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Wednesday, 22 December 2010

Only 30 more days

to use your ID Card.  The Indentity Card Bill was given Royal assent yesterday, and in 30 days time your card, if you have one, will be good for nothing more than scraping the ice of your windscreen. No refunds

The main purpose of this Bill is to abolish identity cards and the National Identity Register; it repeals the Identity Cards Act 2006. There are no provisions for refunding existing cardholders.A small number of provisions in the 2006 Act – unrelated to ID cards – reappear in the Bill. These cover offences relating to the possession and manufacture of false identity documents such as passports and driving licences. The Bill also re-enacts data-sharing provisions in the 2006 Act designed to verify information provided in connection with passport applications. Identification cards for non-EEA nationals are not affected by the provisions. 

Wednesday, 15 December 2010

Stupid people can hurt

An armed man stole at least $1.5m (£950,000) in casino chips from a craps table at the Bellagio resort in Las Vegas before escaping on a motorcycle, police have said.  The suspect entered the casino at 0350 local time wearing a motorcycle helmet and walked directly to the table. The incident at the Bellagio was the 10th casino robbery in Las Vegas this year.

Except, hold on.  The chips are not real currency and at a cost of less than $1.5m the casino can replace them so assuming there aren't too many punters carrying the old chps around in their pockets, the replacement shouldn't cause any great disruption.

So essentially somebody has walked into a casino with a bigweapon and walked out with a sack of worthless plastic.  Presumably if he hadn't been given the dud tokens he might have used the weapon. A smarter thief would have gone for the cash in the casino, except that there are probably very stromg measures to protect the cash, but not the chips.  It is not too hard to figure out why.

Well, maybe not for all of us.

Lest it should pass unremarked

 I would just like to point out that Ed Miliband's new press secretary is notorious for his cocaine habit, not that you will hear this on the BBC: http://www.bbc.co.uk/news/uk-politics-11994759

Disney should make a film about RBS and the FSA

We could call it The Beast and the Beast.

I can't remember whether I posted before about the FSA giving the directors of a clean bill of health, but if I didn't I should have done.  Which was quite remarkable considering one of the biggest banks in the world may not have quite smashed into a brick wall, but it certainly scraped along the wall for half a mile and pulled off most of the body work even if it hasn't come to a complete halt.

So what possible reason could the FSA have had for not publishing?  After all the directors of RBS under investigation have all gone, so the new directors have nothing to gain by asking for anythingt to be kept confidential.  Except of course it was the FSA that was responsible for supervising RBS, and for all we know the reports may have shown us how useless the FSA was in that role.

So unsurprisingly there has been a lot of government pressure on the FSA to publish more, but the FSA hve said that they are asking RBS' permission to do so.  Which sounds like an evasive move on the part of the FSA, because go figure.  The government wants the report published, the government controls the FSA, the government owns a majority stake in RBS, so the Treasury can tell the directors of RBS what to do, and yet the FSA tries to delay publication by asking the government controlled bank's permission to publish a report that the government wants published.

Apart from being once more disgusted at the wastefulness of the process, it is obvious that the box-tickers at the FSA are overing up their own incompetence once again.

Friday, 10 December 2010

How to deal with student rioters

Well they should be arrested and charged first of all (that goes without saying) and prosecuted and then fined when found guilty.

Upto £9,000 per conviction.  Of course most students will be unable to pay the but Government fine loans would be provided in full to meet the cost of the fines so there would be no upfront costs. Graduates would start repaying their fine loans once their salary reached £21,000. Once they reach this level, repayments would be set at nine per cent of income over £21,000. Loans would accrue interest at the rate of inflation while graduates earn less than the threshold, but after that the rate would be set at a rate over inflation.

Tuesday, 7 December 2010

Can you hear me Mark Webber?

Can you hear me, Gough Whitlam, Rolf Harris, Dame Edna, Mark Webber, Shane Warne?  can you hear me Shane Warne, Your boys took one hell of a beating!

One innings and 71 runs (and 5 wickets to be exact).

Sunday, 5 December 2010

Nice one Boris

The Dorchester 

Boris Johnson has withdrawn the offer of a free stay in London's exclusive Dorchester hotel for Fifa executives during the 2012 Olympics.

The Mayor of London had offered the free accommodation for Fifa president Sepp Blatter and his team.
But after Fifa's decision on Thursday's 2018 World Cup vote - which saw the England bid get just two votes out of a possible 22 - the offer was rescinded.

Free hotel rooms for VIP guests are handed out by Locog, the Olympic organising committee.
Mr Johnson is understood to have discussed the issue with Locog chairman Sebastian Coe.

Godd thing too. The rooms will be needed for the delegates of Football Associations who will sign up for the alternative World Cup to be run in the UK.

Saturday, 4 December 2010

Damascene conversions

Writers in the Guardian are up in arms about tax avoidance. They would do well to save their breath to cool their porridge and look a little closer to home, in particu;ar the 2008 accounts of Guardian Media Group which show a tax payment of -£0.8 million on profits of £307.3 million.

Show us the money, Mr Blatter

If you ever needed proof that FIFA is corrupt, you only need to llok as far as their decision to award the 2022 World Cup to that great footballing nation Qatar. Now I have nothing against the Qataris, but the simple fact is that they only have a single 50,000 seater stadium at present:

Doha Khalifa Int'l Stadium 50 000 2005
Al-Gharafa Al-Gharafa Stadium 25 000 2003
Umm-Affai Ahmed Bin Ali Stadium 25 000 2003
Doha Al-Ahli Stadium 20 000 -
Al-Wakrah Al-Wakrah Stadium 20 000
Al-Khawr Al-Khawr Stadium 20 000
Qatar SC Suhaim Bin Hamad Stadium 19 000
Al-Arabi Grand Hamad Stadium 18 000
Al-Sadd Jassim Bin Hamad Stadium 17 000 2004

Ok, so they can build some meore and take capacity up to say 50,000 each for 12 stadiums, two more 75,00 seater stadiums and a 100,000 seater stadium for the final, which would be 700,000 seating capacity. For a country with a population of 840,000. So it ain't gonna happen, because which country needs stadia with a seating capcity equal to 85% of its population.

Likewise hotel capacity. Perhaps they FIFA and the Qatari planners have figured that most supporters will be happy to kip in the desert, but are there 100,000 hotel beds in and around the international holiday destination that is Doha? Obviously not. Past World Cups have received over 400,000 vistors, but with worldwide economic growth expect that to grow every time. With national teams and FIFA officials taking out more than 32 of the biggest hotel resorts/ training camps, where are the fans going to go?

The clear lesson is that all of the expensive fact finding missions and assessments was just an exercise in international bullshit. Money talks, preferably in used notes.

But for the real bullshit let us look at the Russian bid. Why did Putin stay at home? Because he knew the result. He had paid for it after all. How did he know his bribes would be effective? Because while it is easy to lie to a prince or a Prime Minister about voting intentions, nobody takes Russian money and double crosses Putin.

So what does the typical fan have to look forward to in 2018. Well since the collapse of the Soviet Empire the residual state of Russia has become a fully paid up member of the international crime brotherhood, where nothing is though of dropping radiactive materials in the tea of those people that the state chooses not to like.

But the really bad news for fans who will have to travel round Russia on the internal air network are headlines like 'Two dead' as engine failure airliner lands in Moscow

At least two people have been killed and many others injured when a passenger plane rolled off the runway after making an emergency landing at a Moscow airport, Russian officials say.

According to media reports, all three of the plane's engines had failed by the time it landed at Domodedovo.

Yup, the TU-154, one of those Soviet planes that look like something out of Thunderbirds (actually there are quite a few) is still the plane of preference for Russian airlines, mostly because they are cheap, elf & safety is non-existent, and dead passengers can't complain.

By the end of 2018, most footy fans would have preferred that the World Cup had been held in Germany again.

