Wednesday, January 28, 2009

Why are Labour so heavily down in the polls?

There is a big clue in two news pieces that came to me just today via my work in HR:

Over a third of workers are concerned about job security

New research conducted by Nationwide has revealed that 34% of people are currently more concerned about job security than they were a year ago. 1051 UK citizens were involved in the research, which was conducted during November of last year.

The world’s largest building society are advising people to save enough money to cover four months’ salary as an emergency fund. Furthermore, they think it is best that people delay making large purchases until job security returns.

Robin Bailey, director at Nationwide, said: “Job security has become a major concern and it is important that people do not rest upon the hope that they will not experience redundancy. By acting now people can take steps to lessen the financial impact of losing their job and make sure, should the worst happen, they are in the best position to weather the storm and get back into employment as soon as possible.”

UK managers believe their own redundancy is inevitable

One in four UK managers are updating their CV in case they need to start looking for a new job. This is according to new research conducted by the Chartered Management Institute (CMI) that incorporates results of a survey sent out to 1,216 individuals and analysis of calls to the CMI redundancy hotline.

Over a quarter (27%) of those involved in the research are currently trying to develop business networks to uncover new job opportunities. On the positive side, nearly three quarters (73%) argue that there is not as much stigma attached to redundancy than during the 1990s. Furthermore, over half (51%) believe the current economic climate is the perfect opportunity to reassess their career.

Ruth Spellman, Chief Executive of the CMI, says: “Quite clearly, any suggestion that there is already ‘light at the end of the tunnel’ is misplaced. However, if we can help people to dig deep and develop their skills this may enable them to move forwards as well as to move on. There is a worrying lack of concern about helping those who survive redundancy and unless these individuals are given a focus or sense of direction, the spiral of low productivity and morale will continue on a downward trend.”

The unwelcome return of job insecurity brought on by widespread indiscriminate redundancy is in my view the main driver of collapsing support for the Labour Party. Even amongst the most dedicated Labour supporter there lurks the realisation that mass unemployment holds even greater perils for them than it did for John Majors government in 1997 - mainly because people will rightly think 'if Labour can't look after the workers - what use are they to anyone'?

Gordon Browns twelve year boast about how he has personally eradicated 'boom and bust' and saved the world just looks sickening as more and more people pick up a P45 and have their families destroyed and their homes repossessed.

Monday, January 26, 2009

Why stop with just a 'Bad Bank'?

The underlying cause of the credit crunch is that some of the multi-billion dollar investments bought by many of the worlds banks are now thought to be either unsaleable or worthless, or both.
The net worth of the banks concerned has plummeted. And because the banks are overnight worth next to nothing their credit rating has also plummeted; which is why other banks won't lend them any money - which means that they have no money spare to lend to you and I.
And because you and I cannot borrow money house prices are falling, car sales have stalled, and furniture shops are closing.

As I understand it the proposal is for the Government to set up a bank that will buy up (at close to book price) all the ‘assets’ that careless bankers bought that have turned out to be worthless. Overnight the worthless assets aren't worthless, the unsaleable assets aren't unsaleable and hey presto! the bankrupted banks aren't bankrupt, are very credit worthy, so they can borrow a load more money and go out and do it all over again.
Why let only the bankers get off the hook? What about a 'peoples bad bank' that could buy all the assets we have bought over the years that have turned out to be worthless, like pensions funds, for instance?

A bad car dealer would be a good move, to buy up at book price second-hand Alfa’s, Rovers, Citroens and Range Rover v8’s that people bought last year and that have also become unsaleable and worthless, perhaps that would perk up new car sales a bit?.

