Responsibility

I'm traveling on a research trip in the U.S. and whilst my topic is one of organisation and the impact of change, I cannot help but notice the current "confusion of responsibility" that appears to be occurring in the mainsteam media.

All business activities evolve and all organisations are in a constant competitive struggle. One of the impacts of this change is that previously successful models are often replaced, for example the current shift from software products to software services. Unfortunately, organisations who have built around the previous model often face internal barriers which create an internal inertia to making the change necessary for future survival. Without this inertia, external disruption would not occur and today's giants of industry would generally be tomorrow's giants of industry.

Disruption is simply a consequence of management failure, it is the responsibility of management to ensure the organisation not only survives and competes today but also tomorrow. However, management doesn't operate in a vacuum and the inertia is often exacerbated by the actions of the financial markets i.e. it becomes difficult to change a successful model even though that model has a limited lifespan precisely because the financial markets are short term and see only short term value.

The pressure that the financial markets create is immense for any large organisation and ultimately those financial markets share a heavy burden of responsibility for failures caused by the pressure they exert. However, the short term view of the markets is such that this is not seen as their responsibility and long term failure is solely put down to management.

Unfortunately, the financial markets are very adept at blaming others for what is ultimately their fault. The current economic crisis caused by irresponsible lending, a merry go-round of debt re-capitalisation and excessive exposure are all the responsibility of the financial markets. Whilst you can point fingers at consumers, that's like saying a toddler shouldn't have eaten the candy you gave it and blaming the government is like blaming a parent for not providing some rule to govern your irresponsible choice.

The financial markets are entirely responsible for the economic crisis. They're equally responsible for many company failures through short-term attitude. They're also responsible for acting in a dishonorable manner when it comes to the Fed Bank - through the exploitation of quantitative easing for financial gain to the using of Fed money to recapitalize rather than increase lending.

The U.S. Gov and Public should realise that the Financial markets act on a short term basis without consideration of the long term consequences. They act with the persona of an adolescent, always blaming others, threatening to run away, demanding less rules and pointing to a lack of rules as a reason for their own reckless behaviour. They discount the long term to a frightening degree.

Short of grounding the child (the fiscal equivalent of nationalisation), the Gov should understand that the financial markets are an offspring of society and despite the threats they have to operate within its rules. Those rules should and can be gamed to encourage more longer term responsible behaviour.

The financial markets won't magically learn responsibility, that behaviour has to be taught and encouraged. Left alone, they'll just get upto the same old tricks.

Benefit Busters

I was really excited to hear about a program on Channel 4 which was going to look into how "the government is attempting to revolutionise the benefits system".

Promising an "all out attack" and a "no nonsense Yorkshire lass", I was imagining how those MP's were going to squirm.

Imagine my disappointment to discover that instead of hitting some of the biggest piggies in the country, it'll instead focus on the most vulnerable members of our society ... yawn.

According to the BBC, the amount of benefit fraud in the UK was around £2.6 billion in 2007, approximately 2% of a £130 billion (or thereabouts) yearly budget.

If the investment houses aren't making a better than 2% profit on the £175 billion quantitative easing program, I'd be gobsmacked.

This is the sort of benefits we can ill afford. Get your act together C4.

Double, double toil and trouble ...

It seems that the witches of Westminster have been caught with their hands in the cauldron. To avoid being burnt at the stake they've been resigning from the coven in an unnatural haste.

In some warped plot twist that would make Shakespeare squirm these blackened souls have decided that they have been wronged.

"Fair is foul, and foul is fair" these harpies cry as they organise the hapless master's doom.

You just couldn't make this stuff up. Are there no depths that MP's won't stoop to? Have they no shame? Not even a tiny sliver?

"Wool of bat, and tongue of dog, Adder's fork, and blind-worm's sting" - an MP's expense claim or a list of new job titles for them?

An unpleasant odour ...

The reason why a fish pie made with rotten fish and vegetables tastes foul is that the ingredients are rotten. No amount of fiddling with the recipe will ever fix this.

The farce with the MP's expense system has been known about for a long time. Its origins are from a time when the Government urged wage restraint by setting the example whilst secretly creating a lavish expense culture.

