The big "ifs" of the Emergency Budget

It's not so much an issue of trying to sail against a head wind, it's more about trying to avoid getting sucked into the vortex:

https://www.youtube.com/watch?v=Zw3i5Rzpx5A

Failed military strategies and over ambitious IT projects are a desperate attempt to try and keep the profit rate up. To try and grow the system, even though it is bursting at the seams. It's a shame that Hyman Minsky isn't about to remind us of how so many aspects of modern economic life are actually a covert means of expending the REAL surplus.

Miltary / IT contractors & consultants are just a clandestine welfare state in suits & overalls. What the Gvt spends in direct transfer payments is just the tip of the ice-berg.

When I started working in IT it was basically a dull profession staffed by lots of very clever but very dull geeks. Deodorant seemed to be an issue also... and usually too many doughnuts on the table.

But the IT projects got done and they usually came in on time and on budget. The very clever but very dull men would sit down, work out what was to be done, what was needed and how much they had to spend - and then they simply got on and did it.

Then the Internet happened. Bill Gates woke up to the Internet in late 1997 and we had the dot.con bubble. Suddenly everyone and anyone wanted to get into IT - there was suddenly big bucks to be made in IT.

Oh dear.

The very clever but very dull geeks suddenly found loads of people sat around their tables - middle management in IT soared beyond any possible tecnical or business need.

For the first time ever the IT men found themselves not only having to do vast amounts of paperwork but they also found themselves having to constantly explain to these non-technical middle management people everything from how to switch on a PC to really, really complicated geekdom IT stuff... and gradually the very clever but very dull geeks - the engineers who actually did the work - got pushed further and further down the food chain. Instead of just doing the job they had to justify themselves endlessly to people who had no idea what was going on - and when you explained it to them it was like talking Klingon to a Romulan.

Sorry, different geekdom creeping in there.

By the early years of the Century many major IT projects in the Public Sector were being run by people who had great difficulty in accessing their email let alone understanding and implementing the complicated technical projects that they were in control of. Many of the very clever but very dull geeks simply got out of the industry.

The Public Sector IT projects - sorry, the British Public Sector is alone in the Universe in calling IT 'ICT' - also had a wonderful tool, designed by civil servant paper-shufflers, called Prince 2.

It is almost impossible to put a figure on just how much and how bad Prince 2 has been for Public Sector IT projects.

Prince 2 is a British civil servant project methodology tool - paper-shufflers in the civil service make very good salaries indeed, and pensions, from demanding that all Public Sector IT projects follow Prince 2 - it is so good that no Private Sector Corporate uses it. That is how 'good' it is.

So, in the Private Sector IT projects get allocated a need and a budget and the IT staff get on with it but in the Public Sector there are endles rounds of meetings, tens of thousands of emails per project and enough paper shuffled to consume one or two small tax-exempt pine forests in Scotland. It is painfully slow, over-complicated and a big waste of time - but it allows a huge number of non-technical middle management civil servants to attend endless meetings and get paid for doing so.

Look at the Public Sector IT disasters of the past 15 years and the one thing in common in every single one - Prince 2!

Look at the Private Sector IT disasters where projects have gone hugely over-budget, have come in years late and which do not work - um, um... oh, no Prince 2 in the Private Sector.

Private Sector corporates who have to make money to exist have no time and no resourcs to waste on something like Prince 2.

At a stroke UK Public Sector IT projects could save vast sums in staff, in time and in budgets by simply removing Prince 2 completely and running IT projects in the same way that thousands of Private Sector coporates do successfully year in year out.

Will it happen - no, of course not... because the civil servants have a vested interest in keeping it and it is not even on the radar of politicians and journalists who simply do not understand what has been going on inside Public Sector IT projects.

By blaming IT as an ill, in an era when we actuallly need these highly-skilled people in a high-tech industry to help us out of the mess we are in, it is akin as to shooting the messenger.

It is not IT that is the problem, I say it again, but the Prince 2 methodology and the tens of thousands of civil servant paper shufflers for whom it is their gravy train.

As for the NHS IT project - are the rumours really true that they tried to rewrite the Network Stack and create their entirely own proprietary Network TCP/IP Stack separate from the standard used all over the World?

If true, madness... absolute madness...

It reminds me of the time I sat in a BBC Office near Broadcasting House in the late 90s and listened to plans for the BBC to design their own PC operating system to take on Windows - nah, a Public Sector body would not even contemplate wasting money would it!?

Around thirty years ago in the middle of a nasty recession I had a vision that one day the political class will overdo their egotism and spend all the money leaving none left. I never expected to have that vision realised as it was so absurd it made little sense. Sadly, I now know it was prophetic.

This was about the time I quit the old Liberal Party as it was slowly transforming into a social-democratic party full of opportunists.

No doubt my vision was an occlusion of the recession and my political uncertainties at the time.

Now those social-democrats are sitting on the government benches with the loathed Tories trying to put straight the very fears I had all those years ago.

The budget was necessary but it is so very ugly. It is aimed at only one thing really and that is getting the country off the debt hook as fast as possible. I said earlier it has to be seen as work in progress. It won't all go according to plan, there will be muddle, mess and desertion. But it is the only show in town and it will have to do.

The idea that the state can act on behalf of all the people all the time has always seemed absurd to me. As I said I am no social democrat. Mechanisms and policies don't change events on their own as less tangible factors such as leadership, social solidarities, morality and self-belief all come into play. For example, you don't improve the condition of the poor just by giving them money, you also have to facilitate them to escape from their condition. In my view it is in this latter aspect that our welfare system has so utterly failed.

As a people we are going to have to start believing in ourselves a bit more. We once had a clear idea as to what we were but that is fifty years gone and we have still not found a more contemporary answer. So we left it all to the politicians and their state which in turn failed fundamentally in 2009.

It is time now for the ordinary people to take control by elevating our experiences in everyday life as our standard. You simply cannot be deceitful in front of your neighbours, relatives, fellow workers and friends so why is it accepted in public life? You can only live in one place at a time, wear one set of clothes and eat one meal at a time, so why do we have these itches for travel, for many clothes, for huge mounds of food and even second homes. We are a nation of neurotics and all that money we had and lost never made us happy.

So the writing is now on the wall. We have been weighed in the balance and found wanting. Time for that diet sheet and shanks' pony methinks. Time to get working and adding value rather than wait for the Lottery win. This is going to test our business leadership who are as much a product of the boom as the busted banks and the ballooning debt. Life is getting interesting: it might even be fun after a while.

#1

''Failed military strategies and over ambitious IT projects are a desperate attempt to try and keep the profit rate up. To try and grow the system, even though it is bursting at the seams.''

Yep

I would add to that over ambitious (desperate)attempts to get more oil out of the ground.

The slow motion global socio, ecological and economic car crash continues.


