That if "a source close to the Tory leader" had expressed his true feelings about George Osborne BOAP, the man would be sharing initials with the precursor to British Airways. The man says there is not too much swearing in it. There is a bit, but it's still a good read. "There has been a wholesale collapse of authority and competence in our ruling elite…".
Sunday, October 26, 2008
It occurs to me …
COMMENT THREADFiduciary responsibility
Rightly, I think, we've focused heavily on the role of the regulators in this financial crisis, pointing to their considerable failures.
An unlikely ally now comes in the form of Kenneth Clarke MP who, in the Independent on Sunday today, has harsh words for the tripartite system of regulation between the Bank of England, the Treasury and the Financial Services Authority, which took away the Bank's supervisory powers.
"We had enough regulations in place to prevent this, but we just didn't have regulators who were up to it ... If the FSA had been more closely in touch with the banks," he says, "its staff could have spotted that the business models practiced by Northern Rock and Bradford & Bingley were flawed."
He then argues that if the Bank of England had maintained it's banking supervisory powers, it would have seen and controlled the excessive lending by the banks. The FSA failed because it never really got into supervising the banking system. "All the Government's rhetoric was for a lighter touch. But the FSA is not there to be loved by bankers and ministers. It must be made of sterner stuff. It's too easy after the event to cry out for more and new regulation when, in most cases, it's already there," adds the former chancellor.
The Wall Street Journal, however, makes a different point. In an article headed, "Where were the boards?", it suggests that there is one very important question which has gotten little attention: Where were the boards of directors of the companies that helped create this mess?
Boards of directors, it says, set the guidelines and compensation levels, and in the end are ultimately responsible for the performance of their CEOs and companies. They have a clear-cut fiduciary responsibility to provide oversight. We should not ignore their roles in contributing to this financial meltdown.
Behind the CEO of every Freddie Mac, Bear Stearns or Lehman Brothers who led their company down a path toward financial ruin, says the paper, there was a board of directors that sat by silently and let it happen.
Interestingly, in his long, free-ranging interview with the IOS, Kenneth Clarke does not mention this issue at all, despite his declaration of interest in the Parliamentary register. But then, as a paid member of Advisory Board of Centaurus Capital Limited - a European hedge fund managing a billion pound portfolio and major shareholder in the Friends Provident insurance company, which is struggling to contain its losses – Mr Clarke wouldn't be wanting to talk about messy things like fiduciary responsibility, would he?
An even more interesting omission is highlighted by Clarke's comments to the IOS, where he tells the paper that it would be wrong to let the bankers drop the mark-to-market accounting standards. "That would be a terrible mistake and a step back," says Clarke. "It's the bankers, particularly the Europeans, who are trying to wriggle out of the mess they have got themselves into and blame something other than themselves."
How fascinating it is that the Centaurus Alpha Fund, owned by the company of which he is a member, announced last May a formal "Amendment of valuation methodologies", breaking away from mark to market valuation (as is permitted under certain circumstances). Instead the company decided that it would use the:…latest available valuation provided by a relevant counterparty and as adjusted in such manner as the directors, in their sole discretion, think fit. If no such valuation is available, the directors will determine the value in good faith having regard to such factors as they deem relevant.
You might have thought that the IOS could have mentioned this interesting snippet to Mr Clarke, on top of his board membership of Centaurus Capital – detail of which is strangely absent from his profile printed in the article. But, since Clarke is also an non-executive director of the Independent News and Media (UK) group, which actually owns the Independent on Sunday, one supposes that the paper would not be too keen to upset him.
Funny old world, isn't it?
COMMENT THREADSaturday, October 25, 2008
Another confession
Buried in The Daily Telegraph print edition (I seem to be relying rather a lot on this newspaper these days) is a piece, apparently not replicated on-line, headed "Davos organisers express regret over 'party years'".
Definitely coming under the category, "bit f*****g late now", it tells us:Economists from the World Economic Forum have blamed "out of control" chief executives for treating its annual Davos summits like a luxury party rather than a serious conference.
The funny thing is that the WEF meetings have acquired much the same reputation as the Bilderburger meetings – rich and famous men meeting "behind closed doors to set an agenda for the global economy".
Klaus Schwab, executive chairman of the WEF, said he regretted not forcing Wall Street and City executives to listen to the worries of leading economists about the credit bubble over the last five years.
Mr Schwab is now intent of returning the conference to its intellectual roots, based on the 1944 Bretton Woods forum that discussed rebuilding the global financial systems after the Second World War.
"The partying crept in," the 70-year-old economist said. "We let it get out of control and the attention was taken away from the speed and complexity of how the world's challenges built up".
The sad truth though is that they were little more than high-class piss-ups for a bunch of over-paid inadequates. Would that they had been "setting the agenda", instead of leaving all the work to the grey bureaucrats of Basel.
Those tumbrels are going to be really busy when the people finally cotton on to what has been going on.
COMMENT THREADThat North African river again
The trouble with you, Richard, one of my long-suffering friends observed, is that your idea of attacking someone is to stand at the door of a crowded bar and let loose at him with a double-barrelled shotgun. No wonder everyone dives for cover, friend and foes alike.
It is much better, he counselled, to go into the bar, shake the man by the hand, have a drink with him – and then slide a stiletto between his ribs. That way, you can be out of there, bidding everyone else a cheery good night, and no one will even notice it was you.
But hey! I haven't got where I am, living in a seedy Bradford suburb with a pension plan worth slightly less than a pair of second-hand whore's knickers – and going down just as fast – by heeding good advice.
Where was I?
