to be known as the “advanced industrial world”.
Austerity has become the new growth with the INEVITABLE result of ever-lengthening unemployment queues and increasingly turbulent currents of social unrest.
Received wisdom is that deficit reduction is more important than job creation through fiscal stimulus. The downside is that for countries which have already launched themselves on a deficit reduction programme, it is beginning to look as if there can never be quite enough deficit reduction because of rapidly decreasing tax revenue.
There will always be that no-man’s land between deficit reduction and fiscal stimulus. Not a single economy has arrived there yet.
However, what is even more worrying, is that there isn’t a single politician, banker or economist who can even begin to put a time frame on the process. Currently, it looks like an open-ended arrangement.
One thing that the average punter does NOT realise that there are initiatives and money movements within the banking system which he knows nothing about – unless of course, it is such a big move that the banking authorities decide that would be prudent to go public. Last week’s sudden announcement by central banks that they would “assist” European banks which needed US dollars was a case in point.
The coordinated move was so huge that the most likely cause was that one or two major European banks must have made THE phone-call to their own Treasury to say that they were about to go under. The U.S. Federal Reserve Bank, the European Central Bank, the Bank of England, the Bank of Japan, the Swiss National Bank, and the Bank of Canada lowered their rates for borrowing dollars from each other by a 0.5 percentage point to “ease strains in financial markets.” (a meaningless phrase).
They went on: “At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise,”
Even China took steps to stimulate domestic demand by lowering its central bank interest rate.
Make no mistake – there was a crisis.
Every action so far by central banks and politicians has been a temporary fix. They are still trying to figure out the cure – if indeed there is one.
Last week, the central banks merely threw a rope for Eurobanks to cling onto – but that does NOT solve – or even begin to solve the still-spreading sovereign debt crisis.
This week, communiques are being written, meetings are being conducted and financial horse-trading is taking place as under-qualified politicians attempt to put together a package which, in one fell swoop should solve the global financial crisis.
The whole circus will culminate in a December 9th Brussels summit ( another one) during which the 17 Eurozone leaders will be joined by the 10 non-Euro-participants and a series of agreements will be promulgated.
The ONLY agreement that they really need to pull out of the hat is a “contract” to coordinate Eurozone fiscal policies.
Merkel’s dream of a Federal Europe will have taken its first faltering step.
So far , the Markets have tended to play ball with the floundering politicians but even those eternal optimists are fast running out of patience.
The latest rally has no legs because the current assumption is that somehow (for the first time ever), Eurozone leaders will provide a solution.
So, what is the likelihood of a TARP (Toxic Asset Relief Programme)? What is the likelihood of a coordinated programme to recapitalise ALL the banks? What is the likelihood of Germany changing its mind on ever-increasing austerity programmes which are driving weak Euro economies to Depression (these days, mere Stagnation seems like an attractive alternative – an aspiration!)
So far, the Eurointransigence has been destructive: Unemployment, demotivated and desperate countries, amplifying hardship, collapsed governments.
The evidence so far suggests that those believing that this week will provide the Miracle in Brussels will be disappointed.
The weeks events began with today’s meeting between Chancellor Merkel and Nicolas Sarkozy – The Merkozy Meeting. The output was predictable with an early hint of further postponement.
German Chancellor Angela Merkel has called for “structural changes” after the keenly-watched meeting with French President Nicolas Sarkozy in Paris today. The two leaders said that they had agreed on a “comprehensive” agreement to be proposed on Friday at the summit. (What he meant was is that he had agreed with everything that Frau Merkel had proposed)
“This package shows that we are absolutely determined to keep the euro as a stable currency and as an important contributor to European stability,” said Merkel.
Among the proposals were that the European Court of Justice will have a say when countries break the legally established limit for public debt of 3% of GDP. Also, both leaders rejected the need for the joint issuance of European debt by member states, adding that socialising debt burdens is no solution. (Another Merkel victory).
Sarkozy has added that he expects all of the necessary negotiations to be finalised by March (no surprises there!) and that changes to the Treaty will be ratified in France, following the next national elections in March.
The pair indicated that it is yet to be seen if the changes will be adopted by all 27 European nations or simply the 17 Euro states.
Lastly, they also made it clear that it is their intention to continue working with the International Monetary Fund and to bring forward the implementation of the permanent rescue fund by a full year, to 2012.
Here in the United Kingdom, where politicians have recently voiced concerns on how EU treaty changes could affect Britain, Downing Street has said that there will be no referendum on the EU treaty changes.
A spokesman for Prime Minister said, “What is being talked about is a new set of rules for the Eurozone and how those countries that are members of the euro organise themselves on fiscal policy. There is no proposal on the table for a transfer of powers from the UK to Brussels. That is not what is being talked about…No-one has put that on the table and I don’t think it is likely to be on the table.”
At the end of the first day, it seems that we are about to be served-up yet another portion of bland European procrastination – but what an object lesson in Blatant Brinkmanship from the Germans!
World Markets Rally!!!!
A move to boost lending by six central banks including the Bank of England has triggered a rally on world markets.
The banks, also featuring the European Central Bank and US Federal Reserve, agreed to lower interest rates on US dollar loans, which should encourage lending and help to stave off another credit crunch.
The FTSE 100 Index surged as soon as the measure was announced, rising 3.3% or 176 points to 5513.
In the US, the Dow Jones Industrial Average was up by a similar level in early trading, while the Dax in Germany rose 4% and the Cac-40 in France was 3% higher.
Before the announcement was made London’s leading shares index saw gains of up to 1%, amid hopes European leaders would make headway expanding the region’s bailout fund to help shore up confidence in the eurozone.
Banks led the charge despite some of the sector’s biggest UK players suffering a credit ratings downgrade from Standard & Poor’s.
Lloyds was ahead 7%, or 1.6p at 24.8p, Royal Bank of Scotland was 1.4p higher at 20.9p and Barclays rose 11p to 179.9p.
Miners also surged on the news, with South American copper miner Antofagasta topping the risers’ board, up 96p at 1180p.
Cairn Energy was the biggest faller after it reported more disappointing results from its exploration activities in Greenland. Cairn shares were 8.3p lower at 266.9p, a drop of 3%.
The Edinburgh-based firm said it had failed to find oil in two more wells, following the closure of three other wells earlier this year.
Copyright © 2011 The Press Association. All rights reserved.
United Kingdom and Miracle-Gro?
“Growth” is a word which is used far too rarely in all the messages and communiques which we have become accustomed to hearing emanate from the million-and-one Euromeetings.
Consequently, it is refreshing to see something (anything) written-down which indicates some intent from our own government.
On the face of it, a raid on Pension Funds (see below) does not look like a good plan and none of the goals (below) have dates attached to them. If they did have dates , we would probably realise that this is not a plan for an immediate growth-explosion but something which first needs to be created, drawn, discussed, re-discussed before the first spade is ever sunk into the ground. Neither is it an integrated plan – on the contrary, it can best be described as a series of disparate initiatives.
These projects will NOT make the country any richer, because they represent a “spend” rather than an “earn”, that is to say, they are not something which we can exchange for goods or cash with other countries. These are job-creation schemes which are often confused with proper growth.
Nevertheless, it’s a start. We have lift-off!
The Chancellor of the Exchequer, George Osborne, and the Business Secretary, Vince Cable, have announced a wide-ranging package of more than 140 reforms to build a stronger and more balanced economy. These measures include actions from the second phase of the Government’s Growth Review Phase II and the National Infrastructure Plan.
These measures are supported by an infrastructure package of £30 billion. This includes unlocking up to £20 billion of private investment through signing a Memorandum of Understanding with two groups of UK pension funds, an additional £5 billion of infrastructure spending in this Spending Review period, and commitments to £5 billion of capital projects in the next Spending Review period. In addition, the Government is supporting around a further £1 billion of investment by Network Rail.
To make the UK’s infrastructure fit for the 21st century, the Government has published its National Infrastructure Plan 2011. The plan sets out a critical analysis of the state of the UK’s infrastructure and sets out a pipeline of over 500 infrastructure projects. It commits to clear ambitions to address the key challenges in each major infrastructure sector – energy, transport, telecommunications, waste and water.
The key measures in the National Infrastructure Plan include:
- introducing a new approach to financing infrastructure, by leveraging £20 billion of private investment from pension funds;
- giving local authorities more flexibility to support major infrastructure by considering local borrowing to fund the Northern Line extension to Battersea, and exploring new sources of revenue, such as options for tolling on the A14.
- investing over £1 billion to tackle areas of congestion and improve the national road network, including £270 million for two new managed motorway schemes at congested times on the M3 and M6.
- investing more than £1.4 billion in railway infrastructure and commuter links, including £270 million for a rail link between Oxford and Bedford and £390 million on enhancement and renewal works to improve stations and infrastructure.
- investing £100 million to create up to ten ‘super-connected cities’ across the UK, with 80-100 megabits per second broadband and city-wide high-speed mobile coverage.
- The Chief Secretary to the Treasury, Danny Alexander, will chair a new cabinet committee on infrastructure, to push through the delivery of the top 40 priority projects and programmes that are critical for growth.
The second phase of the Government’s Growth Review has been led jointly by HM Treasury and the Department for Business, Innovation and Skills (BIS). The Autumn Statement announces a set of further reforms building on this, including:
- creating a £20 billion National Loan Guarantee Scheme, to lower the cost of loans to small businesses, and a £1 billion Business Finance Partnership, which will lend to mid-sized businesses and small and medium sized businesses in the UK through non-bank channels.
- increasing the Regional Growth Fund by £1 billion to provide ongoing support to grow the private sector in areas currently dependent on the public sector.
- an extra £600 million to fund 100 additional Free Schools, and an additional £600 million to deliver an additional 40,000 school places.
- introducing a new build mortgage indemnity scheme which will help up to 100,000 families to buy their own home, and launching a new £400 million Get Britain Building investment fund to progress stalled developments.
- providing £45 million of support to UK firms wishing to export, doubling from 25,000 to 50,000 the number of SMEs supported, and making similar support available to 500 mid-sized businesses.
- making 100 per cent capital allowances available in six Enterprise Zones (Black Country, Humber, Liverpool, North Eastern, Sheffield, and Tees Valley).
- making available around £250 million from 2013 to support energy intensive industries manage the costs of electricity, including increasing the relief from the climate change levy on electricity for Climate Change Agreement participants to 90 per cent.
- an additional £200 million for science capital investment.
- investing £55m into the Strategic Rail Freight Network to help deliver schemes that remove bottlenecks and improve capability and longer term connectivity to the UK’s major ports.
- giving a bigger role to businesses in purchasing vocational training programmes. In the New Year employers will be invited to bid for a share of a new £250 million government fund. This will route public investment directly to employers.
- taking decisive action to remove barriers to hiring by making reforms to streamline employment law.
- investing £10 million over five years from 2013-14 in Project Enthuse, matched by investment from the Wellcome Trust, to improve the quality of science teaching in schools
- announcing how the Government will maximise the value of public sector data.
The Chancellor of the Exchequer, George Osborne, said:
“We are committed to making Britain the best place to start, finance and grow a business. The measures I am announcing today will help us to achieve this by creating an environment in which businesses are easy to set up, have access to credit when they need it and are able to grow without being held back by red tape. This action supports our deficit reduction plan and the Government’s monetary activism as we build a balanced economy.”
Business Secretary, Vince Cable, said:
“These measures are an important element of the Government’s work to create the right conditions for business to start up, invest, grow and create jobs. They sit alongside our deficit reduction plan and work to increase the supply of credit.
“I attach particular importance to infrastructure and Government capital spending, including that on innovation and science, and the credit easing initiative. Speedy and effective implementation is now required, building on the major progress that has been made implementing phase one.”
The first phase of the Growth Review was published in March 2011. Work has started on all 137 commitments and substantial progress has been made. The Government has published an update on every single measure announced in The Plan for Growth.
Chancellor’s Autumn Statement – just the facts
“We will do whatever it takes to protect Britain from this debt storm” in Europe.
Office for Budget Responsibility does not predict a recession in UK.
OBR forecast: GDP growth estimated at 0.9% in 2011. 0.7% in 2012 (down from 2.5%).
Borrowing falling but not as fast as forecast.
OBR sees additional borrowing of £5bn in 2011/12, £20bn in 2012/13 and £30bn in 2013/14.
Public sector pay awards set at average of 1% increase after the pay freeze ends next Spring.
NHS and schools budgets protected.
Deal on public sector pensions is “fair”.
Basic state pension to rise by £5.30 next April. Pension credit also uprated by £5.30.
In 2026 – state pension age will rise to 67.
Benefits uprated by 5.2% next April.
Credit Easing to help small business – ceiling of £40bn. National Loan Guarantee Scheme to use country’s record low interest rate to ease interest rates charged to firms who borrow from banks.
Country’s low rate to benefit families too through mortgage indemnities. Will reinvigorate “right to buy” to also help construction sector.
Bank Levy rate to rise from January 1st.
National Infrastructure Plan to get Britain building to improve roads, bridges, rail, schools etc. It will be paid for through”British savings for British jobs.” £20bn to come from pension schemes.
£5bn of additional Government spending on infrastructure plan – 90% of homes will have access tosuper-fast broadband.
Regional Growth Fund for England to get extra £1bn.
£0.5bn for science projects.
Health & Safety red tape to be cut further for small firms.
Corporate tax rate to fall to 25%.
Business rates holiday extended until April 2013.
8.7% unemployment rate forecast for next year by OBR.
New Youth Contract to offer work experience and assistance getting into private sector to help ease youth unemployment.
Extra £1.2bn to schools with 100 extra ‘free schools’. Maths Free schools to help UK’s science industry.
Free nursery places for 40% of the country’s 2-year olds (260,000)
Planned 3p per litre fuel duty increase in January is cancelled. August’s planned increase to be reduced.
Rail fares capped at 1% higher than CPI inflation
EFSF Accounting Gymnastics.
Last night , Eurozone finance ministers (sort of) agreed a deal to increase the firepower of the European Financial Stability Facility (EFSF).
Unfortunately, this time it really IS a case of too little too late or perhaps, someone didn’t get his sums quite right. Some of the €440 which the EFSF has to play with has already been allocated to help Portugal and Ireland. There is also the small matter of the EFSF contribution to the next Greek bailout.
Nevertheless, it was agreed that the EFSF will guarantee 20 to 30% of the value of any bond issued by a Eurozone member, allowing the fund’s “assets” to be “leveraged”. That, in effect means that say, €1 billion of EFSF assets can underwrite about €3 billions’ worth of Eurobonds. A dangerous game – especially as the EFSF’s real apacity is so limited.
In reality the EFSF’s capacity might only be between €500 and €700 billion, which is not really even big enough to bailout Italy and Spain. Meanwhile, Greece will run out of cash in two weeks’ time and is already standing in the wings, hands out, awaiting its next €8 billion bailout.
Also embedded in the backdrop to all this accounting wizardry, is a secret Euro report which states that Italy will need to beef-up its austerity measures , otherwise it will soon become insolvent.
The ECB has its own issues, centering around its difficulty in securing support from banks in respect of balancing its sovereign bond purchases. Because banks are so unsure of what is going to hit them next, they wish to maintain liquidity. That means that they are no too keen on even depositing short-term money with the ECB.
When agreeing such initiatives, it is quite normal to “test the water” by soliciting the views of investors. Chris Frankel CFO and Deputy CEO of EFSF said ‘Following extensive discussions with investors covering all types and geographical regions, “a number of them” have given their positive views and signalled their willingness to participate.’
That simply means that institutions which are already government-underwritten will invest in lower-risk bonds as a result of centralised underwriting. Consequently, they will be willing (in theory) to accept lower bond yields.
All of the above is being promulgated as a “done deal” but others believe that the whole arrangement is far to complex and too difficult to understand. It certainly smacks of desperation.
What is really needed is a fund which can operate quickly and simply.
In spite of very strong opposition from Germany, it would seem that the only eventual way forward will be not-only for the ECB to start printing Euros. but to become European lender of last resort.
One thing is definite – the whole thing is hanging by a thread and just one more “Eurosurprise” would be devastating.
And the IMF? Another statement declared: “The 17 Euro Finance Ministers have agreed to work on boosting the resources of the IMF so it can “cooperate more closely” with the European Financial Stability Facility.” Make of that what you will.
One thing is for sure, everything MUST be done to boost the EFSF’s effectiveness and for the “stop-gap accords” to stop. So far, all the temporary “fixes” and retro-crisis-management have failed to protect Italy and Spain from surging bond yields and both Standard and Poors as well as increasingly cynical investors now have France in the crosshairs.
Today is a big day for the Eurozone.
The uncertainty is not helped by statements such as the one from EFSF Chief Executive Officer Klaus Regling who said “It is “impossible to give one number” for the total firepower of the EFSF because market conditions change over time.”
Or ECB President Mario Draghi saying that the ECB’s 18-month- old bond-buying program is “temporary and limited.”
In spite of all the meetings, organisational complexity and communiqués, there are still two vital ingredients missing – a coherent strategy and leadership with direction.
A Cunningly Disguised Bank Handout?
- £1 billion subsidy scheme to get young people jobs.
- Small Business Finance Scheme offering up to £1 billion of bank lending, guaranteed by the Government
- £1 billion guarantee facility to support bank lending to small exporters from the Export Credit Guarantee Department
- £50 million fund to convert businesses’ debt into equity
- £25 million regional loan transition fund to help businesses over the next six months.
BUT it’s not growth. It’s an allocation of money. Easy mistake.
(What about all the unemployed people who are over 24?)
Send for the taxpayer!
In those long-gone antediluvian years before electronic calculators, personal computers, Subway sandwiches, alcopops , female managers and the morning-after pill, there were dusty institutions with mahogany desks, huge ledgers, pound notes and dour-looking men in shiny suits with fountain pens in the breast pocket.
Those venerable institutions were called Building Societies.
They took money from their saving members and lent it to their borrowing members who wished to purchase a home. That’s what they did – and they did it all with real money. Leveraging (borrowing), Gearing (borrowing) and Bonds (borrowing) had not been invented – and if they had, it wasn’t the sort of thing that they needed (or wanted) to know about. Life was simple plus there was the bonus of a typing pool full of straight-backed sexy young typists whose drumbeat was set by the old crone at the front!
Here’s how money was lent and how they managed to lend MORE than the 70% maximum that Banks are currently lending. In those days, banks weren’t even allowed to lend for house purchase (just washing machines and refrigerators).
The mortgage underwriter (in those days, they he was called the mortgage “assistant” ) would decide on whether the “basic” maximum loan that the Building Society was willing to lend was 70% or 75%. Simple! (In very extreme cases – for instance, for properties which were only standing because the woodworm were holding hands – the maximum could be as low as 65% of the valuation).