A bit like watching England really... strewth.


Paul,

Good to see some numbers to back up the theory in your piece last night, the assumptions do appear very optimistic, the comparison with China or Brazil like economic growth activity in the private sector being required for the loss in the government sector is a very useful one.

One comparison that does not work is the oft quoted Canada experience. They did make similar massive cuts sucessfully and recovered quite quickly but their economic base is far more varied and suited to feeding growth in developing nations than ours.

Canada, like Brazil, is a comodities rich country broadly self sufficient in energy, food and materials. Canada had something solid to fall back on when they cut out a bloated state sector, I would like to belive that we have something too.. but I just do not see it.

Can you make sure someone points that out the next time the 'canada' comparison is made on newsnight. I dont think it is a fair comparison to make when trying to sell these cuts, better if we can slay all these myths and get the focus on something suitably radically different that will actually work long term.

Very good piece.

"..there is no guarantee they [cuts] can be achieved" I agree
"..there is no guarantee that the UK can make the switch" I agree
".. it is not clear how hard the poor will be hit until the service cuts take place" I agree, but are there ever guarantees? Could we fund growth on overdraft without reducing the balance outstanding.

I have read that the bond market's price for non-penal interest rates was to see full deficit reduction in five years.Preserving tripleA is being prioritised above maintaining the standard of living to which we have come accustomed on credit.It will be interesting to watch France who might test their rating by avoiding blood-red austerity. Lets see how they get on.They might get away with it or survive a downgrade given their indebtedness was from a lower base. If they have to bail out their banks, their game might well drastically change.

as long as china tilt the table their way through currency manipulation the uk will continue to get poorer. the marxists can then say capitalism has 'failed'.

given the fixed costs of raw materials around the world the cost of making say, steel, should be consistent. yet it is still cheaper to import it from china. this is currency manipulation.

china's currency should be the strongest in the world not weaker than gbp and so extract jobs and wealth out of the uk.

the tory language dwells on cuts not growth, pain forever not temporary restraint and no word about when they will sell the banks off and 'make a profit'. Will all those who get pain now be recompensed for their sacrifice when 'the profit' comes in?

4 better if we can slay all these myths

its the myths they want. trojan horses that will deliver their pet ideology. Labour did it too.

the political class have no society building science. the only theory we get is market fundamentalism that has continually failed. Markets deliver profit not services.

#6 jauntycyclist,

we already got the profits from the bank bailout. We lived beyond our means and the markets loaned us money to do so. Then we had to pay the bill, via the bank bailout. Once the dust from that settles, that is that. We can't have our cake and eat it twice.

The only people claiming a profit would be made on bank sales were Labour. Anyone who believed this needs their head examined. They preferred to say this than to detail reality to the populous.

China are keeping their currency down by supressing internal wages, ie the Chinese are working harder than us for less. If the Yuan rose our import costs would rise, depressing our standard of living. Or if it stays where it is, if we want to be more competitive we must work harder for less. Either way we cannot continue spending more than we earn. I don't know many Marxists but I do know loads of Brits who think they have a right to work less than the Chinese and yet spend more. Even Marx would have thought that was crazy.

China aren't making us buy steel with a gun to our head. They are playing the trading game well. The Yanks don't like it for the same reason we don't - but they won't call time on it because they want the cheap goods. Like children we want what's good for us but not the bad.

shireblogger,

agreed. I think Osbourne is playing this well. Talk really tough to avoid a downgrade as that will cost us a bomb (no Trident pun intended).

Even if they fail to meet the cut targets (and I'm sure they will as the civil service will drag their feet) it gives us breathing space.

Boy is this year going to be interesting. Roll on the spending review in October.

ps wonder how long the MPC can keep a lid on managed inflation given that one broke ranks this month? Everyone who can pay your mortgage with rising living costs and static wages put your hands up. Good! Now keep them up if interest rates go to 4%. Oh dear...

do you mean to say that I get all that cover for such a low premium.....the line uttered by Peter Sellers in the film about blackmail which just about sums up the budget...

On target as usual, Paul. I cant figure out how a DCLG facing a 25% cut over four years will be able to help legions of local councils freeze their council tax. Recently a local council made a middle manager redundant with long service at a cost of £150K - most of which was the strain cost on the pension fund. Budgets may be cut but public expenditure may rise not fall from the consequences - no evidence of any form of whole systems thinking here.

Excellent article, Paul. When's this going to appear on Newsnight?

...you will find some pretty heroic assumptions ... the trade deficit falls from 44bn to just 9bn

That is pretty heroic, they'll be lucky to reduce it by 25%.

The fiscal tightening creates a hole in demand the size of 6.8% of GDP by 2014. Yet the OBR predicts growth of 2.7% by then. To travel at 2.7 km per hour into a headwind of 6.8 km per hour you are really motoring at a notional 9.5 kmh. In other words, we are expecting a growth effect from this budget that takes us into the same league as Brazil or China. That is a big ask.

That really hits the nail on the head. The 2.7% prediction is grossly optimistic.

Bloody-hell Paul!

You seriously need to consider investing in a steam iron.

You looked liked you had slept in your suit on NN tonight.

...mind you though....you didn't look as bad as Kirsty did last week!

Gross investment is down due to private deleveraging.
Exports are not growing due to lack of foreign demand.
Private consumption favours imports.
Government spending also flows to imports.
Surplus in net investment income supports jobs abroad.

Imported price inflation, is pushing up input costs, eroding savings, and pushing up the general cost of living (CPI).
Smaller than anticipated output gap means imports cannot easily be replaced by domestic production.

Inward investment is put off by the weakness in sterling reducing profits when translated into the foreign investor's home currency.

Speculative assets (property, equities, art) are cheap to buy for foreigners, due to sterling's weakness, which pushes up asset price inflation (RPI).

Just read that a top Euro pol has tried out the 'victim of its own success' ploy with the currency, when it appears to actually be 'not working'.

One can see this getting used to great effect in the coming months.

Personally I think it all started in the USA, with that 'draw = winning' quip.

Partial response to #2 tawse57 - a view from the periphery of the network.

Much of this relates to life in in big government department doing non routine work (scientific research, development and project support) between say 1985 & 1995.

The starting point was a small central administrative network which wasn't useful in delivering the technical parts of the job, but didn't get in their way either, and was essentially irrelevant to anyone outside the clerical/adminstrative area.

By the mid eighties, PC's were turning up in all sorts of technical tasks - things like data logging from experiments, basic datahandling on spreadsheets, technical graphics. A big driver was that a project group could "get it done" this way - a PC and software could be purchased and put to work within 10-12 weeks, while attempting to use central IT departments would involve months on end in consultations during which the original technical need was redefined to fit the service which the IT department deemed appropriate.

