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Monday, 27 August 2012

Toot toot, chuff chuff

The last time Beardy Branson had such a good whine, he was crying to his mother from police cells after being questioned in connection with the selling of records in Virgin stores that had been declared export stock. His latest tizzy is all about being outbid for the West Coast Main Line franchise. You have probably heard about it because he has been on the airwaves trying to create a fuss about the rival bid.

For the record, and because you won't hear much about this from the BBC, the rival bidder, FirstGroup, has promised to introduce better wi-fi and food, more frequent trains and more seats, and to cut standard fares by 15%. They would also introduce 11 new 125mph six-car electric trains on the Birmingham to Glasgow route and provide more direct services between destinations. Oh, and they have promised to pay £5.5 billion for the franchise. Now that is what the franchising system is all about.  More competitive bids, offering more for the franchise and creating better services.

But Branson's argument is that they can't deliver. Not so, all the targets are perfectly deliverable.  The only issue is whether they make any money at it,, and that is the risk of the bidder.  Well, what if they don't perform? Well if the franchising contract is drafted correctly then the entire First Group can be held liable.  First Group may have smaller annual revenues (£6 billion or so) than Virgin (£15 billion give or thereabouts), but their embedded infrastructure (train and bus franchises) is a lot less volatile than the video games, jewelry, houseware and holidays that form an increasing part of the Virgin business.

And if anybody has to make a judgement call on that, well it is the rail regulator, or to give it its full name The Office of Rail Regulation, the independent safety and economic regulator for Britain's railways.  Which makes it all the more laughable that Angela Eagles and the Labour Party should be joining the Branson bandwagon, looking for an "independent" review of the the decision.  The ORR is independent, and ultimately answerable to parliament.  Some parliamentary ego-maniacs just never know when to stop.

Saturday, 18 August 2012

Living in the real world

Some people really just don't get it. Such as the BBC and the Labour Party.

 How can unemployment be decreasing (and employment increasing) when GDP is falling? Simple really. Everybody who is in work is being paid a lower aggregate amount (hence the 0.7% fall in GDP). The trouble is that working for less than you did before, or as we old fuddy duddies like to call it, "matching wages to the real value of labour as determined by market forces, is an experience well understood and experienced in the private sector, but virtually unheard of in the NHS, the BBC or the rest of the public sector.

A dear friend, who I knew for many years as a top corporate finance banker, but who left the City ten years ago to work as a consultant, tells me that he has found a new job. I say job, but in reality it is nothing more than a casual labourer contracted by the day for peanuts, paying far less than he earned as a basic wage in the 1980's.

 That is the reality of the private sector today. Remember all the talk of the benefits of globalisation? Real enough if you were a plutocrat staying aloof from all that, but in the real world, wages were forced down., At foirst private sector wages, and now it is time for the public sector to feel the pain.

I 'd like to teach the world to sing in perfect harmony

EU foreign policy chief Catherine Ashton says the jail terms for the Pussy Rioteers questioned Moscow's respect for the "obligations of fair, transparent and independent legal process".

German Chancellor Angela Merkel said the ruling was “not in harmony with the values of European law and democracy.”

True enough, but although the Russian President rules by fear and intimidation and his government is known to have ties to the Russian mafia (the FSB pay them to make arms shipments), it has to be said that  Vladimir Putin was elected into office, unlike Mrs Ashton.

Although the non-election of EU spokesmen and even European heads of state as in Italy and Greece seems currently to be very much "in harmony with the values of European law and democracy.”

Friday, 17 August 2012


My wife's cousin's eldest son (not sure what relationship that makes us) posted on Facebook that he is taking his girlfriend to see The Dark Night Rises tonight.  They haven't been dating very long and he reckons that this is the ninth time they will have been out together.

So far it has been dinner, dinner, dinner, dinner, dinner, dinner, dinner, dinner, Batman.

Thursday, 16 August 2012

Faceplant continues

The fantasy business that is Facebook continued the decline in its share price.

Keen readers may recall that I tipped the price of the share to decline exponentially when it was launched in May.  It seems to have a half life of about three months, because today the prohibition on sales by its major holders at the time of the float was lifted and the shares fell 6% putting them at $19.88, less than half the value just after flotation.

Still not to worry, because the Facebook website will be airing reality TV programs. Well, I'm no media expert, but what I do know is that if a website is putting out TV programs that are available on free to air YV at the same time  don't expect the web business to make out like gang busters.

This one is going all the way to zero.

Olympic Legacy: a suggestion

I am not a great fan of TV.  That may be because I don't watch it very much.  That may be linked to the fact that I don't have a TV, which in turn explains why I don't have a TV license, which in turn is explained every time I peruse the TV listings that show nothing of interest to watch.

But that could change if the BBC actually decided to put on something of interest that didn't involve either (a) putting the same dozen comedians in front of a camera "ad-libbing" pre-scripted jokes and calling it entertainment or a quiz show or (b) using the same tired old formats derived from Antiques Roadshow featuring either chattels or immovable property.

