March 2009

Well Monsieur…..

President Sarkozy yesterday threatened to wreck the London summit if France’s demands for tougher financial regulation are not met.

France will not accept a G20 that produces a “false success with language that sounds good but contains no commitments”, his advisers said.

Asked if this meant a possible walk-out, Xavier Musca, Mr Sarkozy’s deputy chief of staff for economic affairs, said: “A basic rule with nuclear deterrence is that you do not say at what point you will use the weapon.”

If I could just point out that Heathrow is thataway?

Won´t take you long to get home.

Gosh, yes!

Others will now come under unaccustomed scrutiny. Let this be a warning to all public officials, quangos, councils, NHS officials, sports authorities or anyone holding even minor power. Something has snapped. If public trust was always low, it has fallen down a crevasse in this financial crisis. Historians will see why: people feel a grand conspiracy by a well-paid elite has failed them.

A fair enough appriasal of the public mood.

These hyped up "scandals" are frivolous compared with serious investigations such as the Guardian\’s arduous and risky revelations on company tax avoidance. If only more newspapers gave the same space to investigating opaque corporate bad behaviour that they devote to exposés of minor MPs\’ misdemeanours. Eternal trivia is not eternal vigilance.

Yes, also fair.

As would be and were those revelations that the Guardian Media Group was using the same tax dodges they were throwing accusations of around. As would be and were the points about the pay and bonus of the Guardian´s editor. The CEO of GMG itself.


Finally, some sense:

In his speech, Obama appeared to prepare the ground for bankruptcy, saying that a chapter 11 filing for either GM or Chrysler would "make it easier to clear away old debts weighing them down," and that it need not involve years of court procedures.

Yes, that´s the way to go and it has been all along.

Clear out the wreckage of the debts, the promises made and allow the assets to be employed productively. If they can´t be employed productively, then Chapter 7 beckons…..liquidation, not just bankruptcy.

Not entirely convinced

Trademark applications have fallen 30pc from their peak, indicating the decline in business activity and new product launches.

Just a hunch, something in the back of my mind.

Didn´t the law on trademarks change a few years back, meaning that everyone had to reapply?

If so, a decline from that peak isn´t a sign of declining business activity at all, is it?

Interesting idea from the Prime Minister

They must return "honesty and fairness" to the financial industries and not put greed and short-term gratification before long-term benefit, he will warn.

Right, so we shouldn´t put short term falls in output ahead of the long term health of the public financies?

We shouldn´t borrow our children´s inheritances to deal with a hiccup in the growth of the capitalist economy?

We shouldn´t be holding the taxpayer ransom to pay for the Labour Party´s payroll vote in the public sector?

Or is this honesty and fairness something to be urged upon others but not to be done by the urger?

Oh my…

All those who say that a mutually owned banking system won´t produce crashes and insolvencies like a shareholder owned one.

The building society racked up more than £800 million of high-risk loans and assets at the height of the market, including £650million of commercial property, the value of which has since crashed.

Oh yes?


Dick’s waiting for me in Redditch,
Get me there driver soon
I want to lie in his strong arms
And go into a swoon
I want to collect his DNA
For my own database
I want to open my bursting blouse
And thrust them in his face

On Friday night when I got home
My second home that is,
Dick said he was all shagged out
And just gave me a kiss
On that fateful Sunday morning,
I read it in the press
Dick’s been watching some dirty films
And got us in a mess

It seems he’s been paying five quid
For “Dirty Debutantes”
Despite what’s bursting from my blouse
It’s not me that he wants
No Tarantino, no Scorsese,
No Bergmann, no Kubrick
You can’t beat old J Arthur
Says naughty, naughty Dick

Now I’m the two homes secretary
And hold the highest rank

Paternity pay

OK, so we all know that maternity leave….that career gap to bear and raise a child,…is a major determinant of the gender pay gap.