A bad landlord would be a good idea as well - it could buy all those completely overpriced and unsaleable ‘executive flat’ developments in Leeds and Manchester and Bristol, and then completely fail to find tenants for them.
Where would you draw the line? A Bad Sofa Bed Warehouse?
"A bad bank is the latest in a line
of very bad 'quick fix'
ideas imported from America.."
I know and fully recognise that people are scared of the potential of this economic collapse, I fully appreciate (more than many, having been there) the difficulty being faced by a recession when you run a business and even of your business failing and I know people are right to say Government must do what has to be done' to minimise the impact of this on our daily lives.
But the plain fact is that massive intervention by central banks in several previous crisis during the 1990's and early 2000's has simply deferred the economic consequences for a few years and made the eventual problem bigger and more dangerous.
If we defer the long overdue correction yet again all we will do is create an even bigger economic earthquake a few years down the line.
For the last few years the West, and the UK in particular , having been living far beyond our means while emerging countries like China and India have been living beneath theirs; and lending us the difference to keep us going.
Sooner or later, after years of massive growth in countries like China, India, Korea, Taiwan and Russia it had to happen that the world economies would rebalance in favour of the East and that is what is happening. Their living standards are going to rise very sharply in the years ahead and I am afraid that whatever the Government does, ours are going to (relatively speaking) fall.
A bad bank is the latest in a line of very bad 'quick fix' ideas imported from America, I only hope we don't do it.
The Government should be completely focussed on mitigating the effects of this correction on those affected, mainly the unemployed, and on putting the competitiveness that ten years of Labour have taken out of our economy, back into it.

Tuesday, January 20, 2009

A fresh boost to Cameron (and me) from ICM, YouGov and Mori this week.

Three polls this weekend all showed a big boost for the Conservatives at the expense of labour and the Lib Dems; and proved that the much hyped Brown Bounce 2 is over.

If you only ever took your news from the BBC you could be forgiven for thinking that Labour had gone back into the lead over the credit crunch, whereas as the 'poll of polls' chart above from Anthony Wells UK Polling Report webside reveals at no point did Labour gain a lead - in fact they have been behind in the polls consistantly since the election that never was after Brown first took over at the back end of 2007.

During this time the BBC (Brown Broadcasting Corporation) have been parroting the Labour line that there was a poll lead for Gordon, but this was only in the subsiduary question asked by some pollsters "who do you trust to run the economy" where there was a short-lived preference for the Prime Minister during November and December.

However the trend lines are clear, with every passing month Labour and the Lib Dems are falling further behind and the Conservatives are steaming ahead in levels of public support. Interestingly the Lib Dem trend line almost exactly follows the Labour line suggesting that voters are punishing the Lib Dems in equal measure to Labour for the mess the country is in.

Which given their close views on everything from the Euro to tax is hardly surprising, I suppose.

Monday, January 19, 2009

How the mighty are fallen....
The chart at the top of this post is the last years share price movement for the owner of NatWest and Direct Line Insurance, RBS group. In a few months this bank has gone from being worth £60bn to virtually nothing - and the main invester in RBS is... you and me.
The Government has lost £13,000,000,000.00 so far on it's investment in RBS - Thirteen thousand, million pounds. To give you some idea of how much money that is it's enough to build a brand-new secondary school in every major town in Britain; or replace every single piece of miltary hardware in the British Army, and it's five times as much as the treasury lost on 'black Wednesday' when Britain was ejected from the ERM in 1992 - an event that Gordon Brown has used against the Conservatives time and again since.
And that is on top of the unlimited cash guarantee given to the bank by the Government to underpin it's daily borrowing and now to underwrite its lending. The authorities allowed RBS, a small and previously virtually unknown Scottish bank to buy out Natwest (a company three times it's size) in 2001 and at the time I and others said this would turn out to be a huge mistake.
Banks used to boast about their probity, their safety and their security; their names used words like Trustee, Provident, Guarantee, Security, Prudential. Banks were boring, safe and cautious because their customers wouldn't leave their money with a bank seen to be flash, reckless or insecure.
But nowadays it doesn't matter - the Government will bale you out if you deposit your life savings with Fred's Bank ("Your money is safe -top left pocket, my grey suit") so the only thing that matters is the interest rate. Any flaky foreign or upstart 'financial services company' was just as safe as the most prudent of old-style banks so as a result people poured their money into the bank offereing a few pence extra interest and the prudent, the cautious and the safe havens missed out.
"the main investor
in RBS is you and me"
Even now that it's all gone pear-shaped the banks who steadfastly refused to take stupid risks with their customers money (Standard Chartered, HSBC and Abbey National to name three) have missed out again because their reckless rivals have recieved billions in cash aid and near nationalisation, so now they are having to compete with Government ('gilt edged') debt as a secure home for savings.
It's a nightmare that is of the Governments own making - because lets us never forget that it was the creation of the FSA in 1997 that re-wrote the centuries old tradition that the banks, like most businesses were regulated and supervised by their own lender - the Bank of England.

