Honouring Debts

The one thing that is becoming apparent about the Dubai World debt crisis is that Governments are getting tired of just accumulating more debts.

The governments of Dubai and Abu Dhabi are taking a pragmatic view on the debts at Dubai World - they basically say they will pick and choose where to bailout but creditors need to front up to their responsibility as well as Dubai World doing so. While there have been some short term liquidity measures taken by the UAE banks, effectively Dubai World is a pretty unsafe bet and no one is going to step in and pick up a full tab.

At last, some sanity. It finally shows, if a company or entity recklessly gambles on growth via continually rising asset values and creditors lend them money because they think they cannot lose as they can trade and trade the debts, perhaps the Dubai hiccup has taught us the lesson that a debt is just a debt. The even better news is that just because Dubai World is big and important, Governments are in no way going to just save it when it makes stupid decisions.

The fall out of this crisis, being downplayed in most quarters as a side show and trivial in the great scheme of lending, has yet to be really felt. I suspect that credit agencies and creditors will be taking a great deal more interest in what the British Government is doing in order to secure its ability to repay its growing debt. Hope isn't a strategy, as I have blogged before, and it is high time we saw some action on curbing and cutting costs as well as strategic spending to stimulate the economy rather than just shoring up the balance sheets of banks who risk the free cash to make more profits while no real effect is felt in the actual economy.

I still believe that Dubai is a salutary lesson once again that not enough is known about our financial system, locally or globally, and there are few safeguards against high risk products being traded.

Dubai Wobbles - What Does It Mean?

Two authoritative bloggers, Robert Peston and Stephanie Flanders on the BBC site have given the conventional view that the Dubai debt repayment blip is merely that.

They also argue that if push comes to shove then the European banks which are estimated to be exposed to around 50% of the total $80bn that Dubai owes, then they can absorb those losses well within their stride. In reality, they say a big Sugar Daddy in Abu Dhabi is on hand to pick up the tab anyway and they are just toying with Dubai.

It sort of shows just how punch drunk we have become to big numbers. This is a sovereign state - and a rich one at that - delaying loans because of excessive debt.

Hello!

Substitute any rich nation having trouble repaying their loans - and there may be a fair few soon - and you have the real picture. Countries all across the globe, with few exceptions, have vastly increased their borrowing to support the bank meltdown. In doing so, they have burdened their taxpayers with extraordinary new debts and, for the most part, they have underwritten the future debts of the entire global banking system. And we are in the final throws of a recession so there is no growth to offset these debts.

To my mind, Dubai is a stark reminder of how precarious the global economy has become and how interdependent we all are on one another. The butterfly wings beating in Dubai could have a dramatic effect on the world economy and particularly if we remain unimpressed by the magnitude of the numbers involved.

A sovereign state has found repaying its debt hard. It's a wake up call for us all - you don't need many more countries announcing the same for the world to become a pretty shaky place.

It's a real reminder to our Government - plan to repay those debts and take action now. Delay, and we could be in the same boat with no Sugar Daddy oil state locally to bail us out. It should make us think hard.

Very Sharp Reminder

Just when we were believing we were free of recession and the financial crisis was all but over, Dubai has shocked the world.

We were busy worrying how to curb bankers' bonuses and when the economy would show growth again - then we had a day of turmoil as stock markets reacted badly to the news that Dubai World, the state owned investment company, delayed payment on its quarterly debt repayments. Almost unnoticed, book store group Borders slipped into administration following the Thresher off licence chain, making a further 1,000+ people unemployed in the UK.

Dubai has enjoyed a six year period of unprecedented growth as it has invested enormously in property, both commercial and private and the market for it has been buoyant. As an Emirate state it is not blessed with a rich supply of oil but its strategic location makes it compete with Hong Kong as one of the great ports in the world for international freight transport. Dubai has been Western-friendly and inward investment has been enormous but Dubai World itself has clocked up astronomic debts of $59bn.

It's another tragic example of a total belief that asset values can only go up and that all debts can be repaid. The mind boggles to try and work out how many times that vast debt has been chopped up, repackaged and sold multiple times around the globe as part of derivative trades and credit default swaps upon which banks and their trading employees have pocketed enormous profits and bonuses.

This is a stark and sharp reminder of the folly of the global banking system. The total belief that any debt is good and that asset values will always rise has been the bedrock of the financial system that has turned into the sands of the Arabian desert. The creation of structured products to trade around these debts is like a terrible cancer ravaging the financial system and this shows how very easily the whole system can get a critical blow. This kind of catastrophic failure in debt servicing threatens to have a domino effect and I am sure there are many bank executives who are nervously watching and hoping that the oil rich Government of Abu Dhabi steps in to bailout Dubai World - Dubai has total debts of over $80bn.

There is a good reason why everyone is nervous. Dubai World is not the only entity in Dubai which owes incredible amounts of money. If the Dubai economy fails, the fallout could be felt all over the world and snag us all just when we believe we are recovering. As an eminent economist, Nouriel Roubini, has asserted, there is more bad news about debts to come and banks have not yet revealed the full picture on this yet.

Dubai is reminder of how bad things can get very quickly.

Banking Governance

Kudos to Sir David Walker who has at least understood some of the big issues in the banking sector and has proposed some major changes which he believes the UK should lead on.

However, I still do not think anyone has nailed the crux of the problem. It's all very well proposing that banks should disclose how many people earn of £1m or more and that Non Execs (NXDs)and shareholders should take more responsibility in the governance of banks but I really do believe it is naive to believe this will actually solve anything, even if it is a step in the right direction.

Firstly, disclosing millionaire earners is neither here nor there - meaningless in the great scheme of things and it reveals nothing of how a banks works, the basis of reward schemes or whether it is acting properly or not. It is a mere barometer and if anything, it advertises to peer companies which bank is prepared to pay more of its employees more money. As for NXDs and shareholders having more say, I believe there are several issues here.

Firstly, we have seen how NXDs have acted in the lead up and during the crisis. As the proverbial hit the fan and one of its biggest perpetrators was being thrown to the dogs, they still acted as if nothing was wrong in conjuring up a massive pension pay off for Fred Goodwin or re-engaging Andy Hornby on a £60k per month consultancy contract at HBOS. Because the rewards of the NXDs are inextricably linked to the profits, they are hardly likely to kill the golden goose - they are by definition already wealthy people who are there to make a great deal more money. Then there are the shareholders. Of course, their rewards are dependent on the banks' fortunes as well but there is a bigger issue at play.

The vast majority of bank shares are owned by the public but indirectly - either via the Government and its vehicle, UKFI, or via pension funds and the like. The general public owns very few shares individually. Therefore any involvement by shareholders comes as 'block votes' from these 'aggregators'. Again, both fund managers and directors of UKFI are charged with obtaining maximum value from the shareholdings so they are hardly likely to vote against making profits. Again, they are all wealthy individuals and are motivated by making a great deal which their own bonus schemes generously allow.

Finally, as the whole of the banking industry now has a safety net of unlimited lack of liability to their losses should there be wide scale failure, there is zero incentive for any of the 'aggregators' to act in any way different to the banks themselves. Indeed, even the staff at the FSA all received bonuses for last year despite presiding over catastrophic losses.

There are far more fundamental issues to be resolved here and it isn't rocket science. At the heart of the banking system lies a serious flaw and a massive liability. Upon this flaw, the global financial system has built an estimated $550 trillion of open derivative positions and a further $400 trillion of associated insurance positions - all of which are so convoluted as to be virtually unauditable. As long as banks are allowed to continue trading in such products and financial instruments, then the rewards will be massive and yet largely unreal.

Until we get to grips with these 'Financial Weapons of Mass Destruction' as Warren Buffett called them, we will always have a basic issue of governance in banks for which the taxpayer will be liable - yet we are the biggest shareholders.

