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Saturday, 30 January 2010

Credit where it is due

I don't agree with his opinion on most things but I have to admit that Seumas Milne can write. His piece on Blair's appearance before Chilcott in the Guardian, is about as objective as an destructive criticism could be. But then this Marxist-Leninist firebrand was educated at one of this country's finest and most academic public schools, where incidentally he was my "pater":

Once again, the chance to hold Tony Blair to account is being squandered by questioning that has has ranged from the feeble to the shamefully complicit. Faced with such embarrassing cosiness (Lawrence Freedman plumbed the lowest depths), the former prime minister quickly overcame his initial nervousness. Far from conceding any ground over the aggression against Iraq, he repeatedly argued that the same "calculus of risk" now demanded similar action against Iran. The fact that he remains the Quartet's man in the Middle East should be cause for the deepest alarm.

It's been classic Blair: the lawyerly evasions over the wording of the September 2002 dossier, the self-deprecating asides over his Fern Britton interview gaffe, the deliberation conflation of the 9/11 attacks and Iraq's weapons programmes, real or imagined.

His defence of the claim that the intelligence showed it was "beyond doubt" Saddam Hussein had chemical and biological weapons was rendered risible by the fact that it was prefaced with the words "I believe", but that was duly allowed to pass by the assembled trusties – as was his entirely false insistence that you'd have been "hard pushed" to find anyone who didn't believe Iraq had WMD before the invasion demonstrated it hadn't.

Put Scott Ritter and Robin Cook on one side; both Vladimir Putin and Jacques Chirac said in the run-up to war that they had seen no evidence of a continuing Iraqi WMD programme.

Most outrageous, though, was his repeated and so far barely challenged assertion that Iraq was in "material breach" of repeated UN resolutions. In reality, the fact that Iraq had destroyed its WMD stocks in the 1990s means that it was not in significant breach of the resolutions at all. Even Blair's repeated claims that Iraq was failling to comply with resolution 1441 over inspectors' right to interview officials is simply not supported by Hans Blix's reports of the time.

Friday, 29 January 2010

Can any one explain this to me?

Public sector non-job of the week from the Times. Can anyone explain what the postholder will actually do every working day to become entitled to their £82,000?


Head of Democratic and Partnership Services
Calderdale has achieved a tremendous amount over the last few years. We have clear priorities and an ambitious change agenda, ‘Vision to Reality’, which aims to make Calderdale a place where we recognise that ‘everyone is different’ and where ‘everyone matters’.
This is a fantastic time to join Calderdale as we strike out in an ambitious, modern direction. Major change programmes are already rolling-out across the Council and our partner organisations and we are expecting all of our senior officers to play a key role in the delivery of our ambitious plans. We are confident that with the right team in place we will achieve our vision, delivering on what matters to local people.
As a member of the Council’s Extended Management Team, our new Head of Democratic and Partnership Services will be at the centre of this change, ensuring that the Council and its partners meet the requirements of the new Comprehensive Area Assessment regime. Specific challenges will include leading on the development of the external strategic partnerships of the Local Strategic Partnership, influencing cross-council partnership working and overseeing the development and support to Members through the modernisation of Member Support, Democratic Services and Scrutiny. As well as managing Democratic and Partnership services, the post-holder will also be the Council’s statutory Monitoring Officer.
To find out more, please visit http://jobs.calderdale.gov.uk/democraticandpartnership or contact our retained consultants for a confidential discussion: Nick Raper on 0113 205 6076, or Jemma McPherson on 0121 644 5714.
Closing date: 12th February 2010.

Sunday, 24 January 2010

Brilliance disguised as ineptitude?

I am doing some advisory work for a business that is being taken over, although my work is nothing to do with the takeover and I will be long gone before it completes, but I get to see some of what is going on. The acquiring company has a method of communicating with the acquiree's staff which is either incredibly incompetent or a masterstroke in subterfuge.

The "timetable" for what the two parties call "transition" (a polite word for shafting half of the staff) is presented at staff meetings as an incredibly compact and unreadable slide which is accompanied by the words "I won't go into all the details here, but you can download electronic copies later", which of course the staff rarely do, and most of those that do never look down at the bottom right hand corner of the chart which tells them when they find out if they still have a means to pay their mortgage.