Sunday, January 18, 2009

It looks like it could be 1640 all over again at Castle Circus...

After years of brewing tension the battle lines are at long last drawn, long time loyal friends find themselves on opposing sides to fight for the constitutional settlement they passionately believe is essential for the citizenry.

On the one hand the Cavaliers – romantic royalists determined to preserve the traditional way of doing things, they want our civic leadership pre-determined by divine right; ascending to the chair swaddled in robes and swathed in a lavish tradition of pomp and spectre to wow the tourists and enrich the public. On the other side we have the Roundheads, determined to cast to the winds the ceremony and tradition of old; to give power to all the people – abandoning all that went before and running government full of hair shirt humility and 21st century economy.

I am of course talking about the growing controversy surrounding the role and status of Torbay councils’ Chairman.

In 2005 when we decided to switch to a directly elected mayor the local council constitution that had evolved in the previous century became immediately obsolete, the traditional role of Mayor was to chair council meetings and ‘represent’ the town at civic functions. Usually the job was given by councillors to their longest-serving member on a ‘Buggins turn’ basis; over the years the keys and seals of the town grew into chains of office, and elaborate robes which, it has to be said, those who are chosen revel in wearing. The Mayor was, like the leader of the council, chosen behind closed doors by councillors with no direct say from the public.

When the mayoral system came in it was clear that the role of Mayor would become a much more hands-on executive role, and as a result there was a need for a new post – Chairman, someone to act as the speaker of the house and moderate debates. It was decided that the ceremonial duties of the old Mayor would pass to the Chairman instead of –as happens in other countries- the elected Mayor doing all of it.

This slightly uneasy compromise has operated ever since, but recently cracks have appeared as some on the ‘Royalist’ side have been agitating over such matters as who should host the annual Civic Ball, held every February, now that this years Civic Chairman Michael Hytche is not well enough, and over the budget for the Chairman which some modernisers want to do away with or substantially cut.
Like all trivial arguments this one is a proxy fight for a much bigger issue - just who is in charge of Torbay Council?
To you and me the answer is as obvious as it is legally incontrovertible - it's the man elected by you and I in 2005 to serve until 2011.
But a few people on all sides of the political divide wish that it wasn't. A few people who didn't want the directly elected mayoral system in the first place believe that any change to the old way of doing things is an unconstitutional power grab by that most insolent of outsiders - a politician elected by the people.
It took 300 years for the constitution at Westminster to evolve, our own council has been writing it's rules for 150 years whereas the new mayoral system has been in place for a little over 40 months.
So I suppose we just have to give it time....

Friday, January 02, 2009

The pound has lost a third of it's value.

We are in for some very serious stagflation in my view as the gains made to our economic efficiency in the Thatcher Major years are unpicked with ease by Brown.

As the recession knocks out competitors the survivors boost margins to protect gross income; the opposite of what people are saying will happen (ie that greater competition will keep prices low).

I sometimes wonder if people have forgotten the 1970's. If there are less shops to buy things from, prices *rise*.

And the situation is made much worse by the pound losing a third of it's value against most other world currencies (and not simply the Euro and Dollar as the BBC would have you believe).

All those super cheap deals on manufactured consumer items like plasma TV's and sat nav units from China are over, and at just the point when consumers are having doubts about spending anyway.

Your car is going to cost a third more to replace, and the reasale value of the existing one has dropped by about another 40% last year so the cost to change has rocketed. Keeping your car then? servicing and repairs will skyrocket as parts costs will double - manufacturers will keep less in stock and charge you more to try and make up lost profits on new car sales.

I damaged my mobile over Christmas and all those free mobile phone offers are gone already, o2 won’t do 12 month contracts anymore, you have to sign for at least 18 months. Nearly all mobiles are imported and costs to the mobile company of providing them have gone up by 30-50%.

I can remember before Thatcher and it wasn't the socialist utopia many seem to remember (or imagine) it was. I remember 'panic buying' as a weekly occurrence, regular queues for petrol, bread - even toilet rolls were rationed at one point.