It's Bonus Time Again

Most of us live in a twilight world which is only rarely illuminated by the floodlights from above. We get along day-to-day, working for 8 or 9 hours, shopping at Tesco or Asda, watching a bit of TV and sleeping for 7 hours every night. Occasionally, we indulge ourselves in a meal in a comfortable restaurant that employs a good chef or we go to a sporting fixture or a theatre. We have hobbies and interests and we read books and enjoy music. Some of us marry and have families. Some have families but don't marry. We manage this on average pay of £25,000 per annum and after about 75 years it is called A Life.

In recent times we have been hearing more and more about another section of the human race that occasionally provides illumination onto our twilight world and does much the same as we do but with lots more money. Footballers in the English Premier League earn some fabulous wages paid for by foreign billionaires or by virtual money spirited into existence by some exceedingly talented creative accountants. If the creative accounting falls to pieces of the foreign billionaires depart then the clubs will fail and the inflated wages will end.

In the world of high finance different rules apply. Banks operate by using our money to finance dodgy investments that can go belly up - in which case, we, who lent them the money in the first place but were not consulted about the dodgy investments, will bail them out with more money - because the banks are too big to fail and if they did they would take all of our money with them. To operate in one of these wondrous institutions requires great expertise denied to the rest of us and hence the masters of this high finance feel the need to be properly rewarded for their expertise by being paid vast sums in salaries and bonuses. In fact, the expertise is of such high calibre that we insist that they be paid huge bonuses even as we bail them out.

This time of the year is Bonus Time. Stories are coming out telling us of magnitude of this year's bank bonuses and it seems that as they survive with our money they have taken the opportunity to boost the bonuses - very necessary - what with all the worry about their companies getting flushed down the drain and so on. One of the American banks, Goldman Sachs, has £10 billion in this year's bonus box and this will help to provide overall pay and bonus packages for all their employees at an average of $500,000 each. Some of you may have spotted - even if you are not quite up-to-date about the £:$ conversion rate - that this pay package is rather more than the £25,000 that the rest of us have to manage with. Goldman Sachs - or Money Bags, as they are known - have a few thousand people working for them in the UK and the one hundred partners over here will cap their pay and bonuses this year at a mere £1 million. Apparently, according to an official spokesperson, they wanted to be seen to be exercising the restraint which Alistair Darling had demanded of all bankers. It seems that this means that they will have given up "several hundreds of millions of pounds." What will happen to this money? I assume it will be quietly stored away - one way or another - for payment when the heat is off. Below the level of partners, there will still be many employees being paid more than £1 million.

So the obscenity continues. Now, it seems that more and more people are succumbing to the belief that the massive pay outs cannot be stopped. Mr Obama has indicated that he intends to stop it and his leadership will be crucial. But the bankers will fight like hell - and they have the power and the money - our money - to scupper any plans for cutting their pay to levels comparable to other proper jobs - bearing in mind that much of this money making business by the banks is regarded as "socially useless."

Recently the state owned Royal Bank of Scotland provided the finance to help an American company, Kraft, to takeover a much loved British institution, Cadburys, in spite of the fact the most people are opposed to it and that it will lead to many job losses in the UK. The take over is unlikely to be stopped because many of the shareholders at this moment are hedge funds interested only in making a quick few million bucks by selling at a profit shares they bought in the last few months. Royal Bank of Scotland is quite entitled to help sell off our industries because, says Gordon Brown, "it is only a bank" The sale of Cadburys will net huge profits to lawyers, bankers and hedge fund managers none of whom care a monkey's about Cadburys.

If we had governments with talent things could change but we are a long way from such a situation as of now. Is there any hope?

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Who Goes Bust First?