Local networks started arriving in the late eighties/ early nineties and were pretty inoffensive at first - some convenience and efficiency for a limited range of tasks, overhead cost not very high. Things started to go pear-shaped, however, in the early nineties when these networks were looked at by organisations in which:

a/ Large numbers of geographically dispersed medium sized units were to be "integrated" into large structures.
b/ A culture change to ape commercial management structures was imposed.
c/ Every manager was expected to justify their existence and saw their department budget under threat.

What this amounted to was a dramatic increase in the demand for central data which could in some sense be presented as a description of progress on the various projects being undertaken. The network was seen as the solution to this problem, and had the added advantage that much of the cost it implied (primarily data entry) could be made invisible - you didn't need to employ clerks to, say, collate returns of hours worked or equipment purchased, as scientists and engineers would "do it for free" using a PC on their desk.

The problem was of course, that once that idea that the clerical work could be "done for free" caught hold, the quantity demanded expanded without control - individuals were at one stage routinely accounting for the time they worked in a given week against 15-20 "cost codes", at a resolution of six minutes. The "failure" of the IT system was built into it by a flaw in the management model - crudely, "any cost I impose that isn't on my budget either doesn't exist or may be a free lunch that I can extract from someone else".

It would be comforting to think that this weakness has been recognised, and modern IT systems are designed with realistic estimates of the invisible costs they impose. Sadly, whenever I interact with large organisations (at the moment this is primarily in my role as someone applying for a job), I find that I am expected to spend large chunks of my time providing the organisation with marginally useful information at my expense (in this case, I get the distinct impression that most online job applications involve providing either the prospective employer or a recruitment agency with a free entry for a "candidates database"). Blaming the IT developers seems inappropriate - they're simply reflecting organisational attitudes to other people's time and expense.

8
..if we want to be more competitive.....

china is not working within the market economy based on human rights belief system.

the only way to out compete china is to out compete them on currency manipulation, human rights laws, labour laws, freedom of speech laws, copyright and patent laws and foreign policy loans to dictators.

china is not playing by any of those rules. Manipulating them to gain a competitive advantage is not economics. its warfare.


They are playing the trading game well...

A games implies rules and a ref. They have no rules and ignore the ref. that is not a game.

jauntycyclist,

agreed - I wouldn't like China to win out - we will miss the USA if she takes a back seat.

I would say they produce goods cheaply (and hence have a favourable rate of exchange) thanks to a lack of human rights, environmental breaches, ignoring copyright etc. I'd hate to live under that system.

So if we disagree with China human rights etc, why keep buying their goods? Because we like three quid T-shirts so long as we don't have to watch kids making them. So we stop buying their goods and our standard of living goes down. Brits like human rights, but they +love+ three quid T-shirts.

It's in our control to stop playing this game, if we really wanted to. But we won't knuckle down.

Finally, yes this is a global power struggle. It's the human race. China have a chance to get in the lead. When Geithner was in China and said to students they would clear their deficit the students involuntarily burst out laughing. Freedom is best but you gotta back it up with guns and if you can't afford the steel you are stuffed.

Excellent piece of analysis, thanks Paul.

Okay I know that cuts are coming and necessary but it doesn't make me feel any better. I curse the year I graduated from university (2009), because after the umpteenth phone interview and application filled in I have only managed to work two of the last ten months, and now I'm back on the dole again. I have an interview for a call centre soon(a really good use of my degree right there) so hopefully I can at least get working again and use this as a platform to build on.

Ultimately, Britain needs to learn from all to this; not to listen to a cabal that claims its interests are the nation's interests. My fiancee, a foreign national, works as an au pair in leafy Surrey for a City banker, and I have had the eye-opening pleasure of wandering into their world over the last year, having stayed there a few times. The kids are spoilt and don't understand how lucky they are, one of the cheeky monkeys made fun of my non-RP accent. They don't understand that not everyone is rich and has people who work for them. They will never understand that I suspect. The family built the house from scratch in the early 2000s, no doubt off the back of our then booming financial services sector. They are nice enough, but now that they have made their money they are actively looking to move abroad to escape rising taxes. They freely admit that is the reason. Good Riddance. If you're not patriotic enough to stay and do your duty, then go to hell.

I hope those that do stay realise they share a large culpability for what is about to happen, and act accordingly by giving, lots, to British charities. However I have to doubt it, I suspect that having read Ayn Rand, many of them moralise that they are the 'go-getters', and wealth creators and people actually owe them thanks.

We have seen billions wasted on useless IT systems which break down and in many cases never even got off the ground.

All happening in the last ten years or so and all responsible for job losses of good capable people. Has anyone ever done a comparison on productivity and good management before computers took over. Then you had to know your job and how it worked. Now you put someone in charge of a computer who doesn't even understand what goes wrong if they press the wrong buttons. Multiply these mistakes many times over and you get a banking crisis like never before.

We have seen the same problems happening in the public sector and no doubt the private sector too. The money being lost must be astronomical.

Sadly this was easy to predict after having to oversee changes from a manual accounting system to a computerised accounting system. You could put rubbish in and sure enough it would always balance and throw even more rubbish out. Without the careful auditing required I doubt if any accounts can be relied upon to be accurate today.

So until we have people who can once again understand how to control money properly none of the graphs or forecasts will mean anything at all.

This will mean more jobs for real people and in the end could be an actual cost saving when people are once again in control and not computers.

Keynes seemed to manage without computers so is this oldfashioned or just going back to good old basic ideas that actually worked.

Your analysis of the growth mountain implies an impossible performance by the private sector in massively investing in UK PLC, in expanding its share of the british economy and in delivering an export performnce in excess of the most vibrant economies in the world.

As the Office for Budgetary Responsibility has signed up to this, I feel it is vital that this does not go unchallenged because it is totally ludicrous, incredible and flies in the face of all available evidence and experience from the past.

I suspect we will find out that Sir Alan Budd is as unreconstructed a monetarist as John Redwood and we need to smoke this out urgently. What do the OECD make of OBR's projections? If the private growth sector performance does not materialise, what will the ConDems do?

I feel that the rigged trade market run by the Chinese Communist Party to hold down their currency (not to mention their people) is now so blantant that the EU & US need to impose massive import tarriffs to redress the balance, create domestic jobs and rebalance everything from the trade account to British industry.

Meanwhile the "perfect storm" of sovereign debt crises in EuroLand could well provoke a second banking credit crisis and it will be impossible to bail them out a second time, so banks will have to be allowed to fail. If every government follows the slash & burn approach of the UK the issue won't be a double dip recession but a deep longlasting depression.

All of this points towards the need for a G20 initiative to rebase the major currencies, to address the massive debt and asset overhangs of squillions of dollars & euros held by BOP payment-surplus countries like the oil exporters & China that are about to lose most - if not all - of their value.

