Keiser Report: it’s worse than crack, I tell you

Been a bit busy the last few days, but have no fear, for there’s more tomfoolery coming down the pipeline. But just to ease us back in, here’s some more from the best business programme on the box. Once again, Vladimir Putin’s English-language teevee channel shows that financial scandals are interesting enough that you don’t have to jazz them up with funky graphics. You just need to find an angry ex-stockbroker, point a camera at him, and let him rant. Eat your liver, Evan Davis.

Max and Stacy tell it like it is

The latest from Keiser Report, the best (and certainly most entertaining) business programme on TV today, as Max and Stacy do their established double act on all the current financial scandals. Gets especially good about eight minutes in when we broach the subject of Mr Tony Blair. Oh, and there’s a discussion about shiny metals too, but it’s in the matter of Tony Blair and JP Morgan that our host waxes wroth.

The men who stare at porn

You know the Securities and Exchange Commission? The Wall Street watchdog that’s tasked by the American government with overseeing the financial services industry? Ever wondered what these guys were doing when the financial services industry went tits up?

Answer: some at least of their senior officers were spending all day browsing for porn on their government-issue computers. Some examples from an official report:

_ A senior attorney at the SEC’s Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

_ An accountant was blocked more than 16,000 times in a month from visiting websites classified as “Sex” or “Pornography.” Yet he still managed to amass a collection of “very graphic” material on his hard drive by using Google images to bypass the SEC’s internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense, and received a 14-day suspension.

_ Seventeen of the employees were “at a senior level,” earning salaries of up to $222,418.

_ The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.

California Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, said it was “disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation’s economy on the brink of collapse.”

He said in a statement that SEC officials “were preoccupied with other distractions” when they should have been overseeing the growing problems in the financial system.

In other words, when the watchdogs heard the phrase “tits up”, it probably didn’t occur to them that this was something to do with the industry they were overseeing.

Some sober economic debate

And while we’re trawling YouTube, this has become quite the hit in the last couple of weeks. Kind of reminds me of History Today… if they did the economics news in this style, the punters might pay some more attention.

I can haz populist grandstanding?


As our newly-installed finance minister, Sammy the Streaker is supposed to be the man holding the north’s purse strings. However, in a stunning display of béalbochtachas, Sammy has been doing the rounds of the media telling us that there’s no purse and only one string. Not that that’s prevented him striking populist poses.

His latest move is to announce that bonuses won’t be paid in the senior civil service this year. This sweeping gesture affects a grand total of £220 people, and is projected to save the public funds a grand total of (insert Dr Evil pose) one million pounds. The publicity this has generated for Sammy is cheap at the price – he’s even got a welcome from the NIPSA leadership, who with rose-tinted specs only see Sammy accepting their arguments against the bonus culture at the top. In any case, the senior civil service can console themselves with a 3.5% pay rise, while the office grunts still haven’t had an opening offer. Those guys would probably be happy to forgo a £50 non-consolidated bonus in exchange for a few quid on the scales, but in recent years governments have found it too convenient to use non-con bonuses and spine point progressions as a substitute for revalorising the scales. It may be that, while ditching bonuses at the top makes for cheap headlines, it would be too costly to ditch them at the lower grades.

Nor is there any sign of Sammy making any move on the grunts’ equal pay claim. You will recall that the then finance minister, Peter Robinson, committed to pay this just before he buggered off to assume the premiership. His successor, Nigel Dodds, kept saying that he was committed in principle to pay up, while setting in motion various procrastinating consultations and making dark noises about how he couldn’t really afford to settle unless the Brits agreed to pony up. Sammy is continuing with the dark noises. Actually, the money to settle the claim is there. What the Executive won’t say is that, while they can afford to pay the claim, they can’t afford to keep paying the grunts at a higher rate in coming years, especially with the likely knock-on effect once you get above the AA/AO grades. Hence the DUP’s zeal for reducing headcount, which however they still haven’t addressed in a thought-out way.

