"Succeed or Fail Together"

Is it me or does Bob Ainsworth, our Defence Secretary, sound like Mr. Gumby of Monty Python fame?

He is some card - in the face of claims of letting of troops down in Afghanistan, he claims numbers have gone up to nearly 9,000 and an extra 500 are pledged if certain conditions are met. It is not clear what those conditions may be - the weather perhaps or when Mr. Ainsworth's new TV turns up - but there are conditions. Most likely the biggest condition is to see if the US puts in a further 40,000 troops - a ratio of 50:1.

Meanwhile, while Lord Foulkes has sniped away at discrediting the Armed Forces commanders by calling them disloyal because they speak up for the troops they command, having had no experience of either armed forces or war himself, now the PM has said that "we will succeed or fail together".

Talk of failure was not what the troops had in mind when they are already questioning the Government's commitment to them and the war they are fighting - pledging that £1bn has been spent on armoured vehicles since 2006 is cold comfort when roadside bombs continually blow them to pieces. While Lord Mandelson wheels his shopping cart around buying things for the armed forces, allegedly, it may be an idea to have a Minister for War who is isn't play acting for the public and is dedicated to the cause - and perhaps someone should tell Mandelson who won't find arms in Tesco. It may also help if those in charge of re-equipping our troops are not nine to five Civil Servants in the Ministry of Defence but armed forces personnel working war hours.

What is clear is that whatever the strategic objectives of the entire campaign are, we risk failure they way we are going about it now. Further, it appears the Taliban are getting stronger, we have supported a corrupt 'democratic' Government and the heroin supply has gone up despite all those pledges 8 years ago. Laissez faire Government has been the hallmark of the last 12 years and we have lost more lives in service in this year since the Falklands conflict 27 years ago for which Thatcher got roundly vilified for. Limbless heroes break our hearts but over 90 have died this year alone. And finally, the PM cannot even spell a soldier's name right when writing to the bereaved family.

I watched a program called the Somme on Saturday night - it should be compulsory viewing for ministers who think they now how to run a war because politics and war don't mix.

Our brave troops deserve more than this.

Litigious Britain?

They say we are becoming a litigious society.

Perhaps the scandal of MP Expenses and daft Government policies would suggest we are not litigious enough. Between the Iraq and Afghanistan wars, where it is clear we are sending troops into dangerous situations without adequate numbers, armour and transport, a few hundred have lost their lives while we do not even get a sense of how many have been maimed, badly injured, wounded and psychologically affected by the wars. Already it is legally dubious under UN rules that we ever should have invaded Iraq while our participation in abetting torture of those captured has put our leadership into the spotlight but no one seems to have the guts to challenge them legally.

On top of this we hear that slack immigration rules as reported in the Sunday Times has meant that we have almost certainly allowed in potentially dangerous people into Britain without proper checks. It could be a ticking clock as to the next homeland atrocity but would the Immigration Service and the Government be legally culpable for negligence?

This week we also learned that last year over 39,000 serious assault offences which would normally carry up to 5 years in prison for the offenders, if found guilty, have been allowed to go by with mere cautions - no wonder the crime figures seem so low. What if the next victim of one of those cautions is not so lucky to be seriously injured or even killed by lapse rules and target-led policing?

I am not one for a litigious society but some policies are just barmy and are asking for trouble. Perhaps ministers should be exposed to the power of the law for their most stupid of mistakes that leave people in direct danger?

A Dark Cloud Gathers

The news that personal insolvencies are up 28% is not a good sign that we are emerging from recession. While the rate of unemployment slowed last month, it still actually rose.

Many people talk about upturns and green shoots of recovery, but at the business coalface, some businesses are only now trimming their cloth after trying to grin and bear the recession. BA have just increased the number of layoffs planned and many of the High Street banks are culling serious numbers in staff despite making very high paper profits.

But perhaps the worst news is that as we exit the recession, hopefully in the next quarter, some of the Government initiatives are due to expire. At the consumer end, VAT is set to return to 17.5%, and there are rumours even of a hike. Meanwhile, for those businesses who have taken up the HMRC's offer to defer their corporation tax payments, pretty soon the calls will come to get those tax bills paid.

Far worse for businesses, much more than not making profits even, is the starvation of cash. It is, indeed, king - the fuel of any business. No bank will lend just to pay tax bills - it's money straight down a drain in their eyes and it is an act of desperation to ask for it. Many small businesses, in particular, will be fearing a call from the HMRC in the early new year. HMRC are notoriously rigorous about their follow up and not very forgiving. Now that the temporary arrangements are over, they will apply all pressure to get payments in. In fact, the tax coffers are so strained at the moment, that the Government is experiencing sharp shortfalls in revenue and this is a contributory factor.

Some suggest that as we come out of recession, there will be a new wave of company insolvencies as the demand comes to settle their tax bills. It may mean a re-invigoration of the rate of growth in unemployment - possibly around election time.

It needs an initiative right now.