What's flabbergasting is that some of them couldn't even stick to such a lavish system and now they're claiming that the problem is they weren't paid a decent wage. It's shameless.

Of course this somewhat overshadows the more serious issue of expenses fraud. It seems an MP can repay that which is discovered to be stolen from the public purse and the punishment is simply a golden goodbye and a handsome pension. This system can't be fixed; the people and the culture need replacement and some of our right honourable should be spending time at her majesty's pleasure.

What parliament needs is new ingredients and not a fiddled with recipe.

Before anyone says that I shouldn't tar all with the same brush, where have the good MPs trying to replace this whole rotten system been hiding for the last decade? A few may be worthy of remaining but as for the rest ... they should be thrown overboard.

Actions speak louder ...

Today, the chancellor presented an excellent budget.

The budget contained investment in building & green technology, measures for the protection of society's most vulnerable, focus on training & jobs, benefits to savers, introduction of a higher tax rate and increased government borrowing in order to maintain public spending. Unfortunately whilst it's an excellent step in the right direction, it's just a step and we've got an enormous mountain to climb. That said, combined with Brown's recent lambasting of snout troughing MP's, this has been a good few days.

It's still a great shame we purchased all those gilts in the "quantitative easing" fiasco, that interest rates have remained too low, we've been foolishly generous regarding re-insurance of bad debts, the excessive bonus culture remains intact and the for the wealthiest it is all too easy to avoid tax. However, at least this we're heading in the right direction.

Naturally, a few of the most advantaged made the usual hollow threats to leave the country. Such words not only demonstrate arrogant beliefs of self-importance but also a delusion that anyone else cares or that somehow they won't be replaced in a heartbeat. Please don't threaten to leave - just leave, go on, sod off ... and don't come back.

Curiosity ....

I'm curious. What legislation is there to prevent a bank (or any financial entity) with two regional business units (acting as independent entities) from operating identically the same OTC (over the counter) options against each other?

Why would anyone do this?

Well if one of the business units is in a low tax regime and it exercises the options more often in favourable conditions (for example, in the extreme, the other unit exercising the options in all circumstances) then this acts as a mechanism for funneling profits from a high tax to a low tax regime.

It would seem pretty straightforward to create a mass of intra-company trade and algorithms to control this trade that would give the appearance of a legitimate trading activity.

Is OTC intra-bank trading legal? If it does occur, has anyone compared how low tax regime business units fare against their high tax regime counterparts?

When the going gets rough ...

I was recently asked what legislation do we need to control the shenanigans in the financial community. As far as I'm concerned we've got plenty.

Over the last decade much has been done to push forward the ideologies of monetarism with numerous threats made that excessive regulation would force Banks and certain industries to leave our shores. The reckless continuation of monetarist dogma has led to this debt fuelled society and the resultant serious damage to property and harm caused to the public.

The act of threatening or actual harm in order to further an ideology is amply covered by the anti-terrorism laws of 2000 & 2001. Under these laws the Government has the right to seize any cash or assets which are either connected to or have been obtained through threats and acts related to the pursuit of such an ideology.

As far I can see, this includes Sir Fred's pension.

Well, that's what the pirate in me says we should be doing.

National Savers Day ...

At a time when inflation exceeds the national target of 2%, the Bank of England is introducing quantitative easing to solve our economic mess. This is akin to pouring oil onto a road in order to slow down a speeding car. 

Whilst the long term effect of high (and hopefully not hyper) inflation compared to savings returns will eventually resolve the crisis it won't be until a combination of a weakening internal economy, weakening currency and core inflation has helped dig a deeper hole. We should therefore at least spend a moments thought for the ordinary folks whose life savings will become worth a lot less (hopefully not worthless) in the process.

Rather than raising taxes, the savings of common people will be used to bail us out of an economic abyss created by some of our wealthiest citizens combined with some very dogmatic and rather foolish economic policies. Of course, the very approach of quantitative easing will help support stock and house prices (temporarily) which bizarrely enough are things that those people who will be out of work and the most careful of savers don't tend to own a lot of. 

So trebles all around for wealthy gamblers and as for your common ordinary savers ... well, the least we should do is to have a national holiday to say thanks.

