How Osborne is feathering his own nest

June 30, 2013

George Osborne is desperate to have some kind of legacy that he can tell his grandchildren about. Selling the state-owned banks would be that legacy. The only problem is that universal advice tells him that now is not the time.

Stephen Hester had earned great praise for his achievements as boss of RBS, with investors such as Fidelity’s £2.5billion fund manager Sanjeev Shah describing him as “doing a fantastic job.” But look at the reaction from the brokers since Hester announced his departure.

Investec Securities:
The manner of Mr Hester’s departure is deeply unsatisfactory. Since 2008, government inconsistency and mismanagement have hurt shareholder value and, as 81% shareholder, it reaps what it sows.

Espirito Santo:
Mr Hester’s departure was clearly against his wishes and it appears that Mr Osborne had different ideas as to how the bank should be run. The political wrangling has significantly impacted the franchise.

The Economist
[Osborne] shoved out RBS’s boss Stephen Hester, prompting a sharp fall in the bank’s shares. …It is politics not economics that underpins the government’s decision to privatise the banks.

The share price was 334p on 11th June and is now 275p (27/6/13) and continuing to fall against a rising market. That’s an 18% fall so far. Placed in context, that is roughly a £20 billion loss to the British taxpayer in the space of a couple of weeks. (see footnote)
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What they’ll say about QE

June 22, 2013

In time to come people will ask, “Did you really just turn on the printing press, and let it rip?”
We’ll say, “Oh, yes. Three hundred and seventy five billion worth. We know a good thing.”
“Wow! And what did you spend it on? Cathedrals? Bridges? Space exploration?”
“Nah, we just gave it away to the bankers.”
“Really”, they’ll ask. “Why was that?”
“Convention. When high street lending seized up, we needed to get money into the system, we printed tons of the stuff and bought gilts from the high street banks for massively over-the-top prices. That way they had money to start lending again.”
“So at least you got them lending again.”
“Well, no. Not quite. It turns out that the people asking for loans were unrealistic. Like the ones you see on Dragon’s Den who don’t know what day of the week it is. The £375 billion we gave to the bankers ended up in the stock market instead. But the good thing is that the bankers absolutely loved it. Money for free.”
“But why didn’t the realistic companies want loans?”
“Because they were all cutting back. Austerity scared them shitless, so they didn’t want to invest, which caused more austerity and so on.”
“But surely, you could have built 200 St Paul’s Cathedrals with that kind of money. At £30m a mile, we could have had 12,500 miles of motorways. Eleven new HS2 train lines could have been built. The economy would have taken off with that kind of money.”
“True, but it would have looked like a Plan B. So we knocked that one the head straight away.”
“So you gave £375 billion to the bankers rather than be seen to do a plan B?”
“You bet we did. The bankers loved us for it. The stock market went ape.”
“So did that solve the problems?”
“It made sure there was enough money in the economy. The problem was that it didn’t cause the money to move about. There was no circulation. The money went to one part of the economy and kind of sat there. The money was sticky.”
“Wow. Well I think that was a major cock up. The electorate must have been furious?”
“Nah. They didn’t understand it. The politics worked out fantastic for us Tories.“

Why Blair should help Miliband to win

June 22, 2013

I was once in a rock band for whom stardom beckoned. We were 16 years old and practiced in the music room at school, playing ‘60s music. The lead singer, John O’Dea, was a mod whose hobby was to beat up punks and skinheads. He was quite embarrassing. The reason he had something to prove was that back in ‘80s, the mods had a reputation for being soft.

One day John wrote some lyrics to a song called “Bollocks to a Tramp”, and although we didn’t want to encourage him, the words were good so we added a guitar riff and it rocked.

Up the west end every Saturday,
The Mods, Punks and Skinheads all come out to play,
They really make me sick,
I could hit ‘em with a brick,

Say bollocks to a tramp,
Bollocks to a tramp,
Punks and Skins are tramps,

We got our first gig at a Mod alldayer at the Ilford Palais. The crowd went crazy with 2,000 mods cheering at every line, and we were invited everywhere. Unfortunately the band fell at the first hurdle when the bass player got jealous and wanted to take over the vocals, so arranged for O’Dea to be kicked out. At the next gig, we opened with the bass player singing Bollocks to a Tramp, and the audience sat all the way through, then clapped politely at the end of it. The magic was gone and the band soon split.

