Last week’s Money Week contained an interesting take on Stephen Hester (CEO of RBS), his bonus and the prospects for RBS. The whole article (by Matthew Lynn) makes a great deal of sense as the following extract indicates:
The only realistic option (for RBS) is a radical break up. The investment banking business should be stripped out and each unit sold for whatever anyone is willing to pay. Any units that can’t be sold should be handed over for nothing to the staff: let them sink or swim as partnerships.
After that, split up NatWest and RBS into two separate retail banking chains, and sell both – and if they won’t sell, float them as independent companies. The British banking industry could use more competition, having two brands under the same corporate roof doesn’t make sense. Taxpayers will probably never get their £45bn back. But something could be salvaged from the mess.
A million pounds would be cheap for a CEO with a strategy that could sort out RBS. But for one whose strategy looks less and less convincing by the week, it would have been a criminal waste of money.
The route to this opinion can be found on http://www.moneyweek.com/news-and-charts/economics/uk/bonus-bargain-for-a-star-ceo-at-rbs-stephen-hester-57418
Some years ago I was attempting a M.A. in Business and my thesis was focussed on corporate governance. My first chapter drew on the contradiction between the cost of bankers (considered to be too high) and the cost of footballers (all-in-all considered to be value for money as the market corrects itself very quickly and everyone can understand the numbers of goals scored, games won and so on). Based on the above and on what we have seen so far, Stephen Heston needs to be a goal scorer or else given the opportunity to seek new pastures elsewhere.
Money Matters
Home-Start Babergh
Yesterday, Alice & I attended a fund raising dinner at the Brett Vale Golf Club in aid of Home-Start Babergh.
I was vaguely aware of them previously through the modest support provided by Babergh District Council. So I was interested to learn that Home-Start Babergh is an independent charity operating as part of Home-Start UK. The important bit is that they recruit, train and provide volunteers to work with families in times of need.
Their support is available to families that have at least one child under five; it is given through home visits by the volunteers and through support group meetings, where children can play together, supervised by a play leader, whilst parents meet with each other and with Home-Start staff. In many cases, the support is complementary to that of the professional agencies. The volunteer will be there for the family as a friend and confidant during a time of stress or difficulty.
Home-Start Babergh is one of several regional “Home-Starts”. It has a team of over 50 volunteers who, in the main, visit families in their homes. All have undergone training appropriate to their individual roles, and all conform with child protection guidelines and legislation.
During the 12 months ending 31st March 2011 Home-Start Babergh supported 98 families, including a total 0f 253 children. 57 families were supported by home visits only and 41 families were supported in Home-Start Babergh Family Groups.
More info on http://www.home-startbabergh.co.uk/au_what.htm
It makes the Paris Bourse look like a parish council
An open
letter to German Chancellor Angela Merkel (Published in the Express – see below for a link to the original and the comments).
Tuesday December 13,2011
By Frederick Forsyth Dear Madame Chancellor,
Permit me to begin this letter with a brief description of my knowledge of, and affection for, your country.
I first came to Germany as a boy student aged 13 in 1952, two years before you were born. After three extended vacations with German families who spoke no English. I found at the age of 16, and to my pleasure, that I could pass for German among Germans.In my 20s I was posted as a foreign correspondent to East Germany. in 1963, when you would have been a schoolgirl, just north of East Berlin where I lived.
I know Germany, Frau Merkel, from the alleys of Hamburg to the spires of Dresden, from the Rhine to the Oder, from the bleak Baltic coast to the snows of the Bavarian Alps I say this only to show you that I am neither ignoramus nor enemy.
I also had occasion in those years to visit the many thousands of my countrymen who held the line of the Elbe against 50,000 Soviet main battle tanks and thus kept Germany free to recover, modernise and prosper at no defence cost to herself. And from inside the Cold War I saw our decades of effort to defeat the Soviet empire and set your East Germany free.
I was therefore disappointed last Friday to see you take the part of a small and vindictive Frenchman in what can only be seen as a targeted attack on the land of my fathers.
We both know that every country has at least one aspect of its society or economy that is so crucial, so vital that it simply cannot be conceded. For Germany it is surely your automotive sector, your car industry. Any foreign-sourced measure to target German cars and render them unsaleable would have to be opposed to veto point by a German chancellor.
For France it is the agricultural sector. For more than 50 years members of the EU have been taxed under the terms of the Common Agricultural Policy in order to subsidise France ‘s agriculture. Indeed, the CAP has been the cornerstone of every EU budget since the first day. Attack it and France fights back.
For us the crucial corner of our economy is the financial services industry. Although parts of it exist all over the country it is concentrated in that part of London known, even internationally, as “The City”.It is not just a few greedy bankers; we both have those, but the City is far more. It is indeed a vast banking agglomeration of more banks than anywhere else in the world.
