The court case to decide compensation for the Deepwater Horizon oil rig disaster in the Gulf of Mexico has been postponed for a few days, raising expectations that the main defendant, BP, may be about to settle out of court. Watching from a distance, one of the amazing things that strikes the observer is how BP -- or rather, BRITISH Petroleum, as it has been universally referred to in the American media ever since the rig caught fire, has emerged as the sole villain of the piece. It was never the sole owner or the main operator -- giant US corporations including Anadarko, Transocean and the ever-popular Halliburton were all deeply involved.
No matter. Everyone from Wolf Blitzer to Jay Leno piled in on BRITISH Petroleum as the principal owners of the rig, and the company's own partners in the enterprise were all quick to run for cover. There's still a blog somewhere out on the 'net calling for the US government to "seize the assets of British Petroleum" right now.
So it seems only fair to point out that both the Costa Concordia and Costa Allegra cruise ships are ultimately American-owned (by Carnival Cruise Lines). Just to jog your memory, the Costa Concordia ran aground near Sardinia in mid-January, with the loss of at least 25 lives (compared to 11 on the Deepwater Horizon, not that that's especially relevant). And just this week the Costa Allegra has suffered a catastrophic power failure, leaving over 1,000 people drifting in the pirate-infested waters of the Indian Ocean. Sure, the officers are mostly Italian and the crews are from all around the world, but the ultimate ownership is American, and that's what counts in these things. Right, Wolf? Right, Jay?
Tuesday, 28 February 2012
Monday, 27 February 2012
The unfunniest man in the world
In a world that boasts Martin Short, Adam Sandler and Frankie Boyle, there should be plenty of competition for that title, but the truth is, Sacha Baron Cohen has it all sewn up.
Remember Ali G, he of the yellow shell suit and the East Staines Massive? It seemed funny enough at first, as he skewered slightly ridiculous personalities like Mohamed al-Fayed and Tony Benn. But you started to feel a bit queasy when you realised that what you were watching was a university-educated, middle class Jewish man taking the p*ss out of the lifestyles of poor black kids. You began to wonder if anyone would have made a series featuring a black comedian mercilessly mocking Jewish customs -- and you were relieved when you concluded that no-one would.
Next came Borat, the Kazakh documentary maker. Borat was, of course, grossly insulting to Kazakhs, with his violent sexism and unreconstructed anti-Semitism. That wasn't enough for Baron Cohen, though. He used the character to depict large numbers of Americans as anti-Semites too, using the singularly low trick of plying them with booze, and then having "Borat" cajole them into an anti-Semitic sing-song.
After that there was a gay Austrian fashion victim, Bruno, a character that mercifully sank leaving very little trace.
And now he's back promoting his latest creation, The Dictator, in his usual tasteful style. At the Oscars ceremony in LA last evening, he crashed the red carpet and tipped an urn that, he claimed, contained the ashes of Kim Jong-Il over Ryan Seacrest, whoever that maybe. It worked, inasmuch as Baron Cohen is a top trending topic on Twitter today. Tweets are about equally divided between those who found the whole thing hilarious and those who wish he'd just go away. One or two are even suggesting that the stunt leaves him open to an assault charge, if Ryan Seacrest, whoever that may be, is so inclined. That would surely be a big mistake, because it's probably exactly what he wants.
This here blog tries hard to take a balanced view, and in that spirit, here is the Daily Telegraph's choice of Baron Cohen's "20 funniest lines". Take a look and decide for yourself. It seems to me that, to recycle an old putdown, those that are funny are not original, and those that are original are not funny. But then, picking on people who can't answer back rarely is.
Remember Ali G, he of the yellow shell suit and the East Staines Massive? It seemed funny enough at first, as he skewered slightly ridiculous personalities like Mohamed al-Fayed and Tony Benn. But you started to feel a bit queasy when you realised that what you were watching was a university-educated, middle class Jewish man taking the p*ss out of the lifestyles of poor black kids. You began to wonder if anyone would have made a series featuring a black comedian mercilessly mocking Jewish customs -- and you were relieved when you concluded that no-one would.
Next came Borat, the Kazakh documentary maker. Borat was, of course, grossly insulting to Kazakhs, with his violent sexism and unreconstructed anti-Semitism. That wasn't enough for Baron Cohen, though. He used the character to depict large numbers of Americans as anti-Semites too, using the singularly low trick of plying them with booze, and then having "Borat" cajole them into an anti-Semitic sing-song.
After that there was a gay Austrian fashion victim, Bruno, a character that mercifully sank leaving very little trace.
And now he's back promoting his latest creation, The Dictator, in his usual tasteful style. At the Oscars ceremony in LA last evening, he crashed the red carpet and tipped an urn that, he claimed, contained the ashes of Kim Jong-Il over Ryan Seacrest, whoever that maybe. It worked, inasmuch as Baron Cohen is a top trending topic on Twitter today. Tweets are about equally divided between those who found the whole thing hilarious and those who wish he'd just go away. One or two are even suggesting that the stunt leaves him open to an assault charge, if Ryan Seacrest, whoever that may be, is so inclined. That would surely be a big mistake, because it's probably exactly what he wants.
This here blog tries hard to take a balanced view, and in that spirit, here is the Daily Telegraph's choice of Baron Cohen's "20 funniest lines". Take a look and decide for yourself. It seems to me that, to recycle an old putdown, those that are funny are not original, and those that are original are not funny. But then, picking on people who can't answer back rarely is.
Thursday, 23 February 2012
The Dark Ages come to suburbia
In the movie Lawrence of Arabia, Lawrence (Peter O'Toole) chides Sherif Ali (Omar Sharif) about the apparent social and economic regression of the Arab nations. One example he uses: street lighting was invented in the Moorish cities of Andalucia in the eight century, yet a millennium later, the Bedouin were back to living in tents.
