Give Us Your Debts

I read this morning that the BBC's expert on the credit crunch, Robert Peston, has discovered that Sir Fred Goodwin's pension pot is actually £16 million and that, as Peston understands it, the bank was not obliged to pay Sir Fred his monster pension, which, this morning, appears to have increased to £693,000 per annum. Indeed, if they had sacked him, they would not have had to pay him any such inflated pension at all. The government in the form of Alistair Darling, seems to be claiming that they didn't know. Well, as Mandy Rice Davies said more than 40 years ago "He would say that, wouldn't he?" How could they not know? Gordon Brown is seeking legal advice - in order to defend himself, I assume.

As a slight diversion, you may be interested to know that I am thinking of expanding our gym empire by investing all of our capital [and some extra borrowed capital] in a failed gym in Amsterdam which has lost it management team, is operating in a building about to be demolished and which is losing its customers at the rate of 10% per month. And if this doesn't make buckets of money for us my partner has agreed to pay me £50,000 per year for the rest of my life. Before I go ahead though, I just want to make sure that I have properly checked for any potential snags. At the moment it looks a winner if I can just get that extra bit of capital from a bank.

I see that HBOS has also lost a bucket of money in 2008 - but only £10.6 billion. How much toxic rubbish they will pass on to us the taxpayers is not yet clear.

Some Big Numbers

Today the weather has shown a distinct improvement. After weeks of cold and rain and snow, today was occasionally sunny and it was distinctly warmer. I saw the first crocuses daring to poke their heads out into the sun. It was an excellent day in fact for the Royal Bank of Scotland to shake off the dusts of winter, throw open the windows and announce to the world that in 2008 they achieved the biggest corporate loss in UK history. A whacking great £24 billion; that is £65.7 million per DAY. How can any organisation achieve such levels of corporate incompetence? Did no one notice that they were chucking money down the drain on a monumental scale? Of course they did not. Because the brilliant Sir Fred Goodwin told them that everything was OK. But surely, even he could see that things were not OK. But there's more. They have given us, the tax payers, an extra £325 billion of toxic debt to look after for them. Will we ever get anything back? Possibly, one day. But there's even more. The displaced 50 year old Sir Fred Godwin has been given a pension of £650,000 per annum for the rest of his life. Now, my friend the pensions expert tells me that in order to achieve such a pension, I would need a pension pot of £11.8 million. Is there any built in escalation? If Sir Fred has got 3% inflation built in then the pot will need to increase to £18.5 million. When the government decided to invest our money into this bank, was it at some kind of mad hatters tea party. Certainly they were in the Wonderland of British Bankers where nothing is real anymore.

Now, hardly a day passes without some new nonsensical statistic of financial mismanagement being revealed to us. And the scale of the disasters grows ever larger. Yet the bankers and dealers still think they should be paid astronomical salaries and bonuses. Only at the week-end, I was reading an article by one banker who suggested that remuneration packages for bankers could fall by 50% in the next few years. It's not enough. There is no reason why city dealers and bankers should earn much more than the national average. If a bank - common or garden or investment - has 25,000 employees [aka Lehman Bros] I can see no reason why the average pay of those employees should be significantly higher than for the rest of society. Sure, some will work long hours [as many do in other occupations - and some others are more important than investment bankers] but I cannot accept that they be paid on average anything even approaching 10 x average salaries

Is there anyone who can manage this country before we are completely broke.

I Wish I had Thought Of That

Hindsight is, as so many have pointed out over the years, a wonderful thing. I am sure that both Napoleon Bonaparte and Adolf Hitler came to realise that invading Russia and setting off for Moscow was not the best decision they ever took in their plans to rule Europe. And, perhaps, it was rash to describe the Titanic as unsinkable. I could go on. It is a virtue of great leaders that they can see things that could go wrong and apply the brakes before it is too late. Winston Churchill visited Germany in the early days of Adolf Hitler, saw what was happening and reacted strongly as Hitler's power grew. As we know, no-one in government listened until it was too late - and then Churchill was given the job of sorting out the mess.