The debts are unpayable and the assets are unsustainable - sooner or later the line will break and reality will burst in.

Osborne et al are free marketeers to their bones who simply do not hve the stomach for what needs to be done.

#22 imho hopelessly old fashioned. IT will continue to get better, moving more and more into robotics for manual tasks, eroding manual jobs more and more. Economies can either stay manual and be way less efficient or delegate tedious jobs to computers and spend more time on higher level tasks. I reckon this is going to be a major cause of tension in the next decade.

This is an opportunity. If you can be replaced by a robot doing the same task over and over 200 times a minute then please try for another job as Henry Ford production line jobs are soul destroying.

#2 and #17

Interesting points. I think these examples also highlight the considerable inefficiences that come through in highly complex organisations and cultures. Have either of you read John Seddon?

https://www.amazon.co.uk/Freedom-Command-Control-Better-Make/dp/0954618300

23 richard brunning

It is not a case of what will the coalition do if the private sector growth performance does not manifest, it is more a case of what will any of us do. There is no money: it has all gone. The private sector is the only available route out.

China has its own problems. This is not being seen by the West as we are not supposed to see it. The contradiction in the Chinese economy is that they need cheap labour to keep the round-eyes buying but the workers in China now want their slice of the prosperity cake. China will shift the yuan-reminbi off the dollar peg to resolve this tension. It might do us all a favour in some ways.

Your concerns about a second banking crisis are quite correct. This has been my main worry since the first one and have often agitated for fundamental banking reform. I fear that another year for a committee to report is too long.

Also your comment that the debts are unpayable and the assets unsustainable is perfectly valid. There is no risk that reality, as you call it, might break in. It has actually arrived. It is just that most people have not quite absorbed the fact and are still acting out the fantasy.

I don't know what you expect the coalition to do as I fear there is very little they can do. The budget created time for the UK. As I say above it is a work in progress. It won't all happen at once, the world won't come to an end but it will change and keep changing for quite a long time. Times will be rough and hard: we can make it as difficult or as easy as we want.

I would still like to see some bankers up in No 1 Court at the Bailey. This will help us all to get along for a while longer. Next spring perhaps?

No23

Everything you say is correct, I sense from your post that 'the penny has dropped' in another individual.

Good.

Tell all your friends, plant the seed, explain it to them, the underlying basic truth of the real situation is there for any well balanced free thinker to see who chooses to.

I think i am seen as been a bit crazy at work amongst colleagues, always going on about how growth is no longer possible, peak oil, the fundamentaly flawed global economic model in the context of an already highly mechanised and efficient society.

They just want their house prices to continue going up, drive anice car, eat grapes flown in from south america, retire at 60 and spend 3 weeks a year on a beach somewhere.

I guess its easy to see why they prefer to 'put up with that slightly eccentric technical director' than actually engage with what i am telling them and realise the truth of it. Why would they believe me over the procession of economic experts and government departments who fill the pages of newspapers and the media in general?

However as things continue to slowly deteriorate on the prosperity trend graph, i am sensing the tide turning and some of them are now thinking 'hey, maybe he is not so crazy afterall'.

No.21 - yours is the generation that will change all this, the current system offers you no future except 'non jobs' in call centres and the like to keep the fataly flawed current economic model going. There are no jobs for you, there never will be again, how can there be in a world which continually strives to be more efficient and is now very good at it.

But there is another way, unfortunately it seems we will have to wait for the existing system to collapse before we can build it, but the more seeds that can be planted now so that awareness is raised of the truth the easier that process will be.

Tell all your friends as well.


England to beat Germany on Sunday setting up a clash with Argentina in the quarters, that combination is just too delicious a sporting prospect steeped in history and emotion for it not to happen, it would just be such a waste.

Think John Terry arms behind his back to be sure of not giving away a penalty launching himself at Higuins feet as he is about to pull the trigger in the 93rd minute with the score 2 all with maradona and capello doing a demented jig on the sidelines.

It has to happen, its just too delicious a prospect for it not to happen.

We can be anything that we want to be, and it is not too late to change.

There is no way that the private sector in the UK is going to pull enough rabbits out of the hat to replace a quarter of the public sector, deliver a big surge in exports and massive new investment here to produce the growth that is essential to pay off the debt and stop money pouring out through our balance of trade deficit - ain't gonna happen - anyone who seriously claims it is is deluded or lying for ideological motives.

There is a growing international concensus that the prognosis that the UK Budget will push us deep into recession, tax income will fall heavily, unemployment will rocket and the debt level will RISE not fall and leave us with a millstone of another n million unemployed to feed - that is what happened in the 1980s here, in Japan, in Argentina and the other countries that tried this - those that clawed their way out of the mire, e.g. Canada, did it in very different economic conditions from today.

The old model is bust beyond repair - i.e. the Thatcherite/New Labour concensus to deregulate the City and let them go around the world, red in tooth & claw cutting deals wherever they can, then bring their ill gotten gains back to the UK, whilst letting our manufacturing industries go down the pan: Finito.

The ConDem idea that small business will create growth and jobs is also ludicrous: indeed, growing small businesses will make things worse, as virtually no exporting comes from that sector, but they tend to suck in imports. No, we need BIG manufacturing core businesses. Redwood says "it isn't the job of Government to pick winners" - well, the guys whose job it was to do that - ie investment banking have blown it and lost their shirts - there's no one left but government to pick up the pieces so we'd better get to it.

The only short/medium term answer is targeted trade controls combined with investment in import substitution to create jobs here and we also need to address energy and food imports by investing in renewables and moving away from imported grain as the feedstock of meat production. Retailers need to be told, source from UK production or face hefty import taxes; they'll soon crack the whip with their suppliers and new factories will spring up. They in turn will source their materials from UK production.

The new key concept is sustainability: sustainable trade, a sustainable economy, sustainable employment and environmental sustainability. We need to produce our own energy, our own food and our own manufactured goods to build a society that is responsible and viable. We need a socially sustainable economy aimed at full employment, but driven by the objective of becoming as self-sufficient as possible at the local, regional and national levels. Globalisation is not a force for good, it's simply a license to exploit both low-paid labour making goods in China, to rape countries of their raw materials AND exploit consumers in the developed countries through personal debt -it's got to go.

"Free Trade" has nothing to do with freedom and much more to do with subjugation - ask a Chinese worker driven off their land away from-self sufficient agriculture into a dangerous, polluted factory working 80+ hrs pw for slave wages. This is not environmentally sustainable anyway and the state of the world economy shows it simply doesn't work.

We went along with it because the City made money out of it and the really big multinationals did well out of it and we got to buy artificially cheap goods. Now it has destroyed our core industries and its time is past. We need to revisit our EU commitments and reforge alliances with our partners to create sustainable societies, markets and environments. That means employment in productive industries that meet our needs, recycle resources and reduce carbon emissions and run agriculture to feed our populations.

