27 March 2013

Fiddling while Rome burns

Just occasionally, government ministers actually resolve problems.  (I can't for the moment think of any concrete examples but it must be true.)  Mostly, however, they simply try to avoid making them worse, in effect by kicking the can down the road.  But, once in a blue moon, they come across a problem that is so damaging and so intractable that they have no alternative but to resort to the ultimate sanction - they are forced to re-orghanise.  So it is with Mrs May and the UK Border Agency:
The troubled UK Border Agency is to be abolished and brought back within the Home Office, the home secretary, Theresa May has announced.
She told MPs that she will also split the "closed and secretive" agency into an immigration and visa service and a separate law enforcement command while bringing it back under the direct control of ministers.
May first split off the UK border force from UKBA 12 months ago in the wake of the Brodie Clark affair.
The home secretary said in an unscheduled Commons statement that UKBA was "a troubled organisation … its performance was not good enough". She identified four main problems: its size, its lack of transparency, its IT systems and its policy and legal framework.
She said that the immigration agency has been such a "troubled organisation" for so many years that it will take many more years to clear the backlogs, which now top more than 310,000 cases, and fix the system.
It reminds me of the spurious quotation attributed to Petronius:
We trained hard . . . but it seemed that every time we were beginning to form up into teams we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralisation.
Will Mrs May's reorganisation make it better? Need you ask?

26 March 2013

What did he think he was doing?

It may not exactly qualify as snatching defeat from the jaws of victory, but it comes pretty close.  The Guardian reports:

The good news for the eurozone was that the markets reacted well to the bailout deal for Cyprus. The bad news was that the rally lasted barely until lunchtime. By then investors were running scared at the prospect that the terms imposed on one of the single currency's smaller members would be the template for rescue packages for bigger countries.
Credit for the change of mood goes to Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers and who decided it would be a good idea to go public with the idea that Cyprus was not such a special case after all.
For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.
Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.
The comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.
By the end of the day shares in Europe were tumbling, the euro was dropping against the dollar and the cost of insuring European banks against default was rising, forcing Dijsselbloem to issue a clarification of his earlier remarks. Confirming that European politicians could not organise a booze-up in a brewery, Cyprus was back to being a special case once again.


25 March 2013


So, crisis resolved?  The Guardian reports:

European leaders reached an agreement with Cyprus early on Monday morning that closes down the island's second-biggest bank and inflicts huge losses on wealthy savers.
Russians would lose billions of euros under draconian terms that are aimed at preventing the Mediterranean tax haven becoming the first country forced out of the single currency.
"Herman Van Rompuy has brokered an agreement between the troika and Cyprus," said an EU source, referring to the president of the European council and Cyprus's trio of creditors: the European commission, the European Central Bank and the International Monetary Fund.

Well, not quite.  The deal has yet to be finalised.  It remains unclear how many billions of euros will be confiscated from the Russians.  And does the Cypriot parliament have a say?  And when will the banks open?  And under what conditions?

Furthermore, in the medium term, capital controls may stop (or, more accurately, delay) the flight of funds from Cypriot banks, but can do nothing to encourage any further investment.  Who, now, would be so foolish as to put any money in a Cypriot bank?

Should have gone to Specsavers!

Car crash

21 March 2013

In case you hadn't noticed ...

The Telegraph blog records:

But rising numbers of people on above average earnings are paying income tax at 40pc. The starting point for higher rate tax has already fallen from £37,400 under Labour to £34,371 now. HMRC’s figures show that has increased the number of people paying 40pc or higher rates of income tax by 670,000 from 3.19m in in 2009 to 3.86m today.
As a result of Mr Osborne’s proposal to lower the starting point for 40pc tax to £31,865 with effect from April, 2014, nearly 5m people will be caught in the top rate tax net – even if their pay remains unchanged. By the time of the next election in 2015, Grant Thornton forecasts that more than 5.2m people will pay higher rate tax.

