Lessons to learn

Thursday, March 26, 2009

Lessons to learn

One of the most deadly phrases we hear in modern administration is the mantra "lessons that must be learned".

This we are hearing yet again, this time in respect of the failed Icelandic banks. It turns out that seven English local authorities breached official guidance and their own treasury management protocols in continuing to invest in Iceland after the banks' credit ratings had been downgraded below acceptable levels.

One authority failed to open an email warning of the ratings change, another was using out of date information, while a third exceeded its own limit for deposits in a single bank. Another authority, Havering, invested £2m in an Icelandic bank on 1 October - only 20 minutes before it was told the bank's credit-rating had been downgraded.

In all, according to the BBC, a total of £32.8 million was deposited between the downgrading of the banks' rating to "adequate" on September 30 last year and the collapse of the Glitnir and Landsbanki banks on October 7. 

All this information comes from the Audit Commission which says that the Icelandic banking collapse had exposed the "variable" standards of treasury management in local authorities. Treasury managers could and should have been aware that there were risks associated with making investments and that, in particular, there were risks associated with investing in some institutions.

This is the same Commission, incidentally, that invested £10 million in Iceland. As you can imagine, it is insisting that this did not compromise its ability to analyse what went wrong. "We found that most local authorities heeded the warning signs about Icelandic banks," says chief executive Steve Bundred. "But some did not, and a number were negligent. Our report shows that there are lessons that must be learned by everyone."

There is a very simple point to make here. Could we please have public authorities learn their lessons, before disaster strikes, rather than afterwards? Or is that too much to ask?

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Not good

Ralph Peters in the New York Post lists the major mistakes the Obama Administration has committed since January 21, when he became President (and stepped down from his position as Messiah).

It makes disconcerting reading. Some of it is less serious than the rest. What the Castro brothers (assuming they are both alive) say is not really all that important except for the fact that "maltreatment" of Cuba has been a left-wing cry for many years. Though, oddly enough, not much is said about the maltreatment of Cuban dissidents by the Cuban government and police.

Russia is, indeed, preening again, but it is not clear how much of that is talk. Medvedev has, indeed, announced massive expenditure on rearmament but this is supposed to have been going on for years and not a whole lot has been achieved - the Russian military does not seem to be any better armed than it was before President Prime Minister Putin's time.

On the other hand, effectively telling the Russians that they can do anything they like in the old Soviet sphere is not particularly intelligent. With Georgia once again in turmoil, President Obama and Secretary of State Clinton may well find themselves with a serious problem in the Caucasus. With Russia's economy deteriorating and protests in the country mounting, a little war that could ignite nationalist feelings could appear to be just the ticket to the Russian leadership. Of course, little wars have a habit of turning into big ones and recent Russian history ought to be a warning. Let's face it, the Obama Administration is not going to be. 

As for our allies, Obama apparently needs them less than Bush did. O treated Britain's prime minister like the deputy Paraguayan veterinary inspector, and he blindsided the leaders of the Czech Republic, Poland, Mexico and Canada on issues ranging from missile defense to trade. But he'd like them to take the Gitmo terrorists off our hands, please.

Well, that's OK. They won't take the Gitmo terrorists, being readier to scream abuse at the Americans than do anything themselves.

Interestingly, that list does not even mention Secretary of State Clinton'sappalling speech in the European Parliament that ought to have warned our own eurosceptic Obama supporters but apparently did not.

The Western alliance is in the very best of hands.

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