Wednesday, 1 December 2010

Posh and Posh and Becks

An international figure on first name terms with world leaders, a member of our first family and one of the country's most successful sportsmen in recent years pictured today at the FIFA headquarters in Zurich.

Also shown are HRH Prince William (l) and David Cameron, Prime Minister (c).

Mind the gap

Much coverage today on the BBC of Lord Hutton's suggestion that the highest earner in public bodies should earn no more than 20 times the pay of the lowest in the same organisation. 20 times? Just shows that Hutton is no more than a champagne socialist these days.  I remember wehn the French socialists had a similar policy for all companies, but with a multiple of 7.  The French communists went further, and had 5.  Try telling that to some of our union leaders.

Strangely, or perhaps not, the BBC were very quiet about their own organisation, for much as they profess its independence it is a public corporation owned by the government.  It is after all funded by a tax. The BBC may be responsible for the collection of the license fee, a task it subcontracts,. mostly to Capita, but the receipts are paid into the Consolidated Fund.  DCMS takes a cut of the money for itself (not a lot of people know that) and then pay the remainder over to the BBC together with the money for licenses the over-75's which is funded out of general taxation.

Although, in the spirit of pay equality, perhaps the BBC does pay its cleaners £41,700 a year.

Tuesday, 30 November 2010

Looks like this will be kicked into the long grass

Joke of the Day is that the IOC will investigate alleged bribes paid to Juan Kickabol, the 30 year president of some obscure part of the world who also happens to be a freeloader also taking backhanders in his role as a member of the IOC.

This all comes from evidence found by an investigative reporter for Panorama.  The existence of payments was known about for years because of the ISL bankruptcy and fraud trials, and the system of procuring TV rights and marketing contracts was well known: bribing sports officials.  If you ever thought the pompous idiots in blazers who run these global sports events looked like nothing more than a bunch of small time crooks you were right.

But the joke is that the IOC will not be investigating the Brazilian FIFA member who appears on the same list of bribe recipients, despite the fact that he is the son-in-law of Joel Havelange, former IOC President, and the part that really made me choke on my cornflakes was the fact that Joel Havelange himself appears on the list, but wasn't mentioned on Panorama because he had nothing to do with FIFA.

You wan't to know why the London Olympics is going to cost tax payers so much when your typical school sports day costs virtually nothing?  I think we know now.

Monday, 29 November 2010

Some sanity in the tax system

Somebody has obviously given George Osborne some sage advice on the taxation of multinationals.

Readers of the left-wing press will be familiar with the story of how the evil mobile telephone operator has defrauded the Exchequer of trillions by refusing to repatriate its foreign earnings to the UK where they would be subject to corporation tax.  Instead it has parked intra group interest receipts and dividends in Luxembourg, from whence it has reinvested the money elsewhere in its business.  The company has argued that this is a legitimate business activity and as Luxembourg is in the EU, UK tax rules concerning tax havens are disapplied by EU rules on non-discrimination and freedom of movement of capital etc.

The reality is that the last government and HMRC were overzealous in their attempts to reach into the affairs of multinational groups and impose UK taxes on profits earned overseas but which remain offshore.  After a number of groups moved their head offices to Switzerland it should have been clear there was a problem, but it has taken a change of government to restore some sanity. For that we must be grateful.

Sunday, 28 November 2010

Global Warming Update: Record low November temperatures

Temperatures plummeted to the coldest on record for November in parts of the UK overnight.

Northern Ireland hit a new low of -9.5C (15F) at Lough Fea, Co Tyrone, and in Wales, a record minimum of -18C (0F) was reached at Llysdinam, in Powys.

Heavy snow is still falling in much of Scotland and north-east England, bringing travel disruption, and is set to last until Tuesday.

Forecasters says Siberian winds from Monday will make it feel even colder. Met Office severe weather warnings for heavy snow and widespread ice remain in place for eastern Scotland, and eastern England from the Borders down to the East Midlands.

Saturday, 27 November 2010

Those Nigerian scammers obviously read this blog

Deutsche Bank AG
1 Great Winchester Street
Dr. Edward Parker,
Tel: +44 7024062722
fax: +447024062721
First of all, let me start by introducing myself. My name is Dr.Edward Parker, Auditor General of Deutsche Bank London. I have an urgent and very confidential business proposition for you. I am the accounting officer of Mr. Ken Lay, Enron founder, who died on July, 5th 2006, at the age of 64 and his friend and partner Mr.Jeffrey Skilling,Ex-Enron CEO who was recently convicted 24 years for his involvement on the collapse of Enron, the energy trading giant in America. It will interest you to know that on Wednesday, 7th February 2001, Mr. Ken Lay deposited a total sum of 20M pounds and on Tuesday, 24th April 2001, Mr. Jeffrey Skilling deposited 17.5M Pounds in our Bank. These funds were deposited into a non-existing company's account which I opened in our bank (DEUTSCHE BANK LONDON) under their instruction, to avoid raising an eyebrow but unfortunately for them and fortunately for me, the two men are gone.
You can read more about the story by visiting the websites below:
http://www.chron.com/news /specials/enron/
http://www.accountancyage.com /accountancyage/news/2171002 /enron-ceo-sentence-slashed
http://www.economist.com /business/displaystory.cfm ?story_id=8082101
So right now, we have the sum of 37.5M Pounds lying in the two accounts without any proof of ownership as it was opened with non-existing companies name and the bank is not aware of the real beneficiaries as the accounts did not bear any name. As their accounting officer and financial adviser in charge of these accounts, I can comfortably present you to the Bank as the real beneficiary of the funds and they have no right to deny the application.
Consequently, my proposal is that I want to seek your consent as for you to stand as the owner of any of these accounts, since it has no trace or beneficiary which makes it easier to transfer to your designated bank account as the beneficiary. The nature of my work as a staff of the Bank will not allow me lay claim on the funds, hence this proposal is to inform you that as long you are ready to cooperate and be truthful to me, I can assure you that the sky will be our limit. All documents and proves to enable you get any of the money will be carefully worked out, I assure you that the business is risk free, as everything will be handled in accordance with the International Monetary Guidelines. I am offering you 40% for your cooperation in achieving this aim. Please, if you are interested in working with me, I will like you to send the information’s below to enable me procure the necessary documents that will backup the transfer to your account!
3. OCCUPATION....................
4. NATIONALITY...................
6. A COPY OF YOUR ID.............
As soon as I receive your acceptance mail by forwarding the above information’s, I will prepare the paper works in your name for onward remittance of the funds into your designated account. Thanks and God bless you, am waiting for the information’s below to enable me work fast,
My Regards,
Dr.Edward Parker,
Tel: +447024062722
Fax: +447024062721.

A quick quiz

George Harrison, lead guitarist of the Beatles (1962-1970) & Andy Summers, guitarist of the Police (1977-83; 2007-8).  Which was the elder?

Answers in the comments (you may be suirprised).

Friday, 26 November 2010

A 'bootiful' business

Over the years I have aad the pleasure of working with some great little and not so little companies, and one  of the private companies that impressed me the most was Bernard Matthews.  Just less than 10 years ago I worked with them on a refinancing for most of their factory equipment, having just completed a similar exercise for other larger names in the same industry.  And I have to say that it was one of the more pleasant and professional transactions I ever worked on. 

Although I never met the great man himself, who had largely retired by then, it was clear that he had built a great business from 20 eggs and an incubator, a lot due to his own hard work.

Bernard Matthews, one of the Great British businessmen of the last 50 years, has gone to meet the great Turkey Twizzler in the sky.

Flight of fancy

“We’re going to have a system where the middle classes are discouraged from breeding because it’s jolly expensive, but for those on benefit there is every incentive.”  Lord Flight

In a very predictable response, LibDem and Labour MP's and journalists dubbed Howard Flight's remark as offensive, but when it comes to an objective analysis, it is hard to see what there is to be offended about. He uses the term to mean reproduction of offspring, but while he refers to "breeding" by those on benefits, he applies the same term to the supposedly working "middle classes".