More Good News For Banks

Bank executives are probably having a few drinks tonight - not just because they are earning fat profits and bonuses again, but because they have found they can continue to profiteer at the expense of those who go overdrawn.

The Supreme Court has ruled in favour of the banks in the feud with customers over being able to charge excessive fees when customers go overdrawn without pre-agreed authorisation. We have all been victim of this at some point when a cheque is late or something, we get some arbitrary sum charged with no real reference to the cost incurred or to our banking history. There seems to be no real standard charging system and then suddenly, in the same month or more, all letters and administration charges can be lumped on you too.

Many bank customers had rightly complained and taken the action to court - I can only hope they had not gone overdrawn to pay for the legal fees as it has taken years to get to this point. But the Supreme Court was swift and damning in its judgement, allowing the banks to effectively charge what they liked so that they could offset the cost of those who do not incur charges.

Banking is one of the few services that you have little or no control over the charging structure and the costs can be as arbitrary as they like. It is now case law that you cannot complain and get compensation - they are allowed to do it.

Given the fact that banks are extracting front and back office staff at an alarming rate, the £2.3bn they earn annually on such fees are pretty essential to their well being. It seems a little churlish that banks would behave this way after all our incredible generosity in bailing them out - some of the bailout we did not even know about as £61bn was secretly stumped up to 'save' Lloyds and RBS last year and the public were not informed until this week. What else we don't know about may well have been swept under a very lumpy carpet.

It seems taxpaying bank customers are being shafted at both ends. We pay excessive fees for going overdrawn and if the banks go 'overdrawn' we totally underwrite their losses. I am sure that in isolation, the Supreme Court had no real choice but to exclude the fact that taxpayers rescued the banking system but in the cold hard business world once again it just goes to show what a dreadfully poor deal taxpayers got for its largess in saving the banking system.

Politicians may think it is petty to negotiate on such trivia but this is really at the heart of the matter - it is everyday people who simply cannot afford to prop up banks when they fail who have been preyed upon by banks with excessive charges. If the individual or collective taxpayer had had the authority to negotiate the bailout deals rather than ministers, civil servants and investment bank advisers, then the shape of the deals, if any would have been agreed at all, would have been very different. If we were to put that much 'skin in the game' we would have expected something in return. Instead we see high risk plans, excessive wages, written down debt being traded again and a new bonus extravaganza.

Lord Myners and the rest of the crew who negotiated all this rubbish were probably far too wealthy to be worried by such details but that was the essence of the whole lackadaisical approach that led to Fred Goodwin walking away with millions when his strategy had actually wrecked a great company.

At a time when the whole country seems to have gone mad enough to want more of this Government, this ruling was a timely reminder of how badly the whole bank bailout affair was handled.

Customer Billing Service?

It was comforting to hear the patronising tones of British Gas CEO, Bob Bentley, on the radio this morning sounding as if he has had an epiphany when it comes to billing customers. Bless him, he finds the bills his company issues complicated to read and therefore has some empathy with his customers.

Rather nicely of him, he has now decided that 'Estimated Bills' should be done away with. Instead, customers can call in or text their latest readings with only the odd spot check to keep them on the straight and narrow. How very thoughtful of him.

It sounds like this is an enormous innovation in customer service but it hardly moves the needle in reality. Sure, we can now get more accurate monthly or quarterly bills and so smooth the payments better and not have those shocking bills periodically when the utility company gets around to read the meters they own and run, but are these companies providing a real service?

True, they provide gas and electricity to homes - thanks. But in most cases, like the phone company or milkman, they do not provide accurate billing regularly and without customer intervention. The onus, in most usual instances, is on the company providing the service to provide an accurate record and bill of the customer usage and to make payments easy. The meter is provided by them and for them to read, so life could not be much easier for the utility companies really. In fact, these meters have not changed in tens of years despite all these utilities posting nice profits; the billing technology and base mechanisms have not been updated for ages and the onus is right back on the customers to intervene and question bills, estimated or otherwise. And when you do so, boy, are you are in for problems as they do not believe a word you say - the subject of an earlier blog.

It is remarkable in these modern times that at least an upgrade cannot be fitted or new meters put in which negate the need for them to be read by humans at all. It may cost money but I am sure the long term return would be there if they charged just a tiny amount per quarter for the new meter. It isn't rocket science - it's actually, in my opinion, their responsibility to do so and the racketeering we have seen on utility bills over the years has, I am sure, caused customers to pay significantly over the odds for their utility bills. I know that is likely to be the case as it happened to me.

And here's the best of the new billing companies - Transport for London (TFL). Yes, they introduced the Congestion Charge for Central London with a state of the art billing system that required the customer to pay and it was strictly cash on the day or now up to 24 hours later - you miss, your responsibility even though you never asked for the whole thing. It is important also to draw a distinction here - the Congestion Charge is not a service, it's a straight local tax which is entirely incumbent on the individual to pay. If you were a sporadic user of the roads in London or, heaven forbid, a visitor then you were basically stuffed. The onus was on you to know exactly where the limits of the zones were and how to pay - and it isn't that simple. Until recently, the website had an issue with the latest version of Windows - which they denied - that stopped you paying online. But if you made a simple mistake or forgot for 24 hours, the penalties are unforgiving and more than those for assaulting people.

It's draconian and stupid. The technology was put in there from day one to capture images and number plate recognition. They have always had the capability to set up automated billing and it is an absolute crime that they did not implement this from the start.

It is the basic premise - you want to bill people for using roads, then you set up the system for them to pay without even having to think about it. It's a tax in all but name and, boy, do we know the taxman likes to make sure he or she gets her money without the hindrance of human intervention. For TFL, it was always the case to be able to get as many penalty charges in as possible and Capita, the system designers and operators, are superb at making money for old rope.

The day will come when all companies who want to charge for their services set up billing systems which make it simple, easy and automated for customers to pay. I think it's a basic responsibility for being in business.

Debt - The Business Viewpoint

As the Government hit an unpleasant new record on borrowing in October taking borrowing to £175bn for the year, it seems that the mantra is that debt is good.

Meanwhile, out in the world of business, we seem to think the opposite. In the building sector, companies like Persimmon who were particularly debt laden at the start of the recession have slashed their debt by 58% or £960m. Other builders like Barratt and Taylor Wimpey have followed suit but on not such a grand scale.

But across business generally, borrowing is down - £4.6bn down in September, sending the 12 month growth rate to its lowest level since 1999. RBS has over £27bn of approved credit not being used while other banks have a similar situation.

The situation runs at loggerheads to the Government viewpoint as Alistair Darling marched smartly into the banks in July and told them that he was very angry about them denying businesses credit. The simple fact is that businesses are reining in their borrowings in and not asking for more credit.

Here lies the gap between Government and business thinking. In a recession, businesses look to conserve investment as there are fewer opportunities. It's all very well famous entrepreneurs like Lord Sugar telling us the recession is non-existent and opportunities are high, the reality is that few companies thrive in a recession - and it isn't for the lack of trying. The markets are down - that's a simple reality and businesses have to cut their cloth accordingly. They have conserved their cash and credit lines for the upturn and that is good business sense.

While Friedman may be the mantra at the Government level, just wishing companies to grab credit and spend it for the sake of it is not just wishful thinking but it shows a complete lack of business acumen on behalf of ministers. Businessmen understand that profitable sales drive their business and without them they have to make sure they can survive until they increase. Sure, some companies may miss the odd opportunity for growth in a recession but it is the wise businessman who survives.

I may not agree with David Cameron's total argument on the economy but I do believe that you cannot solely wish for growth to solve this country's debt problem. You have to make cuts - that is a reality. And the longer we leave it, the worse it will get.

What I would like to see is an emergency budget that identifies immediate savings through slashing inessential costs, wastage and inefficiencies and then puts more spend directly into areas that will help boost business such as cutting tax in the short term and offering subsidies to firms on wages to keep people employed.

