tag:blogger.com,1999:blog-31692240535654642822012-03-19T17:04:33.118-07:00My FictionThese are my thoughts as I write, on the nature of fiction but also on my current work in progress, Broken Bonds, which explores some of the pressures on those caught up in the banking crisis.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-3169224053565464282.post-84256241031518026392010-10-04T04:26:00.000-07:002010-10-04T04:26:37.429-07:00Children of the sunSimon Head offers <a href="http://www.theguardian.co.uk/books/2010/oct/02/conservative-party-elites-simon-head">an illuminating critique</a> of the evolution of English elite to take full advantage of the extraordinary phenomenon of London as the global financial powerhouse. <br />Societies will always have their elites, but in England in the final third of the twentieth century, it looked as if the elite was broadening and becoming more porous. Head shows how the elite evolved from being simply the aristocracy to include leaders of the professions and financiers. Many of the elite families survived the transition and reinvented themselves. The public schools and Oxbridge all serve to perpetuate this evolving elite. <br />What emerges is a society much closer in division to eighteenth century England, with an elite holding the majority of the wealth served by the remainder.<br />The banking collapse might have been seen as an end to this; in the event the elite not only survived but gained yet more strength.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-57386342802997529532010-09-22T05:45:00.000-07:002010-09-22T06:02:45.203-07:00Stop bashing bankers' bonuses<a href="http://www.theguardian.co.uk/business/2010/sep/21/fsa-chief-bonuses-executive-pay">Today's Guardian reported Lord Turner</a> running to the defence of those whom he had previously termed socially useless. This is all in the context of <a href="http://www.bbc.co.uk/news/uk-politics-11382047">Vince Cable's <span id="SPELLING_ERROR_0" class="blsp-spelling-corrected">speech</span> to the <span id="SPELLING_ERROR_1" class="blsp-spelling-error">LibDem</span> conference </a>where he stated his intention to shine a 'harsh light into the murky world of corporate behaviour.'<br />Turner rightly calls for policy changes to bring in the tight regulation which is vital if these massive <span id="SPELLING_ERROR_2" class="blsp-spelling-corrected">institutions</span> are to act in the interests of the customers and economies they serve.<br />It is a stark <span id="SPELLING_ERROR_3" class="blsp-spelling-corrected">comparison</span> to suggest that a bank might be bigger than the economy of the country in which it resides.<br />This is more than the anxieties over complex financial instruments about which I am writing in Broken Bonds, and much closer to Edward Heath's condemnation of the unacceptable face of capitalism which I recall was directed at <span id="SPELLING_ERROR_4" class="blsp-spelling-error">Lonrho</span>.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-1929626588194863842010-07-28T06:27:00.000-07:002010-07-28T06:43:28.561-07:00Broken Bonds at Port EliotAt the <a href="http://www.porteliotfestival.com/">Port Eliot Festival</a> I read the first scene of the first draft of my novel. The unmoved sea of faces in the audience told me how it needs to bring the taste of breakage. The breakdown of trust is so damaging in many different areas of life. Its web reaches out and grabs the most unexpected bystander.<br />If we look now from a 2010 perspective, all the cuts about which we rightly moan have their origin in the down fall of the banks. Their collapse triggered the drying up of credit which in turn sent the economy into decline. But what was the real reason? The breakdown of trust?<br />I also read a completely different <a href="http://www.profwriting.com/articles/slipping-and-sliding-festival-mud">reflection on the festival</a>. Can they connect?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-29433804512985207462010-04-18T04:25:00.000-07:002010-04-18T04:35:48.467-07:00FSA watches Goldman Sachs case after link to city traderThe Observer article<a href="http://www.guardian.co.uk/business/2010/apr/18/financial-services-authority-goldman-sachs"> suggests that the authorities are pursuing the 'architects' of the exotic </a>financial instruments that helped to cause the credit crunch. I would suggest that the architects merely designed the tools for others to use. Isn't it the case of the bulldozer equally useful in clearing brown field sites and removing settlements in ethnic cleansing?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-90769080376169774702010-04-12T09:51:00.000-07:002010-04-12T10:15:56.100-07:00Avarice: true villain behind global slumpNow, this is scary, to read in <a href="http://www.guardian.co.uk/business/2010/apr/12/pension-funds-global-recession">The Guardian</a> the argument on which much of <a href="http://www.philwilliamswriter.co.uk/Fiction">Broken Bonds </a>is based that forget bonuses and deficits, the root cause of the banking crisis is greed. The article points to those looking for a comfortable retirement, amen to that! The point throughout, though, is that investors will always seek the best possible returns and a banking industry geared to serve this market will seek to produce it. The answer is radical and is about fair shares for all. The question is how might that be achieved.