One possible problem, and this is something that Peter Robinson will be well aware of, is that the civil service is the second-largest employer in the north. Civil servants all have votes, and tend to use them. Their families also have votes. And lots and lots of them live in East Belfast, which could be a fascinating three-way fight between Robin Newton, Reg Empey and Naomi Long at the next election, with the TUV as the joker in the pack. It’s a bit of a dead stymie, and even the Stormont Executive can’t procrastinate forever.

On the other hand, attitudes are not nearly so parsimonious when it comes to the north’s biggest employer, the peace industry. I couldn’t help noticing Roy Garland’s column in today’s Irish News [subs required], arguing that, Conflict Transformation Initiative notwithstanding, not nearly enough money is flowing into loyalist areas. Roy wants the doubloons to flow freely, so that civic-minded loyalists can regenerate their areas.

You know, I’m getting kind of tired of saying this, and Roy Garland is an intelligent man who shouldn’t need to be told. Working-class Protestant areas in Belfast, Derry and elsewhere are in dire need of regeneration. You only have to walk down the Newtownards Road, which used to be a thriving commercial thoroughfare but is now nearly derelict, to know that’s the case. The fact that the regeneration isn’t really taking off, despite money being ploughed into those areas, surely calls into question the architecture of regeneration. To put it bluntly, if Taughmonagh is a hellhole, are you going to make it any less so by giving lots of money to Jackie McDonald?

I would suggest not. But then, the peace industry is virtually beyond criticism. And that’s a situation that does nobody much good, except those on the payroll.

El Gordo goes for broke


All right, so what’s been happening while I’ve been away? Well, it strikes me that it’s been a while since I’ve done anything on the travails of New Labour. There’s been quite a lot of this on the blogs – big up the invaluable Liberal Conspiracy – but I may as well put in my Kent Brockman on the subject.

First off, the Budget. Even the usually sanguine Stephanomics was saying on the BBC coverage that she thought Alistair Darling’s numbers were just a little optimistic. Well yeah, but that’s sort of the point. This was a surrender Budget, but it was a surrender Budget with a little sting in the tail. The gist was that Labour will do the fiscal stimulus bit, then the Tories, inheriting the hangover, will have to do the ruthless austerity bit. Assuming Labour can position itself as a reasonably credible opposition, that might just limit the Tories to one term, rather than consigning Labour to a generation out of office like 1979 did. One could almost admire the deviousness if it wasn’t so transparent.

Of course, this scenario only works if Labour can put up a reasonably credible showing at the election. Nobody, except possibly El Gordo himself, seems to believe they can actually win a fourth term. So then it comes down to how strong they can be as an opposition. Will this be a 1931-style wipeout? Or will they have a sizeable parliamentary party, such that one big heave could put them back in power? And this, by the way, was what the murmuring about the leadership last autumn was about. Not whether a change of leadership could actually win it for Labour, but rather a question of whether, say, Alan Johnson could save them thirty or forty seats.

The time has pretty much run out on the leadership coup scenario, so what’s left? Well, there are reasons to think that this won’t be as much of a walkover for Cameron as he thinks. One issue is differential turnout, which means that Labour can rely on scores of safe seats in urban areas won on small turnouts, while it takes quite a few more votes to elect a Tory MP and lots more to elect a Lib Dem. That makes it difficult to translate swings in the polls into actual seats. Another issue is the polls themselves – this isn’t like the post-Black Wednesday period, where Labour opened up an enormous lead over the Tories and stayed there for years. Rather, as party organisations have atrophied, party policies have converged in a mushy centre ground, and politics have become more about image, spin, personalities and a febrile media, we have seen several years of extreme volatility in the polls.

