30 October 2008
The International Monetary Fund, the European Union and the World Bank announced a huge rescue package for Hungary yesterday in an attempt to save central Europe's former economic powerhouse from bankruptcy.
The $25.1bn (£15.3bn) bail-out, which was much larger than expected, aims to help restore investors' confidence in the country's financial markets and the forint, and marks the first time that an EU member state has been rescued by the IMF.
No, it doesn't. A certain country was rescued in 1976 with an IMF loan. BusinessWeek is a better guide.
29 October 2008
A TEAM of MSPs was last night branded "an absolute disgrace" after a football match in which they were involved was called off when tempers boiled over.
The match at Lesser Hampden in Glasgow on Sunday was stopped after about 55 minutes when the game threatened to descend into a mass brawl following a number of contentious challenges between the politicians and their opponents, a team of sports journalists. One of the flashpoints in the match saw the BBC broadcaster, Chick Young, injured in a tackle involving John Park, the MSP for Mid Scotland and Fife, after which the MSP was sent off.
How nice to see that our politicians and sports journalists still seek to maintain the sporting traditions of fair play and broken ankles.
PS Is Mr Chick Young not a little old for this kind of endeavour?
The only certainty in all of this is that, for men, dyeing hair to hide the grey always looks worse, and if they happen to be world leaders, there is something even more desperate about it. I leave you with two words: Silvio Berlusconi.
Which brings us to the Democrats. I admit it - I was a Hillary fan. It seemed to me that she had been tested in the fire, that she had the experience and the administrative ability to deliver. I was always worried that Obama would be found out; some awful secret would emerge in the heat of battle that would put paid to his chances.
In the past few weeks, I have begun to think that I was wrong. I knew that Obama was an orator of some skill, which is not that common these days. And we have learned that he keeps his cool under pressure; he thinks before he reacts. Maybe he has kowtowed a little too much before the political orthodoxies - on Iraq, on Afghanistan, on taxation. But I can forgive him for that, if we get a man in the White House who thinks.
But what has really impressed me is his organisational ability. Since when did the Democrats manage to raise more funding than the Republicans? How come the Democrats have more local offices and more local volunteers than the Republicans? How did the Democrats manage to recruit all those new voters? One of the newspapers pointed out recently that Obama has more than 1000 lawyers in Florida alone, standing by, ready to pounce on any nonsense at the polls. It didn't happen under Kerrey, it didn't happen under Gore, and - arguably - not even under Bill Clinton.
So, if Obama puts half the effort into governing America that he has put into getting himself elected, he may just be one of the great presidents.
And now he is in trouble. Again.
Amid pandemonium on Frankfurt's stock exchange, VW shares experienced a rollercoaster ride before ending 82% higher on the day at €945, valuing the group at €280bn.
The panic-buying, which began on Monday, came after hedge funds were caught short by Sunday's announcement from the luxury car-maker Porsche that it had seized 74.1% of VW.
With the federal state of Lower Saxony holding a further 20.2% in VW, that left just 5.7% of the firm's shares traded freely. With global car companies in freefall as the recession bites into sales and profits, the funds [had previously] bet hugely on VW's stock falling dramatically. In market parlance, they "shorted" VW shares by "borrowing" and then selling them in the hope they could buy them back at a much reduced price.
Porsche's announcement forced them to close their positions by chasing the few shares on offer and paying ever-higher prices for them.
It's a hard world and getting harder all the time.
27 October 2008
THE Scottish Government has admitted for the first time local income tax rates could be varied locally – a major concession to get the proposal through the Scottish Parliament.
Until the weekend, the SNP administration had stuck hard and fast to its proposal to replace the council tax with a fixed, centrally set 3p income tax supplement.
But yesterday John Swinney, the finance secretary, said he was willing to consider allowing councils to vary the rate up to 3p, but not above.
He also confirmed the government was investigating how to tax unearned income. "We're certainly considering that as an option, I'm very happy to confirm that," he said.
No sign that HM Revenue and Customs would be prepared to operate the system for the Scottish administration - which probably means that individual local authorities will have to take on the task of recovering the tax from employers. And employers may need to get used to making differential deductions from their employees' wage packets depending upon which local authority area they reside in. Furthermore, companies which pay dividends may have to learn how to deduct varying amounts of tax from their shareholders.
The words "administrative nightmare" come to mind.
24 October 2008
If you were a Lloyds TSB shareholder, would you agree to swap shares on the basis that one HBOS share equals 0.605 of a Lloyds TSB share? For that is the deal on offer. As Mr Spock would say, it doesn't compute.