<br /><br />In the run up to a General Election it will be interesting to see whether any of the major parties follow this as a vote catching issue. The point is that we are not talking about bad people. It was easy to point the finger as massive bonuses and crazy senior executive salaries, it was easy to get steamed up about tax havens, but this stuff is too close to home. It's about you and me.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-66012428194698238562009-10-08T02:00:00.000-07:002009-10-27T10:42:44.922-07:00The deficitIn a much earlier blog I observed that what had happened was that public borrowing, which had previously been used to power the economy through recessions, had been replaced by private borrowing on an unprecedented scale. The dramatic reduction in the availability of credit has through the consequent recession caused a very large number of borrowers to default. The anticipation of this stripped banks' balance sheets of value sending them cap in hand to government who have poured in money like water. Government now wrings its hands at the deficit it is running and its own need for borrowing. <br />I can't help feeling that an economy which places sensible controls of private borrowing but which is realistic about the need for cyclical public borrowing is likely to end up healthier than the free for all which has got us into this very much larger mess.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-83368151799262343302009-06-24T07:41:00.000-07:002009-06-24T07:48:35.892-07:00RegulationI am convinced that the single factor most responsible for the banking crisis was loose regulation. Gordon Brown almost admitted it in his interview with the Guardian; his excuse was the the rest of the world was de-regulating and he didn't want London to miss out. <br /><br />Lord Turner, in his evidence to the Treasury Select Committee, voices concern that the mood for regulation may be running out of steam. The suggestion of re-introducing the separation of retail banking from its investment counterpart has fallen on deaf ears. Turner is arguing for tougher capital requirements based on size and, presumably risk. <br /><br />My question is: will regulation based on capital requirements work, when the experience of massive values evaporating overnight?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-19522349966560983312009-06-16T03:00:00.000-07:002009-06-16T03:26:19.249-07:00Bad old ways?<a href="http://www.guardian.co.uk/commentisfree/2009/jun/14/financial-crisis-credit-crunch-economy">The Observer</a> (14 June) offered in its leader a stark warning to the city and those concrned with its governance that it must not be allowed to slip back into its bad old ways. I am probably not the only person who would wish to take issue with the word old; the bad ways were new, the bad ways were post big bang, the bad ways emerged because light touch regulation allowed them to. A most telling comment was that the old (I would say new) way of doing things made some people very rich.'<br /><br />Vested interests are thus very strong and very powerful. In exactly the same way as it was not in the interests of the city to say the emperor had no clothes, neither is it in their interests to question the substance of what might look like the green shoots of recovery. Anything which shows that the city is working is good news.<br /><br />The tragedy is that just when strong government is need, we are having to live with a lame duck. It is sadder still that when a change in government does come, the forces which demand a strong performance from the city will both be vocal and may well be basking in a recovery of their own making.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-22779321527787308172009-05-20T01:48:00.000-07:002009-05-20T01:57:37.283-07:00So, it was bonusesI always remember a client years go who paid commission on the orders a salesman took. This was subsequently changed to giving commission on those orders which became actual sales delivered and paid in full.<br /><br />The argument being made is that bonuses were paid when traders made money but no account was taken of risk. Well, the story would seem to be that when the traders made money, so did the banks and so did their shareholders. Without taking a risk none of it would have happened. So, does that make a risk OK?<br /><br />Well, we can think of the RBS shareholders who received growing dividends and the value of whose shares rose dramatically for a long time. This was the upside of risk. The downside was when everything collapsed.<br /><br />I'm not sure I understand what is proposed for the future. No risk, no bonus, dull dividends?