There’s also the question of the Tory tops themselves. Vince Cable was saying that the Tories think they can sleepwalk into power, and they may be right – but they’re acting as if they can do that. The McBride/Draper scandal may have reduced the possibilities for negative campaigning, which is not necessarily a bad thing, but they will be tested in an election. Let’s not forget that the Tory front bench is largely composed of lightweights, where Michael Gove counts as a dangerous intellectual, and the return of Fat Ken just shows the others up. More to the point, what do they actually have to say about the economic crisis? Eighteen months ago, George Osborne was saying that the financial services industry was much too heavily regulated, while John Redwood was arguing that mortgage lenders shouldn’t be regulated at all. At the moment, Cameron and his chums can make hay by blaming everything on Gordon; it’ll be another matter when they actually have to put forward a programme of their own. As things stand, Cameron’s argument is “I’ve got a plan, I’m not going to tell you what it is, but you can trust me because I’ve an honest face.” Yes…

So I would guess that the agenda for the next year will be taken up with lots of populist gimmicks. That’s what the 50p tax rate for the top 1% of the population was about, anyway. Darling’s case is helped by rich people who have no social conscience screaming about becoming tax exiles, and by many of these people being the same guys who got us into the crisis in the first place. But on closer examination, it’s all about the optics – the loopholes haven’t been closed, and as the super-rich don’t pay much tax anyway, that is much more significant in concrete terms.

There’s also a serious problem with populism, in that to be a successful populist you have to do popular things, and Gordon Brown seems to have developed a cloth ear in this regard. This is the man, remember, who genuinely didn’t understand why abolishing the 10p tax band would piss off the Labour base. You can see it with this Gurkha thing – it’s not so much that Joanna Lumley has defeated the government as the government defeating itself. Brown put Hazel Blears and Phil Woolas in charge of ethnic minorities with the apparent brief of defeating the BNP by giving them everything they want. Woolas reckoned the Gurkhas’ right to settlement was a cheap issue to score anti-immigration points. What he didn’t count on was the public outcry, especially from military circles, on behalf of a group who for 200 years have zealously helped the British Empire put down rebellious tribesmen, and to whom the British government clearly owes a debt of honour. Even anti-immigration Tories love the Gurkhas. You heard something of this on Radio Ulster’s Talk Back, when all but one of the loyalist callers spoke in favour of the Gurkhas’ right to settle, even if they did preface that by taking swipes at those minorities already here. Brown should immediately rendition Woolas, but of course he won’t.

And so it goes. The Tories were reluctant to make much of Jacqui Smith’s expenses scams, not least because their own MPs are up to their necks in similar activities. But Brown’s attempts to gain credit for reforming the expenses system have blown up in his face. And, while the imminent removal of the hapless Wacky Jacqui from the Home Office will undoubtedly reduce bad headlines, New Labour still seems addicted to dopey authoritarianism, pressing ahead with ID cards, with the plans to record everybody’s phone and internet traffic, with millions of innocent people’s DNA on file and in general with an Orwellian surveillance society that, paradoxically, doesn’t keep its citizens safe.

Can someone tell me what’s the point of unpopular populism?

Rud eile: It struck me during the Budget coverage that the Beeb’s economics team really does have the diverse array of voices. You’ve got Stephanomics with her posh accent, Mason with his Geordie accent, Evan Davis with his somewhat camp accent, the wee fella from here and Pesto from God knows where. I kept expecting to see Loyd Grossman turn up.

Rud eile fós: Andrew Neil’s increasingly bizarre perorations on The Daily Politics. I’ve been wondering whether old Brillo Pad was descending steadily into madness, or whether he’s reinventing himself as a satirist. I’m still not sure…

Shooting the messenger

From the Beeb:

The first and deputy first ministers have met the Belfast Telegraph‘s editor to express concerns about its reporting of the executive’s economic policy.

Last month’s meeting followed a letter from Peter Robinson and Martin McGuinness to the newspaper’s proprietor, Sir Anthony O’Reilly.
The letter, sent on 2 March, accused the Telegraph of “demonstrating relentless negativity”…

However, Mr Robinson and Mr McGuinness said the paper was “putting a negative twist on the executive’s handling of the economy”.

“It does seem to us that the Telegraph has been going out of its way not just to highlight negative stories, but to create them and give a negative twist to issues and give them a significantly greater prominence than any of its competitors,” the letter said.

Listing a series of complaints, the letter expressly complained about the newspaper’s coverage of job losses.

And here’s me thought the Tele was doing its bit by predicting every month that house prices were going to start rising again. As an estate agent by profession, surely Robbo could appreciate that.

They added: “We do not seek to fetter in any way the freedom of the press, but by the same token we do not expect to see a campaign ostensibly about creating jobs being used to denigrate and undermine the executive and the assembly.”

