Tuesday, 31 March 2009

Interim Or Contractor vs. Permanent? A Question Of Recruitment

I was prompted to look at this subject by a network colleague of mine, Simon Burns. He posted a question on the subject on LinkedIn recently. Simon asked the question to HR Managers, Hiring Managers and Recruiters alike - in a straightforward choice, would they recruit a person who had been in permanent employment over one who was a contractor or interim?

The answers were varied but there were some recruiters who showed some ignorance by saying that they would not even put contractors or interims forward for permanent positions. Meanwhile most towed the politically correct line and said 'The best person for the job'.

It did not answer the real tack of Simon's question - all things being equal, who would you hire if it came down to the last criteria - permanent or contractor/interim? I don't think Simon was being disingenuous; he was definitely trying to get some insight into what people thought on the subject, being a technical recruiter.

Perhaps an extension to the question would be to add in the currently unemployed into the equation - would the same group of people questioned prefer to employ people from the pool of currently employed staff rather than those who are currently unemployed? And at what point would they consider unemployed people to be less attractive - out of work for one, two, three etc months etc?

Recruiting In A Recession

I recently spent a little time with Dermot Hill, MD of Intramezzo the recruiting boutique company, who made a very interesting point.

'In a recession, it is those people with more experience who will be viewed more valuably to organisations.'

I would like to agree with that to some extent although I always believe that raw talent needs to be valued very highly, regardless of experience. But it does come back to a theme of mine - the cost of bad recruitment. In good times, HR people and hiring managers get very sloppy in terms of just filling open headcounts with warm bodies and to heck if they fail as there is always a fluid market of potential candidates. There is no penalty for failure and so if someone either leaves of their own accord or is fired for non-performance, there is no repercussion to HR or the hiring manager as this is just seen as 'business'. The reality is that such decisions are costing the company money in terms of excess recruiting fees, time taken to go through the hiring and re-hiring processes, time and cost of training, salary costs, the exit costs, and then the opportunity loss of what a really good candidate could have done in place of the failed one.

I would like to think that Dermot has a point that companies will pause and think about each new recruit in tougher times. But I don't think this reflects reality as the same HR and Hiring Managers prevail - there is no penalty for bad recruiting and generally if they regularly go through the process with the wrong criteria, they will still use it during a recession.

So we get back to the natural prejudices in the recruitment process. When I recruited regularly, I was always suspicious of those people who had hopped jobs with less than two or so years tenure in each. It begged the question of such characters, could they actually have been successful in such short terms and so do all the things their CVs say stack up as a consequence? Also, it probably shows that at the first sign of bad news, they jump ship or it takes on average two years to find out they are poor performers. It's a school of thought and typically it helps focus my questions and gauge the answers more thoroughly.

So mentally, I should be wary of contractors and interims, and even more wary of the unemployed, especially of the long term unemployed. Or should I?

The Benefits of An Open Mind

Dermot Hill's comments ring true. Companies should be far more wary about recruiting in a recession and they should be varying their criteria to ensure they get the best bang for their buck and long term benefit for the company. The cost of bad recruitment in a recession is exacerbated.

I believe recruiters, hiring managers and HR executives are missing a trick if they use the same criteria in tougher times as the market is now rich with experience and talent, particularly those who have been victim of poor planning and management inertia in the face of the recession and its effects.

So here are some of my arguments why Contractors, Interims and Unemployed people may actually be good bets vs. Permanently employed people for permanent positions.

1) Interims and contractors by their very nature are taken on to do specific tasks.

They are more focused on goals as a consequence, as their recent career will have been all about achieving certain tasks in certain times as their livelihood is directly at risk. For this reason, they are more determined and motivated by short term tasks and goals and so go about them with better organisational skills and planning leading to better execution of the plans.

2) Interims and contractors are more acclimatised to change around them.

For them, each new assignment represents a new opportunity not a threat and because they are more focused on goals they knuckle down quicker.

3) Interims and contractors are more used to 'hard living'.

Often when assignments finish, there is no time to relax as the task of getting a new assignment means life is a constant process of achieving assignments and then prospecting new. There is no time to settle into a status quo or easy life - it is very much a hand to mouth existence.

4) Interims and contractors do not do 'office politics'.

They come with less baggage and avoid getting involved in politics as this is alien to the way they work. They are more focused on getting the task done than making sure they are liked or progress.

5) Interims and contractors have a wider range of experience and are more adaptable.

Each assignment tends to be different which means they have to be quicker to adapt to get the goals achieved. While they often start assignments without specific experience, they have a long track record of getting into a task quickly, applying their own skills and experience and focusing on the goals. They adapt quicker to change and do not fear it, they have less expectations of niceties from the organisation - they just get on and do things.

6) Unemployed people are more hungry to deliver.

There is no worse thing financially than to have your regular income stopped or reduced. However much of a cushion of savings you may have, it will get quickly consumed and the motivation to work gets higher as the cushion gets less. People who have been out of work for a while will be desperate to prove themselves and get back onto the career track. They will be less arrogant and more eager to deliver because of it.

7) In general, interims, contractors and unemployed people will cost loss.

In a recession, it would be good to be more careful and flexible by having an option to 'try before you buy'. Interims, contractors and unemployed people would be far more willing to do this - not for free as some firms offer which is derisory, but on a contract which gives both parties flexibility. If all goes well, convert it to a full contract. This may be even a part time working contract and so costs can be contained.

8) References are harder earned

Employed people may have a reference from a company they worked at for a few years. Interims, Contractors and unemployed people may well have several references where they had to achieve something specific in order to get one. Remember for an interim or contractor, there is no obligation to give a reference in the same way as an employed person does - each is a customer reference and is so very valuable. It usually means you can contact specific people directly to get a clear, honest picture as you would a customer.

9) Unemployed people will generally be more loyal

People who get burnt tend not to stick their hands in flames a second time. Unemployed candidates will be very determined to rise to the challenge quickly and make sure they make a good impression. They will be loyal and hard working in order to maintain their position and will be more humble and thankful in the process.

10) Flexibility on starting

Of course, employed people are often encumbered by notice periods and covenants - the raft of non-regulars rarely have such baggage and can start as soon as the ink dries on the contract or sooner with no problems with former employers.

These are 10 good reasons why interims, contractors and unemployed people today make good candidates for permanent positions - there are plenty of counter arguments too. For some, contract work becomes a way of life but for others, in tougher times, the shine of flexibility wears off and the lure of a safe position is very attractive. So never pass up the opportunity to interview the non-regulars - they are an experienced, hard working, goal-focused, flexible group who will stand up against any current permanently employed person.
In fact, the above argues that they are a better bet in tough times.

The Nature of The Beast

'Banks are in a dangerous frame of mind: they feel isolated, the whole system of mutual support and syndication has broken down and they are not doing what the government tells them to do.'

The words of Lord James of Blackheath, or to you and I, David James the renowned Company Doctor. Interviewed in this month's Director Magazine from the IOD he insists that in over 55 years in business he has been through 8 recessions and has seen nothing like this one.

At Christmas, a good friend of mine had a very good business, growth was good year on year, his customers seemed buoyant and he was very dismissive of how the recession could affect his business. We talked about diversification and protecting customers by offering them extended deals early but he dismissed this as he 'had never offered a discount in his life'. In February he made 5 people redundant justifying it on the grounds that the chosen people were poor performers. By the end of this month he will have made a further 7 people redundant - in total nearly half his workforce has gone in a single quarter.