Today, our wonderful Prime Minister, Gordon Brown, has told us that in his opinion banks should be regulated to stop them providing 100% mortgages for house purchases. One commentator, Alex Brummer of the Daily Mail has described Brown's comments as pure "humbug". And he is so right. This is, if nothing else, a wondrous example of closing the stable door after the horse has bolted. Indeed, this particular horse got out of the stables about ten or more years ago, disappeared over the horizon, gaining speed as it broke into a gallop capable of out running any race horse on the planet. Totally exhausted by its headlong dash the poor animal fell off the cliffs and into the raging seas about eighteen months ago. What makes our Great Leader's comment even dafter is the fact that these particular stable doors were slammed shut a year ago after the last horse had left.

Of course there should be regulation of the banks. In old-fashioned banks we did not need such regulation because bank managers and building societies regulated themselves. They required a deposit of about 10% and would not lend anyone more than about 3½ times a person's real income against the true value of a property. And these were those same old-fashioned institutions that, as I have said before, borrowed at 3%, lent at 5%, and then closed early so that managers could get down to the golf clubs. Simple but effective. No fancy credit default swaps of indeterminate value, no SIVs, DUVs, FDRs or DDTs or any fancy financial instruments to feed the awesome greed of their staff. And they never built up £40,000,000,000,000 of useless debts.

I await the next piece of news that will reassure us that everything is under control. Think of Andy Murray. At last Britain has a male tennis player capable of beating the best in the world and he did it in spite of the idiots who run tennis in the UK. As I clutch onto the last threads of optimism, I think that there will be enough people in the UK who will manage to pull us up out of the abyss but we have not yet reached the beginning of the end of this depression nor are we even at the point when we can say that we have reached the end of the beginning. But one day the clouds will clear.

The Qualities of Politicians

As many of you will know, the prime qualification required of those who aspire to be politicians is a willingness to stand up in public and talk at length on subjects about which he or she knows absolutely nothing. It helps if you can sound convincing. Many politicians are OK in this respect since they are always very good at believing their own propaganda. Many are the ministers who have been persuaded that versions of events manufactured by their spin departments are in fact real truth. These qualities are universal. But some politicians possess additional qualities - I ignore the possibility of real knowledge - such as those of stand-up comedians. This was demonstrated by the reports that have reached us of the antics of Victor Chernomyrdin, the Russian Ambassador to Ukraine who has got into trouble by describing the feuding leaders of Ukraine as "at each other like dogs, slamming one another." This, to say the least, is regarded as quite unacceptable language and the Foreign Ministry in Kiev is threatening to expel Mr Chernomyrdin. You may feel it is not right to use this gentleman as an example of politicians, since, surely, he is merely a diplomat - albeit a very undiplomatic one. Well, no he is not. For those who have forgotten, he was Prime Minister of Russia from 1992 until 1998, working closely with the sometimes eccentric Boris Yeltsin. At that time Mr Chernomyrdin gave us many sound bites that lead to total darkness in a way that even George Bush would have been proud of. Not one to be put off by a financial crisis he told the world in 1998 that "There was a State; the State retained; the State began to accumulate; results began to be had." What does it mean? Summarising is time in office it is clear that he knew where he had been going during those six years. "If one considers what could have been done and then what we did do over this long time, one can conclude that something was done." We probably couldn't argue with that. But his most famous utterance was "We wanted the Best but it tuned out like it always does." Ah, there are many politicians whose careers have reached the same crowning heights.

Mr Chernomyrdin has brought his ability to see the situation clearly to his present job in Ukraine and it is recorded that he has said. "It has never been like this and now it is exactly the same again." It would be a pity if this entertaining man were to be sacked from his present job and his many talents lost to international politics.

Running A Railway

It has been pointed out in the last few days that we have the most expensive railways in the world. Are they then the best railways in the world? Errr, no! Why is this? Fundamentally, it is because, first of all we have a ludicrous business plan for running the railways which defies all common sense. Privatisation 16 years ago was a daft idea then and it is still a daft idea today. Dividing the whole thing into independent companies looking after the tracks, signalling, running trains etc has no merit whatsoever. John Major's government was running out of things to do. It needed some grand gesture; to look busy. So it privatised the biggest company still in public ownership - British Railways. The plan they dreamt up could never work. If you had studied Thomas the Tank Engine in detail, you would have known that Major's private railway would be a disaster. The idea of letting anybody bid for a franchise every few years leaving the operators with little room for manoeuvring and hiring the rolling stock from another company, provides no security and wastes vast sums of money every time the operator is changed - by end of contract or by sacking. One of many problems is that Ministers of Transport - and at the present time, that, everybody, is Geoff Hoon - can only conceive of time periods in four year bits between elections. This is too short a period for planning a railway. So, we don't plan the railways - we just muddle through at great expense.