The two different mindsets are dangerously polar and too much money has been sunk into banks in preference to general business for zero return. Businesses understand the need to get sales before they invest - the Government is going down completely the wrong direction by wishing only for growth when they should also be driving down costs.

It's a recipe for disaster in the long term.

Bring on The Flexiforce

Today is the start of the CBI Annual Conference and there is a lot of emphasis on change - the idea that the recession has taught us some big lessons about how to adapt to a more volatile future.

Discussion points include how businesses (and remember the CBI represents 240,000 of them in the UK) should partner with their competitors in order to prevent a 'Domino Effect' of the recession bringing down multiple companies rather than just a few weak ones. This will be a bitter pill for many business leaders to swallow and could we have prevented crashes in the UK if Woolworth and Poundstretchers had teamed up? I don't know but it's an innovative and lateral concept.

One area I have blogged on before and is close to my heart is the concept of the 'Flexiforce'. The idea that companies should have a core set of permanent employees and then bring in resources to do specific tasks as and when they need them. The concept that I have referred to as 'Putting the power where it is needed, when it is needed'.

Often we think of this as temporary staff filling administrative holes but I am thinking more about getting in specialist staff to attack new or short term opportunities when the company lacks experience in the specific area. For example, it may be staff to help drive web presence or advertising, telesales people to try and get leads or sales in a specific market, experienced field sales people for a target market or even project managers for tasks. The point is that such resource may be expensive to hold as permanent employees but can be viable if they can be switched on and off when needed - without onerous long term contracts and employee issues. Pay as you go resource, if you like.

To some extent this is what I do but the reality is that there is now a big pool of experienced resource out in the market who are flexible, capable and ready to fill the gaps where needed.

As we emerge from recession, there will be great opportunities to pick off and there has never been a better time to consider the advantages of the new style of 'Flexiforce'.

Bah, Humbug - Christmas Is Cancelled

It is the time of year for Christmas parties at companies. The economic climate as well as the weather, is not good. Will you be having a party this year?

It’s the annual event when the strangest things happen. A normally mild mannered and conservative boss has a few too many and is dancing with his shirt open on a desk with the pretty girl from reception while, in some stationery cupboard a sales representative is introducing the finance director to more than his forecast. Paper plates of food, streamers and half empty bottles are everywhere, lipstick over every collar and well worn branches of mistletoe lay strewn on the floor like small stones laying out the telltale trail to more lewd scenes.

It has become customary in times of success to widen the party from the office to restaurants and even hotels and the Monday after has nothing to do with work but is an hilarious catch-up of who did what to whom and where. The office party has elevated to the company party and it is an annual event which everyone looks forward to, even stuffy managers, as it is the one time where most rules are abolished, hair is unanimously let down and no one worries about the bill after as many companies vie to see how many places they can be banned from over the years.

This year is different - although I was heartened to see at the Grosvenor House last week a very dignified black tie affair going. Then again the City is back in good shape, but let’s not go there to ask who is funding the party. But I have heard many companies will be reining back this year and for some, Christmas will be cancelled.

Christmas parties are one of those galvanising events when a huge proportion of the company ensures it can be there even if they have conflicts in their diary. It’s a sense of family, of community and it is a time to bond – often in more ways than one. From the company’s perspective it is a time to thank everyone and be happy despite the conditions. So is cancelling Christmas a good idea if the conditions are not good?

In actual fact it isn’t a good idea to cancel Christmas. There can be some awful things happening, even redundancies and cut backs, office or factory closures, and while displaced employees may think it is crass, it is really important that those who stay are thanked for their efforts and that the company opens its doors to the family it has. The power of bonding, however deep that gets, is a massive motivator. A great party is a huge stake in the ground for everyone to say that there are 'in it together' and that at one time in the year, hierarchies and titles are pretty much pulled down as the emphasis is on fun. The effects of booze can be a great leveller.

If the company does not have massive funds in play and is in the process of cutbacks it can work to its advantage by ring-fencing some money for the annual party. What more powerful message can be derived by saying, ‘We may be doing badly and making cuts but the company is not going to miss the opportunity to thank everyone and have fun.’ It could be a time, just before the whole thing descends into chaos and debauchery for the CEO to say just that.

Another point is that if the company is truly scraping every penny together to stay afloat, often the staff will chip in with their own money as long as the company makes a gesture – the party is something that everyone values and believes in and can be more symbolic if left to whither. Even a scaled down party is important for everyone to feel that sense of belonging. The preservation of culture can often cost far less than you think.

I hear a lot from companies that parties used to be debauched and involve incredible high antics and that as the company has grown they have calmed down. This is nothing unusual – companies grow and mature and it is a barometer of how far the company has got as to how the party changes. Many companies have a single party and as they grow, it splits up into subsidiaries and departments – it’s a sign of progress.

I would urge all companies who have thought or are thinking of cancelling Christmas, to think again. A single party can be your stake in the ground of defiance of a bad economy and market – it says, 'You will not be daunted and that everyone is in it together'.

My word, you can almost hear the speeches now stirring up the staff and getting them to fight on the beaches, wringing chicken necks or whatever - just before the MD is found in the cupboard with that aspiring manager from HR.

Excellent.

Irrational Decision Making

Emotional and social factors are rarely taken into account when developing ideas on economics. I just read a great article by Professor James B. Duke on why they should be taken into account.

Which camp do you fall into after the economic crisis? Will the crisis change your buying habits or will you change? Here's the conundrum - some will say that because of the crisis they will no longer have a big mortgage or have such huge credit card debt. Then there will be some who think that they have saved for years and now see their savings depressed in the crash and they might think that they have missed out as their purchasing power has declined over time - perhaps they might spend more rather than save for the future because in reality, they haven't saved anything.

In some respects, this is the dilemma our economy faces. We are creatures of habit and so as the economy recovers we will probably revert to type and spend more - but until we see it recover we will more likely hang onto our cash believing that we may be at risk due the economy. It's the sort of circular argument that economists have tried to break by advocating Government spending and Quantitative Easing (QE) to give the economy a 'virtual' boost as it is money we don't have. Economists believe that the market will pick up but they lack the ability to factor in the human emotional and social dynamics which will actually play an important role in any recovery.

Here's an experiment which sort indicates this. Two players are given £10 each. Then player 1 is given a choice - give player 2 their £10 and player 2 will give player 1 half of their money back - or player 1 can keep the £10 and go home. Player 2 has the choice of keeping the £10 they have and the £10 they are given so they can leave with £20 or indeed give half the money back to player 1.

Then a nuance is added, as player 1 gives £10 to player 2, the £10 is quadrupled so that player 2 actually receives £40 and then has £50 in total. Player 2 has the choice of giving half back (i.e. they both finish with £25) or walking away with £50.

Now the rational perspective is that player 2 will never give any of the money back so the prediction is that player 1 keeps the £10 and goes home because they do not expect any of the money back. However, human nature appears to be more trusting as in the experiment it was found that there was a good chance that player 1 gave the money to player 2 and that player 2 would reciprocate and give half their money back. But the more interesting aspect was that if player 2 walked away with the £50, then player 1 is invited, having lost their £10, to give £1 to the experimenter and for every £1 given, the experimenter takes £2 off player 2 - so give them £2 and they take £6 off player 2 and so on. Rationally, why would player 1, who had just lost money, pay more money just to see player 2 punished? The reality is that people often do exactly that - spending money to effectively express revenge even when revenge is irrational.

This is a trust game and it mimics exactly what we have been through as investors in the last two years. We have ploughed money into investments and pensions in the past and we expect fair play from the providers. Now that these investment companies and banks have blown all the money and expected us all to bail them out, our trust has been broken as they have effectively walked away with the 'experimental £50'. Consequently we feel betrayed.

