Skip to main content


Showing posts from November, 2011

Now is the winter of Russian discontent

As regular readers know, I am very sceptical about the stability of the Russian government. The supposedly large poll leads that Vladimir Putin's United Russia has held always seemed to me to be suspect, given the political history of the country. Although dissent was not open, it was always there. I pointed out that the decision of Vladimir Putin to return to the Presidency was a critical mistake that would not strengthen, but weaken the regime. So it is proving to be. Inside Russia, the "September 24th coup" is now seen as such a blatant disregard of democracy, that even those who previously supported Putin have begun to disassociate themselves from his government. The fact is that the Putinistas  by ignoring the voters completely, were placing themselves above the constitution. The result is a chorus of contempt that is going to derail Mr. Putin's plans to remain in power for a further two Presidential terms, and may even stop Mr. Putin from returning to power at

The Credit Crunch Part II

The failure of the German Bund auction yesterday is being written off as being of relatively minor significance. It is not- it is critical. If the Federal German government is unable to attract bids for nearly half of the Bunds that they offer, it tells you that the rest of the credit market is also closed. Banks are unable to access even the interbank market, and we are seeing the system come under renewed strain. Already we have seen the collapse of the Lithuanian bank, Bankas Snoras, which has also been dismissed as being of little significance. However, the fact is that there is now a serious liquidity drought across central and eastern Europe, and this is spreading. There are strong rumours of a major liquidity crisis in the Russian banking system- and again the failure and subsequent recapitalization of Bank of Moscow is being dismissed as being of minor significance, simply the result of the political fall of Yuri Luzhkov. In fact it may well be that the fall of Luzhkov was th

The UK EHRC does not know the meaning of human rights

A report has been published this morning concerning the quality of personal care for the elderly in England and Wales . It sets out findings that suggest that about 50% of those it quizzed are receiving a quality of care that is unacceptable. That, of course, is extremely unfortunate. However there are several features of this report which render its findings questionable at best and useless at worst. The first is the author of the report is the Equality and Human Rights Commission . This is a statutory body that "promote[s] and monitor[s] human rights and.. protect[s] enforce[s] and promote[s] equality across the nine "protected" grounds- age, disability, gender, race, religion and belief, pregnancy and maternity, marriage and civil partnership, sexual orientation and gender reassignment.". The leader of this body is Trevor Phillips OBE , who has had a controversial record. Indeed six members of the commission have left after a series of disputes with the now par

Excessive Executive pay is theft from the shareholders & it can be stopped

The dramatic increase in the gap between the highest paid employees and the average pay grade is not just bad economics and worse politics. It reflects a major break down in corporate governance. The fact is that not only are most fund managers lousy investors- they rarely beat their benchmark, and the majority in recent years have actually lost money for their investors- they are truly appalling stewards of the investments that they make. Fund managers have been content to allow through any pay request made by the management of the companies that they invest in. These requests come, of course, through the remuneration committees of company boards, which are largely staffed by... ex-executives. Instead of querying the increasingly large sums going to senior management, the fund managers, if they dislike their investment, will simply sell it. The result is that executives have had little or no scrutiny of their remuneration- it is simply rubber stamped by a bunch of compliant pl

Housing crisis.. government prepares to act (OH NO!)

The stupidest feature of the Blair-Brown government was they way that they responded to every situation with a detailed policy outline or eye-catching "initiative". No aspect of economic or political life could remain undisturbed for long. More criminal justice bills, for example, were passed in their period of office than in the previous ten governments put together. From bulldozers to benefits, more and more of our lives became subject to government intervention and regulation. It was a disaster. The OCD Brown, both as PM and under Blair undermined our competitiveness, created a class of benefits dependents, demoralized teachers, health care professionals and the police- among others-  by repeatedly second guessing and overruling their experience and advice. It was a breath of air to have the coalition put a pause on legislation and to seek to repeal some of the more crass mistakes of this Labour mismanagement.  So it was with a feeling of groundhog day like despair t