However, there were MANY occasions when a borrowing member would be granted a mortgage of 90 or even 95%.
“How did they manage that?” I hear you ask.
Let us say that the borrower wanted to buy a nice big five-bedroomed house for £10,000 but could only find a 10% deposit. That meant that the Building Society needed to lend him £9000 (90% of the valuation).
The valuer would recommend a basic loan of say 75% which was £7,500. If the Building Society wanted to lend the borrower the full £9000, it would lend – but only after arranging a form of insurance for the difference – in this example £1,500. In this way, the risky top-part of the mortgage was insured by the Building Society.
So, if the mortgage went wrong, the insurance company would stump up any shortfall if the Building Society needed to dispose of the property in a forced sale.
It used to be called the Insurance Guarantee or I.G.
Why all this rheumy-eyed nostalgia?
David Cameron has just announced a new scheme in which banks will be able to lend more than they are comfortable with – and presumably, borrowers will be able to borrow more than they are comfortable with.
The risky top-part of the mortgage will be insured but, in keeping with modern ways, it will be the taxpayer (who else)? and not an Insurance Guarantee company who will accept the risk.
( I wonder who is advising Cameron these days? I bet he has a couple of fountain pens in the breast pocket)
Virgin on the Ridiculous.
“Bend over, George”
A huge slice of the financial services industry is under taxpayer control – or so we all thought. The truth is that a phrase such as “owned by the taxpayer” is a nonsesnse. “
“Bailed-out with taxpayer cash” is the only truth.
The Royal Bank of Scotland, Lloyds Bank, as well as Bradford and Bingley have been bailed-out using taxpayer money but in truth, there is nothing that we, the taxpayers can do , even if the Treasury decides to sell all of the the taxpayer bank holdings to say, Poundstretcher – for a pound.
The Eurozone is about to go “pop” so it must be a good idea for the government to take steps to remove the taxpayer from what promises to be a bloodbath and to put all the bailed-out banks back into private hands – at the same time remembering that demutualisation and placing bank ownership into private hands is what caused the problem in the first place.
The Chancellors USP appears to be that the sale of the good part of Northern Rock to the Virgin Group will inject much needed new competition into the banking sector.
No it won’t.
If Branson has any sense (which he undoubtedly has), the new Virgin Bank will be tarted-up and floated within a few years. No matter what Branson does, the fact remains that “the taxpayer” has been royally screwed to the tune of of up to £700 million. Once again, an example of professionals negotiating with politicians and Civil Servants.
As far as “injecting competition into the High Street” is concerned – that is no more than a tacit admission by the government of its failure to control the banks during their 20-year gorge-fest. Even now, banks continue to profit while economies “tank” and they do it with taxpayer money PLUS a government guarantee! The classic “We win, you lose because we cannot lose” scenario.
The remaining piece of Northern Rock – the quaintly-named Northern Rock Asset Management (NRAM) is still “owned” by the taxpayer. The pattern is as follows:
The Treasury gives away the profit-making bits and is forced to keep the remaining dross, ultimately taking yet another “hit”. Companies such as NRAM, Bradford and Bingley with their very poor mortgage books will deteriorate and become moribund as a result of their customers’ increasing unemployment and the consequent accelerating mortgage delinquencies. A classic “lose lose” situation.
Here’s something to spell out to all governments: There is no such thing as a profitable exit from taxpayer-funded government interventions in the financial sector. (As the Eurozone is beginning to find out.)
Politicians don’t “do” profit. Otherwise they wouldn’t be politicians. Ask Gordon Brown and his gold sale.
The Chancellor is patting himself on the back that (subject to FSA approval) he has managed to extract £747 from Virgin and that, in addition, he appears to have been paid 90% of the book value of Northern Rock (the bank’s assets minus its debts). Once the ink has dried on the contract, just watch Virgin Money revalue those assets – if they haven’t done so already!!
There are supposed to be a few additional payments to the government from Virgin. For instance – another £50 million by the middle of 2012 and a similar amount if the company is sold-on within five years. Best keep an eye on that!
Northern Rock used to be a great Newcastle-based Building Society – so it is a great shame to see yet another former fat northern lass stripped and screwed in such an undignified way.
Not-0nly has the Government lost at least £400 million on the deal (that’s in less than three years) but the mortgage delinquencies within the remaining piece of our former Geordie Giant will ensure further mega-losses for the hapless taxpayer.
No doubt, the government will soon want to do some more “businessing”.
For instance, our 83% stake in RBS plus our 40% stake in Lloyds add up to a cool £40 billion.
(Lloyds is currently the MOST likely bank to experience something akin to the 2007 run on the Northern Rock – especially as it is increasingly reliant on the rapidly seizing-up wholesale money markets. Its share price has dropped by over 15% in the fortnight since its CEO, Horta-Osório took stress-related sick leave. One to watch closely!).
It is only a matter of time before the Chancellor will appear on our screens to tell us that his sale of RBS and Lloyds at a £20 billion loss was a “good deal” for the taxpayer.
The Band Plays on………and on………
Markets are continuing to gyrate quite wildly and it will not be long before they finally wake up and pluck up the courage to realise that the nth solution to the Sovereign Debt crisis is not going to work any better than the (n-1)th solution or even the (n+1)th attempt next week. Greece is still bogged-down in a political and fiscal mess – in fact EVERY SINGLE DAY it is sinking further into the mire. Italy and its change of main players is also becoming unhinged, while everyone else in Europe is keeping their head well below the parapet, cringing in horror at the thought of having to produce increasing amounts of bailout money which DOES NOT EXIST. Countries such as the United Kingdom take scant comfort from changes in growth and forecasts measured in no more than a few basis points. Meanwhile bankers are bracing themselves for the tidal wave of “sell” orders which are about to swamp their offices. Suddenly the Christmas Holiday seems such a long way away.
Politicians and economists are hailing the apparent fact that the Consumer Prices Index (CPI) has fallen to 5.0% for the year ending October 2011. However what many (including politicians) do NOT understand is that this type of result can be caused by one of TWO factors.
It may well mean that prices have decreased from the previous month but by the same token, it can also mean that prices may have spiked in October 2010, giving an apparent October decrease one year later. So, rather than percentages, let us have a look at the ACTUAL CPI figures for September and October.
The CPI was fixed at 100 in 2005. That simply means that a basket of prices was manipulated to produce an easy starting point. So, for instance, if the basket of prices added up to say £510.20, that figure would have been divided by £510.20 and multiplied by 100. This “factor” is then applied to all future baskets of prices.
In September 2010, the CPI was 114.9 and in the next month (October 2010, it was 115.2)
In September 2011, the CPI was 120.9 and in the next month (October 2011, it was 121.0)
So, you can see that between September 2011 and October 2011, the CPI is continuing its upward trend, although the month on month annualised percentage figure tells a completely different story.
PRICES ARE ON THE INCREASE ALTHOUGH THE GOVERNMENT IS PATTING ITSELF ON THE BACK AS IF SOMETHING HAD BEEN ACHIEVED!!!!!!!!!!
These are the figures which the government uses: CLICK HERE (and the government’s own (ONS) figures will appear in a pdf format. Look in the Right-Hand Column).
Eurozone ‘faces sovereignty loss’
Eurozone countries will have to swallow “a big loss of national sovereignty” by pooling resources and control over fiscal policy to restore long-term stability to the single currency, Chancellor George Osborne has said.
Mr Osborne said that the global economy was at its “most dangerous moment” since the crash of 2008, with real risks to British jobs and growth.
But he insisted once again that the UK will not be part of any EU fiscal integration and will not bear the financial cost of bailing out the single currency.
Writing in the Evening Standard, Mr Osborne said: “The financial risks of standing behind the currency will ultimately be borne by eurozone citizens. The eurozone has the financial capacity to restore stability. They now need to deploy it without delay.”
Mr Osborne also restated his opposition to a Europe-only Financial Transaction Tax, warning that a levy on trading in shares and derivatives which does not include the US or China would be “economic suicide” for Britain and Europe.
The European Commission launched proposals for an FTT in September, and they have the backing of France and Germany, who think the levy could help finance the eurozone bailout. Meanwhile, campaigners want some of the revenues from a “Robin Hood Tax” to go towards aid for the poor world.
But the Chancellor said: “Proposals for a Europe-only Financial Transactions Tax are a bullet aimed at the heart of London… The EU should be coming forward with new ideas to promote growth, not undermine it.”
Despite “grounds for optimism” following the formation of new governments in Greece and Italy, Mr Osborne warned that “this remains the most dangerous moment for the world economy since Lehman Brothers went down in the autumn of 2008”.
And he added: “The epicentre may be across the Channel in the eurozone, but the risks to Britain are no less real.
“Jobs and growth in our country have already been damaged by this euro crisis. In such uncertain times, this coalition Government’s priority is to help Britain ride out this storm instead of being consumed by it.”
Copyright © 2011 The Press Association. All rights reserved.
The August riots and looting in London are being described as having “spread”, with references are being made to “copycat crimes”. The reason why the rioting “spread” from London to other cities is because it was advertised on BBC, ITV and SKY. A total news blackout would have contributed greatly to containing the crimes.
Syria has been suspended from the Arab League. “Suspended” is certainly a word which seems appropriate to apply to certain members the current Syrian regime.
This weekend’s goings-on in Greece and Italy have bought maybe two or three days of calm. The usual pattern is for another crisis to surface or for another set of tragic trading figures to materialise and once again, it will be back to square one. No matter how many noughts are added to various bailout schemes, it is the structural and political issues which need to be attacked. Putting bankers and Eurowonks in charge in Greece and Italy does not guarantee anything – in fact it looks like a very high-risk strategy with as much possibility of a positive outcome as there was under the previous regimes. The basic underlying numbers are exactly the same today as they were last week.
The moves by both Greece and Italy towards a Technocratic -style government are both reassuring and frightening. The increased complexity of global economics has really exposed elected politicians as being incapable of making the right decisions, except at the most superficial level. The worrying thing is that Austerity Economics has become a modern Mantra and so has come to be viewed as a modern divine truth. In fact, Stimulus Politics is what is needed. Currently, the cure is killing the patient. The United Kingdom experience is an excellent example of a policy which clearly demonstrates that austerity measures gradually KILL economic growth but that political dogma always wins out. Greece has been an extreme example where austerity has done little more than accelerate economic collapse. Italy has followed and now French austerity economics are set to cause even more economic havoc.
Gaddafi dead? Or Alive?
We don’t need any more sanctimoniously hypocritical nonsense about whether or not Gaddafi was “murdered in cold blood” or whatever….
Admittedly, because Gaddafi was not taken alive, the legal profession has missed-out on yet another Lawyer Bonanza – this one would have lasted YEARS. So perhaps a gunshot to the head was the best way to have dealt with old Muammar.
The fact is that when, on August 24th 2011, a Benghazi businessman offered a reward of £1 million for Gaddafi “dead or alive”, there was little chance of the Old Dictator ever having an Idi Amin-type retirement in Saudi.
I remember thinking at the time of the reward announcement, that it was a tad undignified and not very statesmanlike of Mustafa Abdel Jalil, Chairman of the National Transition Council of Libya, to endorse the reward for Gaddafi’s head. Especially as Jalil used to be Libya’s Minister of Justice.
Mind you, Jalil had been the very first senior Libyan politician to resign from Gaddafi’s gang (February 2011). That resulted in The Gaddafi regime offering a bounty of $400,000, for his capture.
Two days before supporting the “dead or alive” approach to Gaddafi, Jalil had said that people must “not take justice into their own hands”. He had also said that he hoped the dictator would be “captured alive.”
THAT will be Jalil’s big problem – how to prevent Libyan citizens from taking justice into their own hands.
Most will be pretty neutral on the “Democracy – no Democracy issue”. What they really want are the trappings of Western-style affluence.
So, once the big guns have been unbolted from the Toyota pickups and the AK47s handed-in and all 150 Libyan tribes decided to live in harmony – all will be well.
Otherwise, there will be a quite sudden slide into Iraq-type chaos as fundamentalists in oversized vests start going “boom” in crowded places.
(Looks as if Libya is about to receive its very first lesson in Western-style Democracy. The United Nations Human Rights office has called for an “full investigation” into Gaddafi’s death. Their very first Inquiry! Witnesses, statements, cross-examinations……..not a bad consolation prize for the Lawyers!)
José Manuel Durão Barroso is a very able, bright and distinguished politician. He is the lawyer-economist who is President of the European Commission.
His speech of 12 October 2011 to the European Council was going to tell the world what was going to be done about an issue which for the past two years, even during Middle Eastern revolutions, earthquakes and hurricanes , has consistently been one of the TOP THREE news items: The European Economic Crisis.
During that time, politicians, economists and bankers have adopted a strange general, non-specific tone, laced with metaphor and euphemism and we have all become seduced by this new trick of being told nothing, yet imagining that we have been told everything.
Last week, I analysed Bank of England Governor Mervyn King’s latest statement and found that true to form, it was flooded with generalisations and platitudes with a sprinkling of occasional metaphor.
Mr Fact has become a stranger and fear appears to have driven away the the art of realistic economic ambition and goal-setting.
Most of us have come across the goal-setting model S.M.A.R.T.
A goal has to be structured as follows. It has to be SPECIFIC, MEASURABLE, AGREED, REALISTIC and TIME-BASED.
So, if a politician says that “something will be done as soon as possible”, it fails on all counts. However, if a politician says (and the figures do not matter!):
” It has been agreed with all members of the Eurozone as well as the IMF and the ECU that the European Central Bank will hand-over $250 billion to the Greek Government on November 1st 2011 with an additional $50 billion on March 31st 2012″, then we have a definite statement of intent – a goal.
If a Chancellor said “The Austerity programme is NOT an open-ended precaution. On January 1st 2013, the VAT rate will be reduced to a zero rate until the end of the First Quarter 2014 and every viable SME with a turnover of less than £100,000 will be given a grant of £20,000” would also be a goal.
“Boosting Capital”, “Rebuilding Balance Sheets”, “Banks have to lend more” etc. are further examples of empty non-goal-based rhetoric.
The text of Mr Barroso’s speech is reproduced below. I have highlighted certain phrases.
Brussels, 12 October 2011
Presidency in office of the Council,
The European Council of 23 October will be held against a backdrop of urgency over the threat of systemic crisis now unfolding. There are many issues on the European agenda. The Minister of the Polish Presidency mentioned most of them. I will not of course go into detail of the many important challenges, from the conference in Durban to very important external items. I will today focus on the urgent response needed to the financial and economic crisis.
To break the vicious cycle of uncertainty over sovereign debt sustainability and over growth prospects, we need comprehensive solutions now.
In my State of the Union address to this Parliament two weeks ago I promised responses. Today we are delivering. I can announce that the Commission has just adopted a roadmap to stability and growth. And we have set out concrete terms and timelines to implement it. You are the first to whom I communicate the main elements of this roadmap. I am sending to the President of the European Parliament the document that we have first adopted some time ago.
Over the last three years, the European Union has come out with specific responses to different aspects of the crisis. Now is the time to bring them all together. To once and for all meet the depth of the crisis with a full comprehensive and credible response.
The elements in this roadmap are interdependent. They must be implemented simultaneously. They must be implemented immediately. This is the only way that the European Union can convincingly:
- Give a decisive clear response to the problems of Greece;
- Enhance the euro area’s backstops against the crisis;
- Make a coordinated effort to strengthen the banking system including through recapitalisation;
- Frontload stability and growth-enhancing policies and;
- Build a more robust and integrated economic governance.These are the five points of the roadmap I put before this House today and that I will take to the European Council on October 23rd as a coherent and comprehensive plan for Europe that embodies a Community approach.
Here is how.
First, on Greece, we need a decisive solution. Doubts and uncertainties over Greece’s future jeopardise stability in the entire euro area and beyond. The time has come to definitively remove these doubts. This means three immediate and sustained actions:
- paying the sixth tranche of the loans to Greece. The result of the Troika mission has sent a positive signal in this respect;
- deciding a sustainable solution for Greece within the euro area. This should be through an effective second adjustment programme, based on adequate financing through public and private sector involvement, backed up with robust implementation and monitoring mechanisms;
- We also understand that Greece must fully carry out its programme in a timely manner, with continued support from the Commission’s Task Force and maximised disbursement of structural funds focused on growth.
But there is a more general problem in the euro area.
Despite the assurances given by Heads of State or Government on 21 July to support countries under programmes, and despite their assurances that private sector involvement would be strictly limited to Greece, contagion risks have not been contained. To decisively put a stop to this threat that is hampering all our efforts, we must strengthen the euro’s firewalls. We must have credible, stronger instruments.
At the European Council I will strongly urge Heads of State and Government of the euro area to complete and complement the measures they agreed on 21st July.
This is crucial to give a much-needed injection of confidence to market participants.
It means making operational the agreements taken to increase the flexibility and effectiveness of the EFSF and the future ESM, to allow for precautionary programmes based on conditionality, on which the Commission and ECB should be consulted in advance. Stronger monitoring and surveillance could be included as part of the Stability and Growth Pact.
But, the EFSF must be more than just a firewall.
It should have real firepower. We should maximise its capacity.
And, to further cement the expression of unity and responsibility inherent in these crisis resolution mechanisms, we must accelerate the adoption and entry into force of the permanent ESM – preferably to mid-2012.
We must trust that the European Central Bank will continue to provide the background of financial stability necessary for all this to be done.
The strengthened and more flexible EFSF is in the interest of all euro countries, including the Slovak people. Our common currency plays a crucial role in investment decisions, in growth, in jobs, all over Europe. I commend those in Slovakia who have risen above partisan attitudes and voted in favour of what is important for all Slovak citizens, for the euro area and for the European Union as a whole. And I call upon all parties in the Slovak Parliament to rise above the positioning of short term politics, and seize the next opportunity to ensure a swift adoption of the new agreement.
The third element of the roadmap is the need for a coordinated approach to strengthen the banking system. Let us be clear – over the last three years huge efforts have been deployed to this end. Billions of euros in aid and guarantees. An overhaul of banking supervision. Boosting capital requirements and protecting citizens’ deposits.
However, all this has not yet been sufficient to lift the weight of uncertainty hanging over the banking system, or to halt the volatility and pressure on the European banks. While these doubts persist and spread, sufficient confidence cannot be restored to allow liquidity to flow again and to oil the growth that our economies so badly need. For confidence to return we need to fix the sovereign debt problem, which can only be done through a coherent package.
We must therefore urgently strengthen the banks, because in fact those two issues – the sovereign contagion and the banks are now, whether we like it or not linked. This must be coordinated through the Member States, the European Banking Authority, the ECB and the Commission. The strategy should comprise 5 key steps:
- It should include all potentially systemic banks identified by the European Banking Authority across all Member States;
- It should take account of all sovereign debt exposure in full transparency;
- It should involve a temporarily higher capital ratio after accounting for exposure;
- Banks that do not have the required capital should present and then implement plans to have it in place as swiftly as possible. And until they have done so, they should be prevented from paying out dividends and bonuses by the national supervisors.