Professor Duke asserts that this trust needs to be rebuilt and it means that we have to get some understanding of what is going on in order to invest again. He believes there should be new regulations, more transparency and removals of conflicts of interest in order to rebuild our trust. But perhaps the most basic of human nature is at work too, and I know I really empathise with this, we also want to see the perpetrators to feel pain too.

I have to say that I am in that camp that says I really resent that I have been asked to bail banks out without seeing hardly any of the executives and traders who caused the crash suffer - in fact, we are griping and arguing on how to limit their pay rather than stopping them trading. The reality is that even if we attempt regulate their bonuses with laws that in practice cannot be applied they have not suffered for what they have done.

Perhaps this is one of the reasons why the recovery is a great deal slower than anticipated and it is why our Government consistently miscall that borrowing they need. One thing is for sure, the trust of every day people has yet to be repaired over the banking collapse and I, for one, am still not comfortable about paying for other people's mistakes and greed - now or ever.

James B. Duke is a Professor of Behavioural Economics at Duke University, North Carolina and is the author of 'Predictably Irrational'

'I'm Micky Mouse, You Know Where To Find Me'

'I'm Micky Mouse, you know where to find me,' is allegedly what Mr. Mouse said after damaging another motorist's parked car in a street in Dulwich last July.

It was further alleged that not only did Mr. Mouse leave the scene of the accident without leaving details like his address or contact details, but that he also was using his mobile phone when the accident occurred, which is an offence. Mr. Mouse vigorously denies using his mobile phone while driving and insists it was simply someone mistaking his white gloves against the background of his large ears.

A spokesman for insurance company, Aviva, a Mr. Bruce-Alice Cooper-Willis, said, 'Mr. Mouse really needed to have left his details with the unfortunate person whose car he had damaged. After all, just because he is a famous rodent it is not incumbent on the person to recognise him - he could be pretending to be Micky Mouse but was actually Roland or Reckless Rat or even Stuart Little, how would our client know? My client may have been a foreigner visiting or an illegal immigrant who may not know that Mr. Mouse works at Disneyland. Besides, Mr. Mouse's employer might have objected to handing out Mr. Mouse's private address which is of course required to pursue the insurance claim.'

Some have described Mr. Mouse's actions as arrogant and full of his own self- importance, some say it was flaunting the very laws he helps make. When asked what he had for Christmas, Mr. Mouse replied, 'A Harriet Harman watch.'

2010 - A Year of Hope?

At least there is a broad consensus that growth is returning in 2010 and the even the Organisation for Economic Co-operation and Development (OECD), which has traditionally set a gloomy outlook, has indicated next year should see a strong rebound with China benefiting most while the outlook for the UK is good too.

In revising its forecasts, the OECD has predicted that even the UK will perform better than it thought previously which must be welcome news at last for a beleaguered Alistair Darling. October was another farce in terms of predicting borrowing with a record rise in our Public Sector Borrowing for a traditionally strong tax month of £11.4bn, pushing this year to date to nearly £90bn.

The main 'head winds' to growth, as the OECD calls them, will be unemployment and our public finances - the two areas where this Government has performed poorly. October was a dire month for both, the borrowing figure showing finances are nowhere near under control as we dedicated yet more to bank bail outs, while in turn banks announced major swathes of redundancies. Just when the news needs to be getting better, October could not have been worse all round, particularly as we found out that were still officially in a recession.

Reports in some papers today talk of a 'Black Hole' in our finances which is affecting our Government's debt calculations while others talk of unemployment rising to 3m in less than a year as the full repercussions of the recession are felt, dragging as down as we recover. The Queen's Speech was depressing from three aspects - 1) we missed the opportunity to get action on MP Expenses, 2) we got some pretty ill thought through but headline grabbing initiatives on care for the elderly which seemed to favour only one sector for some curious reason and badly at that and finally, 3) we got no action on how to solve the public finances.

This latter inactivity will cost us dearly on our road to recovery. Yesterday, I blogged on 'Hope is not a strategy' and clearly the message falls on deaf ears. Hoping to cut the budget deficit by half and then seeing the forecast for borrowing missed within a day for the previous month just shows a hopeless lack of understanding of our finances and a monumental hubris about what needs to be done for the future. While the strategy of spending is generally accepted as reasonable, surely we must be focusing on where we can make cuts and efficiencies so that we try to at least cut the deficit now to have any kind of hope of meeting the increasingly delusional target of halving the deficit by 2014?

The danger here is that as we recover, we continue to spend recklessly and find cutting hard - in fact, the temptation will be to believe that because growth is returning there is less need to cut spending. This will be a huge mistake.

The public finances has been for the last 12 years, and will be for the next 12 years, the most critical part of a Government's strategy. We have wasted vast tranches of money in the belief our economy was 'robust' and the temptation will be to waste more because we believe it is recovering. Getting our National Debt down must be the number one priority going forward and we are already way behind in our action plan. The last few months of this Government is already laid out in terms of its plan and not a single action along the way is designed to cut the deficit.

With that kind of leadership, what hope have we of meeting goals and reducing debt by 2014?

This is already, and will be for the future, a massive millstone around our necks as taxpayers. Add that to our limitless liability for bank losses, of which there could be more massive losses in 2014 as Private Equity Houses default on their loans, the future is actually not as bright as we would think.

Perhaps Brown has already worked that one out and has already 'lost the election' in his mind and so is actually preparing the ground for a ruined economy to be handed over to the next poor incumbent to make their tenure really awful.

What a nice way to thank John Major, who did precisely the opposite for him.

The Ticking Bomb

According to Guy Hands, CEO of Private Equity House, Terra Firma, the good days of making a fast buck on leverage buy outs are over. It's no bad thing.

But the really bad news is, as the global markets have gone down, Private Equity Houses have gone into what we would understand as negative equity on our mortgage. As they scramble to renegotiate loans, of which some £420bn are due in 2014, banks are giving them the stonewall treatment as they do not want to increase what are now looking very shaky lending positions.

It's a ticking bomb - if the markets do not recover sufficiently for the Private Equity Houses to sell their leveraged assets for a price which can repay their loans and interest, then they face total ruin. Imagine then what clever companies that have bought toxic debts like 'Protium' from Barclays are facing long term.

Hands asserts that by not renegotiating, banks are going to halt recovery. Once again, it seems that such companies believe the markets and economy revolves around their own ability to make money - as if we all owe them something. The fact is that Private Equity is still doing well in the main and over the last 5 to 10 years, investors have made billions by leveraging huge loans for little capital outlay - the risk taking has been enormous. As with all gambling, you will lose at least some of the time and with such high stakes, one failure can wipe you out totally.

Talking of ticking bombs, public sector borrowing in a typically good month for the taxman was up by a record £11bn in October. Once again, the Treasury miscalled the amount of borrowing as corporation tax collected was a good deal below expected. It seems that the old calculators once again let the Chancellor down and makes Gordon Brown's pledge to halve the budget deficit by 2014 a complete joke if he can't even get it right one month at a time.

Finally, the good news is that Tony Blair's simpering face will not be seen as the first EU President. Thank God for some common sense.

Election or Groundhog Day?

Having presided over the build up to worst financial disaster since the Great Depression and sent Britain to fight at least one war of dubious legality, Tony Blair may well be elected today as the inaugural President of the EU.

Like a day out of the film Groundhog Day, we will have the simpering, patronising smile back and all that self importance to go rubbing shoulders with the other world leaders he so craves the attention of. His supporter, David Milliband, believes that Blair would have a that wowability and his motorcade would stop people in the street as he swept past. As he stepped into the White House, I dare say Barack Obama would say 'Tony who?'.

Since his passing of the baton of power to Gordon Brown which was more like passing a fizzing bomb packed with horse manure, Mr. Blair has been busy lining his pocket with book advances, after dinner speaking, non executive directorships and his Faith Tour in which he no doubt tells us that God supported his decision to send troops to Iraq even though he barefaced lied to the British people about the reasons why he did that. In the process, Blair has amassed a £12m fortune while sparing little time to devote to his Middle East Envoy task.