Nowadays Lawrence would not have to travel to Wadi Rum to find examples of regression, because here in leafy, prosperous Hertfordshire, UK, street lighting is being uninvented. As part of the cheeseparing needed in times of austerity, the local council is turning off the lights on all but the busiest main roads between midnight and 6 am, for at least the next two years. Opponents of the scheme (basically everyone) have pointed out that this is almost certain to trigger an increase in crime, and that the supposed saving in carbon emissions will almost certainly not be realised because householders will choose to leave their own outside lights on all night. These arguments have fallen on deaf ears.
A story like this would, of course, have less impact if there were not an egregious example of unnecessary public spending going on at the same time. Needless to say, there is. In the main park in our city, a massive swimming pool and leisure centre is currently taking shape. There was nothing wrong with the old pool, or at least there wasn't until the council starved it of maintenance funding in order to build the case for demolishing it in favour of the new one.
More seriously, however, the park in question was the site of one of the three largest Roman settlements in Britain -- Verulamium -- in the early Christian era. Within yards of the massive and unattractive new building there are stretches of Roman walls, a hypocaust and a Roman theatre. Mind you, since the council is also allowing the same park to be used for an annual comedy festival that they hope to build into "the standup equivalent of Glastonbury" (really!), I guess we can be under no illusions about how highly they value the area's heritage.
Intriguingly, there's a possibility that once the new pool is ready, the council won't be allowed to fill it with water. We now have an official state of drought in this part of England, and restrictions on water use are looming unless the skies open in the next month or so. About 90% of the UK's fresh water supplies are in Scotland -- Loch Ness alone has more fresh water than all the lakes in England -- but no serious attempt has ever been made to develop a national water grid. Once again, we seem to be lagging behind our forebears: as anyone can attest who has seen the extraordinary Pont du Gard in France, or numerous other such structures across Europe, the Romans knew a thing or two about moving water to where it was needed.
Of course, with the UK being relatively small, you'd think it would be easy to move water around anyway. Scotland could pump surplus water to the network serving the north of England, which could pass it on to the Midlands and so on until it reached the drought areas. Not so. An interesting little column in today's Times (paywa££) by their weather expert, Paul Simons, tells us that such water trading is almost unknown, even between neighbouring water companies. Something about fear of encouraging competition, apparently. Gee, and there I was starting to believe all the guff about how privatisation of the water utilities would be good for the consumer.
Britain 2012! The Queen's Diamond Jubilee! The Olympic Games!! Darkened streets and water shortages!!! Oh well, I hear Wadi Rum's nice at this time of the year.
Nowadays Lawrence would not have to travel to Wadi Rum to find examples of regression, because here in leafy, prosperous Hertfordshire, UK, street lighting is being uninvented. As part of the cheeseparing needed in times of austerity, the local council is turning off the lights on all but the busiest main roads between midnight and 6 am, for at least the next two years. Opponents of the scheme (basically everyone) have pointed out that this is almost certain to trigger an increase in crime, and that the supposed saving in carbon emissions will almost certainly not be realised because householders will choose to leave their own outside lights on all night. These arguments have fallen on deaf ears.
A story like this would, of course, have less impact if there were not an egregious example of unnecessary public spending going on at the same time. Needless to say, there is. In the main park in our city, a massive swimming pool and leisure centre is currently taking shape. There was nothing wrong with the old pool, or at least there wasn't until the council starved it of maintenance funding in order to build the case for demolishing it in favour of the new one.
More seriously, however, the park in question was the site of one of the three largest Roman settlements in Britain -- Verulamium -- in the early Christian era. Within yards of the massive and unattractive new building there are stretches of Roman walls, a hypocaust and a Roman theatre. Mind you, since the council is also allowing the same park to be used for an annual comedy festival that they hope to build into "the standup equivalent of Glastonbury" (really!), I guess we can be under no illusions about how highly they value the area's heritage.
Intriguingly, there's a possibility that once the new pool is ready, the council won't be allowed to fill it with water. We now have an official state of drought in this part of England, and restrictions on water use are looming unless the skies open in the next month or so. About 90% of the UK's fresh water supplies are in Scotland -- Loch Ness alone has more fresh water than all the lakes in England -- but no serious attempt has ever been made to develop a national water grid. Once again, we seem to be lagging behind our forebears: as anyone can attest who has seen the extraordinary Pont du Gard in France, or numerous other such structures across Europe, the Romans knew a thing or two about moving water to where it was needed.
Of course, with the UK being relatively small, you'd think it would be easy to move water around anyway. Scotland could pump surplus water to the network serving the north of England, which could pass it on to the Midlands and so on until it reached the drought areas. Not so. An interesting little column in today's Times (paywa££) by their weather expert, Paul Simons, tells us that such water trading is almost unknown, even between neighbouring water companies. Something about fear of encouraging competition, apparently. Gee, and there I was starting to believe all the guff about how privatisation of the water utilities would be good for the consumer.
Britain 2012! The Queen's Diamond Jubilee! The Olympic Games!! Darkened streets and water shortages!!! Oh well, I hear Wadi Rum's nice at this time of the year.
Monday, 20 February 2012
ED-onomics -- is that the best you can do??
Ed Balls thinks he has a plan to get the economy going. Labour's Shadow Chancellor wants the government to cut VAT temporarily to boost consumer spending, or failing that, to cut income tax for the lower paid.
Bad idea, Ed, for several reasons. First and foremost, it's quite clear that a lack of consumer spending, which is the only thing a VAT or income tax cut could hope to remedy, is not the economy's main problem right now. As the ONS reported last week (see previous post), retail sales rose 0.9% in January and are more than 4% higher year-on-year. Retail sales in volume terms have been rising, slowly but steadily, since August. Now that inflation is finally heading lower, even the Bank of England has turned cautiously optimistic, both that a double-dip recession will be avoided and that growth will accelerate after mid-year.
The economy's real problems lie elsewhere. First and foremost, slow growth in Europe will continue to weigh on UK output growth. There's not much that the government can do about that, though if one were cynical, one could argue that Ed's VAT cut would give a nice boost to the German auto industry.