When, many moons ago, Peter Parker was Chairman of BR he complained about the impossibility of agreeing anything with a Minister of Transport - and he had dealt with several during his term in office - because every plan halted after four years. And it's still the same. At the same time the private railways receive more public subsidy than they ever did as a nationalised company - and still they are the most expensive. Now, in a period when this country is going to need all the jobs it can get, Hoon tells us that we are placing an order for trains for the East Coast Main Line with Japan. These are not super-special Hi-Tec trains. They will be quieter and lighter than the 25 year old HST but they will travel at the same speed of 125 mph. Hoon then indulges in grandiose spin to suggest that placing an order in Japan will create or guarantee 12,500 jobs in the UK. Hitachi think they will create 200 jobs in the UK. Who do you believe? Hoon's figure will include every maintenance engineer, every maker of nuts bolts and screws who may supply a packet of something to the railways, every supplier of oil an hydraulic fluid, every accountant and possibly every spin doctor for all I know. What we will not do is provide real jobs making trains. Assembly, perhaps but that is all.

In recent weeks and months there have been many news reports in newspapers and on TV telling us about the steam locomotive, Tornado, an A1 pacific of a type designed in 1948 that has been built by enthusiasts up in Doncaster and is the first main line steam locomotive built in 50 years. We built the railways of the world. From Richard Trevithick and George Stephenson, we built a transport system that transformed the world. I have travelled in all five continents and seen in operation, locomotives that were built in Glasgow, Manchester, Vulcan Foundry in Newton-le-Willows and in Leeds. Now, we have to buy trains in Japan.

The first time i went to Australia and visited Sydney, of course I visited the harbour bridge - until the Opera House came along the bridge alone epitomised Australia for many of us. I was amazed when i got close to the bridge to see little plates that said "Dorman Long Middlesborough". I found out that the bridge was built by Dorman Long and by Cleveland Bridge in Darlington and opened in 1932. And I was proud of seeing a monument to what this country was once capable of doing. Now we make nothing and for ten years or more have kept the country afloat on a sea of debt. We close factories and transfer everyone to Kentucky Fried Chicken - who are one of the few companies that wants to employ any new staff.

Is there no one who can lead us out of this sad mess precipitated by the greed of the city men and let us, once again, start making things that people want to buy. Somewhere along the way, we may, once again, learn how to run a railway.

When Will Banks Become Banks Again?

The state of the financial system remains dire as the government prepares to chuck even more money at the banks. How much more money will we have to pour into these institutions before we get something back? So far the government has committed us to nearly £100 billion with every prospect that they will need to provide still greater guarantees. We are told that we cannot let the banks go bust but the money being given to them disappears into a bottomless pit. Almost all banks have vast hoards of toxic rubbish on their books and it seems that they are just using our money to get the books straight. I thought the whole purpose of the support given to banks was to get them functioning again as banks. Clearly that is not happening. Nobody can borrow money to finance their businesses, mortgages are almost unobtainable - unless you are so rich that you do not need one - and as everyone cuts back the economy spirals down and down. People are afraid for their jobs - so they spend less. Everyone is buying less - so some stores close. Other stores are selling less - so they buy less. Stores are buying less - so manufacturers cut back. Manufacturers cut back - so people are laid-off. People are laid-off - so they spend even less. And so on. If the government directly poured £100 billion into the economy in the shape of tax cuts, etc they really would give the economy a boost. At present we just pour the money into funds to compensate banks for their own incompetence and still we pay ridiculous salaries and bonuses to those responsible.

I was amused by the little cartoon above that I saw in an advert for Witan Investment Services. There are still some things we can laugh at.

Jobs! Jobs!