The latter form of mental torture features heavily on BBC 1 on Saturday afternoons. This week we have:

12:10 – 13:10 Homes Under the Hammer
Martin Roberts and Lucy Alexander visit properties in Cheshire, Kent and Derby. (R)

13:10 – 14:10 Bargain Hunt
31/32 Four experts make up the red and blue teams shopping for bargains. (R)

14:10 – 14:40 Cash in the Attic
A mother and son invite Jennie Bond and expert Jonty Hearnden into their home. (R)

14:40 – 15:40 Escape to the Country
Alistair Appleton seeks a Hampshire home for a couple who spend half the year in America. (R)

Nearly 4 hours of tawdry asset gawping, and not only that, but the programmes are all repeats, so that the UK TV viewer can decide whether they are still as enthralled as the last time they watched this tat.

And hats off to the BBC, recipients of £10 million a day in licence fees, who will have managed to have satisfied about £1-2 million of their prime-time weekend obligations on the major TV channel by simply switching on the video playback machine and going on a 4-hour tea break.

But it doesn't have to be that way.  There could be a sports programme lasting for 4 hours, perhaps extending into the football scores, covering all the minor sports that feature in the Olympics and more besides. Not just athletics and swimming, but boxing, judo and taekwondo, cycling and rowing, sailing and canoeing, the odd bit of horsey stuff (even dressage), archery, shooting and modern pentathlon, and in the winter skiing, bobsleigh and the rest.  None of it difficult to cover, just a few cameras and a knowledgeable presenter/commentator.

I even have a name: Grandstand.

Churls just wanna have fun

I was struck by a piece in HM Telegraph this morning about the turnover of senior civil servants:

There must be something rotten in the Coalition, when so many of our top civil servants are on a veritable stampede for the exit. Right across government the mandarins are shaking the dust of Whitehall from their feet and moving on to bigger, better jobs elsewhere. They include senior officials at Education, the Cabinet Office, the Ministry of Justice, International Development, Energy, and the Home Office. Surely they can’t all be leaving because they are brassed off with David Cameron’s Government?

“No,” said one insider. “Not all of them.” The emphasis was telling. Some undoubtedly feel that Mr Cameron’s Whitehall no longer offers them a rosy future. Cuts and more cuts stretch ahead; staff are demoralised. Ministers with unrealistic political timetables display growing impatience.

“Being a perm sec isn’t fun any more,” was one comment.

Fun? Fun!?!? Fun??!?!?!?  Did somebody say it wasn't "fun" to be a civil servant? 
Listen buddy, we don't pay you to have "fun".  If you really think that the vastly overpaid (in my book anyone earning more than the prime mininister or 7 times average earnings without actually taking any "business risk" is by definition overpaid) senior civil servants in this country have job descriptions that contain the word "fun", then you must be living in cloud cuckoo land,  err... make that Disneyland.  

It was the public sector that grew under the last government, that spent £700 billion a year while collecting only £530 billion in taxes.  It was the public sector that has burdened the tax payer with ridiculously expensive PFI schemes in order to overcome departmental accounting and budgeting issues rather than considering the broader national interest. It was the public sector that managed to double health spending with very little extra output, just letting the extra money flow through to the highest paid clinicians in Europe. It was public sector departments that wasted money by spending their full budgets when economies could have been made, out of fear that economies would lead to lower future budgets, and loss of status or power.  

And now they complain that they aren't having fun any more.

Tuesday, 14 August 2012

Kazakhstan residents are happy to victories of local athletes

The Kazakhs were definitely "in it to win it" at the Olympics.  Out of eight Kazakh medals, seven were gold and the eighth was silver, but only just judging by this report from Caspio.net:

On the last day of the London Olympics Kazakhstan residents watched fights of Kazakhstan boxers online. The Mangistau region residents supported all boxers but they paid particular attention to their fellow countryman Adilbek Niyazymbetov. In the final fight Adilbek Niyazymbetov fought with Yegor Mekhontsev.

Adilbek showed all his best in this fight. The fight was head-to-head and finished in a draw. However, additional factors made the judges award victory to the Russian athlete. The honoured boxing coach of Kazakhstan Alexander Drach believes that Kazakhstan athlete lacked a stroke of luck.

Alexander Drach, Honoured Boxing Coach of Kazakhstan said «He is a very talented athlete; it’s a gift from god. At the same time he is a very modest guy and it was very pleasant to work with him. It was a truly spectacular fight and Adilbek should have been a little more active. The Russian athletes showed more attacks. Adilbek can work with such boxers and he should just be a bit more active.»

Sabit Niyazymbetov watched his son’s match with particular attention. Father is proud of his son and thinks that a silver medal is still a victory. Sabit Niyazymbetov, Father of Adilbek Niyazymbetov said «I am very happy for my son. His silver medal is like gold medal for me. I would have been happy even if he gained bronze. I would like to thank all Kazakhstan residents and residents of the Mangistau region for all their support for my son.»