Here's the rub. He isn't short of cash - he's short of sales. In a single quarter, his major customer indicated he was no longer in the market for his services and then a few more hit with the same message. Of course, he had reviewed the pipeline and tried to reason that each deal was good but he had failed to talk to his customers early and address the issue of those who might actually not continue to buy. By the time he had realised what was happening, a massive drop in sales left him with no course other than to cut costs radically.

Economic Shock

I have blogged before on the extreme speed at which this recession has hit. But there are survivors, there are losers and there are winners in the tumult. While Sainsburys reported a recent rise in sales, Marks and Spencers have just announced a 4% like for like drop - they have already announced the closure of many of their smaller outlets which had so much captured the public's eye at service stations and the like.

David James asserts that anyone who tries to expand through bank borrowing is likely to find their funding withdrawn - and this echoes concerns I raised yesterday that many small businesses are not getting access to the Enterprise Finance Guarantee (EFG) scheme as put up by the Business Secretary which made sure banks were only liable for 25% of any loss on lending. Yet little of that money has been released to businesses while banks are busy converting current lending to the scheme by offering small top ups and then getting 75% of previous borrowing covered.

It's a blatant scam and as usual the Government's implementation of what on the face of it was a decent idea has been incompetent to say the least.

The emphasis from senior business luminaries (and not people like Ruth Badger) is to look at cash-based rather than sales-and-margin-based sales. This will put a pressure on the social cycle we all want like suppliers paying on time, which has been an exaggerated problem in the last few months for many, but the advice is that we should also pay our suppliers on longer terms and conserve our cash while offering incentives for sales which bring cash in quickly. In the same breath we are advised to cut capital spend, cut people, take no risks, do nothing novel and batten down the hatches or go bankrupt. This is the advice of Jon Moulton, founder and Managing Partner at private equity firm Alchemy.

As he puts it, 'When there are seven of you and only five seats in the lifeboat, what else do you do?'

Risk in A Recession

No one could argue that Moulton's advice is not sound. In the teeth of the worst economic recession since the 1930s, it would be suicidal to start taking daft risks. However, that does not mean that there are not opportunities out there. Yesterday, I gave the example of Richard Branson seizing the opportunity to sponsor the new F1 Team Brawn who had formed from the ashes of the Toyota Team. With two decent drivers and a team, Ross Brawn has developed a car that is not only competitive at the first time of asking, but actually qualified in positions 1 and 2 on the grid and finished the race in the same order. Branson, not even an F1 geek like some sponsors, seized on the fact that there was not a single logo on the car and signed a hastily put together, tentative deal by his standards, to sponsor the Brawn cars. It could not have been a more spectacular coup for a man known as the master PR expert.

Virgin will be in pride of place at the next race, at the top of the driver and constructor tables and feted as the saviour of the team. Such bold risk taking in hard times is a priceless gift.

Business Myopia

The car industry is an example of a tragic crash in the heart of this recession. Hit by the dual cosh of lack of credit and lack of sales, production has slumped dramatically and this means that the car makers are quite literally in survival mode. Promised a £2.3bn package of rescue by the Business Secretary, none of that money has yet flowed to the companies, and across the UK it is estimated that over 800,000 jobs are directly or indirectly dependent on the industry. In the '80s, Sir John Egan epitomised Margaret Thatcher's industry boot-boy who got out and kicked the unions and slammed Jaguar back into shape after years of fattening under state control. He improved productivity by some 70%, slashed the workforce by 40% and exceeded the cash targets set.

As Egan said recently, 'For all but the grandest companies, cash will be more important than profit right now.'

John Mumford, a former BP executive and now at risk of my haranguing for being on the board of several companies, claims that companies he has worked with, large and small, suffer from what he describes as 'business myopia' - a lack of empathy with introversion regarding what is going on in the real world. I can only agree - too many companies I have spoken to recently who poo-poo'd the recession and claimed that they were having a record year, had a recession-proof business and thought people like me were 'talking up the recession', have had to lay off staff at minimum and, in some cases, tried to get emergency loans.

Mumford believes there is a 'high level of dysfunction in terms of talking to outsiders and seeing problems coming.'

Mumford also believes that in larger companies there is a level of 'group think' and that those who do not share the collective view are cast aside politically. In the past IBM suffered from what was called internally as managers giving 'Good slide' - a vernacular that described their ability to dress up the issues and results. In the aftermath of massive failure, it took a breakfast cereal executive to rescue the company and bring it back to leadership again, though never with the same dominance. Many would suggest that Microsoft could be going through the same problems, Apple did some years ago until Steve Jobs was brought back and more recently, Dell has recalled their CEO, Michael Dell, in the face of business problems.

Too often management just ignore the real world in favour of looking politically good and agreeing. Dissenters are seen as whistle blowers, pariahs or unnecessarily negative.

Company Politics Can Kill

The issue highlighted above does not have to be a large company. Medium and even small sized businesses suffer from inertia due to internal politics. There is an element of group think that suggests that no one should tell the Board or owner that he/she 'has no clothes on' and is out of touch with reality like the fabled emperor.

Sometimes it takes guts to challenge management views and get a taste of reality.

The best way I have seen this work is by staff actually talking to customers and feeding back their views. If you can combine that with some simple research about each customer, an informed report about the actual state of each customer and therefore the dependencies of deals becomes more fact than supposition.

This is vital in seeing the issues companies face.

There is no tried and trusted method as to who should do this. Sales Directors and managers who dare talk to customers about the potential of their orders arriving and state of their company are seen as 'making excuses' for poor performance often but if they can combine that with a realistic action plan then they may be able to be seen as forward thinking.

However it is done, Board Directors and executives need to take a longer, closer and more realistic view of their position and make sure that they clearly understand the implications to their future. The worst that can happen in any business, large or small, is that warning signs are ignored. Face them, act on them, communicate with everyone and tackle them.

After all, you don't want to be branded a real politician, do you?

Breach of National Security

Labour MP, Sir Stuart Bell, is on the warpath. In the wake of revelations that Jaqui Smith's husband claimed for viewing two porn films, Sir Stuart asserts that all 650 MPs' expense receipts have been put 'up for sale' and are valued at several hundreds of thousands of pounds as the interest of nosy voters rise amid the recent revelations.

In an interview on BBC's Newsnight, Sir Stuart, who sits on the Speakers Commons Estimates Committee, showed bold determination to keep facts of MPs' expenses away from public viewing. 'All of the receipts of 650-odd MPs', redacted or un-redacted, are for sale for around £300,000, so I am told,' he said. 'The price is going up because of the public interest.'

Bold Response

In a fit of pique over the fact that Jaqui Smith has claimed over £100,000 of allowances for a second home which happens to be her main family home, the fact that she pays her husband to watch films as part of her retinue and that the same 'working' husband watched porn films at that, PM Gordon Brown has boldly suggested that MPs' allowances for second homes should be scrapped.

It is alleged that an audible gasp and massive of slapping of a forehead was heard in London, followed by a prolonged sigh sounding like 'D'oh!'. The noise is believed to have come from Tony Blair's mansion somewhere near Sloane Square and nowhere near the Middle East.

It will be a move pretty unpopular with most MPs, particularly the army of Labour MPs who avidly claim expenses on second homes while having their first home less than 14 miles from Westminster. Sadly, for those whose constituencies are beyond a radius the length of London to Watford Gap are going to be seriously out of pocket. But it is envisaged they could make up the difference in allowance by pretending to cycle their bicycles each day but actually take first class on the train.

I am sure that has never been done before.