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-32380872122636269802009-05-03T02:20:00.000-07:002009-05-03T02:33:22.616-07:00Carol Ann DuffyIn his Holy Week talks in Canterbury Cathedral Rowan Williams quoted from Carol Ann Duffy's sonnet Prayer and praised the way she uses poems as places where new combinations of words and ideas spring together. Saturday's Guardian leader quoted the first four lines:<br /><br />'Some days, although we cannot pray, a prayer<br />utters itself. So, a woman will lift<br />her head from the sieve of her hands and <span class="blsp-spelling-corrected" id="SPELLING_ERROR_0">stare</span><br />at minims sung by a tree, a sudden gift.'<br /><br />The leader goes on to quote Robert Kennedy's complaint that GDP failed to measure 'the health of our children, the joy of their play, the strength of our marriages, the intelligence of our public debate - and the beauty of our poetry...neither our wit nor our courage, neither our wisdom not our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life <span class="blsp-spelling-corrected" id="SPELLING_ERROR_1">worthwhile</span>.'<br /><br />This is a timely reminder to put all of this finance stuff into some sort of perspectivePhil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-81052962308869267672009-04-26T08:15:00.000-07:002009-04-26T08:25:19.720-07:00Budget DeficitThe budget speech and articles in the Guardian which followed spoke of a <span class="blsp-spelling-corrected" id="SPELLING_ERROR_0">mammoth</span> deficit. This is not small beer by any stretch of the imagination.<br /><br />If it came about because banks lent at high interest rates to people with no realistic means of repaying, we stand back and wonder. If these mortgages, sub-prime mortgages, were cleverly packaged with better fare and traded on, we sit back and wonder. If banks around the world invested in these bonds because they believed what it said on the tin, we sit back and wonder. If politicians now come along and blame the bankers, we should not sit back but ask how come the banks could lend as they did, sell the bonds they did and invest in the junk they did. Sure, they could have said no. But when everyone else was on the bank(d)wagon, it is brave man who stands on the side.<br /><br />Surely the fault lies with those who allowed the creation of a banking world where all this could happen. Who deregulated? Brown was not alone.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-58546463893295078682009-04-02T01:44:00.000-07:002009-04-20T22:26:36.768-07:00G 20The more you look at this whole business, the more obscene, but also the more complex it becomes. The headlines about bank bonuses talk to the protesters, but also to the thousands who have lost their jobs simply because borrowing, ordinary business borrowing, became so difficult; they talk also to the thousands more who lost their homes. Massive bonuses were wrong; but <em>who</em> was wrong?<br /><br />As my character Ed puts it, in a University town which is the most popular pub? The one which doesn't chuck you out at closing time, of course; the one which has the loosest rule book. These tend to be the places where trouble is to be found. So too with banking, loosen the rule book and the bastards will push beyond even their wildest imaginings. The recent book <a href="http://cityboy.thelondonpaper.com/book/">City Boy</a> would seem to confirm this in spades. It is Lord of the Flies, isn't it?<br /><br />All this would be bad, but not horrific, were it not for two things. The impact is global and massive. It came about as a result of the policy of western governments to let markets govern themselves.<br /><br />Surely in a civilised society we all need boundaries?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-19761346488200769532009-03-23T10:44:00.000-07:002009-04-20T22:43:26.761-07:00The Crunch by Alex BrummerThe interested reader of the financial pages will almost certainly have some idea of the causes of the woes that have hit the world economy. We all knew that borrowing had hit crazy levels; we all knew that house prices were defying gravity.<br /><br />Words like toxic debt and sub-prime have been the stuff of bar room chat, but Alex <span class="blsp-spelling-error" id="SPELLING_ERROR_0">Brummer</span> has drawn the strands together and produced a coherent narrative. It is deeply depressing. It makes the calmest of men don the <span class="blsp-spelling-corrected" id="SPELLING_ERROR_1">witch hunt</span> uniform.<br /><br />What is probably the worst of all, though, is that the cream of a generation, the very best brains, have been engaged in what is really the most enormous fraud. It is breathtaking stuff.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-37375899134942136452009-03-04T05:47:00.001-08:002009-04-20T22:45:56.266-07:00Tax AvoidanceThe dust is settling a little after the Guardian's crusade against the evil tax <span class="blsp-spelling-error" id="SPELLING_ERROR_0">avoiders</span>. There are to me two points which need to be made.