But that is the tip of the iceberg. Also in the City is the world’s greatest concentration of insurance companies. Add to that the brokers, traders in stocks and shares worldwide, second only, and then maybe not, to Wall Street. But it is not just stocks. The City is also home to the exchanges of gold and precious metals, diamonds, base metals, commodities, futures, derivatives, coffee, cocoa… the list goes on and on. And it does not yet touch upon shipping, aviation, fuels, energy, textiles… enough.
Suffice to say the City is the biggest and busiest marketplace in the world. It makes the Paris Bourse look like a parish council set against the United Nations and even dwarfs your Frankfurt many times.
That, surely, is the point of what happened in Brussels. The French wish to wreck it and you seem to have agreed. Its contribution to the British economy is not simply useful nor even merely valuable. It is absolutely crucial. The financial services industry contributes 10 per cent of our Gross Domestic Product and 17.5 per cent of our taxation revenue. A direct and targeted attack on the City is an attack on my country. But that, although devised in Paris, is what you have chosen to support. You seem to have decided that Britain is once again Germany’s enemy, a situation that has not existed since 1945. I deeply regret this but the choice was yours and entirely yours. The Transaction Tax or Tobin Tax, you reserve the right to impose, would not even generate money for Brussels. It would simply lead to massive emigration from London to other havens. Long ago it was necessary to live in a city to trade in it. In the days when deals can flash across the world in a nano-second all a major brokerage needs is a suite of rooms, computers, telephones and the talent of the young people barking offers and agreements down the phone. Such a suite of rooms could be in Berne, Thun, Zurich or even Singapore. Under your Tobin Tax tens of thousands would leave London. This would not help Brussels, it would simply help destroy the British economy. Your conference did not even save the Euro. Permit me a few home truths about it.
The euro is a Franco-German construct. It was a German chancellor (Kohl) who ordered a German banker (Karl Otto Pohl) to get together with a French civil servant (Delors) on the orders of a French president (Mitterrand) and create a common currency. Which they did. It was a flawed construct. Like a ship with a twisted hull it might float in calm water but if it ever hit a force eight it would probably founder. Even then it might have worked for it was launched with a manual of rules, the Growth And Stability Pact. If the terms of that book of rules had been complied with the Good Ship Euro might have survived. But compliance was entrusted to the European Central Bank which catastrophically failed to insist on that compliance. Rules governing the growing of cucumbers are more zealously enforced. This was an European Bank in a German city under a French president and it failed in its primary, even its sole, duty. This had everything to do with France and Germany and nothing whatever to do with Britain. Yet in Brussels last week the EU pack seemed intent only on venting its spleen on the country that wisely refused to abolish its pound. You did not even address yourselves to saving the Euro but only to seeking a way to ensure it might work in some future time. But the Euro will not be saved. It is crumbling now. And since you have now turned against my country, from this side of the Channel, Madame Chancellor, one can only say of the euro: YOU MADE IT, YOU MEND IT.
The full article (and the comments) may be found on http://www.express.co.uk/ourcomments/view/289553/Frederick-ForsythAn-open-letter-to-German-Chancellor-Angela-MerkelAn-open-letter-to-German-Chancellor-Angela-MerkelAn-open-letter-to-German-Chancellor-Angela-Merkel
Car Parking & Other Matters
On Tuesday 13th (December) I took part in Babergh’s Joint Overview & Scrutiny (Community Services) and (Stewardship) meeting. I appointed myself as initial chairman of the meeting so that we could elect a chairman (not me!). The chief purpose of this meeting was to recommend to the Strategic Financial Planning Task Group the key options for the draft budget. The Council faces a substantial reduction in Government funding. After some considerable debate the Committee overwhelmingly opted for the following recommendations:
- · Council Tax to rise by 3.5%. This will increase our tax base, give us additional revenue of £45,000 and will ameliorate future shortfalls. After the increase we will still have the second lowest Band D in Suffolk. The additional cost will be less than £5 per year per Band D property.
- · To leave the present car parking regime unchanged.(The Portas review was published this morning). (see http://www.bis.gov.uk/highstreet).
- · To use up to £3000,000 (s.t.c.) of the £924,000 received from the Government as a New Homes Bonus (based upon past performance) to balance budgets – or to put it another way to invest and support the social investments represented by our car parks.
The recommendations were all against the Executive’s recommendations (which would have been cleared beforehand with members of more senior committees) and have yet to make their way through the various decision channels before coming to the full council in February.
So it remains to be seen how far democratic principles will prevail and the New Year promises to be interesting.
Ideas before their time
It is no secret that every year Babergh District Council faces a difficult time balancing its budget and during the course of the year the problem is resolved by cutting costs, using reserves, deferring expenditure etc. This year is no different, despite the savings being achieved by amalgamating departments with Mid Suffolk District Council. One interesting idea this year was to defer some of the pay-down of the pensions deficit. The deficit which was mainly caused by previously contribution holidays soaks up just under a million pounds a year. Deficit fluctuations in the past have been as high as a positive £19 million which completely dwarfed anything we might do on an annual basis using current funds. All was going well and there was a good head of steam developing behind the idea of seeking a review of the contribution schedule. Alas between the 31st March valuation and 30th September’s (made available to us at the end of November ) the deficit had grown from 19.8% to 30.5% of the fund’s liabilities. Any review of the contribution schedule would have to take into account the deficit increase and on a cash flow basis we could end up being worse off. So we need to wait and hope that the markets recover by 2013 when the actuary once again consults the auguries and issues his pronouncements. (Unless of course we can find another reason to change current arrangements).
