US President Harry S. Truman took the principle of personal responsibility so seriously that he famously installed a sign saying "The buck stops here" on his desk in the Oval Office. Sad to say, that honourable principle has taken a hell of a battering over the past week.
Here in the UK, we have been treated to the nauseating spectacle of a failed public servant, Sharon Shoesmith, gloating at her supposed legal "vindication" in the matter of her firing by her employer, the London Borough of Haringey. Ms Shoesmith was Haringey's head of children's services for part of the past decade. This was a period in which a number of well-reported cases of child abuse took place in the borough, which the social services people (latterly under Ms Shoesmith's "management") seemed incapable of preventing. After the brutal and tragic death in 2007 of "Baby P" (later identified as 17-month-old Peter Connelly), a public outcry led Ed Balls, then in the Labour Cabinet, to order Haringey to fire Ms Shoesmith.
There's no doubt that Ed Balls and Haringey Council breached due process here, and this is the "vindication" that the appalling Ms Shoesmith is now claiming. What does not seem to be in any doubt is that the Haringey Children's Services department failed Baby P and others to a shocking extent. Three individuals in the department resigned in response at the time of the tragedy, as did two elected officials. In other words, those directly above and below Ms Shoesmith in the chain of command tried to act honourably. And Ms Shoesmith herself? She "doesn't do blame", apparently, and is set to demand as much as £1 million in compensation, even as she protests that this is all about justice and not (perish the very idea) money.
I could go on about this, but I couldn't do any better than Libby Purves, who has today delivered a brilliant tirade of barely controlled rage against Ms Shoesmith in The Times. It's behind the Murdoch paywall, unfortunately, but well worth reading if you have access to it.
Someone else who apparently "doesn't do blame" is Sepp Blatter, the President of FIFA. This past weekend, FIFA's ethics committee suspended two senior members of the organisation's Executive Committee, pending an independent investigation of bribery allegations. The Committee decided that Blatter himself had no case to answer, on grounds that give a whole new dimension to the concept of a legal technicality. Blatter admits that he knew that the two officials in question, Mohammad bin Hammam and Jack Warner, were planning to offer bribes in connection with the World Cup, but he claims he didn't know about the actual offence, so he's in the clear!
This episode would be bizarre and reprehensible enough in itself, but it's barely the tip of the iceberg at FIFA. Almost half of FIFA's 24 Executive Committee members are currently caught up in one corruption scandal or another, and one might think that the head of the organisation (Blatter) would take some responsibility for that. Instead, Blatter is more than likely to be elected unopposed as FIFA President this week, to serve another four-year term, since his only opponent -- bin Hammam -- has been neatly pushed aside.
And guess who's set to take a leaf out of the Shoesmith-Blatter playbook? Step forward, Ratko Mladic. Apparently his defence against charges relating to the massacre of civilians at Srebrenica will be that it was done by others, "behind his back". You wouldn't think that could possibly work, but as Sharon and Sepp can tell you, you can get a long way by just being brazen.
UPDATE, 31 May: The English FA's decision today to call for the postponement of the FIFA election is welcome but way too late to have much chance of success. Much more hopeful is the evidence of serious unrest among the sponsors. Coca Cola, Emirates and adidas have all expressed their concerns today. If the money starts to melt away, Blatter and his co-conspirators are toast.
And meanwhile in Belgrade, a court has cleared the way for Mladic's extradition to The Hague. A new line of defence in relation to Srebrenica has also emerged. Supposedly the number of people killed under Ratko's direction was really only 2,500 or so, not the 8,000 usually claimed. So he only slaughtered 2,500 unarmed civilians? Well, I guess that's all right then.
Monday, 30 May 2011
Saturday, 28 May 2011
Their des res, your expense
Courtesy of the Freedom of Information Act, we learn that David Cameron has authorised the spending of £680,000 of taxpayers' money on improvements to his official residence in Downing Street since last year's election. About £30,000 of this was spent on the flat the Camerons live in (which for reasons of space is in No 11 rather than the iconic No 10), most of it on the kitchens. Yes, that's plural -- this small family in supposedly cramped surroundings apparently needs two of them, presumably to cater for the Big Society.
The rest of the money -- £650,000 or so -- was spent on repairs and renovations to the conference rooms within No 10 and on repairs to the fabric of the house, such as plumbing and wiring. The Cabinet Office is refusing to specify where this rather large sum was spent, though the Information Commissioner (and a Labour MP, Tom Watson) are not giving up the effort to find out. This comment from a Downing St spokesperson, quoted by The Guardian, is interesting:
"This spend relates to the Downing Street Building Modernisation Programme launched in 2006, under the last government, to address structural repairs and the renewal of failing infrastructure, having gone without refurbishment for some 50 years. This work is still ongoing. Downing Street is a Grade I listed building. As such it requires a certain level of maintenance."
"A certain level"? You could call it that, I suppose. The £650,000 now reluctantly disclosed to the taxpayer is in addition to £1.3 million spent on the buildings in 2007, when one T. Blair was in residence. The place must have been in REALLY bad shape, wouldn't you say? Pending more ferreting around by the Information Commissioner, there's still no information on how much may have been spent in the intervening years, but it seems unlikely that Gordon Brown was content to live surrounded by stuff chosen by Blair.
But why am I complaining? We're all in this together, right Dave?*
* Dave's not so keen to splash his own cash, it seems. The Cameron family has just headed off for a week's holiday in Ibiza, flying with EasyJet.
The rest of the money -- £650,000 or so -- was spent on repairs and renovations to the conference rooms within No 10 and on repairs to the fabric of the house, such as plumbing and wiring. The Cabinet Office is refusing to specify where this rather large sum was spent, though the Information Commissioner (and a Labour MP, Tom Watson) are not giving up the effort to find out. This comment from a Downing St spokesperson, quoted by The Guardian, is interesting:
"This spend relates to the Downing Street Building Modernisation Programme launched in 2006, under the last government, to address structural repairs and the renewal of failing infrastructure, having gone without refurbishment for some 50 years. This work is still ongoing. Downing Street is a Grade I listed building. As such it requires a certain level of maintenance."
"A certain level"? You could call it that, I suppose. The £650,000 now reluctantly disclosed to the taxpayer is in addition to £1.3 million spent on the buildings in 2007, when one T. Blair was in residence. The place must have been in REALLY bad shape, wouldn't you say? Pending more ferreting around by the Information Commissioner, there's still no information on how much may have been spent in the intervening years, but it seems unlikely that Gordon Brown was content to live surrounded by stuff chosen by Blair.
But why am I complaining? We're all in this together, right Dave?*
* Dave's not so keen to splash his own cash, it seems. The Cameron family has just headed off for a week's holiday in Ibiza, flying with EasyJet.
Wednesday, 25 May 2011
Michael O'Leary erupts again
Ryanair boss Michael O'Leary really is the gift that keeps on giving for journalists and bloggers. All it took was a brief shutdown of Scottish airspace, in response to the latest Icelandic volcanic eruption, for him to mount a typical Ryanair stunt, then deliver one of his habitual rants against the government for keeping his planes out of the air.