- Banks should use private sources of capital first. If necessary the national government should provide support as a next step, as a last resort, drawing on a loan granted from the EFSF. Any public support should be compatible with the state aid rules. The Commission intends to extend the existing state aid framework for bank support beyond the end of 2011.
Naturally, details on capital ratios and evaluation methods should be proposed by the EBA with national supervisors, who are best placed to judge on this.
At the same time, the ongoing work on a new financial regulation system should be completed as swiftly as possible. To that end, the Commission will present its remaining proposals to implement the full G20 commitments by the end of this year. We also urge rapid adoption of the Financial Transaction Tax I presented to you two weeks ago.
The fourth element is to frontload policies that consolidate stability and boost growth.
We all know that most Member States do not have much room for fiscal stimulus. Those who have should use it. However, all Member States do have at their disposal means to implement structural reforms, to focus spending on priority areas, and to remove obstacles to growth.
As I said to you in my State of the Union address, growth is within our reach if we can break down the barriers that stop money, services and people flowing through our Union as they should.
This means first – getting more out of what has already been agreed at the – European level.
I am talking about implementing for instance the services directive, delivering on the digital agenda. I’m talking about maximising our trade agreements.
These are measures we can take today, that don’t require significant additional investments or budgetary effort, but that can have immediate and significant benefit for our companies, for our citizens, for our economy.
This means second – accelerating adoption of what is on the table. There are many proposals on the table that we can fast-track for adoption. I am talking about unitary patent protection. I am talking about the energy savings directive. I am talking about concluding ongoing trade agreements.
And it means third – fast-tracking the most urgent growth-boosting proposals. I am talking about the Single Market Act, about forthcoming proposals to facilitate access to venture capital because today there is a lack of venture capital in Europe and this is especially felt by SME’s. I am talking about the Young Opportunities initiative to increase youth employment.
And where agreement on fast-tracking proves difficult, we should be able to use enhanced cooperation so that those who want to move forward are not held back. Frankly dear members of the Parliament it is time to say that the speed of the European Union should not be the speed always of its slowest member. We need sometimes to use reinforced cooperation.
All this should be done in conjunction with targeted investment at European Union level, such as through the Europe 2020 Agenda where we propose also our Project Bond Initiative, the Commission will propose it next week, and will maximise the resources of the European Investment Bank so that it can lend to the real economy.
So reforms, implementation of everything we have agreed and also try to fund some of these efforts through new sources of investment using the appropriate instruments we have and some we can create like the Project Bonds.
The fifth and final element of the Commission’s proposed roadmap to stability and growth is the pursuit of sound economic policies by the Member States, especially of the euro area, reinforced by stronger Community governance.
We now have the six pack– and I thank you for your support in getting the ambitious proposals approved. We have the European Semester and all that it entails in strengthening governance. But we must go further to match the ambitions of our monetary policy with those of our economic policies. As we have said we have to complement the monetary union with a real economic union. The future of the single currency also depends upon it.
In its roadmap, the Commission is proposing a much stronger euro-area dimension in planning, implementing and assessing national policies. This dimension is backed up by strict constraints enforceable at the Euro-area level and is based on an enhancement of the Community approach, which will reinforce the role of the European Parliament in economic governance. We will further reinforce the role of the Commissioner for economic and monetary affairs in full respect of the Treaty.
There are other actions we can take very quickly, without change in the Treaty:
- We must improve working methods and crisis management between the European Commission, the European Council and the Eurogroup. Proposals to this end will be made soon, in line with the agreements of 21 July, by the President of the Council, Commission President and President of the Eurogroup and the aim is to have a more streamlined process between the Euro area summit, the Eurogroup and the Euro area working group.
- Second, we should streamline and reinforce the instruments we have. Not only by rapidly implementing the six-pack, but also by strengthening the European Semester by intensifying surveillance and integrating the Euro Plus Pact into the Semester – hence reinforcing the Community method in the Union.
- And we must also go further than the measures set out in the six-pack, by setting out provisions for strengthening the economic and budgetary surveillance of Euro area Member States requesting or receiving financial assistance from the EFSF, ESM, or other institutions. The Commission will make a proposal to the Council and the European Parliament under Article 136.
- We must monitor the national budgetary policies of Member States in excessive deficit procedure or countries under programmes through a Commission-Council procedure which will enable the European Union to intervene. For example, in serious cases it could request a second reading of draft budgets, to suggest amendments in the course of the year and to monitor budgetary execution. The Commission will make a proposal to the Council and the European Parliament under Article 136 setting out the graduated steps and conditions that should apply in such cases. You see, honourable members, that we are really speaking seriously when we mention we urge for more discipline, more integration. It means more Europe that, I think, should be the goal of all of us.
- All this is in addition to the proposals on a more unified external representation for the Euro area and options for ‘stability bonds’ the Commission will bring forward by the end of this year.
One final point on governance – In the State of the Union address I said the Commission would present a single, coherent framework for better economic governance based on the Community method. We are developing that right now.
The proposal will ensure the compatibility between the euro area and the Union as a whole. It will be done in a way that aims to integrate the Euro Plus Pact because coordination and integration must be carried out on a single, Community level. How can we speak about coordination and integration in a disintegrated manner. It is obvious that we need a Community approach to do that. Yes, we need stronger governance. Yes, we need the Euro area heads of government to meet more frequently. But no, we do not need to create yet more institutions or yet more titles, when we already have the structures in place to do the job.
It is essential that we do not create a division between the 17 members of the euro area and the 27 members of the European Union – most of whom wish to join the euro. Such a division could deeply harm the European Union as a whole, put in question the Single Market, be an invitation for renationalisation of Community policies. That is why we need to have stronger governance for the countries that are in the euro area, but have it in full compatibility with the rules and the acquis for the European Union as a whole. This is why it is essential to keep the Community institutions – this European Parliament, the European Commission – at the core of the process of coordination and integration.
The role of these institutions is also to guarantee this link, to guarantee that no Member State is jeopardised, to guarantee that Europe remains strong and united.
The solutions to Europe’s crisis, I believe, are known by most of us. But to grasp them requires courage and political will. To do so is to fully acknowledge our interdependence and to take a bold leap towards further integration. The problem of Europe is not too much integration. It is in fact a lack of a European approach. Such changes to the nature of our Union may need to be enshrined in changes to the Treaty. Changes that must keep the Community method at their core.
But one thing is for sure – as the crisis narrows in on us, I see no other option but to act now, so the fact that we are considering for the future more ambitious changes should not be an excuse not to adopt the decisions now and this is why we need to act together in a unified and coherent way.
This crisis is not partial. The response cannot be partial. Our responses cannot be piecemeal. That is why this roadmap is a single, comprehensive approach and all its elements must be implemented in parallel.
This is the message I intend to take to the European Council on 23rd October and for which I would like to have your support – the support for a united and stronger Union.
Thank you for your attention.
You know when an organisation, government or even a collection of governments is in trouble. The directors, senior management – the leaders – instead of thinking strategically, concern themselves with day-to-day issues.
Some call it Crisis Management.
That’s exactly the zone in which Eurozone politicians are currently operating.
I share the frustration of many others who have been watching the painfully slow process that Eurozone leaders have embarked upon in respect of the terrible and complex financial mess which currently envelopes Europe. In spite of their rank, it would seem that many high-level politicians are incapable of reaching decisions within an appropriate time-scale. Hence the sudden appearance of the ” kicking the can along the road“, ” into the long grass” and the other modern economic metaphors.
We are all frustrated.
The decision-making processes at National and pan-National level are based on the depersonalised mechanistic value system of bureaucracy-based thinking.
However, we live in a very turbulent environment in which many activities – especially those affecting economies have become both differentiated as well as interdependent. In addition, there has been a subtle change in organisational values which have become more based on humanistic-democratic ideals.
Political decision-making is now lagging behind and, under the guise of “democracy”, refuses to become more adaptive and integrated in order to meet the rapidly changing economic and political environments which, from now on, will remain in a constant state of flux.
To put it simply – by the time politicians have provided a solution to a problem, they have been overtaken by the next issue which makes their initial solution redundant.
Decision-making groups should be thinking along organic rather than mechanical lines and leadership and influence should fall to those who seem most able to solve the problems rather than to pre-programmed role expectations – especially those tainted by various flavours of political dogma.
We need adaptive temporary systems of diverse specialists, co-ordinated through say, non-political civil service link-pins to replace the current theory and practice of political bureaucracy.
Imagine, say our current economic issues being solved by individuals who are differentiated not according to rank or role but according to skills.
Certainly NOT politicians.
Currently, the same politicians who decide how often our bins are emptied or the number of hospital beds, are the same ones who make multi-billion economic decisions.
So, hopefully someone somewhere will have the will and the strength to realise that our present decision-making processes at “Macro (international) level” are outdated and ineffective.
The future is with more “Organic-adaptive” structures.
In addition, a combination of centralised and decentralised control mechanisms needs to be adopted – control mechanisms which recognise that , for instance, the various Euro states are significantly different from each other and therefore require different methods of both management and control.
Half-hearted attempts at control such as the largely discredited occasional bank stress-tests or toothless financial “authorities” are just that – cosmetic attempts.
The solution to the flaky political decision-making process is not intellectual – it is organisational.
Might as well make it £200 billion, Merv .
Below is the statement issued yesterday by the Bank of England’s Monetary Policy Committee. It defies comment because it runs out of facts after Line 2 of the first paragraph.
Paragraph 2 is no more that the usual retrospective “No shit, Sherlock” statement which has become the Bank of England’s trademark.
Within the statement, I have highlighted the words which give a clear indication of the overall wishy-washy tone which Mervyn King and the Monetary Policy Committee have made their own.
The £75 billion which is being pumped into the system is more-or-less an arbitrary figure and purely cosmetic – because it was deemed time for someone to take action.
Why Quantitative Easing? Because this is the only item remaining in the monetary toolbox.
Politicians and Central Bankers are out of ideas. This latest initiative is the Bank of England’s own version of Pin the Tail on the Donkey.
An increasing number of individuals who understand the mechanics of the global economic system agree that we are rapidly approaching a time when governments should simply guarantee bank customers’ deposits and allow certain banks to finally fail and introduce a more direct form of QE to stimulate production and encourage consumers to consume.
Attempts to stimulate an economy by filtering cash into moribund banks merely pushes the recovery horizon further into the distance.
MPC STATEMENT 6TH OCTOBER 2011:
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £75 billion to a total of £275 billion.
The pace of global expansion has slackened, especially in the United Kingdom’s main export markets. Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery.
In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated. The squeeze on households’ real incomes and the fiscal consolidation are likely to continue to weigh on domestic spending, while the strains in bank funding markets may also inhibit the availability of credit to consumers and businesses. While the stimulatory monetary stance and the present level of sterling should help to support demand, the weaker outlook for, and the increased downside risks to, output growth mean that the margin of slack in the economy is likely to be greater and more persistent than previously expected.
CPI inflation rose to 4.5% in August. The present elevated rate of inflation primarily reflects the increase in the standard rate of VAT in January and the impact of higher energy and import prices. Inflation is likely to rise to above 5% in the next month or so, boosted by already announced increases in utility prices. But measures of domestically generated inflation remain contained and inflation is likely to fall back sharply next year as the influence of the factors temporarily raising inflation diminishes and downward pressure from unemployment and spare capacity persists.
The deterioration in the outlook has made it more likely that inflation will undershoot the 2% target in the medium term. In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the Committee judged that it was necessary to inject further monetary stimulus into the economy. The Committee therefore voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £75 billion to a total of £275 billion. The Committee also voted to maintain Bank Rate at 0.5%. The Committee expects the announced programme of asset purchases to take four months to complete. The scale of the programme will be kept under review.
THIS is yesterday’s letter from the Governor of the Bank of England to the Chancellor of the Exchequer. Perhaps the letter-writing ceremony, together with ribbons on MPs’ coathooks into which they can hang their swords, ought to be consigned to the poubelle of history!
This statement about the British: ” Crap food but such LOVELY manners” should be rewritten: “Crap economic policy but such LOVELY letters and statements”
Cameron’s Speech – the Tevez Way!
Yesterday, during David Cameron’s Speech to the Conservative conference, I took off my microphone and left it in front of the radio . Unfortunately, I forgot to switch-off the mic.
The mic was still connected to my voice-recognition software which as some of you may know, is tuned just for my voice.
Below is the result. The scary thing is that it makes perfect sense – with a twist of Tevez (and Stanley Unwin).
I have not included the whole speech ( for health reasons!)
This week’s Liz Barclay at show discipline the unity and that is that is a lot of classy. I’m proud of my team and I are members and gradually the art but most of all I’m proud to you made this week the success that I believe it. Then run on it and run people have very clear instructions. The site of this economic is a way that is fair and right as you don’t please build something worth while for us and our children. Clear instructions clear objectives and really a clear understanding that any times is leadership and to get are probably get our society works at Hay.
Pitiable while the options to show everyone what would really is the first. I’ll say something to everyone in this will add despite predictions in one elections are wrapped treatments may to S a great campaign or one Hassan (of the something in the AEE). Get you a certain is that you keep that institutional banking system up the political agenda. Bred generations about the benefit of the next letters make sure with the gay week by Boris and wiki London observance of all is this is all inserted.
It went when the schedule is so much that the spirit of what some in Bristol which reporting all your books well below is very carefully at. But my colleagues chose George knew exactly what you want a widespread that the matter would begin so either over or is is that instead he chose the joy site. Are the one I chose person I said Ken this little crime and punishment I’ll read it twice.
Yesterday we should all be reading what it is likely they were children and that you remember what it helps the police to catch the blood that will keep in touch. And hours that never were and earlier this year some people said it here that is not our concern the business don’t let anyone say that it wasn’t in our national interest will remember what exactly did you know it’s sent text the IRA immobilisation. And the police officer in a square and is not what they may disguise a weblog so I say let us be right what we did doubt if it will take back that much of it in the remaining within writing is greatly any little rock of it.
Wales will benefit baby and we are on target to bring the low end of 2040 days in a incredible origins and I know that everyone is all want to send a message in to our Armed Forces in our beliefs. And to those of you who keep a safe terrorism on streets we are proud of what you write leadership will that will bring as much.
A right of the month ago I was in Nigeria on a trade mission while I was there I visited acceleration and experience I will never again. It was very hot bring basic allowance. Go on but in the 80s is that was once one of the nurses told that it was made many of the babies and employers time this country will help vaccinate all the world’s poorest children are now able to do what they will make sure you’re on a post-it note will do it where it is an account but I elegantly in spite of all out of this the right thing to do it in our country and our people never turn our backs on the world’s poorest and I believe.
I will never pretend there are shortcuts to success. Success will come with the right idea right to write leadership. Leadership job to set the direction was taken and the choices you must make but you should also do for the end that will read another success of our politicians. Or double if the people and the spirit of some people say that to succeed in this world we need an eye on the approach I will still I say to you by us the real us hard-working high end and yet optimistic carried out as a spirited and I’m thinking it’s a small country that does read it while boasting a successful history.
Of one of… I believe is alive and well today. I set to Sydney Roberts headteacher I note in Norwich who started a response from scratch at South Alterman oversubscribed what her ambition to do it all over again and leadership. I see it did not object easy access to technical the network patients in the country free treatment in our history the RHS and leadership. I said in all we saw this he watched the rise and fall onto the set now they are just be the chance to clear up kicker.
It is set out all without this started social people picked up rooms and reclaim our streets to the argument I want to make today leadership works I know how things are 1 min underestimate how I repeat the weather is about making ends meet state of the world the truth is right now when the amateur is not paralysed by group the of the world as long.
Sells – it is describing it and the rest just let them decide what is written about our country we don’t set that success in this century automatically belongs is just have to remember the origin. She the people Britain taking it as why much of it was much more why each is about unleashing your English chance to see the opportunity sub for a while and get it done again.
Everyone wants to build it, but are working on taking responsibility will be well rewarded and Solaris project the pessimism that rebel group is this some energy at right I’d better get your rock country rate in Britain. It wasn’t so it will we should do it is the right as you it was that so many people actually written could do something like that and any of your fellow passengers the economic future of social and political system our best days are behind is where I’ll certain.
I’m here to tell you at Sydney is true because they said around and hope the best the rest will need a spot in a cell with raw network society and our children which will give ourselves we can get these things at black corrected us states that fronting best interest they’ll likely as well and you put in thethat’s desirable at a meeting in Manchester the threat to the world the following and written is as serious as in 2008 when world recession the Eurozone is in crisis threat even people finds the normally require.
You were this time it’s not like people to know that the good times so long in coming the answer it’s straightforward about this was in session the things will work with you to get the clear understood into recession.
“E7?” I hear you ask: China, Brazil, Mexico, Indonesia, Turkey, India and Russia.
In terms of economic output, these are the countries which will overtake the increasingly arrogant and shaky G7 cartel. It will happen within a generation and has been predicted by both Goldman Sachs and Price Waterhouse.
Apart from Turkey, all of the E7 are “over there somewhere”, whereas Turkey is on our doorstep – and we would do well to pay attention.
For the moment though, let’s park Turkey back within the G20.
You may be forgiven for not knowing that last year, the The Turkish economy recorded the third-fastest G20 growth rate. The country was untouched by the current economic crisis and not a single Turkish bank failed.
Almost modestly, the Turkish government slid onto the World stage and presented itself as the voice of reason during the Libyan crisis.
They seem to be doing a lot right.
The Turkish community is the United Kingdom numbers about half a million – about 150,000 Turkish nationals with the rest of Turkish-Cypriot origin. They represent the epitome of integration, whilst maintaining their own traditions as well as contact with their country of origin – and the don’t make a noise about it.
Almost unnoticed, we have our first-ever woman of Turkish-Cypriot origin to be elected to the House of Lords: Baroness (Meral) Hussein-Ece . She’s already making an impact and adding a bit of much-needed administrative experience and glamour to what was rapidly becoming a Westminster rest-home for bilious ex-MPs.
She is a Liberal – but you can’t have everything! Seriously though, the important thing is that in what appears to be a Turkish trait, she is a straight talker – another attribute which has been sadly lacking in the recent political universe.
I was going to say “Turkey is Coming!” – but it seems that it’s already here!
Baroness Meral is on Twitter and very worth following (@meralhece ) because her opinion on a variety of topics is now regularly sought by the media and whenever she can, she shoots from the lip!
This, for example, is a link to her interview today on Radio 4: CLICK HERE
Many of us are already smitten!
