For Whom The Pell Tolls

I sometimes wonder if bosses in the UK and elsewhere DO actually live on the same planet as the rest of us. This week we have the Deputy Chief Executive of  the Royal Bank of Scotland, Gordon Pell, telling MPs on the Scottish Affairs Committee that 2,700 job losses were in the pipeline, despite an RBS spokesman later saying that no firm figures had been set. Mr Pell, who earns a paltry £908,000 a year, also sprang to the defence of Sir Freddie Goodwin, the former boss of RBS, saying that history would recognise the banker’s many skills, and the huge contribution he had made to Scotland. This Mr Pell was a member of the board during the disastrous takeover of ABM Amro, and admits that RBS expanded into areas that they didn’t understand. If he and his fellow board members didn’t understand things back then, I doubt if even a brain transplant would help him to understand anything nowadays either, apart from the number of zeros in his salary.

Not to be outdone in the stupidity ranks, Northern Rock carried on lending high risk 125% mortgages for six months after getting a multi-million bailout from the taxpayer. This was happening from September 2007 until February 2008, while the Treasury was pouring public money into the bank, and thousands of its depositors were queuing up to try and withdraw their money. In all, £1.8 billion was lent, although some of the loans had been made as a result of prior commitments. Some financial authorities had noted the need for further investigations into the bank’s lending, but the matter was not considered to be a priority by the Treasury. 

In America, the “retention bonuses” that were to be paid to executives of the failed firm AIG (arrogance, ignorance, greed, as one wit called them) has caused widespread anger and demonstrations. Much more serious for the US leaders was a statement issued by China’s Premier Wen Jiabao -- “We are very concerned about the economic developments in the U.S. economy.  We have lent a huge amount of money to the United States and of course we’re concerned about the security of our assets and, to be honest, I am a little bit worried.”   China is the largest holder of U.S. debt, passing Japan in September for that honour. The country now owns roughly $1 trillion in U.S. Treasuries and other government-backed bonds, or about $1 dollar for every $10 in U.S. debt. China’s key financial position means that as Washington borrows record amounts to spend us out of recession, Beijing’s economic power grows stronger. In effect, the Chinese leader now feels that he has the power, and the right, to tell the US President to cut down on America’s spending.  

With unemployment in Britain now over 2 million, it is shocking to hear that the Government is running a number of free courses to encourage companies to legally employ non-EU workers in the country. This is to cost £20,000, and is to be funded by the long suffering taxpayer. What on earth is wrong with recruiting people from the increasing number of British workers whose only chance of doing anything constructive nowadays is to sign their name in the nearest Job Centre.

Canada Copes With Credit Crunch

Canada is the only country, alone in the industrialized world, that has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, and Britain's 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15^th largest bank in North America one year ago. Now it is the 5^th largest. It hasn't grown in size – the fact is that the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking. Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. America has always insisted that the “Dream” should become a reality – that the average Joe Bloggs should be able to own his own home. What’s the situation nowadays?  Sixty-eight percent of Americans own their own homes, whilst the rate of Canadian homeownership is 68.4 percent!

Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing. Its health-care system is cheaper than America's by far, (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes.

If Prime Minister Brown is looking for smart government, there is much he could learn from Canada’s policies. Meanwhile, in the councils of the financial world, Canada is pushing for new rules for financial institutions that would reflect its approach.

How I sometimes wish that my grandfather had stayed over there, instead of making the return journey across the Pond!

 

Arrogance, Banks, and Football

What on earth is going on in the Scottish Parliament? We have Anne McLaughlin, Scottish National Party, who is to be sworn in as a list MP this week, secretly filming photos inside the building, and posting them on her blog. Although there are no firm guidelines on photographs being taken by workers in Holyrood, there ARE other things to be considered, such as respect and trust. I would think that she will not be accorded those in abundance by opposition MPs when she takes her seat. If she is voted out at a subsequent election, or decides for some reason that she would like another career, I don’t think she can depend on getting a phone call from David Bailey CBE.

 

Scottish Labour leader Iain Gray claimed yesterday that Scots could benefit from the “next stage of global economic development” if Labour policies were followed. Maybe he’s forgotten that Labour have been in charge for the past 12 years, and that a certain Mr Brown has been running  the economy, as Chancellor and now Prime Minister, when he’s not engaged in that other pursuit of his, saving the world.

In Westminster today, four disgraced members of the banking community were to be smuggled into the building to avoid having to face protests from angry workers. Those four are just some of the high flyers who managed to bring the UK’s financial services industry to its knees, but are too scared to face hard working bank employees. Having watched them on TV news bulletins, their so called apologies seemed to be rehearsed, half hearted, and insincere, and I must concur with John McFall, the committee chairman, that at the end of the meeting, they were as arrogant and unrepentant as ever. They can well afford to smirk, as the Government seems unable, or unwilling, to punish them.