When Labour got rid of Tony Blair, I reflected on the sacking of John O’Dea. Even though I was politically closer to Gordon, I didn’t think it was a good idea to make the bass player into the Prime Minister when we had a star singer in Tony Blair.
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We should not fear the data state

June 14, 2013

Ever wondered how mobile phone companies know where you are, in order to route the phone calls through to you? The phone in your pocket is keeping a constant “chatter” with the network informing them of your location. That’s how the police can track you down if you ever become a fugitive. They can tell where you are within a 10ft radius. And if you run, every 30 seconds your phone will inform them, and inform them, and inform them. You were never told this when you bought your phone. No one ever told you your privacy was being compromised on such a scale.

We live in a world where we are recorded by video dozens of times a day, simply while shopping for groceries. At the checkout, our bonus cards record the frequency and breadth of our purchases, and even the times of day of our habits and movements. Our websites download “cookies” to our computer hard drives which record and survey our surfing, in order to guide us toward the products they’d like to us to buy.The credit card companies constantly trade information with the credit reference agencies who have a record of every time you’ve paid your phone bill (late or on time), every application to take out a loan (successful or not), and every move of address and consequent new post code. They use this information to judge you, your character, whether you can be trusted with the money they lent you.

Don’t you feel uncomfortable? Don’t you just feel slightly nervous about it all? The sheer size and scale of all the information being collected about you, your habits, what you own and where you shop and whether you can be trusted anymore. How about if I told you we could end it all with one sweep of a politician’s pen? Would you vote for it? Would you vote to end all the surveillance and data gathering that swims around you every second of the day?

If I told you that by pressing a single button you would be able to wipe all the information kept on you and you’d able to start your life afresh knowing that not one single sinister agency would have one single sinister fact about you, would you press that button? I can make this happen. I have just such a device and I’m putting it in front of you now. All you have to do is press the button. Why don’t you do it? The button is in front of you. Press it and let’s see how it can feel to be free.

OK. So you’ve pressed it. It’s going to take some time, but all the information that’s ever been kept on you will be deleted. I’ll give you a running commentary while this happens, shall I? It’s started.

Right now, your supermarket bonus card is being deleted. They don’t know who you are anymore. You are anonymous to them. Good, ain’t it? All the pictures on the CCTV cameras are being wiped, not that you were doing anything wrong, but it’s nice to know your human rights are being respected.
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John Mills, Tax and Dishonesty

June 7, 2013

On the issue of taxation abuse, we need to move on from the oversimplified distinction between legal avoidance and illegal evasion.

At the moment some avoidance has shocked people, while other avoidance, such as my tax free savings, is not such an abuse. In order to sort out the difference between good and bad avoidance, I suggest people concern themselves with whether the avoidance was dishonest or not.

In the case of George Osborne’s complaint about a Labour donation, we need to ask, was John Mills dishonest in his method of avoiding tax in this donation? If he was, then Labour is in trouble, if he wasn’t then we are not. Mr Mills chose not to sell the £1.5m of shares and give the cash to Labour, as that would have been taxed as a capital gain. By giving Labour the shares, then Labour will be taxed on the dividends, but only liable to the capital gains if they are sold.
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Polls say Ed Miliband is Honest but Untrustworthy

June 5, 2013

So YouGov tell us that Ed Miliband is regarded as “honest but untrustworthy”? What to make of it all? I’m sure his speech on Thursday will sort out all the confusion. What I think he need is to show us what he stands for.

There has been recent comment about whether Labour should reveal it’s policies, with Alan Johnson arguing that Miliband has already “shown too much leg”. Others, including myself, argue that a lack of openness creates a lack of trust. We’re both right and wrong. The confusion is in the distinction between policy, and aims/values.
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