Greece and the Deutschebond
Hopefully, Europe is NOT relying on yesterday’s conference call between Angela Merkel, Nicolas Sarkozy and Greek Prime Minister, George Papandreou.
Lets not beat around the bush. The Greek government lied in order to gain entry to the Eurozone. It did it with the connivance of Goldman Sachs who were paid $190 million for their trouble. CLICK HERE.
Euro auditors ought to be in Athens performing Due Diligence in order to make sure that the numbers stack-up and more importantly, that Athens really is making progress and reducing its budget deficit.
The days of “My word is my Bond” are over.
Greece is an economic Basket Case which will be a drag on the Eurozone economy for ever. Historians will also know that Greece tends to make a habit of going bust and defaulting.
The destructive influence of Greece is now causing rifts within Europe and there is now a very real danger of the German government disintegrating.
Finally, empty pronouncements by senior European officials which are designed to manipulate Stock Market prices MUST stop.
The ONLY morsel of common sense was delivered yesterday by Guido Westerwelle, Germany’s Foreign Minister. He said: “….we believe you can’t fight debt in Europe by making it easier to take up debt.”
We all know that economic GROWTH is the answer. That’s something that Greece will not be capable of for years – if ever.
I pointed out a few days ago that it seemed as if there was an orchestrated effort by politicians and bankers to put-out weekly or bi-weekly “Statements of Intent” — purely in order to placate the Markets as well as to postpone the inevitable collapse of the Euro. That means NOT actually doing anything but promising to do something, sometime in the future. It’s the new “Weapon of Choice” for politicians whose ideas have run out.
THIS week is shaping up as a very special example of this comparatively new phenomenon.
Today, the Markets have responded well to yet more wind and wee from a politician. So whose turn was it THIS time?
None other than European Commission President himself – Jose Manuel Barroso!
Let’s have a close look at what he said and maybe ascertain whether his statement actually contains any “doing” words.
He said that he will put forward moves to tackle the Eurozone crisis. “Put forward”? “Moves”? What moves?
He will urge the Eurozone countries to issue joint bonds. “Urge”? “Joint Bonds”? How will he “Urge”?
Unsurprisingly, Italian Finace Minister Giulio Tremonti supports Eurobonds. Italy is vastly over-borrowed – to the extent that its attempt to borrow even more from China was given very short shrift by the Chinese – even though the Italians were offering security.
The fact that George Soros (no less) has backed the concept of Eurobonds was weaved into the equation. Ancient George’s ONLY motivation is to save Uncle Sam – not Greece or Italy.
The main player in the Eurofarce , Germany, is NOT even remotely interested in the Eurobond because, effectively, it with be the “Deutschebond”. German Charity.
Barosso wants a United States of Europe. Pure and Simple.
He went on:
“I want to confirm that the Commission will soon present options for the introduction of Eurobonds.” Soon? How “soon”, Jose? “Options”? WTF?
Jose does NOT give up easily: “Some of these could be implemented within the terms of the current treaty, and others would require treaty changes.” “Treaty changes“, Jose?
That’s lots of meetings and could take years. That might just keep the markets interested!
He really declared his hand when he said that “the measure” on its own was not enough to solve the Eurozone debt crisis. (What “measure”, Jose? So far,we’ve only heard Eurobullshit)
He said Europe needed a “Federalist Moment” to rescue it. He argued that the solution to the crisis would have to involve the “Community method” which presumably, like the Rhythm Method involves someone being screwed. For instance: the Taxpayer and the Investor?!
( Isn’t it amazing how few NUMBERS there are in a statement about fiscal deficits?)
Dans la merde or in der Scheiße?
I just have a look at the European stock markets and on the surface everything appears to be quite normal.
The banks are doing especially well!
Today’s showing in the markets is the most clear indicator so far, as to the utter confusion generated by the intransigence and incompetence of senior politicians.
Today President Nicolas Sarkozy of France and Chancellor Angela Merkel are involved in pointless discussions with Greek Prime Minister George Papandreou. Why pointless? Because they probably all began their telephone conference chat with this afternoon’s communique already written.
Chancellor Merkel has expressed the schizophrenic views of the Eurozone. She has stated that the Eurozone will not allow Greece to default but on the other hand Greece will not secure access to the next 8 billion euro bailout unless new budget cuts are made.
Greece will be running out of cash in about three weeks.
Everyone, understandably, is beginning to feel frustrated and impotent at the pace of the so-called rescue package.
If the Eurozone is serious about the Greek bailout, the cash should be handed over today. That more than anything will placate the markets which must by now be feeling as if they’re on a bad acid trip. The current situation is certainly a candidate for the old 1960s hippie slogan ‘Stamp out reality’.
In reality though, the politicians will wish to leave all options on the table rather than make a move which could be catastrophic. The fact is that whichever move they make, there is bound to be either a national catastrophe or a pan-European catastrophe. More likely both.
That in turn will generate an American catastrophe ; the U.S has been teetering on the edge for many months.
There is only so much time that we can all just stand staring into the abyss.
Currently we are all keeping an eye on Ben Bernanke and the Federal Reserve, because we fully expect them to start printing money at any minute.
In fact we should be looking at the French because it cannot be too long before they make a similar decision – and they will probably ink their printing presses well ahead of the Americans.
If the French go ahead and print money in order to provide a cushion for the French banks against a Greek default and the Greek default overhead anyway, it will be the equivalent of them having unnecessarily dumped billions of euros.
Unfortunately, that’s the ONLY plan which the French government has.
Today, the United Kingdom has announced another 80,000 unemployed between May and July. That is NOT the sign of an economy in recovery. THAT is the sign of an economy still in recession. The official unemployment figure in now in excess of 2.5 million. In fact, the actual number has probably been in excess of 3 million for quite a while.
In recent months there has been a bit of Schadenfreude-induced gloating from the United Kingdom’s senior politicians and commentators in respect of the Eurozone’s woes. That will stop very soon – as our meagre exports dry up because no-one in Europe has the cash to pay for them.
It is not just the Eurozone which is crumbling, it is EUROPE.
It is NOT just the European Economic Class System which is going to be everyone’s downfall. It is NOT because the “HAVES” dictating to the “HAVE-NOTS”.
On a macro level, the vast socio-economic differences within the Eurozone do no more than reflect socio-economic differences within individual states.
They tried an experiment whereby the poor (countries) were expected to compete with the rich and as we should all know by now, this type of “Faux cross-border Socialism” can never work.
There can always be “liberté” and “fraternité” between such disparate states but there can never ever be anything even vaguely resembling “égalité” between the rich and the poor.
In the Eurozone, some are definitely more “égal” than others.
Currently, the more equal are terrified that the less equal will take them down.
(Personally, I believe that Greece will be allowed to default. Glad I kept those Drachmas!)
The Greek Entry.
Last week I predicted that it was Sarkozy’s turn to deliver yet another mealy-mouthed statement. Looks as if it’s this afternoon!
The question is CAN he save the French Banks whilst convincing an increasingly cynical public and sceptical markets that it’s all about saving Greece?
Money Market Funds have been selling French Bank Shares for about a year, during which time they have reduced their holding in French banks by about 50%.
After Sarkozy (or Angela Merkel) tells us that Greece is “doing the right things” or that ” it is making good progress“, it will be interesting to see what the markets make of it all.
The MOST likely outcome of today’s meeting between Sarkozy, Merkel and Greek Premier Papandreou is a statement indicating that Greece needs more time.
The Euro and the Eurozone both need time – another commodity which is fast disappearing.
Today’s summit has an interesting sub-plot. Rating agency Moody’s has just downgraded France’s two major banks. Credit Agricole has been busted down from Aa1 to Aa2 and Société Générale from Aa2 to Aa3.
Once again, this has come as both a surprise and relief to the experts because the downgrades were “not as bad as expected“. It seems that these days, NOTHING is as expected.
For politicians and most economists, these are indeed The Days of Mystery!
The seriousness of not-only the Greek but the entire Eurozone situation is exemplified by the fact that The US treasury secretary, Tim Geithner, will be attending Friday’s meeting of EU finance ministers.
Even the Americans can see that Greece is the No1 domino!
The hard fact is that Greece ought never have been allowed to join the Euro. It was a predictable accident waiting to happen.
As many politicians will attest – especially those who attended boarding school, the “Greek Entry” was always going to be painful.
After three years, the scales have fallen from our eyes and finally, the light has flooded in. It has been long time coming but suddenly – an Epiphany!
The politicians, bankers, economists and even the Central Bank astrologers have absolutely NO IDEA as to how to deal with the gradually building waves of a massive economic crisis which is about to sweep the world. They’ve been gambling that random fiscal and economic measures would somehow provide a solution and make everything well again!
Money has been printed and distributed, bonds have been issued, promises have been made, false political visions have been shared and yet the self-amplifying problem continues to self-amplify.
Some of us finally realised that the Eurozone had run out of ideas when the German authorities temporarily banned “naked short selling” of Eurobonds. The action had absolutely NO effect. However, it did demonstrate that the politicians (who initially blamed the bankers for the pit of shit that they had help to create) were now turning a rheumy eye on everyone’s new bête noire – the SPECULATORS!
Bankers were greedy bastards with large bonuses but now it was the turn of the “casino-banking” speculators. Spit!
In any crisis, it is always a good idea to look for the root or initial cause. In the case of the Euro and the Eurozone it was an ill-conceived plan which , without tighter integration of fiscal policies between states was doomed to failure.
Make no mistake, the increasingly pathetic bleating of the French and Germans in respect of the looming Greek collapse and default has absolutely NOTHING to do with Greece.
It is all about their joint delusive attempt to prevent the inevitable collapse of their banks – which are holding billions in Greek IOUs. Nothing at all to do with Franco-German altruism.
As the French and Germans intertwine, hug each other and panic, their assault on the “speculators” and the markets , although understandable is also ironic. Why? Because eventually, the Western-European begging bowl will be waved at the markets and the “speculators” – in the vain hope that they will lend the impoverished Eurozone BILLIONS so that the sacred Euro cow can be reprieved.
Biting the hand that could feed you is never a good plan but currently, the markets are dealing with increasingly desperate politicians who have painted themselves into a Euro corner with absolutely NO way out.
Euro and Western economies in general are in debt – both in the public and private sectors. Several countries are bankrupt.
The only REAL solution is GROWTH which unfortunately is NOT achieved by insisting that the weakest economies attempt to restore growth through the unusual and meritless medium of The Austerity Plan.
Austerity gains you a lot of points with the rating agencies, makes it easier for you to borrow more but in the long-term, it is NOT a sustainable strategy – as we in the West are ALL about to discover. Overborrowing is what caused the problem in the first place.
The economic affliction is the mire of public and private sector debt and uncompetitiveness into which the weaker economies of southern Europe have sunk.
The cure should be to create an atmosphere for economic growth.
Unfortunately, the generally accepted (unproved but imposed) speculation is to force broken countries to try and balance their budgets and restore economic growth whilst slashing expenditure and demotivating taxpayers through increased unemployment, inflation and the resultant decimation of tax-revenues.
It will NOT be long before the inevitable wake-up call is heard!
Casino economics does not work.
Wondering where real decisions are made? This is a list of attendees at this year’s Bilderberg Conference.
The conference is held annually with about 140 participants. This year the conference was on 11th June at the Suvretta hotel in St. Moritz, Switzerland.
If you scroll down the list, you will see familiar names. The Great Britain delegates’ list is particularly interesting. George Osborne was an attendee for a few years before he became Chancellor.
The list is incomplete because certain delegates requested anonymity.
· Coene, Luc, Governor, National Bank of Belgium
· Davignon, Etienne, Minister of State
· Leysen, Thomas, Chairman, Umicore
· Fu, Ying, Vice Minister of Foreign Affairs
· Huang, Yiping, Professor of Economics, China Center for Economic Research, Peking University
· Eldrup, Anders, CEO, DONG Energy
· Federspiel, Ulrik, Vice President, Global Affairs, Haldor Topsøe A/S
· Schütze, Peter, Member of the Executive Management, Nordea Bank AB
· Ackermann, Josef, Chairman of the Management Board, Deutsche Bank
· Enders, Thomas, CEO, Airbus SAS
· Löscher, Peter, President and CEO, Siemens AG
· Nass, Matthias, Chief International Correspondent, Die Zeit
· Steinbrück, Peer, Member of the Bundestag; Former Minister of Finance
· Apunen, Matti, Director, Finnish Business and Policy Forum EVA
· Johansson, Ole, Chairman, Confederation of the Finnish Industries EK
· Ollila, Jorma, Chairman, Royal Dutch Shell
· Pentikäinen, Mikael, Publisher and Senior Editor-in-Chief, Helsingin Sanomat
· Baverez, Nicolas, Partner, Gibson, Dunn & Crutcher LLP
· Bazire, Nicolas, Managing Director, Groupe Arnault /LVMH
· Castries, Henri de, Chairman and CEO, AXA
· Lévy, Maurice, Chairman and CEO, Publicis Groupe S.A.
· Montbrial, Thierry de, President, French Institute for International Relations
· Roy, Olivier, Professor of Social and Political Theory, EUI
· Agius, Marcus, Chairman, Barclays PLC
· Flint, Douglas J., Group Chairman, HSBC Holdings
· Kerr, John, Member, House of Lords; Deputy Chairman, Royal Dutch Shell
· Lambert, Richard, Independent Non-Executive Director, Ernst & Young
· Mandelson, Peter, Member, House of Lords; Chairman, Global Counsel
· Micklethwait, John, Editor-in-Chief, The Economist
· Osborne, George, Chancellor of the Exchequer
· Stewart, Rory, Member of Parliament
· Taylor, J. Martin, Chairman, Syngenta International AG
· David, George A., Chairman, Coca-Cola H.B.C. S.A.
· Hardouvelis, Gikas A., Chief Economist, Eurobank EFG
· Papaconstantinou, George, Minister of Finance
· Tsoukalis, Loukas, President, ELIAMEP Grisons
· Almunia, Joaquín, Vice President, European Commission
· Daele, Frans van, Chief of Staff to the President of the European Council
· Kroes, Neelie, Vice President, European Commission
· Lamy, Pascal, Director General, World Trade Organization
· Rompuy, Herman van, President, European Council
· Sheeran, Josette, Executive Director, United Nations World Food Programme
· Solana Madariaga, Javier, President, ESADE
· Trichet, Jean-Claude, President, European Central Bank
· Zoellick, Robert B., President, The World Bank Group
· Gallagher, Paul, Senior Counsel; Former Attorney General
· McDowell, Michael, Senior Counsel, Law Library; Former Dep. P.M
· Sutherland, Peter D., Chairman, Goldman Sachs International
· Bernabè, Franco, CEO, Telecom Italia SpA
· Elkann, John, Chairman, Fiat S.p.A.
· Monti, Mario, President, Univers Commerciale Luigi Bocconi
· Scaroni, Paolo, CEO, Eni S.p.A.
· Tremonti, Giulio, Minister of Economy and Finance
· Carney, Mark J., Governor, Bank of Canada
· Clark, Edmund, President and CEO, TD Bank Financial Group
· McKenna, Frank, Deputy Chair, TD Bank Financial Group
· Orbinksi, James, Professor of Medicine and Political Science, University of Toronto
· Prichard, J. Robert S., Chair, Torys LLP
· Reisman, Heather, Chair and CEO, Brookings Institution
· Bolland, Marc J., Chief Executive, Marks and Spencer Group plc
· Chavannes, Marc E., Political Columnist,Professor of Journalism
· Halberstadt, Victor, Professor of Economics, Leiden University
· H.M. the Queen of the Netherlands
· Rosenthal, Uri, Minister of Foreign Affairs
· Winter, Jaap W., Partner, De Brauw Blackstone Westbroek
· Myklebust, Egil, Former Chairman of the Board of Directors SAS
· H.R.H. Crown Prince Haakon of Norway
· Ottersen, Ole Petter, Rector, University of Oslo
· Solberg, Erna, Leader of the Conservative Party
· Bronner, Oscar, CEO and Publisher, Standard Medien AG
· Faymann, Werner, Federal Chancellor
· Rothensteiner, Walter, Chairman of the Board, Raiffeisen Zentralbank
· Scholten, Rudolf,Board of Executive Directors, Oesterreichische Kontrollbank AG
· Balsemão, Francisco Pinto, Chairman and CEO, IMPRESA, S.G.P.S.
· Ferreira Alves, Clara, CEO, Claref LDA; writer
· Nogueira Leite, António, Member of the Board, José de Mello Investimentos
· Mordashov, Alexey A., CEO, Severstal Schweden
· Bildt, Carl, Minister of Foreign Affairs
· Björling, Ewa, Minister for Trade
· Wallenberg, Jacob, Chairman, Investor AB
· Brabeck-Letmathe, Peter, Chairman, Nestlé S.A.
· Groth, Hans, Senior Director, Healthcare Policy & Market Access, Pfizer
· Janom Steiner, Barbara, Head of the Department of Justice
· Kudelski, André, Chairman and CEO, Kudelski Group SA
· Leuthard, Doris, Federal Councillor
· Schmid, Martin, President, Government of the Canton Grisons
· Schweiger, Rolf, Ständerat
· Soiron, Rolf, Chairman of the Board, Holcim Ltd., Lonza Ltd.
· Vasella, Daniel L., Chairman, Novartis AG
· Witmer, Jürg, Chairman, Givaudan SA and Clariant AG
· Cebrián, Juan Luis, CEO, PRISA
· Cospedal, María Dolores de, Secretary General, Partido Popular
· León Gross, Bernardino, Secretary General of the Spanish Presidency
· Nin Génova, Juan María, President and CEO, La Caixa
· H.M. Queen Sofia of Spain
· Ciliv, Süreyya, CEO, Turkcell Iletisim Hizmetleri A.S.
· Gülek Domac, Tayyibe, Former Minister of State
· Koç, Mustafa V., Chairman, Koç Holding A.S.
· Pekin, Sefika, Founding Partner, Pekin & Bayar Law Firm
· Alexander, Keith B., Commander, USCYBERCOM; Director, NSA
· Altman, Roger C., Chairman, Evercore Partners Inc.
· Bezos, Jeff, Founder and CEO, Amazon.com
· Collins, Timothy C., CEO, Ripplewood Holdings, LLC
· Feldstein, Martin S., George F. Baker Professor of Economics, Harvard
· Hoffman, Reid, Co-founder and Executive Chairman, LinkedIn
· Hughes, Chris R., Co-founder, Facebook
· Jacobs, Kenneth M., Chairman & CEO, Lazard
· Johnson, James A., Vice Chairman, Perseus, LLC
· Jordan, Jr., Vernon E., Senior Managing Director, Lazard Frères
· Keane, John M., Senior Partner, SCP Partners; General, US Army, Retired
· Kissinger, Henry A., Chairman, Kissinger Associates, Inc.