Domestically, the UK's main problem is the low level of business investment. Many larger companies are choosing to sit on cash rather than invest in new productive capacity, while smaller ones are also reluctant to splash out because they are either unable (their version) or unwilling (the banks' version) to get the credit they need. It's well known -- and was demonstrated as recently as 2010, when the last Labour government cut VAT in an attempt to soften the recession -- that the main effect of any temporary tax cut is to bring spending forward, rather than produce a sustained increase. Big ticket consumer spending would be dragged into 2012 from 2013, so a year from now, when the cuts expired, the Chancellor would be facing renewed calls to "do something" to prevent growth from sliding again. Businessmen know this, even if Ed Balls doesn't, so a temporary VAT or income tax cut would do nothing to encourage business investment, which has to be based on a much longer view.
Balls estimates the cost of a 2.5% VAT cut for one year at £12 billion. He regards it as "absurd" to call that unaffordable, when slower growth is projected to add £158 billion to projected borrowing over the next five years. It's more than a bit intellectually dishonest to compare a one-year figure with a five year projection, but leaving that aside, the fact is that there are now plenty of signs that the government's austerity measures are starting to have a measurable effect on the fiscal situation. The budget surplus for January, traditionally a strong month for UK public finances, is expected to confirm the probability that the deficit for the full fiscal year will be significantly lower than originally expected*. If the economy really is showing signs of improvement, it would be absurd to throw away those gains now, particularly for the sake of something as pointless as a VAT cut.
You might have hoped that Ed Balls and his team, including Mrs Ed, would be taking the opportunity of a spell in opposition to come up with some new ideas. So much for that.
* UPDATE, 21 February: As expected the budget surplus for January was sharply higher than in January 2011, at almost £7.8 billion. Borrowing for the full fiscal year is likely to be more than 10% lower than the budget's projection of £127 billion. BBC story here.
Bad idea, Ed, for several reasons. First and foremost, it's quite clear that a lack of consumer spending, which is the only thing a VAT or income tax cut could hope to remedy, is not the economy's main problem right now. As the ONS reported last week (see previous post), retail sales rose 0.9% in January and are more than 4% higher year-on-year. Retail sales in volume terms have been rising, slowly but steadily, since August. Now that inflation is finally heading lower, even the Bank of England has turned cautiously optimistic, both that a double-dip recession will be avoided and that growth will accelerate after mid-year.
The economy's real problems lie elsewhere. First and foremost, slow growth in Europe will continue to weigh on UK output growth. There's not much that the government can do about that, though if one were cynical, one could argue that Ed's VAT cut would give a nice boost to the German auto industry.
Domestically, the UK's main problem is the low level of business investment. Many larger companies are choosing to sit on cash rather than invest in new productive capacity, while smaller ones are also reluctant to splash out because they are either unable (their version) or unwilling (the banks' version) to get the credit they need. It's well known -- and was demonstrated as recently as 2010, when the last Labour government cut VAT in an attempt to soften the recession -- that the main effect of any temporary tax cut is to bring spending forward, rather than produce a sustained increase. Big ticket consumer spending would be dragged into 2012 from 2013, so a year from now, when the cuts expired, the Chancellor would be facing renewed calls to "do something" to prevent growth from sliding again. Businessmen know this, even if Ed Balls doesn't, so a temporary VAT or income tax cut would do nothing to encourage business investment, which has to be based on a much longer view.
Balls estimates the cost of a 2.5% VAT cut for one year at £12 billion. He regards it as "absurd" to call that unaffordable, when slower growth is projected to add £158 billion to projected borrowing over the next five years. It's more than a bit intellectually dishonest to compare a one-year figure with a five year projection, but leaving that aside, the fact is that there are now plenty of signs that the government's austerity measures are starting to have a measurable effect on the fiscal situation. The budget surplus for January, traditionally a strong month for UK public finances, is expected to confirm the probability that the deficit for the full fiscal year will be significantly lower than originally expected*. If the economy really is showing signs of improvement, it would be absurd to throw away those gains now, particularly for the sake of something as pointless as a VAT cut.
You might have hoped that Ed Balls and his team, including Mrs Ed, would be taking the opportunity of a spell in opposition to come up with some new ideas. So much for that.
* UPDATE, 21 February: As expected the budget surplus for January was sharply higher than in January 2011, at almost £7.8 billion. Borrowing for the full fiscal year is likely to be more than 10% lower than the budget's projection of £127 billion. BBC story here.
Friday, 17 February 2012
UK retail sales are rising steadily! (Yes, really)
UK media are full of stories about a "surprise" increase in retail sales in January. Sales rose 0.9% in the month, following on from a 0.6% increase in December, to stand 4.4% higher than a year ago.
Why exactly are they surprised? The BBC story linked above provides the answer; the Beeb has found an economist who notes that "all the surveys" showed weak sales. Ah yes, the surveys! When the British Retail Consortium's survey for January came out a while ago, I posted a note here to point out that the BRC had contorted the data to an astonishing degree in order to make a genuinely strong survey look weak. It's disappointing to realise that there are still economists out there who take these benighted surveys seriously.
The official ONS report on the data can be found here, and bears a bit of scrutiny. The data show that for all the doom and gloom out there, retail sales volumes have been edging steadily higher since August 2011, after a lengthy period of stagnation. Here's a quote from the report: "The index levels of the volume and value series between October 2009 and January 2012......show that the volume series has remained broadly flat until around August 2011 and then shows a modest increase whereas the value series continues to increase at a much faster pace throughout the period shown. This implies that the increase in the value series is largely driven by an increase in prices rather than an increase in the amount bought". That last sentence is interesting because the retailers themselves constantly claim that it's only price discounting that's keeping sales moving -- Sir Philip Green was on TV just now saying exactly that -- but the official data suggest that's not actually true.
Another interesting stat from the report is that internet sales now make up 12% of the total. The flipside of this is a continuing decline in the role of the traditional High Street shop. Across the UK, 14.2% of stores are vacant. Categories such as bookshops and electrical good retailers, which are particularly affected by online competition, are being replaced by charity shops and "pound stores". This trend is even apparent in my own smugly comfortable commuter town; the overall store vacancy rate is the lowest in the UK, at 8.2%, but we now have two pound stores side-by-each in the main shopping street, and two Oxfam stores.
