Wednesday, 16 May 2012

Edward Lear

On 12 May Google celebrated the bicentenary of the birth of Edward Lear.

Google Lear

Edward Lear

Monday, 14 May 2012

Apart from that, Mr Dimon ...

"We made a terrible, egregious mistake," Dimon said in an interview on NBC's Meet the Press on Sunday. "There's almost no excuse for it."

He said bank executives were completely wrong in public statements made in April after being challenged over the trades in media reports.

"We got very defensive. And people started justifying everything we did. We told you something that was completely wrong a mere four weeks ago."

Dimon added: "In hindsight we took far too much risk, the strategy was barely vetted, it was barely monitored. It should never have happened."

... how is the teapot?

Saturday, 12 May 2012


…the balance sheet of the euro system, isn’t only gigantic in size but also shocking in quality.

former European Central Bank board member Juergen Stark

the idea is to get two cripples to lean on each other. As long as the two cripples stay very still you can see them as propping each other up.

Tuesday, 8 May 2012

Bankia and bankia

Spanish prime minister Mariano Rajoy looked ready to backtrack on pledges not to use more public money on banks. "The last thing I would do would be to inject or lend public money, but if it is necessary I would not hesitate to do it, just as other European countries have done," Rajoy told a radio interviewer.
Yet it never is the last thing.

New Franco-German axis

She comes! she comes! the sable throne behold Of Night primeval, and of Chaos old!

Nor public Flame, nor private, dares to shine;
Nor human Spark is left, nor Glimpse divine!
Lo! thy dread Empire, Chaos! is restor'd;
Light dies before thy uncreating word:
Thy hand, great Anarch! lets the curtain fall;
And Universal Darkness buries All.

Maybe now

 "In 2007, the final year before the meltdown, shareholders received £2.23bn and BarCap's 16,200 investment bankers took home £1.3bn in bonuses. By 2009, bonuses had reached £2.2bn but shareholders received just £285m".

But let's not get too excited about the 'shareholder spring' with some of them waking from their long slumber. Shareholder Value Maximisation with its inevitable pressure towards short-term priorities can drive companies and wider concepts of social wealth into the wall as much as executive looting.

Monday, 7 May 2012

Let's shift again, like we did last summer

"Financial markets reeling after France and Greece elections"

"The French outcome was as expected. The markets have already shifted to a view that austerity on its own wasn't the right policy mix and that other things needed to be considered."
Richard Yetsenga, Head of Global Markets at ANZ Research.

"Austerity will not work to solve Europe's debt crisis. However, shifting austerity to higher earners and business will accelerate the debt crisis."
Jeff Sica, president of SICA Wealth Management

Shifting market wisdom: it's fortunate someone has such foresight and vision. No wonder the voters are so calm.

Saturday, 5 May 2012

If not now, when?

Executive pay has now left the planet and not just at banks:

Sorrell, who turned a shell company called Wire & amp; Plastic Products into an empire that also includes media buyers Mediacom, market researchers Kantar, and public relations firm Hill & Knowlton, took home £50m of shares in 2005 after a long-term share scheme – known as a leadership equity acquisition plan, or Leap – paid out.

The 30% pay deal that has been struck takes his basic salary to £1.3m and comes with the potential to earn up to 500% of that in bonuses – an extra £6.5m. Until now he could receive up to £3m in bonuses – some 300% of his £1m salary – and the company said the "adjustment" followed the "share owner consultation process"

No doubt he deserves it, by the standards that hold across large corporations, in relation to his company's perfromance. Meanwhile those whose fortunes are made by sailing rather closer to the wind can take comfort that:

The episode marks an embarrassing end for Alderman, whose time in charge [of the Serious Fraud Office] has been dominated by budget cuts of more than 30% and a ruthless purge of almost all of the SFO's most senior and experienced prosecutors.

Recent cuts in staff at the Inland Revenue must be quite reassuring as well.

Companies are keen to explain that they have a duty to their shareholders to take the most energetic steps to minimise their tax payments find themselves a little more conflicted when it somes to reconciling executive 'compensation' with shareholder interests:

As with Barclays, 11th-hour tweaks in pay [at Aviva], plus pledges to listen harder to shareholders, probably will not quell the anger when it comes to the vote. The basic problem is similar: shareholders have suffered a massive drop in dividend income since 2008, plus a substantial decline in the share price, yet boardroom pay practices continue as if nothing has changed.

Except that it has a little.

Whilst at WPP:

In the annual report Rosen said: "Following our 2011 AGM we recognised that a number of our share owners had issues with some aspects of the group's executive compensation arrangements."

Who's sorry now?

Philip Hammond, the government's defence secretary (defence of what, one wonders) has some stern words for 'ordinary people':

"People say to me, 'It was the banks'. I say, 'hang on, the banks had to lend to someone'. People feel in a sense that someone else is responsible for the decisions they made. Of course, if banks don't offer credit, people can't take it. [But] there were two consenting adults in all these transactions, a borrower and a lender, and they may both have made wrong calls. Some people are unwilling to accept responsibility for the consequences of their own choices."

So it's all our fault. It sounds rather cosy actually. The idea that the world economy got into a bit of a pickle because we all pulled a bit of a fast one on our bank managers and borrowed too much for new cars and garden patios. Into the headmaster's study for a bit of a wigging and we can pull our socks up in no time and sort it all out.

For a slightly different suggestion of the scale and location of the problem that 'the banks had to lend to someone' (and how) look at these graphics:

and for and view of what the future may hold on our high-finance roller-coaster see:

Meanwhile, who's got the real money?

And so

Friday, 4 May 2012

Left Foot, right foot

Tory MPs, including a minister, have openly urged David Cameron to adopt more traditional Conservative policies in response to his party's drubbing at the polls. Gerald Howarth, a defence minister, said that Cameron should accept that Tory voters do not approve of gay marriage. Bernard Jenkin, a backbencher, said Cameron should resist Lib Dem obsessions like Lords reform.

This is a variation of Dennis Healey's celebrated observation that the first thing to do when in a hole is to stop digging, and of the constant suggestions  when the Labour party under Michael Foot had been decisively rejected by the electorate ('the longest suicide note in history') that it was because voters found the party insufficiently 'left wing' and wanted from it more of what they had voted against.

For some voters that will of course be the case (UKIP have made some gains - probably included in agriculturally dependent communities, which also seem to like suicide notes), but it was the lamented Tony Blair who decisively demonstrated that elections are won in that 'middle ground'.