· Kleinfeld, Klaus, Chairman and CEO, Alcoa
· Kravis, Henry R., Co-Chairman and co-CEO, Kohlberg Kravis, Roberts & Co.
· Kravis, Marie-Josée, Senior Fellow, Hudson Institute, Inc.
· Li, Cheng, Senior Fellow and Director of Research, Brookings Institution
· Mundie, Craig J., Chief Research and Strategy Officer, Microsoft Corporation
· Orszag, Peter R., Vice Chairman, Citigroup Global Markets, Inc.
· Perle, Richard N., Resident Fellow, American Enterprise Institute for Public Policy Research
· Rockefeller, David, Former Chairman, Chase Manhattan Bank
· Rose, Charlie, Executive Editor and Anchor, Charlie Rose
· Rubin, Robert E., Co-Chairman, Council on Foreign Relations
· Schmidt, Eric, Executive Chairman, Google Inc.
· Steinberg, James B., Deputy Secretary of State
· Thiel, Peter A., President, Clarium Capital Management, LLC
· Varney, Christine A., Assistant Attorney General for Antitrust
· Vaupel, James W., Founding Director, Max Planck Institute
· Warsh, Kevin, Former Governor, Federal Reserve Board
· Wolfensohn, James D., Chairman, Wolfensohn & Company
Neo Mushroom Management
The standard of senior management in the United Kingdom appears to be deteriorating at an alarming rate and it seems to be a comparatively new phenomenon.
It all started about four years ago.
Bank Directors had no idea that their banker-underlings were dealing in financial products that neither they nor their employees understood.
Lords as well as senior politicians were blind to the fact that fraud was rife in Westminster .
Senior Newspaper executives did not have an inkling that their reporters were resorting to criminal methods in order to obtain a story.
For a while, Government has not felt able to make a major decision without the involvement of lawyers and inquiries. Gordon Brown started THAT craze and it appears to have caught on.
Elsewhere, politicians continue to dance between the shower-drops because they have NO IDEA when something horrendous is coming down the economic pipe.
Senior Military officers don’t know that squaddies are brutalising and murdering prisoners.
Once a month, the Bank of England soothsayers come blinking into the sunlight to deliver their traditionally mysterious but fallacious prophesies.
Directors are directing but they cannot be doing it efficiently because they do not have the information or even the knowledge.
A Stygian blackness has descended.
We have what can only be described as a “Reverse Mushroom” management problem.
Nowadays, it is not just ordinary people who are kept in the dark and fed shit.
We sit shoulder-to-shoulder with our leaders.
The above is representative of the perennial management dilemma – especially after the solids have come into contact with the air-conditioning. Does a leader :
A. Admit that he or she DID know what was going on and accept responsibility?
B. Allow the self-preservation instinct to kick-in i.e. plead ignorance, deny everything, apportion blame and live with the impression that they’re a lousy leader.
MOST OPT FOR OPTION B.
Bend Over, America!
We have all known for some time that the ongoing banking crisis was originally started by some sort of banker-naughtiness and what we have in common with the vast majority of Bank Directors is that we don’t really understand WHAT happened. But we do know that someone somewhere is guilty and needs to be spoken to very severely.
It was good to hear that the US government via its regulator (Federal Housing Finance Agency), has filed suit against seventeen financial institutions. Specifically, they want answers as to why $200 billion in bad mortgage-backed securities was sold to mortgage companies Fannie May and Freddie Mac.
They made their announcement just as the Stock market closed last Friday afternoon – their timing was exactly what you would expect but nevertheless totally wasted. Today will be the day when their proposed action will shake out on the markets. Fortunately for the stock prices, the Swiss have moved to protect their own currency which has had a small positive impact on equities.
So what did the bankers do?
Imagine that a bank grants a $100,000 mortgage which results in the borrower repaying say, $1000 per month. Now imagine 1000 such mortgages. If the mortgages were pooled , you’d have a “product” which generates an income $1,000,000 per month. Then you sell shares in the product to investors such as other financial institutions. Here comes the good bit: You omit to tell the institutions buying shares in your new product that the mortgagors (the borrowers) have absolutely no chance of making the $1000 per month repayments. Thus, the banks sold and also invested in worthless products because they could not generate any income.
These were the famous Sub-prime Bonds. The term “sub-prime” describes the borrowers – the so-called NINJAS to whom the banks lent billions. NINJAS? No Income, No Job or Assets.
(That was a very simplified explanation but it does demonstrate the principle of dealing in debt – you create debt by lending and then sell shares in it).
Embarrassed financial institutions then either sold-on these “investments” and/or attempted to hide their mistakes through the medium of creative accounting, by keeping these items “off balance sheet”.
The US Government’s move on the banks is perfectly justified but any legislation will take years and so leave the banks with permanently damaged balance sheets and income.
The other downside will be that banks, having been bitten once by their OWN greed are unlikely to ever lend money for house purchase as aggressively ever again.
The Fed now fully expects the banks to pay for mortgages which they granted five or six years ago.
Fannie May (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) guaranteed most of the dodgy mortgages and are currently the subject of a Federal takeover and have been placed into conservatorship, which in US law is a form of temporary nationalisation
US banks have so far benefited from a $700 billion Federal bailout but nevertheless both Obama as well as the Federal Reserve have been accused of being too easy on the banks.
In fairness to the American banks, most of the money that they were handed by the Fed has been repaid. However, the rescue of Fannie and Freddie could cost the government as much as $350billion.
To add to the banks’ headaches, they are not only being sued by the US Government but also by many private investors who have also lost money.
So, at a a time when the banking industry is trying to rebuild whilst at the same time being urged to lend, it is having its share values decimated. Then there’s the inevitable and customary Lawyer Bonanza which could add BILLIONS more to their expenses.
The principle of the legal actions is simple: The banks screwed-up through near-fraudulent activities and pushed all Western economies into recession.
Someone HAS to pay.
The FHFA claims that banks were negligent and misrepresented the mortgage-based bonds they were selling because of sloppy underwriting, that is to say, they did NOT carry out proper checks on the people to whom they were lending money.
That is going to be a very difficult defence for the banks.
The FHFA further argues that the Sub-Prime Bonds should NEVER have been marketed because the underlying “assets” did not conform to normal investor criteria. Yet another difficult position to defend.
Meanwhile, some bankers are attempting to shift the blame to Fannie May and Freddie Mac, while others are hoping to settle the claims in order to limit litigation. Our own RBS intends to fight any action. RBS is being sued for over £30 billion.
The most sensible outcome will be for all lawsuits to be settled. That would generate another outflow of cash from the banks but would also draw a firm line under the shenanigans leading up to the 2008 crash.
In the United States, the banks are not just being sued by the government for marketing questionable financial products. They are also being sued in respect of bad foreclosure practices and evictions as well as lawsuits over mortgage debt losses.
Such bank payouts will reduce and weaken their capital levels – further harming banks’ ability to lend.
With politicians everywhere pointlessly (and theatrically) screaming for banks to enable economic growth as well as stimulate housing markets, the road to full economic recovery looks more impossible than ever.
Over here in the UK, we are still awaiting ANY indication from the government of ANY litigation.
So far, the best that we can do is PPI – but even after being TOLD to pay out, our banks continue to drag their feet and not distribute refunds as fast as they might.
It seems that here in the UK, the promise and lure of fat post-Westminster banking directorships is far too strong – as well as the rather ambiguous relationship between our bankers and politicians.
Nowadays, even on the world stage, politicians become bankers and bankers become politicians – especially in Europe.
It’s the ONLY logical reason for our politicians to sanction not-only immunity to our bankers but even after such catastrophic failures, to continue rewarding them with the glittering prize of the over-inflated, stock-market-generated bonus.
Between Gold & a Hard Place.
2011 will be remembered as the year when the gold price really took off. It will also be remembered as the year of the PIIGS.
That’s Portugal, Italy, Ireland, Greece, Spain.
So what would happen if we combined the two? What would happen if the PIIGS decided to sell their gold in order to clear their debt? (As recently suggested by Germany’s Vice Chancellor).
And while we’re at it, let’s get away from expressing sovereign debt in percentages of GDP. No-one understands that anyway.
Let’s be different and look at it all in cash terms:
The total gold holding of the PIIGS is about 3250 tonnes. At current prices that’s worth about 132 billion euros. That’s 132,000,000,000 euros.
Unfortunately their combined outstanding sovereign debt is about 3,300 billion euros. That’s 3,300,000,000,000 euros
For instance, Portugal has about 390 tonnes of gold, currently worth about 15 billion euros. That is about 20% of its latest bailout package.
The biggest Eurozone gold hoarder is Italy. It is also the world’s fourth-largest owner of the metal . Italy’s 2,450 tonnes is worth about 95 billion euros at today’s prices. That’s 95,000,000,000 euros.
Italy’s government has $2.45 trillion dollars in debt. That’s 2,450,000,000,000 euros.
It is estimated that as a result of inevitable defaults, banks will LOSE £200 billion euros. That’s 200,000,000,000.
Hence all that nervousness around bank shares.
It’s all theoretical anyway because gold is not the property of the PIIGS’ governments to sell. Gold is part of a country’s Foreign Exchange Reserves which are managed by central banks and cannot be used to finance the public sector – except apparently, in certain Middle Eastern states.
What a mess!
Finally, in case you’re still wondering why the politicians have not actually put into place a plan to sort-out the debt-related issues, it is because they don’t really know what to do. Plus, they are playing the NOMW game.
NOMW? Not On My Watch.
President Sarkozy has an election to fight in 2012 and Bundeskanzlerin Merkel has one in 2013.
Can they possibly keep it all going until then?
Banks? It won’t be long!!
When the big boxes of money arrived in Libya yesterday, I bet that there were several European states who were slavering and wishing that someone would send them a box too!
Especially Greece. Plus other states who don’t really want to admit it!
Greece has been back to the well for another 109 billion Euro bailout. That bailout could well be the last one because the well is now well and truly dry.
Even quiet and up-to-now compliant Finland is becoming a little bit fractious and will not contribute any more money to the bottomless pit that is Greece without a Charge on Greek assets. The Finns want collateral – and who can blame them?
The German electorate and many politicians are also beginning to voice their displeasure at having to hand over vast volumes of cash to the Greeks, no doubt followed by others.
Quite rightly, German Chancellor Angela Merkel insists she won’t be “blackmailed” into backing Eurobonds and the Germans have every reason to be worried! If they put their national balance sheet at risk just to support countries like Greece and Ireland, Germany’s borrowing costs would be driven up by an unsustainable additional 50 billion euros!
The simmering Eurocrisis could explode at virtually any moment because the politicians’ “Let’s wait and see” tactics have failed.
That is what sent European bank stocks lower today. They tanked!
The other day, Warren Buffett threw $5 billion at “near-death” Bank of America. In spite of Warren’s munificence, the bank has now been asked to sort out any potential problems. The bank’s fire sale continues with them now trying to offload their non-profitmaking Countrywide lending unit.
Does the Fed know something that we don’t?
America and Europe do NOT have a liquidity crisis! It is a MAJOR SOLVENCY problem.
Banks do not have enough capital to absorb losses on all the European sovereign debts that they are now loaded down with.
Pan-Western bank failures are now inevitable!!
The politicians? They will be doing what they do best.
Observing, having meetings and telling us not to worry.
p.s Sorry of this post does not make total sense. It was typed in a hot un-airconditioned dump on a Blackberry and then emailed for tarting up. But hopefully, you get the gist.
Syria and Hilary.
The reason NATO is showing no interest in direct assistance to Syrian rebels is because they have requested NO foreign interference.
They’ve seen the results in Afghanistan, Iraq, Croydon and now Libya. They are obviously very happy to trash their own country without NATO’s help.
Statement from Hilary Clinton:
We’re in the Shapps!
House building in the United Kingdom has slumped to a 90-year low. Home ownership is predicted to slump to approximately 65%. The proportion of people living in owner-occupied homes is forecast to fall to 63.8% by 2021, down from 72.5% in 2001 and from the mid-eighties high of 74%.
According to economists, house prices are set to soar by 21.3 per cent over the next five years whilst rents are set to rise by up to 20%.
In some parts of the United Kingdom, 16% of home owners owe more on their mortgage than their property is worth.
Housing minister Grant Shapps said: “The trebling of house prices in the 10 years from 1997 has locked too many out of owning their own home.
“I want to see a period of house price stability so that more homes become affordable, but I am also determined that we pull out all the stops to give hard-working first-time buyers the help they need.
“That’s why I’ve held summits with lenders to encourage them to do more to help people take their first step onto the housing ladder, and I’ve launched the First Buy Scheme as a valuable alternative to the Bank of Mum and Dad for those struggling to get together that much-needed deposit.
“But we also need to get Britain building again. That’s why I’ve announced plans to release thousands of acres of public land for housebuilding.
“Despite the need to tackle the deficit we inherited, this government is putting £4.5bn towards an affordable homes programme which is set to exceed our original expectations and deliver up to 170,000 new homes over the next four years.”
Phrases from Mr Shapps such as: “I Want to see”, “Pull out all the stops”, “The help they need”, “We need to get Britain building”, “Announced plans”, “Set to exceed” all indicate well-meant sentiments – a “politician’s intent”. Even the “170,000 homes over the next four years” is preceded by the phrase “set to exceed” and not “WILL exceed”.
Incidentally, the ONLY thing that Mr Shapps promises to exceed are his own expectations – which have not yet been delivered anyway.
Yes, there is a shortage of housing but the ROOT CAUSE of this dire situation is not being treated.
Once again, I shall put it in plain English: The reason why the housing market is in a moribund state is because the banks are NOT lending money to building companies and they are NOT lending money to first time buyers – who incidentally are becoming a near-extinct species.
Mr Shapps may well have held “summits with lenders” but he has not yet given us any indication of any positive outcomes. Meetings do NOT solve issues – only outcomes. So, Mr Shapps, what have the banks promised on this occasion? Amounts? Terms ? LTV? Underwriting Criteria? Perhaps The Big Society Banks can help??!
So far, we have The Big Society, Enterprize Zones and now the The First Buy Scheme.
The first is still a mystery, the second contributes little more than mass relocations of existing businesses and First Buy-type shared equity schemes do little more that frighten first-time buyers by the morass of bureaucracy into which they are suddenly plunged.
Once again, the REAL solution is in the hands of the BANKERS.
p.s. I am surprised by the fact that the Royal Institution of Chartered Surveyors is still allowing itself to be pushed about by the banks. They used to be a very powerful organisation which played its part in controlling house prices. The boom times prior to the 2008 crash turned the RICS into followers. They USED to be leaders. CLICK HERE
Go for Gold!
Eighteen months ago, I predicted that during 2011, gold would hit $2000 per ounce. So far, it has I topped-out at just over $1900 and then pulled back to about $1750
There was a 10% price drop in three days! That appears to have frightened some but has also done a lot of good because gold has been hugely overbought in the last few months and was due a correction.
This correction is likely to continue to well below $1500. I am therefore no longer predicting $2000 per ounce.
It will rise to above $4000!
Within a few months, Ben Bernanke’s “do nothing , wait and see” policy will no longer be viable and the American economy will begin to crumble, closely followed by a mega-slide in Euro stocks.
At that point, those who do not become jammed in the exits will once again rush for gold – at the point when Bernanke and other Finance Ministers begin to oil the money-printing presses for more empty Mickey Mouse “quantitative easing” money!
Although we are already in a Bear Market, there will still be unexplained rallies, falls and adjustments but thanks to politicians who have lost the art of decision-making, gold is still the way to go.
p.s. this is a fitting time to once again pay tribute to our former Prime Minister, Gordon Brown.
States of the economies.
The next economic and banking collapse is going to make the 2008 crash look like a slight adjustment.
Once-powerful Western economies are booking quarterly GDP growths of 1% or less. For the non-mathematicians, that is within a rounding error of ZERO growth. So when you hear a Chancellor deriving solace from an economy achieving a growth of say 1.5% which was “better than the expected” 1.3%, we know that they and we are in trouble.
Politicians and central bankers have exhausted their entire repertoire on a THREE YEAR attempt to put their economies in order whilst at the same time propping-up a broken banking system. None of it has worked!
They all know that the tsunami is coming but there is no high ground to run to.
European politicians are rushing about, turning inaction into an art-form whilst economies and banks are merely standing on the trapdoor and holding hands hoping that somehow all this will go away and the entire system will somehow self-right. Their impotent prevarication can (and will) only result in two things – collapse and bankcrptcy.
Bankruptcy of governments, business and of private individuals.
Last week we had the very first example of a banker who more-or-less threw-in his hand, admitting that there was little-else that money could do. The Federal Reserve’s Ben Bernanke had the choice of either printing more empty dollars or not. The so-called Quantitative Easing 3 would have increased US inflation and made Investment Bankers happy. It would have enabled the bankers to further plunder the markets and create more of those illusory profits. They’ve been operating on that basis for two years now and perhaps Bernanke decided that enough was enough.
Mainlining money is never the long-term solution – it’s too addictive!
However, No U.S Quantitative Easing has simply accelerated the collapse of the United States economy.
Yes! It’s as clear-cut as that.
In the end, Bernanke took a leaf from the politicians’ book and decided to do nothing but sit and wait. NO mention of QE3 and no steps to promote economic growth.
He has decided to kick the the whole thing forward yet another month in the vain hope that Congress can deliver the next promise. THAT’S what you call a long-shot!
For the moment both Europe and the USA appear to be quite content to pause and doze in the middle of their joint economic tightrope until someone else (as yet unknown, probably China) comes along to coax them out of their torpor.
Unfortunately, America and Europe are entwined in such a way that if Europe falls, so will the USA.
We used to dismiss the PIIGS nations as the ones heading for the econo-slaughter house — Portugal, Italy, Ireland, Greece and Spain. Their problem is very simple – they have debts so huge that there is absolutely NO prospect of them ever being repaid. Their politicians are also waiting for something miraculous to happen sometime in the future.
The Euro saviour WAS supposed to have been the “strong man of Europe”, the one with the largest economy – Germany. Unfortunately,Germany has also hit the economic buffers. It’s growth in this year’s second quarter was just 0.1 percent!
France, Europe’s second-largest Euro-economy, has also ground to a halt. President Sarkozy’s has followed the UK route with huge budgetary cuts. That certainly looks good on paper and may lower deficits but will produce an impossible drag on an already-waning economy. THAT will inhibit growth and ultimately lower tax revenues – which will inevitably result in higher taxation.
The United Kingdom’s Chancellor can take the credit for showing everyone else the way to economic stagnation through the triple whammy of Government budget cuts, rising inflation and plunging consumer confidence. EXACTLY the conditions to discourage anyone from risking any sort of entrepreneurial initiative or borrowing from the banks to fund commercial expansion. That is, if the banks weren’t continuing to sulk.