<br /><br />In the UK, Public companies owe a duty to their shareholders. In exercising this duty it is generally considered reasonable that they should minimise costs and maximise revenue. If taxation, which is a cost, is not to be minimised then they would be failing in their duty. So the answer is not to wring hands, but to open a debate over the duties of directors of public companies. If, however, taxation is a distribution of profits in the same way as dividend then the tax needs to be maximised. But what then about employee remuneration; is it a cost or a distribution? What about local taxes? This subject needs proper debate.<br /><br />The second point is banal, tax avoidance is as old as the hills. I spent most of my career advising clients on how legally to minimise their tax bill. But the question is the same; is tax a cost or a distribution?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-89542200163385988312009-02-11T03:20:00.000-08:002009-02-11T03:31:05.571-08:00I'm going on a witch huntLast night I sat and watched as the select committee questioned the four bankers who are being pilloried but also <span class="blsp-spelling-error" id="SPELLING_ERROR_0">skapegoated</span> for the banking collapse. This was poor drama, far too well rehearsed and so wide of the mark it was embarrassing.<br />I mean how convenient for <span class="blsp-spelling-error" id="SPELLING_ERROR_1">RBS</span> to have <span class="blsp-spelling-error" id="SPELLING_ERROR_2">ABN</span> to hand? How convenient for <span class="blsp-spelling-error" id="SPELLING_ERROR_3">HBOS</span> to have questionable lending decisions? How frankly undignified to have four unquestionably intelligent men in the dock.<br />Does anyone seriously believe it was their fault? As always on such occasions the metaphor is to be found in sport: if the rules permit it you do it, to do otherwise will guarantee defeat and defeat would serve no one <span class="blsp-spelling-corrected" id="SPELLING_ERROR_4">admittedly</span> least of all those set to gain most through their bonuses. The point though is surely that deregulation had made possible the fantasies of financial engineering that filled the <span class="blsp-spelling-corrected" id="SPELLING_ERROR_5">balance</span> sheets of <span class="blsp-spelling-error" id="SPELLING_ERROR_6">financial</span> <span class="blsp-spelling-corrected" id="SPELLING_ERROR_7">institutions</span>. So it was obvious that the brightest and best would be recruited to invent ever more fantastic <span class="blsp-spelling-corrected" id="SPELLING_ERROR_8">devices</span> and the banks would milk them dry of profit. Was I the only one to raise a slight eyebrow at the <span class="blsp-spelling-error" id="SPELLING_ERROR_9">RBS</span> <span class="blsp-spelling-corrected" id="SPELLING_ERROR_10">results</span> following the <span class="blsp-spelling-error" id="SPELLING_ERROR_11">NatWest</span> acquisition. I rather doubt that results like that didn't come just from cost savings.<br />The point though remains that the banks did what was only natural, given the environment in which they were allowed to operate.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-30458495607074649812009-01-21T04:03:00.000-08:002009-01-21T04:20:20.934-08:00Dot com - remember that?Amid the really astonishing events surrounding the banks comes a thread of memory of quite why it was the FTSE last reached the 6,000's. The context is relevant and might well age me. Dear old <a href="http://www.ubs.com/1/e/about/history/1970_1989/1986">Phillips and Drew</a>, a massively respected name, stuck to the principle of value investment; you know, actually looking at what a company does and assessing the quality of its earnings. They fell in the league talbes whilst the flash boys all went for momentum investment; my favourite image of the round tray filled with water which sloshes to the side to which the trays is tipping at any one time; and the more it sloshes the more it tips until...you've guessed.<br />Well, dot com was quintessential momentum, money piled in after money and values (what an odd use of a word) rose and rose. This is so like the other metaphor of the roundabout which spins for ever faster until some one blows the whistle and, another metaphor, the king is seen to have no clothes.<br />What strikes immediately as odd is how the banking sector seems to have taken the mantle of the dot coms. It is odd until we look more closely at what banking had become. Profits it seems came from clever financial instruments which defied gravity. So that they fell should be no surprise. The problem is that they were in the same banks which have serious job to do in any economy.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-25951203224110198452009-01-19T03:50:00.000-08:002009-01-19T04:02:49.790-08:00EmploymentThe Graduation Ceremony at Exeter on Saturday brought it home. It is no longer numbers; it is names and faces and on Saturday they were mostly post graduate degrees.<br />I return to a piece I wrote with tongue firmly in cheek, as indeed we all did, as we argued that higher education should be only for the rich. Outrageous and wrong, but...