Let's look at the stunt first. According to O'Leary, Ryanair sent a plane on a roundtrip from Prestwick to Inverness to Aberdeen to Edinburgh and back to Prestwick on Tuesday morning. He reported that when the plane landed, it displayed no traces of volcanic ash, even though the area had been declared a "red zone" with a high ash density.
There's no doubt that the plane flew, but the rest of the story is not so clear. The UK Civil Aviation Authority (CAA) tracked the flight on radar, and reports that the aircraft did not actually fly through the red zone. What's more, if The Guardian is to be believed, the flight was carried out at a height of 41,000 feet. This is significantly above the altitude that Ryanair's usual puddle-jumping flights would normally reach; in fact, you don't often go that high even on transcontinental flights. The presence or absence of ash particles at that height is thus largely irrelevant to the question of whether normal flying operations are safe or not.
The "success" of the test flight prompted O'Leary to urge the CAA to "take their fingers out of their incompetent bureaucratic backsides" and lift the ban on flights. (What a honey-tongued persuader the man is!) Ryanair went so far as to start checking in passengers for flights at Edinburgh, even though the air traffic controllers would never have given take-off clearance. At one level this looks like a low-rent imitation of BA's remarkable powerplay during last year's ash disruption, when the airline set over a dozen long haul flights from around the world on their way to Heathrow, basically defying the CAA to keep them from landing. More likely, however, O'Leary was simply looking to bolster his (not unreasonable) view that if the cancellation of flights takes place at the government's insistence, then it should be the government that picks up the costs involved.
The public's response to the O'Leary-CAA standoff was interesting. One caller to BBC Radio 5-Live called O'Leary "the Arthur Daley of flying"; not much doubt where his sympathies lay. Quite a few others, however, took a more pro-O'Leary view. Consider this reader comment on the Daily Telegraph website:
The government and the met office have a model that they 'know' is right. On the basis if the model alone, they cancel all flights. No cost to them, no unhappy consequences. Easy.
RyanAir however incur some costs. Pissed off passengers, aeroplanes earning no revenue, connsiderable disruption to their plans for a week or so (getting planes and crews back to the right place).
So they go flying to look for the ash. They are the only ones who do so because they are the only ones with an incentive to settle the question. Met Office/Govt have none.
Isn't that risk/reward assessment a bit skewed? If the CAA holds its breath and decides to allow flights to carry on, and then the worst happens and there's an ash-induced disaster, who's going to get blamed? It won't be Michael O'Leary. Ryanair has all the upside here, and the authorities all the downside. As the Transport Secretary Philip Hammond said after the Ryanair "test flight", the authorities can't allow themselves to be bullied. Least of all by "the Arthur Daley of flying".
Let's look at the stunt first. According to O'Leary, Ryanair sent a plane on a roundtrip from Prestwick to Inverness to Aberdeen to Edinburgh and back to Prestwick on Tuesday morning. He reported that when the plane landed, it displayed no traces of volcanic ash, even though the area had been declared a "red zone" with a high ash density.
There's no doubt that the plane flew, but the rest of the story is not so clear. The UK Civil Aviation Authority (CAA) tracked the flight on radar, and reports that the aircraft did not actually fly through the red zone. What's more, if The Guardian is to be believed, the flight was carried out at a height of 41,000 feet. This is significantly above the altitude that Ryanair's usual puddle-jumping flights would normally reach; in fact, you don't often go that high even on transcontinental flights. The presence or absence of ash particles at that height is thus largely irrelevant to the question of whether normal flying operations are safe or not.
The "success" of the test flight prompted O'Leary to urge the CAA to "take their fingers out of their incompetent bureaucratic backsides" and lift the ban on flights. (What a honey-tongued persuader the man is!) Ryanair went so far as to start checking in passengers for flights at Edinburgh, even though the air traffic controllers would never have given take-off clearance. At one level this looks like a low-rent imitation of BA's remarkable powerplay during last year's ash disruption, when the airline set over a dozen long haul flights from around the world on their way to Heathrow, basically defying the CAA to keep them from landing. More likely, however, O'Leary was simply looking to bolster his (not unreasonable) view that if the cancellation of flights takes place at the government's insistence, then it should be the government that picks up the costs involved.
The public's response to the O'Leary-CAA standoff was interesting. One caller to BBC Radio 5-Live called O'Leary "the Arthur Daley of flying"; not much doubt where his sympathies lay. Quite a few others, however, took a more pro-O'Leary view. Consider this reader comment on the Daily Telegraph website:
The government and the met office have a model that they 'know' is right. On the basis if the model alone, they cancel all flights. No cost to them, no unhappy consequences. Easy.
RyanAir however incur some costs. Pissed off passengers, aeroplanes earning no revenue, connsiderable disruption to their plans for a week or so (getting planes and crews back to the right place).
So they go flying to look for the ash. They are the only ones who do so because they are the only ones with an incentive to settle the question. Met Office/Govt have none.
Isn't that risk/reward assessment a bit skewed? If the CAA holds its breath and decides to allow flights to carry on, and then the worst happens and there's an ash-induced disaster, who's going to get blamed? It won't be Michael O'Leary. Ryanair has all the upside here, and the authorities all the downside. As the Transport Secretary Philip Hammond said after the Ryanair "test flight", the authorities can't allow themselves to be bullied. Least of all by "the Arthur Daley of flying".
Monday, 23 May 2011
Nothing to say, but Vince Cable says it anyway
You'd think there was enough ammunition around to fire at the UK banking system, without politicians and the media needing to manufacture more, but apparently you'd be wrong. Bank of England statistics released today show that the UK's five major banks have fallen slightly short of their agreed business lending targets under the so-called "Project Merlin" agreement with the Government. Overall business lending in Q1/2011 was £47.3 bn, which is virtually on target to hit the agreed annual level of £190 bn. However, lending to the small and medium-sized enterprise (SME) sector, unaccountably beloved of politicians and mediacrats alike, was £16.8 billion, more than 10% short of the level needed to hit the £76 bn target for the year.
Cue large-type headlines on media websites and harsh warnings from politicians, with Vince Cable predictably in the van. Even at the most superficial level, however, there are at least two problems with all of this confected fury. First, Project Merlin wasn't signed until mid-February, half way through the quarter to which these supposedly unacceptable numbers refer. Second, the targets apply to the year as a whole; only an idiot (or, I suppose we now have to assume, Vince Cable) would think that each quarter's numbers should amount to exactly one-fourth of the annual target.
On a less superficial level, there are significant issues with the whole "Project Merlin" approach. Governments have never acknowledged the obvious contradiction between the two tasks that they have imposed on the banks: rebuilding of their capital bases and a return to pre-crisis levels of lending. It's certainly true that banks can't make profits and rebuild their capital resources if they don't lend, but it's equally the case that pushing loans too hard could get them into serious trouble and trigger further losses. Could it really be the case that the lessons taught by the gung-ho lending of the pre-crisis era have already been forgotten by politicians? Apparently it could.