So then, revise the terms of the offer? Well, they've already tried that and it does not appear to have worked.
But if the merger/takeover is abandoned, what future for HBOS?
It's hard to make a reasoned and fair judgment about the Alaska Governor because she has been the victim of one of the nastiest, most sustained and comprehensive slime-jobs ever performed by a hyper-partisan national and global media.
Is it really that hard? When you see some of her incomprehensible interviews, notably with Katie Couric. When you hear her constant repetitions of terrorist slurs against Obama. When you read about her dismissal of those she regards as not real Americans. And that's before we get to the lies about the bridge to nowhere, about the gas pipeline and about troopergate.
Face it, Gerry, the woman is a dingbat.
23 October 2008
What possessed him to pick a fight with Mandelson on terrain that overwhelmingly favoured the latter I doubt he could coherently answer himself.
But his decision to break the Code of the Bullies, by passing on confidences gleaned at billionheir Nat Rothschild's villa amounted to a form of suicide by cop. He simply begged for the bullet.
On reflection, Lord M's counterstrike deserves another point of reference. Forgive yet another boxing analogy, but here we find Mandy as Muhammad Ali to Osborne's George Foreman. For this is the most sensational act of political rope-a-dope ever witnessed.
For two weeks, he soaked up incessant haymakers from front-page headlines about his connection with the oligarch, and for all the world looked ready to drop. And then, quite suddenly, he danced off the ropes to unleash a murderous combination of his 0wn, with a little help from that tireless correspondent with the editor of The
Times, Mr Rothschild.
One particular beauty about the Rumble in the Jungle was The Punch Ali Never Threw. Knowing it would ruin the elegance of the knock-out, he stopped himself hitting Foreman again as he began his slow motion lump to the canvas. I like to think Lord M will show such restraint, graciously retiring to his corner to be mobbed by delirious hangers-on from the Labour benches. They should hail him as their new, undisputed champion because that, miraculously, is what he has become.
Georgie-Porgie - silly boy.
If you believe it is reasonable for the state to maintain a permanent database, holding details about everyone's communications; if you believe that the state has a good record of safeguarding individual databases on benefits, health and the military; and if you are confident that Britain's anti-terrorist laws will never be used for other purposes, then you will support Ms Smith's planned bill. If, on the other hand, you agree with articles four, eight and nine of the European convention on human rights, or with the US fourth amendment, or even if you simply think that Britain's creeping surveillance society has got to be reined in before it is too late, then you will respond to Sir Ken's warning and insist that, as with 42-day detention without trial, this new degradation of our freedoms is one that parliament must never allow to pass. As the prime minister so succinctly put it: which side are you on?There is a third point of view - that of practicality. There are some 70 million mobile phones in the UK. If you assume that, on average, each is used twice a day (once for a text message, once for voice communication) then each week will add about a billion items to the database. (And that is before you add in all those websites visited on the internet, all the e-mails, or the telephone calls made from landlines.) Accordingly, after the first year, at an absolute minimum, there will be more than 50 billion separate entries. Or possibly three times as many. Do the tools exist to store, maintain or search such an enormous database?
22 October 2008
With Mr Osborne having to break his holiday – to make a speech on poverty in London – it made sense for his wife to have the company of Nathaniel Rothschild and the collection of financiers and their families.
It must have been really tough for Mr Osborne to relinquish the company of Rothschilds, Murdochs and Russian oligarchs in order to deliver a speech on poverty. My sympathies for the puir (well rich actually - Daddy is a wallpaper magnate and the 17th baronet) wee lamb.
21 October 2008
But what did we do to get the bunch of tossspots involved in this latest imbroglio, involving a floating gin palace off Corfu, owned (needless to say) by the latest Russian oligarch to emerge from the steppes?
Mandelson, Osborne, Feldman. Would that they spent a bit more time tending to their knitting and a little less sucking up to the super-rich.
20 October 2008
17 October 2008
THE tycoon Sir Tom Farmer is at the head of a growing list of senior business figures demanding a rethink of the HBOS takeover, The Scotsman can reveal.
Figures from industries including construction, retail, property and tourism are all concerned the controversial deal could be against the long-term interests of the taxpayer. They are deeply worried it could prove contrary to Scotland's future economic success and damage its corporate environment and retail banking and mortgage sectors.
