Vir Cantium

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Monthly Archives: October 2008

Accountants' Joke

What is the capital of Iceland?

About £3.50.

I thank you.


Worthless Brand

OK, so that’s probably enough of a blogging holiday. Did I miss much?

One thing that I do make of point of missing is Russell Brand’s show on Radio 2, though I am a regular R2 listener. Even Ross is something I make no effort to catch. Like many others, and maybe it’s an age thing, but I cannot by any measure see how Brand is so popular – or at least popular enough among some demographic to still be on the air. The fact that “questions are being asked in the house” – or at least EDMs are being tabled – is something he will probably regard as an honour.

Iain Dale points out, validly, that the producers should also share some of the blame – but it does beg the question, what else has happened in the past which hasn’t made it on air?

While not forgetting the upset caused to Andrew Sachs and his family, there is one other aspect to this, given that OFCOM are now investigating. I’m bound to make the point that other than (a) the attitude that the listening and viewing public are somehow incapable of finding the off button and (b) (specifically for the Beeb ) the “unique way the BBC is funded”, OFCOM wouldn’t need even to exist, let alone justify its existence by ticking off Brand and Ross. Not, that is, that I would fail to delight in their comeuppance, and not that I am under any illusion that any significant sanctions are really likely to emerge from this episode.

UPDATE: Result!

Councillor’s Rant

So Gordon is going to give the Icelanders what-for. He’s going to sue them. Eh? Does anyone actually believe this rubbish?

There has been much gnashing and wailing in the last 24 hours over the amount of money deposited in Icelandic banks by public authorities and charities. The critics fall into two broad camps:

There are those who think Councils shouldn’t have been so stupid to put taxpayers money in dodgy offshore accounts and why are they holding so much cash anyway. Why don’t they spend it on schools’n’hospitals buses. Let’s call these people the “financially illiterate” – the sort of people who, if they won £1m on the lottery, would probably blow it all in six months, rather than invest it and enjoy the returns for the rest of their days. In any case, the Heritable was a top credited-rated British based bank (albeit owned by Landsbanki), so was hardly a dodgy offshore arrangement.

Then we have those who are opposed to any compensation on the back of the British taxpayer, whether it’s to retail depositors or anyone else. I can see their point as it happens, though I would have had no problems with a properly funded insurance scheme that doesn’t burden the public purse. However, to shift overnight the goalposts of the existing arrangements (however imperfect they are) hardly encourages those of us who have been careful and spread our risk – mindful of the £35,000/£50,000 guarantee limits, but whose taxes will now be bailing out the imprudent (such as the idiot woman on the radio the other night who had put her life savings of £190,000 into Icesave, and this a year on from Northern Rock – jeez!)

Given that the Treasury has now extended 100% cover for UK retail depositors of Icelandic based/owned banks, local government’s position is simply that sauce for the goose is sauce for the gander. The government argues that Councils are in a different positions, having received professional advice and acted as professional investors. That’s true, but given that councils do indeed work to professional advice and make use of credit ratings such as Fitch’s, they are by most measures being more prudent (despite my heated remarks of yesterday) than a good few retail depositors who will be compensated 100%.

Then again, has this government ever regarded local government as anything more than a dumping ground for the tough decisions that Gordon Brown and co have regularly bottled out of in the least eleven and a half years?

Arctic Exposure

No doubt following George Osborne’s question to Alistair Darling yesterday, the media are picking up the exposure of local councils to the crisis in the Icelandic banks, and the failure of the Treasury to extend the guarantee offered to retail depositors to wholesale monies. The Heritable Bank, in particular, had made a big play for public authority deposits in recent years. As one with considerable experience in local government I do find it incredible that, just as some individuals seem not to have heeded the lessons from Northern Rock and still held their life savings in one bank, some councils are exposed to such an extent to the collapse of just one bank – however good the institutions credit rating was when the deposits were made.

We Are Saved

John Redwood, speaking at a Freedom Zone event at Party Conference last week, estimated that, were it to use the same accounting standards that are required of the private sector, the government would be £1.5 trillion in debt.

Well, looks like we can add another £50bn to that this morning and potentially another £450bn which, at the very least, would warrant a “note to the financial statements”.

The best bit, though, is the idea being touted that the taxpayer might make a profit on the deal when the shares pick up again. Clearly, this is such a good deal that all the other potential private investors are just being altruistic and community spirited in allowing the government to take advantage of the situation.

How is it, at the same time that so many are bemoaning how irresponsible lending and investment decisions ought now to come back to bite the decision-makers in the backsides, the government is helping out so many of the culprits? (Or at least, accessories to the “crime”, since nobody forced mortgage borrowers to load up with excessive debt.) What? Let a bank go down? Think about the effects! Yes, think about it, and use a fraction of that £500bn, instead, to mitigate those effects on people and businesses on the ground.

Darling was, of course, stunned into “action” by continuing falls in banking shares and confidence in the system.

There is a growing school of thought, though, that rather than blow another £50-500bn on panic measures rescue plans bail-outs, a much cheaper solution would be to deal with Robert Peston, the BBC’s Business Affairs Editor, who, not for the first time (ahem – Northern Rock), has proven himself the epitomy of irresponsible journalism. Does he actually understand the financial world? Does he appreciate the concept of the effect of the observer on events – an idea widely accepted elsewhere, from the world of finance to that of physics?

Oh, and at the time of posting the FTSE is down 6%. A thumbs up for Alistair there, then.

Carry On Comrades

A bit of a conference catch-up today, since I cannot bring myself to be really interested in yesterday’s promotions and demotions among the crew of the Titanic.

This was the trade unions’ welcoming committee outside the ICC on Wednesday lunchtime as delegates arrived for Cameron’s speech.

Quite a heartening sight … for a Conservative. For the general public to know that the unions are still around, itching to create a bit of 1970’s style chaos, must be worth a good couple of dozen more on our majority come May 2010.

Goodbye Mr. Blair (The Sequel)

So now the other Blair has gone, after failing to receive the support of Mayor Boris Johnson. Livingstone has decried the move as marking a politicisation of the Commissioner’s role …. like it’s a wholly bad thing. While the Mayor may not (yet) have the explicit power of appointment or dismissal of the commissioner, today has shown that the power and influence that comes with the directly elected Mayor’s position can still have much the same effect – at least, so far, as far as an effective dismissal is concerned. It has laid down an important marker that the person directly accountable to the people of Greater London can trump the delegated authority of the Home Secretary and, perhaps more importantly, the constant of the civil service that serves her.

I’ll leave the discussions of the merits or otherwise of Sir Ian Blair’s tenure to others. A positive and powerful precedent has been set, and a clear example of real devolution has emerged.