Aktau fans of Adilbek are happy with his success in London. They believe that he will achieve a lot, since the Mangistau boxer is very promising sportsman.

Saturday, 11 August 2012

Congratulations to Ed McKeever

Probably the only part qualified accountant to win a gold medal at London 2012.

Mens 200m kayak, since you ask.

Thursday, 9 August 2012

Standard outburst in uncharted waters

So a US regulator in NY that you have probably never heard of is kicking up a fuss about Iranians, or rather about Standard Chartered, the London-based but Asian-focussed bank that operates in Iran.  Now Iran isn't everybody's favourite nation, particularly Israel (which views Iran as the root of most if not all evil), and the United States (which for the last 33 years has waged an economic war on the state with a comprehensive range of economic sanctions).  The US rules pretty much prohibit US citizens and corporations from doing any business with Iran, with limited humanitarian exceptions (medicines and the like).

But the rest of the world doesn't quite see it the same way.  The EU is quite happy to permit business relations with Iran.  The French designed and managed the construction of the Imam Khomenei International Airport.  The Germans sell them machine tools, as do the Japanese and both countries sell their cars.  The Chinese buy Iranian oil, but they also built the Tehran subway.  Australia sells them wheat, New Zealand sells them lamb and Argentina sells them soya.  Meanwhile Iran sells the rest of the world its oil, Persian carpets and .. pistachios.  Chances are the next bag of pistachios you buy in the shops (assuming you are not reading this in the US) will be contributing to the Rafsanjani family fortune.

All of these goods and services have to be paid for, and in all likelihood the non-Iranian buyer or seller will want to pay or be paid in dollars. And that is where it gets tricky, because in theory all dollar denominated payments (unless they are between accounts at the same bank) would have to be made through the correspondent banking system in New York.

For those who don't know what correspondent banking is, instead of the tens of thousands of banks in the world maintaining accounts with each other on the off chance that the Third National Bank of Kurdistan should want to send $25,000 to Banco Comercial de Patagonia, smaller and even quite large banks keep accounts at a few large money centre banks and use those banks (correspondent banks) to operate payments to other coresspondent banks in the same country/city who forward the payment to the account of the recipient or his bank.  Which means that if anybody is sending dollar payments to or from Iran, they are likely to go through New York at some point, at which point the US authorities might get a bit touchy.

Now arguably, nobody in the US is doing any business with Iran, simply with the people who are moving money to or from Iran, but that doesn't seem to cut much ice with Benjamin Lawsky, the Superintendent of Financial Services in New York.  Mr Lawsky, who as you might expect from his name is a Friend of Israel, who thinks that such business transactions are just plain evil.  "How much of this $285 billion has been used to fund terrorism?", he asks. 

At a rough guess, I would say pretty much none of it. Terrorism doesn't require much funding, Mr Lawsky.  Just ask your fellow citizens at Noraid.  And most terrorist funding in Iran comes not from the government, but from the Islamic foundations ("bonyads") that own vast swathes of the Iranian economy.  They don't need to send money to Hizbollah in dollars because I doubt Hizbollah has a checking account with Citi on 5th Avenue in NY.  Wherever their terror cells are located, chances are the local currency will be dirhams, riyals, pounds or euros, not dollars, so no need to trouble Uncle Sam's end of the SWIFT network.

Meanwhile, Mr Lawsky's accusations may be rebounding on him.  There have been reports that the censuring of Standard Chartered on Monday by the New York state regulator surprised not only the bank’s executives but also stunned officials at the federal agencies investigating the bank, the Treasury and Justice Departments and the Federal Reserve. Some of the Treasury officials had reportedly concluded that while Standard Chartered’s handling of Iranian transactions might have been questionable, they were not necessarily illegal.  The trading with Iran occurred with non-US entities, which is why Mr Lawsky accusations have nothing to do with OFAC regulations, but the catch all charge of money laundering and false accounting.  Whether or not these apply will depend on the facts, but since the money seems to have got through to the right place, it sounds as though any mention of an Iranian bank would have been superfluous, and the fact that a particular transfer was connected to Iranian business but that the Iranian business was not actually involved in a particular leg of a transaction suggests that the transactions were perfectly compliant under the law as it existed at the time.

And if SCB want to structure dollar payments so they don't pass through the US, it is so easy to avoid doing so:  If Iranian client with $100 million on deposit at SCB wants to make a $100 million payments they buy $100 million of euros from SCB, and send that amount to the account of the intended recipient at their bank.  The payment is cleared through the euro clearing system outside the US.  Simultaneously SCB and the other bank enter into a $/€ FX deal for $100 million face value at the same rate and the other bank does the same with the end client.  Net result, Iran moves $100 million to client, and the US is none the wiser because all they see is an FX deal between 2 non-US banks.