Things could yet become even more bizarre. The banks see their role under Project Merlin as a commitment to increase the availability of loans; the Government (or at least Uncle Vince) interpret it as a target for loan disbursements. The Bank of England data today show that while overall business credit demand is rising, demand from SMEs is continuing to fall. That may not cut much ice with the politicians. As Robert Peston puts it in a surprisingly balanced posting on his blog:
"...what is striking to me is that if the banks fail to hit the target for the year as a whole, members of the government say that they will not accept that the demand for loans from small business wasn't there.
Ministers want the banks not only to take this particular horse to water, but they expect the banks to force the horse to drink, where he is thirsty or not".
So even Pesto is taking the banks' side, after a fashion. Still, I guess we can't begrudge Vince Cable a chance to sound off, not after the month the LibDems have had.
Cue large-type headlines on media websites and harsh warnings from politicians, with Vince Cable predictably in the van. Even at the most superficial level, however, there are at least two problems with all of this confected fury. First, Project Merlin wasn't signed until mid-February, half way through the quarter to which these supposedly unacceptable numbers refer. Second, the targets apply to the year as a whole; only an idiot (or, I suppose we now have to assume, Vince Cable) would think that each quarter's numbers should amount to exactly one-fourth of the annual target.
On a less superficial level, there are significant issues with the whole "Project Merlin" approach. Governments have never acknowledged the obvious contradiction between the two tasks that they have imposed on the banks: rebuilding of their capital bases and a return to pre-crisis levels of lending. It's certainly true that banks can't make profits and rebuild their capital resources if they don't lend, but it's equally the case that pushing loans too hard could get them into serious trouble and trigger further losses. Could it really be the case that the lessons taught by the gung-ho lending of the pre-crisis era have already been forgotten by politicians? Apparently it could.
Things could yet become even more bizarre. The banks see their role under Project Merlin as a commitment to increase the availability of loans; the Government (or at least Uncle Vince) interpret it as a target for loan disbursements. The Bank of England data today show that while overall business credit demand is rising, demand from SMEs is continuing to fall. That may not cut much ice with the politicians. As Robert Peston puts it in a surprisingly balanced posting on his blog:
"...what is striking to me is that if the banks fail to hit the target for the year as a whole, members of the government say that they will not accept that the demand for loans from small business wasn't there.
Ministers want the banks not only to take this particular horse to water, but they expect the banks to force the horse to drink, where he is thirsty or not".
So even Pesto is taking the banks' side, after a fashion. Still, I guess we can't begrudge Vince Cable a chance to sound off, not after the month the LibDems have had.
Friday, 20 May 2011
Little Canada
Canada has always had a suspicious attitude towards foreign investment; understandable, perhaps, in a country that shares "the world's longest undefended border" with the United States. Back in the 1970s, all incoming foreign direct investment was subject to scrutiny by an agency known as FIRA, the Foreign Investment Review Agency (though it often seemed as if the "R" stood for "Rejection").
FIRA is long gone, but large swathes of the Canadian economy remain off-limits to foreigners: the banking sector, for example. Now there are plenty of signs that the spirit of FIRA is stalking the land again. Last year a takeover bid for Potash Corp by BHP Billiton was inderdicted by the government on national interest grounds. Currently a merger proposal between the London Stock Exchange and Canada's leading exchange, TMX (basically the Toronto and Montreal exchanges) looks likely to be gazumped by a hastily cobbled together rival bid fronted by Canadian pension funds and banks.
The argument being advanced against the LSE-TMX deal is that it would dilute the Toronto exchange's supposed expertise in mining financing, an argument that looks downright ludicrous in light of this week's flotation of Glencore on the London exchange. The fact is that the counter-offer is nakedly nationalistic, right down to the name of the special purpose company put together to launch the bid: Maple Group.
While the nationalist tide has been building at home, Canadian firms have been enthusiastically and without hindrance snapping up foreign assets. Canadian banks have been expanding at amazing speed in the US, even though US banks would never be allowed to do the same in Canada. My own former employer now has more branches in the US than in Canada, and remains in acquisitive mode. Here in the UK, Canadian money has focused on infrastructure assets: the high-speed rail line from London to Kent, for example, is now owned by a Canadian pension fund. (It's not as if this brings any synergies in the way that the LSE-TMX or BHP-Potash deals would ondoubtedly have done. In terms of modern railway expertise, Canada ranks second to just about everyone).
It's all very anachronistic. What's all the more surprising is that it's taking place under the supposedly pro-market Harper government. FIRA was eventually abolished because it turned out to be counter-productive and frankly embarrassing, but right now, leaving aside a few snarky editorials in the UK business press, nobody outside Canada seems to be paying a lot of attention.
UPDATE, May 21: No sooner was the above piece posted than the TMX announced it was rejecting the Maple Group bid and pressing ahead with the LSE merger. It cited potential regulatory concerns as the main reason for its decision. The flag-waving and politicking should get REALLY interesting now.
FIRA is long gone, but large swathes of the Canadian economy remain off-limits to foreigners: the banking sector, for example. Now there are plenty of signs that the spirit of FIRA is stalking the land again. Last year a takeover bid for Potash Corp by BHP Billiton was inderdicted by the government on national interest grounds. Currently a merger proposal between the London Stock Exchange and Canada's leading exchange, TMX (basically the Toronto and Montreal exchanges) looks likely to be gazumped by a hastily cobbled together rival bid fronted by Canadian pension funds and banks.
The argument being advanced against the LSE-TMX deal is that it would dilute the Toronto exchange's supposed expertise in mining financing, an argument that looks downright ludicrous in light of this week's flotation of Glencore on the London exchange. The fact is that the counter-offer is nakedly nationalistic, right down to the name of the special purpose company put together to launch the bid: Maple Group.
While the nationalist tide has been building at home, Canadian firms have been enthusiastically and without hindrance snapping up foreign assets. Canadian banks have been expanding at amazing speed in the US, even though US banks would never be allowed to do the same in Canada. My own former employer now has more branches in the US than in Canada, and remains in acquisitive mode. Here in the UK, Canadian money has focused on infrastructure assets: the high-speed rail line from London to Kent, for example, is now owned by a Canadian pension fund. (It's not as if this brings any synergies in the way that the LSE-TMX or BHP-Potash deals would ondoubtedly have done. In terms of modern railway expertise, Canada ranks second to just about everyone).
It's all very anachronistic. What's all the more surprising is that it's taking place under the supposedly pro-market Harper government. FIRA was eventually abolished because it turned out to be counter-productive and frankly embarrassing, but right now, leaving aside a few snarky editorials in the UK business press, nobody outside Canada seems to be paying a lot of attention.
UPDATE, May 21: No sooner was the above piece posted than the TMX announced it was rejecting the Maple Group bid and pressing ahead with the LSE merger. It cited potential regulatory concerns as the main reason for its decision. The flag-waving and politicking should get REALLY interesting now.
Wednesday, 18 May 2011
Don't you just hate when that happens?
UK employment data for the three months to March were scheduled for release this morning at 9:30. BBC News 24 normally starts its bulletins on the half-hour, but because of the imminent data, they started a bit early, bringing in one of their economics experts. Just so you could be in no doubt about how they were set to spin the coverage, the expert and the news anchor talked about how it was likely that youth unemployment had moved above a million for the first time.