Far from being Groundhog Day, this could be Nightmare on Elm Street as Blair returns like Freddie Kruger to haunt us.

Hope Is Not A Strategy

'Hope is not a strategy'. It's a bit of a truism which you can apply to most things from business to politics to sport and lots more. I heard it today in a meeting and it was attributed to the founder of Tech Data inc, Steve Raymond. I like it as a little maxim.

It's immediate application could go on Gordon Brown's speech in the Commons today after the Queen's Speech. In the the outline of some 20 or so bills - the lowest in a Queen's Speech since the 40s allegedly (even John Major squeezed more legislation through in 1996 with a smaller majority in the build up to his loss in 1997 to Blair) - Brown made a legal pledge to halve the budget deficit by 2014.

When pressed on this almost irrelevant attempt to woo the public, he said that his master plan was to tax higher earners and remove the tax relief on pensions - two things he accused the opposition of not supporting. As if those things alone would wipe out the tens of billions required to do what he has pledged. The fact is that he will have to make a whole raft of serious cuts and raise taxes on a wide scale in order to achieve what he has 'committed'. Of course, he will carefully manipulate the agenda so that little gem never gets into law, but it's the legal equivalent of making a statement at a trial, being over ruled but the statement is remembered regardless, having been made in front of the jury. The jury, in this case, is us, the voting public.

Frankly it was a desperate gesture by a desperate man in a desperate Government. Incredibly, and not for the first time, he laid the whole banking crisis on the door of the Conservatives who he claimed had called for less regulation over the last 12 years. Therefore, the incredible tab to pick up by the public was to be blamed on David Cameron. The PM seems to think that despite the fact he was Chancellor at the time and then PM, it was the Opposition that ruled the country. It was a bizarre statement by a seriously deluded man.

It seems the only strategy left to the PM and his limping Government is hope. And hope is not a strategy.

I only hope that the general public see through the outright lie and the fantastical claim the budget deficit can be halved. Then again, I sometimes fear for the sanity of all of us.

Cut One's Budget Deficit

Amid a ceremony which might have been required some 300 years ago, the Queen will today effectively be the puppet to Lord Mandelson and read out what he thinks the General Election will be fought on next year.

There will be the grandstanding and total impracticality of a bill designed to curb bank bonuses which you can almost guarantee that it will not make it to law but if it does it will just cause chaos because it is so ill thought through and irrelevant. Then there is the superbly named 'Fiscal Responsibility' bill which will be a Government pledge to cut the budget deficit by half over four years.

The chances of the latter making it to law in the 70 or so business days left for the existing Parliament are virtually nil but should it actually get enshrined in law then it will probably be meaningless. By 2014, it is predicted by authorities like the IMF that Britain's borrowing will be over 90% of its GDP. The only thing that could decrease the budget deficit by half would be an incredible upswing in the UK economy so as to wipe out the requirement for further borrowing over that period - the sort of suicidal growth the country does not need or swathing cuts to public expenditure which the Government tells us it will not do.

Other than that, the whole thing is a complete con trick to make you think that the sad bunch has an iota of knowledge about what it is doing. That has been decisively been proven to be not the case in the last two years, though arguably for the last 12.

There are important things that need to be attended to between now and May of next year. Yet again, we have a missed opportunity to get to the heart of some the real problems in Britain for the sake of leading us down the vote decision making path as early as possible. The opposition are up in arms, maybe be rightly, as they don't get the same opportunity. But the howling shame will be that, despite Harriet Harman's lie the 'most' of it will be come law before the election, hardly any of it will actually get on the agenda to become law.

We now have one of the Milliband's spouting off to tell us that we will hang about in Afghanistan until the Taliban are no longer a threat, condemning our Armed Forces to an interminable new Northern Ireland - a tour of duty no one will want as it is where an unseen enemy can take potshots and hone their killing skills on you without much you can do in return. Such a vague strategy has been at the heart of the issue - what is it we want out of Afghanistan as illegal drug production is at a peak, the violence is getting worse and the democracy there - which we sponsored - is a sham amidst a corrupt regime?

The Queen's Speech is about as irrelevant as the content of it - the only important thing to note is that she and the Commons will be summoned to Mandelson's feet in the process.

Debt Is Good?

Hey, if bankers can make billions out of trading debt then every penny we clock up as a nation must be a good thing? Right?

Really, we owe £825bn as a nation and we must be getting richer if we borrow more, according to the rules of bankers - so borrowing a record £175bn more over the next two years must actually be a good thing. No need to tighten our belts, rein in the spending, cut costs, make efficiencies - perish the thought. Spend as if there is no tomorrow, because debt is seriously good.

Well there is a minor flaw to the logic. We know as individuals and consumers that we can borrow and borrow thanks to the plentiful supply of low cost credit using the above logic. Then the party can come to a shuddering halt. As if someone has noticed a small turd in the bath water or that the emperor is actually wearing no clothes, someone always realises that your ability to service the debt gets in the way of a good time. The debt suddenly becomes a millstone around your neck and for consumers that can mean a lot of hardship, possibly bankruptcy in the extreme. Banks can be merciless if you cannot pay up, as we know, yet when they get into debt, we get to pay for it. An odd story but that's 'Big World Economics' for you.

While our Government continues to spend as if there is no tomorrow, we ordinary folk in the street know that it cannot go on - just as many of us realised that the rise in house values had to collapse at some time. Too much debt is a nightmare. We know that, yet we are not the equivalent of financial 'rocket scientists'.

It seems the public know more about the current national situation than the ministers at the helm - in line with people at the IMF and other bodies that look at Britain as growing pile of sewage on the world seas when it comes to borrowing money. We borrow and borrow yet we make no long or short term plans in which to pay the money back other than believing we will win phenomenal growth at the next throw of the dice or that the economic recovery will take care of all that we need to repay the money. It's like an executive asking the bank for a loan as the business is losing money but makes no modifications to his or her business because they believe success is just around the corner when it hasn't been for six straight quarters.

Put in those terms, Britain is heading for a financial disaster. By all means follow the creed of Friedman but there comes a time when you have make cost cuts as the situation will start to spiral.

A survey of the public agrees - so it is not the population of this country that wants to keep clocking up this debt. We have to pay for it in taxes - the interest bill by 2014 will be £60bn, the size of the NHS budget in a single year - and contemplating it scares the heck out of us. A BBC poll suggests 59% of people would prefer to cut spending rather than have increased taxes. Almost half of those surveyed (48%) also believed there should be a pay freeze in the public sector - the reason it was only half, I suspect, is that the proportion of jobs in the public sector must mean that statistically half the people who were surveyed that work must be in the public sector - it's a position which itself is a time bomb. Bureaucracy and civil service should be the first big area to get the knife, there are just oceans of people doing little of value to this nation other than occupying a seat and consuming tax pounds.

31% of those surveyed reckon the pay freeze should for two years - welcome to the world of sane thinking. The good times, as the public know, are over.

Here's a thought, over half the people reckon that the highest earners in the public sector should take between a 5% and 10% pay cut. During the entire recession and credit crunch, the Sunday Times Appointments Section has been chock full of public sector senior jobs with huge salaries - far greater than the private sector for similar jobs and with gilt edged pension plans and benefits. It seems as if the public sector has been booming while business has experienced reality.

Of course, you have to get the priorities right - the Armed Forces and parts of the NHS should not endure some cuts but there is so much wastage in this country all the way to the top that thinking you have only to cut all salaries is the mindless way of viewing things. It's like us cutting spending on training reservists and then sending them to fight the Taliban - doing such things are stupidity in the extreme but increasing the pay for MPs is exactly the same. You have to look at things from a value point of view. Increasing the pay of a CEO at an NHS Trust gets you no value while increasing the wage of a nurse or hospital doctor does. It makes you shudder when Labour introduced the manic scheme for GPs that increased their pay overnight by a huge amount for nothing extra only to find they had made a gross mistake in calculating how much they actually worked to qualify for their money.