And it's not just those who suddenly find themselves in the higher tax bracket.  The reduced threshold means that everyone in the higher tax bracket will pay more tax than would otherwise have been the case.


Aspiration nation

So the chancellor mentioned aspiration 16 times in his speech yesterday.

When I studied phonetics some 40+ years ago, I was taught that aspiration was the puff of air that accompanied the articulation of a voiceless plosive,  Basically, it was just hot air.  Seems appropriate somehow.

In those days, a pint of beer could be bought for between 2/- and a half a crown.  A penny off your pint would have meant something.  Nowadays, with the price of beer exceeding £3 a pint, a penny off is neither here or there.  It's just a gimmick.


19 March 2013

Cyprus - what happens next?

Good question.  The answer is that nobody knows.

It remains possible that, as the Cypriot parliament has rejected the deal, the troika withdraws its (conditional) offer of a bail-out.  Cyprus renegues on its debts and its banks go bust.  The EU throws it out of the euro and Cyprus starts again with a new currency and capital controls.

But this will not suit anyone.  The obvious next step is for the troika and the Cypriot authorities to get together and thrash out a new deal.  But it is difficult to see how the gap between the two sides can be bridged.  Nor does it seem possible that the Cypriot banks can re-open until the issues are resolved (as everyone would immediately empty their accounts).  How long can a country survive without a functioning banking system?  We may be about to find out.

Could the Russians come to the rescue?  In return for what?  And where would that leave the EU?  And what about contagion spreading to Greece, Italy, Spain and Portugal?

We live in interesting times ...

The drama continues

I would respectfully suggest that the ba' is on the slates,  The Guardian reports:

It appears certain that the Cyprus parliament will reject the bailout package as it stands.
A spokesperson for the governing Democratic Rally (Disy) party of President Nicos Anastasiades revealed before the debate started that its MPs have decided to abstain, rather than support the package.
With the rest of the parliament expected to vote against it, this is a major display of defiance from Nicosia against the eurozone.

And so armageddon draws a little bit closer.

Meanwhile, the Ministry of Defence is getting over-excited:

Britain has just sent a aeroplane carrying one million euros to Cyprus as a"contingency measure" to help troops and their families.
The move (which sounds like the start of a Hollywood heist), is an attempt to make sure military personal [personnel?] won't run out of cash if ATM machines and bank cards stop workinh
Further plans [planes?] could be sent too. PA says the Ministry of Defence is determined to minimise the impact of the Cyprus banking crisis on "our people" and it will consider further shipments if required.

Not looking good

Imagine that you are one of the Russians who have a collective €30 billion plus on deposit in Cypriot banks.  You are about to lose 9.9% (perhaps more) of those funds in expropriations.  What are you going to do when the Cypriot banks re-open?  Are you going to sit around waiting for the same thing to happen again (as euro crises have a habit of recurring)?  Or are you going to move what remains of your money to somewhere safer, outside the EU (Switzerland perhaps, or the Caymans, or the Middle East)?  I know what I'd do.

Then imagine that you are one of the 18,000 plus British pensioners resident on the island.  You are also about to be expropriated. perhaps by a smaller amount than the Russians.  Worse, the UK Government has stopped your pension until the current banking confusion is cleared up.  And, as the banks are closed, at least until Thursday,  you cannot access any of your money anyway.  Are you ever going to trust a Cypriot bank again?

Finally, imagine that you are the boss of a Cypriot bank.  Although you were only doing what you were told, you and your bank are being treated like lepers.  The foreigners and the locals are closing their accounts like there was no tomorrow.  And for you, there may not be a tomorrow.  After all, for how long can you expect the ECB to keep you afloat with expensive loans?  Banks rely on trust and, even if it was not entirely your fault, you have forfeited that trust.

Where will it all end?