The trend towards internet shopping is probably irreversible, but that doesn't mean there's nothing that can be done. There was an interesting story on the TV last month of a businessman in the Hampshire town of Gosport. He had bought up a series of shops in the main street, one of which had been vacant for many years, and re-let them at half the rental rate demanded by the town's traditional landlords. He has a zero vacancy rate and his tenants are making money. There must be a lesson there somewhere.
Why exactly are they surprised? The BBC story linked above provides the answer; the Beeb has found an economist who notes that "all the surveys" showed weak sales. Ah yes, the surveys! When the British Retail Consortium's survey for January came out a while ago, I posted a note here to point out that the BRC had contorted the data to an astonishing degree in order to make a genuinely strong survey look weak. It's disappointing to realise that there are still economists out there who take these benighted surveys seriously.
The official ONS report on the data can be found here, and bears a bit of scrutiny. The data show that for all the doom and gloom out there, retail sales volumes have been edging steadily higher since August 2011, after a lengthy period of stagnation. Here's a quote from the report: "The index levels of the volume and value series between October 2009 and January 2012......show that the volume series has remained broadly flat until around August 2011 and then shows a modest increase whereas the value series continues to increase at a much faster pace throughout the period shown. This implies that the increase in the value series is largely driven by an increase in prices rather than an increase in the amount bought". That last sentence is interesting because the retailers themselves constantly claim that it's only price discounting that's keeping sales moving -- Sir Philip Green was on TV just now saying exactly that -- but the official data suggest that's not actually true.
Another interesting stat from the report is that internet sales now make up 12% of the total. The flipside of this is a continuing decline in the role of the traditional High Street shop. Across the UK, 14.2% of stores are vacant. Categories such as bookshops and electrical good retailers, which are particularly affected by online competition, are being replaced by charity shops and "pound stores". This trend is even apparent in my own smugly comfortable commuter town; the overall store vacancy rate is the lowest in the UK, at 8.2%, but we now have two pound stores side-by-each in the main shopping street, and two Oxfam stores.
The trend towards internet shopping is probably irreversible, but that doesn't mean there's nothing that can be done. There was an interesting story on the TV last month of a businessman in the Hampshire town of Gosport. He had bought up a series of shops in the main street, one of which had been vacant for many years, and re-let them at half the rental rate demanded by the town's traditional landlords. He has a zero vacancy rate and his tenants are making money. There must be a lesson there somewhere.
Wednesday, 15 February 2012
Dawkins invokes God, unsuccessfully
You'd need a heart of stone not to laugh. Richard Dawkins, the self-effacing scourge of believers everywhere, was on the radio this week arguing that, guess what, religion no longer has a purpose. Said he: “an astonishing number [of Christians] couldn’t identify the first book in the New Testament”. For what it's worth, it's St Matthew's Gospel, but the interesting part is what came next. Dawkins's fellow-panellist was Giles Fraser, who was Canon of St Paul's Cathedral until he quit in a huff last year over the Occupy London protests. Here's a transcript, courtesy of Stephen Pollard in the Daily Telegraph:
Fraser: Richard, if I said to you what is the full title of The Origin Of Species, I’m sure you could tell me that.
Fraser: Richard, if I said to you what is the full title of The Origin Of Species, I’m sure you could tell me that.
Dawkins: Yes I could.
Fraser: Go on then.
Dawkins: On the Origin of Species…Uh…With, oh, God, On the Origin of Species. There is a sub-title with respect to the preservation of favoured races in the struggle for life.
Couldn't have happened to a nicer guy, and the inadvertent invocation of the Almighty is a particularly pleasing touch. But without taking sides on the serious underlying issue here (I could, but I won't), just what was Dawkins trying to prove anyway? I'd bet a tidy sum that most people think that Darwin's book is called "The Origin of the Species" (at least Dawkins got the first line of the title right). I'd bet an even bigger sum that not one atheist in a hundred has read it, and a larger sum still that far fewer people have made it through any of the works of someone like Stephen Hawking than have read St Matthew's Gospel.
Does Dawkins really mean to suggest that what's important and true should be decided on the basis of what people can easily recall? If so, St Matthew and the rest of the Bible (or the Torah, or the Koran) still have a pretty sizeable lead over string theory and the multiverse.
Monday, 13 February 2012
Naming and shaming the spendthrifts
The Eurozone financial crisis has triggered an unseemly bout of finger-pointing, much of it almost racist in tone. German politicians, reflecting domestic public sentiment, have been castigating their profligate southern neighbours; the UK government has been piously telling everyone who will listen that only its unpopular austerity measures have kept the country from a similar fate; the Greeks are accusing the Germans of quasi-revanchist aggression; and US business commentators have portrayed the whole of Europe as a socialist midden beyond any hope of salvation.
It's useful, then, to discover that someone has made an effort to rank the fiscal status and outlook of 34 of the world's developed economies. The snappily-titled Sovereign Fiscal Responsibility Index is produced by graduates of Stanford University, in conjunction with something called the Comeback America Initiative, which may not be an affiliate of the Socialist International.
The results are fascinating and quite surprising. No big shock to find that Greece comes 34th out of 34, or that Portugal and Ireland are also near the bottom of the charts. However, the United States, which despite its own brush with fiscal armageddon last year has still seen fit to lecture Europe incessantly, ranks only 28th -- behind Italy and Spain, among others. Equally surprisingly, Germany ranks only 25th, two places behind France, despite its reputation as the fiscal paragon of Europe. The UK ranks as high as 9th, suggesting that there is at least someone out there who believes George Osborne when he talks about getting the UK's finances back to a sustainable basis.
Top spot is held by resource-rich Australia, while New Zealand is in second place. Considering the dire fiscal straits in which New Zealand found itself less than a generation ago, this is a remarkable turnaround, and may offer at least some solace to those countries that are now trying to claw their way out of the mire.
Two lessons here, I think; one almost metaphysical, and the other more practical. The metaphysical: let him who is without stain cast the first stone. The practical: if you're going to run a dodgy fiscal policy, it helps if you have a printing press.