Thank you savers for keeping within your means, being careful with money, saving up for a rainy day and then bailing out the rest of us when we've blown all the future cash. Whilst your savings might crumble on the bright side it will maintain house prices you can't afford and stocks you didn't buy. So, thank you.

Lastly, a friend asked me to provide a short definition for quantitative easing.

"Quantitative easing is a fiscal laxative best avoided when your economy is already in the toilet."

Or in other words, when you're in a hole ... stop digging! And no, by digging a deeper hole you won't be able to magically back fill the hole you've already created with the new earth you've just dug. It doesn't work like that.

Update 9th May 2013

Warren Buffet says he feels sorry for savers - ah, what kind words. That must warm the heart of the savers out there as they're looking at the cat food tins and asking "is it edible?"

Update 5th August 2013

I do think the Government should bring in a range of issues for the five year old "granny bonds" (NS&I Inflation Linked Certificates) even with a low maximum capital (i.e. £100K) so that some of the least well off savers don't get utterly mutilated by what is about to start to unfold.

When in a hole ...

Once again we approach the cataclysm that is quantitative easing, otherwise known as printing money (but without the direct investment of a Keynesian type approach).

The whole approach of reducing interest rates led to savers having less money to spend whilst those in serious debt just tried to hang on. The net effect might be to slow the creeping expansion of toxic debt (good for banks), reduce currency value and cause an influx of cheap foreign capital (good for stock market and house owners but bad for inflation) but this is at the cost of shrinking and weakening our overall economy (bad for people).

A large number of souls are out of work for no particularly good reason. With inflation running at 3.1%, we need to be restoring confidence to our savers and our currency. Printing more money through such a scheme will either cause an exodus that'll lead us into a tailspin or more likely drag out the recession for many years.

Despite beliefs that we can dig our way out of this mess by applying the same sort of techniques which got us here in the first place, we just seem to be getting in deeper.

By the way, if the banks have so many toxic assets they would like to get rid of, can't they at the very least pay bonuses in them?

The weak minded live in the gutter ...

Today, my weekly shop was delivered with a free copy of the Times. This single act falsified the old adage that the "best price is free".

Had they attempted to charge for it, I would have refused. Since it was free, I ended up wasting precious time. This gutter rag is so poisonous, that its use to wrap fish and chips would cause a major health scare.

Whilst I don't agree with ad hominem attacks, the first opinion piece I read deserves no quarter. Magnus Linklater's miserably titled "Don't try to teach pupils who can't learn".

Magnus' argument, I use that word out of generosity not merit, is that it is not worth trying to educate those from the most deprived backgrounds. As someone who was brought up in his early life on a London council estate but managed to get to Cambridge through good state school teachers, I feel tempted to tell this old fart to stick his head in a pig.

However, I'll show restraint (but not much).

Magnus' drivel questions whether those from deprived backgrounds have the ability to absorb academic subjects. His polemic would have us investing in enthusiastic children from suitable backgrounds (i.e. those in the middle to upper classes) whilst the rest of us learn vocational skills.

Magnus would reinforce the social divide by depriving those from deprived backgrounds because of their background and regardless of ability. He theorises that perpetually consigning a whole class of people to vocational work would be in their interests. Stuff and nonsense.

He conflates ability with background and resurrects the old arguments used in eugenics. However, the poor are not somehow defective and ability is not the preserve of the rich.

We have a disgraceful lack of social mobility in this country. This is the problem we need to solve.

I will however agree with Magnus that there is one case where the perpetually weak minded live in the gutter. It's in the press and Magnus' shockingly poor analysis provides plenty of evidence of this.

Zeroes for Zeroes

There's a lot of hostility in society to the largesse that some banks continue to show their staff, despite the complete disaster they've created. The banks argue that they need to pay big bonuses to keep the brightest staff. There is one counter argument and one assumption here.

The counter argument is to ask the question of where the bankers would go if the banks didn't pay big bonuses. The assumption however is that the brightest work in the financial community in the first place.

When I was at Cambridge, the brightest went into research or built their own companies or pursued more noble goals. Those that I know who headed into the city were not the brightest but they were certainly the most self seeking.