Right at 9:30 they cut to a spokesman from the ONS in Cardiff, who began to give the numbers. Total employment? Up 118,000, to stand only 300,000 below its pre-financial crisis peak. Unemployment? Down 38,000, with smaller numbers of both men and women out of work. Youth unemployment? Alas for the BBC's carefully planned coverage, it fell by 30,000, to stand at 935,000. The economics expert valiantly tried to talk the numbers down by pointing out that the "claimant count" rose slightly, but the employment minister quickly appeared on-screen to point out that this mainly reflected rationalisation of the welfare system. This is causing recipients to migrate from other programmes onto the jobseeker's allowance scheme that the claimant count measures.
In short, the report was good news*, so of course the BBC dropped it pretty quickly. By mid-afternnon it was buried deep on their webpage, which (I'm guessing here) wouldn't have happened if the data had been dire. The youth unemployment data that they had been prepared to do a song-and-dance about barely made it into the web story. This blandly reported that youth unemployment stood at 935,000, with no mention of the quarterly decline.
None of this is meant to downplay the problem of youth unemployment. An Unemployment rate of 20% among 16-24 year olds is a national disgrace, but it clearly owes more to the failings of the education system** than to the effects of the government's spending cuts, which the BBC was undoubtedly primed to blame until it got blindsided by the facts. They (and the rest of the media, come to that) really are incorrigible, aren't they?
* Unless you agree with @CJFDillow, who tweeted thus: Employment rose 0.4% in Q1. Implies productivity rose 0.1% V.weak - suggests empt growth is unsustainable. Well, it might mean that Chris. Or it might mean that the 0.5% first estimate for Q1 GDP growth was too low, which is what some of the other data are suggesting.
** This explanation is strongly suggested by this jaw-dropping little nugget from the ONS data release itself: The number of UK born people in employment was 25.09 million in the three months to March 2011, up 77,000 on a year earlier. The number of non-UK born people in employment was 4.04 million, up 334,000 from a year earlier.
Right at 9:30 they cut to a spokesman from the ONS in Cardiff, who began to give the numbers. Total employment? Up 118,000, to stand only 300,000 below its pre-financial crisis peak. Unemployment? Down 38,000, with smaller numbers of both men and women out of work. Youth unemployment? Alas for the BBC's carefully planned coverage, it fell by 30,000, to stand at 935,000. The economics expert valiantly tried to talk the numbers down by pointing out that the "claimant count" rose slightly, but the employment minister quickly appeared on-screen to point out that this mainly reflected rationalisation of the welfare system. This is causing recipients to migrate from other programmes onto the jobseeker's allowance scheme that the claimant count measures.
In short, the report was good news*, so of course the BBC dropped it pretty quickly. By mid-afternnon it was buried deep on their webpage, which (I'm guessing here) wouldn't have happened if the data had been dire. The youth unemployment data that they had been prepared to do a song-and-dance about barely made it into the web story. This blandly reported that youth unemployment stood at 935,000, with no mention of the quarterly decline.
None of this is meant to downplay the problem of youth unemployment. An Unemployment rate of 20% among 16-24 year olds is a national disgrace, but it clearly owes more to the failings of the education system** than to the effects of the government's spending cuts, which the BBC was undoubtedly primed to blame until it got blindsided by the facts. They (and the rest of the media, come to that) really are incorrigible, aren't they?
* Unless you agree with @CJFDillow, who tweeted thus: Employment rose 0.4% in Q1. Implies productivity rose 0.1% V.weak - suggests empt growth is unsustainable. Well, it might mean that Chris. Or it might mean that the 0.5% first estimate for Q1 GDP growth was too low, which is what some of the other data are suggesting.
** This explanation is strongly suggested by this jaw-dropping little nugget from the ONS data release itself: The number of UK born people in employment was 25.09 million in the three months to March 2011, up 77,000 on a year earlier. The number of non-UK born people in employment was 4.04 million, up 334,000 from a year earlier.
Thursday, 12 May 2011
It's different this time (but not in a good way)
As global financial markets ponder with trepidation the possibility of a Greek debt restructuring (or worse), it's worth remembering that cross-border lending has always been a shortcut to financial hell. The United States itself has defaulted no fewer than four times (though not since the Civil War); decorative but worthless Russian railway bonds paper the walls of banks across the globe; in the 1970s and 1980s the mania for LDC (less developed country) lending ended in bitter tears; Russia defaulted again at the end of the 1980s; and now, despite the supposed comfort and support provided by the EU and the IMF, the Eurozone's PIGS are in deep doo-doo, with Greece currently at the forefront of market concerns.
Banks seem to be unable to shake the habit of underestimating sovereign risks. During the LDC lending binge of the 1980s, loans to countries in the old "Warsaw Pact" countries of Eastern Europe were perceived to benefit from the "Soviet umbrella theory": loans to Poland were safe because the USSR would never allow its satellites to default. Three problems with that, of course: the USSR was never formally on the hook; it wasn't in a position to meet the obligations anyway; and it ended up falling apart itself.
In a similar vein, lenders have piled into Greece and the other PIGS partly because of the perception that these countries' membership of the EU and the Eurozone offered some kind of protection to lenders. At the time most of the bonds were sold, this support was as theoretical as the Soviet umbrella of yore. Although the EU has rushed to establish formal mechanisms since the crisis erupted, the sheer scale of the support that is likely to be needed is now triggering voter discontent, as recent election results in Germany and Finland attest.
In the specific case of Greece, assessment of the risks has not been helped by the fact that the country misrepresented its financial position in the runup to Eurozone accession. The so-called Maastricht criteria were intended to ensure that prospective new Eurozone members had "converged" to accepted inflation and fiscal standards before they were admitted. Since Greece appeared to be meeting the criteria, the perceived EU blessing encouraged private lenders to get involved in the country. It turns out, of course, that Greece had been massaging the data to ensure it was accepted into the Eurozone. It would be unfair to blame the banks for being taken in, when the due diligence failings appear to have been mainly on the part of the Eurozone authorities.
Not that this is the first time that borrowing countries have misled their lenders. If I may be allowed a personal anecdote here, in early 1980 I went to Rio de Janeiro to prepare the "information memo" for a loan my bank was planning to syndicate for Petrobras. The stated purpose of the loan was to finance the purchase of four offshore oil rigs. As a colleague and I sat in a hotel room overlooking Copacabana beach, working on the information memo, an oil rig was towed into the middle of the bay just in front of us. Petrobras admitted to us the next day that this was one of the rigs our loan was financing. They already owned it, but they knew that attaching the loan to an identifiable project would secure better terms than describing it as balance of payments financing, even though that's what it was. This was normal practice for Brazil, and the loan went ahead anyway (and was repaid on time).
So the road that's led to the edge of the precipice with Greece is one the banks have travelled before. But there are differences this time, and they're not reassuring. Back in the days of the LDC lending boom, loans were syndicated out to a small syndicate of lenders, who kept them on their own balance sheets. The information memo that I worked on in Rio was intended to help with risk assessment, but each participant had to assess the deal for itself. All banks had internal limits for how much exposure they would take to each sovereign risk.