It's useful, then, to discover that someone has made an effort to rank the fiscal status and outlook of 34 of the world's developed economies. The snappily-titled Sovereign Fiscal Responsibility Index is produced by graduates of Stanford University, in conjunction with something called the Comeback America Initiative, which may not be an affiliate of the Socialist International.
The results are fascinating and quite surprising. No big shock to find that Greece comes 34th out of 34, or that Portugal and Ireland are also near the bottom of the charts. However, the United States, which despite its own brush with fiscal armageddon last year has still seen fit to lecture Europe incessantly, ranks only 28th -- behind Italy and Spain, among others. Equally surprisingly, Germany ranks only 25th, two places behind France, despite its reputation as the fiscal paragon of Europe. The UK ranks as high as 9th, suggesting that there is at least someone out there who believes George Osborne when he talks about getting the UK's finances back to a sustainable basis.
Top spot is held by resource-rich Australia, while New Zealand is in second place. Considering the dire fiscal straits in which New Zealand found itself less than a generation ago, this is a remarkable turnaround, and may offer at least some solace to those countries that are now trying to claw their way out of the mire.
Two lessons here, I think; one almost metaphysical, and the other more practical. The metaphysical: let him who is without stain cast the first stone. The practical: if you're going to run a dodgy fiscal policy, it helps if you have a printing press.
Saturday, 11 February 2012
Merlin the not-so-wizard
Official data on UK bank lending for 2011 will be released on Monday, and will reveal whether the major banks met their commitment to increase lending under the so-called "Project Merlin" agreement with the government. Recent releases of these lending numbers have been poorly reported by the media, with the result that the banks have found themselves under assault from politicians and business lobbyists for their perceived failings. For example, take a look at this post about the lending figures for the first three quarters of the year.
This time the banks are trying to get their retaliation in first. On Friday the British Bankers Association announced that the major banks had easily beaten their Merlin targets, lending £215 billion in the year, versus a target of £190 billion. Predictably, though, this just started the firestorm of abuse a couple of days early. First up, as usual: the small business lobby, which noted that the BBA figures showed that banks' small business lending had fallen short of the separate target set for it. The shortfall appears to be not much more than 1%, but to hear the lobbyists tell it, that discrepancy is what's keeping the economy from powering ahead.
Next up: Laura Kuenssberg, the ITV business correspondent recently poached from the BBC. She told her Twitter followers: "Remember crucially about Merlin, it is total lending that's been offered, not actual lending that's actually been taken up - big difference". Indeed it is, but perhaps Laura should have paused to consider that if firms are not taking up all the credit that's being offered, then maybe the banks have a point when they claim that slow lending growth is the result of lagging demand rather than inadequate supply.
Ms Kuenssberg also tweeted a number of quotes from Barclays' boss Bob Diamond, who was attempting at a press conference to bring off the unenviable double play of defending his bank's lending record and deflecting criticism of his own soon-to-be-revealed bonus. According to Laura: "Diamond says 'we don't need Project Merlin, lending is what we do'".
Well, up to a point. Barclays is more vulnerable than the other big UK banks to criticism that its activities are too heavily skewed towards non-lending related activities -- so-called "casino banking". For all the banks, though, there continues to be a delicate balancing act between making fresh loans -- which inevitably involves risk -- and rebuilding balance sheets. From this standpoint, it's unfortunate that the biggest player in the UK business loans market is RBS, which even more than most of its competitors needs to avoid making any more mistakes.
If the official data confirm that the banks have in fact met their lending targets, questions may arise as to why the Bank of England saw a need to add £50 billion to its quantitative easing programme last week. One explanation is suggested by Chris Dillow, who has done some very creditable research that shows that most of the impact of past rounds of QE has not been on the banks, but on other types of financial institution, mainly institutional investors. Dillow's conclusion: you can't judge the success of QE by what happens to bank lending. It will be interesting to see whether any of the media pundits have picked up on that when they comment on the official Project Merlin data on Monday.
This time the banks are trying to get their retaliation in first. On Friday the British Bankers Association announced that the major banks had easily beaten their Merlin targets, lending £215 billion in the year, versus a target of £190 billion. Predictably, though, this just started the firestorm of abuse a couple of days early. First up, as usual: the small business lobby, which noted that the BBA figures showed that banks' small business lending had fallen short of the separate target set for it. The shortfall appears to be not much more than 1%, but to hear the lobbyists tell it, that discrepancy is what's keeping the economy from powering ahead.
Next up: Laura Kuenssberg, the ITV business correspondent recently poached from the BBC. She told her Twitter followers: "Remember crucially about Merlin, it is total lending that's been offered, not actual lending that's actually been taken up - big difference". Indeed it is, but perhaps Laura should have paused to consider that if firms are not taking up all the credit that's being offered, then maybe the banks have a point when they claim that slow lending growth is the result of lagging demand rather than inadequate supply.
Ms Kuenssberg also tweeted a number of quotes from Barclays' boss Bob Diamond, who was attempting at a press conference to bring off the unenviable double play of defending his bank's lending record and deflecting criticism of his own soon-to-be-revealed bonus. According to Laura: "Diamond says 'we don't need Project Merlin, lending is what we do'".
Well, up to a point. Barclays is more vulnerable than the other big UK banks to criticism that its activities are too heavily skewed towards non-lending related activities -- so-called "casino banking". For all the banks, though, there continues to be a delicate balancing act between making fresh loans -- which inevitably involves risk -- and rebuilding balance sheets. From this standpoint, it's unfortunate that the biggest player in the UK business loans market is RBS, which even more than most of its competitors needs to avoid making any more mistakes.
If the official data confirm that the banks have in fact met their lending targets, questions may arise as to why the Bank of England saw a need to add £50 billion to its quantitative easing programme last week. One explanation is suggested by Chris Dillow, who has done some very creditable research that shows that most of the impact of past rounds of QE has not been on the banks, but on other types of financial institution, mainly institutional investors. Dillow's conclusion: you can't judge the success of QE by what happens to bank lending. It will be interesting to see whether any of the media pundits have picked up on that when they comment on the official Project Merlin data on Monday.