I am sure that at this point lots of people would jump in and remark that breeding is a loaded word with implications for eugenics etc, but that is clearly not the intent.  Likewise the fact that rats "breed" in sewers or the fact that the word is used in similar contexts is only an issue if the febrile imagination of the listener chooses to make that connection.

Lord Flight has nothing to apologise for, unlike the opportunistic whiners who piped up yesterday.

Monstrous Carbuncles'R'Us

I like to think that I have travelled the world a few times over and seen most of what there is to be seen, but until yesterday I had never come face to face withe the centre of our second city. Been underneath it on the train more times than I can remember, and driven past it on the motorwayequally often, but I had never actually gone nose to nose with the Bullring, so to speak. Until yesterday.

And boy is it an ugly place. I like a good piece of urban architechture, but some how Birmingham city centre fails on every level. The area was notorious for riots in the mid-nineteenth century, with notable vandalism of property. It seems this is still commemorated in the architecture of the day. Anyway, breathtakingly hideous and as they say in the Michelin guides: vaut la visite.

Wednesday, 24 November 2010

Private sector leads recovery

The UK economy expanded by 0.8% in the third quarter.

GDP growth ignoring government spending is stronger than overall growth, and rose by 1%, after a 1.3% in the second quarter. That is equivalent to 4.7% annualised growth. Nominal GDP is now back above its level at the peak in late 2008 allowing for the impact of VAT.


As I have said before, bankers will leave Loindon because of the 50% tax rate.

Not immediately because there would be up front costs, but over time as expatriate tours of duty come to an end and businesses reorganise, the powers that be will see London as an expensive place to put businesses because of the high cost of grossing up expatriates compared to other jurisdictions, so expect businesses to move over time and their London operations to downsize.

Like J.P.Morgan, who until recently, planned to build a 1.9 million square foot building in Docklands to house their 17,000 staff who are currently spread across several offices in London.

They still plan to move to Docklands, but have halved their office space requirements to the 1 million suare feet offered by the former Lehmans building. And if you think that soundslike they can pack people in tighter that is only 60 square feet per employee. If you think that 7.5x7.5 feet per employee sounds enough, remember that that doesn't take account of the space needed for corridors, meeting rooms, filing cabinets, computers and the rest.

Sounds like that 17,000 London headcount is not going to last either.

Tuesday, 23 November 2010

Lack of imagination from the FT

"US has no good options over North Korean clash 

The news that North Korea has launched an artillery barrage against a South Korean island shows that last weeks move to put its nuclear capability back on the world agenda was part of a deliberate strategy to escalate tension in the region."

Not so, sell the worldwide video/pay-per-view rights to HBO and go for it.

Royal Wedding on a Bank Holiday

Wow, fantastic, great if you are a pen-pusher, bureaucrat or diversity outreach worker because you get paid the same for doing less courtesy of your employer or the tax payer, but too bad if you happen to be an entrepreneur, trader, plumber, consultant, lawyer, accountant, GP or anybody else paid according to the number of billable hours they put in.  They can sit at home and pay for the privilege thmeselves, and to the unemployed and retired it doesn't make a blind bit of difference.

OK, I can understand why the Royal Family would like the wedding on a Bank Holiday for maximum PR exposure, but why not choose one of the many other Bank Holidays available next spring.  There are plenty of them.

If the cap fits wear it

The number of "skilled" migrants from outside the EU will be capped at 43,000, 13% lower than 2009's figure and the highest figure recommended by the independent migration advisory committee last week, but staff transferred by their companies to the UK from another country will be exempt from the cap if their salary is over £40,000.  The Labour Party first argued that this would be ineffective and then claimed that it would make British industry uncompetitive, so what is really going on here?

First of all, most migrant workers who come to the UK come from within the EU, so these rules don't apply.  Then we have all of the high paid expats in the City.  The rules hardly apply to most of them because they are transferred in by their companies and earn more than £40,000 a year (most earn more than that a month when housing and other costs are taken into account).  So that leaves us with requirements for NHS staff, of which there are still a lot, not just from the subcontinent, but quite a few from the Middle East, particularly where we have bombed their countries flat, and then there is IT.

The £40,000 cap is interesting for IT staff, because there are many Indian IT workers who are transferred into the country by outsourcing companies such as Wipro to work here for up to 52 weeks a year.  These workers are relatively cheap, not because they are prepared to work for less money than other programmers, but because of extraordinary concessions by HMRC as encouraged uinder the last government.  First of all anybody coming to work in the UK for less than 52 weeks is exempt from National Insurance, although this is a completely different basis than taxation, which aoppluies to all workers based here even temporarily, and secondly there are the extraordiary concessions given by HMRC who are prepared to treat a large part of the worker's remuneration as non taxable remuneration of living expenses.

Now we all know about per diems and other expenses that the civil service gives to its employees when they work aeay from home and many firms do the same, but the outsourcing companies are taking the mickey.  generally the transferred in IT worker is paid a salary barely above the minimum wage, but with upto £2,000 a month in living expenses, which are paid free of tax.  If this wasn't enough, until now, the UK Borders Agency was willing to treat these expenses as part of the salary paid to the employee when considering whether to admit the employee under the previous, lower salary floor.

It will be interesting to see whether this continues under the new regime, or whether the government has wised up.  Of course one of the biggest direct losers would be government departments who had driven most of this outsourcing work having been told by the consulting firms that it could be farmed out at lower cost to offshore companies.  It is a shame that they didn't figure out that the only reaosn it would be ceaper was because another arm of government would be collecting less tax.

Further update:

The devil is in the detail. It turns out that firms are also being allowed to bring one of their staff in to work for the UK for a year if the job is an ICT one and the salary is over £24,000, which sounds like they still get to put the NI + expenses scam.

I have just come across this example of skilled non-EU labour. Sadly I don't think he would qualify for the minimum salary exemption:

Monday, 22 November 2010

Cui Bono?

As it happens, I am not too fussed about the £7billion we are lending to Ireland. They are a small country and a dependent neighbour with whom we have many links and friendships.

But if there is a cause for celebration it is that the next time the sanctimonious U2 frontman comes calling to berate us about how little we do to help poorer countries, we can point out that while we put up a ten figure sum to help out his home country, he routes his royalties through the Netherlands to the Dutch Antilles because he finds the 5% cost of doing so preferable to the meagre 12.5% corporate tax rate he would have paid if he left them in Ireland.

Opportunity knocks

So Ed Balls says that the Labour government of which he was a member the balance between civil liberties and security wrong. So the 24/48/72 days detention was just a political stunt to wrong foot the Conservatives rather than a serious bit of government.

And a few days earlier Ed Miliband said the Iraq was wrong, but that didn't stop him being a member of the government that was responsible for 100,000 Iraqi civilian deaths.

And then Harriet Harman applauded Ed Miliband for saying so, although at the time, she had voted for the war, although she had seen no evidence of WMD

So when it comes to voting for these shysters in 4 years times, just remember that Labour are a bunch of hypocritical opportunists who will say anything to get back into power.

Saturday, 20 November 2010

Living in a parallel universe

Alan Johnson has been on the radio quite a lot in the last few hours, probably to knife his boss, but he manages to get a few words in to enlighten u with his view of the economy.  He does his job well, and his job is to get across the Labour spin, not that he understands a word he is saying because if he did, he would know what he was saying was guff.

First he comes out with the tired old Labour line that the budget deficit is due to the bank failures in 2008.  Not so the one time cash that the government put into the banks was of the order of £60 billion, whereas the recurring budget deficit is over £150 billion a year for the last 2 and the next 5 years. The other support through guarantees is a non-cash item, largely synthetic in that it tidies up the banks' capital ratios without ever being likely to trouble the government, and doesn't show up in the deficit numbers.