Scams, Telephones and Credit Cards
People are receiving calls from a ‘representative’ of BT, informing them that they were disconnecting the line because of an unpaid bill. In one such case the representative demanded immediate payment of £31.00 or it would be £118.00 to re-connect at a later date. The guy wasn’t even fazed when one subscriber told him that he was with Virgin Media as allegedly VM have to pay BT a percentage for line rental!
The representative gives a very English name “John Peacock” but with a very ‘African’ accent – & phone number – 0800 800 152 (which turns out to be unobtainable).
Many people query the veracity of the statement and so John Peacock offers to demonstrate that he is from BT. The subscriber is told to hang up & try phoning someone – and he would disconnect the phone to prevent this and he does !
The phone then goes dead- no engaged tone, nothing – and then he phones again.
Very pleased with himself, he asks if it is enough proof that he was with BT. When asked how the payment was to be made and he offers to take credit card details there and then.
How’s it done: the cutting off of the line is very simple, he stays on the line with the mute button on and you can’t dial out – but he can hear you trying (This is because the person who initiates a call is the one to terminate it). When you stop trying he cuts off and immediately calls back.
The sad thing is that it is so simple that it will certainly fool the elderly and vulnerable.
Incidentally this is not about getting the cash as this would not get past merchant services – it is all about getting the credit card details including the security number so that it can be used for far larger purchases later.
O tempora o mores
Yesterday’s Times contained the following letter:
Sir,
We recently heard a teenage waitress instructing a new recruit:
”When you press this key on the till, it tells you how much change to give. Otherwise you just have to guess”
Old Dogs – New Tricks & Neophobes
Zombieism refers to a tendency of things to become paralysed and parasitic. When anything ages it becomes less adaptable, less flexible, more ‘stuck in its ways’.
You know the expression: ‘You can’t teach an old dog new tricks’.
That’s partly because the old dog is tired and doesn’t want to learn any new tricks. And it’s partly because he doesn’t need to. Old dogs just lie around. They eat, but they don’t hunt. Their joints are stiff. Their ambitions are few. They’ve figured out how to get the bone without much effort.
Likewise, old people often distrust anything new. They’ve seen that most new things don’t work out very well.
And they often become parasitic. They eat. But they don’t produce. It’s just natural. Often, old people mimic the grave before crawling into it. They don’t move. They don’t think. They shuffle around… like zombies.
Taken from: http://www.moneyweek.com/about-us/the-moneyweek-team/bill-bonner (The game is rigged)
Bailiff Issues (2)
Earlier in the year (16th August) I wrote about a meeting at Babergh with a so called debtor who was (erroneously) alleged to owe Council Taxes on properties which had been taken over by the Official Receiver upon my “client” being made bankrupt.
On Saturday my “client” came to see me to thank me for my intervention and management of the situation which as of that morning had been satisfactorily resolved.
So chalk one up for the good guys – the system does work and from time to time a councilor can be useful.
The Zaccheus 2000 Trust
I have received an email asking me to register with Nat West’s Community Force grant programme and vote for the Zaccheus 2000 Trust project (http://communityforce.natwest.com/project/566). Voting closes on the 23rd October.
I am a fan and supporter of the Zaccheus 2000 Trust who are a charity helping people living on benefit or low incomes to access justice when they face claims for debt or fines.
- · They provide intensive help and advice to vulnerable debtors.
- · They act as McKenzie Friends (non-legal support for people without representation)
- · They train volunteers and organisations to provide advice and support to their client group, or to act as McKenzie Friends on their behalf
- · They use evidence from their case work to pursue test cases through the courts and lobby Parliament when the law, legal process or the benefits system is unfair.
I am an alumnus of their training programme for McKenzie Friends. I found it very useful and helpful in my Councillor role when I am trying to help people resolve difficulties with the Council.
Recent changes to the amount of help the government will give people with their housing costs will mean that many thousands of households will be forced away from their homes, jobs, friends and family and into cheaper areas.
The Z2K project will focus on those families. Moving house can be stressful and traumatic for everyone at the best of times, but it is especially for those forced to move while surviving on a small income. It will be particularly difficult for those who are working on low wages who depend upon their local networks for child care help that enables them to work.
Z2K wants to use money from the NatWest Community Trust to employ a part-time co-ordinator to recruit a number of volunteers to assist families to settle in their new neighbourhoods. These locally based volunteers will help with important activities such as enrolling in local schools, registering with doctors while also supporting people with integrating into the local community and making new friends.
A vote costs nothing but the potential return is massive – so please register with Nat West’s Community Force grant programme and vote for the Zaccheus 2000 Trust project (http://communityforce.natwest.com/project/566).
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