A spokesman for Sir Anthony said the letter had been “sent to a non-existent” address and was not received by him “for some weeks”.

Still, it’s nice to see our leaders have their priorities right.

Scotsman asks black guy for change


So on Tuesday night I switched on the telly in anticipation of Heston Blumenthal’s Buck Mad Cookery Show. But I’m not going to tell you about that, because I got distracted by Faisal Islam. I must admit, I like Faisal Islam. He has this slightly Tiggerish air, with his emphases and his gesticulations and his graphs, that always makes me think he should be presenting Blue Peter or something, rather than doing the economics report on Channel 4 News, which isn’t exactly where you expect to find young and energetic folk.

Anyway, Faisal was interviewing Jim Rogers. Not, I hasten to add, the language-mangling former Lord Mayor of Belfast, but the legendary financier. Jim has a fine line in futurology, and that’s what he was doing on Tuesday night. To summarise, Jim reckons the American economy is fucked, the British economy is even more fucked, and all those whizzkids in the City of London better start learning to drive tractors. He also predicts that the axis of the world economy is going to shift big time to Asia, which is why he’s put his money where his mouth is and moved to Singapore, so his kids can grow up speaking Mandarin.

The occasion for this was El Gordo’s trip to Washington, which seems to be based on the premise that Barack O’Bama will bail out everybody else’s economy. It doesn’t seem to have occurred that the American economy is also bankrupt. The Yanks do have the advantage of a currency that other people want, but that’s being attenuated as Bernanke keeps printing dollars like there’s no tomorrow. Brown also wants O’Bama to join his great crusade against protectionism, but Congressional Democrats may have something to say about that.

Brown’s other big problem, in advance of his G20 jamboree, is that every government is working to its own theory. Even different bits of his cabinet are working to different theories, as the former Trotskyist Alistair Darling tries to keep the banks solvent by nationalising them, while the former Eurocommunist Peter Mandelson wants to keep Royal Mail solvent by privatising it. This is what’s known as joined-up government.

It gets even less coherent when you move to the intergovernmental scale and try to get Washington and Beijing and Paris to all agree common approaches, let alone sign up to Brown’s theory. We saw some of this when the East European bloc in the EU put together a case for a bail-out of the region. Angela Merkel immediately told them to get stuffed, and now the Magyars and Slovaks and Bulgarians are left scratching around for alternatives. Which would be a good opportunity for a canny Russian government, with lots of gas on tap, to quietly reacquire much of the Near Abroad.

Which leads me to a modest proposal. The use of filthy lucre, rather than military might, to extend your empire is something we associate with the Americans. There was the famous Louisiana Purchase when they acquired a huge amount of territory from Napoleonic France; the 1867 purchase of Alaska from the Russians, who weren’t too worried about what the Aleuts or Yup’ik had to say on the matter; and the 1917 purchase of the Virgin Islands from the Danes, who apparently had just remembered they had a Caribbean colony and didn’t know what to do with it.

But there’s a long history of this sort of thing before we enter into the annals of American commercialism. Back in feudal times, it was quite common for skint kings and princes to raise money by selling bits of their territory to their more flush neighbours. That’s why maps of the Holy Roman Empire are as confusing as they are. In fact, there’s an example not far from Gordon’s own backyard. As any Shetlander or Orcadian can tell you, back in the day Orkney and Shetland were not part of Scotland at all but under Norwegian sovereignty. In fact, the islands were Norse-speaking until the 18th century. This changed in 1472 when the King of Norway found himself short of a few kroner and pawned these outlying islands to the King of Scotland, just as his ancestors had rid themselves of Man and the Hebrides.

Why not revive this tradition? The British government doesn’t have many assets to fall back on, but there are some uneconomic parts of the kingdom that Gordon may well think could raise a reasonable price on the open market. The North of Ireland comes to mind. Instead of doing his head in trying to get Peter Robinson to cut costs and reduce the British subvention, he could just sell us to the Chinese. After all, Beijing may own much of Africa and have extensive interests in the Pacific Rim, but a little beachhead in Europe could just come in handy to the up-and-coming mercantile power.