Oh Willie, You're Not So Fine

Oh dear. In a week where the union, Unite, launched a legal action against BA in order to try and stop the imposition of new contracts, the news has just got worse.

Far worse.

BA's results to the end of September showed a £292m loss - far greater than had been predicted by most analysts. Revenue was unsurprisingly down by 13.7% and Willie Walsh, BA's clueless CEO, could only forlornly point to the fact that there is a recession on - a real 'no sh*t Sherlock' moment. Lord Sugar would surely have slapped him about the face for saying so, not least as Ryan Air had only released their figures a week before with excellent profits buoyed by a 40% decrease in fuel costs over the same period.

If that was factored into BA's results as well, it makes these results not just grim but catastrophic.

Confidence in the airline was not helped in the period as Walsh himself was involved in the high profile launch of what many believe to be a 'white elephant' new all-business class service between London's City Airport and New York, carrying just 32 passengers and stopping in Ireland on the way to refuel. Given much of BA's woes have stemmed from a dramatic decline in business class sales on other services, this seemed like either monumental madness or callous hubris in the face of the sacrifices made by staff in a desperate bid to save costs. It just seems a huge waste of money on a service almost certain to make a loss in the short and medium term - if ever - given two previous attempts to have a business class only service went belly up in happier times about a year ago and at least they had more passenger capacity and flew non-stop to their destinations.

I really am stumped over BA's strategy. They continue to just try to reduce costs and do the same thing when the industry has moved on. They are caught between offering premium services but trying to compete at the budget end and are failing at both.

I also find it hard to believe that shareholders grimly keep the faith with a CEO who is so clearly out of his depth, obsessed with using his dwindling funds to buy another struggling airline, Iberian, as his last, desperate and hopeless fling of the dice.

He really needs a strategy that hangs together before he spends so much wasteful money. At this rate he needs to horde as much as he can as BA is going nowhere fast.

Enterperise Biz-Tsar

It's good to know that our Enterprise Tsar, Lord Sugar, is there batting for all us small businessmen in his role to advise the Government on such matters that affect us.

His professional and positive approach was to explete vehemently with his back to the camera when asked, at an Exhibition on How To Survive a Recession, what did he advise for businesses in the recession. He then came back to the camera, visibly upset, to say we should stop talking about a recession as there is not one. Despite the fact his own Government's figures tell us that, in fact, we are still in one.

During his speech in Cambridge he was critical of small businessmen who 'whinged' and implored they should get on and 'adapt'.

While his bull faced staring down of the recession is a positive and bold attitude, calling small businessmen whingers in the face of their pleas to be heard by the Government was not exactly what people wanted to hear - except those who could afford to be at the exhibition. Once again, it is worth reminding ourselves, Lord Sugar and the Government that small businesses represent 97% of all the companies in Britain and employ 13m people, paying a disproportionate amount of tax into the coffers via Corporation and PAYE tax. In the scheme of the vast stimulus packages wasted on the financial system, the amount of credit to such businesses has been reduced by nearly £15bn this year. It is not even a small crumb of comfort that interest rates have been again pegged at 0.5% and QE has been increased by £25bn when most of that aid does not flow into the economy at large.

It would help if an Enterprise Tsar stopped representing his own views and values and understand how this recession is affecting small businesses, many of whom will not survive this year and have contributed disproportionally to the rising figure on unemployment.

To take just one example from the weekend's papers. Small, independent shop owners have gone to the wall at an alarming rate this year while huge supermarkets announce growing profits and sales - over 500,000 have lost their jobs in that sector alone and some 12,000 businesses have failed. Tesco, Waitrose and even Marks & Spencer, meanwhile, have thrived.

Perhaps Lord Sugar should down into the detail and look at which businesses have been favoured in the stimulus strategy. No doubt, companies like Viglen, which he owns, have benefited nicely from increased Government spend in the schools sector.

For a man who is normally well at ease when he has plenty of script to work with in front of the cameras, he was pretty poor when asked about his supposed specialist subject ad hoc.

The Patient is Not Responding - Hit Him Again

The operating theatre euphoria dies down as the man in the white coat and thick glasses points at the bank of monitors and speaks in a weak voice.

“Em, I said it looks as if the patient’s recovery has faltered,” said Dr. King in a frail voice. L. Ron Mandelson gave him a look of pure evil. The rest of the team looked down at the patient, a Mr. British Economy, who had looked as if he was recovering from his massive open heart surgery in the wake of a severe heart attack suffered due to incredible over indulgence.

“But I thought the surgery went well,” stammered Nurse Darling. "All the other people operated on from France, Germany, Japan and USA have recovered while the Italian one is getting better despite being fatter and with all that plastic surgery that he had too."

“The expensive sticky plaster is holding the heart in place nicely, indeed,” remarked a man in an expensive suit, a Dr. I. Banker. “The vital signs have wained but a new boost of intravenous QE should sort it out. Get another bag.”