I am still trying to work out whether this was deliberate or just plain incompetence.

But I was struck by the same thought today when I heard Bob Ainsworth mention the likely date of the next General Election on the Andrew Marr Show. With a slight hesitation in his voice (as though he was struggling to remember his lines), Ainsworth said that voters might regret voting Conservative if they did so on May 6th.

OK, first thought is that this is just bumbling fool Ainsworth who can't be trusted to keep a secret. But the second thought is, well that is probably what Mandelson and Brown want you to think, so they got Ainsworth to say it.

But that means Mandelson and Brown want you to think that the the current government would be more competent than the alternative, so that, for example, we can trust the Secretary of State for Defence with military secrets.

Which of course we can't if it turns out that the election will be on May 6th. But if the election is on another day, Ainsworth will have done his job brilliantly.

Friday, 22 January 2010

The prez takes the Masterley line

I've said it before and I'll say it again. I have nothing against bank staff gambling for profit, but I object to them doing so with depositor's money backed up with tax payer's cash. So two cheers for Barry Obama for his announcement, and another one if he pulls it off.

Needless to say, The Monocular Leader is dead against any sort of separation of retail or commercial banking from investment banking, because , err, because he is. In fact his only reason is because the Conservatives like the idea.

"Oh no", says Aliaistair Darling, the sage of Omagawd, "it may have been a good idea in the 1930, but not in the 21st century", without giving a reason because he hasn't got one. Fact is, Glass-Steagall was in place until the late 1990's. Ten years after it was ripped up we had the mother of all banking crises, and that was entirely due to securitisation, OTC derivatives and a whole bunch of factors deriving from the interplay of retail and investment banking.

The world is a brighter place and the days are getting longer already.

Lib Dems in the Brown Stuff

From Private Eye, but too good not to lift verbatim

Michael Brown
EMBARRASSMENT ahoy for the Lib Dems, just in time for the election campaign. Next month the party’s biggest benefactor, Michael Brown, will feature in Crimestoppers’ “most wanted” list, having given the party £2.4m in 2005 via a shell company, 5th Avenue Partners, of which he was the sole director

Three years later he skipped bail while awaiting trial for fraud. He has not been seen since, though he is thought to be in the Caribbean. In November 2008 he was convicted in absentia of stealing £36m from investors to whom he posed as an international bond dealer.

His appearance on the Crimestoppers website may prompt some voters to wonder what happened to his political donations. Those wholesome Liberal Democrats wouldn’t wish to get rich on the proceeds of crime, would they? Er, yes they would!

Free helicopter flights
They have refused to return the money, insisting that they accepted it “in good faith”. Was their curiosity really not aroused when someone they’d never heard of started writing them seven-figure cheques and giving the party leader free helicopter flights? Mightn’t a bit of due diligence have been in order? Apparently not. The Mallorca-based Brown was barred by law from making political donations, since he wasn’t registered as a British voter; but even this aroused no suspicions in those sweetly trusting Lib Dems.

Luckily for them, the Electoral Commission is equally unworldly. Shortly before Christmas it published its final verdict on the tainted donations. Under the rules a British company must be “carrying on business” in the UK to give money to a political party, and the commission believes that 5th Avenue Partners was doing so. It had bought “office furniture and equipment”, and set up “trading accounts”.

‘Fraudulent from its inception’
This ignores all the evidence at Brown’s trial – and a previous high court action in 2006 – showing that the only business carried on by this shell company was that of diverting dosh from his victims to himself. As Mr Justice Cooke said in 2006, giving summary judgment in a case brought by four of the firm’s investors: “There was no trading and the scheme was fraudulent from its inception, it never being Brown’s intention that the money should be used this way. Funds had instead been shunted around various accounts in Europe. It is also clear that Michael Brown tried to hide the fact that there had been no legitimate trading with the funds supplied to him.”

There was one other question the Electoral Commission had to consider. Was the true donor 5th Avenue Partners – or was it Michael Brown, in which case the Lib Dems would have to repay it? “There is no credible evidence,” the commission concludes, “that any of the donations came from Michael Brown’s own money rather than from one of his companies.” Well, they’re right in one respect. It wasn’t Brown’s own money, it was money he had stolen from investors and laundered through his company. According to the commission, this makes the gift entirely “permissible”. Case closed.