The Governator’s kingdom goes belly up

Blimey, this crisis of capitalism is going great guns, isn’t it? It’s not just high street retailers that are falling like ninepins. Entire national economies are going kablooie.

All right, the Icelanders I might have expected, what with them building up a banking sector just too big for their currency to support. Whatever about the possibility of the Vikings being fast-tracked into the EU, dumping the króna for the euro now seems inevitable, if only to get a bigger umbrella. And why not? They’ll be in the good company of the Pirate Republic of Montenegro, which also uses the euro as a parallel currency with smuggled fags, having apparently given up on the idea of minting gold doubloons and pieces of eight bearing Milo Djukanović’s likeness. They may not seem to have much in common, but two small countries with buccaneering pasts can maybe learn from each other.

Then you’ve got the poor old Isle of Man, which did its image as an offshore financial centre no good at all by putting its money in, er, Iceland. Luckily the Manxmen are still in the sterling zone and don’t have a pound of their own to support, although as sterling goes down the dunny… they may like to consider their options.

And, just as those vacant Woolworths and Zavvi outlets are going to be snapped up by healthier retailers, it’s a good time for an enterprising government to pick up a few countries on the cheap. The Russians look to have Kyrgyzstan in the bag and are the lead bidders for poor old Iceland. China, meanwhile, not content with buying up much of Africa, will be increasing its stockholding in Pakistan (Mr 10% prop.) and is even splashing the cash in the West Indies. Having been watching Hu Jintao’s state visit to west Africa, it strikes me that, if our leaders are relying on Moneygall native Barack O’Bama to bail out the failing Irish economy, it wouldn’t do any harm to discover Mr Hu’s Irish ancestry, and maybe build an ancestral home. You know, a belt-and-braces strategy.

Meanwhile stateside, I’m startled to note that California has gone bust. One is tempted to say that, if you elect as governor a B-movie actor who waves a broom around and bellows “I vill clean haus” then you’re asking for trouble, but there are broader forces than Arnold at work. I saw an article the other day, where I don’t recall, predicting that a majority of the United States had unsustainable levels of debt and may have to look at filing for bankruptcy.

This, I presume, is what President O’Bama’s bailout programme adds up to, especially in the monies being made available to the states for public works. But, aside from building tunnels to New Zealand and trying to make I-95 less of a Malthusian nightmare, there’s a basic problem in that the federal government is basically bankrupt as well, but just won’t admit it. And this is where we enter the realms of voodoo economics. What we’re going to have is Bernanke printing shitloads of dollars, and never mind that cheap money – not least Bernanke printing shitloads of dollars – played an enormous role in getting us into this crisis in the first place. And, what might provoke a cat to laughter, the British government trying to create yet more cheap money.

Yes, if there’s any major economy heading up shit creek at a rate of knots, it’s the Brits. It helps, you know, to have something fundamentally sound you can fall back on. The Chinese and Japanese and Germans have economies that make stuff – there may not be many buyers, but they do still have the capacity. The Russians have their natural resources. The Yanks, if nothing else, have a currency everybody else wants.

And what does Gordon Brown have? On Radio Galloway you often hear George growling, “Brown’s got no balls. He’s got no balls except Ed Balls.” To be honest, he ain’t got much else in the way of industrial capacity or natural resources. That’s why all you’re getting from Alistair Darling, who obviously doesn’t remember much about crisis economics from his Marxist-Leninist days, can only come out with populist gestures on bank bonuses and crackpot schemes to reflate the housing bubble.

Ye gods, it’s depressing. You would really need an Ernest Mandel to make some sense of the situation, and look at what we’ve got. Just a load of pish and vinegar.

The last of the Austrians

For those of you who didn’t understand Gregor Gysi or are just looking for an alternative perspective, here are some pithy remarks from Ron Paul, who is that rarest of creatures, a politician who actually knows a great deal about economics. I have of course pretty major differences with Ron, but his critiques are usually great value. And, with there being more common ground than you would think between the Marxists and the Austrians… well, his talent for hitting the nail on the head comes in handy.

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