National Security At Risk

When asked who was selling the information, Sir Stuart was at the edge of his seat with excitement. 'We have a pretty good of not the person, but the source, and that is the subject of a House of Commons Investigation,' said Sir Stuart. 'It's probably a breach of the Official Secrets Act, it may be theft, but we will get to the bottom of it. In the public interest by the way.'

My sources tell me that the Justice Minister may step in and use special powers to stop details of MPs' expenses reaching the public eyes as National Security may be breached. The fact the public would actually want to know such details of what sort of freebies MPs are snorting in the trough for are full reason that we might divulge which fine wines an MP might have had while watching 'Debbie does Dallas' when they should have been casting a vote on the 42 day Detention Bill.

It is also believed that the details of MPs' favourite hotels and swimming pools may be known risking their travel schedules when visiting Brazil and sampling their local 'playful and colourful' back street culture.

Rising Cost of Politicians

The cost of the second home allowance as a bill to the public rose 6% last year, while it has been found by some committee that MPs should get a pay rise of 2.3% this year - Brown has vetoed any of his ministers getting a rise in a fit of rage at the embarrassing revelations and the fact they will get it all back in increases in spending on expenses anyway.

Of course, nobody would want to know why on the PM's recent trip to save the world that he and his team having called in to address some of the largest economies of the world that they then chose to go and see Brazil and Chile on the way back. Perhaps there were some good 'restaurants and clubs' there that Peter Mandelson knew or some special offers on Scotch Whisky at their duty frees.

MPs' Expenses are the thin edge of the wedge. Jaqui Smith is being supported by the PM even though she claimed £116,000 by designating a room in her sister's house as her primary residence so that she could claim her family home many miles away was her second home. Employment Minister Tony McNulty shows particular disdain in claiming that his second home is his parents' house just 11 miles from his apartment in Westminster.

Perhaps he should be thankful he is still in employment let alone the minister for it.

Personally, I think it would be £300,000 of bail out money very well spent if the entire 650 MPs' expense receipts came into the public domain so that we could see just what the hell we are getting for our money and how it is being abused. As for national security, that is a comment worthy of Jack Straw or Alistair Campbell. It's laughable - perhaps MPs have been downloading plagiarised documents off the web and paying via PayPal in order to convince us all that we should be fighting wars and bailing out banks.

Then we should open the lid on Assembly Members, Local Councillors, Civil Servants and the vast array of other Public Department workers who have the life of Riley, guaranteed pensions and some of the least required jobs in Britain.

I am sure we would save a great deal of money.

Monday, 30 March 2009

Be A Dragon - Get An Ego

If you want a darn good read about those annoying people who have started 'building their own brand', then flip to Jane Simms' article in this month's Director Magazine from the IOD.

I am sure we have all experienced the same as she had done - attending some self-help or business guru's online or live seminar when they start off by spouting on about how many books they have written, what companies they have created and sold, how much their life is better than ours, yada, yada, yada.

I have read many of Thomas Power's (co-founder of www.ecademy.com with his wife, Penny) articles on how the web has gone through phases and is not at the 'Follow me' stage which is represented at the nth degree by www.twitter.com and I have to say that I am not convinced. It all reminds me of those clever adverts you would find at the back of newspapers which tell you how to become a millionaire for a small sum. If you reply to them and pay the money, allegedly you would get a book detailing how to take out an advert in a newspaper saying how you can make someone a millionaire for a small sum - hey presto you become a millionaire and so does the next person ad nauseum.

Tony Blair is at it although 10 years in power, some dodgy dealings and a new job he never turns up to might be seen as a drawbacks, but he's earning nicely thank you at £250k for 90 minute speeches, £4m+ advances for his memoirs, and around £4m per annum for advisory positions at financial institutions. Tony Robbins, Deepak Chopra and many more have made absolute fortunes out of our ability to get sucked into the promise of a fantastic career, personal fulfilment and large bank balance.

Big Ego, Big Career?

But all this presupposes we have the ego to go do it. Watching the new series of The Apprentice for just a few seconds and it reminded me of all that it is bad in management - this self-belief and lack of depth which seems to be so lauded by Alan Sugar and his gurus. Former Apprentice contestant, Ruth Badger, got her own TV Show doing a 'John Harvey Jones - Troubleshooter' and going in to fix companies essentially off the back of scowling when other people were talking to make them look small or retarded. Character assassination by sarcasm and facial expressions tend to go only so far in business and mercifully I have not seen any new series of such tosh. The late Harvey Jones, meanwhile, made his name building ICI.

Jane Simms points out that Rachel Elnaugh on Dragons' Den has one claim to fame which is starting and busting the company known as 'Red Letter Days' - great concept but poor execution. Yet she has risen from the ashes with a personal brand of some kind of entrepreneurial guru. The difference between many with failed businesses and her is sheer ego, yet why would a failure like Red Letter Days be of particularly good value to others as it was so badly executed?

Ah well, that's for you to find out on one of her smashing 'Entrepreneur Courses'.

There are some who do match ego with success. Simms cites Gordon Ramsay and Richard Branson and they are good examples of well manufactured brands with real substance. Last weekend, Branson flung himself, albeit tentatively by his standards, behind the phoenix-like formed new F1 Team, Brawn. The result was a spectacular PR coup for the master PR man - not only did Team Brawn dominate qualifying to get positions 1 and 2 on the grid but they also occupied the same positions at the race finish - in the team's very first race, and with a British driver at the front. Branson has a real knack of spotting an opportunity and laying out some risk. Team Brawn was hastily put together when Honda pulled out of F1 due to the recession - how they could have done with Branson's nose for an opportunity and stuck it out.

Meanwhile, Peter Jones of Dragons' Den has won a Government contract to set up an Entrepreneur's academy ahead of many an eminent person and team who know plenty about how to teach the skills of business, entrepreneurship and success. He is a man who has made a lot of money over time and has built a fantastic personal brand of late. This is a big risk for him to take as now he has to prove beyond the puerile facial expressions on the show and fats cars that he has more then one success inside him. It will be interesting to see the result.

Personal Branding And Success

It is certainly wise to build something of a personal brand. We all do it - it's the ability of a friend or colleague to actually say what they think we are about if asked. Our brand is the mark we leave on people. You can build that up more by using clever tools like Facebook, LinkedIn, MySpace, Bebo, Twitter, blogs, and having the front to build a business around yourself. The danger always is that there needs to be some level of substance behind it all as no one likes paying for something that does not add value.

So, do as Jane Simms recommends, brand yourself by all means but make sure there is something that underpins it.

Quantum Theory - The Theory With A Big Ego

My wife and I had a fairly untypical but cerebral discussion the other day. I was reading an article about Quantum Theory (well it was filling in some time) and I tried to explain a point about its apparent absurdities when she blurted out that the whole thing was so full of its own ego.

I tried to come back with some well informed repartee or to mildly rebuke her for her lack of intelligence but as I sat and thought a moment, it seemed a very intelligent response. You have to get bit of context.

Schrodinger's Cat

Yes we all know the thought experiment involving a cat, a lead box and some poisoned milk. Until we open the door, the cat is in an indeterminate state that is neither alive nor dead until we observe it - at this point, we see if the cat is alive or dead. The idea is that our very act of observing interacts with the system and we see the result. Extending this concept to all reality, it is suggested that all matter, indeed the whole universe, is in fact in a state of complete flux and actually only takes any shape or form as we observe it. It's a difficult concept to grasp but it is the idea that if we close our eyes, the whole outside reverts to a continuous mass of energy, vibrations and whizzing particles and only forms anything of consequence when we observe it.

The act of observing changes the system around us to be something real - when we don't observe it, then it is not.