So, exactly where do these super bright individuals who created a house of cards beyond their understanding and squandered trillions gambling with money they didn't have, come from? Also, if they were that bright, why was it that back between 2002-2005 when huge numbers of people were warning of impending collapse through debt, the city was completely silent on the subject?

Some even have the gall to say that no-one saw it coming during a time where many have personally profited whilst creating a toxic dump. Of course, they're hardly likely to say otherwise or accusations of false representation, failing to disclose information and abuse of position would be levelled against them, followed by swift prosecution.

Whilst it's difficult to feel charity towards those who committed such excesses, maybe charity is the root of the problem.

At Harvard, those with sports scholarships or others who lacked talents of the grey matter kind could undertake a simplified classical history course, nicknamed heroes for zeroes. Has this generous & charitable spirit found a new home in the financial community? Are we paying huge bonuses for the least able? The evidence would suggest that lots of Zeroes for Zeroes is rife.

Cassandra's crossing ...

Many years ago, I was predicting trouble in our economic system due to the excessive debt burden, the overheated housing boom and the actions of the OTC market. I'm no Cassandra, as my predictions were wrong.

I expected this to happen before 2005 and yet somehow we managed to continue sinking into more debt. I couldn't understand how we muddled along, I was perplexed by our constant assumption of a soft landing. I was still wrong.

The point about prediction is you need to be right about what happens and when it happens. Any fool can predict that eventually time will catch up with our own folly.

However, by all accounts we're about to embark on a new folly called quantitative easing. The use of such a quasi-scientific term is meant to give us reassurance for what is the fiscal equivalent of printing more money. Fortunately, we're told that this money won't be used to buy bad debts (yet) as we'll be busy underwriting the more media friendly euphemism of toxic assets.

Toxic assets are the financial sector's equivalent of friendly fire. Spinning bad news doesn't mean it goes away.

Unfortunately there is likely to be trillions in more bad debts which have yet to flush through the system. As the former masters of the universe know, this is a black hole that the government could continue to shovel money into. I'd rather us avoid the old adage of "In for a penny, then in for a pound".

Whilst the big easing (as I like to call it) will fare little better than the bail-outs, it should not result in the same waste on bankers bonuses, hoarding and buying jet planes. Instead the big easing will create a relatively short lived increase in share prices, probably benefiting those with deferred share option bonuses along with penalisation of savers through low interest rates. Oh damn, bigger bankers bonus, more inequality and more tension.

However, this unnecessary exposure (the major banks are already well capitalised) will also impair our ability to adapt and manage the hardships that many will experience in the coming years. People will become angry, desperate and disenfranchised.

This brings me to the title of this piece. Having learned the lesson of before, I'll make a cowardly custard prediction containing an element of sense with added vagueness and definitely no timeline. I predict that the slow march to the Rubicon has already begun, we would be wise to turn around soon.

Things will only get better ....

After a whiff of financial sense the government has embarked on a policy of printing more money (for monetarist policy reason of increasing money supply rather than a Keynesian approach of  direct investment), excessive loans, attempting to resurrect a bloated housing market and finally to the idea of bailing-out bad debts.

Who exactly is advising the Government? Estate agents and bankers? This is financial lunacy. You may as well employ me as an advisor, in which case I'll have all the cash and a one way ticket to Acapulco.

Buying up toxic debt is like investing in dead institutions, it's daft. If there is "a sucker born every minute" surely it's time for the Government to let someone else buy the Emperor's new clothes? What Wormtongue is leading our Government to transfer private debt into the taxpayers hands? There are much better ways of resolving the problems, especially as there are trillions more bad debt in the OTC market heading in our direction over the next five years.

Buy-out not bail-out please. The Government shouldn't touch the bad debts. If the banks need more capital then consider, after due diligence, further investment in return for more equity. Make sure the strike price is well below the current market value. Allow them to seek other forms of investment first but if they need our cash then be ruthless, be pirates. If you want to get banks lending then use Northern Rock as an instrument to do this.

If you want my opinion, then in those banks which we have a majority shareholding we should take an active role and flood the boards with Government lackeys. Appoint the National Audit Office as auditors, it's a nice little earner from a body we can trust. Force a share rights issue and create more capital. Control excessive remuneration and above all be brutal in the use of our money. Extract every ounce of flesh and the best return.