<br />But, is it fair to take people through three years as undergraduates and then one doing a masters or solicitors exams or some such, with no real possibility of work? Or do we play a longer game and accept that first time round the right job won't come, but that there are other opportunities which will add something whilst we wait? It is the prospect of so many people educated to a level which the jobs market simply does not require. Or, again, is government thinking of a longer game? Or, as I have argued before, is it a device to massage the unemployment figures?<br />An honest and informed assessment would go down well.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-55501753602201395722009-01-09T06:45:00.000-08:002009-01-09T07:26:09.072-08:00Will this recession pass?Simon Jenkins in the <a href="http://www.guardian.co.uk/commentisfree/2009/jan/09/simon-jenkins-recession">Guardian of 9 January</a> takes leaf out of the historian's file to assure us that all will be well.<br /><br />As usual with Jenkins, there are buckets full of common sense slopping around everywhere in his argument. I'm with him in his jibes. I have to say the Bishops got my goat particularly with their hefty shutting of the borrowing the door so long after it would have done any good.<br /><br />My question though is whether we are seeing something that has a substantial structural element to it. A friend told me that he had been away from Falmouth for the Christmas Holiday and returned to find third of the shops shut. This is an exaggeration, but the high street of smaller towns are beginning to look like mouths after a visit to the dentist. Retail is changing. My own village is awash with courier companies delivering on line purchases. It has been apparent for ages that the high street is made up largely of financial services, opticians, designer clothes and coffee shops. Soon surely it wil just be spectacles and cups of coffee.<br /><br />But what does or should this mean for the economy? As pointed out elsewhere in Jenkins's article one third of workers are relatively untouched by recession, being on the public payroll; another cohort, those already taking their pensions, are in the clear. Those at risk are those for whom economic growth is a vital link in the chain. Many jobs go on from year to year simply because they need to be done; these surely are pretty safe. It is the jobs that come from someone taking risk to gain advantage that go in recession but even then not all of these.<br /><br />But in the longer term, are these jobs less likely to appear in the future? I think not. the entrepreneurial instinct is firmly in place and will be bursting through any minute now.<br />The landscape though will change and this we must accept. Perhaps though the old labourites were right. An economy cannot exist happily on financial service and retail alone. some how, somewhere, someone needs still to make something.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-79339714306807020942008-12-23T02:33:00.000-08:002008-12-23T02:49:12.910-08:00The nationalisation of capitalEarlier this month interest rates went to an new low, the rate current in the year of my birth. This places what is happening in a different context: it is no longer about a theoretical world of money; it is about the lives of the baby boomers. We began in the post war reconstruction, although we didn't know it, we had never had it so good. We moved into the white heat of technology and the fear or expectation of socialism. Perhaps neither happened. Then into Europe and winters of discontent, millions unemployed. From here the unions were crushed and deregulation first appeared, but in the name of financial proberty, the day of the monetarist. I suppose we then went into never never land as the western economy grew on a fiction, or perhaps two fictions, that financial services create wealth and that asset values will always rise giving everyone infinite scope for personal borrowing. The merry-go-round then came to a shuddering halt and many fell off.<br />We have witnessed central government taking on what is, in effect, that irrational borrowing of individuals: a negative income tax of some sort. Commentators are talking about a new capitalism. I wonder what this might mean. Will we, some years hence, read a party manifesto arguing for the privatisation of money? At current interest rates, capital has meagre reward. Would anyone want it?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-57509358746193407032008-12-02T22:35:00.000-08:002008-12-02T22:44:47.443-08:00Pension Scheme fundingNo, don't go to sleep; this one matters. You will recall the interplay between three or four numbers which drive the result of an actuarial valuation: inflation, wage increases, pension increase and equity premium. On these four hang all the law and the profits [sic]. A key question is the equity premium post credit crunch. The FTSE is where is was ten years ago, having been 50% higher both last year and twelve years ago. The equity premium is the amount by which returns from equities will exceed those from gilt edged stock (government bonds). The argument has to be that the premium will now be considerably higher; the starting point being considerably lower. This assumes that in the fullness of time the market will once again rise to 6000. I recall that when it did first time round, I thought it has assumed the growth for he next ten years. (One day I must follow my instincts.)