Here we go again - by Richard... Monday, June 07, 2010

Here we go again - by Richard... Monday, June 07, 2010

Reuters is playing its games again, manipulating pictures - this time cropping images to remove incriminating evidence (click on the pic to see what they left out).

And then you have that idiot Hague call on Israel to agree to a "credible and transparent" investigation into this "deadly raid" on an aid flotilla as activists whose ship was blocked from delivering relief supplies to Gaza returned home today.

Speaking alongside Bernard Kouchner, the foreign minister for the Kermits, Hague said there should be an "international presence at minimum" in an inquiry into the deaths of nine "activists". No doubt he too would be happy to see Reuters processing the evidence for such an inquiry to use.

One thing is for certain though ... nothing of this is going to reach the MSM. As with Qana, they will close ranks and pretend it never happened. Never can it be admitted that photographs used by the media are routinely manipulated - as is the written copy - all to ensure that the "great unwashed" are only told the "right" things. But for the "derivative" blogs, nothing of this would reach the wider public.

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Treating us as if we were morons - by Richard...

Do our politicians really think our memories are so short that we cannot remember how little the economy played in the general election campaign, and how reluctant both major parties were to talk about "cuts"?

But now with the election safely out of the way – as we always knew they would – we have The Boy poised to tells us that things are "even worse than we thought" and draconian cuts must now follow.

If the Cameron and his little mates are genuinely taken aback by the size of the deficit and its effect on government finances, then they can be the only sentient people in the whole of the UK to be thus afflicted. Booker put the position with utmost clarity on 10 April, then noting the reluctance of the parties to talk about the issue.

So, with weary predictability, we must watch the politicians go through their little charades and pretend how shocked they are, and then listen to them tell us how they are going to sort it all out. And maybe this lot will do a marginally better job than the last lot – or maybe not. 

One does, however, wish they would not treat us as if we were morons. It is not possible to be as stupid as these ghastly creatures make out and have enough brain cells to stay alive. After all, no one but a politician could seriously argue that things are "even worse than we thought" and expect people to keep straight faces.

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A "deadly raid"? - by Richard... Sunday, June 06, 2010

Israel we are told is defying "mounting international pressure" to subject its "deadly raid" on a Gaza-bound aid ship to international scrutiny, when it rejected calls for a UN-backed investigation.

This, presumably, is the Telegraph's idea of objective reporting – shared by most of the Western media. But since when was a boarding party carrying out action to enforce a blockade ever been considered a "raid"? Even in a technical sense, the description is wrong. 

Further, while the Gaza-bound ships were carrying "aid", that does not make them aid ships. Technically, they were blockade runners. The intention of their owners was to embarrass the Israeli government, to which effect aid materials were also being carried, as a transparent ploy to legitimise the action.

Given that the media cannot even begin to get it right, Israel has every reason to expect that a UN-back investigation will be equally prejudiced and – almost certainly – fail to conduct an impartial investigation. Under the circumstances, therefore, the Israeli government is right to resist demands for "international scrutiny".

However, it should commission its own investigation, it should ensure that work proceeds quickly and is well conducted, and it should publish the results in full.

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Not dead yet - by Richard...

The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years. So say twelve out of 25 "leading economists" questioned by The Sunday Telegraph. Eight believed the euro would survive and the remaining five were undecided.

This sounds rather like the embodiment of the old joke: if all the economists in the world were laid end-to-end, they still wouldn't reach a conclusion. But how this information helps us understand the current predicament of the euro is less clear. 

What is increasingly clear, though, is that debt is creating massive stresses on the banking system, with the ECB's Financial Stability Review pointing out that eurozone banks could face a credit crunch as they compete with governments for funds in coming years.

The prospect of banks and sovereign borrowers competing head-on for funding is not a happy one, with the concomitant risk of public debt crowding out bank borrowing. 

But what is getting bizarre to the point of being surreal is the increasing difficulty in separating the two. In 2009, countries borrowed more than €800 billion, partly to bail out banks, which in turn then bought public debt that had been driven up by the bail-outs.

Carsten Brzeski, a senior economist for ING, thinks we should "really take this seriously." The process of banks buying public debt after being bailed out with state funds resembles the shady practice of using multiple bank accounts to cover "rotating overdrafts". This is a parallel "which holds very well in terms of the inner eurozone circle," he says.

Brzeski adds that "pushing it from one to another and back is kind of a multiplier effect", but notes that governments held underlying assets and their economies generated value that underpinned the process. "It only works if the underlying fundamentals are healthy," he cautions. "Otherwise it just goes up in smoke."

It takes no great expertise, however, to realise that the "underlying fundamentals" are very far from healthy, a point reinforced by the New York Times. 

This paper tells us that, while foreign banks and other financial companies have lent $2.6 trillion to public and private institutions in Greece, Spain and Portugal, no one - not investors, not regulators, not even bankers themselves - knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. 