Furthermore, stop trying to bring back to life the Frankenstein that is the housing market. The best you'll achieve is an artificial blip of a life enabling the more savvy to offload their hyper inflated assets onto the more unsuspecting. It's an unethical waste of taxpayers' money.

If you want to protect the poorest, accept that the market is going to return to a more historical norm. Nationalise the major building companies and embark on a building programme of civic buildings, council and affordable homes. Give people jobs in the industry (i.e. embark on some Keynesian style direct investment in chosen industries) and a security net rather than waste cash to prop up a failed system and allow the unscrupulous to dump and run.

If you can't do something positive, then give me the cash instead and I'll go look after it. At least you'll get most of it back, minus a few margaritas.

Give us more money ....

To rebuild the economy we need to get rid of our love affair with debt, to create a solid base and rebuild industries. We also need to stimulate the economy but as we know money trickles up, not down. So, we need to put reasonable wages into the hands of as many people as possible. We also need to encourage a measure of austerity, saving and debt-reduction.

Finally we have to deal with the issue that the housing market is built on future money which has already been spent. It's not going to be an easy process, it's going to be painful and there are no quick fix solutions or snake oil cure.

We're in this recession until probably 2012 (possibly much much longer depending upon how daft the policies get). The chickens have come home to roost and they're not going anytime soon.

The latest idea for a magic turnaround is to print more money (not for reasons of direct investment but instead to increase the money supply with money from nothing). This is nothing less than catastrophic, madness and is likely to prolong our pain. At worst it could cause a flight to safety of savers and bring our economy into a full blown spiral of depression, as per the 1930s. The last thing we need in a debt laden economy is for the savers and their liquid assets to take flight.

Only a fool of a took would entertain such a move. If you want to get things going, we're going to need to Tax & Spend. We're going to have to redistribute the wealth and bring confidence to the poorest and largest groups of our society. We're going to need direct investment and create stability as well.

Since I seem to get asked for suggestions a lot, I've listed what I consider our actions should be. These are my thoughts:-

Stability

• The Bank of England needs to return to its original mandate of controlling inflation. Interest rates need to be raised and maintained. Having a weak pound is good for exports and influxes of cheap foreign capital (which is good for house and stock prices) but it can cause inflationary pressures on imports whilst threatening savings and leading to a weaker internal economy. Low interest rates are not going to kick start our economy as people who have saved are not going to be frightened into spending. They are more concerned over the entire economic situation. Unless the situation is mis-managed, the threat of deflation is only problematic for those with large debts or a portfolio of physical assets and pandering to such groups risks economic collapse and social upheaval. Whether you like it or not, house prices need to fall from the current 7-10x average salary to the historical norm of 3-3.5x, if not below.
• Raise the lower tax threshold. You want to put more money into the hands of as many people as possible.
• Introduce and police a fair rent scheme and cap the level of individual housing benefit. Recession is always a good time for the least scrupulous landlords and exploitation. We will need to move fast on this issue.
• Introduce a derelict, vacant and unkempt seizure programme. Allow councils to seize properties both retail and domestic with due notice into national control with no compensation. In a recession some groups will be tempted to leave their properties in a state which will lead to degeneration in our city centres.
• Adopt the EU working time legislation and introduce a mandatory 35 hour week. You're going to need to spread the work.

Raise Capital

• Lower the higher tax threshold and introduce a new higher tax rate band with a 60% tax rate. You're going to have to redistribute wealth. Don't get suckered into this idea of the 'trickle down effect' again.
• Drop the non domicile status. Again you need to raise capital and the threatened flight of some investors is something we should simply accept because any vacuum created will quickly be filled.
• Drop the charitable status of private schools and nationalise those schools which go into bankruptcy. If we want to invest in education we should look at absorbing the private schools on the cheap.
• Drop council tax reductions on second homes.
• Cancel all non-essential government expenditure including ID cards and the NHS system. Redirect savings into building programmes, education and regeneration. Government needs to redirect all high cost, low employment items to high cost, high employment items.
• Show leadership in austerity measures by freezing MP's pay and simultaneously reducing the range of expenses. The last major recession saw MPs freeze wages but enjoy massive increases in expense - this won't wash again.
• Reduce the death tax threshold.
• Introduce equity fines such that companies (& parent companies) found to be in neglect of health and safety, environmental or other government legislation can be fined in terms of cash and penalised in terms of equity. We need to prevent, especially in a recession, companies exploiting the situation and using the defence that fines will bankrupt them. To this effect fines should be cash and equity.