According to various uses of Heisenberg's Uncertainty Principle, the position of any electron cannot be exactly determined as the act of measuring it actually changes its position.

This is what prompted my wife's outburst. Much of Quantum Theory involves the observer taking measurements or simply observing in order to determine reality or its approximation. How egocentric is that? Why can't reality be a force of its own and we, the observers, actually form when we interact with it? It seems all too convenient to have it this way around.

I didn't like to say but obviously it is a mixture of both but it was a point well made and taken. But with all this swirling lack of reality and uncertainty around us, it is remarkable how it seems so predictable when we observe it. For instance, if I shut my eyes now, the coffee cup is in exactly the same place as I left it, I can walk 5 paces back from the window with my eyes shut if I wish and then turn left for one pace and there will be a door - the only unpredictable things will be the position and state of my dogs. I could in fact do the same thing any number of times in the next 5 minutes and nothing would have changed - in fact, the door will remain there until I choose to open it and walk past.

Reality, in my wife's definition, has little to do with the observer. Put in her succinct way, if that was the case then the world would have ceased with the deaths of Adam and Eve. Reality is more a function of time than of observers.


It's just as well I didn't read the rest of the article to her. I have always been baffled by such things as gravity and particularly lines of flux from a magnet. Such forces act over distance with no apparent intermediate medium with which they interact in order to take effect. Einstein would have us believe that gravity is a distortion of the space-time continuum and so in his view there is a medium which does affect the two bodies to produce the observed effect. I am sure there is a similar explanation for magnets.

Such effects are known as 'locality' - the concept of if I want to move an object I must apply a force to it through some medium like a stick or by throwing a stone at it. I could use a ray gun but that would involve some disturbance of elements in the air between the ray gun and the object in order to create the effect. Even hidden things like listening to the radio is in fact electromagnetic waves propagated via the air. There has to be a connection of some sort to create the chain of actions and reactions to cause the moving of my object or listening to a radio. Even if this is over a great distance, as gravity can act weakly, it still is something causing something to do something. We have to be somehow local. So if we are to get a full picture of the physical world it should be the sum of its constituents' stories.

Oh no - here comes 'Entanglement' and it trashes all we think we know.

So imagine then the concept of 'nonlocality'. This is the idea that two particles may behave synchronously with no intermediary over any distance. This is the idea of two particles being a known and precise distance apart yet neither particle has a definite position. In fact, Nils Bohr if he were still alive, would contend that we do not know the facts about such particles because there aren't any facts to know - in fact.

To ask the position of a single particle would be as meaningless as asking the marital status of the number five.

Such particles that are related in this way are quantum mechanically 'entangled'. The two particles may spin in exactly the opposite way yet we cannot determine which way either is spinning for definite. Entanglement may connect particles irrespective of where they are, what they are and what forces that may be exerted on one another. It could be that one is an electron, the other a neutron and one is located in some other galaxy.

In essence, this new field of thought from quantum computation and cryptography, is the idea of something affecting something else without touching it or any series of entities in between. I could punch your face as you read this without actually affecting a single thing between us. Entanglement has profound consequences, one of which is that poor old Einstein has once again had his quaint theory of Special Relativity broken - then, he did write it back in the 1920's so he could not have known all things at that time, fair play. But he did.

Einstein had thought of it but merely dismissed it as some kind of mathematical anomaly and so was rarely, if ever it at all, observed in reality. He, with some colleagues, produced a paper which stated that no genuine physical nonlocality exists in this world and that the experimental predictions of quantum mechanics are correct. Nils Bohr had contended the results of the paper and particularly had issue with Einstein and his colleagues' use of the word 'reality' and its definition. Whilst Bohr agreed we do not observe nonlocality, he argued its potential existence was a good reason why we should revise our view of what reality is.

He argued fiercely that we should not use algorithms and equations to predict what is a realistic picture of the world we see from moment to moment, but he argued that this shady, dark view of the world we see is in fact as good as it gets.

It was a philosophical answer to a very scientific question and Douglas Adams' vast computer had produced the answer of 42 as the response to the question 'what is the meaning of life?' Bohr had abandoned such thoughts and said forget it, this is what we see so be happy with it.
And science basically drew a line under it.

John Bell And Reality

30 years ago, scientist John Bell, produced a mathematical proof of nonlocality but some have argued that this proof has some get out clauses. Bell argued from the basis that quantum experiments have unique outcomes. But the 'many-world' protagonists assert that quantum measurements in fact split the world into an infinite number of branches representing the possible outcomes - and all different outcomes actually do occur. Frankly, this does not explain why we observe so many predictable things like the door behind me or my coffee cup - surely by now I will have gone down another quantum reality track and ended up in a world of beautiful women where I am the only man? Maybe it doesn't work like that.

Many believe that Bell started by assuming that the world conforms to local realism and he therefore proved that either locality or realism is violated. Thus the world could be local if it violates realism.

But this seems to be a loop of logic that just goes round and round in ever decreasing circles before disappearing up one's own backside.

Subtlety Is Out, Reality Is Where It's At

This quote is from a friend of mine, Duncan Read, many moons ago while sitting in a bar in Spain. Quite what he meant, we had no idea at the time, nor perhaps had he and things have not changed much since. What he was clamouring for, as many do, is some explanation of what reality is and why we observe the things we do. Why does time flow one way? Why does entropy always increase? These are not the questions he was asking but our manifestations of these phenomena actually shape the world we observe and how we observe it.

My wife and Duncan have a point - reality is indeed where it's at. The world goes on irrespective of what we observe and long after we are dead as well as long before we were born; reality existed and continues like the flow of time. Quantum Theory and the concepts of nonlocality, I think are fundamental to the make up of our world, our universe. Things go on which are far beyond our comprehension and our obsession with everything being observed by us and therefore being our only view of the world seems to place constraints and limitations on our thinking and so our views.

Locality is the theory of all that we see about us is only real as we act upon it by observing it. Einstein's theory talks of relativity, we all observe things essentially relative to ourselves. Locality is therefore reality by our own interaction with the world around us. This does not explain the fact that the door will always be in the same place no matter if I am observing it or not, as will the coffee cup. It will be in the same place even if an alien in Alpha Zog IV cannot, or has not, observed it either.

Reality exists irrespective of the observer and therefore locality cannot be the only possible explanation of what we see in this world.

Our imagination is perhaps the key to unlocking concepts far beyond me.

Small Businesses - The Forgotten Masses

Mighty big talk came from the newly manufactured peer, Lord Mandelson, regarding the great steps he was taking with banks to guarantee loans for small businesses. Just how much of that mighty big package of help that is filtering through is pretty minimal, it looks like.

Over the weekend, it was reported that banks are allowing around 120 small businesses go bust every day while large scale ones get bailed out completely. The so-called Enterprise Finance Guarantee (EFG) was set up by the Government with £1.3bn capital in the form of loans or overdrafts which would be 75% guaranteed by the Government. If you have a small business like mine, then my overdraft has been cut back and last year I was not allowed to flex it for a single month even though I had a capital bond with the same bank worth over 5 times the lending required for just a 30 day period.

Banks did not seem to want to lend even when you had cash and security at the very same branch.

The Scheme That Never Was

As with so much lately, the EFG was set up as a knee jerk reaction to the recession and credit crunch and as a sound bite to ward off criticism and show that the Government cared about small businesses while wasting billions on larger ones.

As has been the case with most things, it was mighty big talk without any action to show for it.