With this in mind, the FSA has asked UK banks to model a number of disaster scenarios, including Greece defaulting on its loans. Analysts estimate that British banks have a total exposure of more than £100 billion to Greece, Portugal and Spain.

The situation gets even more murkier when, as Spiegel reports, the ECB has been buying up Greek bonds by the bucketload, even though Athens is already getting money from the rescue funds set up to bail it out. German central bankers, we are told, suspect a French plot behind the massive buy-up - giving French banks the perfect opportunity to get rid of their Greek assets.

Small wonder Václav Klaus was recently telling the Wall Street Journal that the eurozone has failed and Richard Woolnough, M&G Optimal Income Fund Manager, was in The Daily Telegraphasserting that "the possible demise of the euro is now very much up for debate."

The debate may well erupt this week as Belgium, Holland, Austria, Portugal, Spain and Italy collectively test market confidence this week when they try to borrow a total of €20 billion on the bond market. However, with Reuters suggesting that the euro will be down to $1.17 by the end of the month, it does not seem as if the single currency will be collapsing this week.

How much longer Greece will still be on board is another question.

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The more we pay, the less we get - by Richard...

So often these days, the point made about public sector salaries is that, to compete with the private sector and to be able to hire the best, huge sums of money must be paid.

Notwithstanding that a considerable number of people in the private sector are grossly over-paid, the point made by Booker in his column this week is that the grotesque inflation of salaries has gone hand in hand with a deterioration of almost every public body. We've all heard the old saw, "pay peanuts, get monkeys" but we are paying gold bars and getting monkey droppings.

One glaring example of this, notes Booker, is the BBC, the head of which, Mark Thompson. He now receives a staggering £834,000 a year yet, twenty-odd years ago, the director-general was paid a mere £80,000. Yet in almost every respect over the same period, the performance of the BBC's bloated empire, awash with £3.5 billion a year of licence-payers cash, has declined, to the point where it has become a national scandal. 

The more its professional standards have fallen, the more puffed-up and pleased with themselves its grossly overpaid executives and celebrity presenters have become.

Another once-respected body which has suffered a catastrophic drop in its reputation is the Met Office, currently run by John Hirst. He gets £170,000 a year to preside over the hugely expensive computer models that have become such a laughing stock that it was recently forced to drop its wildly inaccurate "seasonal forecasts" altogether. 

Yet these are the same models which for years have been relied on by the IPCC to drive its great scare over global warming, by forecasting what the earth's climate will be like 100 years into the future. The Met Office and its discredited computer models were also recently part of another massive official system failure, the volcanic ash fiasco, which in April cost the airline industry more than £2 billion. 

But the real problem here was that the official bodies responsible for air safety, including our own Civil Aviation Authority, were relying solely on the Met Office's modelling – all under the aegis of "quango queen" Deirdre Hutton, receiving £130,000 a year, just for turning up at the office two days a week.

Another example of casting pearls (or gold bars) before swine is Adam Crozier. Having recently stepped down as head of Royal Mail, he had presided over a disintegrating postal service and an industry in chaos, with post offices closing almost as fast as the price of stamps has risen. Yet his pay package last year was an astonishing £2.4 million.

Strangely though, the department with the most officials on the inflated-salary list is the Ministry of Defence, headed by the Chief of the Defence Staff, Sir Jock Stirrup, on £245,000 a year. 

Yet, writes Booker, this is a ministry whose record in recent years has been one of almost unmitigated failure, ranging from the humiliations it has presided over in Iraq and Afghanistan to the billions it has wasted on buying inappropriate or wholly unnecessary equipment.

Unlike the loathsome Hutton, who simply milks the system and leaves others to do the work, people like Stirrup on his inflated salary are responsible for the lives of personnel under their command. And, in Afghanistan, where eighty percent of the casualties are from IEDs, nothing characterises the campaign more than the failure of British forces to get to grips with this threat.

With more senior officers employed, pro rata than ever before in the history of the armed forces, at salary levels never so high, we have a situation where we are less well equipped to deal with the threat than we were 20 years ago, when with officers on a fraction of the current rates, Britain was leading the world in protection equipment and systems. Thus, as our capabilities have degraded, so have the wages increased.

At the heart of that very obvious failure is the Chief of the Defence Staff, the one man with sufficient clout to over-ride the petty jealousies, back-biting and incompetence of people like Gen Dannatt (who is now a Tory defence advisor), who could have ensured that the right equipment reached theatres.

Yet, even though the MoD announced that it was belatedly proposing to equip our troops in Afghanistan with Buffalos, available "off the shelf", as long ago as October 2008, they still have not arrived – but Stirrup just goes on being paid his £245,000 a year – plus perks. 

So it is, Booker concludes, the more all these public servants are paid, the less they understand what it is the rest of us are paying them for.

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