Things are different today. Loans to Greece and the other PIGS have been packaged up and sold off to all comers. Most of the buyers have relied on the credit rating agencies for their risk assessment, and we all know how safe that's likely to be. The result of this process is that it's difficult to know in advance where the damage may be done if Greece were to reschedule its debts.
Uncertainty over where the risks lie is massively heightened by the extent to which banks and investors have relied on credit default swaps (CDS) and similar instruments to lay off some of the risks of their exposure in Greece and elsewhere. Recent data seem to suggest that the outstanding volume of CDS is far lower than it was in 2008, as deals have rolled off, but it remains far higher than the volume of actual debt outstanding. (Remind me again why CDS are not purely speculative instruments?)
Recall that in the 2008 financial crisis in the US, it turned out that the institution most exposed was not a bank but an insurer, AIG, almost entirely because of its insatiable appetite for CDS. The current belief is that the greatest exposure to Greek debt is held by the German Landesbanks, but it's impossible to be sure because CDS remain an over-the-counter product: nobody has a clear handle on who has bought what.
Some of the same people who said that it was a mistake to let Lehman collapse back in 2008 now seem to be suggesting that it was a mistake not to let Greece collapse as soon as the problems surfaced, because the costs of a rescue are even higher now, and are more likely to fall on the taxpayer, since the ECB has been hoovering up outstanding Greek debt for the past couple of years. (Good old Harry Hindsight, always at the fore in a financial crisis). The EU's strategy of muddling through seems to be reaching its limit. Whatever comes next, it's going to be messy.
Banks seem to be unable to shake the habit of underestimating sovereign risks. During the LDC lending binge of the 1980s, loans to countries in the old "Warsaw Pact" countries of Eastern Europe were perceived to benefit from the "Soviet umbrella theory": loans to Poland were safe because the USSR would never allow its satellites to default. Three problems with that, of course: the USSR was never formally on the hook; it wasn't in a position to meet the obligations anyway; and it ended up falling apart itself.
In a similar vein, lenders have piled into Greece and the other PIGS partly because of the perception that these countries' membership of the EU and the Eurozone offered some kind of protection to lenders. At the time most of the bonds were sold, this support was as theoretical as the Soviet umbrella of yore. Although the EU has rushed to establish formal mechanisms since the crisis erupted, the sheer scale of the support that is likely to be needed is now triggering voter discontent, as recent election results in Germany and Finland attest.
In the specific case of Greece, assessment of the risks has not been helped by the fact that the country misrepresented its financial position in the runup to Eurozone accession. The so-called Maastricht criteria were intended to ensure that prospective new Eurozone members had "converged" to accepted inflation and fiscal standards before they were admitted. Since Greece appeared to be meeting the criteria, the perceived EU blessing encouraged private lenders to get involved in the country. It turns out, of course, that Greece had been massaging the data to ensure it was accepted into the Eurozone. It would be unfair to blame the banks for being taken in, when the due diligence failings appear to have been mainly on the part of the Eurozone authorities.
Not that this is the first time that borrowing countries have misled their lenders. If I may be allowed a personal anecdote here, in early 1980 I went to Rio de Janeiro to prepare the "information memo" for a loan my bank was planning to syndicate for Petrobras. The stated purpose of the loan was to finance the purchase of four offshore oil rigs. As a colleague and I sat in a hotel room overlooking Copacabana beach, working on the information memo, an oil rig was towed into the middle of the bay just in front of us. Petrobras admitted to us the next day that this was one of the rigs our loan was financing. They already owned it, but they knew that attaching the loan to an identifiable project would secure better terms than describing it as balance of payments financing, even though that's what it was. This was normal practice for Brazil, and the loan went ahead anyway (and was repaid on time).
So the road that's led to the edge of the precipice with Greece is one the banks have travelled before. But there are differences this time, and they're not reassuring. Back in the days of the LDC lending boom, loans were syndicated out to a small syndicate of lenders, who kept them on their own balance sheets. The information memo that I worked on in Rio was intended to help with risk assessment, but each participant had to assess the deal for itself. All banks had internal limits for how much exposure they would take to each sovereign risk.
Things are different today. Loans to Greece and the other PIGS have been packaged up and sold off to all comers. Most of the buyers have relied on the credit rating agencies for their risk assessment, and we all know how safe that's likely to be. The result of this process is that it's difficult to know in advance where the damage may be done if Greece were to reschedule its debts.
Uncertainty over where the risks lie is massively heightened by the extent to which banks and investors have relied on credit default swaps (CDS) and similar instruments to lay off some of the risks of their exposure in Greece and elsewhere. Recent data seem to suggest that the outstanding volume of CDS is far lower than it was in 2008, as deals have rolled off, but it remains far higher than the volume of actual debt outstanding. (Remind me again why CDS are not purely speculative instruments?)
Recall that in the 2008 financial crisis in the US, it turned out that the institution most exposed was not a bank but an insurer, AIG, almost entirely because of its insatiable appetite for CDS. The current belief is that the greatest exposure to Greek debt is held by the German Landesbanks, but it's impossible to be sure because CDS remain an over-the-counter product: nobody has a clear handle on who has bought what.
Some of the same people who said that it was a mistake to let Lehman collapse back in 2008 now seem to be suggesting that it was a mistake not to let Greece collapse as soon as the problems surfaced, because the costs of a rescue are even higher now, and are more likely to fall on the taxpayer, since the ECB has been hoovering up outstanding Greek debt for the past couple of years. (Good old Harry Hindsight, always at the fore in a financial crisis). The EU's strategy of muddling through seems to be reaching its limit. Whatever comes next, it's going to be messy.
Tuesday, 10 May 2011
Feel like I win when I lose
Despite all the brickbats (and worse) that have come his way in the past few days, Nick Clegg must sometimes wonder whether it would really be a good idea for the LibDems to have an electoral triumph. Disasters seem to work so well for the party.
In last year's general election, the LibDems won far fewer votes and seats than opinion polls had predicted, finishing in third place. Their reward? Participation in a governing coalition with the Tories, the party's first taste of national power in eighty years.
In last week's local elections, the Lib Dems took a fearful hammering, losing seats and control of local authorities all over the UK. (It's sad but true that UK local election results are almost always viewed as expressions of public sentiment toward the central government at Westminster). The Tories, responsible for far more of the coalition government's policy actions than the LibDems are, increased their vote slightly, while Labour and the Scottish Nationalists performed very strongly. On the same day, the referendum on the alternative vote (AV) system), which the LibDems had strongly supported, was massively defeated.
The reward this time? Far from cutting the beleaguered LibDems adrift from the coalition, the Tories seem to be making nice to them. It looks very much as if the half-baked NHS reform package, one of the main bones of contention between the two parties, may well be jettisoned in order to keep the coalition together.
If problems for the LibDems lead to the abandonment of wrong-headed Tory policies like the NHS reforms, then one can only hope that Clegg's party faces more trials than Job. However, the Tories won't keep indulging ther junior partner indefinitely. For now it suits both sides to keep the coalition going, but as we move toward the next general election (supposedly not before 2014), the calculus will change. If the LibDems continue to flounder in the polls, at some point the Tories will want to distance themselves from the party, either by terminating the coalition deal themselves, or by moving far enough to the right that the LibDems flounce out. At that point, it really will be Waterloo for Nick and his dwindling band of friends.