Thursday, 9 February 2012
Addio, Fabio
The media are pronouncing themselves shocked that the hatchet-faced moneygrubber, Fabio Capello, has resigned from his job as England football manager. Leaving aside the fact that Fabio seems to be a man who never knowingly walks away from a paycheque, I have to say I'm shocked that they're shocked.
Anyone who has worked in business for any period of time will know that once a CEO falls out with his Board of Directors, it's in the best interests of all concerned to end the relationship as quickly and cleanly as possible. Considering Capello's record since he took the job -- the ludicrous and ill-advised "Capello Index" money spinner, the firing and then reinstatement of team captain and serial recidivist John Terry over allegations of an affair with a team-mate's girlfriend, and most of all, the team's abysmal performance at the World Cup in 2010, just weeks after he had bamboozled the Football Association into extending his contract -- the only surprise is that he's lasted this long.
There's a fascinating (albeit long) story here about a recent falling out between the CEO of a major New York bank and his Board, which illustrates very clearly why it's best just to cut bait and move on. (Disclosure: I know the CEO in question, Bob Kelly, though not well).
Thanks to the Football Association's mismanagement, barely four months before the next major tournament, the England team has no manager and no captain in place. Still, I suppose it will provide the best possible excuse if they turn in another sub-par performance in Poland and Ukraine come June.
So away goes Fabio Capello, millions of pounds richer, but likely to be recalled by England fans mostly as a man who made Sven-Goran Eriksson look good. Let's say "addio" rather than "arrivederci", Fabio, because we really don't want to see you again, and I suspect the feeling's mutual.
Anyone who has worked in business for any period of time will know that once a CEO falls out with his Board of Directors, it's in the best interests of all concerned to end the relationship as quickly and cleanly as possible. Considering Capello's record since he took the job -- the ludicrous and ill-advised "Capello Index" money spinner, the firing and then reinstatement of team captain and serial recidivist John Terry over allegations of an affair with a team-mate's girlfriend, and most of all, the team's abysmal performance at the World Cup in 2010, just weeks after he had bamboozled the Football Association into extending his contract -- the only surprise is that he's lasted this long.
There's a fascinating (albeit long) story here about a recent falling out between the CEO of a major New York bank and his Board, which illustrates very clearly why it's best just to cut bait and move on. (Disclosure: I know the CEO in question, Bob Kelly, though not well).
Thanks to the Football Association's mismanagement, barely four months before the next major tournament, the England team has no manager and no captain in place. Still, I suppose it will provide the best possible excuse if they turn in another sub-par performance in Poland and Ukraine come June.
So away goes Fabio Capello, millions of pounds richer, but likely to be recalled by England fans mostly as a man who made Sven-Goran Eriksson look good. Let's say "addio" rather than "arrivederci", Fabio, because we really don't want to see you again, and I suspect the feeling's mutual.
Tuesday, 7 February 2012
Even the good times are bad
I haven't had a rant about the misleadingly gloomy tone of business reporting in the UK for quite a while. Time to remedy that.
Yesterday the British Retail Consortium (BRC) published its report on High Street spending for January. Press reports on the data today include: "gloomy figures" and "a bunker mentality" (The Times); "drop in sales" (The Guardian); and "shoppers cut back" (Daily Telegraph).
The numbers must have been pretty bad, right? They couldn't all have got it wrong, could they? Well actually, yes they could. The BRC's report actually showed that overall retail spending in January was up 2.1% from the year before. As usual the BRC chose to emphasise the "like-for-like sales" data, which were marginally lower, even though this is a meaningless number. (It only includes sale from stores open for at least a year. This means that it excludes the massive Westfields shopping centre near the Olympic Park, which opened to such fanfare just ahead of the Christmas shopping season!) The BRC's spin was enough to bamboozle both the Telegraph and the Guardian, with the latter not even finding space to report the overall 2.1% increase.
The Times did a bit better, correctly reporting the overall 2.1% increase, but still imparting a negative tone: this was, according to the BRC, the second worst January increase since the survey began 17 years ago. Still and all, it was an increase, and it would be entirely true to report that the value of UK retail sales last month was the highest for any January in history, although neither the BRC nor the media seemed to think that was worth saying.
Retail sales are not the only UK indicators that are doing just a bit better than some, or rather most, of the reportage might lead you to believe. Car sales rose in January (albeit by a nugatory 0.03% year-on-year); consumer confidence has edged higher; and both manufacturing and services surveys are showing a modest increase in sentiment. With the Eurozone crisis still rumbling along, it's too soon to break out the prosecco, and it may well be that the Bank of England will see fit to carry out a third round of quantitative easing later this week. Even so, a return to recession is far from certain, and as inflation continues to decelerate, there could even be some pickup in the pace of the recovery by mid-year. Just don't look for it in the business pages.
Yesterday the British Retail Consortium (BRC) published its report on High Street spending for January. Press reports on the data today include: "gloomy figures" and "a bunker mentality" (The Times); "drop in sales" (The Guardian); and "shoppers cut back" (Daily Telegraph).
The numbers must have been pretty bad, right? They couldn't all have got it wrong, could they? Well actually, yes they could. The BRC's report actually showed that overall retail spending in January was up 2.1% from the year before. As usual the BRC chose to emphasise the "like-for-like sales" data, which were marginally lower, even though this is a meaningless number. (It only includes sale from stores open for at least a year. This means that it excludes the massive Westfields shopping centre near the Olympic Park, which opened to such fanfare just ahead of the Christmas shopping season!) The BRC's spin was enough to bamboozle both the Telegraph and the Guardian, with the latter not even finding space to report the overall 2.1% increase.
The Times did a bit better, correctly reporting the overall 2.1% increase, but still imparting a negative tone: this was, according to the BRC, the second worst January increase since the survey began 17 years ago. Still and all, it was an increase, and it would be entirely true to report that the value of UK retail sales last month was the highest for any January in history, although neither the BRC nor the media seemed to think that was worth saying.