In these days of money shortages - except for the extra stuff that the Bank of England is printing - are we approaching the day when the English Football Premier league will go belly up? Certainly it is becoming increasingly apparent that the finances are in a mess. Portsmouth looks likely to be the first club to collapse. They have not paid their players for 3 months - although I expect that the poor dears will be able to get by for a few weeks without having to go down to the National Assistance Board. Portsmouth are being threatened by HMR&C, who want their money now - to help Gordon and Allister bail out the banks. Now, I have little sympathy for the football clubs who live in a cloud-cuckoo land that makes no sense unless they have an Arab sheik or a Russian billionaire to pay the bills. Manchester United is probably the most successful sports club anywhere in the world with an estimated value of £1½ billion but its ability to make money has been much compromised by the American businessmen who now ..... well ......sort of own them. It is difficult to be sure. To buy the club in the first place 4 years ago the Glazers had to borrow lots of money. They then refinanced the debt using Manchester United as the collateral. The total debts are staggering and increasing. Some of the money is owed to hedge funds and carries a staggering and accumulating interest at 14.25%. In order to repay this and increase their takings from the club they are attempting to raise £500 million via a bond with a probable interest rate of 9%. Next year the club will have to pay out well over £100 million in interest on the bond, other interest payments, service charges to the Glacers, dividends, etc. Last year the club only made a profit because they sold Christiano Ronaldo for £80 million. How they can make a profit in the future and pay off their debts is a bit of a mystery. Sir Alex Ferguson has no money for new players and fans are paying double for their season tickets. The whole scenario is one which confirms that football now is a matter of money and accountants and less and less about footballers.

Liverpool is in a similar position, owned by rich - but not super-rich - Americans and is spending all its profits paying the interest on the borrowings.

In the lower layers of the Premier League the numbers are smaller but clubs are still up to their eyes in debts because they pay their players too much. Bolton Wanderers - struggling in the relegation zone - uses 80% of their revenues to pay their players. And its is true of almost every club in the league. Only Arsenal has a viable balance sheet.

Reality will only set in when a few clubs have gone bankrupt. Fans seem less and less willing to pay ridiculous sums to buy tickets - particularly if they think that they are being ripped off or that they are paying their hard earned cash to foreign owners bleeding them dry.

Who will be next to go after Portsmouth? Hull? Bolton? Wigan? A little time will tell.

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Chocolate Is Not So Sweet Anymore

I like a bit of Milk Tray or Fruit & Nut now and then. But perhaps not for much longer. On Tuesday, we found that another British institution had been sold off to foreigners. Cadburys was taken over by American soft soapy cheese maker, Kraft. It has to be admitted that Cadburys long ago ceased to be the public spirited company owned by the Quaker philanthropists who built Bournville. The CEO is an American with 27 years of service, who will lose his job when the Kraft men move in. But in spite of the changes that have taken place over the years, Bournville still exists and there are many workers whose parents, grand-parents and great-grand-parents worked in the factory. Some of them will lose their jobs. Indeed, in the fullness of time, they may all lose their jobs. Kraft has form. They took over the Terrys factory in York in 1993 and then slowly moved all the manufacturing to Poland and the Czech Republic. All that remained were the names of the products. It is difficult to get too worked up about a bar of chocolate even if the British do have a penchant for consuming the stuff. But it is the principle. Here was a successful British company with 45,000 employees world-wide and now it is owned by someone else in a foreign country who cares not one jot about the workers in Bournville or about UK plc.

It is something we have been doing for the last 30 years or so - selling off the family silver to anyone who comes along with a big enough bundle of cash. Actually, in this case, they didn't actually have a bundle of cash at all. They borrowed £7 billion to buy the business. And just to rub out noses in it, it was state owned Royal Bank of Scotland that facilitated the deal and will, of course, generate lots of cash to pay the salaries and bonuses of the investment bankers. Of course, a few hedge fund managers will do well out of the deal as well.
These lucrative wheeler-dealer sales are a speciality of unregulated City of London. Selling off blue chip companies is much more difficult in most other countries - including the USA.
Will we ever draw a line in the sand? Already, there is very little left. Since the days of Margaret Thatcher we have been selling our heritage and there is still no one in government who is likely to suddenly say "No!"
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Boozers Galore