Testing China to destruction

A major characteristic of the Great Recession is the way that chronic and long-term problems finally lead to an acute crisis. The public sector profligacy in Greece or the high debt position of Italy are the consequence of decades of policy mismanagement. The US deficit is the result of long term political deadlock, while in the UK and Ireland the roots of the crisis lie in an obsession with property, rather than production, as the key to wealth. Policy mistakes, misallocation of capital, unfunded pensions, poor productivity have been festering for decades. It is only now that the pressure that these put on economies finally leads to crisis. We have, up until now, mainly seen the crisis hit the Western world. The United States still faces a political struggle to control its deficit as the parties refuse to compromise and, as with much else in the political discourse of the USA enters instead into an arid discussion on matters of the constitution. Yet Business America has coped better

Estonian Egalitarianism (= success)

One of the most attractive features of Estonian society is the complete lack of anything that could be described as social hierarchy. Even in countries smaller than Estonia a great deal of pomp is given to the political leaders- large numbers of bodyguards, police outriders on motorcades, government jets and all the toys of the powerful. In Estonia the ministers fly commercial and the level of security is minimally discreet. Talking last night to a friend who is the head of one of the largest local banks, he remarked on the fact that Estonians do not feel constrained by different levels of wealth- money is not a social barrier. There are creative people who have very little money, but they may still socialize with business leaders, indeed artists or writers have their own clubs, and an invitation to visit is quite prized- and is not a function of price in the slightest. I suppose this egalitarianism is a function of the long periods when Estonians were an undifferentiated mass of p

Euro breakdown is bringing us to closer to catastophe

The economic crisis that began in 2007, became a banking crisis in 2008, a sovereign debt crisis in 2009, a Euro crisis in 2010 has now become a political crisis in 2011. All of the deficit countries in the Eurozone, the so-called PIIGS: Portugal, Ireland, Italy, Greece and Spain have now seen their governments replaced (in Spain, that will actually take place after the election this weekend, though the result is not in doubt). Germany seems to have won the argument that harsh economic discipline is the only solution to the protracted restructuring that seems to be required. The stereotypes that have been flying around: that Greek dishonesty or Italian indiscipline are the root of the crisis may appeal to a certain kind of headline writer, but in fact the crisis has been caused as least as much by German indiscipline and banking incompetence. Of course Chancellor Merkel has much to gain by being portrayed as an inflexible, "iron" Chancellor, but the reality is that unless

Syria follows Libya...

Restored Libyan Flag Soon to be Syrian flag again The Libyan revolution saw the restoration of the pre-Gadaffi flag . Today in yet another tumultuous demonstration in Syria, I saw that the crowds had swapped the Assad-era flag of Red-White-Black with two green stars on the white stripe, for the flag above. As the news comes in of a major attack against the feared Air Force intelligence by the Free Syrian Army, it is increasingly clear that Bashar Al-Assad is losing his grip on power. An ambush earlier this week, again said to have been carried out by the FSA, left 34 government soldiers dead.  France has recalled its ambassador, and the country now faces increasing isolation and probable sanctions if the situation continues to get worse. It is really only a question of time before the regime must fall, and if Assad wants to avoid the fate of Gadaffi, then he should open negotiations as soon as he can. Yet, he remains his bloodthirsty fathers trusted son and anointed succ

Small is still beautiful

In the 1970s came a school of economic thought popularized by the German-born British economist, E.F. Schumacher  called  "Small is Beautiful" .  This itself was the product of much work done by Leopold Koh r, Schumacher's teacher, and the author of the seminal work "The Breakdown of Nations".  The simplest level of the ideas of the small is beautiful movement is that "when something is wrong, something is too big". The implications of this are profound. Innovation, for example, usually flows from small companies, not from large ones. Mergers of large companies almost never deliver the returns that they promise, In the realm of ideology, the creation of massed -isms is a reflection of a social unit that is unable to create bridges across different aspects of the human condition. In short, the alleged benefits of economies of scale are largely fictitious. The current debate about the future is being made in increasingly apocalyptic terms. The crisi

IS Football as fixed as cricket?