No the real reason there is a deficit is that under Labour government spending rose 100% from £350 billion to £700 billion, while receipts from taxation rose only 51% from £350 billion to £530 billion, while the private sector portion of GDP has only risen 23% from £525 billion to £650 billion. First we had more tax on the private sector (remember stealth taxes) which pretty much killed off investment and then we had the Gordon Brown GDP fetish whereby the Balls and Brown thought that if they could keep pushing up the headline GDP figure by borrowing and spending the media and thus the populace would be fooled into thinking everything was fine and dandy.

If the banks were at fault, the government and FSA were equally culpable not for a lack of regulation, but for a lack of supervision. You can have all the rules you like, but usually banking risks can be handled by common sense. Banks have an obligation to be prudent but they only see their own hand in the poker game whereas the bank supervisor sees them all.  The quid pro quo of the banks consenting to be supervised (and of politicians seeking to be elected) is that those with the bank supervisory powers are supposed to take their role seriously, and not turn the whole exercise into class war/banker bashing to protect their skins while abdicating their responsibility to the tax payers.

The reality was that the UK economy (and other economies) resembled one of those cartoon characters that had run off a cliff.  For a moment they run in mid air before plummeting.  The British electorate got wise to what was happening and are clinging to a rope trying to haul themselves back.  The Irish on the other hand have hit the bottom of the ravine.

But to compound the unreality we also heard Mr Johnson tell the Conservatives that they should learn from the lesson of Ireland, that cutting Government expenditure would lead to economic collapse.  For the umpteenth time, the UK government is not spending less year on year like the Irish government, but is actually increasing spending approximately in line with inflation.  All that is being cut are the Labour spending plans which were a continuation of the same fantasy economics of the last 13 years.

If the Conservative government have anything to learn from Ireland it is the same lesson that they can learn from Labour, that a government cannot sustain a large deficit indefinitely and the shyster economists of the Labour Party deserve to be kept out of power for a long time.

Friday, 19 November 2010

Who said crime doesn't pay?

I see that "philanthropist" who bankrolled Michael Brown so that the Lib Dems could hang onto the £2.5 million "donation" that funded half of their 2005 election campaign funds has been rewarded with a free trip to the House of Lords.

Over the past five years Mr  Paul Strasburger and his wife Evelyn have made donations to the Liberal Democrats of more than £765,000."I am a donor and I have got a peerage," Mr Strasburger told the Bath Chronicle today. "If people think those things are linked that is up to them. They may or may not be right, I don't know."

Amongst the financial support that Mrl Strasburger gave to the Lib Dems was the offer to stand bail for Michael Brown, the convicted fraudster, fugitive, and notorious major donor to the Liberal Democrats before the 2005 election.  What has never been clear is whether Mr Strasburger knew Mr Brown before he stood bail (I presume not), and we know that when Mr Brown absconded Mr Strasburger forfeited his bail money.

He is now repaid in the only commodity that the Lib Dems have to offer: ermine (rhymes with vermin).

Lord Young was right

My local Somerfield wasn't particularly good, but I patronised it from time to time for the odd packet of biscuits or last minute ingredients for supper. And then it got taken over by the Co-op, and there wasn't a great deal of difference, except that the prices went up, but I signed up for my Co-op membership card, so I get their monthly junk mail telling me what I can buy.

So now I know that at £12 for the "delicate and aromatic" Janisson Brut, you too can be a Champagne Socialist.

Truly, you never had it so good.

We are going to have such fun

Looking at Government spending

It took me 2 minutes to find this:

Department of Health
Department of Health 20/05/2010 Consultancy/Professional Advice COMMISSIONING MCKINSEY AND CO INC UK 11064 £6,121,750

That's more than the NHS pay their Chief Executive over 25 years.

Oh my God, it's so big

One of the smaller pleasures of banking is reading the fraud reports  In fact as small pleasures go it it comes second only to the aviation incident reports, which sometimes read like an installment of the Keystone Cops, particularly when they involve helicopters and logging (load of logs drops out of harness, harness bounces up and wraps itself round the rotor blades, surprisingly frequent).

Anyway the fraud reports, which are crculated amongst banks list the dodgy characters who walk in with all sorts of weird and wonderful instruments which they try to use as collateral for borrowing real money - fake diamonds, Bolivian bearer bonds, US Treasury bills from the 1920's whose face value exceeded the entire US National Debt of the day, letters of credit signed by Napoleon III etc, you get the picture.  The reports usually end with the words: "Business declined".

But until yesterday I had never heard of anything as daring or foolhardy as this *3 trillion* dollar attempted fraud.

10/10 for ambition, but 0/10 for common sense.

Thursday, 18 November 2010

I received an e-mail

Fifa-strasse 20,
8044 Zürich, Switzerland
Dear Friend,
I got your contact today,with report you are reliable and trustworthy.
Am the member of the contract award committee and for FIFA World Cup 2018 which as you will be aware is due to be award later this month.
Due to unforeseen and most fortuitous circumstance which I am not able to at present divulge, I need your assistance to bank (USD10.5M) and subsequent investment it on properties in your country urgently. It go without saying that is matter is to be held secret between us and I know from accounts of others that you are a person of super integrity and I am sure will not divulge.

You will be required to.
(1) Assist in the banking safely of the said funds
(2) Advise on lucrative areas for investment
(3) Assist in purchase of properties.
If you can render your assistance in this regard, 20% of the total investment sum will be for you as your commission. It will be done under a legitimate process so that we will not breach any international or local  laws governing the same. Making it a 100% risk free. For the security reasons i will advise you to email me use my private email: [xxxxx]@hotmail.com
I wait in anticipation of your reply and co-operation.
Best Regard,
[Name redacted to protect the guilty].
Private Box: [xxxxx]@hotmail.com

2 problems solved for the price of 1

As I have noted before, it is amazing how problems can often be solved when they are combined. It is just a question of thinking laterally and putting the two together:
  1. Ireland wants a bail out.
  2. Britain wants somewhere to put its nuclear waste.

Doing more for less?

"‘Doing more for less’ has become the mantra by which the public sector deals with the substantial financial challenges facing our economy and society. For too long local government has been perceived as part of the problem, not the solution.
In the past year, the LGA Group has been turning that image around."

Or so says the last Annual Report of the Local Government Association, a lobbying group working on behalf of local councils to lobby government with an annual budget of £35 million paid for by your taxes. Yes that's right, you are paying for one bit of government paid to lobby another bit of government.

But, more for less? Apparently not because the chief executive has just awarded himself a £70,000 pay rise, so that he now trousers £302,840 a year.

Hang on, that's more than the Chief Executive of the NHS who is responsible for a £100 billion budget. Perhaps that was what they meant by "more for less".

Wednesday, 17 November 2010

Unemployment down, but it is better than that

Unemployment, that is to say those registered as unemployed reduced by 9,000 last month, although the number actually receiving job seekers allowances actually went down by slightly less (5,300) showing that people on benefits are more likely to hang on to them than those people who are out of work but living off their own resources.

But that only tells half the story because overall employment in the UK economy increased by 167,000 in the three months to September, compared with the previous quarter, reaching 29.19 million.  What is actually happening is that over 150,000 people who had actually given up bothering to register as unemployed got back into work in the 3 months immediately following the Conservative election victory.