Concluding that it was time that "policy-making enabled men to play an equal part in parenting", the EHRC proposes that the first 26 weeks of a baby\’s life would remain dedicated maternity leave for mothers, but with higher rates of pay, so that they would receive 90% of pay for the entirety of their maternity leave. Fathers would still get two weeks of paternity leave at the birth of their child, but this would also go up to 90% of their pay.

Beyond the first six months of maternity leave, the commission proposes three blocks of "parental leave", which could be taken any time before the child\’s fifth birthday, each of about four months, one block dedicated to mothers, one to fathers and one either could take.

The first eight weeks of each of these blocks of leave would be paid at 90%.

Excellent! So we\’ll raise maternity pay, thus increasing the gender pay gap. And we\’ll raise the cost of employing fathers as well. So that we now have a parent pay gap!




Ok, this is a good idea.

The call comes from the Government\’s Environment Agency under a policy that amounts to \’rationing by price\’.

The introduction of smart meters could see families charged more for water in the summer months in order to stop them filling up paddling pools or washing their cars.

The agency argues that a drastic reduction in water use is needed to conserve supplies and save the planet.

It claims that universal meters would cut average household water use by as much as 15 per cent.

Rationing by price. Yes, we know this system works. Excellent.

I\’d probably go  a little further and adopt part of the Portuguese system. X per unit as a basic supply, X plus per unit for higher useage and X plus lots per unit for very heavy users. Basic supply being some estimate of what a household needs for cooking, washing etc.

But OK. However, this is stupid.

It also wants strict controls on how efficient appliances must be, which could lead to a ban on power showers.

If you\’re already rationing by price then you don\’t need to ban anything. You\’ve already solve your problem of resource allocation.



We had the power all in the wrong place – too concentrated, too many bankers with monopoly power.

Sunder Katwala, Fabian Society.

There wasn\’t a monopoly in banking. Far from it. And how can "too many people" have monopoly power anyway?

Dan Mitchell

Eight years later, Mitchell is on the warpath again. "Tax competition leads to low tax rates and increased prosperity," he told the Observer from his office in Washington. "Sovereign entities have the right to secure tax privileges. Even if the US government does not like it."

Well, he\’s right. That is what sovereignty means.

Insisting that other countries do it your way is, well, a bit colonial or imperialist, isn\’t it?


Which benefits?

The chancellor is preparing to channel cash to poorer families in his budget as part of a mini-fiscal stimulus to kick-start the economy and protect the vulnerable. Senior cabinet figures are backing a campaign by more than 110 Labour MPs, including some ministerial aides, to top up benefits or the tax credits paid to low-income parents.

If it\’s any of the means tested ones then it\’ll just increase the marginal tax benefit withdrawal rates faced. Thus worsening the overall situation.

The good bank solution

All sorts of poeple are calling for simple retail banks, divorced from the problems of past loans and the excesses of capital markets.

Tesco, the UK\’s largest supermarket, will open bank branches in 30 of its stores by the end of 2009 as part of a massive assault on the financial services sector.

So no doubt they will all welcome this move.

Or will the fact that it\’s Tesco mean they\’ll oppose it? The right to lashings of ginger beer for the first to spot some tortured reasoning as to why this isn\’t in fact a good idea.


The publication the full expenses claimed by all MPs in 2007-08 will include a detailed breakdown of family travel expenses, a House of Commons spokeswoman confirmed.

MPs\’ spouses and children under 18 are entitled to 30 single trips – or 15 return journeys – every year between their constituencies and London.


Ah, Polly….

Labour should simply announce an emergency cap on top pay. Anything over the prime minister\’s £200,000 should be temporarily taxed at 90%. No bonuses, no fiddles. The golden geese will fly away to Dubai, Mumbai, Shanghai? Unlikely, but if a few go, who cares?

Well, it depends upon how many do go.

The money should be hypothecated for an emergency national job-creation plan

For if any significant portion do go then there won\’t be any extra money.

That\’s leaving aside the Laffer Curve effects of such taxation on future efforts. Tax rates of 90% do indeed depress economic activity and thus the tax that can be raised from such.