I watched the football match between the Republic of Ireland and Estonia last Friday.  As the Hungarian referee made decision after decision that favoured the Irish visitors, it was firstly frustrating, then infuriating, then contemptible. I am not the only one who believes that the match we saw last Friday was not fairly refereed. Other too point out that Estonia should not have had to face two red cards and a penalty There is then the question of why Estonia faced this biased match? Personally I do not think that UEFA or FIFA would have decided that Ireland deserved a measure of recompense for the Hand of Gaul , although Armenia have formally complained that they suffered similar bias when they played Ireland. I do think it is possible that Football may be suffering from the same kind of problem as Cricket . Ireland is a betting mad nation, and huge wagers are staked whenever the Republic plays. I am no expert, but to my eye, the quality of refereeing was


The eleventh hour of the eleventh day of the eleventh month of 1918.  It is where we get the expression "at the eleventh hour" from. It was the end of the most disastrous war in British history- a war that destroyed the flower of a generation, so that when the war was resumed only twenty years later, there were very few men in their forties left to lead. A war that destroyed centuries of careful husbandry, so that when the war was resumed, only twenty years later, the financial reserves were utterly exhausted, and the national reserve had became the national debt. A war that led to the break-up of the Kingdom of Great Britain and Ireland, so that London presided over a larger loss of the territory of the homeland and people, than Berlin did. When they sang "I vow to thee my country", which was created in 1921 by matching the words written in 1908 with the beautiful music of Holst, the words: The love that asks no question, the love

Tory Troubles may undermine conventional wisdom

Although the opinion polls say different, there is an emerging consensus among the chattering class that the Conservatives are likely to achieve an outright majority at the 2015 election. Yet, our old friend "events" could well conspire to frustrate this, and after my recent visit to Westminster, I am beginning to wonder if the old Greek adage, "whom the Gods would destroy they first make mad" might not apply to the Tories. The obsessive hostility to the EU which comes not simply from the old guard of Euro-sceptics, but also from many of the new intake elected in 2010 comes badly. The fact is that despite the serious crisis at the heart of the Euro-zone, British withdrawal from the European Union is an extremely radical and uncertain step. The British Conservative Party does not advocate withdrawal - that policy is supported only by UKIP- yet many of the new MPs particularly are loud in their determination that Britain should indeed leave. For them, it is self evi

The end of the Scottish Conservatives opens up a new opportunity for Scotland- and for the Scottish Liberal Democrats

The election of a new Scottish Conservative leader is not usually an occasion of great moment in British politics. From being the preeminent force in Scotland in the 1950s the party now has only the rather gauche and lumpen David Mundell to represent them at Westminster, and even that is by the thinnest of margins. Yet the choice that the Scottish Conservatives will reveal tomorrow will mark a significant change. Either they will choose the uncertain risk of Murdo Fraser, who has said openly that he intends to remake and even rename the Scottish Conservative and Unionist Party or they will vote for an apparently safer choice in Ruth Davidson,who is said to be the choice of the London party leadership, but who is otherwise both rather inexperienced and a rather unconvincing proponent of the discredited status quo in the party. In my view, whether Murdo Fraser wins or not, he has already opened up an intriguing possibility for Scottish political realignment. The Socialist hegemony

Greek gamble pulls Euro to the brink

The decision by the Greek Prime Minister, George Papandreou, to submit the Greek austerity measures to referendum could be seen as a reassertion of democratic control over the relationship between Greece and the rest of the Eurozone. In a way it is a laudable expression of the democratic rights of the Hellenic Republic. In practice, the two or three months of uncertainty that will result, before any referendum can take place, look like being a Greek revenge upon the rest of the Eurozone. The fact is that the markets will most likely deliver a verdict long before the Greek people are able to. It is an astonishingly high stakes gamble for the Greek government, and it is a gamble that could drag other countries beyond the point of no return, and they too fight to restore liquidity and in some cases, solvency. It may well be that Mr. Papandreou can win a referendum, but he may also face the collapse of his PSOK party, as certain defections today seem to hint. The breakdown of the Gr

How the Liberal Democrats are recovering

I often find that returning to the UK for a rare visit is a rather sobering experience. The difficulties the government faces seem exposed in sharp relief when you have been away for a while. This trip was a little different. Yes, it is all to obvious that the physical infrastructure needs investment: but despite potential future problems, Crossrail is being built- and the tunnel portal, close to Paddington station is well underway. Above the ground, Heathrow's new terminal is also now taking shape, and flying over London, the Olympic stadium gleams above the winding river Lea. The giant Shard office building too is nearing completion. The pace of development is visibly quicker than last year, so for the time being at least, London is moving forward. The sense of depression that seemed all pervasive in the summer is also a little lighter. For the first time in a while, I went to visit a friend who is a Member of Parliament. Indeed, he has become a Liberal Democrat minister in