But we're not doing this - we're holding on to Little Englander ideas of cutting back the state and recreating a nation of shopkeepers - and it will be "England" - the Scots are much cannier in their politics and are being driven into the arms of the nationalists who will get their YES for independence, at which point the UK stops being an oil producer and overnight our balance of payments will have to be re-written and the pound will be the currency of a banana republic, but without the bananas.

The SNP could help us come to our senses by stepping up the pace and taking the ConDems to have a good long, hard look over the precipice they are steering towards.

#27 I try not to think of John Terry at all......

28 richard bunning

I would agree that private sector manufacturing and commerce will have difficulty achieving an export revivial given the low base into which the last government pushed it. However, it is the only economic show now left in town.

We are in recession and have been for two years now. We have had the economic stimulus and are currently enjoying the consequences but please do not associate this with economic recovery. This is not recovery: it is the consequence of an attempted second bubble. There are those who argue that we need to have a full recession or slump before recovery can be expected. I don't necessarily agree with them but I understand their reasoning.

The old model is bust but it has been bust for longer than is appreciated. The model which you define as Thatcherite was just a sticking plaster on a model that has failed this country since 1945. This model was based on the principle that `the man in Whitehall knows best'. I will let you into a secret he doesn't: he only knows his own best interests.

I have worked for the last 32 years in the SME sector and they all end up exporting to sustain the level of growth they need to keep finance attracted. The great problem in this sector at the moment is that much of the management has no experience of working through recessions having grown up in the boom times. I am looking at a demand pattern which reminds me of 1981 but can I explain it to others who lack that experience?

The matter of importing is a critical factor and is very much the consequence of two trends in establishment thinking. The first is that Britain can only be a service provider in a knowledge economy. My objection to that is the words `can only' which bring me to my second point. This is that the barrier preventing the development of manufacturing in the UK as an economic staple is not in the ability and competence of the workforce but in the perceptions of those who make the big decisions in our society. They know nothing of manufacturing, they are frightened of the flat management model implicit to modern manufacturing technique and they find it all rather smelly and vulgar.

Our current manufacturing position is rather that we need a thousand flowers to bloom. A good number will fail but from the others we can build part of the future. Our problem is finding something sustaining
into which to plant the seed and a means to tend the shoots to ensure they grow.

I have floated the idea that if free trade does not work for us then we should stop it. There are arguments for and against that view. For the moment I am agnostic not least that my own economic interests would be best served through higher tariffs and regulation. I cannot be objective on this topic. However, you have to appreciate our entire trade policy is managed by the European Union.

I am a firm believer in a small state. In fact I could get by without a state as in my view it is wholly unnecessary to my life. The state can only ever be the expression of whoever controls it. Whoever controls the state can only have a minority and sectional view so lets restrict its influence. With any luck this would make us the nation of workshops, factories and farms, informed by good journalism and sustained by competent scholarship: the sort of place we once used to be where nobody controls the agenda.

Your final comment about nationalism is, I am afraid, quite wrong. I accept the nationalist have asked the right question that challenges the view that the man in Whitehall knows best. Sadly, they have come up with the wrong answer as they now think the man in Holyrood knows best. No one individual can know what is best for anyone else. This is the problem and this is what has been strangling our country since 1945.

Hi Paul,

On Wednesdays NN you showed housing contributing a much more to growth in 2013 that in did from 99 to 08.

I find this a little stange? Apart from anything else housings a non-productive asset? Can you calrify?

#29

John terry has many many faults... but defending the England goal on the pitch while wearing an England shirt is definitely not one of them. On that stage he is the budha of central defending with no sense of 'the self' what so ever, he becomes a pure instrument of the singular purpose of stopping a ball going between 2 posts.

I dont like to think of JT off the pitch but on the pitch he has much to teach us all.


I wonder who will be the first to drop out of the G8?

Paul, does the G8 have an economic measurement criteria to determine who is in it like the FT100. Would be a nice piece to look back say 10 years as a benchmark year then see who should be in the G8 today when compared to that underlying economic performance (not just turnover of debt).

Brazil to win today in a scary way for the rest of the teams, spain and Chilli to draw. Ivory coast to win.

The Liberal-Tories have claimed that the was No Alternative (Remember TINA) to their programme of cuts and Welfare attacks. They claim that they aim to be fair. I have a proposal that meets both criteria without imposing cuts, or attacking the weakest in society.

In my latest blog I've show how this could be done. All it requires os for every Limited Company to be required to create new shares equivalent to 10% of their Issued Share Capital, and to hand these new shares over to the Government. As there are more than a trillion pounds worth of shares listed on the Stock Exchange, such a measure would mean transferring over £100 billion into the Government's coffers. But, because this payment would be in the form of shares rather than cash, it would not affect companies profitability, their cash flow, their ability to pay wages, or to make investments.

The Government could raise the cash to cover the deficit by simply selling these shares through the arms length body it set up to manage the Bank shares created in a similar way. It could sell them at times that were most conducive. Of course, it might result in a temporary fall in share prices, when these shares came to market, but such falls in share prices are a regular occurrence, even when they bring no benefit as the above proposal would. Moreover, for the reasons I have given on my blog, its liekly that no such fall would occur, precisely because this method would promote economic growth, Capital Accummulation, and therefore, higher Capital and Share values.

Of course, the Liberal-Tories will not pursue such an eminently sensible and achievable course, because whatever they say they are no interested in solutions which are fair, or on behalf of the people as a whole. They are only in favour of solutions that work for the benefit of Capital, and make the working class and middle class pay.

@stanilic

In fact I could get by without a state as in my view it is wholly unnecessary to my life.

Puhlease ... I could start with the police stopping the hordes from stripping your home clean, and go on to the teachers and doctors who, even if you can afford to go private, are themselves educated by the state sector. And all those nice roads you drive on. Etc., etc.

Paul, a much needed return to the serious stuff, don't be offended but there are other places I'll go to first if I want football punditry.

Of course, we all know that this budget was an illusion, a hearty attempt to lift ourselves out of the mire but ultimately doomed to unravel - no doubt to be heralded by the leftist trolls that stalk these corridors.

But it's like the guy who stopped to ask directions in Ireland, only to be told "but ye wouldn't be starting from here..." Like it or not, even with as much pain as we can bear, we're still an awful long way from stability.

How do we reverse years of economic mismanagement culminating in the bail-out of the banks? Sure, we can try to rap the banks, and punish the innocent with the guilty, but in failing to set the right terms for supporting the banks at the time, there's no longer a clear way back. Likewise years and years of Guardian jobs - mock them all you like, but each and every one are someone's livelihood these days.