In last year's general election, the LibDems won far fewer votes and seats than opinion polls had predicted, finishing in third place. Their reward? Participation in a governing coalition with the Tories, the party's first taste of national power in eighty years.
In last week's local elections, the Lib Dems took a fearful hammering, losing seats and control of local authorities all over the UK. (It's sad but true that UK local election results are almost always viewed as expressions of public sentiment toward the central government at Westminster). The Tories, responsible for far more of the coalition government's policy actions than the LibDems are, increased their vote slightly, while Labour and the Scottish Nationalists performed very strongly. On the same day, the referendum on the alternative vote (AV) system), which the LibDems had strongly supported, was massively defeated.
The reward this time? Far from cutting the beleaguered LibDems adrift from the coalition, the Tories seem to be making nice to them. It looks very much as if the half-baked NHS reform package, one of the main bones of contention between the two parties, may well be jettisoned in order to keep the coalition together.
If problems for the LibDems lead to the abandonment of wrong-headed Tory policies like the NHS reforms, then one can only hope that Clegg's party faces more trials than Job. However, the Tories won't keep indulging ther junior partner indefinitely. For now it suits both sides to keep the coalition going, but as we move toward the next general election (supposedly not before 2014), the calculus will change. If the LibDems continue to flounder in the polls, at some point the Tories will want to distance themselves from the party, either by terminating the coalition deal themselves, or by moving far enough to the right that the LibDems flounce out. At that point, it really will be Waterloo for Nick and his dwindling band of friends.
Sunday, 8 May 2011
Scot free?
The past week brought one of those little coincidences that history sometimes likes to throw at us. On Monday, Canada held national elections, and the Bloc Quebecois (BQ) was almost wiped off the political map, signalling at the very least a long pause in francophone separatists' decades-long efforts to break up the country. Then, on Thursday, the separatist Scottish National Party (SNP) won an overall majority in the Scottish Assembly, setting the clock ticking for a referendum on independence some time before 2015.
Already there are similarities between historical events in Canada and the way things are shaping up in the UK. As soon as the BQ's doppelganger, the Parti Quebecois (PQ)*, first won election at the provincial level in 1976, it began setting the stage for an independence referendum, picking fights with the federal government in Ottawa and generally trying to foment an "us against them" atmosphere in the Province. The SNP has signalled a comparable stance, announcing that it will demand that greater powers are devolved to the Scottish Assembly, while reserving to itself the right to determine the timing of any referendum.
There are also similarities between the initial responses of the respective central governments in Ottawa and London. Way back in the 1970s, Ottawa made no attempt to deny the PQ its right to hold an independence vote on its own terms and at a time of its won choosing. News reports suggest that David Cameron has made a similar commitment to SNP leader Alex Salmond, though not all of Cameron's Tory backbenchers are as equable about the prospect of a referendum. Some are urging Cameron to "call the SNP's bluff" by calling his own referendum on the issue in the very near future. There are two problems with this. First, Salmond isn't bluffing; he really does intend to call a referendum on independence, and thinks he can win it. Second, a Westminster-run referendum would stoke the us-against-them mentality among Scottish voters that Salmond desperately needs if he is to achieve his goal.
This is not to say that there is nothing Cameron should be doing. Canada endured two separate independence referenda in Quebec, the second of them defeated by the narrowest possible margin, before the federal government decided to take a more proactive stance. The right of the people of Quebec or of Scotland to decide their own political arrangements is hard to deny; after all, politicians in London and Ottawa have enthusiastically endorsed sovereignty movements in places as far-flung as Bosnia, Kosovo and Southern Sudan. However, the terms on which the national government would allow separation to occur -- everything from how assets would be divided to the wording of the referendum question itself -- are legitimate concerns of the national government. The government of Canada passed legislation defining its stance on these issues at the end of the last century, in the wake of the second referendum. The effect has been to remind Quebecers, in a non-confrontational way, that opting for independence would bring real costs as well as the putative benefits offered by its proponents.
Until that legislation was passed, and in the lulls between referenda, Canada experimented with all kinds of "amending formulas". This only tended to reinforce the notion that the provinces could call the shots. In the UK, however, the right to amend the constitution rests solely with the national government in Westminster. This makes it both appropriate and important for it to spell out the conditions on which it would accept a Scottish referendum vote for independence, and what its negotiating stance would be in the aftermath. The key message: you can check out any time you want, but you should clearly understand how much of the furniture we'll let you take with you.
Scottish independence would be less of a blow for the UK than Quebec independence would be for Canada. Scotland accounts for much less than 10% of the UK economy, whereas Quebec is near 20% of Canada's. More importantly, Scotland's departure would not leave part of the UK physically cut off from the rest, whereas a separate Quebec would create a 500-km wide gap between Ontario and the Maritime provinces. Still, better for all if Scotland were to stay, and that's what Cameron and his pals need to start showing now, rather than taking comfort in opinion polls or muttering unwise threats.
* Do you really want to know the difference between the BQ and the PQ? Oh, all right. The older PQ only contests elections in Quebec, disdaining overt involvement in Canadian national politics. Some time in the 1980s the separatists realised that there was something to be said for establishing a beach-head in Ottawa as well, so the BQ was formed to contest seats in national elections (but not in Quebec provincial elections). In practice the supporters of the two parties are the same and separatist politicians move freely between the two. There, now you know.
Already there are similarities between historical events in Canada and the way things are shaping up in the UK. As soon as the BQ's doppelganger, the Parti Quebecois (PQ)*, first won election at the provincial level in 1976, it began setting the stage for an independence referendum, picking fights with the federal government in Ottawa and generally trying to foment an "us against them" atmosphere in the Province. The SNP has signalled a comparable stance, announcing that it will demand that greater powers are devolved to the Scottish Assembly, while reserving to itself the right to determine the timing of any referendum.
There are also similarities between the initial responses of the respective central governments in Ottawa and London. Way back in the 1970s, Ottawa made no attempt to deny the PQ its right to hold an independence vote on its own terms and at a time of its won choosing. News reports suggest that David Cameron has made a similar commitment to SNP leader Alex Salmond, though not all of Cameron's Tory backbenchers are as equable about the prospect of a referendum. Some are urging Cameron to "call the SNP's bluff" by calling his own referendum on the issue in the very near future. There are two problems with this. First, Salmond isn't bluffing; he really does intend to call a referendum on independence, and thinks he can win it. Second, a Westminster-run referendum would stoke the us-against-them mentality among Scottish voters that Salmond desperately needs if he is to achieve his goal.
This is not to say that there is nothing Cameron should be doing. Canada endured two separate independence referenda in Quebec, the second of them defeated by the narrowest possible margin, before the federal government decided to take a more proactive stance. The right of the people of Quebec or of Scotland to decide their own political arrangements is hard to deny; after all, politicians in London and Ottawa have enthusiastically endorsed sovereignty movements in places as far-flung as Bosnia, Kosovo and Southern Sudan. However, the terms on which the national government would allow separation to occur -- everything from how assets would be divided to the wording of the referendum question itself -- are legitimate concerns of the national government. The government of Canada passed legislation defining its stance on these issues at the end of the last century, in the wake of the second referendum. The effect has been to remind Quebecers, in a non-confrontational way, that opting for independence would bring real costs as well as the putative benefits offered by its proponents.