Europe is frantically cutting spending in a desperate attempt to postpone the inevitable debt meltdown. Meanwhile Washington continues to rack-up up its national debt at the eye-watering rate of more than 10 percent per year.
All that America has achieved so far is to have its credit-rating slashed by Standard & Poor’s while its local governments, states and cities frantically try everything from releasing prisoners early to selling off the family silver.
The ENTIRE Western economy has ground to a shuddering halt with the weird unwanted bolt-ons of climbing inflation and consumer confidence at near an all-time low.
So what IS the solution?
The solution is comparatively simple and should be attempted in stages.
The first would be to reconcile ALL sovereign debt.
Secondly, the markets and banks would collapse – but at a controlled rate.
Thirdly, it should be admitted that the Euro and the Eurozone were both very bad ideas which developed into a grotesque sacred cow.
Then we could ALL start again.
The alternatives are greater budget shortfalls, greater deficits, even faster growths in government debt, followed by catastrophic collapses and Depression.
The former all require political decisions of such magnitude that even the politicians have come to realise that we do not have anyone with even remotely the courage to raise his or head above the parapet to take control.
So for the moment, it seems as if we’re knowingly headed for an economic holocaust.
So, unless the politicians wake up soon, we need to create hell and not wait for it.
From “Brother, Can You Spare a Dime,” lyrics by Yip Harburg, music by Jay Gorney (1931)
Morton’s Fork lives!
Post-Saddam-type chaos in Libya will NOT be avoided. That’s nigh-on impossible.
One of the overlooked plans of the Iraq campaign was the Exit Strategy. Well, bugger me, the West has done it again in Libya.
The next major initiative will be the customary “Humanitarian Assistance” which is as good an excuse as any to maintain a military presence to ensure that the fuzzy-wuzzies keep in line.
THAT is going to be the most impossible task. The average Libyan’s loyalties are like this: 1. Family 2. Tribe 3. State Flag…….. In that order.
NOTHING but a totalitarian state can keep tribal factions in line. Government by Brutality appears to be the only way to stop tribes from killing each other. Saddam demonstrated that in Iraq and every other state in the Middle East continues to suppress its people – but for very valid reasons.
Democracy is an anathema to tribal people. It is an alien concept.
In Libya’s case, the theory is that a fiefdom which has controlled many tribes through the medium of suppression can be turned into a democracy. Politicians may not have yet noticed that such a thing has never been done. It’s been tried on many occasions but so far, without success.
The most likely outcome in Libya is either the emergence of another authoritarian leader or the breakup of a country which was a western construct in the first place. It is a politically barren place with no political parties or constitution.
Meanwhile, the rebels are heading for Gaddafi City – SIRTE. One hopes that they all remember that the Tahoura Research Centre near Tripoli houses (or housed) the remnants of Libya’s nuclear programme. There are stocks of nuclear material which could easily be turned into a “dirty” bomb.
There has already been a half-hearted attempt to launch a Scud missile so hopefully, the rebels do not, once again find themselves on the receiving end, should Gaddafi supporters decide to surprise them.
Luckily, the BBC’s John Simpson has finally arrived in Libya – so all should be well. We don’t yet know whether he travelled across the desert with the Tuaregs or whether he is wearing the customary tea-towel on his head but after hearing of his exploits in Afghanistan, it’s possible. He’ll know what to do.
Meanwhile the next battle that into which new Libyan Prime Minister Mahmoud Jibril will have to lead his people will be the rather unedifying soon-to-be-fought campaign for Libyan reconstruction.
The cue for the Western invasion is the phrase “Humanitarian Catastrophe”. Look out for that one.
p.s. The politicians appear to be surprised by the fact that, in spite of the announcement that the war in Libya had been won, the fighting appears to be continuing. Just like Iraq.
There appear to be more and more self-appointed “GURUS” on the Internet: Finance Guru, Lifestyle Guru, Management Guru….the list is endless.
I used to be one of those but luckily managed to extract my head from my ass before it was too late.
Please don’t do it.
I now prefer the more modest “Messiah”.
Yesterday, I was listening to the BBC World Service when I was surprised to hear a presenter use the word “Asyla” as a plural of Asylum. WTF? People who do that are nothing but pretentious scrota.
Tomorrow, if Ben Bernanke announces that the Fed is going to print yet more “empty” dollars, he will be introducing yet more inflation into the US economy. Markets will recommence their downward slide and investors will all rush-off in the direction of the Bullion Markets.
If however, there is no further printing of dollars and QE3 does not happen, the likelihood is that the American economy will collapse as investors all rush off in the direction of the Bullion Markets.
Either way, gold is the safest bet.
Meanwhile in Germany, Chancellor Angela Merkel is also between a rock and a hard place. If she agrees to fully support lame-duck Euro economies through the issue of the Euro Bond – so that countries such as Greece are able to enjoy unlimited credit at reasonable rates, she risks a rebellion back home from the Christian Democratic Party as well as from an electorate which does not wish to donate any more to broken Euro economies.
However, if there is no mechanism to support poorer Euro states, the Euro could collapse, together with the German economy.
By the way, it is time to start worrying about the world’s Stock Markets. Starting tomorrow.
Today, Liberals are UP(!) 4% in the latest opinion poll. Does that mean that there may be a change of plan in Nick Clegg being handed a sexy European Parliament job as a consolation prize after the 2015 General Election?
In response to emails concerning my dog…
I am sick and tired of receiving questions about my dog who mauled an illegal immigrant, two rappers, a hoodie-looter with hanging-past-the-crack tracksuit bottoms , three Sub-continent customer service clerks speaking broken English, one Member of Parliament, two policemen, three flag burners and a taxi driver.
FOR THE LAST TIME…THE DOG IS NOT FOR SALE !
Press release from HM Treasury: http://bit.ly/oIgJbo
Record results! Congratulations kids – another record year. You must have worked SOOO hard.
Here’s something for the cleverer ones to colour-in:
Survival of the Weakest?
Usually when there is any battle between two factions, the stronger of the two wins. It triumphs because there are more of them, they are better organised or have better equipment.
This is NOT the case in Libya. Without the NATO intervention, there is absolutely NO WAY that the so-called rebels would have conquered Gaddafi’s army. NATO had to provide air support and effectively fight most of the battle as the rebels careered up and down the road in their Toyota pickups firing their guns into the air and posing for macho pictures.
So what happens now? Does NATO continue to hold the rebels’ hands? Once NATO backs off and the Gaddafi supporters wake up, they will soon realise that it would not take much of an effort to overwhelm the former rioters.
There are scores to be settled, relative seniorities to be re-established and government coffers to be plundered.
Tribal leaders will want to make sure that their people are heard at government level. Women will want to continue to be heard and respected.
For instance, it is only since 1969 that women’s rights have been on the agenda. Under Gaddafi’s predecessor King Idris, even the education of women was frowned upon and positively discouraged.
Without NATO, the rebels who appear to have Allah (but more importantly, NATO) on their side are a bit like the bespectacled playground wimp who has been adopted by the school bully. He can say and do whatever he likes to his enemies but only for as long as the bully is behind him. Otherwise, he’s in big trouble.
If , like me, you have always had a feeling that there has been something missing from the whole Get-Gaddafi production – apart from hubcaps – it was a total lack of any expression of idealism, binding ideas, political concepts or the future.
The rebels do not have common political beliefs. All that they have is a common enemy. THAT is what has been holding them together for six months.
Once Gaddafi is gone, the glue which held the rebellion together will be gone. There’s no stronger bond than that provided by fear or hatred of a common enemy. Then, new enemies will be sought. Unfortunately the new enemies will be former neighbours.
As I have said before, this has NOT been about the D-word (democracy). This has been about power.
Power is OK if you genuinely want to do something with it – but it looks increasingly as if the Libyan Islamists are becoming the most influential group within the National Transitional Council. That does not bode well for “democracy and freedom” – especially for women.
It looks as if the school bully may have to stay-on much longer than has been anticipated.
Even post-euphoria, the “conquering” rebels will have over-high expectation levels. Within weeks, we should fully expect to see demands for better living conditions, more income and lower prices. The D-word will be consigned to the slogan drawer from which it should never have been taken and the Mullahs will slowly seep even further into Libyan society.
Those flags that everyone in Libya seems to be waving – the plain green Socialist Arab Peoples Gaddafi-supporters’ flag, versus the rebels’ 1951 Independence tricolor – where have they all suddenly appeared from? It’s as if boxes of flags magically materialised out of thin air!
Now what was it I spotted on one of the flags? It looked like a maker’s name…must have stood for Created In Algeria.
Can’t be! What a coincidence!
They’ll know what to do once the post-Gaddafi explosions start.
Jittery Markets make small gains.
European markets have made nervous gains despite lingering fears that the world economy is heading back towards recession.
The FTSE 100 Index in London gained 1.5% as traders decided that shares represented good value after the index fell 5% last week. The CAC 40 in France and the DAX in Germany also pushed higher.
However, markets remain jittery after last week’s poor economic data from the US and eurozone created fresh panic about the prospect of a global recession.
The glut of bad news caused London’s blue chip index to suffer its biggest daily loss in nearly three years on Thursday, wiping £62.3 billion from the value of the UK’s 100 biggest companies.
In another session of volatile trading on Monday, London’s leading shares index slid nearly 1% at the start of the session – taking it below the 5000 mark – but it bounced back shortly afterwards.
Gold continued to hit new record highs, rising to 1,895 US dollars (£1,151) per ounce, because it is seen as a safe haven amid the market turmoil.
Oil prices fell more than 2%, on speculation that Colonel Muammar Gaddafi’s 40-year rule in Libya is on the edge of collapse, which traders think could reopen supplies from the war-torn country.
The gain for European markets was despite the Dow Jones Industrial Average in the US falling more than 1.5% on Friday.
Markets have swung wildly in recent weeks as figures revealed the pace of economic growth in countries such as the US and Germany has slowed, leading to fears that the global recovery is running out of steam.
Fears about the strength of the world’s biggest economy were heightened by a rise in the number of jobless claimants and weak manufacturing and home sales figures. There are also unresolved worries about the eurozone debt crisis after French president Nicolas Sarkozy and German chancellor Angela Merkel failed to back eurozone bonds to fix the current problems at an emergency meeting.
Copyright © 2011 The Press Association. All rights reserved.
Libya: Freedom or Democracy?
Democracy is comparatively easy. Democracy, self-determination, having a say in the decisions which affect your life or whatever else you want to call it – can all be arranged comparatively easily. But there’s the much grander concept of freedom – for citizens of both sexes.
Freedom is NOT a “Pick and Mix”. You either embrace it or leave it alone.
Democratic, educational, secular, political, economic, entrepreneurial, medical, scientific, technological, environmental, artistic, philosophical are just SOME freedoms.
So, apart from being ruled by a self-obsessed maniac, what was wrong with Libya?
Libya used to have a higher GDP than Russia plus free education and healthcare. The oil was about to be nationalised so that the Libyan people rather than the West would profit. Their national central bank operated in such a way so that it could NOT be exploited by the West. As far as the West was concerned, those were all very worrying developments which needed to be controlled.
Yes, Gaddafi was a thug whose main purpose was to amass riches for his own family and yes, there is poverty in Libya. There are hungry dispossessed people who feel that they were being unfairly treated by their rich, privileged rulers. But those people exist all over the world. They still exist in Libya and will continue to exist long after Gaddafi becomes a mere memory.
Poverty, deprivation? Sometimes it would be a good idea for the USA, United Kingdom, France , Germany etc to have the mirror held up to themselves. Just before they lecture others on inequality and deprivation.
Some say that it was the CIA which started the Benghazi unrest as a result of Gaddafi’s proposed economic “adjustments”. Whoever was responsible is now an irrelevance. Suffice it to say that suddenly, Gaddafi went from being rewarded by the West for Libya’s “excellent human rights record” and being practically ravished by Tony Blair, to a despot who “slaughtered his own people”.
(That particular phrase was thrown at us so often that it became fact).
The West’s selective memory, illusion-mongering and propaganda are standard components used to excuse what has just been happening in Libya. It was always meant to be a war-by-proxy.
Gaddafi had to be deposed and no-one from the West needed to get their hands too dirty! (William Hague: “It’s up to the Libyan people”. Yeah. Right! What he meant was “We can get those Libyans in their Toyota pick-ups to do all the dirty work on our behalf”).
Gaddafi was right in one very important aspect of the whole sordid affair. It was all orchestrated for the sake of self-interested domination by others – both inside and outside of Libya.
(Make no mistake – it was right that Gaddafi should “retire” but the handling of the whole affair did not exactly cover the West in glory).
So here we are : 22nd August 2011 – The Libyan people are (hopefully) about to taste democratic freedom – just like ours. They will become proper free taxpayers and voters – just like us.
Eventually, they’ll become voters and taxpayers who pay to carry their economy to the point of mind-numbing distress – but that’s OUR kind of freedom.
When I say OUR kind of freedom, I am of course not referring to those really “free” people who have knowledge of subsidies, tax deferrals, loopholes and non-registered tax havens.
They already have those – just like us!
Usually, that sort of freedom takes a while to develop.
Proper freedom and democracy won’t come to our Libyan friends until their oil runs out.
So much to look forward to!
Politicians? Self-interest? Surely not!
The world’s economic problems will not be solved by politicians. Firstly because they do NOT have the skills to deal with a multi-causal, muti-faceted and highly technical international phenomenon. Secondly, their decision-making is always impaired and affected by the very ugly spectre of self-interest and their primary preoccupation: re-election.
If you look at the very front-end loaded “austerity programme” here in the United Kingdom, it is no coincidence that so much has been concentrated into the beginning of the government’s new term in office. The hope is that if all the bad stuff is dealt with at the beginning, then the year or eighteen months leading up to the 2015 election can be a time of faux-plenty with give-aways and maybe some unravelling of the incredibly draconian measures which have been thrust upon us in this last year.
The government could have “phased” the introduction of its programme of economic destruction but its other agenda was to please the euro bankers and money lenders – certainly NOT the electorate. The bankers (as usual) demanded immediate gratification.
There is a good argument for only ever allowing a government a single-term. Unfortunately , after 4 or 5 years, many leaders demand squatters rights over their job with some having extended their tenure for decades.
It would be MOST refreshing for a political leader to say ” We are in deep trouble and at the moment we do not have all the answers, so we are going to try a few random things in the hope that some of them work”. THAT is the truth because THAT is what is happening.
The politicians REALLY have NO idea what to do next. They have joined us peasants in the gallery as mere observers while the Global Economic Tornado gathers strength and velocity.
The first thing that should be done is for that most sacred of sacred cows, the world’s banking system to be reappraised. Once again, self-interest and re-election prevent the politicians from doing anything but complain and maybe introduce small doses of irrelevant pseudo anti-bank legislation. More window dressing.
Banks should be a service industry which supplies and redistributes money and not the Black Hole which it has become. The billions that banks generate in profits is NOT money which has been generated by production or even work – it is “profit” which takes money and value OUT of the economy. Bank profits are profits which commerce would have generated if banks did the job that they were supposed to do.
So that’s Number One on the agenda.
Now who has the guts to take that first step?
The Petulant One
“I condemn you, Gaddafi!!”
William Hague briefly came out from behind America’s voluminous skirts a couple of days ago to announce that the Libyan embassy was to be cleared of pro Gaddafi officials and that they would be replaced by rebels.
Has there ever been a more puerile sign of frustration from a grown-up politician?
The thwarted Western powers, represented by NATO have made little progress since the initial Benghazi protests and riots six months ago. The protesters shouted “democracy” and as usual, the politicians came running. Most neutral observers have learned that any Middle Eastern protest is absolutely nothing to do with democracy, free speech or any of the other Western indulgences that we have become used to.
It has always been about power and economics. The poor, the impressionable young and the students riot, whilst the intelligentsia and the military plot behind their king’s back. They are the ones who enjoy the spoils of war. Life doesn’t really change for the poor and the young. Life rarely changes for the poor.
Decisions made by politicians in respect of Libya seem to have been made with one eye on the oil with the other on the opinion polls. In spite of the rhetoric, this has never really been about “The Libyan People”
President Sarkozy of France had hoped to make a victorious announcement on Bastille Day because all that he’s thinking about at the moment is re-election. Hopefully he will soon accept that it is not going to happen for him and that although he somehow made it to the top of the greasy French political pole, his grip has never been that strong and he has been sliding back down ever since. His involvement in the Libya bombing should help him along on his journey south.
William Hague on the other hand has been handed the Foreign Office as a bit of a consolation prize, following the disaster of his leadership and the years spent in comparative obscurity . Rather worryingly though, he remains one of the more talented members of the Cabinet. From the beginning he has looked not only out of sorts but out of his depth when dealing with a soldier-politician as slippery as Col Gaddafi.
Obama has much bigger things on his plate at the moment and his own re-election chances may also have been dealt a fatal blow by Libya – although his advisers seem to have foreseen Gaddafi’s intransigence. A small blessing for Obama is that America went into reverse gear on Libya a few months ago. He had little choice in the matter.
We’ve had sanctions, we’ve had “no fly” zones, we’ve had bombing and we have had strong words. Libya’s assets were frozen, the Gaddafi family’s assets were stolen but still, the mad Col continues to elude all attempts to oust him. Surprisingly, to some, it was predictable from the very beginning. Unlike Mubarak, Gaddafi sees himself as Emperor of Libya – the first of a dynasty. Imperator Muammar l.
One wonders what ever happened to the “that’s up to the Libyan people” mantra? It seems that everything is up to the Libyan people apart from who rules over them. That appears to be in the gift of the West. Even if two-thirds of the 6.4 million population of Libya have abandoned Gaddafi, that still leaves him far more support than Obama, Sarkozy or Cameron enjoy back home.
The propaganda machine has convinced us that Gaddafi is a BAD person. However, it is not Gaddafi who is dropping high-explosive on someone that he does not approve of.
Why is it that whenever we see any sort of conflict, we feel that we (United Kingdom) have to elbow our way nearly to the front of the queue, stand behind the the muscled bully-boy friend that is the United States of America and jump out occasionally to yap like a toothless, castrated old Jack Russell.
This so-called “Arabs Spring” is a headline writer’s nonsense. It is no Solidarność and it is no knocking down of the Berlin Wall. It started with a bunch of vandals and students waving placards believing that the mere act of defiance would be enough to remove Gaddafi. They chanted the “D” word. D E M O C R A C Y!
What they would prefer is a box of food and a TV set.
Yes, they fooled us into thinking and believing that what they want is democracy. In fact all they want is a fair share of the oil spoils, more money in their pockets and a State which cares about them.