Investment

• Force the nationalisation of the major building companies and embark on a national building programme. Rapidly increase the stock of council homes, public buildings and infrastructure works. We need to kick start the building industry and stop the loss of jobs. We need to build around 3 million homes by 2025, however our focus must be in putting wages into the hands of as many people as possible and not in supporting shareholders.
• Invest in education, training and adult learning programmes. Rapidly increase our basic R&D funding. We've got to work on the principle of building for the future not the past.
• Introduce a significant Government VC & National Wealth Fund to invest in start-ups rather than propping up failing companies. Don't get suckered into VC tax breaks, focus on increasing mobility for the poorest and support those wanting to start companies. It's far better to listen to the poorest and start-ups on how we can meet their needs, give them a better future than to listen to entrenched views of the successful and wealthy who will just try to reinforce their position.
• Introduce a government paid national wage to all NI holders who are registered voters. This wage should be paid regardless of employment status and replaces other basic social security benefits. We need to create the feeling that everyone has a safety net and reduce the fear (and hence loss of confidence) associated with the current economic situation.
• With the exception of the national wage, all income should be taxed. Firstly to pay for the national wage but more importantly to break the idea that you will lose benefits by working.

--- 4th Sept 2014

Alas, we pretty much didn't do any of these. We instead did a whole lot of things I wish we hadn't. Fortunately there was some good movement in terms of Gov IT. I'm reminded of this because it's manifesto time again and all the lobbyists are out in force promoting their own self interests. It'll be interesting to see which Party (if any) stands up for societal best interest.

For those who want to know my political view - I'm a great advocate of Deng Xiapong's approach of "it doesn't matter if a cat is black or white as long as it catches mice". I view the market system as an extremely useful tool but not an ends. The role of Government should be to game and exploit all such systems to its advantage, to consider the effects of social inequality on growth, to invest to overcome inertia, to game certain beneficial behaviours and to leave alone when needed. I follow a dual path of both Keynes and Hayek used simultaneously in different markets. In one market you leave alone whilst in another you directly invest, exploit and game. In my world, a Government should doth the caps of both investor (in basic R&D, in encouraging change) and pirate (exploiting other markets for long term gain).

I'm 'old' labour. I view putting our society, the social contract and the the needs of our citizens first as the entire purpose of Government. This is the 'catch the mice'. to create a beneficial outcome for society. It doesn't bother me whether we use markets, or gaming of markets, nationalisation or centrally planned to achieve this and experience dictates that effective management requires all of these methods to be exploited. 

Hence my view of a mixed economic system as being the most likely to create benefit over any single method. I'm very firmly in favour of markets and governments. I'm a bit of a dinosaur to some because I'm from the 'Adam Smith' school of economic thought and no, I'm not a friend to the 'Laissez faire' world.

P.S. I do love the T-Shirt "Labour, I preferred their early work" ... I do miss them.

For the people, by the people ...

The people of Sark have struck a blow for democracy. Not only did they decide to have elections but they also, rather peskily, voted for the people they wanted.

According to the BBC, this hasn't made the Barclay Brothers very happy and as advocate Gordon Dawes said:"Sark doesn't appear to want or appreciate the Barclays' investment and so it doesn't have it".

Hence 15% of the people of Sark are losing their jobs because the brothers didn't get the sort of democracy they wanted.

Naturally the brothers have the right to pull out of Sark, it's their choice. However, by doing so they throw down a gauntlet to free democracy. It is the right of every society to hold free elections without fear of recriminations or the economic equivalent of collective punishment. For us not to take up this challenge would only encourage other companies to bully governments and their people.

We too can exercise our own rights of choice. I will never knowingly buy any of the papers produced by the brothers companies including the spectator and the telegraph. I would ask you all to examine your conscience.

Remembrance Sunday

This is the time of year when we remember those soldiers who have made the greatest sacrifice on our behalf. I'm sure however they would prefer it if we didn't have this one special day and instead remembered them for the rest of the year.