Yet, I believe there is hope. This budget arises from the politics of consensus. The petty-mindedness and intra-party control-freakery that characterised the longest tenant of Downing Street (and that, for the absence of, that is neither Thatcher nor Bliar) has now been cast aside. We will no longer be passing our money away on high-blown schemes and vainglorious projects for short-term political objectives.

But it ain't gonna be easy.

34 gastrogeorge

Sorry old bean, haven't you heard of an alternative to this corrupt and rotten life we are all forced to lead exploited, unequal and unable to control what happens to us?

Perhaps your educated state funded teachers did not bother to tell you about Winstanley, Godwin, Proudhon, Bakunin, Kropotkin, Rocker, Mallatesta and so and so on and so on? Well they wouldn't would they because if they did they would lose their place in the pecking order.

You talk about the police? What a joke! The only time I see anything about the police is when they write telling me they want more of my money to feed their pension fund. And to think Ronnie and Reggie got put away for collecting for their pension fund!

Around our way we use public opinion to manage the vandals and if outsiders invade the locals come out together to deal with it. It is called cooperation, solidarity even: something the state does not want which is why its supporters spend so much of their time trying to divide us, one from another.

As for the roads the taxpayer paid for them and the road builders made and maintain them. I don't see the state anywhere in that other than the as the taxer, the expropriator of most of the tax, and the owner of the purchase order for the road building and repairs. Why can't we just fund the road builders direct? Now there is an organisational challenge.

In the society I envisage nobody will need to go private for anything as there will be no scarcity built into the system. We do not need the state to educate people to be doctors or teachers for the simple reason these people will come forward of their own accord which they do anyway even now.

I am sorry if I have upset you but there are alternative methods of arranging society which have been put forward over the years and ignored because they don't put money into certain pockets. I accept that I will only ever be able to have a compromise between what there is and what I would like to have but if you don't have a vision how do you go forward?

I expect you will now tell me that this won't work. Well, does your state work? Not that I can see....

Hey Paul and above
If you needed convincing that the UK government was linked at the hip to its main UK banks, read the Bank of England Financial Stability report. The expectation of government support could be giving UK banks credit ratings five notches above their financial strength rating. The reverse would also be true. If the UK government sovereign credit rating was to deteriorate the value of the implied bail out decreases and bank funding costs increase when on average 60% of their funding matures at intervals of less than 12 months. This in a world of nerve-jangling sovereign debt worries where investors are not that keen to fund banks.

I think this explains, better than most comments I have read, why Osborne has put preserving the UK gilt credit rating above almost everything else. He would be concerned with funding a bank bailout Number 9 ( or is it 10 now?) on top of a sovereign debt crisis where the government has to pay higher debt interest itself.

It also gives a warning about ETFs. I have read about CDOs, CDSs, RMBS,CMBS, SPVs.....who and what are ETFs?

36 stanilic

I've been trying to avoid saying this all my life, but I used to be there 30 years ago.

The problem is that I've also travelled in Africa. Now I'm full of praise for the energy and spirit of cooperation you find there - the generosity is quite inspiring. But it doesn't make you yearn for the lack of a state - which is what you effectively find in vast expanses there.

But we're not going to agree here, so let's not get side-tracked. There's a lot of sense in what you say otherwise:

This is that the barrier preventing the development of manufacturing in the UK as an economic staple is not in the ability and competence of the workforce but in the perceptions of those who make the big decisions in our society. They know nothing of manufacturing, they are frightened of the flat management model implicit to modern manufacturing technique and they find it all rather smelly and vulgar.

Excellent. I can add that UK managers are very much finance-driven, rather than market-share-driven. They would sooner do the deal, make their money and get out rich, rather than build an industry.

Was it Paul that said in this article or another recent one that, rather than take advantage of the recent fall in the pound to increase output and gain market share, companies were just using it to increase their margins? It's this kind of short-termism that kills UK industry in the long term. Just look at how little investment went in during the good old days of the 50s and early 60s - when we actually had some manufacturing industry. Companies chose to milk the available profits instead, until their products become uncompetitive.

A MUST READ STORY...

The Great Inertia Sector: A whistleblower's account of council work where staff pull six-month sickies

https://www.dailymail.co.uk/news/article-1289702/Public-sector-inertia-council-office-employees-month-sickies.html

37. At 4:43pm on 25 Jun 2010, shireblogger wrote:

It also gives a warning about ETFs. I have read about CDOs, CDSs, RMBS,CMBS, SPVs.....who and what are ETFs?

----------------------------

ETF = Exchange Traded Fund

https://en.wikipedia.org/wiki/Exchange-traded_fund

They're a form proxy for certain physical assets that are traded on the stock exchanges...so, say if you wanted to invest in gold but didn't want to actually buy physical gold....you could buy gold linked ETF's from a reputable stock-broker instead. In the case of gold, I believe (so don't quote me on this) that the shares are linked to gold mining companies whose share prices tend to closely match the real price of gold at any given time.

#39 DebtJuggler

It's an article from The Daily Mail so no agenda there then. The first two paragraphs contain the following statements

'Monday morning, it's 10am and I'm late for work - but there's no point hurrying because even though I should have been at my desk 30 minutes ago, I know I'll be the first to arrive at the office.'

'Our flexi-hours policy means that employees can start any time between 7.30am and 10am...'

It's 10am, so the writer is not late nor should he have been at his desk 30mins ago (9:30am) as he clearly states that he is not contactually obliged to start till 10am.

There are no doubt anecdotal elements of truth in the article but in typical DM fashion it has be sensationalised.
All working environments contain employees who would rather be elsewhere, slackness, disingenity and downright dishonesty are not the preserve of the public sector.

I'm not in anyway defending the public sector, I am aware however that the newspaper has a vested interest in slanting and sensationalising a story for their own benefit. (scandal sells papers, outrages their readership and reinforces the readership belief that their paper 'tells it how it really is')

#38

Nicely analysed if i may say so.

Old testament - 'where there is no vision the people perish' .... or business ...eventually.

That same thread you allude to runs through much of what we can see, from the Culture at BP being an expression of it....500k aday to hire the rig against the risk of environmental catastrophe..I see it every day at my workplace also it is endemic... profit is all instead of value. profit is no longer the same thing as value, once it was (if re-invested usefully) but now we can not re-invest it usefully, all we can do is re-invest it in a destructive manner under the current global economic system.

Why cant more people see that???

#37 Shireblogger

I haven't read the BOE FS report yet (I'm still reading the UNODC WDR 2010, all 313 pages of it). So how much do the UK Banks need, don't tell me, somewhere in the region of £60bn perhaps ?

QE created £225bn, £175bn was spent supporting the previous years spend (although the deficit was allegedly ~£160bn) under the terms the other £50bn was supposed to buy commercial paper. It would not surprise me if the BOE was buying UK bank paper in return for UK banks buying BOE paper.