It's 10.30 pm on Monday 16 February and I have just been watching the Dispatches programme on Channel 4 in which Digby Jones investigated the growing problem of unemployment. Standing now at 1.97 million, the numbers out of work is likely to exceed 3 million this year. The method of counting the unemployed has been changed so much in the past that there is little room left for government massaging the figures downwards yet again. It is a depressing picture. Not just the obvious despair of those who had lost their jobs and who were being offered little prospect of any other job. One government minister, at least, thinks that we have already the worst financial conditions for a century. On the Dispatches programme of course, the small number of individuals that the programme focused on to present their picture could be unrepresentative of the overall situation. But I suspect that they were reasonably typical. The things that stood out were :

[a] The pitiful allowances paid to the unemployed - the Job Seekers

[b] The inability of the Job Centres to even cope with the numbers and fill in the forms, let alone actually find jobs.

[c] The modest levels of pay that all but one of the individuals enjoyed when in work - no £100,000 + salaries here.

[d] The efforts that the individuals were putting into trying to find a job - any job.

[e] The yawning gap between the public statements of government ministers and the reality. How can we pour vast sums into ruinously incompetent banks but not give any help to efficient and effective companies to preserved the integrity of their workforces for the future. Why can't we come up with a support structure in which the employee takes a wage cut, the employer pays him for working fewer hours and the government tops up the pay packet so that overall the employee gets 75% pay [say] but keeps his job?

On top of all this, we have the almost total lack of any government commitment for a real future. If we survive this depression, we can no longer have uncontrolled, unregulated banks and an economy based on gambling and debt. We have to make things which the world wants to buy. That means that, somehow or other, we have to re-build the manufacturing base that has been steadily destroyed since the Old Bat [Thatcher] started the rot.

I would like to be optimistic but we need competent leaders with vision. Where are they?

Olympian Bills

The building of the Great White Elephant on Hackney Marshes is proceeding apace with minimal attention to the global credit crunch. Indeed, never has the atmosphere of unreality seemed quite so dense around this mad project. From the start, I have been opposed to the idea of Britain even bothering to bid for the Olympics, let alone becoming successful and thus being committed to one gigantic waste of money. The whole project is surrounded by the most comprehensive programme of spin that we have ever been subjected to. The current expected cost is said to be £9.5 billion. This number excludes all kinds of things like security, transport improvements, etc - and God knows what else. Even so, the spinners will struggle to avoid us coming to realise that the actual cost will be nearer £20 billion. And then there is all the nonsense about Olympic Heritage. After the fortnight of Olympic endeavour, all being well, we will spend a few millions looking after unused stadiums for a year or two and then, like everybody else, we will start the work of demolition. The whole project is one of insanity. And, in order to get to this position, we - and other cities - go through a process of wining and dining, pimping and prostitution at a cost of £35m each in order to be given permission to chuck £10 billion or £20 billion at 2 weeks of minority sports.

Meanwhile, Canada is becoming worried about the cost of the Winter Olympics in 2010. Does Vancouver want them anymore? Canada has only just finished paying for the Olympics in Montreal in 1976 and now they look like being saddled with another long and crippling bill. It is very educational to look at the saga of the Olympic Stadium [Stade Olympique] in Montreal [picture on the left]. The original estimate for building this was $134 million. By the time it was opened for the Olympic Games in 1976, it had cost $265 million and was only half finished. In May of 1976, the Quebec government introduced a new tobacco tax to help pay for the stadium. It took another ten years before the roof was finally installed but there have been numerous problems with operating the roof; it is an all weather stadium with a roof that doesn't work too well in wind and rain. It has broken many times and collapsed completely on one occasion. The complex structure of the tower has caused many problems, has been partially destroyed by fire and rebuilt and taken years to finish; chunks have broken off at times and fallen onto the field during a football game. Officially Montreal finished paying for the stadium in November 2006 by which time the total cost for building, re-building, maintenance and repairs was $1.6 billion or 12 x the original estimate. It is not used much and is universally considered a white elephant. Let the London Olympic Delivery Authority be warned.

When will somebody get to draw up some realistic costs for staging these ridiculous games at the bidding stage and thus prevent any other country from embarking on the projects? Either hold the Olympics in Australia for ever - where they have plenty of room, good weather and an existing set of facilities - or abandon them for good.