Whilst we happily reduce a hero's income support because they have some paltry war pension, I notice that bankers (who don't have a special day) happily spend governmental support on plumping up their pensions and bonuses.

When you consider contribution to society, it is difficult to justify the huge salaries in the investment world when compared to that of a teacher, policeman or a soldier. The reason of course is that our economic system has little regard for contribution to our society and we delude ourselves when we consider it as being anything other than a system that needs active management.

If there is one thing to remember, it is that our current system rewards those who sacrifice the most the least and offers everything to the most callous and greedy who risk nothing.

Every day we enjoy the security and the benefits of an educated and ordered society. Every day we enjoy the peace and freedom that men and women have fought and died for. Every day we should honour all our heroes but above all else we should honour those who have suffered and died in conflict in the service of their country and all those who mourn them.

One day a year, is not enough.

For the people, by some of the people ...

The one thing that we don't seem to hear a great deal about on this side of the pond is the policies of the presidential candidates. The election seems to have almost become Obama vs Palin and whether the U.S wants someone who's black in a position of power or someone who's a woman.

Well, I'm not an American, so I have no vote and my voice counts for nothing. I don't even know the issues at stake. However, I recently heard someone say that they couldn't vote for "a rootin' tootin' hockey mom". Why not? Surely a government by the people, for the people should have all walks of life in charge or is a Yale or Harvard degree becoming mandatory for office these days?

By pure coincidence, I read in the FT how Andrew Lahde, founder of California’s Lahde Capital, rounded on the US “aristocracy” who were able to pay for their children to go to Yale and then a Harvard MBA. He apparently said that “these people who were truly not worthy of the education they received rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.'

This all reminded me of when I first visited San Francisco. I was staggered by how segregated the community was between poor and rich. The divide was sharp and crystal clear. A 15 second crossing separated the "American dream" from the "American nightmare". It certainly gave meaning to the old phrase of "from the wrong side of the tracks."

I wish I could go back and ask the person I heard saying they wouldn't vote for a "a rootin' tootin' hockey mom" whether they had the cash to pay for their children to go to Yale and Harvard?

For the people, by the people ... be careful not to lose this ideal and never dismiss someone just because they have a fairly ordinary background.

Ahoy there mateys

The housing market was hyper-inflated by excessive future borrowing. It's going to crash and a lot of people who have borrowed too much are going to get burned.

This is going to happen, the best that can be done is to put measures in place to protect the most vulnerable members of society and by that I mean the poorest. If you've been investing in property, it's unfortunate but it probably wasn't worth what you paid for it.

The "toxic" assets in the banking system mean that few banks are lending to each other creating problems on the money markets. Most of these weak banks were being torn apart through shorting but we've stopped that happening and furthermore we're exposing ever more tax-payers money to cover bankers failures.

In my view, this is just plain wrong.

We own a mortgage and loan bank - Northern Rock - and we should be directing all taxpayers money through it. The government should have bought out Lehman's European operation and combined the two to create an institution that competes aggressively on the financial markets as well as in the mortgage and loans business.

We should certainly allow the shorting of institutions as we should be looking to see what other bargains we can pick up. Despite what the popular press might say, shorting is not some evil act responsible for all the world's gloom. Bankers are responsible for the mess that many banks find themselves in and you shouldn't blame the cassandra's of the financial world for exposing the lie which some banks have been telling. If individual banks are weak then let's turn that to our advantage.

The government's job is to serve society, however it would seem as if we are being told that our only options are to bail-out or the banking system fails. This is clearly not true. I certainly don't mind my taxes being used to buy-out banks particularly when assets are cheap and they can turn a profit in the future but I do have a real problem with bailing out bankers for their mistakes.

The banking community wouldn't miss a heartbeat before making a quick buck on treasury bonds or bleating about how they need help or how the government interferes too much and they'll happily crash the pound if it helps them too.

However, it's not just bankers that our government should take a real interest in. The huge land banks, the suggestions of acting like cartels, increasing unemployment in the building trade and the claims that our three million new homes target won't be met should pique our interest.