“Hold on,” said Dr. King. “That’s bloody expensive stuff you know – we’ve put in £175bn so far. We are not made of money, you know.”

“To my mind, you are,” replied I. Banker tersely. He gave L. Ron Mandelson a nod. He smiled back and turned to King and twisted his ear.

In the corner, a man with manic look on his face was putting weights on a rubber band scale which was connected to a speaker which made an annoying ‘weee, pop’ noise.

“Who is that idiot making that noise,” asked Professor Brown.

“That’s Dr. Sants,” replied and adviser. “He’s besotted with his new Stress-Testing Machine. I’ll tell him to stop.”

“Tell his boss to tell him,” snapped Prof. Brown.

“Erm, he is the one in the corner tied to a chair and gagged, sir. The one with the notice saying ‘Loony’ around his neck at the request of Dr. Banker, sir.”

A lady shuffled forward. “Before you put that bag of QE on the drip, I would like to point out that the last lot of QE had no effect. In fact I think it isn’t getting into the patient at all but it’s been diverted by another tube into this drain which says ‘Financial System’.” Whoever she was, L. Ron Mandelson cuffed her on the head and told security to remove her.

“I wouldn’t give the patient QE, try cannabis,” said a man. L. Ron Mandelson immediately cuffed the man on the head and had Porter Johnson remove him.

“I don’t pay you to advise, Nutt,” remarked Johnson. “ I pay you to toe the line.”

“You don’t pay me at all,” remarked the man.

“Precisely my point, Nutt” hissed Johnson as he threw him out.

“Right,” said Dr. Banker. “All agreed?”

Everyone looked at one another before L. Ron Mandelson dug his elbow into Prof. Brown’s ribs with some venom.

“Ow,” screeched Prof. Brown. “Yes, yes, of course, all agreed.”

“Good,” said Banker. “I’ll add that to our fees and £25bn extra QE via drip please, Nurse.”

“Wait, wait,” interjected Nurse Darling excitedly. “What about that idea of the Government being a Hedge Fund and buying further into our hopeless banks. It sounds as if everything is just going down the toilet.”

“Trust me,” replied Banker. “I know what I’m doing - as if I would ever lose you billions? You don’t think you pay all those fees for nothing, do you? Just buy the shares and put the QE in and stop asking irrelevant questions. "

It's Management, Stupid!

I have always believed that banking has been stocked with poor managers - I don't mean retail banking but the stuff where they make the profits and blow them. Regularly.

This is not a new phenomenon. Indeed, Gordon Brown has always labelled the Conservatives as 'Boom and Bust' merchants and that description was largely attributed to their cycles driven by investment banks making big profits and then blowing them in relatively short order. Nicholas Taleb contests that banks only ever really make money out of loans, mortgages and other products to businesses and people - all the other profits they make they surrender.

While the above statements are not entirely accurate, banking is one of the few industries where an incredible focus goes on making money with money to lavish huge rewards and then as busts come, they simply surrender the profits, make a ton of backroom people redundant and then carry on as if nothing has happened. Why would you run a business to do that?

This particular cycle, although a massive crisis around the world that has taken more then just surrendering profits to resolve, is not different. At the core of it is not just the bonus culture, it is not even the derivative type products that can be so destructive, it is not even that the financial system has its own in-built self-destruct or that many of the products are for banks alone to play with - all of which are highly toxic when mixed together. Nope, you can survive all these things so long as you have decent management - and that has always been what was missing.

If we drove our car recklessly and crashed it as a result, we would tend to learn our lesson and so not do it again. But there are those in life who actually thrive on the risk of crashes and love the sensation of speed. Normally, such people would try their hand at racing cars and exercise their urge at purpose made circuits where their activities are well managed and the dangers are minimised. But there are those who insist on continuing their hobby on our roads - they are a huge danger not just to themselves but to us all. Their activities can damage our cars or even hurt us. In extreme, they can kill.

In all cases, these people can, at some point, do it again. Unless, that is, we make them drive slower. We can put cameras and signs up, put bumps in the road or more traffic lights but ultimately if they want to speed, they will. The only real way to slow them down is to make their cars slower.

This analogy is like management. Managers will be reckless if left in an environment where there are few controls, all of which can be ignored if not enforced rigorously. Even the threat of transgression fuels the urge. Not until the business is modified so it cannot do the dangerous things, will managers stop doing them. In banking, this is precisely the issue. They are driving fast cars on our roads and they can kill. Unless we make them modify their cars, they will kill just as they have done in the last year.

The heart of the issue is not the free availability of fuel (money), it is not the way they transact business (the roads), it is not they way they drive (their bonus culture) - it is the cars they use. Give them lesser cars and they can only drive slower.

This will take a different type of manager.

The management of banks, having suffered their reprimands having caused untold damage have clambered straight back in and they are driving just as, or even faster than, before.

Henry Mintzberg, Professor of Management at McGill University, has an interview in this month's Director Magazine. It augments exactly the point I make.