Grassing Up The Cornflakes

How do they make breakfast cereals? These products seem to be unique in the world's basket of foodstuffs in that they bear no resemblance to any natural products. A chicken in a supermarket looks like a chicken; a tomato looks like a tomato; and so on. But a breakfast cereal? The main ingredients are, apparently, milled corn, sugar, malt flavouring and "high fructose corn syrup", ie more sugar. In the world of bodybuilders who have to care about nutrition, it has to be said, that cornflakes are not rated very highly - even to the point where it has been suggested, facetiously, that there is more nutrition in the cardboard box in which the cornflakes are supplied than in the cornflakes themselves. These comments may be not entirely fair. Cornflakes has almost entered the language as a generic term to describe all breakfast cereals; and cornflakes to most of us means Kellogs. Cornflakes have been around for more than one hundred years, since they were invented by the Kellog brothers "in their quest for healthy foods."

Kellogs as a company are known world-wide and what would be more natural for such a prominent American company than to promote the healthy image of cornflakes by printing pictures of an American Olympic champion all over their cornflake boxes [as well as the similar frosted flakes boxes]? Who could be more suitable than Michael Phelps, the slightly geeky looking swimmer who captured a fantastic 8 gold medals in the Beijing Olympics last summer? No doubt they agreed to pay Mr Phelps quite well for the use of his image - and good luck to him. All was fine and dandy until last week, when, a photograph appeared that seemed to show the swimmer smoking a bong. He subsequently admitted smoking marijuana and instantly Kellogs cancelled his contract with a company spokesman saying that Michael Phelps's behaviour was "not consistent with the image of Kellogs." Oh, come on. He was smoking a bit of grass, something that millions of others around the world were doing on that very same day in November 2008. This is a recreational drug, not a performance enhancing drug and a 23 year old, quite rich American was reported for smoking it at a party. Shock! Horror! To suggest that this damages the image of Kellogs is pure ........ hog-wash. But this nonsense does not end with the cancellation of the Kellogs contract and Phelps's humiliating apology. It is suggested that this minor misdemeanour will destroy the whole of his potentially $100,000,000.earning power because no public company will want to touch this tarnished man. Michael Phelps has my total sympathy and I hope that he can achieve everything that he deserves from his fantastic athletic endeavours. We are here witnessing corporate humbug and hypocrisy on the grand scale. Everybody wants to get in on the act of condemning the man for his horrendous transgression. Do they get cash back or just brownie points for their self-righteous outbursts? Are the people who tell us that Michael Phelps's career is in ruins such fine, pure, up-standing and free of all sin individuals that they can clamber onto their collective soap boxes, halos aglow and proclaim this rubbish? All this is an age when financial wizards around the world can bugger up the whole of the world economic structure, without, apparently, even giving up their bonuses.

If all this rubbish were not bad enough the anti-doping in sport quangos - anxious not to miss a chance for a bit more pontification - are suggesting that they will make an example of Phelps to send a message to all other world-class athletes who need to be shown who is boss. God! This world is run by madmen and sanctimonious prats.

Good luck Mr Phelps. May you get things sorted and don't dare light up an old-fashioned fag or the anti-smoking lobby will be after you as well. From now on, I will not be buying any cornflakes - but, then, I wasn't buying any before, either.

The President of Europe

I was about to write about my car but I got a bit of a rush of blood about Tony Blair. This obnoxious man is in the news again because he has [a] been discussing with President Obama the matter of God and his place in the life of Tony Blair and [b] his wish to be the first president of all Europe - a sort of latter day Holy Roman Emperor. Blair has few redeeming qualities. Without doubt, to my mind, he is the worst prime minister in my life time. There are some who believe that he and Bush should be charged with war crimes for what they have done in Iraq and in particular their by-passing the Geneva Convention in order to allow prisoners to be tortured. Blair is a man who makes me ashamed of being British - almost ashamed of being a human-being. Even when the man speaks with sincerity, he still sounds like a liar. At best his ever-so-humble, arrogant, self-righteous, patronising and slightly slippery delivery always puts me in mind of Uriah Heap in David Copperfield. Am I insulting Blair with my bigotry? I don't think so. The catalogue of his 10 years in office is one of maladministration, of destruction of our liberties, of government waste, of destruction of democracy, of cow-tailing to George Bush, of hypocrisy and incompetence.

If Blair becomes president of Europe, we must be allowed his promised vote on the European Constitution - or Lisbon Treaty as it is now known - so that we can vote ourselves out of this Tower of Babel.