Until that legislation was passed, and in the lulls between referenda, Canada experimented with all kinds of "amending formulas". This only tended to reinforce the notion that the provinces could call the shots. In the UK, however, the right to amend the constitution rests solely with the national government in Westminster. This makes it both appropriate and important for it to spell out the conditions on which it would accept a Scottish referendum vote for independence, and what its negotiating stance would be in the aftermath. The key message: you can check out any time you want, but you should clearly understand how much of the furniture we'll let you take with you.
Scottish independence would be less of a blow for the UK than Quebec independence would be for Canada. Scotland accounts for much less than 10% of the UK economy, whereas Quebec is near 20% of Canada's. More importantly, Scotland's departure would not leave part of the UK physically cut off from the rest, whereas a separate Quebec would create a 500-km wide gap between Ontario and the Maritime provinces. Still, better for all if Scotland were to stay, and that's what Cameron and his pals need to start showing now, rather than taking comfort in opinion polls or muttering unwise threats.
* Do you really want to know the difference between the BQ and the PQ? Oh, all right. The older PQ only contests elections in Quebec, disdaining overt involvement in Canadian national politics. Some time in the 1980s the separatists realised that there was something to be said for establishing a beach-head in Ottawa as well, so the BQ was formed to contest seats in national elections (but not in Quebec provincial elections). In practice the supporters of the two parties are the same and separatist politicians move freely between the two. There, now you know.
Friday, 6 May 2011
Humpty Dumpty economics
'When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.' (Lewis Carroll, "Through the looking glass")
The press's favoured description of the performance of the UK economy in the final quarter of 2010 and the first quarter of this year is either "flatlining" or "dead in the water", even though it's likely that output only declined in one of those six months, December, and even that was entirely attributable to adverse weather. (See my post of 27 April on the Q1 GDP data for more details).
The same stretching of the dictionary is already under way as we start to see the first snippets of data for the current quarter, specifically the Markit/CIPS PMI (purchasing managers' index) series. There are three of these, relating to services, manufacturing and construction. Here's how the various PMIs were reported this week in The Times:
"....data out yesterday showed that construction activity slowed sharply last month, with the Markit/CIPS construction index falling to 53.3, from 56.4 in March.".
"Activity in Britain’s dominant services sector suffered a sharp slowdown in April as government spending cuts began to bite.
According to the closely watched CIPS/Markit Services Index yesterday, activity in the sector, which accounts for three quarters of the economy, fell to 54.3 last month, from 57.1 in March".
"Britain’s manufacturing sector last month grew at its slowest pace since September, fuelling fears that the economy will continue to suffer muted growth.
The Markit/CIPS manufacturing index fell to 54.6 in April, from 56.7 the previous month".
Feeling gloomy yet? That seems to be the desired effect. But the fact is that every one of these indices is above the breakeven level of 50, so all three sectors actually continued to grow in April, albeit a bit more slowly. To be fair to The Times, the reporter goes on to note that not insignificant fact, but only after front-loading the doom and gloom.
Mind you, Markit themselves did little to help the cause of accurate reporting. Their press release for the services PMI, which also served as a summary appraisal of all three series, was headlined "PMI surveys point to sharp growth slowdown in April". In case you missed the point, the first subheading was "Largest fall in all-sector PMI Output Index since collapse of Lehmans signals GDP growth of just 0.4% at start of Q2".
Any Lehman reference is bound to lure in the reporters, right? But hang on! If memory serves, GDP growth in Q1 was 0.5%. So the "sharp growth slowdown" is from 0.5% to. ....0.4%? That's right. Interestingly, Markit thinks that in March the economy may have been growing at about 0.8% on a quarterly basis (an annual rate of well over 3%!), which provides at least some justification for the term "sharp slowdown". However, that point doesn't seem to have made it into any of the media coverage, either because (a) it would have contradicted the established wisdom that the economy was "flatlining" in Q1 or (b) nobody bothered reading past the first paragraph of the Markit release. (Markit also suggested that construction would boost overall GDP in Q2. Try finding that in the press reports!)
Sadly, deconstructing the business press like this is easier than shooting fish in a barrel. I used to get paid good money for doing it. Now I do it out of the goodness of my heart, but I still wish it wasn't necessary.
The press's favoured description of the performance of the UK economy in the final quarter of 2010 and the first quarter of this year is either "flatlining" or "dead in the water", even though it's likely that output only declined in one of those six months, December, and even that was entirely attributable to adverse weather. (See my post of 27 April on the Q1 GDP data for more details).
The same stretching of the dictionary is already under way as we start to see the first snippets of data for the current quarter, specifically the Markit/CIPS PMI (purchasing managers' index) series. There are three of these, relating to services, manufacturing and construction. Here's how the various PMIs were reported this week in The Times:
"....data out yesterday showed that construction activity slowed sharply last month, with the Markit/CIPS construction index falling to 53.3, from 56.4 in March.".
"Activity in Britain’s dominant services sector suffered a sharp slowdown in April as government spending cuts began to bite.
According to the closely watched CIPS/Markit Services Index yesterday, activity in the sector, which accounts for three quarters of the economy, fell to 54.3 last month, from 57.1 in March".
"Britain’s manufacturing sector last month grew at its slowest pace since September, fuelling fears that the economy will continue to suffer muted growth.
The Markit/CIPS manufacturing index fell to 54.6 in April, from 56.7 the previous month".
Feeling gloomy yet? That seems to be the desired effect. But the fact is that every one of these indices is above the breakeven level of 50, so all three sectors actually continued to grow in April, albeit a bit more slowly. To be fair to The Times, the reporter goes on to note that not insignificant fact, but only after front-loading the doom and gloom.
Mind you, Markit themselves did little to help the cause of accurate reporting. Their press release for the services PMI, which also served as a summary appraisal of all three series, was headlined "PMI surveys point to sharp growth slowdown in April". In case you missed the point, the first subheading was "Largest fall in all-sector PMI Output Index since collapse of Lehmans signals GDP growth of just 0.4% at start of Q2".
Any Lehman reference is bound to lure in the reporters, right? But hang on! If memory serves, GDP growth in Q1 was 0.5%. So the "sharp growth slowdown" is from 0.5% to. ....0.4%? That's right. Interestingly, Markit thinks that in March the economy may have been growing at about 0.8% on a quarterly basis (an annual rate of well over 3%!), which provides at least some justification for the term "sharp slowdown". However, that point doesn't seem to have made it into any of the media coverage, either because (a) it would have contradicted the established wisdom that the economy was "flatlining" in Q1 or (b) nobody bothered reading past the first paragraph of the Markit release. (Markit also suggested that construction would boost overall GDP in Q2. Try finding that in the press reports!)
Sadly, deconstructing the business press like this is easier than shooting fish in a barrel. I used to get paid good money for doing it. Now I do it out of the goodness of my heart, but I still wish it wasn't necessary.