Retail sales are not the only UK indicators that are doing just a bit better than some, or rather most, of the reportage might lead you to believe. Car sales rose in January (albeit by a nugatory 0.03% year-on-year); consumer confidence has edged higher; and both manufacturing and services surveys are showing a modest increase in sentiment. With the Eurozone crisis still rumbling along, it's too soon to break out the prosecco, and it may well be that the Bank of England will see fit to carry out a third round of quantitative easing later this week. Even so, a return to recession is far from certain, and as inflation continues to decelerate, there could even be some pickup in the pace of the recovery by mid-year. Just don't look for it in the business pages.
Sunday, 5 February 2012
No good deed goes unpunished
The UK coalition government's austerity measures have left very few areas of public spending untouched. Even the the National Health Service, whose budget has supposedly been "ring-fenced", is only protected in nominal terms, so real spending is being seriously crimped by persistently above-target inflation.
There is, however, one exception: the overseas aid budget. David Cameron has repeatedly boasted of his government's commitment to get UK aid spending up to the internationally-agreed (though never achieved) goal of 0.7% of GDP by 2013. This translates into a 34% increase in aid spending over the first three years of the government's term, which has not gone down well with a lot of voters at a time when domestic programmes are being slashed.
No good deed goes unpunished, and Cameron has just learned the reward for his -- or rather our -- generosity. It transpires that India, which is still the largest recipient of UK aid, wanted to put an end to the programme last year, on the grounds that the amounts involved are so minuscule in relation to India's own development spending -- "a peanut", as the Indian Finance Minister described it to parliament in New Delhi last year. Remarkably, the UK's aid authorities leaned on India to keep taking the money, on the grounds that ending the programme would be deeply embarrassing for the UK government.
That embarrassment is likely to be dwarfed by the opprobrium that may descend on the government once the tabloid press gets its teeth into this story. Giving aid purely for development purposes has never been popular with the electorate, and the government has always sought to justify it in part by pointing to its role in promoting UK trade. In the case of India, however, even that has backfired spectacularly. As the story linked above points out, UK aid to India was partly based on a desire to win a big jet fighter contract with the Indian Air Force. Last week, however, India awarded the contract instead to France, even though the French aircraft, the Rafale, is regarded as technically inferior to the Eurofighter Typhoon that the UK was trying to flog.
Most UK voters, if they have bothered to think about it at all, probably regard it as odd that the UK's biggest aid recipient is a country that has been growing by 10% a year, and one whose own companies have been enthusiastically buying up chunks of the British economy in recent years -- especially when that country fails to deliver the expected quid pro quo in the form of trade deals. There are dozens of countries around the world where British aid is desperately needed. It would be very sad if the whole aid programme now gets gutted just because the aid ministry has been doggedly throwing the money at the wrong target.
UPDATE, 7 February: It bothers me a bit to find that I keep agreeing with Dominic Lawson about things, but he has a very good piece on aid to India here.
There is, however, one exception: the overseas aid budget. David Cameron has repeatedly boasted of his government's commitment to get UK aid spending up to the internationally-agreed (though never achieved) goal of 0.7% of GDP by 2013. This translates into a 34% increase in aid spending over the first three years of the government's term, which has not gone down well with a lot of voters at a time when domestic programmes are being slashed.
No good deed goes unpunished, and Cameron has just learned the reward for his -- or rather our -- generosity. It transpires that India, which is still the largest recipient of UK aid, wanted to put an end to the programme last year, on the grounds that the amounts involved are so minuscule in relation to India's own development spending -- "a peanut", as the Indian Finance Minister described it to parliament in New Delhi last year. Remarkably, the UK's aid authorities leaned on India to keep taking the money, on the grounds that ending the programme would be deeply embarrassing for the UK government.
That embarrassment is likely to be dwarfed by the opprobrium that may descend on the government once the tabloid press gets its teeth into this story. Giving aid purely for development purposes has never been popular with the electorate, and the government has always sought to justify it in part by pointing to its role in promoting UK trade. In the case of India, however, even that has backfired spectacularly. As the story linked above points out, UK aid to India was partly based on a desire to win a big jet fighter contract with the Indian Air Force. Last week, however, India awarded the contract instead to France, even though the French aircraft, the Rafale, is regarded as technically inferior to the Eurofighter Typhoon that the UK was trying to flog.
Most UK voters, if they have bothered to think about it at all, probably regard it as odd that the UK's biggest aid recipient is a country that has been growing by 10% a year, and one whose own companies have been enthusiastically buying up chunks of the British economy in recent years -- especially when that country fails to deliver the expected quid pro quo in the form of trade deals. There are dozens of countries around the world where British aid is desperately needed. It would be very sad if the whole aid programme now gets gutted just because the aid ministry has been doggedly throwing the money at the wrong target.
UPDATE, 7 February: It bothers me a bit to find that I keep agreeing with Dominic Lawson about things, but he has a very good piece on aid to India here.
Friday, 3 February 2012
First they came for Hester....
With all the inevitability of flatulence after Mexican food, the populist success in getting RBS CEO Stephen Hester to give up his bonus is leading to a rash of calls for other executives to be similarly mugged. First up: top management at Network Rail, who are in line for payouts of as much as £350,000, peanuts by top bankers' standards but enough to attract the ire of the politicians.
Well, at least Network Rail is publicly owned (sort of -- its ownership structure is, quite intentionally, obscure), giving the politicians some sort of right to put in their two cents' worth about how the place is run. But of course, the anti-bonus tide isn't stopping there. The next target is Barclays CEO Bob Diamond, who is set to be awarded a bonus way larger than Stephen Hester's -- as much as £10 million in stock, by some reports --some time next week. In an effort to head this off, Labour is planning to table a resolution in the Commons calling for an end to what Ed Miliband today described as a "one-way" bonus culture in the banking industry -- payouts for success, no punishment for failure. (I wonder if all the folks filmed carrying their careers out of Lehman Brothers in cardboard boxes back in 2008 see it that way).