Not at all: near-bust UBS cut top pay but finds other banks picking off their top people. That\’s why government has to call time on pay for all, to end the greed game where every silverback demands to be in the top quartile.

But such top people are indeed in an international market. They can bugger off very easily indeed.

As an aside, worth noting that these punishing tax rates are coming in just above Polly\’s gossiped about salary level….but well below those of her bosses at The Guardian and the GMG.

"Hey Boss, you should pay 90% tax but I shouldn\’t" will make for interesting water cooler talk.

This does very much amuse me though.

But "Eat the Bankers" signs do not portend a spit-roasting in Canary Wharf:

I don\’t think that Polly knows what "spit roasting" means in today\’s parlance.

At least I hope not.

Statistics, statistics.

Robert Reich.

As a result of increasing global competition and technological advancements, the US and other post-industrial nations have seen declining median incomes….

So, is this true?

Number Median income Mean income
with ______________________ ______________________
Region income Current 2007 Current 2007
and year (thous.) dollars dollars dollars dollars
2007 210,019 $26,625 $26,625 $38,174 $38,174
2006 208,491 25,795 26,527 37,517 38,581
2005 207,231 24,325 25,835 35,499 37,703
2004 35/ 205,157 23,214 25,482 33,859 37,167
2003 203,482 22,672 25,560 32,976 37,176
2002 202,275 22,118 25,492 32,222 37,137
2001 200,814 21,934 25,688 32,099 37,593
2000 30/ 200,208 21,516 25,906 31,199 37,565
1999 29/ 198,099 20,584 25,614 29,677 36,929
1998 193,642 19,953 25,347 28,236 35,869
1997 191,615 18,756 24,159 27,022 34,806
1996 189,997 17,587 23,143 25,466 33,511
1995 25/ 188,073 16,775 22,662 24,211 32,707
1994 24/ 186,402 15,943 22,057 23,278 32,204
1993 23/ 184,611 15,427 21,798 22,199 31,367
1992 22/ 183,692 14,902 21,577 20,758 30,056
1991 181,222 14,688 21,806 20,280 30,109
1990 180,465 14,383 22,119 19,842 30,515
1989 178,852 13,856 22,371 19,348 31,238
1988 177,177 12,935 21,785 18,049 30,398
1987 21/ 175,374 12,103 21,132 17,041 29,753
1986 172,293 11,546 20,840 16,174 29,194
1985 20/ 170,163 11,008 20,229 15,323 28,158
1984 19/ 167,738 10,417 19,800 14,412 27,394
1983 164,739 9,720 19,232 13,362 26,437
1982 162,227 9,143 18,862 12,709 26,219
1981 161,828 8,532 18,664 11,909 26,051
1980 159,487 7,944 19,032 10,998 26,348
1979 18/ 158,050 7,254 19,308 10,121 26,939
1978 147,473 6,813 19,871 9,451 27,565
1977 139,422 6,429 20,037 8,886 27,695
1976 17/ 135,945 6,002 19,887 8,242 27,309
1975 16/ 132,041 5,664 19,847 7,704 26,995
1974 16/15/ 130,505 5,335 20,230 7,255 27,511

The one to look at is of course the one in constant, 2007, dollars. This takes account of inflation. And the answer is that no, the US has not been seeing declining median incomes.So Mr. Reich can bugger off then, can\’t he? For it\’s very difficult to say that median incomes which have risen by some 30% since the beginning of the current wave of globalisation have been declining as a result of said global competition.

How to deal with a bankrupt banking system

Major banks have been nationalised by governments around the world, providing a perfect opportunity for ministers to steer lenders in a new direction. Private money needs to be siphoned into a sustainable future through more forward-looking banks and finance houses. These key institutions need to abandon their sole focus on short-term profit maximisation in favour of a long-term, non-profit performance view.

Stop asking banks to make a profit.

Yes, that\’ll work.