There is an easy solution - a national building company. A quick bit of legislation to force open auctions on any land which has uncompleted planning permission or is vacant, mixed with a healthy dose of short selling on a builder and any other trick we can find in order to snap it up cheaply and we could be well on our way. Flood the market with cheap and environmentally friendly homes and most voters will thank you, especially if they can get a decent mortgage from their friendly national bank. It will also give a much needed boost to employment.

However, we can do better. Since all the banks that have gone bust or needed emergency funding had their accounts signed off by one of the big four accountancy firms, it is quite clear that tax auditing isn't working as it should. So let's nationalise that industry too by introducing new legislation such that the tax office is the only one entitled to audit and sign off accounts. It's an entire new revenue opportunity for the government.

Why are we being so soft? The government should be embarking on pillage and plunder of the banking, building and other communities and not handing over pots of gold to them. The government could really clean up here and get some quality assets at knockdown prices. With a bit of cunning it could probably get them for free.

The tax-payer shouldn't be seen as an easy option but instead a ruthless operator. Ask yourself what would happen if the government finances were run by Warren Buffet. Do you see Berkshire Hathaway offering to bail out the industry or is it using the current situation to make handsome investments. Why should the government be any different?

Now we're involved, we should stop acting like villagers and start acting like pirates. We want a good return on any investment we make.

How's Joe?

Since the U.S. financial system seems to be on the verge of collapse, it's worth taking a look at the financial state of your average U.S. citizen (i.e. the size of the debt spread equally among all 304 million citizens, children included.).

Roughly speaking :-

• Credit Card Debt : $8,000 ($2.56 Trillion)
• Mortgage & Loans: $39,000 ($12 trillion)
• Government Debt: $32,000 ($9.8 Trillion)
• Overseas Financial Exposure (i.e. Mae & Mac): $17,000 ($5.2 Trillion)
• Current Budget for 2009: $10,000 ($3.1 Trillion)
• Total Potential Liability: $106,000

Of course this doesn't include the outstanding liabilities such as the amounts owed to overseas programs (i.e. make poverty history) and the environmental liabilities from years of excess.

Joe certainly seems to have been splashing the cash, especially since he's only got an average income of $28,567.

I wonder how long will it be before some "fool of a Took" decides that the solution is to print more money? If Wall Street can offload its "toxic" assets onto poor Joe, don't be surprised if they end up devaluing the little Joe has left.

Deepest, darkest ...

I arrived back today from my week long trip to deepest, darkest southern France. No internet, no phone and completely off the grid for a whole week.

I had a fabulous time.

The food and wine was outstanding, being not only better but also cheaper than the fare served up in UK establishments and supermarkets. Trips like this provide a sobering reflection on how the UK is still fervently rip-off Britain.

The pace of life was slower, more friendly and overall appeared more healthy. There was little of the bling bling narcissism and rap-a-long grotesques which litter our culture.

Concerns over the credit crunch appeared far and few between. Few eyebrows were raised at the news that Lehman bankers, analyst and traders who had gambled and profiteered profusely were about to lose their jobs. However, there was genuine concern for the large number of secretaries, cleaners, security guards and others who would also lose their livelihoods and are probably least able to cope. It was disappointing to note that the UK press seemed only to concern itself with the former, those most responsible for the problems and not the latter, those most likely to be seriously affected.

A week away from reading the popular press shows how the bling bling nature of our lifestyle certainly seems to permeate everything. This lack of caring for the weakest and the worship of all things Mammon is an American import we would do well to lose.

Other imports which we should also consider returning include the abundant slaughter and torture of our language. On arrival back in the UK, I was immediately struck by how many businesses were a "solution" to something.

"SeaFood Solutions", "Coach Travel Solutions" ... the list is endless. However I'm perplexed as to what the problem is that SeaFood is a solution to, and how a coach solves a coach travel problem. This massacre is not however confined to commercial enterprises, as Professor Van Gore eloquently explains in the New Statesman :

"We will broker the skills need of employers and employees within the city at whatever level is required; that is, we do not just concentrate on skills at university level but actually do the necessary brokerage work."

I think he means that they will help graduates find jobs. If only people would take a more simple approach to life, then maybe we would all understand what is going on and the consequences of all this complex financial instrument collapse would never have happened.