36,000 businesses will go bust this year according to BDO Stoy Hayward and that will cause the loss of over 150,000 jobs, and many affected by this squarely blame the banks. One firm of accountants claims that every single one of his clients who applied for a loan under the EFG had it turned down and that he had not yet heard of any firm that had been granted such a loan. Often the whole thing does not get past a first meeting with the bank.

A Sunday Times report shows that in fact many of the loans granted under the scheme are not new money at all but merely the transferring of an existing overdraft or loan facility with a small top up. In other words, banks have used the opportunity to protect current loans and get a 75% guarantee on them by transferring old loans under the scheme and making them qualify by offering a small bit more.

As has been the way in the this whole banking fiasco, it is the implementation of talk and plans which have lacked precision and diligence and then the Ministers involved either blame those below, the banks or anyone else they can think of when the schemes go wrong.

It is the attention to detail of such plans and their execution that determines their success not the assertive soundbites and words used at the journalistic launches.

The Real Facts

As this week Lloyds are planning to pay hefty bonuses to staff and executives after being bailed out by the taxpayer and despite our owning a decent chunk of them, it really does beggar belief that banks like Lloyds are letting businesses down.

The bail outs and daft schemes have had little or no effect other than to preserve the status quo and small businesses have been just left with the echoes of words from the likes of Mandelson to pull them through.

What companies need is action on these ideas. Banks should be compelled to instantly review cases for loans and answer them in a minimum period of time, certainly less than 6 but ideally 4 weeks from initial contact. Realistically, no small business puts in such a request unless it is urgent so there should be a mechanism to get bridging loans in as soon as the request is made.

To add to this, many businesses who apply for such loans are still being asked for security like their homes, yet up to 75% of the loan is being guaranteed by the EFG scheme - banks should step up to their side of the bargain and take the 25% risk themselves. In order to get faster decisions, the local branches should be given more authority to make the calls on these loans - the faster, the better. Too often such requests are lost in the system and people who know nothing of the business or bank relationship make the decisions in the ether.

Bank terms are changing rapidly and there should be far more notice for small businesses and more proactive help. Too often the first we know of change is after the first new statement is received.

Finally, it would really help if people like Mandelson and bank managers show more knowledge and understanding about the plight of small businesses. Soundbites are only a starting point - to make this work there has to be a flow of commitment and understanding down the entire process chain so that at each step and for each decision made, the goal is understood and the sympathy lies with the business concerned.

The speed at which this recession has struck is frightening and while I have pleaded in this blog with executives to plan ahead, too often businesses can turn from buoyant sales with upward growth to downward with 20 to 30% declines. For small businesses, it is hard to legislate for such incredible swings even with good forethought and so banks have to understand how usually good businesses can need a short term support to hold onto until the business can once again stand on its own two feet.

That will need proper execution of the EFG Plan and its failure flows right to the top. It's time to stand up and be counted for ministers and banks managers as business leaders will not forget how they let us down.

Forfar 0 - Dunfermline 1 billion

I have been past Dunfermline a few times at the other end of the Bridge at Queensferry but I mostly know it from my curious fascination of listening to the Alexander Gordons reading out the football results. Much more about the place I cannot tell you other than the fact its building society went belly up with around £1bn of toxic debt.

Fortunately Nationwide has stepped in to buy the good bits but the debt is all ours - we the generous taxpayer. For some time, apparently, the CEO of the Society, Mr. Faulds, has been ranting at what he calls the 'faceless mandarins' at the Treasury to try and get a bail out sorted. As the glorious leader chaired the G20 summit after his rapid worldwide shuttle tour (what a waste of a round the world ticket), the Dunfermline gave up the ghost and went belly up after efforts by the FSA to get things sorted.

And so we end up with another £1bn of liability and another bank down the toilet - the Nationwide picks over the juicy bones and life in 2009 goes on.

Chalking One Up To Experience

The good news is that all savers and mortgage holders plus the staff at the Dunfermline are safe. The bad news is, of course, the taxpayer picks up the tab once again, but we should be used to it by now - I mean, what's one more billion other than a rounding error these days?

It's Mr. Faulds I feel sorry for. He had to shout and scream at the FSA and Treasury to get them, to listen. Presumably his shout was. 'Err, hello guys. Another one down the pan over here. Help me out here, I've spent money I did not have and bought debts I shouldn't have and killed a perfectly decent company and now I want someone else to pick up the tab.'

Ach, I just is a bit embarrassing this happens under our glorious leader's nose just when he is saving the world again. It just had to be his local, didn't it?

Along with Local Authorities investing their balances in foreign banks, quite what the Dunfermline was doing buying £274m of debt from Lehmans and GMAC is a little surprising. Then having around £500m of buy-to-let mortgages and daft business loans adding up to a total liability for dumbness in excess of £900,000 is beyond most of us. The cost of the debt from defunct banks alone was way more than could have been covered by their profits so this was just simply suicidal business practice.

The obvious is howling at me. As most Building Societies don't operate in such risky ways, surely regulators must have seen an exception floating by or were they too busy being 'low touch' as per the PM's asking? And secondly, why on earth are we saving companies from simple gross incompetence?

This may be a microcosm of the RBS situation and maybe we should have applied the same process but once again, the public are shown just how poorly let down we have been by authorities and how they continue to expose us to liabilities we cannot pay for.

Science And The Church - Back to Medieval Times

We are rightfully reminded as we fight them, that the Taliban would have all men grow their beards, make women stay at home and cover up while young girls would not be allowed to attend school. It is, to ours eyes, a backward way of thinking.

Having just got back from Italy this weekend, much of the talk in the papers was about the Pope's comments on the use of condoms on his recent trip to African Nations. In direct contradiction to international policy based on medical evidence, he has directly said that the use of condoms is against the doctrine of the Catholic Church and, further, their use has nothing to do with the prevention of the spread of AIDS.

The Reality Of AIDS

It has taken a long time to get education into the developed world about the practice of safe sex to reduce the spread sexually transmitted diseases. And recently, much of the good work has waned as young people have ignored the advice and there has been a sharp growth in the instances of old favourites like gonorrhea and chlamydia, as well as a new risk in the rise of AIDS. The use of condoms to decrease internal contact and the flow of bodily fluids is common sense rather than just incontrovertible medical evidence, yet people ignore the advice as a lifestyle choice while the Pope tells his subjects to do so in contrary to the medical evidence.

Pro life campaign is something I have a stake in but simple contraception is the best method to avoid the debate - when it comes to the spread of disease, there could be no argument. Yet there is.

The statistics about the epidemic of AIDS in underdeveloped countries in Africa is truly awesome. Unless the spread is arrested, it will become the biggest single killer in many countries very soon. The education process in these countries has been painstaking and expensive but there were signs that the message was getting through and that the disease could be arrested in its onslaught.

Then along came the Pope.

The Church And Science

The Pope or 'Papa' is supposedly God's appointed representative on earth and as such is the Supreme Commanader of the Catholic Church. Many countries in Africa, and particularly those who are colonies of France, have a massive population of Catholics. So when on the one hand a doctor tells them to use a condom helps prevent a terrible disease and on the other their 'Papa' tells them not to as it has nothing to do with it, there will clearly be a dilemma. The French believe that this is not a dilemma as they believe the Pope's words have done irreparable damage in the race to stop the spread of AIDS.

On the same weekend, my wife was reading a book called 'The Company of Liars' by Karen Maitland which is set in 1348 in England. The Plague has a grip of the nation and The Church is using its authority to sort out the problem. The central assertion is that it is a pestilence sent by God and that sinners will be consumed but those with wealth can survive - you just have to go give it to the Church. The issue here is that during that time and right through until the Renaissance took a grip, The Church stifled free thought and the belief in scientific method to discover things. Dogma hit progress and they were called the Dark Ages for good reason. Scaremongering and the Inquisition held sway and creative minds like Nostradamus, Copernicus, Gallileo and many others were branded as heretics for daring to say simple things which were observations as being crimes against God.