Why is this happening?  Take a look at this story from a few days ago

LONDON, Nov. 4 (UPI) -- The British government supports a plan by BP to broaden its exploration licenses in the regional waters of the North Sea, the company said.
British supermajor BP announced it won seven offshore exploration blocks in the North Sea during the latest licensing round from the British government.
BP has been offloading foreign assets to pay for the damages incurred from the oil spill in the Gulf of Mexico during the summer.
BP in its latest financial report said its $39.9 billion tab for the Gulf of Mexico spill "represented its current best estimate of those costs that can be reliably measured at this time."
Trevor Garlick, the company's regional president, said strong investments in the North Sea, however, were a boon to BP's continued success.
"These license awards are a significant success for BP and a further boost to the long-term future of our North Sea business," he said in a statement.
Garlick added that projects in the North Sea are part of a strong investment strategy in the region.
The awards were from the British Department of Energy and Climate Change.

British Petroleum didn't invest a penny in the North Sea while the Labour windfall taxers and profit ring-fencers were in power, but now they look as though they have gone for a while, BP are back to extract oil deposits that were there all along. The UK can count on £6 billion of productive investment that wouldn't have happened under Labour.

You could not make it up

The BBC is carrying reports from whingers who want the Royal Family to pay for the cost of their own wedding, or in other words, the BBC news editors are voicing their own opinions by reporting the view of proxies.

Let's get this straight:  the BBC who sent more staff to the Beijing Olympics than the UK sent athletes, who sent 17 staff to cover 33 miners coming out of a mine in Chile, who send more staff to cover major diplomatic meetings that the country sends delegates, is telling the Royal Family to go easy on the public purse.


The Royal Family costs the tax payer £36 million a year (but in return the country gets to enjoy the benefits of the Crown Estates which generate far more than £36 million a year for the Exchequer).  For that we get an independent head of state, a figurehead for the armed forces and a substantial stream of tourist revenue.

The BBC costs license payers £3,600 million a year.  For that we get glitzy ballroom dancing on Saturday night, innumerable house/life swap/antique/cooking/chat shows, ubiquitous unfunny comedians in lieu of scriptwriters and darts and snooker as a poor substitute for sport.

At least a Royal Wedding would give us something different on TV.

I have managed to contain my joy and excitement

But sadly things aren't looking too good for the young couple when it comes to picking a date:

The French Open             23 May 2011 to 05 June 2011     Roland Garros
Chelsea Flower Show        24 May 2011 to 28 May 2011    Royal Hospital, Chelsea
Epsom Derby 2011         03 June 2011 to 04 June 2011     Epsom Downs Racecourse
England v Sri Lanka Test Match     03 June 2011 to 07 June 2011     Lord's
Queen's                 06 June 2011 to 12 June 2011     Queen's Club
Royal Ascot             14 June 2011 to 18 June 2011     Ascot Racecourse
Wimbledon             20 June 2011 to 03 July 2011     All England Lawn Tennis Club
Henley Regatta             29 June 2011 to 02 July 2011     Henley
British Grand Prix        08 July 2011 to 10 July 2011     Silverstone
The Open Golf Championships     14 July 2011 to 17 July 2011     Royal St George's Golf Club

It seems I may well be corporately entertained on the day, and my attention will be elsewhere.  I am of course open to offers.

Tuesday, 16 November 2010

How did I miss this?

PricewaterhouseCoopers, one of Britain's largest accountancy firms, has launched an investigation after male staff at one of its branches in Ireland were found circulating emails where they rated the attractiveness of their female colleagues.

But just for the record, reading from left to right, top row first: 6, 7, 8, 9, 7, 8, 7, 7, 7, 6, 8, 6, 7.

The ideal Christmas present for anyone

  • who wants to make phone calls
  • on the move
  • whose name is John.
  • err.. that's it

That Irish bail out which they say isn't going to happen

How much are you on the hook for, dear tax payer?

Well there is the EU bail out fund to which the U K isa 13% contrbutor.  Chances are thy will tap that for £70 billion, so that's £9.1 billion right of the top, courtesy of Mr Alastair Darling who signed us up for that just before he got booted out of office.

Then there is the small matter of the government shareholding (84% as it happens) in RBS who say they have Irish bad debts of £4.3 billion, so I put £3.6 billion of that down to you dear reader, but of course, there may be more to come.

And then we have another £4billion of ‘impaired loans’ in Ireland over at Lloyds, so you can chalk up another £1.6 billion to the tax payer their through their 41% stake..

So I make that a tidy sum.  It may not seem much these days (5 years revenue at al-Beeb, or 2 months cash flow at the NHS), but some of us can remember the time when £16,000,000,000.00 was serious wonga.

BBC waste of money special

Man to wed woman next year (we wish the happy couple all the best).

 BBC News 24 (most-watched news channel, delivering breaking news and analysis all day, every day or so they claim).switches to non-stop coverage and ... launches a helicopter to circle over Buckingham Palace

Sunday, 14 November 2010

Why Formula 1 is so overrated

I used to enjoy Formula 1 racing, but that was years ago when there was some racing. These days it depends almost entirely on which car gets to qualify first, which is not so much a question of driving skuill as engineering, and we can have a drivers' champion who is nothing more than a boy racer in a fast machine who has to start at the front of the grid to win because he doesn't know how to overtake at this level.  For all the glitz and glamour I have no idea why any serious company would waste money sponsoring a cross between a high-tech procession and a tyre change race.

Friday, 12 November 2010

Well it's somewhere to put the flowers

What would you rather have: a vase or a Bugatti Veyron? OK, not everyone is into cars, so what if I say: a vase or a villa in the South of France?  Fair enough, some people don't go for houses abroad, so let's say a fully furnished apartment in Knightsbridge, just around the corner from Harvey Knicks, or a vase?

You still want the vase?  It's just a vase, nice design with a bit of history but its less than 300 years old, so in the whole scheme of things it is really no big shakes.  Nice craftsmanship but hardly the originality of a Van Gogh or a Monet.

You still want the vase? OK, you've got an honest looking face and I like you so here's what I'll do.  You can have the Bugatti, I'll throw in the villa and and the flat in Knightsbridge and I'll tell you what:  you can have a 200 seater passenger jet aeroplane, I would say that little lot would set you back a cool £53 million or thereabouts (including commission), so which would you prefer?

You still want the vase? Well, I suppose its less than a Cristiano Ronaldo.

Wednesday, 10 November 2010

Not above the law

Some good news from the courts where the judge has ruled that MPs who cheat on their expenses are no different than any other fraudster or false accounter and should be tried in the plain vanilla bog standard criminal court. The BBC report is here.

Perhaps they will begin to see that they are not above the law, and the same principles apply to the Woolas case.  The High Court judges who declared his election void are not trying to limit his freedom to speak out.  In fact they were quite happy to let Mr Woolas say what he liked, true or untrue, hurtful or kind.  They didn't actually serve any punishment on him for that.

What they did do was to apply a law that had been enacted by Parliament that said that when a candidate lied about an opponent their election should be declared void.  The courts have acted as parliament decreed and the Labour MPs who are crying foul should realise that just like the MPs who will be tried in the usual criminal courts for falsifying their expenses, they are not above the law.

Monday, 8 November 2010

I am not a lawyer, but

.. it seems I know more about the law than those who make it.  It seems the High Court agree with my post below that judicial review is not the correct venue for an appeal against a decision of the High Court and the correct procedure is to go to the Court of Appeal. Any lawyers reading might care to confirm/deny that.

That doesn't stop Woolas and his hack lawyer protesting that it is, but on the one one hand there is a High Court judge telling Woolas to go away, and on the other we have one of those Labour MP's divorced from reality who thinks he can spin his way out of any situation who thinks he knows better or can persuade the rest of the world that he does.

If that wasn't bad enough, we now have the half-pint Mr Speaker telling us that Woolas' seat won't be contested until after the case has gone to judicial review.  Perhaps we can understand Woolas' strategy now, because that judicial review is never going to happen, so by protesting that the case should go to judicial review, Woolas gets to hang onto his seat indefinitely.