This whole Government tenure has been one of laissez faire management of finances, policing and immigration as examples and now, as we contemplate the abyss of massive and unmanageable public debt, they continue to spend on stupid things like MoD and FSA staff bonuses when the country is on its knees while cutting spend on Armed Forces and frontline weapons while trying to fight two wars.

The penny has not dropped in all quarters yet as Glasgow North East showed - but at least this survey shows we are finally getting there.

Banks Sorted - Move Along, Nothing More To See

A simple podcast and bit of TV interviewing and finally Gordon Brown and Alistair Darling have brought the banking crisis to its conclusion.

The final solution is the FSA will be given the authority to tear up bankers' contracts if they feel they are excessive or reward high risk activities. Makes you wonder why the FSA would do that after sitting by and watching the last crisis unfold last time and doing not a sausage about it - in fact, receiving bonuses themselves for their good work at the time. Indeed, to a person, the same staff exist at the FSA so we can expect this new, draconian behaviour to really work. Sure.

Along with a few gems on higher capital to be kept by banks, Gordon Brown confidently announced in his podcast that "We will ensure that the banking crisis we have experienced over the last two years should never again come at a cost to the taxpayer".

The finality was awesome - the banking crisis as we experienced it will never happen like that again but if it does we will never have to pay for it the way we did before. Of course, if you believe that then you will believe anything and vote for a landslide Labour win at the next election.

Much more to the point, long before we look at why Brown's comments are not true, we should be asking why did the last crisis cost so much. Brown tries to tell us that as recessions go we have not fared badly on unemployment and repossessions. I think sometimes he must be reading different reports than the rest of us as unemployment is now higher than at any point in the last 12 years and if you add those who have been on long term benefits for whatever reason, then Britain is at its worst in terms of Welfare strain for a long, long time. As for repossessions, when those who have opted for the deferred payment schemes and when the interest rates start to pick with those in negative equity, it is arguable that we have yet to see the full effects of the housing crash.

As before, Brown seems to think the financial situation in Britain is far better than it really is.

The stark facts are there to see. We have spent £1.4 trillion on saving the financial system and to this day we have no idea whether that is too little, too great or enough. The bankers remain unscathed by our generosity and the best we can do is to threaten their bonuses in the future while at right now headhunting, sign on fees and massive profiteering on written down debts are bolstering earnings greatly. Under our noses, the very machinations that brought about our ruin are going on and the best our ministers can do is to write a few rules that banks and their lawyers are adept are getting around.

The actions by Darling and Brown are superficial and treat only the symptoms of a flawed banking system that is working in exactly the same way as it did before. We have printed £200bn of new money and given it to the banks to shore up their finances and play the markets - none of it has got into the real economy whereas the exact same QE in the US was put into the asset backed securities markets and guess what? They emerged from recession and we didn't.

At every turn and juncture this Government has got the financial calls wrong. We have spent far too much money rescuing a system that did us no good to act the same way again. None of what these two goons have done or said will make an iota of difference and at every point they called the situation wrong and estimated its extent wrongly too. It has been a process of escalation all along of reacting to the crisis, trying numbers and then spending much more as the guesses made were never right. How much we could have avoided paying, we will never know.

If you believe this cod's wallop they have spouted this week, you may as well believe pigs can fly.

Take Off or Landing?

It's taken two years and arguably when it all started it seemed like a good idea, but the merger between BA and Iberia Airways has finally been agreed. Willie Walsh, CEO of BA, has hailed it as 'Good news for passengers'.

In the last 18 months of intense European travel, the two airlines I personally rate the worst for service are BA and Iberian so it could be said this the merger of two airlines who have lost their way and have resorted to the old adage of 'two heads are better than one'. Both companies made whacking great losses, with BA clocking up £292m in the last six months and Iberia €182m in the last nine months as they competed to be the airline who could clock up the most losses in the shortest time - it looks like a dead heat. The interesting thing is that passenger numbers are similar with BA at 33m and Iberian at 28m yet BA operate 246 aircraft to Iberian's 174 which suggests a disparity on loads. Also, the overlap on destinations means that both airlines get benefits but that creates a problem - how do you drive the kinds of savings you need to get any benefit and keep the same number of routes operating?

This is the real problem - the estimated £358m of savings nowhere near covers the combined loss and it is not clear how the savings will come about. The new headquarters will be in London and Walsh will be the new CEO - none of the news so far is actually very encouraging.

Ryan Air sees this as 'Two drunks propping themselves up' and for once they are spot on and not being loony. On the face of this it is exactly that - two airlines who had run out of ideas and strategy think that combining two worthless strategies and ailing businesses, led by donkeys, will actually solve their problems. It really is a merger devoid of inspirations, carved out of a desire first dreamt up in better days. While big can be beautiful, the merged companies are going to spend the next two years arguing over cuts and who does what as the industry emerges from recession. A really clever move by two companies that have hit the recession with no real idea what the core strengths of their airlines are.

Walsh's only victory seems to be that BA will be the dominant company with the HQ in London and 55% of the shares owned - and he is CEO which seems to be a sad indictment of the combined management talent of the two companies. BA has been particularly rudderless and idealess during this recession with an emphasis on lack of strategy and daft ideas on cost cutting, while their low cost competitors have thrived. As fuel prices came down to help costs, BA fared worse than before and the underlying profitability of the business is virtually broken. BA and Iberian are caught in the no man's land of European airline strategy and the combination of the position does not actually help them with such poor leadership at the top. No wonder the staff look to the HQ and ponder what will happen next.

One thing is for certain, two huge clouds hang over this merer long before they try to get any strategic or operational benefit - 1) the impending action by a once loyal staff against the suicidal efforts to cut costs and dumb-down jobs and 2) the enormous hole in BA's pension pot. The latter may yet scupper the deal while the former will blight it at every step because it is an issue that will only grow as the combined airline will strive for even greater cuts and efficiencies.

On thing is for certain, the worst news is that Willie Walsh has won the top job. It's the equivalent of asking a passenger to fly the plane.

How Will You Vote?

Glasgow North East has delivered its message - Gordon Brown and Labour are doing a fine job and there is no need to change a single policy.

You have to wonder where the folk of Glasgow North East have been these last few months. The by election was triggered by the resignation of their sitting MP, former Speaker Michael Martin, who was at the centre of the controversy over MPs' expenses. It appeared that Mr. Marin had lost his sense of reality and fairness as well as possibly his senses in actually not agreeing with the general view in the country that MPs were ripping us off at a time when ordinary families were struggling to make ends meet. Further, as we wallowed in bad news after bad news on bank bailouts, bonuses, Fred Goodwin's pension and our treatment of our fighting soldiers, it appeared life in Glasgow was not just unaffected but thriving. The majority returned was all but what Martin won at the last election except for a few votes that were picked up by a Conservative candidate who decided to contest the seat for the first time in ages.

I am sure Michael Martin was a popular local man and had represented his constituency well - no doubt. However, it seems that the staunchest of Labour supporters cannot seem to link the country's woes with the sitting Labour PM and his Government. Perhaps the whole affair over the SNP's decision to allow the Lockerbie bomber to go free on compassionate grounds to be received by a hero's welcome by Libyans on his return was a step too far for the sitting party. Perhaps the feeling is that while Labour may be a bunch of incompetent dolts who now agree that rich people should get richer while shafting the working class, the contemplation of Tories ruling is too unpalatable. At least the BNP came nowhere - a small victory for democracy and common sense.