Hey Paul and above
If you needed convincing that the UK government was linked at the hip to its main UK banks, read the Bank of England Financial Stability report. The expectation of government support could be giving UK banks credit ratings five notches above their financial strength rating. The reverse would also be true. If the UK government sovereign credit rating was to deteriorate the value of the implied bail out decreases and bank funding costs increase when on average 60% of their funding matures at intervals of less than 12 months. This in a world of nerve-jangling sovereign debt worries where investors are not that keen to fund banks.

I think this explains, better than most comments I have read, why Osborne has put preserving the UK gilt credit rating above almost everything else. He would be concerned with funding a bank bailout Number 9 ( or is it 10 now?) on top of a sovereign debt crisis where the government has to pay higher debt interest itself.

It also gives a warning about ETFs. I have read about CDOs, CDSs, RMBS,CMBS, SPVs.....who and what are ETFs?

#43 me

Doh!

accidentally pressed the 'Post Comment' button before I had cut out the extraneous material.

#43 me, this is what I meant to post, rather than what I did post (if you see what I mean)

#37 Shireblogger

I haven't read the BOE FS report yet (I'm still reading the UNODC WDR 2010, all 313 pages of it). So how much do the UK Banks need, don't tell me, somewhere in the region of £60bn perhaps ?

QE created £225bn, £175bn was spent supporting the previous years spend (although the deficit was allegedly ~£160bn) under the terms the other £50bn was supposed to buy commercial paper. It would not surprise me if the BOE was buying UK bank paper in return for UK banks buying BOE paper.

Paul, it's a big post (and as usual up to your thought provoking best) so I will work my way through it

'The June 2010 budget was unusual because it had a clear narrative: it said our aim is X and therefore we are doing A, B C. Previous budgets have not always been so clear.'

Presumably A & B & C = X which implies that failure to hit either A or B or C means X is unachievable. (rod/own back)

Previous budgets stated A or B or C = X which implies hit any target and it's a bullseye.(obviously he didn't consult Ken Clarke)

I'll put that one down to naivety (I cannot currently see a vested interest in falling at the first hurdle)

#41 BobRocket

OK....fair points I suppose!

Also, the on-line poker gambling at work part is also a bit suspect as most IT departments would have access to those types of sites blocked.

But there were some good one-liners in the story. It kind of reminded me of the recent Birmingham City council equal pay story that surfaced not that long back.

https://www.guardian.co.uk/society/2010/apr/28/pay-female-staff-birmingham-council

'Under a bonus scheme, male refuse collection staff sometimes received up to 160% of their basic pay. In one year a refuse collector took home £51,000, while women on the same pay grade received less than £12,000.'

Paul,

'The problems with this narrative are equally clear:'

'The scale of the cuts required' and 'the UK can make this switch'

These are A and B and are measurable and objective.

'how hard the poor will be hit'

This is C, it is subjective (and divisive)

The Chancellor can claim that C has been achieved (whatever the feelings of those affected)

A lot of IT chat here.

2. At 5:46pm on 23 Jun 2010, tawse57

That made me laugh so much!

Been there and seen it - and it was not funny at the time, it was a mix of disgust and sadness at the sheer incompetence.

Just watched Muse perform 'Uprising' at Glastonbury on the Pyramid stage.

Hmmm...pyramid!

...or am I just being a bit paranoid?

42. At 11:53am on 26 Jun 2010, Jericoa

Why cant more people see that???

People can see it. And those that do are never allowed to sit at the big table with the big people - why invite a party-popper?

I learned something working in the private sector for a couple of years between research grants. Those who sang the song that everything was wonderful because they simply didn't know better climbed the ladder. Those who identified the problems were hounded down a long, torturous road to either a new job or illness rather than being seen as the voice of wisdom and improvement. I saw that happening with my own eyes over and over again. I bet most of us have. So who can say they were really surprised when it became public knowledge about the treatment of risk managers in banks?

Wonder what engineer at BP was possibly hounded because he/she insisted on remote controlled devices saying it was really important because things can and do go wrong....

I don't have the data to prove it, but I wouldn't be surprised if there is a correlation with worker stress/depression and management tally-ho, because the workers can see what is coming down the road....perhaps what has been happening in a local office has been just a small scale version of national and international mismanagement.

Paul,

'But not all problems are solvable through technocratic means and strong narratives'

You mention dogs, Afghanistan and NPfIT (National program for IT)

Dogs - Owners should be chipped, anybody caught in control of a dog who is not chipped should be subject to a statuary fine of (say) £120 + CR + the costs of capturing and destroying the dog. Feral dogs (dogs deemed not to be in the immediate control of a chipped owner) to be shot on sight. They do this with foxes and will now be doing it with badgers in Wales.

Afghanistan - now here is somewhere that a serious public spending cut would have a big impact upon the private sector, just think how much it costs to defend that pipeline for private oil, defend that mineral stake for private mining. If these commodities are of such public interest that we as taxpayers invest over £14bn so far why have we not nationalised those interests for public gain.
As an aside, the Taliban closed down Afghanistans most profitable export (drugs). Since the intervention that particular commodity has thrived.(why?) The sums involved are huge, enough to fund a war in a third world country for example

NPfIT (NotFit)- Success or Fail ?
This program has been successful in transferring large amounts of public money into the private sector however the results for the public have been pitiful.
£10bn and no National Patient Record.

Paul, all problems are solvable, once you have identified a problem the solution becomes apparent (the solution may throw up problems of its own)



Since its inception I have been campaigning for this system to be 'Open Source', a system led by our universities to be scalable (from one doctor one patient to multi doctor, multi patient) and transferable.
An International Standard Patient Record and associated processing system (British Made) We can export experts in this system all over the world.

George Osbourne is correct to identify the consensus of what X represents and a target for what X should be,however he has not shown how he will reconcile all the vested interests into agreeing that they should be moving towards A & B (given C has little say in the matter and is only included to make up the numbers)

#47 Debtjuggler

I know plenty of people who work in the public sector, some of whom are as described (to a certain extent) in the DM article, I work in the private sector, some of my co-workers are equally as described in the DM article, such is life.

There are many reasons for the disenfranchisement (and subsequent loss of productivity) of a worker and mainly that is to do with ownership of the task required. In my industry, de-skilling (ie. re-placebility) has meant devaluing of a valued workers input (the joke that initiative is a disciplinary offence) has a big effect on pride in the job in hand

When the workers feel that the bosses don't care, why should they care?
When the workers don't care the product is rubbish.
When the product is rubbish the buyers don't buy...and the workers get sacked.



Oh Yeah, the bosses jump ship to another consortium/conglomerate making sure their golden parachute is intact without a thought for the devastation that they are directly responsible for.
(it's a cultural thing)

38 gastrogeorge

I was there 44 years ago and despite all my attempts I keep going back as that way I won't be driven sick or mad by the lunatics in charge. Call it therapy. It is either that or the Pentecostals, who are a true delight, but I have no natural sense of rythmn.