Quote of the day

Simon Hoggart in The Guardian (here):
Gosh, they were pleased with themselves. They'd come to a deal over press regulation, and there hasn't been so much self-congratulation over a multilateral pact since Versailles in 1914. David Cameron paid tribute to Nick Clegg andEd Miliband. Clegg had kind words for Miliband and Cameron. Miliband himself was in grateful debt to Cameron and Clegg. It was what the Americans call a "circle jerk".
Don't expect any comments from me on the deal.  The press have written yards and yards of comment, none of which actually explains what the deal involves.  And I am far from sure that Cameron, Clegg and Miliband understand precisely what they have signed up to.


18 March 2013

Am I a media whore?

Not all bloggers are what they seem - allegedly.  The Independent has the skinny:

So in a media world where the lines between editorial and advertising have never been harder to detect, how many more bloggers out there are working for a hidden paymaster?
It has recently been brought to my attention how easy it is for public relations firms to round up whole battalions of lifestyle bloggers with no apparent experience in professional journalism and feed them video clips, which appear like harmless fun, but have a deeper political significance. The amateur bloggers are encouraged to share the material with other like-minded blogs and offered free "press trips", unaware that their presence may have a political purpose.
Fashion blogs are offered giveaways for readers in return for using agreed copy. Numerous websites encourage bloggers to make money by composing (presumably favourable) product reviews.

I can only assure you that this blogger has never been offered any inducements; the opinions expressed here are unaffected by monetary or other external considerations.  Buy, hey, if anyone out there is offering ...

17 March 2013

Daylight robbery?

Oh to be in Cyprus now that spring is here.  The Observer reports:

Cypriots reacted with shock that turned to panic on Saturday after a 10% one-off levy on savings was forced on them as part of an extraordinary 10bn euro (£8.7bn) bailout agreed in Brussels.
People rushed to banks and queued at cash machines that refused to release cash as resentment quickly set in. The savers, half of whom are thought to be non-resident Russians, will raise almost €6bn thanks to a deal reached by European partners and the International Monetary Fund (IMF). It is the first time a bailout has included such a measure and Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis. The move in the eurozone's third smallest economy could have repercussions for financially overstretched bigger economies such as Spain and Italy. 
People with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said, while those with greater sums will lose 9.9%.

You think it wouldn't happen in Spain, or in Italy, or in the UK?  Don't count on it ...


05 March 2013

Military mysteries

So, some 16,000 soldiers are to return from Germany over the next six years.  I wonder what they have been doing in Germany for the past 20 years.

I can understand why British troops were located in Germany in the years following 1945 and during the Cold War.  But it is now many years since the USSR posed an invasion threat to Western Europe.  Did someone in the Ministry of Defence just forget about all those troops stationed in Germany?  What possible purpose could they have been serving?

Meanwhile, through all those years, MoD bigwigs were complaining of a lack of resources.  Funny old world, isn't it?

01 March 2013

Quote of the day

From the Home Affairs Select Committee (here):

 "We do not believe that officers should enter into intimate, physical sexual relationships while using their false identities undercover without clear, prior authorisation, which should only be given in the most exceptional circumstances.
"In particular, it is unacceptable that a child should be brought into the world as a result of such a relationship and this must never be allowed to happen again."

I can see their point but I'm not sure how it can work in practice:
"Look boss, I have infiltrated this group of environmental eco-terrorists and I have met this nice lady.  She says she will tell me when they next propose to bomb a certain nuclear facility but will only do so if I agree to sleep with her.  May I have your permission, please.  I promise to use a condom."
It's not going to happen, is it?


It's a funny old world

I suppose that it would be naive of me to wonder why a bank which makes an annual loss of more than £5 billion should pay out any bonuses at all, let alone £607 million.  The fact that the bank is 83% owned by the taxpayer merely compounds my irritation.  What special magic is this that insists that top bankers (and their ilk) require massive bonuses in order to do a decent job?

Meanwhile our Prime Minister seeks to resist EU proposals to limit bankers' bonuses to 100% of their salaries, apparently on the grounds that these might encourage foreign banks located in London to decamp to Zurich, Singapore or New York.  My own (naive) opinion would be to let them go; we have more than enough parasites feeding on the system.  It is not as though they do anything useful, after all.