Friday, 5 November 2010

Pulling the Woolas over viewers eyes:

The BBC covered the Woolas  court case by saying the former minister vowed to fight the judgement of the High Court by seeking a judicial review.  Fair enough, but one can't help thinking that if they were reporting a Conservative MP they would have given more prominence to the fact that the former minister was found guilty by two High Court judges of lying in his election material and was banned from sitting in Parliament for three years.

If the BBC had less of a numpty writing up the case they would have pointed out that judicial review is for the review of administrative matters and legislation.  The proper venue for appealling against a High Court decision is the Court of Appeal.  Thank goodness these people aren't running the country any more.

Monday, 1 November 2010

A little quiz

Whose manifesto said "Our goal is to make responsibility the cornerstone of our welfare state. Housing
Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford."?

 Answer here (see page 2:3).

The Sun sheds some light

I am not an avid reader of the Sun, but I admire its writers who can put a cross a message boldly and clearly
THE BBC should hang its head in shame.
At a time of grave economic peril, it is this public sector broadcaster's duty to tell the impartial truth.

Instead it has chosen, disgracefully, to take sides.

As The Sun reveals today, it is ready to bend the facts in a relentless propaganda war against the Government. It falsely portrays shiftless, workshy scroungers like James Van-Cliff as hapless victims of cruel coalition cuts.

The art school dropout is allowed to claim on the flagship News at Ten that he is being thrown on the streets by new housing benefit rules.

Nowhere is he asked why he refuses to work and has chosen to live off the backs of taxpayers.

This is not just an abject failure in the first rules of journalism. Nor is it the only example.

The Beeb is today the pompous voice of defeated socialism.

Labour lumbered us with terrifying levels of debt. Yet Newsnight relentlessly blames "nasty" Tories for trying to bring it under control.

Radio 4's Today programme gives Government critics like hysterical Polly Toynbee endless airtime while constantly interrupting ministers.

Its news programmes rip into any plan to make Whitehall's big spenders more efficient while rarely saying why savings are needed.

We are sitting on a powder keg of national debt, yet the BBC treats the crisis as if it were the coalition's fault, not Labour's.

It broadcasts ludicrous warnings about cardboard cities, mass evacuations and Nazi-style extermination of poor families as if they were fact.

Yet it scarcely mentions that Labour was planning almost exactly the same VAT hikes and draconian cuts to housing and incapacity benefit.

Nor does it mention the legion of Labour ex-ministers who have denounced mealy-mouthed Red Ed Miliband for failing to say so.

Labour is playing politics. That's their job.

The BBC is generously run on public money. It has a charter promising editorial independence.

That must not become a licence for malicious and unscrupulous propaganda.

Britain as a basket case

Yet more evidence of the truly dire mess that the country was left in by the Labour Party comes in the form of graduate employment figures for 2009 graduates, the last gradation year under the old government.  Much heralded in the news is the 1% increase to 8.9% of those reporting themselves as unemployed, but more illuminating ar the other figures, 59.2% in full-time employment (down from 61.4%), 15.4% in further study/training (up 15.4%), 8% working and studying (down 0.1%) and 8.4% "Other" (down 0..1%).

So what does that tell us? 83% of graduates are either working or studying, although a fair number of those "working" will actually be doing unpaid internships, but an amazing 17% have nothing to do when they get up in the morning.  Even more worryingly, only 5% of graduates have gone into business or financial services. So don't be surprised if we slip further behind in the next 20 years.

And before anybody tells me that all the unemployed graduates are feckless layabouts, get in touch with me.  I can put you in touch with numerous Oxbridge graduates, 1sts and 2:1's, hard working and sensible, whose talents are going to waste in post-Brown Britain.

Saturday, 30 October 2010

BBC should put some of its reporters on hold

You would have though that with a budget of £3 billion or so, the BBC  would have been able to put together a more professional report on the pcketing of Vodafone shops than the student journalism on display on their website.

The simple facts are that Vodafone and HMRC won and fought a case through hte Revenue Commissioners, High Court and Appeal Court, plus a trip to the ECJ with each side winning and losing points on the way, but in the end both sides agreed to settle on a liability of £1 billion or so.

The story had been covered in Private Eye mentioning a liability of £6 billion, which is easily seen to be implausible with a bit of simple maths but is taken as gospel by a bunch of ignorant protesters, encouraged by the usual left wing suspects. An HMRC spokesman has said: "We can't comment on the details of the settlement but we can confirm that it was reached by HMRC following a rigorous examination of the facts. It was agreed that Vodafone's liability was £1.25bn and at no point was the liability greater than that", so it is very unprofessional of the BBC to give this story any prominence.  If HMRC say the figure at issue was never more than the amount Vodafone paid the protesters are not credible.

Amongst the poor reporting was the following claim that the issue "purportedly stems from Vodafone's purchase of the German telecoms firm Mannesmann, which was supposedly bought through a Luxembourg subsidiary to avoid paying tax in Britain."

Well no it doesn't.  If the German comapny had simply been bout by a Luxembourg holding company then there would be no tax payable in Britain if the profits remained in the foreign subsidiaries.  The issue was that the Luxembvourg subsidiary provided loans to the German and other subsidiaries which HMRC claimed provided low taxed passive income to the Luxembourg subsidiary which should be allocated to the parent under the UK controlled foreign corporation rules and which Vodafone claimed was a bona fide active part of its business and protected from those rules by the EU directives providing for freedom of establishment in the EU and non-discrimnatory taxation.

When Vodafone firsbought Mannesman they asked the Revenue whether there proposed arrangements wouldcauise the CFC rules to be disapplied.  The Revenue as is usually the case decided not to play ball, but as they usually do, told the company to do what they intended to do and file a tax return, which is what they did. After severalyears and a lot of haggling HMRC, the courts and Vodafone have basically determined what level of substance is required for the Vodafone treasury operations in Luxembourgf, which is why Vodafone now have an agreement that establishes that they won't be liable for any UK tax on their Luxembourg and other EU operations under the current UK laws, at least until they bring that income back to the UK. And quite right too.

Friday, 29 October 2010

Turning London into Paris

Chris Bryant has said that capping housing benefit at £20,000 a year risks turning London into Paris.  Now having lived in both Paris and London, that may be no bad thing.  Paris has an inner ring road that may be a death trap but it ensures that it takes no more than 20 minutes to get from the centre of town along one of the military boulevards to get onto the motorway and away.  Compare driving up the Champs Elysees and down the Avenue de la Grande Armee to get onto the Peripherique with the 90 minutes I spent last Sunday night getting from Battersea to the M4 and you will see what I mean.

But we shouldn't dismiss the idea out of hand, because Mr Bryant may have hit on an idea.  Instead of paying £2,000 a moth in rent in London, the government could save a fortune by sending the homeless to live in Paris. €2,025 a month gets a very nice 3 living room 2 bedroom apartment in Neuilly close to the shops and metro, and of course for EU residents would pass the cost of unemployment and health care onto the French. Plus they might learn to speak a foreign language.

Thursday, 28 October 2010

The (New Labour) police state we were in

101,248 people were stopped and searched last year in England, Wales and Scotland under Section 44 of the Terrorism Act.

506 of those searches resulted in arrests. None of those arrests were for terrorist offences.  I suspect many were for objecting to being stopped

Since July, the police are not allowed to stop and search people unless they "reasonably suspect" them of being a terrorist. It will be interesting to hear what those "reasons" have been so far.

Tuesday, 26 October 2010

Global Warming Update: coldest October night in 17 years

Do I hear "short term fluctuations", anyone?

Left wing wrong-footed by reality

The BBC set out its anti-government stall this morning by saying that a consensus of City economists took a dim view of the state of the economy.  These let us remember were the same economists working for banks that the BBC was happy to chastise only a few days earlier because of the size of their bonus pools.  That was enough to allow Lord Mandelson to grace the airwaves saying that the Coalition had failed, blah, blah blah..