There is little doubt that Gaddafi has gone way past his sell-by date and that he’s no longer even fit to run a British Nursing Home. Unfortunately, it usually takes a country a few years to realise that things are better than they were but not as good as they could be.
Gaddafi used to be a hero as he had liberated “his” people from the oppression and the years of Stone Age “nothing” under King Idris. As has been shown in many other states from France to Iran, deposing one set of royals invariably results in a temporary euphoria, followed by the installation another set of unelected “royals”.
Gaddafi ( just like a French President) has developed into their new King, his children are his heirs and his primary method of ensuring the faithfulness of those who matter, is through the medium of the bestowal of money and favours. Nothing unusual in that! That what kings do!
Six months ago, the West’s initial reaction to the Libyan friction was the usual formulaic stuff. It had recently been practiced on Mubarak. Our governments “condemned” Gaddafi’s actions. One day the United Kingdom and others will realise that words such as “we condemn” or “we call upon……” no longer frighten “the natives”.
We fell into a trap similar to the one that Saddam inadvertently sprung (on himself) when he appeared to exaggerate his own military prowess.
Gaddafi, on the other hand, threatened to “kill his own people”.
That is the “Way of the Dictator”!
Dictators always seems to end up behaving just like the has-been heavyweight boxer who craves recognition and needs to reassert his rapidly diminishing masculinity and popularity. It’s “Dictator Trash Talk”. It’s plastic defiance and paper posturing. It’s NOT real!
And we fall for it every time.
Murdoch, Fox and 9/11
Up to now, we, the British public have had our share of fun and entertainment at News International’s expense. However, the whole circus is about to move into a new and darker phase. The only brief piece of theatre (or should I say “farce”) will be the performance of the Parliamentary Culture, Media and Sport Committee as it attempts to bamboozle the Murdochs into incriminating themselves. Or even better-still, to self-flagellate in front of the British population. I have news for them – it ain’t going to happen.
Not one of the Committee has any “big company” experience. Therefore there is a definite danger that they will not understand that in spite of the fact Rupert Murdoch ostensibly runs the whole corporation, he probably was NOT aware of the fact that certain rodent reporters were behaving illegally. In the same way that a Prime Minister would not be expected to know that certain MPs were submitting expenses claims for duck houses and batteries for their wind-up torches.
Murdoch sits at the very pinnacle of a very large corporate pyramid which employs tens of thousands of people. Consequently, his only contact with the “shop-floor” is via several layers of management. That means that the information which he is fed is extremely selective. Plus, if any part of an organisation is performing “to-plan” or even exceeding targets, the questions asked by management tend to be of the gentler variety. Possible naughtiness is rarely on the agenda.
Directors and very often CEOs do NOT micro-manage; their focus is NOT on the day-to-day running of a department . They look towards the horizon. The weekly focus is provided by the supervisors, the monthly focus by the managers, the quarterly view by senior managers and so on, up the pyramid. The Directors tend to devote themselves to the long-term strategic stuff.
Just like Army Generals, they have no idea that Private X screwed Private Y or that Private Z ran out of bullets.
A few years ago, I chaired a Citibank meeting and took to the stage with the UK board. I was the question-master and referee. Prior to this momentous and unique staff meeting, I had asked employees to let me have written questions well before the event because I have always believed in a “no-surprises” management culture.
The meeting progressed very well as I invited ready-primed, chosen members of staff to ask their pre-submitted questions. That enabled board members to demonstrate their “I can think on my feet” abilities, without the staff necessarily suspecting that it had all been well-rehearsed.
The meeting went so smoothly that we finished ten minutes early. The Chairman , who was sitting next to me turned to me and whispered, “As we have some time, why don’t we take a few random questions from the floor?” I whispered back, “Mr Chairman – I don’t think that’s a good idea. I’m sure that they’ll all appreciate leaving the meeting a few minutes early.”
“Nonsense!” bellowed the Chairman. He stood up, grabbed the microphone and announced to the assembled staff “We have a few minutes…so…. are there any further questions on maybe a few things which we have NOT covered? … Anything at all?” I could see a hand shoot up at the back of the hall.
“Fuck!” I thought.
Harry was a 65 year-old post boy who thought that management was “the enemy”. His moment had come. His 15 minutes! The Chairman had no idea who this person was. He pointed towards a smiling Harry.
I could see Harry pull out what appeared to be a ream of folded A4 from his inside jacket pocket.
“Mr Chairman. Are you aware that there are no bandages in the 5th floor First Aid box and that is contrary to……..” Harry went on an on…and on…., clearly demonstrating that this oversight by “the management” was yet another clear manifestation of the management’s and indeed the directors’ total lack of care or respect towards the staff. Harry was an ex-union man and made a very impressive speech which all but destroyed all of the goodwill which we had created in the previous 90 minutes.
When Harry had finally exhausted himself and had sat down to tumultuous applause, the Chairman turned to be and said: “Why the bloody hell was I not briefed on this?”
Chairmen have NO IDEA of what goes on within a business. They are interested in RoI, RoE, 5 year forecasts, cash-flows, share price etc. They don’t know or even give a shit about day-to-day operations.
That makes me suspect that Murdoch will be asked questions that he genuinely will not have the answers to. That is because his interrogators have neither the background nor the “feel” to understand exactly what goes on within a huge organisation such as NewsCorp.
Here in the UK, after more corporate obfuscation, a tsunami or PR, several newly-created lawyer millionaires and an inquiry, Murdoch will be rehabilitated, some of his ex-management team will be banged-up and by 2020, life will return to normal. THAT is how we do things.
The United States – that’s another matter. They have a darker tinge to the way that they operate.
Over here, the politicians have rolled out the Dowler family, Gordon Brown has made his assault on recent history and a few celebs have been upset. Nothing that a few quid, a bit of political sincero-talk and a good old-fashioned grovel from Murdoch won’t sort-out. Even Max Clifford should score a few grand.
In the States, it looks as if certain NewsCorp journalists tapped and hacked the phones belonging to family members of 9/11 victims. That was a VERY bad sin! “Distraught” relatives of the dead are making public statements with accusing fingers already pointed at Fox News.
Anyone in America who lost a relative on 9/11 has a special exalted status – that of a latter-day martyr-saint-by-association. You cannot and should not mess with those people.
If Fox News – that video-comic of the American Right is shown to have abused this precious sainted group, it will lose its broadcast licences. THAT’s how serious life may become for the Murdoch Dynasty.
So at worst, next week’s questioning by Tom Watson MP and the Gang will be a mild entertainment – not just for us but for the Murdochs too!
Compared to what could be awaiting them in the States, this will be a walk in the park.
p.s. Rebekah Brooks has gone. In spite of the Murdochs wishing to retain her services and possibly persuade her to “take the bullet”, we have to remember that although Murdoch claimed that she was “one 0f the family”, she never was and never could have been. She was the hired help and as such, she was and remains expendable.
Government Pension Scam?
There has been talk recently about the ridiculously high salaries that some Local Authority employees are enjoying. There is another issue which, because of its somewhat technical nature , is not often discussed. It is the way that Local Authority pensions are administered.
Most of us have heard about the so-called Final Salary Pensions – they are also sometimes known as Defined Benefit schemes. They are called that because an employee knows how much pension he or she will obtain or retirement and how it will be calculated.
The amount of pension depends on the salary in the last year of service – the year leading up to retirement. It is paid as a proportion of that year’s salary and depends on the number of years service.
What is not generally known is the fact that pensions are very often artificially boosted by two main methods – the first may be construed as “naughtiness with intent” and the other one seems quite OK but is sometimes abused.
Let us assume that the final year’s salary (in the year before retirement) of the Head of Meetings at Smallville City Council is £150,000 and that his pension, based on service should be £75000. The first scam is that in his last year he is given a couple of spurious additional jobs and job titles which increase his final year’s salary by say, £30,000. His final year’s salary becomes £180,000, thus making his pension £90,000 per annum.
Secondly, an employee can purchase “added years”. That simply means that if he has worked for say 30 years , for a small outlay, he can buy fictitious years which make his length of service look longer for the sake of the pension calculation. That 30 years can become 36 years! If he or she opts to purchase “additional years” and then suddenly retires through ill-health, then that benefit is preserved in the pension calculation even though it has not been fully paid for. There is also the scope to add these years for the sake of a pension calculation when an individual is made redundant.
(Have you noticed the high number of “ill health” retirements among public sector workers?)
The rules are changing very soon but instead of added years employees will be able to boost their pension by as much as £5000 per year.
I think that it would be an excellent idea to look into how public sector executives’ salaries increase in their final year of service.
Strange how private industry is having difficulty in funding this type of pension whereas the Public Sector employees have a seemingly bottomless pit funded by tax and local rates payers.
For all the talk of reducing departmental budgets by 25% or even 40%, the area that will really cripple this country if left unchecked is public sector pensions.
Lord Hutton has produced a report that has given the following recommendations:
Pensions should accrue benefits at one 80th of final pay for every year an employee is a member of the scheme, not 60ths. This would cut the cost by £10bn a year. In fact, some public sector pensions are already 80th schemes.
(Any scheme which is expressed in such fractions is very simple to explain – although it does look quite technical. an 80ths Scheme is one where a member (employee) is awarded a pension of 1/80th of his final salary for each year that he or she has been a member of the scheme. For instance, if the last year’s salary is £50,000 and that person has been in the scheme for 20 years, the pension will be 20/80ths (a quarter) of £50,000 which is £12,500.
Public Sector salaries are too high and people are living too long for the taxpayer to fund this type of scheme.
Lord Hutton recommends an increase of the pension age for all members. That is calculated to save £5billion per year. He also recommends a short-term option of increasing employee contributions. That will raise up to £2bn a year.
The government is also considering hybrid schemes – a mixture of defined benefit and defined contribution pensions. Defined contribution means that a pre-defined percentage of salary is paid into a pension fund and this money is invested on behalf of the member. The amount of final pension depends on factors such as Stock Market performance. Most private pensions are defined benefit (sometimes called Money Purchase Schemes). Monthly contributions are paid into a fund, the fund is invested on the member’s behalf and the amount of pension depends on how much is in the fund on retirement.
The downside is that we are all too aware of what can happen to a pension if you happen to be retiring when share prices have crashed, although Pension Fund Managers are supposed to invest in less risky sectors as a member is approaching retirement. This does NOT always happen.
This is the area of reform which is most fiercely opposed by the Unions.
Some experts believe that the government has been “spooked” into unnecessary action and has announced the proposed changes prematurely. According to the independent Institute for Fiscal Studies, pensions are set to fall in relation to the size of the economy over the next half-century from 1.8 per cent of national income to 1.4 per cent).
So the “burden” will shrink.
The REAL problem for future governments will be caused by public sector pensions being “unfunded”. That simply means that there is no pension “pot”. That in turn means that the Government must pay the bill however large it gets. In other words, successive governments have not been “saving” in order to provide their employees’ future pensions.
(One question which the Unions ought to be asking the government is “How much of our pensions have you got left?”) The fact is that for years now, governments have been deducting pensions contributions from public sector employees and spending the money.
That is why the government is now asking its own employees to make an additional payment of 3.2% of salary by 2014, with an exemption only for those on less than £15,000, and a rate of 1.5% for the £15,000 to £18,000 salary range.
Everyone will be asked to work longer. At present public servants can retire at 60. This will gradually be brought up in line with the age when people become eligible for the state pension – age 66 for everyone by 2020. The armed forces, police and fire service would, however, be exempt.
Finally, the “Final Salary” will not be used to calculate a pension. Instead, it will be based on a “career average”.
Of course, new pension rules will mean that the government will have to fight hard in order to control public sector salaries because , in order to maintain decent pension levels, the public sector unions will want to ensure higher salaries. That will undoubtedly and inevitably lead to further Union/Government conflicts.
In spite of all of the above, it does seem that the government is in too much of a hurry and appears a little too keen to adopt Lord Hutton’s recommendations without proper consultation.
It has also made the mistake of adopting an over-officious tone and has not bothered to “sell” the changes to those affected.
The British don’t like that. There will be blood.
Direct Sales? No thanks!
We have imported many things from the United States – some good and some not so good. One of the most popular American business activities which we seemed to embrace in the 1950s and which is only now dying out, is “cold-calling”. That is to say, knocking on someone’s door and then attempting to sell whilst at the same time not quite hearing the word “No!”. Ask the “God sellers” – the Jehovah’s Witnesses and the Mormons – they’re the real experts.
Remember the old encyclopaedia and vacuum cleaner salesman of the fifties and sixties? Then of course, we had the Life Assurance salesman of the seventies and eighties, followed more recently by the double-glazing salesman of the eighties and nineties. Now we have the door-to-door “energy” salespeople who want to save you money by showing how to switch your gas and electricity bill.
“Foot-in-the-door” selling used to be great fun if you were a good professional salesman – and a nightmare if you were not. The more advanced “foot in the door” technique was the “head in the door” – which meant that when the door was slammed, you could carry on talking until you passed out.
Our real problem though, is that Brits are lousy salespeople and our natural shyness and inability to close a sale made cold-calling excruciating – both to the salesman and to the prospective customer. We are not genetically programmed for sales. We do not possess the “good” bullshit gene – only the pretend one.
Sadly, direct salesmen are a dying breed and nowadays, most initial contacts with clients are made either by telephone or possibly email. Nevertheless, it is still tempting for some amateurs to try their hand at the old art of door-knocking………..
If you have ever been a door-to-door salesman, what is written below may rekindle some old memories. If you are not yet a Direct Salesman but are thinking about it and have been promised unimaginable riches – don’t you wish that you’d paid more attention at school?
The rust-encrusted Vauxhall Nova with a very old “Tax in Post” sticker rattled past the seemingly endless handkerchief-sized front gardens. The single remaining wiper blade was having difficulty in coping with the solid sheet of sleet that appeared horizontally reflected in the dim headlights.
He tapped the petrol gauge nervously. He’d become used to the gauge reading ‘empty’ and he could now read it to the nearest half-millimetre. Almost instinctively, he knew that he had enough fuel for another 8.6 miles , as long as he did not drive above 45 mph in third gear. The Manager had made him promise that he would knock on fifty doors tonight and then meet him at a pub just round the corner at 9 o’clock.
Unfortunately he had been late starting because he could not find a friendly-looking door. (Only those who have “done it” will understand that reference).
Eventually, after driving up and down six more streets, he saw the door! Its porchlight beckoned to him! This was the one! He was drawn to the light like a moth to a flame. He could smell a deal! He would show them back at the office. At next Monday’s sales meeting, he would be the star. He would be the one who would be handed the bottle of cheap red wine. He would bask in the warm applause of his peers and tell them how he had pulled the deal off! They would look up to him and then it was just a matter of time before he was the top salesman. As he parked the Nova, he dreamed of drunken sales conventions in the sun and paid-for weekend breaks in country hotels…..and sex. Lots of it!
He parked the car on a slight incline away from the house – just in case the starter motor jammed again and wedged the front wheel against the kerb because the handbrake was not working properly.
As he stepped out of the car into the rain, his mouth felt dry, although his bladder felt strangely full. He needed the money! That commission cheque was his! Tomorrow there would be a sale against his name! He was a superstar!
As he stepped into the road, he turned up the collar of his cheap Topman suit jacket. He clutched the already soggy business card in a trembling hand. The combination of the streetlight and the warm glow from the porchlight cast a macabre shadow behind his shambling frame as he bent against the sleet on the short trip to the front door.
He paused at the door, straightened the business card and with a short intake of steaming breath, lifted the heavy brass knocker and smashed it on the peeling door. There was a loud silence immediately followed by a commotion and some shouting. He imagined that he heard something about a “ King Salesman”. Well, he was certainly one of those!
The light in the hallway lit a bit suddenly and the startled Salesman twitched in anticipation. SHOWTIME!
The door swung open and It stood before him.
“It” appeared to be a large biped clad only in a grey vest plus what had once been boxer shorts and It appeared not to have the full complement of chromosomes. It did not speak. It only looked.
“GOODEVENINGIREPRESENTCRAPENERGYCANIINTERSETYOUINCHEAPERFUEL..! choked the Salesman as he tried to control his bowels and wave his business card about.
The man looked him up and down, smiled, said “No thanks. Fuck off” and slammed the door in his face.
Ten minutes later, the merriment and banter in the Dog and Duck were briefly interrupted by the entrance of a young man with crazed-looking eyes and wearing what appeared to have once been a cheap Top Man suit. It now looked like a dishcloth with the collar turned up. It and the pathetic figure it contained slipped and slid up to the bar and stood very close to a man in an Yves St Laurent suit who was wearing a chunky gold bracelet on one wrist and a fake Rolex on the other. He spoke too loudly, having just consumed his fifth Scotch.
“ How did you get on then? How many sales did you get then? Bet you didn’t manage fifty doors.”
The Salesman faced his Manager, melting sleet running down his face and back. He moved one more step forward. He was now so close that he could smell the stale Paco Rabanne on his Manager’s quizzically quivering jowls.
Swiftly he brought his knee up.
Recently, military men and politicians have been talking about “mission creep” in Libya. There is a certain inevitability about conflict escalation, yet in spite of tons of historical evidence, politicians ignore the phenomenon – at their peril. Mission Creep occurs when an invading power has only ONE overriding objective. It begins immediately after it has taken that first stride towards its military goal.
That first step is followed by a series of incremental shuffles which are driven by the failure to secure an early result. In Libya, warnings to Gaddafi were superseded by a “no-fly” zone, then bombing, then military advisors, then the deployment of helicopters, then the supply of arms to the rebels. As soon as the first NATO helicopter is shot-down and Gaddafi holds a few NATO hostages, the next step will be justified. “The situation has changed” reasoning will be deployed.
A single focus on just ONE end-game results in the protagonist doing anything to achieve his ambition because politico-military “tunnel vision” kicks-in. Western politicians believe that they have painted Gaddafi into a corner but in having done so, their inflexibility has meant that they have done exactly the same to themselves.
NATO views the Libyan end-game in very simple terms – a dead Gaddafi. Some may say that there’s nothing wrong with that very laudable ambition but there are alternatives. There are always alternatives.
Meanwhile, Gaddafi’s focus is equally intense – to stay alive. The “big picture”, i.e Libya’s future is largely ignored because there is a dictator to be killed.
President Obama has been advised by his own people to “back off” in order to allow minnows such as the United Kingdom and France take the lead in the Libyan “mission”. Why? Obama is essentially a man of peace and he knows that there are alternative end-games in Libya but it is not politically expedient for him to explore the other options. His and the American government’s stance is further driven by public opinion and the rather flaky state of the US economy as well as the relative unimportance of Libya as a strategic jumping-off point.