Back in the Nineties as a conseqence of the previous recession then, and as part of the manufacturing recovery of that time a lot of work went into analysing why British industry had consistently failed. The perception then was that on the shop floor the culture of remuneration through production bonuses, piece-work, shift allowances and all the other chiselling management practices were a major obstruction to productivity. So in manufacturing, organisation became less hierarchical, the shop floor was empowered to make decisons and the reward to the people who worked there became more consistent. What is more through lean management the businesses were more efficient and better able to perform profitably.

Yet what happened then? Well, the equivalent of the production bonus was brought into white-collar jobs in order to motivate people. As if a secure, steady and well-paid position in a clean working environment with a professionally trained and experienced management was not sufficient to motivate a person. Despite its failure this pernicious device spread throughout the economy: even into the public sector. If we aren't aware of the outcomes of that management philosophy then we have learned nothing from the last three years.

The problem with WGMGD is that what gets measured gets done but nothing else. So professionalism got thrown out of the window as the country went bonus-mad. Anyone who thought differently got trampled by the Gadarene swine.

You say quite rightly:

`.....UK managers are very much finance-driven, rather than market-share-driven. They would sooner do the deal, make their money and get out rich, rather than build an industry.'

This is the short-termism that has crippled our entire economy. I am now waiting for the consultants to come tripping along with arguments for customer focus and lean management......we cannot go on like this. Every business I have ever worked for bar where I am working now has gone bust due to poor management and a lack of vision which amounts to poor management anyway.

I must confess I am watching with amusement a group of senior managers, very bonus driven, drive the business that I made possible either into a brick wall or over the cliff. At my time of life I can be amused by their antics as I look forward to the shareholders rumbling what has been going on. I expect they will find out soon. I have to be amused as otherwise I would get angry but HR have advised there is no point to that. I don't agree with that view as the corrupt and incompetent should be confronted so that some sort of justice can be enforced.

So just what do you? Shout in the streets or appeal to the supernatural? This could just as easily be put down to Original Sin and the Fall of Man....

#51

People can see it for sure, but just not enough of us I guess was my point.

I challenge the management all the time, which pretty much gets me absolutely nowhere apart from the odd deeply patronising call from HR department who are 'concerned for me'.

They have to put up with me begrudgingly because I both generate income and protect the business from engineering risk but there is clearly an active covert policy of continual attempted control and repression of opinion, sometimes dressed up as pseudo HR science at 'management courses' they keep trying to send me on.

These 'management courses' are actually deeply disturbing, the last one started off by quoting Ghandi!!

''for the world to change first i must change''.

It then moved swiftly on into how ' individual behavious' have a deep effect on the smooth running of the business and went on to give a corporate lists of what was considered to be 'good behaviours' in line with corporate goals..all this was meant to make us work better and feel happier i might add..

True to form i asked the 'expert' running this what the difference between behaviour and personality was.

It was generally agreed that there is no substantial difference as behaviour is simply an expression of personality.

To cut a long story short we got to the point where I was suggesting what the company was actually trying to do was to change peoples personalities to be in line with the corporate ethos, which meerly makes people feel repressed and unhappy with little scope for personal expression.. which is certainly the feel of the office I would say.

It all sounded pretty 1984 to me and I said so.

I went on to say that i was quite happy with my personality and the resulting behaviour thank you very much, to the extent that I was considering to register my behaviour as a religion which would then compel them under corporate policy to provide me with facilities in the office to allow me to practise said religion which would involve a padded room with a punchbag in it which I would visit 3 times a day.


All it got me was one of those 'concerned' calls from HR dept, she tried to be funny by asking if I had Latin blood in me. They will probably try sending me to one on one therapy next. I should refuse really, surely no therapist would deserve such a thing.



My footie unlike economic and political predictions are absolutely rubbish and I am on the verge of giving up entirely if it were not both so much fun and a humbling experience.

England will win easily today with some of the German key playmakers missing, England will be relatively free from the repressive fear of failure to a 'minnow' and finaly, it must be our turn, beating the Germans in a major tournament once every 40 odd years is about the right return period...we are due one.

England 3 Germany 1

hmmm maybe I do need one on one therapy after all.

#54 stanilic

Every business I have ever worked for bar where I am working now has gone bust due to poor management and a lack of vision which amounts to poor management anyway.

Agreed, I think the biggest problem with the UK is the appalling standard of management. Managers who don't actually understand what the job of management is. They are just asset squeezers and worker squeezers, trying to sweat the last ounce of profit out of business - without any future view.

You can look at the pub business as a microcosm of the problem. It's a problem business, coming under pressure because of changing public drinking and eating habits, but what have they been doing? First there is the cosy cartel of the pubcos, reducing competition. Then they turn themselves into financial engineers - piling themselves with debt, securitising their future income, while sitting on the rising asset price of the pub itself. Finally they squeeze their tenants with ridiculous rents and tied drink/food contracts, relying on a steady supply of people with too much money who want to live their dream.

There's no thought about building the business - which a lot of free houses seem able to do. It's all about extracting as much money from the business until it all goes tits up.

56 gastrogeorge

The difficulty the free house has is if the owner wants to move on. We have a classic of that not far from here.

A couple who had built up a struggling pub into a good gastro-pub - best beer in the area - were refused planning permission to extend. So they sold up to a pubco who set about wrecking the business.

These then appealed for planning permission and got what the previous owners had been refused on the basis that the business was struggling! So failure has its own reward. By this time the cost of the investment would not justify the return so the pubco sold out to a one-man band. He got promptly hit by the smoking ban, his own poor judgement and lack of cash because he paid too much for the place anyway. It closed: then it burned down.

Now someone wants to buy the site and develop a small group of private houses in an exclusive site. This change in planning use has been refused as the local authority wishes to retain the facility of a pub/restaurant on the site. Now nobody wants to know as investing in such a business at a time like this is of no interest.

Thanks Ben, Debtjuggler and Bobrocket.

I think the BoE report says for every percentage point increase in core tier one capital ratio imposed on the banks it will require £30bn additional equity injections,costing them ( and us) £2-3bn per annum.

This all started with the banks, its continuing with the banks and will end there. The so-called monetary boost which was to do the heavy-lifting of stimulus for the real economy ( sold as such to us by BoE) is, from what I can see, disappearing down the deleveraging black-hole which is now bilateral : banking and sovereigns now alligned in the same trap and joined at the hip. So neither want increased capital charges, increased funding costs or credit downgrades. The entrepreneur, taxpayer and service user provide the only real umbrella for them from the rainstorm.

I agree interest rates and inflation are now the focus.