Sir Tom and his contemporaries are the first to sign an open letter being sent to political leaders throughout Scotland and the UK – including Alistair Darling, the Chancellor, and Alex Salmond, the First Minister.
The obvious route is via the shareholders who will have to agree to the takeover. Is it impossible for these captains of industry to pressurise the HBOS shareholders (many of whom are institutions themselves) to resist the takeover? Meanwhile the shares are going cheap - if the big guys have a spare million or two to spend, perhaps they might become shareholders in order to vote. They would thus be putting their money where their mouths are.
16 October 2008
The chief executive of MG Alba will ask the BBC Trust to consider allowing the broadcast of the new Gaelic digital television channel on Freeview.
Programmes, launched a month ago, are available on Sky and Freesat, but it was not planned to show them on Freeview for another two years.
If they continue to show live Scottish club rugby as they did last Saturday, I'll watch it, even if it does have a heedorum-hodorum commentary.
First, inter-bank lending - despite government guarantees - remains severely constipated. At least, so says the current poster-boy, Mr Peston. And, if the banks do not trust each other, the provision of further (or even existing) credit to their retail customers, both companies and individuals, is a non-starter.
Second, the banks (notably Lloyds TSB) appear to be challenging the requirement to buy back the government's preference shares before issuing dividends, a period which might last for five years. The Times appears to think The Treasury has made or will make concessions, whereas The Guardian suggests that the government is holding firm.
Meanwhile the stock market is tanking (again) ...
SNP leader Alex Salmond will open his party's annual conference in Perth later in a bullish mood.
The first minister will tell delegates ...
He will say that ...
Mr Salmond will tell the conference ...
..., Mr Salmond will say.
He will say that ...
Mr Salmond will encourage his party ...
What are the conference delegates supposed to do? Tick off the paragraphs as he delivers them?
If I were a delegate, now that I know what the Dear Leader is going to say, I might be tempted to skip off to the nearest pub for a quiet pint.
15 October 2008
Unemployment in Scotland has risen by 4.7% in the last quarter, the latest official figures have shown.
The number of people not in work increased by 19,000 between June and August, to 124,000.
The Labour Force Survey showed there were 10,000 fewer people in work, compared with the same period in 2007.
Jobseekers Allowance claimants rose by 3,100 in one month, to 81,800. The number of people in employment within the three-month period was 2,538,000. The Scottish unemployment rate rose by 0.7% over the quarter, to 4.7%, which is below the UK average joblessness rate of 5.7%.
1. No, unemployment did not increase by 4.7% in the last quarter; it increased to 4.7%.
2. No, the Scottish unemployment rate did not rise by 0.7% over the quarter; it rose by 0.7 of a percentage point.
14 October 2008
The chief of a Native American tribe was asked in the autumn if the winter was going to be cold or mild. Being a 21st-century chief he had no idea, but said that it was going to be cold and told the people in his village to collect wood.
A few days later he rang the National Weather Service.
“Yes, it is going to be cold,” they told him, so he went back to his people and told them to collect more wood.
A week later he called again.
“Is it going be a cold winter?” he asked.
“Yes, very cold.”
So he went back and told his people to collect every bit of wood they could.
Two weeks later he called again.
“Yes,” he was told, “it is going to be one of the coldest winters ever.” “How can you be so sure?” the chief asked.
The weatherman replied: “The Native Americans are collecting wood like crazy.”
13 October 2008
Triomphe à l'anglaise : c'est Gordon Brown, celui qui empêcha Tony Blair d'adopter l'euro, qui introduit l'Eurogroupe. C'est lui, le magicien du social-libéralisme anglo-saxon, qui donne des leçons d'interventionnisme aux continentaux. Pendant une demi-heure, il expose le plan de sauvetage britannique dont il a proposé, dès le 8 octobre, de généraliser à l'Europe une des mesures-clés : la garantie des prêts interbancaires.
The New York Times takes a similar line:
The damn plan better work after all this.
What we do know, however, is that Mr. Brown and Alistair Darling, the chancellor of the Exchequer (equivalent to our Treasury secretary), have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up.
This is an unexpected turn of events. The British government is, after all, very much a junior partner when it comes to world economic affairs.
It’s true that London is one of the world’s great financial centers, but the British economy is far smaller than the U.S. economy, and the Bank of England doesn’t have anything like the influence either of the Federal Reserve or of the European Central Bank. So you don’t expect to see Britain playing a leadership role.
But the Brown government has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions. And this combination of clarity and decisiveness hasn’t been matched by any other Western government, least of all our own.