But it does make you wonder what will Labour have to do worse than they have so far in order to lose their core vote? Even their own MPs are fed up with Brown's leadership while who would have thought Peter Mandelson would rise to the very top like the villain of a Harry Potter book and rule the country as 'Minister for Information'. It's like the chilling plot of a novel worthy of George Orwell.

Maybe I'm seeing it all wrong. Perhaps my lingering distrust of Tony Blair's cynically sleazy regime and its decision to fight wars without good legal reasons really got to me. Perhaps I read too much into Governments that try to manipulate our minds by programming our thoughts. Perhaps I should not be surprised that the whole financial system has failed and I have born a cost for no good reason while the bankers continue to earn millions. Maybe I am the one who is illogical here, expecting too much for our troops fighting wars I think are unwinnable - certainly the way we are engaged in now. Maybe I am the one who is wrong in believing MPs should not be allowed to claim cleaning bills as that is a lifestyle decision not a burden for taxpayers or that they should benefit from the profits of houses whose mortgage interest we paid for. Maybe I am the one who is out of touch believing the credit crunch and how we dealt with it has left us worse off than all other rich nations - maybe I am too idealistic in believing as a result of this our fight to save the planet and the starving people of this world has been set back years as we have ploughed all our money into saving the wrong people because they have us by the short and curlies.

That is the Labour world I thought I would never see. From my viewpoint it has catastrophically failed us all - but Glasgow North East is just fine. I wonder if Willie Bain's first words after winning will have made the penny drop. If everyone adopted the same approach, Gordon Brown and Labour will be back in on a landslide come June.

Surely there is something wrong in that?

'Stinging' Attack

With a pretentious name like Sting, it's a tough call to say that the X Factor is 'TV Karaoke'.

He may have a few gold albums, Grammys and whatnot under his belt, but Sting doesn't seem to know his music after all. He has launched a pretty scathing attack on the X Factor branding it a 'soap opera with has nothing to do with music'.

He sort of gets it but he doesn't. The X factor, as everyone knows, has nothing to do with music but everything to do with a few people making a very great deal of money.

The fact that the public funds the entire contest plus the advertising over the endless monotony of each series, culminating with the play off between two acts guaranteed to get hit singles as the public has to maintain its loyalty, seems to elude him. The acts are just the fodder for the public and should any of them have an iota of talent, they signed away the rights to any real earnings at their applications for the first audition. None are expected to last - that's not the point as the next series provides the ongoing revenues. Why should Cowell care if anyone is actually any good?

Yes, it is about Simon Cowell self promotion and, no, it isn't about helping kids fulfil their dream. It is a rock solid formula to exploit the public's fascination with the sad spectacle of, and participation in, human competition, embarrassment and rejection. The cynical exploitation of Susan Boyle nearly ruined a genuinely sweet person's life but it has helped maintain a long forgotten career of a person who avoided the 'ugly stick' mainly thanks to the skills of a good plastic surgeon.

The formula is repeating in all formats from Strictly Come Dancing, to the ice skating version, and much more. But like it's forerunners of talent shows they all come to the end of their line - as even Big Brother did. By then, Simon Cowell will be very, very wealthy and, hopefully, forgotten. The one legacy will be that youngsters will think that success can come on a plate and last when it really doesn't. Will Young has shuffled away after his monotonous rendition of the classic soul song 'Come on baby light my fire' which was an embarrassment as well as an insult and it shows that while there is a voice, it does not mean you have talent. The lack of creativity is frightening as the performers even get told what to wear, steps to dance and how to behave. I somehow long for someone to bring back the days of wrecked hotel rooms, dead chickens and drug-laced blank interviews.

Sting needs to get a life and maybe prolong his career by doing a cover version of Jedward's first hit single. Which will probably be a cover version of one of his song's but only he will spot that.

Bonus For The Desk Jockeys

The rasping attacks by former heads of the Services are still ringing in their ears but the Government still seems hell-bent on lurching from one dumb scandal to the next.

Hardly has the dust settled on the stupidity of not allowing the TAs to train properly in order to save £20m, we find that the faceless civil servants behind the desks in the MoD have shared in £47m of bonuses. We hear of project overruns, inflated prices for contracts, kit gone missing, not enough protective armour or troops and transport, whole regiments being disbanded, training without live ammunition - we hear of over 90 heroes dying this year alone and hundreds injured - and who gets the plaudits for an 'excellent job'?

It makes you absolutely sick - Alan Johnson, the would be PM and his inadequate henchman, Bob Ainsworth, plus the PM are a shocking disgrace.

The Battle of The Giants

It had to happen. One of the outcomes of most recessions is that there are some fearfully large consolidations of big companies - and yesterday saw another big announcement in a market sector that is heating up big time.

Hewlett Packard announced it was acquiring networking company, 3 Com, for around $2.7bn in the same breath as producing better than expected profits on lower sales last year. For those in the industry, this the annual musical chairs time at the computer giant, HP, and many will find that a few more chairs than usual have been whipped away as they keep making sure they are as lean as possible.

Ostensibly, the acquisition is to give HP a footprint in the lucrative Chinese market where 55% of 3 Com's sales come from. However, there are other motives as there have been major moves by networking giant Cisco to move into the server market at the datacentre which is a direct threat to the giants of that market, HP, Dell and Sun. The 3 Com acquisition, in that context, is all about augmenting HP's portfolio of networking switches and infrastructure devices to ensure they have all the pieces of the server, storage and networking products required to maintain their market position as Cisco put their formidable weight into this market.

There is more. Cisco's market play into the server market takes it from its luxurious, high profit network business where it dominates into the grimy and lower margin world of PCs and servers where HP have great skill in thriving. It could be argued that Cisco will find it hard to apply its typical cost models in the server market to be able to compete or make a decent profit. HP's move is certainly a clever defence of their position, although in reality, 3 Com has only a single digit market share in Cisco's core markets and was no longer the big player it used to be. Some analysts feel that companies like Brocade would have been a better buy, but in the great scheme of things, any old company in networking would have done.

HP have learned how to acquire and absorb big companies very quickly. Starting with the huge takeover of Compaq which cost Carly Fiorini her job, they have more recently acquired EDS which almost doubled their workforce. Meanwhile, their arch rivals in the PC and server market, Dell, has been building out its portfolio to compete by adding Equalogic and Perot into its midst making it a much stronger company.

What does this all mean for companies, large and small? Well this period of formidable consolidation will likely increase the massive competition in what is already a highly competitive market for PCs, servers, storage and networking. It is likely to drive prices down further which may be a good thing - but for those companies who sell these products, the decreasing profit margins in selling solutions based around these companies and Microsoft is squeezing the life out of what was a vibrant market to be in. I don't think this will make life much better for them.

It certainly means that Cisco and HP are now toe to toe and head to head in the market. It will be a battle royal to win the loyalty of the customers.

A Sad Demise

Would you want to be a shareholder in Lloyds Banking Group right now?

Those who own Lloyds shares will wistfully remember the good times of a steady bank which paid good dividends, made some shrewd acquisitions and maintained a good share price. Theirs were a share renowned for a good long term performance and a company for its sensible management.

Just about a year ago, all that changed. From a peak of £8.20 the shares of the bank dropped to a low of 25p. In the face of the credit crunch, the bank made its most disastrous move in its long history when it made a bid for the beleaguered HBOS, who had been guilty of some of the most reckless corporate lending amongst other sins. As the bank suddenly realised the extent of HBOS' woes and the incredible strain on its own finances as the crunch took hold, it frantically tried to renegotiate the deal and even back out, despite the fact that EU competition rules were temporarily waived to allow the new group to own a whacking 28% of the UK mortgage market.

It was a collision of management incompetence and all consuming greed.