But then we hear the news that the UK economy grew at a "faster-than-expected" 0.8%.  Faster than expected by the BBC, New Statesman, Guardian and their ilk, but not by anybody who has seen the recent growth in activity by UK companies following the election.  Nothing too dramatic, and pay is still restrained but companies are building headcount and expanding hence the 3.3% (annualised) GDP growth rate.

Of course that doesn't stop the BBC wheeling out their latest economics correspondent, the Shadow Chancellor Alan Johnson, who tells us that it is not as rosy as the figures tell us, because, err, because .. he doesn't want it to be. In fact according to the Labour Party the cuts (which of course aren't cuts in reality because actual spending is going up by more than RPI) should be reduced us to stave off the fall in GDP which ... isn't happening.

Alan Johnson even wentso far as to say that the government were still taking a "reckless gamble" with the economy, although he stopped short of saying why Labour's planned 1% extra cut was not even more of a gamble, and for the more economically astute, why government spending which is actually 3% more than last year is a gamble.  Well, he wouldn't, because it isn't.and more fool Labour and the BBC for thinking it is.

Meanwhile rating agency Standard and Poor's upgraded its outlook for the UK's triple-A credit rating, which is nice.

But how did the Labour Party get it so wrong? The main reason appears to be a poor grasp of reality.  The "cuts" aren't cuts in totality, merely a scaling back of the preposterous notion that we can boost our way to prosperity by ever greater borrowing and spending. 

What is more, while some government spending may be cut back. total government spending is still increasing.  This means that GDP, which measures broad activity in nominal terms, will not actually fall (because actual spending is not falling).  Add to that the reassurance to business that the new government has a dose of sanity about it (capping benefits at a figure significantly higher than the average wage is not meanness, but a recognition that while some do little to receive their weekly cheque from the state, many others work for 40 hours and pay taxes to receive far less), and the effect is a boost to the economy after several years with a negative outlook.

But if you really want to see the bizarre narrative of the Labour Party, you need look no further than Ed Miliband's speech at the CBI, which the BBC covered in much more detail than the Chancellors' (but there you go).  The problem in Britain, says Red Ed, is that we don't put enough emphasis on industry. 

True enough. I don't disagree, having spent much of the last 25 years trying to finance UK industry and its exports.  The problem is that the last government of which Mr Miliband was a member and previously a Treasury policy wonk, had a series of policies that acted against British industry more than any other government.

Leaving aside all the red tape, compliance costs and bureacracy, let us just look at the financial measures enacted by the Labour government from 1997:
  1. effectively preventing capital intensive companies from financing their assets through sale and leaseback in the second (i.e. post-election) Finance Act 1997, 
  2. effectively banning finance leasing (which had been used to finance all of the inbound industrial investment - think Japanese - in the 1980's and 1990's), unless you happen to be a foreign shipping company taking the UK tax payer for a rise in Giovanni Prescott's Tonnage Tax abortion, 
  3. the promotion of multiple film finance schemes using tax breaks snapped up by Hollywood studios, on the basis that it would stimulate the British Film industry, when in reality film crews pack their bags and move elsewhere as soon as the film completes and the subsidies dry up, while there were no such tax breaks for investors in British industry where an investment in plant and machinery would likely result in 25 years of employment, rather than a summer of filming; and
  4. the crassest of Budget manoeuvres where a reduction in the corporation tax rate from 30% to 28% is announced, to be funded by ..... a drop in the rate of capital allowances from 25% to 20%, or in other words, since there is no net cost to the tax payer, this is a movement of cash from the capital intensive, plant and machinery buying industry and utilities to the much less asset intensive advertising agencies, investment bankers and estate agents.
As buggers' muddles go, that doesn't just take the biscuit.  It ransacks a whole tin of Huntley & Palmers' finest.

Sunday, 17 October 2010

Cutting back to ... 2009

Many years ago (which in City terms means at least 3), I worked for a specialist corporate finance boutique that was linked to Tullett Prebon.  That little venture flourished and then several years after my departure grew like topsy before imploding in a big way down in Australia.  The Tullett Prebon connection was no less racy, being a money broker, whose trading floor it was unwise to cross in a skirt, nay positively dangerous.

Those days are long gone, with Tullett Prebon somewhat tamed by its acquisition by Collins Stewart, although the groups have recenly announced a de-merger, with the chairman of the former group, Terry Smith, deciding to go with the interdealer broker rathar than the stockbroker.

Those with long memories will remember Mr Smith when he was an analyst for BZW and issued a sell recommendation against the parent bank.  I can't say I would have blamed him at the time. Barclays was in a big mess.  Mr Smith went on to earn muchos kudos by penning the classic Accounting for Growth, an encyclopedia of UK GAAP accounting scams, which won him royalties from book sales to the likes of me, but cost him his job as head of research at UBS (see previous comments on UBS). It is surely because of Mr Smith's chairmanship that we should pay attention to a simply stated paper on the likely impact of the cuts from Dr Tim Morgan of TB who predicts a shower not a hurricane.

Friday, 15 October 2010


I'll admit I have never been a great fan of UBS. To be a major league investment bank, you have to have smarts, but to be honest, the typical UBS banker always had the whiff of mountain goats about him. They aimed to ape their cousins on Wall Street, but somehow they seemed to end up more ape than banker. Some would say that a lot of their presence owed itself to their "advice" to wealthy individuals and businesses who wished to avail themselves of the dicrete attractions of central European banking, but whatever it was, they always seemed to be copying the behaviour of the Americans without ever leading the way.
Which is why it is hardly surprising that we should read in a 69-page “transparency report” prompted by a Swiss parliamentary committee this year, that the bank's losses were attributed to the bank’s drive for growth in investment banking, notably by originating and distributing structured products that were based on US mortgages. The bank says its risk controls had been based too heavily on statistical models, while ratings supplied by external agencies were seldom questioned.
“The incentives in place at that time to generate revenues without taking appropriate consideration of the risks underpinned this strategy and facilitated losses,” said UBS.
So as I have said before, while stochastic models might be a good measure of something, perhaps fairness of pricing, they are no measure of the overall risk in a security. The Swiss relied on their models and the model based valuations of the rating agencies. But that risk management strategy, like a Swiss cheese, is full of holes.

Wednesday, 13 October 2010

Fantastic news from Chile

The ordeal will soon be over for the 25 who have been separated from their families for weeks.  Stuck in appalling conditions not knowing when their ordeal is going to end, and with their ability to escape depending on a tiny capsule hanging on the end of a 700 meter cable.

But it will soon all be over, and the 25 brave men and women of the BBC news teams will be ready for their next overseas junket.

Sunday, 10 October 2010

Life is full of surprises

Probably the last thing you would expect to here on the secular BBC, but the Radio 4 programme Americana features an interview with Harvard professor Robert Putnam who reports that in the US, and, but to a slightly lesser extent in the UK, by any of a number of measures, those who engage in some form of regular religious practice are more likely to engage in charitable activities, more likely to donate to charities, more likely to volunteer in their free time and are all round better neighbours.

Well, that's an observation that I make from life, and perfectly understandable - if anybody went to a weekly meeting where they confessed their misdeeds, expressed thanks for the good things in life and promised to lead a better life, then it is hardly surprising that, on average, they make for more congenial neighbours, but it is not something that you hear very often on the BBC.

Friday, 8 October 2010

Smart move by Miliband

Putting a former postman in charge of economic affairs.  First of all, since he knows nothing about economics he won't realise when he has lost the argument, and second, being a former postman he will know how to write what he does know on the back of a postage stamp.

Meet the new boss. Same as the old boss.

Of the 22 shadow cabinet members ten went to fee-paying schools and three went to grammar schools. If you include Ed Miliband, six members of Labour’s front bench team did PPE at Oxford and nine went to either Oxford or Cambridge.

If you think this is a "new generation" of Labour, then it is worth remembering that all of the shadow cabinet were on the government payroll before the election as ministers or whips.