The Modern World

There will be those that would say that AIDS is the modern day equivalent of The Plague - the pestilence on a wicked society. That may be true. Yet they found a way to stop the spread of The Plague by not knowing biology but by understanding that cleanliness and sterility could prevent its spread. Today, we know far more about the structure and workings of AIDS and still we cannot find a cure but we certainly know how to stop its spread.

For those who know the risks and then make a lifestyle choice, they are actually knowingly abetting its spread rather like driving a car while drunk they are not just a risk to themselves but to us all. For those who know less about it, it is our duty to educate them and to give them the practical items to help reduce the risks.

Trashing all that education by a few words of a dead dogma could have set the world back several years. History shows that The Church has made huge mistakes before - this is another big one. So as we stand here and condemn the Taliban for their dogma, we should look closer to home to get our house in order too.


I could never be a Politician for the simple reason that some of the embarrassing and occasionally unpleasant things that have happened to me in my life would eventually catch up with me. I dare say that most people are the same as are modern day Politicians. The difference between us and them is generally the thickness of their skin and their sheer front.

I always try to work by the adage that if I do something I would not be proud of others knowing then it's probably a wise idea not to do it. The Max Mosley issue is a case in question and that man has so much front he's going all the way to the Court of Human Rights to have his dignity bought back after his bizarre orgy was filmed.

For Jaqui Smith, expenses had seemed to become a part of family life. Already at the centre of a hubbub over expenses we now find that her husband had claimed for several films to be viewed. She is actually trying the falsely enraged act over the issue that two of the films happened to be blue movies and he got a real ear bashing.

The fact is that there is no earthly reason why she or any of her family should be claiming for watching films at all.

McNulty is one of those great characters too. One of the go getting set of MPs living just outside the limit of the expense line in London and just 11 miles from his 'office' he claims for a second home - which happens to be his parents while he keeps another in Westminster.

It is not a question of whether he does anything wrong on expenses prodecures, as they are as daft as a bag of spanners anyway, but that he has the front to say this is morally right.

Having spent a pleasant weekend in Milan, the local talk is of Berlusconi and how he has had 3 terms in office but continues to front out the dodgy dealings in his business life. Tessa Jowell's husband was not so lucky, having been one of the Berlusconi 'bag men' he took his pay off and blatantly used it to pay off a mortgage while Tessa herself unquestioningly signed off the papers. She later ditched him when the trail led back to the Italian Master and that would be no good for her career.

Blind trusts are another example of good political thinking. Peter Mandelson, a career politician with no other visible source of income, has one set up to keep his investments away from the public eye. To set up such a trust is itself an expensive business, at least £20,000 of keenly attuned accounting and lawyering to make sure 'tax is mitigated'. For such an earner though, it makes you wonder where he gets so much money to have to hide it. The Blairs had one and even though they are not allowed to be accessed, Cherie did so - to buy her young one a flat in Bristol both to accommodate him as a student and as an investment. Good thinking, until we found out she bought not one but two. And there was the small affair of the convicted conman who brokered the mortgages without a licence - and she a QC and all that. There is never smoke without fire and as a lawyer she would have known how indefensible her actions were.

The Blairs courted controversy when Cherie got paid handsomely for dinner speeches about being the 'First Lady' while touring with Tony and latterly in his role as peace envoy to the Middle East, he has visited once after the latest violence because he was too busy lining his pockets on conference speeches, adviser roles and penning the 'story' of his gifted life.

So what is the point of this article today?

Well choosing your friends is one thing but choosing your 'employees' is another. We find that Lord Myners was indeed one of the in crowd of blind trusters who had protected his wealth from public view. Mainly as he was one of the City boys and when it came to understanding how he or any of his clan would deal with Fred Goodwin and the boys at RBS, he was one of the team. We are about to hear the rebuttals from McKillip and Scott, the NXDs who negotiated the pension, and it will assert that Myners and the Government were fully aware of Goodwin's pension prior to him signing the deal.

If the Government is going to lie, do so convincingly rather than just trying to hang a single individual out to dry.

Finally, after his exhausting and wasted trip around the globe, the PM has now told us that tax havens are the next area to be targeted. I do hope he makes sure that all those around him, the likes of Glen Mareno, Lord Levy, Lord Sainsbury, Blair, Mandelson, Myners and the rest have got their books in order. I feel we are yet to hear the full Deripaska story, maybe we will soon.

I feel another set of hauntings coming on.

Thursday, 26 March 2009

Is It Time To Get Worried?

Yesterday marked an historic moment for Britain. For the first time since 1995, British Sovereign Debt was questioned when the auction to sell Gilts failed, with some saying the lowest interest in our bonds ever.

As Gordon Brown tours the world mustering support for his spending plans to fuel the economy which will rely so very heavily on the country’s ability to raise money via selling its debt, we may well ask is it time to get worried? Our inability to sell our debt is a very clear question by the outside world as to whether Britain has the long term ability to repay.

Government debt in the form of so-called gilt-edged bonds which bear a fixed rate of interest over their term are usually classified as the safest form of investment. As a sophisticated, rich and well developed democracy and having one of the major financial hubs in the world in the City of London, it is not a surprise that many traders have been shocked by yesterday’s failed auction.

Policy Worries

The markets may well have got spooked by Mervyn King’s comments and actions this week when he cautioned Brown over raising too much debt. He also was surprised that inflation had reared its head when everyone thought it would fall, which brought into question the Bank of England’s plans for Quantitative Easing (QE) which involves the Bank creating money to buy Government debt. The markets may well have felt that King’s apparent volte face would reduce the amount of bonds he planned to buy and they copied his lead.

Who knows what the real reasons may be but what is clear is that a sharp warning has been sent to the people at the top that the world is not in agreement with Britain’s policies on how to tackle the failing economy. Confidence in Britain’s future, so much part of the Brown-Mandelson mantra, is not shared beyond the realms of the Cabinet Room.

The long term effects of such a failed auction is that the cost of borrowing may rise as Britain may have to borrow from other countries or the IMF and suffer higher interest rates. Worse still, Britain’s credit rating may well get reduced, which was a rumour circulating a short while ago. The repercussions for taxpayers would be that all this massive borrowing required by Brown to fight the economic maelstrom we are in – which is now set to rise to over £1 trillion by 2013 - is that our personal burdens will rise once more. As unemployment rises, the burden on the welfare state gets heavier while tax revenues actually fall as we have already seen at the last announcement, which means that those in employment will have to shoulder more of the cost of that borrowing in the future.


In the midst of all this is the apparent lack of consensus on the way out of the mess. Brown was preaching in the US that in fact King may be right in not borrowing too heavily which comes as some relief but in the same breath he says that the answer lies in QE. Sadly, Mervyn King had started to back track on that idea as the surprise rise in inflation had caused concerns that this tactic could horribly backfire as one of the disastrous side effects of QE can be inflation and, worse still, hyperinflation – the sort of nightmare suffered in 1930’s Germany and, more recently, Argentina.