 

Turning to football, we find the same kind of arrogance and incompetency coming to the surface. The guys running the Scottish Premier League have decided that the league programme for 2009-10 will begin on August 8, only days before Scotland meet Norway in Oslo in a World Cup qualifying tie. The manager, George Burley, asked that they have an earlier start to the league, and then leave the weekend before the international free, so the team could have a few extra days together. So far, they haven’t agreed to this sensible suggestion. Of course, it is not the first time that they’ve clashed – last May, Burley asked for talks to be held between the SFA and SPL over fixtures, as his first game in charge was wrecked with call-offs as it came immediately before an Old Firm game.

 

Burley himself is under scrutiny this week – he’s known for months that there was to be a Celtic-Rangers game this coming weekend, yet he arranged a get-together for the Scotland squad this week. There has been the usual spate of call-offs, and due to the freezing weather and the fact that Scotland doesn’t have one decent indoor facility, it looks as if the venture has been a waste of time. It seems to me that well paid people at the top in Scottish football arrive at decisions without giving a thought to the consequences, or the adverse effects they will have on our game.

 

A happy (or otherwise) note to end with :-- Research has shown that a bachelor is three times more likely to go mad than a married man. I tend to disagree, especially if the married man is the father of a bride-to-be, as the average price of a wedding is now £22,000.

 

 

Banks, Allowances, and Cheddar

 

Over the weekend, we have been given the glad tidings that the Royal Bank of Scotland and Lloyds TSB are to give staff at least £1billion in bonuses, despite having having received more than £25 billion in hand-outs, largely because of their ineptitude. That amount represented an average contribution to the bank of around £1,300 by each family in the UK. The banks justify their actions by saying that if they don’t reward their best employees, they will seek work elsewhere. I think it might take a while for them to get other work —  are they not aware that Britain is sinking deeper each day into recession and mass unemployment?

 

Home Secretary (should there be a “Second” in front of that “Home”?) Jacqui Smith, responsible for law enforcement in the country, has a large family home in Redditch, for which she claims a tax free payment of up to £24,000 a year, as she has designated her sister’s house as her main residence, meaning that the Redditch one is classed as her second home. Her husband and children live there, and he is paid £40,000 for the privilege of being her assistant. Ms Smith herself earns £142,000 as Home Secretary, and claimed a total of £152,000 in Commons expenses for the period 2006-07. That’s a handy £5654 a week, just a trifle more than those of us who have the option of either eating or heating.

 

A list of Britain’s Top National Wonders was released at the end of the week. It was headed by the Lake District; The Scottish Highlands made it into second place, and according to the Daily Express, Cheddar George came in third. I can only hope that his partner is partial to the bovine product as well.

 

I see that Bernard Madoff, he who made off with an estimated £35 billion, has taken to wearing a bullet-proof vest. He’s currently under house arrest at his £4 million Manhattan apartment, poor chap. I don’t think the vest should make him feel too confident about his safety, as many of those trigger happy guys who’d like to take a potshot at him would probably be aiming further south.

Freddie Goodwin, Banks, Birds, and Stripper

Airdrie Bank and Sir Freddie Goodwin

The good folk of Airdrie in Scotland must be scratching their heads in bewilderment this week. After all, it’s only very recently, 2002 in fact, that Airdrieonians FC, their football team founded in 1878, had to fold due to bankruptcy, with debts approaching £3 million. Fortunately a local man, Jim Ballantyne, bought out the ailing side Clydebank, relocated the club to Airdrie, and a new club was born, with the name Airdrie United.

It now seems that the Chief Executive of Airdrie Savings Bank, Britain’s smallest, is to open a new branch in South Lanarkshire, and is considering disgraced Sir Freddie Goodwin for the manager’s post. This is the guy who was forced to quit the Royal Bank of Scotland last year, when the Government stepped in with an emergency bailout. RBS revealed earlier this week that Sir Fred’s acquisition of Dutch rival ABN AMRO would cause record losses of £28 billion for 2008. Compare this to the £790,000 profit that the Airdrie bank made for that year.

Surely the 60,000 customers and 103 staff of this small but successful bank, must be hoping that Jim Lindsay, the Chief Executive, is talking tongue in cheek. Otherwise, they might as well splash out on bigger mattresses sooner rather than later.

Stripper’s Shoe

A nightspot is being sued for £18,000 by a man who was hit on the nose by a stripper’s platform shoe. The lawsuit alleges that the XTC nightclub management allowed the dancers to wear “improper attire”, and asked strippers to perform dances that made the stage a “hazardous area”. Yusuf Evans, from Ohio, claims that he has had difficulty in breathing since then. Given the nature of the entertainment, methinks that he had difficulty in breathing even before the shoe made contact.

Bird Count

The annual bird count is now upon us. I wonder if I should include the blond neighbour on my left, and the brunette who resides on my right?