The threat of a Commons debate was what persuaded Hester that he had no choice but to surrender his bonus, so it will be interesting to see whether Diamond and the Barclays board show any more backbone. Barclays, after all, did not take any taxpayer money at the time of the financial crisis; instead it went out and raised capital from Qatari investors, a decision for which it was, bizarrely, criticised at the time by the one and only Vince Cable.
There's a strong case to be made that UK executives, and top bankers in particular, are overpaid in relation to the rest of the populace. Even RBS Chairman Sir Philip Hampton admitted as much today. Probably the best solution is worker representation on boards of directors, something that seems to work well in Germany. Not much chance of the Tories going for that, of course, so instead we get the distasteful spectacle of Ed Miliband and his pals launching ad hominem attacks on people whose main crime is that they can't keep their pay packets out of the public eye. It's no substitute for a properly thought-out policy, is it?
Meanwhile, it emerges that Chris Huhne, forced to resign as Energy Minister because he is facing serious criminal charges, is entitled to a severance payment of about £17,000. Any thoughts on that, Mr Miliband?
Well, at least Network Rail is publicly owned (sort of -- its ownership structure is, quite intentionally, obscure), giving the politicians some sort of right to put in their two cents' worth about how the place is run. But of course, the anti-bonus tide isn't stopping there. The next target is Barclays CEO Bob Diamond, who is set to be awarded a bonus way larger than Stephen Hester's -- as much as £10 million in stock, by some reports --some time next week. In an effort to head this off, Labour is planning to table a resolution in the Commons calling for an end to what Ed Miliband today described as a "one-way" bonus culture in the banking industry -- payouts for success, no punishment for failure. (I wonder if all the folks filmed carrying their careers out of Lehman Brothers in cardboard boxes back in 2008 see it that way).
The threat of a Commons debate was what persuaded Hester that he had no choice but to surrender his bonus, so it will be interesting to see whether Diamond and the Barclays board show any more backbone. Barclays, after all, did not take any taxpayer money at the time of the financial crisis; instead it went out and raised capital from Qatari investors, a decision for which it was, bizarrely, criticised at the time by the one and only Vince Cable.
There's a strong case to be made that UK executives, and top bankers in particular, are overpaid in relation to the rest of the populace. Even RBS Chairman Sir Philip Hampton admitted as much today. Probably the best solution is worker representation on boards of directors, something that seems to work well in Germany. Not much chance of the Tories going for that, of course, so instead we get the distasteful spectacle of Ed Miliband and his pals launching ad hominem attacks on people whose main crime is that they can't keep their pay packets out of the public eye. It's no substitute for a properly thought-out policy, is it?
Meanwhile, it emerges that Chris Huhne, forced to resign as Energy Minister because he is facing serious criminal charges, is entitled to a severance payment of about £17,000. Any thoughts on that, Mr Miliband?
Wednesday, 1 February 2012
Time to cancel The Gong Show
The Government doesn't seem to be able to put a foot right at the moment. Last weekend's faux furore over Stephen Hester's bonus saw David Cameron talking out of both sides of his mouth and getting embarrassingly outmanoeuvred, inside and outside the Commons, by Ed Miliband. Now, the politically-inspired decision to rescind the knighthood awarded almost a decade ago to Britain's least popular man, Fred Goodwin, seems to be pleasing precisely nobody. Some, including Ed Miliband and much of the more left-leaning media, are wondering why the process of deknightification should stop with Goodwin; there are lots of begonged bankers out there just crying out for similar treatment. Others, including the more pro-business press and some senior politicians, think the whole thing looks too much like a witch-hunt. Here's a good summary of the arguments on both sides, from the BBC website.
Removing a knighthood is not unprecedented, but it is rare. The last person to be so treated was Anthony Blunt, the Queen's personal art curator, who happened also to be a spy for the Soviet Union. Goodwin hasn't been accused of breaking any laws, so it seems he is being shamed for being (a) famous and (b) incompetent. It does seem odd that this would happen when at least one recently-created Peer of the Realm is serving time for fraud and other offences in a Florida prison, with no apparent threat of losing his precious peerage. (Long-term readers of this blog will need no further clues; for newer arrivals here's a hint: Fleet Street).
Surely the problem here is that the UK's "honours system" has got wildly out of control. At least twice every year (New Year and the Queen's birthday), awards are given to huge numbers of people from all walks of life, in recognition for, on the most part, just doing their job. It's good to recognise genuine military or civilian heroes, but is it really appropriate to bestow awards on people just because, at a particular moment, their face happens to fit? Nobody would deny Corporal Johnson Beharry his Victoria Cross, but did we ever need Sir Fred Goodwin, or Sir Bruce Forsyth, or CBEs for every luvvie who manages to get through their career without falling off the stage?
These awards have become every bit as devalued as GCSEs. They would be worth a lot more, both to society and to the recipients, if there were a whole lot fewer of them.
Removing a knighthood is not unprecedented, but it is rare. The last person to be so treated was Anthony Blunt, the Queen's personal art curator, who happened also to be a spy for the Soviet Union. Goodwin hasn't been accused of breaking any laws, so it seems he is being shamed for being (a) famous and (b) incompetent. It does seem odd that this would happen when at least one recently-created Peer of the Realm is serving time for fraud and other offences in a Florida prison, with no apparent threat of losing his precious peerage. (Long-term readers of this blog will need no further clues; for newer arrivals here's a hint: Fleet Street).
Surely the problem here is that the UK's "honours system" has got wildly out of control. At least twice every year (New Year and the Queen's birthday), awards are given to huge numbers of people from all walks of life, in recognition for, on the most part, just doing their job. It's good to recognise genuine military or civilian heroes, but is it really appropriate to bestow awards on people just because, at a particular moment, their face happens to fit? Nobody would deny Corporal Johnson Beharry his Victoria Cross, but did we ever need Sir Fred Goodwin, or Sir Bruce Forsyth, or CBEs for every luvvie who manages to get through their career without falling off the stage?
These awards have become every bit as devalued as GCSEs. They would be worth a lot more, both to society and to the recipients, if there were a whole lot fewer of them.
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