Some interesting statistics have surfaced this morning. Interesting, even if hardly surprising. Research by the National Health Service has discovered that the average adult in Scotland is consuming the equivalent of 46 bottles of vodka every year. This is an astonishing amount of alcohol and is 25% higher than in England and Wales. By comparison my consumption of one bottle of whisky, plus about the equivalent of two bottles of whisky as beer and wine in a year is very modest. If the adults in Scotland were to consume their alcohol only as normal strength beer it would be well over 500 pints per year. The government in Scotland is at present pursuing a policy to fix a minimum price for alcoholic drinks. Whether this will help or not is debatable - it will certainly make selling alcohol more profitable, unless the government takes more in tax. Consuming so much alcohol can only be bad for any country. Disruption at week-ends caused by drunks and alcohol fuelled violence cost much in social disruption and in paying for the police and NHS services needed to deal with the consequences. On top of this there are the commercial losses to firms whose staff are drunk or have hang-overs. And finally there are the long-term health consequences to the heaviest drinkers. Some parts of Scotland already have male life expectancies of only 55 years - some 17 years less than the UK national average.

I got drunk a few times as a student but since I was 23 years old I have never been severely drunk. I may have exceeded the driving alcohol limit a few times - not when I was driving a car - but I could never get near the long-term performance levels of these mega-boozers in Scotland.

Alcohol consumption is a national problem in these days when some young people go out every week on Friday and Saturday nights deliberately to get as near as possible to unconscious drunk. The low price of alcohol in supermarkets - where alcoholic drinks can cost less than bottled water - is a factor but at base there is something wrong with a society whose members believe that life is only tolerable if they can drink themselves into oblivion at least once or twice per week. We have members of this society who come to our gym. I would expect it in 23 year olds but there are some men over 40 who still consume vast amounts of alcohol. Coming to the gym regularly helps their overall fitness but it cannot overcome the constant onslaught on their bodies of regular binge drinking.

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Electricians in Birmingham - England

I have been banging on about the pay and bonuses of bankers and financial whiz-kids for months. I have also complained about inflated payments in salaries and bonuses to Chief Executives [formerly town clerks] of towns and cities. But as the various political parties vie with each other to tell us how much they will cut government spending - without any proper plans, of course - we now hear that the lunacy of public sector pay has explored new areas of excess.

An electrician working for Birmingham City Council has been paid - I refuse to suggest that he has "earned" this much - £124,000 last year. And just in case we think this is exceptional, a traffic lights repair man was paid £81,940; drivers of bin carts were paid £50,917 and even the bin emptying dustmen managed £46,000. No doubt the figures will be denied by the council - they are at this moment saying that the figures were "historic" - and that is certainly true. Perhaps, they pay their employees even more now. No doubt some trade union leader will talk about how much lower is their take-home pay - because like everybody else they pay tax and NI. They probably believe that binmen shouldn't pay tax at 40%. These payments are ludicrous, no matter what the excuses about stand-by times, overtime and bonuses. The electrician claimed for £90,000 in overtime. How is this possible? If we assume that £34,000 was his basic pay - which is more than is possible if he has a bonus as well - then he earned 2.64 x his basic pay as overtime. How did he find the hours - even if it was all at double time? He must have worked 7 days per week, 12 hours per day throughout the year with no holidays. Even if he did, the pay is still crackers. They should hire another electrician on basic pay.

If our political parties are going to sort out the debts and the tragedy that is the economy, then the vast payments made to government employees in wages and bonuses and unsustainable pensions, plus the massive payments wasted on socially useless quangos will have to be eliminated. Will any of them do it. They will not. Just as they will bugger up everything else that they touch. We will be lead inexorably down the road to ruin.

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What Is Going On?

I am feeling very disgruntled at the moment. The excuse is the winter weather. In fact, the winter weather is the excuse for everything. Today, I tried to take my bags of domestic refuse to the council tip but I couldn't because the place was all locked up. I was amazed. We haven't seen the council bin men since before Christmas - no collections are being made because the side roads are so bad. They are so bad because none have been gritted. No attempt is being made to do this because [a] they don't have enough grit, [b] councils will be responsible if anyone has an accident on a less than 100% satisfactorily gritted road or pavement. Even better, they advise private individuals and companies not to try to clear snow because they could then become liable if anyone falls over. Schools are closed, dustbins are un-emptied, refuse tips are closed, grit stocks are inadequate, roads are un-gritted - is there anything that councils are doing except making sure that they are not responsible, no matter what happens.