The Slippery Slope

It seems we have teetered past that edge of the precipice that we had reached and are just beginning to scramble for footing at the downslope. The next few months, possibly weeks, could determine whether we lose our balance and start to slide without control or regain our composure. The problem is that having got to this horrific situation through uncontrolled greed, we have plotted a strategy that tries to get us back to the point where it all went wrong. For this, an incredible amount of money has been consumed and pledged in order to shore up the failed system. In reality, we cannot get back to the point we are aiming for as the system failed so badly that it needs to be completely remodelled and then restarted at a lower point – we must endure the punishment of decrease in the economy before we can move it forward again, and that will take time.

The first major mistake was to step in to rescue Northern Rock by taking it into public ownership instead of taking the time to look at alternatives and form a cohesive plan to fight the crash. It triggered a succession of similar knee jerk reactions which have cost us dearly and got us nowhere.

The reactions have been followed by management of the poorest quality by the Government and their army of advisers realised by a shameful attention to detail as to how the enormous mountain of money has been spent. Fiasco after fiasco surrounding bonuses, pension payments, consultancy fees show us how failure in execution of the plan stemmed from the lack planning and foresight by the people who devised it.

I am reminded, having stepped through it this morning, of the incredible lack of planning and execution showed by an inept British Airways (BA) and BAA in the Terminal 5 launch. Bad management is endemic in business and Government and it leads to poor execution which wastes money. Fortunately for BA and BAA they recovered to have a well functioning Terminal. After 12 years of incompetence, I do not have the confidence that this Government has the ability to get out of this mess. The clearest indicator that the same view is held by the wider world came at yesterday’s failed bond auction.

The reality may have dawned that the apparent success of the New Labour Project was built as a house of cards. Fine words and clever spin have been the key factors in creating the vision of a ‘Cool Britannia’, the stuff of dreams. Reality has proved that it was only a dream. But it could have been attained if as much attention to creating the plan and vision had been given to executing it.

For that, we will all pay a very high price as we bear the cost of their failure - every single penny of it plus interest.

Wednesday, 25 March 2009

Does Anybody Actually Know What They Are Doing?

The PM is in the US to talk to the President to compare the size of their economic phallus' (phalli?) and see who has spent the most money in the bail outs on things that they shouldn't have - like bonuses, fat pensions, consultants, investment banking advice and daft conferences to whitter on as if they know what they are talking about.

In a single day, even an hour, it seems fiscal policy was turned on its head and there are worrying signs that not only does no one know what they are doing, but worse still, they are all promoting doing the opposite thing.

Knee Jerk Reactions

In the series of bank bail out knee jerk reactions like large nervous twitches, we have seen several hundred billion spent by the government and the Bank of England to try and remedy the financial mess we are in. I am deliberately vague on the figures as there seems to be no popular consensus on how much actually has been pledged, spent, put up as guarantees and loans or slung down a large drainpipe leading to nowhere. In the remarkable series of events that allowed Fred Goodwin to walk away with a fabulous pension at our expense, no minister seemed to be able to know his address or phone number to contact and tell him he was not going to be rewarded for failure. How surprising that a bunch of vandals found Goodwin's house with remarkable ease and made the same feelings known with a series of well directed bricks.

Barack Obama seems to have lost his coolness and has developed a nasty habit of tittering when answering questions on the crisis which he refers to as essential 'gallows humour', and his usual unflappable speech style has been replaced by a Gordon Brown stutter.

The two should get on famously this week as the one thing they are both getting good at is spending large amounts of money their countries haven't got.

The latest in the series of knee jerk reactions came yesterday as inflation shot upwards and not one single economist had predicted it, which does not inspire much confidence. Having already embarked on his course of Quantitative Easing in earnest, Mervyn King, wobbled visibly and there now seems to be a volte face likely on that particular bright idea. In response gilt yields shot up record amounts as investors started to speculate that the era of low interest rates may be short lived.

The rise from 3% to 3.2% in the Consumer Price Index was very unexpected - in fact falling high street prices had been seen as potentially pushing us toward deflation if anything. But it is clear that economists don't spend much time in the real world as from my tired eyes shop prices have stabilised and gone back up with few exceptions. The fire sales seemed to be over a while back. In response, Mervyn King penned a fifth letter of explanation to the Chancellor.

I hope he put pictures in it as I think Alistair Darling is having real trouble reading things at the moment.

Further, King then told the Treasury that he may hold back on spending his £75bn of Quantitative Easing that he agreed to do not a month ago. The fear that inflation takes off is one of the side effects in the theory book on this one and Merv is playing very much by the book it seems.

The combined effect of these two things then sent gilts down in price and yields up as investors speculated that the Bank would buy far fewer Government bonds than first thought which had sent prices up previously. Another unexpected result of all this tumult was that sterling rallied against a whole basket case of currencies and gained 2.25 cents against the dollar.

Opposite Views

As Gordon Brown starts his visit to Washington to basically agree with the US that buckets more spending is the only solution to this economic crisis, Mervyn King was warning the Treasury Committee that the Government should not embark on a policy of further spending to stimulate the economy and was specific that the country should not run up more debt. Instead there could be targeted measures to get us out of the mess.

The Government was quick to point out that there was no rift with King on the stimulus package. We can only assume that either no one knows what the other is saying or Brown will simply tell King what to do - no discussion.

Rumours are that Alistair Darling is sitting muttering in a corner not knowing which way to turn. It will be an interesting match when Darling meets his US counterpart, Tim Geithner, who far from retreating into his shell with a face like a slapped backside as Darling has, he has boldly stepped forward and said that he wants wider powers to deal with financial firms. He claimed that the £173bn spent on bailing out AIG could have been avoided if his predecessor had the powers to have put AIG into receivership. Darling will be shocked at such a notion with the Government having to step in to save 5 major banks falling in the UK, the first of which, Northern Rock, had a strong case for just withering.

Bungling, Incompetence and Negligence

It may come as cruel twist to the saga of Goodwin-gate that in fact the US taxpayers and not the UK's may end up paying the cost of Fred's pension. The RBS Board insured themselves against their own incompetence (what foresight they had) and the main underwriter is none other than AIG. So if the UK Government do sue Fred and by some miracle they win, AIG amongst others will have to cough up. Pigs will be flying snow to Eskimos before the Government will get a penny back from Fred.

But it has been a depressing week for our super hero leader. As he flies like a speeding bullet to several countries to bore them with his monotonous message on spending and non-protectionism, the revelations by the National Audit that after the Northern Rock bail out was done, the highly paid consultants, under the watchful eye of ministers, allowed a further £800m in 125% stupid mortgages to be handed out up to 6 months after. Even a an imbecile would ahve thought to have told Rock management the very first thing they should do was to stop such nonsense - but no the object was to 'save' the bank not to rectify its brilliant lending policies. We then had Lord Myners whinging that he was not to blame for the Goodwin pension fiasco when it was his responsibility to get it right, we had Northern Rock paying its staff bonuses and changing the terms of its loan repayments to us, a sharp rise in unemployment was announced, tax revenues dropped by 10%, deficits rose sharper than anticipated and now we have the Czech Republic becoming the third and most significant country to oust its Government in the wake of the crisis.

As each country reports dramatic bad news after bad news, it is now absolutely clear that the financial crisis and recession has gone far deeper than expected and into the general commercial markets. It is becoming fast apparent that the drop in consumption in the wider sense will not be replaced by the vast spending by central governments. The spiral is beginning to lose control.

What is most worrying is the divided opinion amongst the people charged with getting us out of the mess having allowed us to get into. It is no good turning to the Conservatives as they are struggling to keep up with the niggling soundbites and witty one liners of criticism to have enough time to have ideas on how they would go about it.

Niall Ferguson had a long and technical article in the Telegraph yesterday with his ideas on how to stimulate the economy which I did not understand but what he does agree upon, as many are realising for themselves, is that the anticipated results of pouring a vast pile of money down a drain have been over estimated while the long term borrowing requirement has been vastly underestimated.