Fugitive sugar daddy
One wonders if this naivety will also dictate the outcome of another party-funding case. Last January the commission began investigating whether Bearwood Corporate Services, which is controlled by Tory moneybags Lord Ashcroft and has given more than £4.7m to the Conservative party since 2003, is actually “carrying on business in the UK”. One year on there’s still no answer. If the commission spins this out much longer, its report may not appear before the election, much to the Tories’ relief.

Meanwhile, the wretched Lib Dems must endure the shame of having their fraudulent and fugitive sugar daddy displayed on Crimestoppers. Which should give some pleasure to the founder and chairman of Crimestoppers… one Lord Ashcroft!

Tuesday, 5 January 2010

Absence of posting

I have had a few comments and emails bemoaning the lack of posting for the last few weeks, indeed a few hoping that I have not given up posting. Apologies to those who have missed getting their financial fix but this due to a number of reasons:

  1. Christmas is a big even at Masterley Towers. Not just on the day but also in the ays leading up to Christmas. So much to do, so little time.
  2. December is a busy month for deal completions. This year there wasn't a lot of new business but there were some time consuming restructurings.
  3. There hasn't been a lot of financial news.
At least not that was really ground breaking or significant enough to blog about. Two items that might have merited a post they hadn't been done to death here over the last year would have been the government's spending outturn, which came in at £617.9 billion, and the Oxford Economics report which said that UK GDP per capita is lower now than it was in 2005.

On the first point, the issue wasn't so much the headline figure for Total Managed Expenditure but the shenanigans by which the government arrived at the figure. The details are here.

This year the government "spent" £91.449 billion on "non-cash" items of resource departmental expenditure up from £49 billion last year and on a rising trend from £28 billion from 2004/5. They also spent £85 billion on "other capital expenditure" (prior years negligible or negative). Now because those two unpalatable sums would have upset the numbers, the government made 2 "accounting adjustments" (read that as "reductions in reported spending") of £87 billion of revenue expenditure and £98 billion of capital expenditure.

Now as already reported here, we know that a lot of the £87 billion of "non-cash" items that the government doesn't want to count as current expenditure relates to PFI, where departments sign as service recipients under service contracts on terms that would normally dictate that they should capitalise the underlying asset and book the service contract as a financial liability, only when it comes to reporting government figures, the liability is "adjusted" away.

And then again we now that the government argues that all of the money it spends on bank shares doesn't really count as expenditure because it is supported by assets - which is a bit like saying spending isn't spending if in the process a valuable asset is acquired (i.e. pure tosh). OK, say the government, it doesn't count as part of Total Managed Expenditure because it is a one-off. Try that line with your bank manager (e.g. "No, I am not really overdrawn, because it was a one-off, just like the government and the bank bail-outs").

So that's £185 billion of spending that the government says we didn't really have, but the media and the opposition don't make a fuss.

And then we have the Oxford Economics report, which made some of the papers, saying that GDP per person is no higher than it was after the last General Election. Which sounds bad, but as discussed here throughout 2009, the reality is far worse.

GDP is a measure of public and private consumption, and whereas public consumption has grown at the rate or 6-8% for the last several years, public sector activity has gone the other way, so that as reported here 6 months ago, in inflation adjusted terms, private sector consumption per capita has declined by 25% since 2003, whereas public sector consumption has grown by more than 30%, so that GDP (interpreted by the government as a measure of economic activity) is largely flat.

Brown play ed on this as Chancellor, knowing that he could put his foot on the government spending gas pedal at any time so that he could always say that GDP was growing at 3% and hitting growth targets. The reality was that the "quality" of the GDP declined. The value of goods and services freely traded in the private sector, rather than the value of money blown by the government to support whatever scheme they thought would give the illusion of economic growth, has fallen rapidly. We have now reached a point where the government bleats that cutting expenditure would lead to a further recession, even though the value for money from current expenditure is very poor. How many £1,000 a day consultants does the NHS really need? But if we follow their Keynesian logic with 3x multiplier effects (not that I believe that figure) we would conclude that instead of a £175 billion deficit, £525 billion of GDP is unsustaianable. The best solution is to cut spending back to mid-2000 levels, suffer the pain and rebuild the economy on a more realistic basis.

Let us hope that the media start to bite on this.