Nevertheless, cigar-chomping generals are in the driving seat – and once they have a taste of blood, they are notoriously difficult to control. They do NOT understand the concept of “reverse gear”.
European jets and helicopters are busy dropping explosives over Libya with an abnormal concentration having been dropped on Tripoli – specifically in the vicinity of Gaddafi’s compound – all in the name of peace and protection of civilians.
Their lack of success and increasing frustration caused by the failure of their “Kill Gaddafi” objective will create battlefield escalation and a constant reinterpretation of UN Resolution 1973. That means that the military invasion of Libya is a forgone conclusion. It is merely a matter of “when” and not “if”.
Lords minority groups (Is it ‘cos I is Black?)
I’m not sure why, but the conviction and imprisonment of Lord Taylor has made me uncomfortable. He is obviously NOT a crook and if we accept that Westminster expenses fiddling was a pretty ancient sport, his prosecution seems a bit extreme. Deep-down we also perceive that many of Their Lordships have got away with it.
At £65K, our MPs are underpaid and I cannot think of a worse honour than becoming a Lord on a daily attendance allowance of £300 per day. If those incomes are annualised the actual hourly rates are probably somewhere approaching the minimum wage.
The “forced” demographic profile of both Houses is another aspect of modern government which is beginning to look more and more ‘token’ and more decorative than practical. Why? After many years of the “Let’s get some Johny Foreigners and coloureds in”policy, ethnic minorities continue to be under-represented at senior political level. It’s a national disgrace.
However, that does NOT appear to be the case as far as Lords who have been ‘busted’ in the expenses scandal. That is a list where minority groups are over-represented.
The whole expenses affair (Lords and Commons) is symptomatic of the British unaccomodating and obdurate attitude towards money and commerce.
THAT’S why we are unable to turn the occasional blind eye and why we continue to elect governments which allow their drumbeat to be set by the media.
THAT’S why we failed in our World Cup bid and that’s why we’re still moaning about Sepp Blatter’s election as President of FIFA.
THAT’S why we will never again win the Eurovision Song Contest.
THAT’S why appearances continue to matter more than pragmatism and success.
THAT’S why enjoy national self-flagellation and the ruining of public servants’ careers because ‘it’s the right thing to do’. (Is it right to break an individuals career for £15K?)
Admittedly, the Brits do not have that Jewish, Middle Eastern, or even Far Eastern ‘merchant mentality’ in which the goal is the deal and the deal is the goal, where financial ‘flexibility’ or ‘an understanding’ wins the day.
NOT a po-faced inflexibility, commercial rigor mortis and constant accusation of dishonesty, misappropriation and banditry in others.
We are Victorians who have yet to awaken. Until then, the United Kingdom will move from having been a country which 100 years ago made things happen to a country which will soon be wondering what happened.
Here is the list of the Lords who were busted (note the ‘ethnics’):
Lord Brooke of Alverthorpe, LABOUR
Yorkshireman Clive Brooke pocketed more than £140,000 of overnight subsistence allowance in seven years by claiming for his mortgage-free house in Brighton instead of his £700,000 townhouse in Battersea, South London.
Viscount Falkland, LIB DEM
Hereditary peer Lucius Edward William Plantagenet Cary registered a two-bed house owned by his wife’s aunt near Maidstone in Kent as his main residence, paid no rent but spent most of his time at £500,000 townhouse in Clapham, South London.
Lord Rosser, LABOUR
Former union man Richard Andrew Rosser received £50,000 in overnight subsistence allowances since buying a flat in Chippenham, Wiltshire, in 2007 and ‘flipping’ his main residence from £750,000 four-bedroom home in Uxbridge, West London.
Baroness Neuberger, LABOUR
Rabbi Julia Babette Sarah Neuberger claimed £80,000 overnight subsistence allowances in five years by designating £237,000 flat in Leamington Spa instead of family’s £2.3million townhouse in Regent’s Park, central London.
Lord Taylor of Warwick, TORY
John David Becket Taylor, who is of Jamaican extraction, claimed £70,000 over six years by saying his main residence was his dead mother’s house in Solihull – which had been sold – then his nephew’s friend’s house in Oxford, all while living in family home in Ealing, West London.
Baroness Goudie of Roundwood, LABOUR
Mary Teresa Goudie claimed £150,000 over eight years by saying her main residence is a Glasgow flat she bought for £200,000 in 2001, not the £1.5million mews house in Belgravia she shares with her husband.
Lord Paul, LABOUR
Indian-born Swraj Paul claimed £38,000 in less than two years by telling the Lords his main residence was the one-bed manager’s flat attached to a hotel owned by one of his companies in Chesterton, Oxfordshire, not his central London family home.
Lord Sheldon, LABOUR
Robert Edward Sheldon Claimed £130,000 over six years whilst owning a £1.3million mortgage-free flat in central London, he told authorities his main residence was a house in Manchester, which he in fact gave to his son in 2003.
Lord Bhatia, LABOUR
Tanzanian-born Amirali Alibhai “Amir” Bhatia claimed more than £20,000 in two years by flipping main residence from £1.5 million family home in south London to a two-bed rented flat in Reigate, Surrey, occupied by his brother.
Lord Clarke of Hampstead, LABOUR
Former union man Anthony James Clarke claimed up to £18,000 a year despite often staying with friends for free or going back to his home in St Albans, Hertfordshire.
Baroness Uddin, LABOUR
Bandladesh-born Manzila Pola Uddin claimed £125,000 between 2005 and 2009, second home allowance on her London property, claiming that she lived in Maudstone.
Lord Hanningfield, Conservative
Paul Edward Winston White has been found guilty of fiddling his House of Lords expenses and will be sentenced within six weeks.
Ratko Mladic, Srebrenica and Lawyer benefits
POSTCARD FROM SREBRENICA
The International Court of Justice sits at the incongruously named ‘Palace of Peace’ at the Hague.
The whole process within the Palace of Peace is controlled by lawyers for lawyers.
Whilst making MILLIONS in legal fees and boosting their retirement funds, the lawyers should investigate Euro Law in order to establish whether the International Court of Justice could register as a charity in order to formally establish its charitable status as a ‘Lawyer Benefit Organisation’.
Currently, it takes YEARS to convict a war criminal. Some of the “accused” die before the end of their trial.
The death of an accused war criminal is no doubt treated as a great tragedy by the legal profession because when the flow of taxpayer ‘big bucks’ ceases, the lawyers find that their regular ‘nice little earner’ has died with the deceased.
Here’s a suggestion: Instead of trying to indict war-criminals on EVERY SINGLE CRIME that the legal profession can think of – they should be tried ONLY on their MAJOR crimes. Forget the minor murders and parking tickets. Try them for the crimes that matter.
Just for starters, Ratko Mladic should be indicted for the Srebrenica massacre. Once convicted, he should be dancing at the end of a rope. If found innocent, the lawyers can move down his portfolio.
That approach certainly will NOT produce the customary lawyer-revenue but will certainly generate a result within the accused’s lifetime.
Adopting the simple approach would mean that war criminals could be charged and convicted (or otherwise) within months, rather that years – or possibly never.
Then, we can show them the mercy that they showed their victims and move on.
That way, scumbags such as Ratko Mladic would not relish a taxpayer-funded future of five, ten or more years whilst enjoying a Holiday Inn living standard which they could only have dreamed-of when they were slaughtering innocent fellow countrymen.
Obama at the No 10 Barbecue
Large men wearing shades, wires dangling from cauliflower ears and overcoats neatly folded in front of them stand very still. They are watching a little man running about putting the last touches to the seating arrangements. Sweat is pouring down his pink face. He looked quite neat when he arrived with the milk at 4.00 a.m. Now he looks like a sweating anaemic blood orange in a crumpled grey suit.
At last his master summons him. “Clegg!”
The Prime Minister, looking very casual in his white shirt, navy blue suit trousers, black brogues, pulls off his tie and hands it to the hapless Clegg. “Get rid of this. Don’t lose it. When my bestest chums Barack and Michelle arrive, take their coats and put them somewhere safe. Can you manage that? I don’t want any more fuck-ups. Speaking of fuck ups, how’s the Huhne thing going?”
“Well, your Highness……….”stammers Clegg, “I…..I…..I. Sorry your Eminent and Serene…..Highness….”
“Just shut the fuck up and get rid of the tie, Make sure that you fold it properly.”
Clegg scuttles off pausing only to be searched and for the tenth time, have a metal detector waved over him by a gorilla in RayBans.
He runs into No 10, through the French windows, up a short flight of stairs, into the lavatory. He decides to have a quick pee but in his blind haste, he wets the Prime Minister’s tie. “Fuck!” he mutters. Another bollocking.
Imperceptibly, the mood in the Rose Garden changes. The Special Service psychos suddenly stand a bit straighter whilst the biggest one – the one with shoulders like an overstuffed sofa speaks into his sleeve. They’re here!
An immaculate and very cool Obama sweeps through into the garden . Michelle, looking casual yet expensively glamorous follows discreetly.
The “Mwwwah! Mwwwah” ceremony between the Camerons and the Obamas is quickly concluded as the rest of the Cabinet lines up for the handshakes. Hague is looking especially resplendent in his New York Yankees baseball hat, multi-coloured Hawaiian shirt, khaki shorts and Argos trainers. Cameron looks across at Hague, just as the Foreign Secretary says to Michelle ” Hello, Nice day”.
“Twat!” thinks Cameron as he watches Sam fuss over the pre-cooked, pre-tasted, Texan burgers on the grill .
” Would you like a burger, Barack?” he shouts over to the President who at that moment stands shaking hands with the Home Secretary who once again is wearing her leopard print “Fuck me” shoes.
The President is relieved to have finished the gladhanding , grabs Michelle by the hand and returns to the comparative sanctuary of the blazing-hot barbecue.
Cameron repeats: ” Burger Barack?”
Barack pulls a sheet of paper from his trouser pocket.
“As the white-hot fingers of the London sun caress the pale face of this momentous day in this Rose Garden, I would ask something of you – my fellow human being and servant of the people…Mr Prime Minister………..something that I am not just asking of you. It is something that I would ask of anyone. Take your wooden tongs , and reach…………yes, reach for that burger bun ( Yes we can!) and having split it with the ice-sharp steel of your artisan knife – thrust into it one , just one onion-laced beef patty and hand it to me – for I am like you . I am your brother and I know that you also feel my hunger and the hunger of the people, your people, my people……OUR PEOPLE! The people of the world! We are the people! And when you have handed it to me, I will endeavour to accomplish what has been instituted by families up and down this great land of Ingerland since the mists of time parted. They parted to reveal our forebear – the common man ( Yes we can!). I am not asking for anything more that a bite – or if it pleases you, my dear and gracious Prime Minister Cameroon – just the opportunity of a bite. Now if that bite seems unpleasant or offensive in any way – we neither make nor demand apology – we simply ask the one question that matters – ketchup or none? Cheeze or no cheeze I do not yet know the answer but…..we shall begin our journey, this barbecue journey together and we shall find out! It will be our quest! We may not get it right first time but one day soon we will know! Maybe even before the end of this great day! God Bless the County of Ingerland and the United States of America!”
Cameron and Sam are now beginning to look quite ill-at-ease. Sam turns to her husband who appears to have gone into “shut-down”. “What the fuck was that all about. Does he want a fucking burger or not?”
Just as President Obama pauses for applause an embarrassed Michelle steps in. The only person clapping, jumping up and down, waving an American flag is Clegg. One of the Secret Service gorillas looks as if he is about to shoot the Limey faggot with the wet stains down the front of his trousers.
Michelle helps the Camerons ” He means ‘yes please’. Can you please give him a burger in a bun. Sorry about that but I’m always having to do this. He does get carried away”
Clegg approaches the great man. He is clutching a worn schoolboy autograph book.
“Can I have your autograph, please?” He is barely managing to hold back the tears of joy.
” Of course, Clegg. Should I do it ‘to Nick’ ?” Clegg is so overcome, all that he can do is nod.
Cameron signs his name. “Now piss off and help with the washing up.”
What?! Mandelson for the IMF?
The Chinese have asked if Prince of Darkness, Peter Mandelson would be interested in THE job at the International Monetary Fund!
Does a Pope crap in the woods? Is the bear a Catholic?
It is difficult to understand the qualities that the Chinese admire in Western politicians. If you recall, they were great fans of President Richard Nixon, even after the Watergate bust. They’re obviously seeing something that is invisible to the Westerner.
As well as having been EU Trade Commissioner, Mandelson is our former Business Secretary and he is known as an excellent manager, administrator and shrewd political operator. So he does have (with apologies to Dominique Strauss-Kahn) previous form.
If the oleaginous Mandelson were to be handed the job ahead of sexy Christine Lagarde or bumbling Gordon Brown, many, including our own Prime Minister would be reasonably happy – after all, Mandelson, in spite of his many foibles is a very smooth international wheeler-dealer.
Mind you, ‘ la cerise sur le gâteau’ would be that not-only the French but more importantly, Gordon Brown would throw all of their toys out of the pram.
French President Sarkozy is still developing his neo-Napoleonic image by having elbowed his way to the front of the NATO queue in order to enhance his recently acquired ‘decisive international statesman’ image by bombing Gaddafi. For balance, he and his wife are expecting a child. He has literally worked his nuts off in order to create a new shiny voter-friendly image for the forthcoming 2012 French presidential election. Make no mistake, the alleged DSK-rape affair is a massive bonus to his campaign.
Now he has the opportunity to install his “protégé” Christine Lagarde at the IMF. That will be yet another feather in his ‘chapeau’ plus Christine will be out of the way, charming bankers and politicians, thus removing herself from the local (French) political scene. Currently, Christine Lagarde is so popular in France that if she decided to run for the French presidency, she would doubtless win.
Gordon Brown needs a job and when interviewed, he didn’t rule himself out – after all it’s £320,000 tax-free – he just tried to sound serious and statesmanlike. He’s definitely making a low-key play for the job. For instance, he had wasted no time in flying out to South Africa, where he was launching a new High Level Panel on Education. Today’s interview had a backdrop of a classroom full of nicely polished black kids. That always goes down well with the media.
When asked about his candidature for the IMF job, he replied in his usual sparkly way “Any candidate to head the IMF needs to be appointed on merit”. When he said that, he probably didn’t realise that in that single sentence, he’d ruled himself out.
David Cameron would probably settle for anyone, as long as it wasn’t Gordon Brown – and for valid reasons. There is little doubt that Brown the Bully would try and ‘lord it’ over our Coalition Government. After all, it is barely a year since he suffered his very public humiliation. Plus he does not possess the urbanity or chic of any of the other candidates. Management by Shouting does not go down well in the IMF environment and Brown has proved more than once that he is a natural backroom boy and not a figurehead.
Nowadays, the Chinese tend to get what they want. After all, even the mighty United States is in hock to them.
Right now, the Chinese want Mandy.
This is going to be a very interesting summer.
(While we’re waiting, Greece will just have to sign a few more IOUs.)
Christine Lagarde or Gordon Brown?
The bookies’ favourite for the suddenly vacant IMF Managing Director’s job is the very bright, willowy 55 year-old Christine Lagarde. The only obstacle in her way is the fact that she’s currently French Finance Minister. President Sarkozy needs her.
By training, Christine Lagarde is a lawyer with a Masters in Politics. She has spent time working in America, speaks perfect English and has been voted the best Finance Minster in a G8 country ( Financial Times).
If given the IMF job, she will bring some much-needed glamour and grit to what is arguably the world’s top banking job. She is more of an economist- politician than banker but but has the sort of no-nonsense rod of steel running through her which will doubtless help a worried world through the current economic upheavals.
She is well-liked by the international political and banking communities and has the credibility to talk to them as an equal.
Gordon Brown is an academic, an analytical and a history graduate. During his short tenure as unelected British Prime Minister he demonstrated a total lack of management and organisational finesse. He continues to delude himself that the ‘led the world’ out of the economic wilderness. Here in the United Kingdom, he left a trail of economic destruction which continues to look like the inspiration for the recent Japanese Tsunami – but with a longer recovery time. Brown’s legacy of incompetence and intransigence will continue to reverberate for at least another two generations.
His popularity within his own country plummeted and remains somewhere below the baseline. At the age of 60, he continues (wisely) to exist below the public’s radar. Unlike the roguish but still likeable Tony Blair, Gordon Brown’s name is never mentioned. He has morphed into the Voldemort of British politics.
In his favour though, he is very unlikely to attack a woman in a hotel room – because he comes across as someone who is frightened of women and was extremely lucky to have been chatted up by the sainted Sarah, otherwise, he’d still be ironing his own shirts.
The International Monetary Fund gig requires what one can describe an Economic Showman – a Personality – a ‘Sophisticat’ – a ‘Name’. An economist with a personality. (Sorry, Gordon).
Former Turkish Finance Minister Kermal Dervis, South African Trevor Manuel (we cannot possibly have someone named “Trevor” running the IMF! It’s alomost as bad as “Mervyn”!) and even Singaporean Tharman Shanmugaratnam are in the frame.
Off-stage, the Chinese, Brazilians and Turks are making anti-european noises . (Turkey has competed in the Eurovision Song Contest since 1975 but failed to qualify for this year’s competition)
Meanwhile, German Chancellor Angela Merkel is pushing for former Bundesbank head Axel Weber.
Christine Lagarde is odds-on!!
Goldman Sachs strikes again!!
It was GS who helped Greece to cook their books before Greece’s bid to enter the Euro. They were paid a very large fee for their economic culinary skills. We can all see the fallout of the GS ‘advice’ as Greece is exposed as a Third World economy which is only surviving because of IMF handouts.
Goldman Sachs wields an unfeasible amount of power in the United States Economy: CLICK HERE
Dr Ben Broadbent has just been confirmed as an external member of the Bank of England’s Monetary Policy Committee. His employer? He is senior European economist at Goldman Sachs.
Does the Goldman Sachs strategy include world domination?
That would be surprising, considering the mess that they managed to get themselves into in 2008.
Double Agent Kim Philby had the distinction of being tasked by MI6 to catch himself.
The Governor of the Bank of England, Mervyn King appears to have managed the same trick.
His Quantitative Easing programme has created too much cash in the markets. That cash has been used by the speculators to zero-in on commodities.
Consequently, commodities have risen in price to ridiculous levels.
Governments appear to believe that it is mostly demand which is fuelling the commodity price rises – it is not – it is rampant speculation by City screen monkeys.
The rise in commodity prices has fuelled inflation which Mervyn King and his Monetary Policy Committee are supposed to control through the increasingly blunt and redundant instrument of the Bank Base Rate.
Create inflation and then be paid to control it. Nice work – if you can get it.
(Meanwhile in the USA, Ben Bernanke and the Federal Reserve continue the economic equivalent of pouring more petrol on a rapidly dying fire)