It has been obvious for ages that the lunatics had taken over the asylum but it gets worse. The costs of local government rise year after year after year, yet they contrive to do less and less. Admittedly, central government has added to the load of bureaucracy but it is not something that councils resist. More bureaucracy means more jobs.

And what about the weathermen? They told us that we would have up to 150 mm of snow over-night and that today would be sunny but very cold. The reality? We had no snow over-night, today is very dull and cloudy and it is warmer with a slow thaw. We may confuse weather with climate. I am not sure what they are getting wrong. Have they got so many instruments now that they are made punch drunk by knowing too much?

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A January Plot

One of the more bizarre bits of political entertainment this week has been the Odd Plot to get rid of Gordon Brown. If there had been a Tory plot, it may have made some sense but this was one seems to have been devised entirely inside the Labour Party by Geoff Hoon and Patricia Hewitt - with some background orchestration by Charles Clark. The wonderous Geoff tells us that he has been thinking of this idea of an internal referendum among MPs while eating his mince pies over Christmas. I think he must have had too much after dinner port. I find it amazing that Geoff Hoon is still here. Somehow he survived as a cabinet minister for ten years in spite of being singularly inept. He was the idiot who, as Defence Secretary, when we invaded Iraq, went on holiday. What kind of idiot is it that wants to unleash the Labour Party's leader electoral system to find some new charismatic leader 5 months before a general election? It seems that the man expected to rise up to be the new leader was to be David Milliband. I find this even more bizarre than the original idea of a plot against Brown. David Milliband has not been an impressive foreign secretary and he has the charisma of a dead cod fish. He always strikes me as a priggish, untrustworthy, second-rate public school prefect. What madness is it that makes anyone in the Labour Party think that this is the man to lead them into a new exciting future. He is a ditherer who makes Brown look the picture of decisive leadership. Indeed, the only man with any authority in the Labour Party is still Gordon Brown. All the rest of the cabinet seem pretty second-rate. The party is lumbered with the debris left behind by the deluded and demented Blair and I think that after they have lost the general election they will be in the wilderness for a very long time.

Mind you, I still have no confidence whatsoever in Call Me Dave Cameron and his Old Etonian Buddies.

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Brrrrrrr! It's Cold Outside

Well, I have been silent for 3 weeks but now I can get back to looking at the world. After the floods in Cumbria in October and November, we now have the freeze up. The whole of Britain from Lands End to John O'Groats is buried in snow. Night temperatures are plunging to record lows - last night managed -22.3C in the Highlands - and day-time temperatures only creep above 0C with difficulty. The weather men see no let-up just yet and temperatures could go even lower. Two nights ago, even Oxfordshire saw a low of -20C. Airports are closed, roads blocked and railways are disrupted - although the Southern area with its 3rd rail electrics is coping better than I would have expected. There is snow everywhere in the northern hemisphere from London to Vladivostok and from London to Vancouver. The extreme conditions are encouraging the global warming sceptics to gather strength - confusing weather with climate. In Britain this is officially the worst winter since 1981 and in my own experience is the worst since 1962/63. Then we were better able to deal with it. The most striking thing about this cold spell is the speed with which they have closed the schools. Everywhere hundreds and thousands of schools are closed and likely to stay so until ............ when? In my school days, I cannot ever remember the schools closing. Of course, then we walked to school or went on the bus. The buses would get through on the main roads and we would walk from home to the bus stops. Very few families had cars and the idea of being ferried to school in a Chelsea tractor by a mum desperate to get to the job that provided the extra income that allowed the family to have 2 cars, one of which was the said tank thing, would have been laughable. And local authorities gritted the roads more quickly and, more importantly, they also gritted the side roads so that everywhere was passable. Now it seems that we have to accept that nothing will be done to grit either side roads or pavements. This brings us to the nonsense of H & S. Schools are closed and no side roads are gritted because the local authorities will not accept any responsibility for any accidents. If there is ice and snow on the ground, people will fall over - and that should be an end of it. I think I could make an equally strong case against local authorities for denying me my human right to go out every day without risk - and this is a result of un-gritted side roads, etc.

More cold and snow is expected over the next few days and there is no sign at all of a thaw.
So, as Winston Churchill advised during the dark days of WWII, we must KBO - Keep Buggering On!

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