The Tories picked up on one of my analogies from some months ago, saying that Gordon Brown was like an obsessed, broke gambler believing it just requires one big bet to wipe out all his losses. The trouble is, he is gambling with borrowed stake money, and the IOUs are underwritten by us. I think we should take a lead after Latvia, Hungary and the Czech Republic and turf Brown and all his incompetent ministers and advisers out.

The sad fact is that we don't have anyone competent to replace them, except for the guy by the fruit machine in the Robin Hood pub last night who advocated bringing back Nigel Lawson, Ken Clarke and John Major led by Margaret Thatcher - his A Team. Er, no thanks.

Go on then, Gordon, have another throw of the dice on all of us. Here's hoping.

Big Brother Is Watching You - And It Ain't So Cool

Hot foot on my article yesterday on Google Street View, today there is an announcement that the Government may start watching conversations and information on sites like Facebook. It has been further suggested that the Government will start watching emails, texts and internet contacts.

It has branded a 'Snoopers' Charter' and this time it doesn't seem to be in line with the 'Way cool' philosophy of the seemingly philanthropic gestures made by Google. Should we now start being afraid?

Is this stepping too far into this nice new technology and spoiling the party or should we start getting getting all indignant and joining the prissy campaigners who tell us our privacy is being violated?

The Snoopers' Charter

The proposals by the Government are to keep user details on sites like Facebook. The home Office claims that the information may be vital in combating crime gangs and terrorists who 'might' use the sites. The idea follows a similar proposal to record every phone call, text and email and internet visit made in the UK. Ministers say at this stage they are only interested in user details and not conversations which may take place on sites like Facebook, Bebo and MySpace.

The Government denies it is trying to intrude on people's personal lives and that they were merely trying to keep up with technology. A Home Office spokesman reiterated the view that there was no interest in the content of information but that the aim was to be able to collect communication data for law enforcement agencies to use to gather evidence and prevent things like terrorism. The same same spokesman confirmed the proposal for recording the content of emails, phone calls and texts - again saying the content of the conversations was not the target.

Home Office Minister, Vernon Croaker, whose name sounds straight out of gangland, confirmed the Government was aiming to act on social networks as they were not covered by EU legislation. He acknowledged that it would raise fresh concerns about the right to privacy and acknowledged it was 'an extremely difficult area'.

The Reaction

Facebook's Chief Privacy Officer, for indeed they have one, Chris Kelly, said that the company was considering lobbying Ministers over the issue and described it as 'overkill'. Lib Dem MP, the appropriately named Tom Brake, pointed out the websites contained sensitive personal data which could easily leak from any Government-controlled database. Pointing out the extended proposals on monitoring emails, phone calls, texts and internet visits, he branded it as 'The most expensive Snoopers Charter in history' He also pointed out that information like people's sexual orientation, religious beliefs and political views could be monitored.

A View From The Public

Yesterday, I suggested that maybe we should lighten up about Google's aims with Street View where cameras could give people looking at Google Maps the opportunity to have a quick look at the cities they may be visiting or just looking out of interest. Already Street View had received a complaint via the Information Commission (ICO) that over 200 people had been identified in the pictures causing 'embarrassment and damage' with one woman identified after she had moved house to get away from a violent partner - she was seen outside her new home.

We generally agree that Google's intentions are just to be 'way cool' and have clever and neat gadgets and applications which lighten up our lives, are helpful and make life more interesting. If they make a few bucks at the same time, so what. The same could be said of sites like You Tube, Facebook, LinkedIn, Bebo, MySpace and the plethora of social networks that exist. In general. it is all just good fun, hip and fashionable. The abuses tend to be minimal but there have been definite instances where embarrassing or possibly sinister scenes have resulted in people getting into trouble or fired at work.

The famous sporting phrase 'What goes on on tour, stays on tour' has been replaced by 'What goes on tour, goes on Facebook.'

Now the Government has stepped in and could be ready to urinate on the fun. The Government has many ways of recording who exists in Britain, from births to deaths, immigration records to electoral roles, bank accounts, tax records, school attendances - you name it, our information should be there and pretty much in plain view. So delving into social networking sites on the face of it seems like overkill.

The threat of gang crime and terrorism is very real. However, I would argue very strongly that just by knowing someone's social networking handle and profile information you are hardly likely to spot that Osama Bin Ladin has a Facebook profile and invites members to join him on his cause. I don't think it is likely that he has a Twitter handle and his latest 'tweet' says he is 'cleaning the cave and doing a little scheming before lunch'.

I would argue that if terrorists do use Facebook and the likes then they possibly use handles so that they are less conspicuous but then again I don't have a criminal brain. I would suggest that the only way to spot criminals and terrorists on such sites, on the internet in general, via emails, texts and phone calls is to monitor their conversations and try to look for keywords, phrases or coded messages in their content. Much else would be pointless - unless indeed it was a good excuse to gather information on innocent people and filter the information for other uses like how to tax us more or find out our personal information for monitoring purposes.

The obvious conclusion would be the first thing the Government would do is to take a look at all people who are Muslim. The theory goes, you see, that not all Muslim are terrorists but all terrorists are Muslims - so all you have to do is drill down. That has a minor flaw - recently the Continuity and Real IRA were implicated in a repeat of Sectarian violence in Northern Ireland - so you would have to include Catholics as well.

You see where I am going with this - already there are profound implications about our sensitive data without even trying to think of the wider possibilities.

The Future

I don't think this is about tracking people on Facebook whose profile says their hobby is drug dealing or organising false identities for terrorists - I presume if they were that open they would have an entry in the Yellow Pages. This is about another mechanism and possibly an excuse to pry into people's lives.

Britain leads they way with over 1 camera per 14 people monitoring us - higher than any other European country. So far it has not really helped to reduce crime or stop events such as 7/7 even though the terrorists were clearly seen entering Luton and Kings Cross Stations.

Already we have seen Councils win the right to turn security cameras in city centres to use to track people who park illegally. We use a good proportion of the cameras to catch people speeding rather than find people who steal cars or drive illegally. My point is that once you have carte blanche to access the information, what you do with it has endless opportunities and usually, crime solving, terrorist prevention and personal safety may be the given reason initially but actually are way down the agenda.

On the other hand, crime perpetrated on and via the internet is fast rising. Our identities, personal information, habits and most sensitive data like credit cards and PINs are regularly passed around the web. Identity cloning is becoming too easy and the criminals are far too nerdy to be foxed by security systems and protection provided to companies and individuals on the web. Ebay has been a classic area for crime with spoofs in London alone in 2006 were running at over £1m per week just on car sales.

It is a short hop to believe that terrorists are using the ability to mask their true identity and communicate via the internet to coordinate their efforts - after all we regularly round up people for nights out or birthday parties in pretty much the same way.

Vernon Croaker at the Home Office is not wrong in saying that it is a very sensitive area. It is why individuals should be well appraised of the motives and reasons why such data is needed and more importantly how it will be stored, segmented and used for the future.

The big question will always be - if it starts at the Government and law enforcement having access to the data today, which other agencies will have access to the data tomorrow?

If a Government can pluck a document off the web written by a 21 year old student and use it to persuade us that we need to invade a country then we need to be healthily cynical about what the Government is up to.
Our freedom and privacy is quietly being eroded and while we may think that technology like Google Street View and Facebook is 'Way cool' today, we may actually regret we accepted it with such open arms in the future - if we allow the Government to have its way.