Then in stepped the final bunch of meddlers - the Government. It is widely believed that the PM himself personally intervened at the 11th hour to urge this merger to go through. Incredibly, the handshakes had barely stopped when Lloyds saw the folly of what they had done, tried to mess with the price of the deal and then went cap in hand to the Government to shore up the group's finances in order for the deal to go ahead and for the two companies to survive. As the whole mess unravelled, the taxpayer came to the rescue and took a 43% stake in the new group to stop BOTH banks sinking. The shareholders at Lloyds, after years of content, suddenly saw their investments collapse to virtually nothing.

So here we go again. Today, Lloyds launch the biggest rights issue in history. A further £21bn is required to shore up its capital which is only around £22b now, principally so that it does not have to join the Asset Protection Scheme (APS), the euphemistic name for the financial cesspit where toxic debt is to be parked and underwritten, in full, by the taxpayer - the premiums for which, Lloyds deem too expensive.

It's remarkable. They deem the insurance premium for APS too expensive - less than a year ago, they would have paid anything to be saved. As taxpayers, we should be happy, I suppose. Lloyds was always a dedicated stock market performer, so it would make sense to see it steadily rise again so that our 43% can be sold and returned to us. In the short term we will need to pay a further £4bn as our part of the rights issue so our stake rises but we would all believe it is money well placed?

That's if the management know what they are doing. Remember, the same bunch of individuals, which is a truism of all the management of all banks with the exception of RBS, the Lloyds Chairman and Andy Hornby of HBOS, are running the show. The daft investments they all made are being made again across the board as banks feed on the frenzy of a nicely depreciated market courtesy of the taxpayer. Across the globe, banks are accruing nice bonus pots for their good work and in the Sunday Times, the CEO of Goldman Sachs claims that his bank is doing 'God's work'.

Many economists are now coming to the conclusion that it would have been better and cheaper in the long term to have just guaranteed the deposits of savers, created a central mortgage bank and let the rest go down the swanny with the idiots who took them there with it. We would not be talking about bonuses and reforms now, we would have a new look banking system based around sensible criteria and practice.

I find the fact that genteel Lloyds shareholders having to stump up to pay for the whims of a management that nearly bankrupted the company abhorrent. Further, to pay for the suicidal practices that led to this sad demise of a once great bank, 5,000 staff at Lloyds will have to lose their jobs - people who were not involved in the abysmal decision making that got them to this point. That act alone has been described by unions as 'arrogance' and I agree. At all banks, we see low level staff paying the price while people like Stephen Hester at RBS accrue bonuses equivalent to the salary bill saved - in just one year at the helm of a company propped up by the taxpayer so that he could not possibly fail. Even then, he has us all pay more and been let off around £10bn of debt he owes us - for that he accrues £9.6m.

You could not write a script with such a plot as no one would buy the book - it would have been deemed too far fetched. The problem is that within a year, we will have all forgotten what and how it all happened. We will carry on and allow the whole process of rebuilding the house of cards again, ready for the next gust of ill wind to sink the whole lot.

Monumental hubris and arrogance at the most senior level in the banks, the regulators and the Government are at the witch's cauldron stirring up a foul future for the lot us. They will do nicely though, thanks to the taxpayer.

Lack of Role Models?

It is fair to say that young people are sometimes wrongly led by modern role models. In a recent survey, careers at the top of young people's lists are no longer doctor or lawyer but singer or sports star.

I'm not sure how such careers got to the top of the list but certainly there is a growing belief, it seems, that success comes on a plate ala X Factor or scouts just arrive from Premier League clubs at your municipal sports ground. It appears that hard slog is no longer on the agenda - and some would say this a direct result of our 'Can Have' rather than a 'Can Do' culture of materialism and new found affluence, perhaps fuelled by the credit boom years since 1997. I don't know.

So scouring the Sunday Times on the weekend, I came across an article in the Appointments Section which intrigued me. Under a general article on the Law as a career, there was a pull out biography of a Mike Pullen, described as a 'Class Warrior'. Mr. Pullen has no doubt had an extraordinary and hard career, having not attended school until 12 as a fairground child. The rest you can read for yourself but suffice to say he is now at the top of his profession and he advises countries on how to deal with the EU and the World Trade Organisation. He cites that he gets on well with Iraqis as he also comes from a 'tribal society', having not lived in a brick building until he was 26. A great 'rags to riches story', it appears - the stuff of role models.

He claims he fought the class system as his accent was a negative for getting into the City, but he did. Pity for us Welsh too but we each have our cross to bear. Then it all goes belly up as he says, "If you want to be controversial, you would say the most disadvantaged minority is the white working class male. They've no role model, apart from drug dealers and footballers."

There was a bit of 'lawyer speak' up front so that you cannot say it was his real opinion but it is clear that it is by glancing at his background. It's the kind of comment that would appeal to Nick Griffin and the BNP Party - successful white lawyer fought prejudice to get to the top and it is a story tinted with colour. White working class men are at a disadvantage - and they don't even have role models.

I think his comment is both dangerous and laced with racial connotations and is not worthy f a successful person. You only have to look at people Lord Sugar or Sir Philip Green to see how people who come from a working class background can get to the top. I am always moved by the story of Bruce Oldfield who came from a Barnardo's Home to rise to the top of his profession - ah, but he was more advantaged because of his colour? There are many, many stories of not just sports people but business people who have made a great fist of their lives yet came from a working class background - and they would be people of any race, sex, colour, or disability. We might find that most people from a working class background who have made success are white - we may not. I would be more interested to know if coming from a working class background is a disadvantage at all - the opportunities are there for those with the commitment to to better themselves. I would suggest there are sectors of society far worse off than white working class males - if Mr. Pullen wants one great role model, look to Simon Weston. Neither his accent or his horrific burns or lack of education has held him back when any one of those could.

I don't see why white working class males should have a role model who is the same as them in terms of colour of their skin - what has that to do with it? I doubt if Tiger Woods thought about his origins when rising up to become the most brilliant golfer in the world in a sport dominated by white people, nor Arthur Ashe or Barack Obama for that matter but in professional careers and business we can all think of many people who rose to the top from working class backgrounds. Looking across the array of successful business or legal people, I suspect that there is a whole array of stories of hardship to get to the top, and it would have involved all sorts of race, sex and disability stories to go with it.

I come from a working class area although my father, a man with no degree, worked his way up from a working class background to become a highly rated professional in the oil business that gave me an advantage in life that I was very grateful for. He was always my role model because he worked hard for what he got and he developed skills and expertise of his own to become an invaluable commodity to his company, BP. It killed him in the end but that is a different story.

It also taught me that you may think you are disadvantaged in life but if all you do is wallow in your situation then it is highly likely that you will stay there. In my final year at college, I was the only graduate in my class who had got a job before my course ended. There was a good reason for that as we were in the turmoil of miner's and steel strikes - the same time as Mike Pullen was graduating the 'University of Life' - I applied to 72 companies, got 55 first interviews, made 23 second interviews and got offered two jobs. I went to work for Hewlett Packard, about who I had no idea when I applied, and the interviews were with real managers who were looking for something different in what was then, and now, a company that held talent in high regard rather than looked at your home background. My accent or background never held me back.

I think Mike Pullen is doing himself a disservice but he is definitely doing a disservice to others. I fail to resonate with his point and I think it is remark savoured by the wrong sort of people and serves as little inspiration to any working class person let alone white males. It is the kind of remark that is at the heart of the BNP's illogical ideal - if you are a white working class male, blame everyone else for your plight except yourself as you are disadvantaged.

How you better yourself has plenty to do with race, colour, age and disability and Britain has a track record of prejudice in all those areas. But to say that white people are discriminated against in Britain is worthy of the BNP only and it's why it is representative of the 'blame culture' that is growing in our society.

We are in a modern world and opportunities to grow ourselves abound. Mike Pullen could be a role model but he didn't have to be white to be one. If he wants to see what disadvantage is all about, take a trip to Africa and see at first hand. His eyes may just get opened.