New generation? Won't get fooled again.

More boutiques than Bond Street?

Interesting to see that the EU is getting the hang of the US extra-territorial regulation and is trying the same game on bankers' bonuses.  According to the BBC, the new bonus rules would apply to the worldwide operations of banks and subsidiaries operating within the EU.

Key points of the proposals include:

  • Cash element of standard bonus capped at 30%, and one-fifth for large bonuses;
  • New watchdog for European banks to define what is a big bonus;
  • 40% of normal bonuses deferred or paid over several years, while 60% of big bonuses postponed;
  • A clawback mechanism, meaning a star banker might not receive the full payout if investments unravel.

I like the idea of a 'malus', a reverse bonus that is due if the previously profitable trade goes wrong, but how do you enforce this when the bonus recipient may have moved to the other side of the world.  And how does the EU expect to force Yankee Bank Investments Ltd, the UK incorporated to react if its former employees are paid big bonuses when they move back home or elsewhere in the organisation.  If the EU goes against the London operation they will quite rightly have a case to take to the ECHR.

I reckon that over time this is likely to lead to the return of the merchant bank - little or no capital, but big fees for advisory work, mergers and acquisitions.  Why would a corporate finance advisor who has worked all the hours of daylight and more for months to earn a big fat fee for his firm, and at no continuing risk once the deal goes through, want to see his/her bonus tied up in shares where the value can be wiped out by one stupid trader?   All that goes away by working for an institution that is not a licensed deposit taker.

Wednesday, 6 October 2010

Are you doing your bit?

There has been a lot of discussion in the media, the internet and down the pub about whther £44,000 is a lot of money or whether somebody who earns that much should be getting benefits, or more importantly, whether somebody earning £15,000 a year should be subsidising the children of someone else earning 3 times as much.

SoI did what I usually do in these circumstances, and got out a metaphorical envelope to do some sums on the back thereof.  It trurns ot that there are about 60 million of us give or take a cargo ship of illegal immigrants and the government plans to spend £680 billion this year, but there is an additional £30 billion or more of tax xcredits that the gobvernment calls "negative taxation" and lopps off the tax receipts number but should really add onto spending, so let's do that.  That gives us an average spend in central and local government of £12,000.

Now I know that we all receive different amount at different times in our lives, and some of us are perfectly healthy until we drop dead while others make the localhospital a second home, but bear with me and let us just assume that we all draw the same average figure throughout our lives, and let's call that figure £12,000.

Well the good news for Mrs £15k Shop Assistant is that she isn't subsidising any one.  On the back of my envelope I made some broad brush assumptions about council tax and VAT, based on income and then came up with a figure for the total amount of income tax, NI, council tax, VAT and other duties that someone would spend according to their income (assuming it was all spent). Quite horrifically for Mrs Assistant about 40% of her gross income ends up in the government's maw, but that means she is only paying half of the value of services the government says she receives, and none of the cost of any dependent relatives.

To come close to breaking even for her ow account she would have to earn £30,000, and for 2, 3 and 4 people she would have to earn £55,000, £75,000 and £96,000. The situation would be slightly more in her facvour with a second earner earning rougly the same salary, because the government would be spending as much on them as they paid in tax for 2, 3 and 4 people if they both earned £16,000, £48,000 and £58,000.

Or to pu it another way, anyone with 2.4 kids who earns less than £125k is living off the state.

And who is picking up the tab for that?  Your grandchildren.

Tuesday, 5 October 2010

The fastest way off the dole and into work

Justice secretary Ken Clarke has said that a "regime of hard work" needs to be introduced to the prison system to reduce re-offending and to instill a work ethic in inmates. Speaking to the Conservative party conference, he confirmed plans to make prisoners work a full forty-hour week where they were likely to be paid the national minimum wage. He said: "If we want to reduce the crimes these people will commit when they get out... We need as many prisoners as possible to work hard for regular working hours."

So there you have it, for anyone who wants to get off benefits into work. Rob a bank and you will be put onto a minimum wage job in no time. Better still, for an OAP strugling to make ends meet on the full state pension off £97.65 per week (single) or  £156.15 (married couple) per week, get yourself banged up for sheltered accomodation and a job that pays  £185 a week.

Crime of the week: The sentencing of Jerome Kerviel

Jérôme Kerviel was sentenced to three years in jailon Tuesday. On the face of it, and without going into the details, that seems fair enough.  Acording to the three-judge panel,  “By his deliberate actions, he put in peril the existence of the bank that employed 140,000 people, of which he was a part, and whose future was threatened.”

Fair enough, because the guy ran up €50 billion of unhedged trades that were un reported until they were discovered in January 2008 - the old trick of winning trades going into the book and the bonus pool, the losers going into the drawer (for more details see Joe Jett). And if it wasn't bad enough on top of the 3 year sentence, M. Kerviel was given a 32 year suspended sentence and a prohibition on further trading - as if anyone would let him near their trading floor.

But the real crime is that Kerviel has been ordered to pay Societe Generale the staggfering sum of €4.9 billion in damages.  The reality is that SocGen were probably aware of the risks Kerviel was taking but turned a blind eye, until things went wrong. It was the bank that was telling its traders to make short-term profits. That doesn't absolve Kerviel of any guilt, but the bank should be taking more of the blame, if for nothing other than the laxity of its controls.

Monday, 4 October 2010

Osborne's faux-pas

A big mistake from Multi-millionaire trustafarian George Osborne in promising to abolish child benefits for anyone paying tax at the higher rate.

First of all let me declare a non-interest. My children have grown up and have either left home or reached an age for which they are no longer eligible for child benefit. Now let me say why it is wrong.

First of all the restriction will apply to any household where one of the members is paying tax at the higher rate (roughly  £44,000).  But because of the crude way it is applied it will not apply to a household where there are 2 earners earning £43,000 each, fopr a combined family income of £86,000.  Others who would still qualify would include the private equity manager who can defer millions in gains and show little income on his tax return and the resident non-dom who has little UK taxable income and pays for his lavish lifestyle with a foreign credit card issued by his friendly offshore bank.

More seriously, the idea is poorly thought through for a number of reasons.  A family with 3 eligible children would receive £20+ 2*£13 or £46 per week, which is just slightly under £2,400 a year. That may not sound much to Mr Osborne, but to a family on a taxable income of £44,000 a year taxed at a marginal rate of 40% plus 2% NI, that represents the net income from an extra £4,135 of extra income.  Or to put it another way, earning anywhere between £44,000 and £48,135 makes them worse off that they would have been earning £44,000.

Of course (and at this point I warn you that I am not a regulated financial adviser), that any parent caught in this trap would be well advised to make additional voluntary contributions, or possibly to make donations under gift aid, to reduce their taxable income in order to retain their eligibility for child benefit. Alternatively, if you are an MP, you will still be allowed to employ your spouse as a secretary during this parliament.

But that misses the real iniquity. Originally child benefits were implemented as a tax allowance.  The logic was that a single or childless married coupleshould be granted individual personal allowances each, at some times transferable, at othe times strictly personal, because the first so many pounds of income is deemed to be required for basic personal needs such as minimal housing.  The logical extension of this is that further allowances are needed for additional family members because the income of the familt, effectively a single legal and economic unit, is stretched further.  Hence the availability of income tax allowances for children.

When it was realised that tax allowances benefitted high rate tax payers disproportionately - a factor that was less aparent before income tax rates increased after the second world war, the child tax allowance was changed to child benefit, with broadly the same impact for basic rate tax payers.

Removing the benefit for higher rate tax payers no means that a married couple with 3 children where the only working spouse will be paying tax at the higher marginal rate despite an average income per capita of £8,800 per person in the family, whereas a childless couple each earning £43,000 will be paying tax at a marginal rate equal to the basic rate, despite having an average income per capita that is 5 times higher.