You may have been the mastermind behind RBS' acquisition of NatWest and its subsequent integration, thereby converting a provincial bank into an international player (and, incidentally, making pots of money for shareholders and enhancing Edinburgh's reputation as a financial centre). You may have directed the profitable if gradual expansion of RBS into the USA and into China, again to widespread benefit for all.
But now it's all gone pear-shaped and you have been nominated to carry the can. You have therefore been shown into that room with the pearl-handled revolver and the bottle of whisky. Only history can judge whether your successes outweighed your failures.
12 October 2008
As a former student of Old English and Old Norse (yes really), I can advise you that it is the letter thorn, used extensively in both those languages to represent the sounds usually spelled "th" in modern English. I was pleased to see that it has survived in modern Icelandic, together with its confrere, the letter "ð", known as eth and used to represent the same sounds in those ancient languages.
However, back to our friend thorn. Thorn survived through early middle English, but when printing first arrived in the UK from Germany, there was a problem in that the printing sets did not have the letter thorn. Accordingly, the early printers substituted the letter "y" which looked vaguely similar. And this is the explanation for such phrases as "ye olde tea shoppe". Nobody ever actually pronounced it as "ye" - it was a misprinting of þe (the).
Not a lot of people know that.
It will no doubt be the government's intention to sell off (privatise?) its shareholdings as soon as market conditions permit. But, in the meantime, life at HBOS and RBS should be interesting.
And when HBOS demand excessive charges for my overdraft, can I complain to my MP?
And sometimes, when the music stops, there just isn’t a chair for you. It can be as simple as that and you just have to accept it.
It is easy to forget that government ministers are human beings too.
I hope that he keeps on blogging.
11 October 2008
1. Prolonged recession is now unavoidable. Let us not argue about whether to call it a depression. The economies of the UK, the US and the Eurozone will contract. This will have (is already having) serious implications for the Chinese, Indian, Russian and Brazilian economies, although some of these may be able (just) to keep their growth rate above water. Oil prices will fall below $50 a barrel.
2. For the UK, the lack of credit will lead to companies going bust or downsizing; unemployment and house re-possessions will soar, leading to additional welfare spending. Foreign adventurism (in Iraq and in Afghanistan) will be taken off the agenda - we can't afford it. The same applies to new aircraft carriers and other defence equipment. Domestic capital infrastructure will also suffer - forget about new roads or rail lines. Ditto foreign aid. A Labour administration would no doubt seek to protect health and education but don't count on it.
3. All this faffing about with "re-capitalisation" of the banks and guaranteeing liquidity is not achieving anything. The banks are in a deep hole and will need to be wholly nationalised, especially RBS, HBOS and Lloyds TSB. Some of the others might survive as independents but, once those three are in the government's hands, the others will have a tough time as the spotlight is turned upon them. Given the value of bank shares, compensation for shareholders will be derisory.
4. Italy, Spain, Ireland and others will leave the Euro, as the German government and the ECB will refuse to help bail out those countries (or to allow them to weaken the euro as an aid to recovery). On the other hand, the UK might be forced by economic circumstance to join the Euro, forming an ever-closer union with Germany, Benelux and perhaps France.
5. The Labour government will be replaced by a government of national unity, including members of all three of the main UK political parties.
Don't believe it? Tick off the predictions in the months to come ...
Equally, I endorse the government's hesitation about providing similar assurances to local authorities. health trusts, universities and charities rich enough to invest millions. These bodies employ professional advisers and have access to financial advice.
There were plenty straws in the wind to indicate the shakiness of the Icelandic economy. (Even this blog drew attention last May to one such.) What were all these professional advisers doing? Not a lot, it seems.
Furthermore, we have been here before. In the early 1990s, when the BCCI went bust, a number of local authorities (including the Western Isles Council as it then was) had substantial funds on deposit. Happily, most of these funds were recovered in due course but not before various directors of finance lost their jobs. I sometimes think that the intrinsic dullness of the accountancy and other financial professions attracts people who are not very bright. After all, what kind of intelligent teenager wants to grow up to be an accountant or a banker?
In any event, remember that if a proposition looks too good to be true it probably is.
10 October 2008
Bankers and financiers who take irresponsible risks should be “punished” for their actions, Gordon Brown said today.
Following yesterday’s massive Government bailout for the banks, the Prime Minister spoke of his anger at the way some in the City had behaved.