<br />The question is whether it will rise again, or whether we truly are in a new world.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-45360159570748776122008-11-17T06:41:00.000-08:002008-11-17T06:49:33.652-08:00Keynes, Bretton Woods 2, Citigroup and AliceThese really are heady days and feel rather like Wonderland. Is Mr Brown the Rabbit?<br />Last weekend was billed the great <span class="blsp-spelling-error" id="SPELLING_ERROR_0">Bretton</span> Woods 2 and those closet <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Keynsians</span> amongst us <span class="blsp-spelling-corrected" id="SPELLING_ERROR_2">perhaps</span> felt our eyes water a little as the great man was dusted off. The <span class="blsp-spelling-corrected" id="SPELLING_ERROR_3">difference</span> is that last time he had spent months of preparation and even then only just manged to get his point across. It strikes me that the extent and level of thinking is a <span class="blsp-spelling-corrected" id="SPELLING_ERROR_4">shadow</span> of what went before.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-48675288856068678662008-11-13T01:07:00.000-08:002008-11-13T01:16:04.815-08:00BT and efficiencyIt is the old story, our work force has reduced from 250,000 to 160,000 and may well fall further as we seek to be more efficient for our customers. The announcement of <span class="blsp-spelling-error" id="SPELLING_ERROR_0">BT's</span> figures this morning showed a business that was growing but whose profits had fallen slightly. The market actually responded positively, having previously fallen on a profits warning.<br />Is a business more efficient if it employs fewer people? It is more profitable if it has lower costs. It is more effective if it gives its customers the service they seek. This perhaps naive, but there is scope for a debate. Last time businesses shed people and those people cost huge sums in unemployment <span class="blsp-spelling-corrected" id="SPELLING_ERROR_1">benefits</span>. The question is, who really benefits?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-58270353736098692012008-11-04T07:52:00.000-08:002008-11-05T05:23:57.273-08:00So the real culprit was economic growthThe new chief executive of <span class="blsp-spelling-error" id="SPELLING_ERROR_0">RBS</span>, Stephen Hester, interviewed by Robert <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Peston</span> on this morning's Today Programme (4 November 2008) <span class="blsp-spelling-corrected" id="SPELLING_ERROR_2">blamed</span> the years of good economic performance for the excesses that led to the tidal waive of bad debts. This links in an interesting way to Saturday's Guardian Review and the book by Niall Ferguson The Ascent of Money. It would seem that there is a point at which the financial markets detach from anything resembling real economy. The knee jerk reaction to this is evident in politicians of the left who now queue up to preach the gospel of manufacturing, failing to notice that cost profiles make this a pipe dream for western economies. Yet the answer is not the focus on financial services from which we are now all <span class="blsp-spelling-error" id="SPELLING_ERROR_3">reeling</span>. It boils down to finding new ways to add value.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-48372431642157774122008-10-29T09:03:00.000-07:002008-11-04T07:57:55.118-08:00JM KeynesIs it possible that we have been Keynsian all along?<br /><br />If we look back over the years of uninterupted economic growth, we see beyond question that it was funded by borrowing. Much of that borrowing has resulted in bad debts to the lenders, many of whom have been bailed out; by whom? Isn't this public borrowing by another name?<br /><br />The Guardian (28 October 2008) headline 3 trillion lost, makes the inocent look round for a very large hole. Where has it gone? Indeed where did it come from in the first place? Pension schemes are a major source of investment and a great many of these are now money purchase. That is a frightening part of the answer. Looking back though at the way in which the ftse has moved, the story is, if anything, more chilling. There is a shifting sea of value, but it would seem a sea with a plug hole with plug removed.Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0tag:blogger.com,1999:blog-3169224053565464282.post-37737309761020184892008-10-27T07:50:00.000-07:002008-10-27T07:54:19.167-07:00Vince CableMonday's Guardian (27 October 2008) offers an appropriate reminder that the LibDems' treasury spokesman did make warning noises about house prices and the level of personal debt. The point remains though that it was in no one's interests to do so. A parallel is drawn of the other voice in the wilderness before WW2. Again, what incentive did Churchill have and were we really so surprised that government sought to shake him off. It is the problem of the status quo - it works in the short term, so why rock it?Phil Williamshttp://www.blogger.com/profile/15299134545473860221noreply@blogger.com0