Ah! Our target for tonight is Mr Andrew Pierce, that esteemed member of the fourth estate, highly respected and fêted by the chattering classes. In The Daily Telegraph today, he writes a long feature article headed, "Financial crisis: Our masters' summer of denial". And the strap tells you more: "What were our leaders doing as the credit crisis developed? Posturing and relaxing, says Andrew Pierce."
Now, don't get me wrong – this is a good piece, proving that the man has a brain and can write. His thesis is that, while the storm clouds of a financial meltdown gathered, the political elites were disporting themselves at Wimbledon and other salubrious venues, or indulging – as did the Labour Party – in an orgy of internal bickering over the leadership issue.
Regrettably, writes Pierce, in a stunning flash of originality, "Nero and Rome burning springs to mind." He then cites Tim Congdon, the economist who was an adviser to the last Conservative government, who says: "There has been a wholesale collapse of authority and competence in our ruling elite…".
Citing this piece with evident approval in the leader column, the writer unfortunately anonymous, we have another profound and well-written exegesis which sternly informs us that, "The politicians failed, and we will pay the price." In full flow, as the leader-writer develops his theme, we get:The Bank's insouciance was encouraged by stupefying political complacency. In his Budget in March, Alistair Darling repeatedly insisted that Britain was better placed than almost all its competitors to face "economic turbulence". He cut his growth forecasts, yet still expected a 2.5 per cent expansion next year, a prediction that should warrant an inquiry into the quality of Treasury number-crunching. Why should we believe him now when he says the recession that he failed to predict will be less painful that previous slumps?
And then we are treated to this strident conclusion which has us cheering to the rafters:Given the economic circumstances, the Conservatives should be 25 points ahead in the polls, but they have yet to find the right voice to vent the spleen of the nation - and have anyway spent the past week on the defensive over their shadow chancellor's summer antics in Corfu. Are the abiding images of an economic crisis to be these: the Bank of England Governor at Wimbledon while failing to cut interest rates soon enough; politicians luxuriating on the yachts of the super-rich; empty benches in Parliament despite the worst financial crisis for 80 years; a governing party concerned more with its own internal machinations than with dragging the economy back from the brink? At times like this, the political classes are meant to earn their corn. They flunked it and we will all pay the price.
But just hang on a minute. Where was the media when all the chaps were disporting themselves and pratting about with their internal squabbles? Do we recall posting one or two pieces making just tiny references to the media, with the odd suggestion or two that our revered fourth estate might possibly be missing the plot?
In general terms, we noted on 15 January 2008 the strange absence of the media from any serious debate about our plight, commenting on a piece by Ambrose Evans-Pritchard, where we opined:Actually, Ambrose was writing in the business section, a completely separate section where there is still some serious news. More and more, one gets the impression that there are two separate newspapers, one the main newspaper which should more rightly be known as the entertainment section, while the hard news is consigned to the business section.
More recently, as we were sinking into the doo doo, we actually wrote this:Thus, when the prime minister calls a press conference in No 10 on the economic situation, with the chancellor of the exchequer standing beside him, and announces he is going to go to Paris, and tells the media that he intends to put forward his proposals "about how a stability programme can work for each country", you might just have thought that some of the assembled journalists – or even one – might on our behalf be just a little interested in what those proposals were, what the reception might be and sundry other details.
Many, many more pieces of a similar tenor did we write, the latest being this one - far too numerous to cite here, but if you google our site, using the search string "soap opera" you will find no shortage of comment, not leastthis and this, the latter actually bearing the title "a retreat into infantilism".
But no! This is our media we are talking about. First off in the questioning was that dreadful Nick Robinson, oozing with self-importance. He launches into a question about Brown's personal relations with Mandelson and why he picked him for a job in the cabinet. Brown answers the question only to get Robinson put a detailed supplementary, on exactly the same issue.
And now, having prattled and preened, itself indulging in the vacuous "soap opera" that has so dominated the headlines, The Daily Telegraph in the persons of Mr Andrew Pierce and others, has the unmitigated gall to write of "our masters' summer of denial", complaining that our political classes had lost the plot.
As to their own role, it seems to me that our media friends are also floating in that North African river. Now, where was that shotgun?
COMMENT THREADThe Rt Hon George Osborne, BOAP, MP
According "a source close to the Tory leader": "George has been a bit of a prat" (BOAP). This is retailed to us by The Daily Telegraph - on the front page in the print edition. Mr Heffer is even less kind.
Funnily enough, there is absolutely no mention of either piece in that sterling political blog, which charts the fortunes of the Conservative Party.
A little while ago, we conjured up a picture - meant to convey the full horror of the financial crisis – of a runaway train, the driver having leapt to safety, leaving no one at the controls. It was this image of no one actually in control that represented our worst nightmare.
In a conversation with a friend (I do have some left) this morning, however, we mused upon an even worse scenario. Imagine, if you will, terrified passengers, sensing something wrong with the train, struggling their way forwards, through the rocking and swaying carriages.
With the buffers looming on the near horizon, panic rising, they finally make it to the front of the train and, with the strength born of desperation, break through the locked door that separates them from their imagined salvation.
As they pour into the cab, what do they see? A suntanned George Osborne, the great political "tactician", slouched in the driver's seat with his feet on the dashboard. He is chatting animatedly to "Dave" on his Blackberry about the next move against Peter Mandelson.
Mr Heffer has it, methinks.
COMMENT THREADOur ruling elites
COMMENT THREADThey've noticed!
In The Daily Telegraph today. Where we lead, others follow.
COMMENT THREAD
Sunday, 26 October 2008
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