Wednesday, 4 May 2011
The AV Factor
It looks as if Thursday's referendum on adopting the "alternative vote" system for UK parliamentary elections is going to be defeated. (Perhaps quite heavily -- BBC News suggested last evening that the NO campaign might be leading by as much as 35 percentage points). If you live in Australia, Fiji or Papua New Guinea, countries that use this voting system, you won't need it explained to you. If you don't, well it probably isn't going to matter anyway after this week.
Knives will be out for poor Nick Clegg if that happens. In fact, they already are --over the weekend Ed Miliband was heard bemoaning the fact that the task of the YES campaigners was being made much harder by Clegg's presence in the forefront of the campaign. Gee Ed, we never heard you so much as mention AV when you were part of the Labour government and in a position to do something about it. Now that it's proving a hard sell, that's somehow Nick Clegg's fault??
Clegg may currently be having a reverse King Midas effect on everything he goes anywhere near, but he's only part of the problem for the YES side. Here are some of the factors in play...
* And we'll start with Nick Clegg, just to get him out of the way. Although AV wouldn't make a material difference in most general elections (see next point), it would tend to make it more likely that one or other of the big parties would have to form a coalition with Clegg's LibDems in order to govern. Right now it's hard to know whether that's more of a turnoff for Clegg's own party members or for his political adversaries (those two groups may be the same people, come to think of it) but it certainly isn't helpful to the AV cause.
* Nobody really, really wants AV. The LibDems have always wanted proportional representation (PR), which AV isn't. Private Eye ran a photo of Clegg and Cameron a few weeks ago, with a speech bubble of Clegg saying "AV's all right, but it wouldn't be my first choice". It's suggested that LibDems are in despair that their one and only shot at voting reform is about to go down in flames. However, advocates of real PR might actually want the AV alternative turned down, because if AV were ever adopted, it would surely put paid to the chances of real PR ever coming to a vote. That doesn't exactly contribute to fired-up campaigning on the YES side.
* The YES campaign have made the rather odd decision to recruit celebrities to front the cause: Eddie Izzard (note to non UK readers: a transvestite comedian) most prominently, but also Stephen Fry (comedian and Twitter addict), Tony Robinson (comedy actor and archaeology buff) and Richard Wilson (geriatric comedy actor). That may be a nod to the zeitgeist, where celebrity rules all, but is it really a smart choice? There were articles in the press earlier in the campaign pointing out that the NO side was a celeb-free zone, but why is that a bad thing? On issues like this, it's more important to hear from those with something to say than from those who just like to hear the sound of their own voices.
Sad to say, there's probably more interest in next week's final of the way-past-its-best Eurovision Song Contest than there is in the AV vote. That doesn't say much either for the campaigners or for the choice on offer. A YES verdict on AV wouldn't be a disaster, but it would be a potentially expensive botch that would stand in the way of real electoral reform. That's the real reason to hope for a NO victory.
Knives will be out for poor Nick Clegg if that happens. In fact, they already are --over the weekend Ed Miliband was heard bemoaning the fact that the task of the YES campaigners was being made much harder by Clegg's presence in the forefront of the campaign. Gee Ed, we never heard you so much as mention AV when you were part of the Labour government and in a position to do something about it. Now that it's proving a hard sell, that's somehow Nick Clegg's fault??
Clegg may currently be having a reverse King Midas effect on everything he goes anywhere near, but he's only part of the problem for the YES side. Here are some of the factors in play...
* And we'll start with Nick Clegg, just to get him out of the way. Although AV wouldn't make a material difference in most general elections (see next point), it would tend to make it more likely that one or other of the big parties would have to form a coalition with Clegg's LibDems in order to govern. Right now it's hard to know whether that's more of a turnoff for Clegg's own party members or for his political adversaries (those two groups may be the same people, come to think of it) but it certainly isn't helpful to the AV cause.
* Nobody really, really wants AV. The LibDems have always wanted proportional representation (PR), which AV isn't. Private Eye ran a photo of Clegg and Cameron a few weeks ago, with a speech bubble of Clegg saying "AV's all right, but it wouldn't be my first choice". It's suggested that LibDems are in despair that their one and only shot at voting reform is about to go down in flames. However, advocates of real PR might actually want the AV alternative turned down, because if AV were ever adopted, it would surely put paid to the chances of real PR ever coming to a vote. That doesn't exactly contribute to fired-up campaigning on the YES side.
* The YES campaign have made the rather odd decision to recruit celebrities to front the cause: Eddie Izzard (note to non UK readers: a transvestite comedian) most prominently, but also Stephen Fry (comedian and Twitter addict), Tony Robinson (comedy actor and archaeology buff) and Richard Wilson (geriatric comedy actor). That may be a nod to the zeitgeist, where celebrity rules all, but is it really a smart choice? There were articles in the press earlier in the campaign pointing out that the NO side was a celeb-free zone, but why is that a bad thing? On issues like this, it's more important to hear from those with something to say than from those who just like to hear the sound of their own voices.
Sad to say, there's probably more interest in next week's final of the way-past-its-best Eurovision Song Contest than there is in the AV vote. That doesn't say much either for the campaigners or for the choice on offer. A YES verdict on AV wouldn't be a disaster, but it would be a potentially expensive botch that would stand in the way of real electoral reform. That's the real reason to hope for a NO victory.
Tuesday, 3 May 2011
The bin Laden business report
In times of sorrow, anger or triumph, the business of America is always business.
As the world watched the awful scenes of 9/11 unfold, one of the talking heads on CNBC voiced what was apparently her (and presumably her producer's) main concern: "Obviously there's some doubt about whether the markets will open on time this morning".
Once the dust settled over the World Trade Centre and the preparations for war got under way, a small sideshow unfolded in New York. The Securities and Exchange Commission (SEC) and the major exchanges carried out a detailed investigation into whether al-Qaeda had tried to profit from its foreknowledge of the atrocities by shorting airline stocks. No conclusive evidence was found, though the suspicions were never fully allayed.
Yesterday, as the world came to grips with the news of Osama bin Laden's death, CNBC was at it again. Another talking head posed the key question of the day to a guest panellist: "So what effect do you expect bin Laden's death to have on commodity prices?"
At least there won't be any need for an SEC investigation this time around. Looks like the Navy Seals didn't give bin Laden a chance to call his broker.
As the world watched the awful scenes of 9/11 unfold, one of the talking heads on CNBC voiced what was apparently her (and presumably her producer's) main concern: "Obviously there's some doubt about whether the markets will open on time this morning".
Once the dust settled over the World Trade Centre and the preparations for war got under way, a small sideshow unfolded in New York. The Securities and Exchange Commission (SEC) and the major exchanges carried out a detailed investigation into whether al-Qaeda had tried to profit from its foreknowledge of the atrocities by shorting airline stocks. No conclusive evidence was found, though the suspicions were never fully allayed.
Yesterday, as the world came to grips with the news of Osama bin Laden's death, CNBC was at it again. Another talking head posed the key question of the day to a guest panellist: "So what effect do you expect bin Laden's death to have on commodity prices?"
At least there won't be any need for an SEC investigation this time around. Looks like the Navy Seals didn't give bin Laden a chance to call his broker.
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