“I am angry at irresponsible behaviour,” he told GMTV. “Our economy is built around people who work hard, who show effort, who take responsible decisions, and whether there is excessive and irresponsible risk-taking, that has got to be punished.”
I'll believe in the punishment of irresponsible City operators when it happens. Meanwhile I await with interest to see the terms (including the pension pots) of those such as Sir Fred Goodwin when he eventually takes his leave of RBS.
Meanwhile, who was it who was in overall charge of the economy when all this irresponsible behaviour came to a head?
09 October 2008
WASHINGTON — Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.
The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.
The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays
and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.
The Scottish Secretary, who took over his new role only last weekend, wrote to the First Minister offering to promote issues that Mr Salmond believes should be on the agenda for the Prime Minister's new National Economic Council.
Mr Murphy went further by suggesting to the First Minister that they meet for “a summit” next week, along with the CBI Scotland and the STUC, to discuss specific Scottish issues arising from the turmoil gripping the world economy.
Mr Murphy's “hug them close” approach to Mr Salmond and his SNP ministers is a departure from that of his predecessors, who viewed the SNP government with deep suspicion. However, it also placed Mr Salmond in the position of having to accept the new cordial spirit of the Scotland Office for fear of appearing petty and partisan if he did not.
For once, and perhaps for the first time since he became Prime Minister, it is not Mr Salmond who is setting the agenda. From Mr Murphy's point of view, even if his approach may not be entirely successful, it at least indicates that Labour may be recovering from the doldrums they have been in since losing power in the Scottish Parliament.
People would be able to chat, drink coffee and watch videos in English libraries under a new government proposal, The Independent has learnt. Andy Burnham, the Secretary of State for Culture, will today launch a consultation on changing the face of libraries which he believes are out of touch.
Under the proposals, libraries could install coffee franchises, book shops and film centres. Noise bans will also be reviewed. Mr Burnham will tell the Public Library Authorities conference in Liverpool that libraries must "look beyond the bookcase and not sleepwalk into the era of the e-book".
Does Mr Burnham understand what a library is for? As the name suggests, a library is primarily about books. I don't mind libraries providing internet access, or lending out cds and dvds, providing it is done quietly. (My own local library keeps its computers in a separate room.) But adding a coffee shop and lifting noise bans are surely steps too far. If you want to have a coffee and a chat, there are plenty other places to go.
08 October 2008
Take, first, the vast new National Economic Council (NEC). It contains 12 Cabinet ministers, two ministers-who-attend-Cabinet and three other ministers. But it is also supported by a “senior officials working group”, including the permanent secretaries of all the ministers, which is a lot of them, a secretariat of senior staff from the Cabinet Office and Treasury, “regional ministers” (eight more), and 17 “business ambassadors” (these separate from the 18 members of the Business Council who advise the Prime Minister and the Chancellor on “business issues”; there was an international one too for a while but let's keep this local). Blimey. In less-restrained times we could go the whole hog and call this a “government”.
Except that we have had a new one of those this week as well, bigger and better, yeah. The number of ministers-half-in-the-Cabinet (the full Cabinet is restricted to 23) is getting higher as the country collapses: after last week's reshuffle the total number of full and part-time Cabinet ministers rose from 28 to 33. To think that Margaret Thatcher used to manage with a paltry 20 or so. The official list of Her Majesty's Government is now so complicated that it comes with a series of footnotes: “* unpaid”; “** attends Cabinet”; “*** attends Cabinet when ministerial responsibilities are on the agenda”, etc.
Do big meetings ever achieve anything? Or are they just a means of deferring decisions and spreading blame?
Compare and contrast Mr Salmond's heavily slimmed-down cabinet of himself, 5 cabinet secretaries and Bruce Crawford as business manager.
03 October 2008
Never mind, his pal, Tony, fixed him up with a nice little number in Brussels. But now, to everyone's surprise, he is to become a lord and a cabinet minister again. The surprise is because everyone thought that he and Gordon hated each other. But, no matter, another few months, and he will undoubtedly be forced to resign once again ...
To be continued.
01 October 2008
The problem is that HBOS shares are currently trading at 126.80 pence, well below the value placed on them by the takeover.
So, if you are a Lloyds TSB shareholder, are you going to vote in favour of buying a company at a price which is well above what 'the market' values it at? Reduce the price, I hear you say. In which case, if you are an HBOS shareholder, are you going to vote in favour of an offer which values your shares at peanuts (even if that is the current verdict of 'the market')?
All very difficult.