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Monday, October 25, 2010

EU CONSERVATIVES IN TOTAL DISARRAY

       BY TERRY MOORE IN BRUSSELS  25 October 2010   

This month's resignation by the Conservative's leader in the European Parliament (EP) has thrown Euro-Tories into a state of flux. In a wholly unexpected development, Timothy Kirkhope MEP stood down after five years in the post.
            Kirkhope states that he wants to spend more time developing the Tories' right-wing grouping in the EP, i.e. .the European Conservatives and Reformists (ECR). The ECR is nicknamed by many as 'The Addams Family' of EU politics because of its motley collection of parties and partners.
            One Brussels-based wag has already commented that "it's like a weird echo of John Nott's resignation when he stated he wanted to spend more time with his family, except in this case it's the Addams Family that Timothy wants to spend more time with".
            This yet another example of the Tories' growing incoherence in the EP. The latest damming development; sees the new Latvian Government refuse to go into coalition with the Tories' Latvian allies 'For Fatherland and Freedom Party' because of their ultra-nationalist position.
            The new Latvian leadership said this week that "having the nationalists in the government would raise ethnic tensions and harm Latvia's image abroad". It appears that the Conservatives in the EP don't worry about associating with ultra-nationalists or about their image abroad, reputational damage seems to be acceptable.
            The ECR group has also had the embarrassing misfortune of having to "virtually defenestrate" the current Czech President from the website of the Alliance of European Conservatives and Reformists. The website has a picture of President Klaus as one of the five main images (another one was a youthful looking Margaret Thatcher). However, it was pointed out that Klaus is not a member of the AECR and it was entirely inappropriate to have his image on the website.
            Another minefield for David Cameron's regular breakfast meeting with ECR leaders when he came to Brussels for the European Summit (29-30 October). Last time Cameron met the leader of his Czech allies but snubbed the second largest party in the coalition, the Polish Law and Justice Party. However, it appears the Poles, led by their often absentee leader of the ECR, Michael Kaminski, will insist on Cameron meeting the volatile Jaroslaw KacyƄski.
            Bets are now being taken on who will lead the Tories disparate band in Brussels. There are 25 Tory MEPs in the EP and it will be amongst those ranks that the new leader will be elected.  
            Early indications are that the leader will be one of six current MEPs, The daily Telegraph's blogger Daniel Hannan, a compromise candidate Struan Stevenson, Richard Ashworth, the aptly surnamed Nirj Diva and Mr Bean's (Rowan Atkinson) politically dyspraxic cousin, Martin Callanan.. An outside bet is Geoffrey Van Orden MEP (Vin Ordinaire to his critics).

Wednesday, October 6, 2010

CAMERON AND OSBORNE; HYPOCRICY KNOWS NO BOUNDS

Following from Gideon Osborne's avaricious announcement yesterday that families on benefits will only receive a maximum amount equivalent to the average family wage, this set me thinking.

Since the average family wage is believed to be £26,000 per annum, I remembered the taxpayer each year paying out an equivalent sum to Cameron and Osborne during the last Parliament.

When they both bought second homes after being elected to Parliament in 2001, they structured their financial affairs so that they could get their snouts into the trough for the maximum amount they could claim from the public purse.

i.e. These two independently wealthy people took out totally unnecessary mortgages so as to be able to claim public funds instead of using their own capital to buy their second homes. This enabled them to use the capital they didn't employ to invest in othe opportunities. For instance Samantha Cameron had a £300,000 bonus paid the same year that Cameron bought his 2nd home in Oxfordshire with a mortgage of £300,000.

Hence they have profited big time from house price inflation and on the returns from their investments whilst the taxpayer picked up the tab.

Cameron claimed over £141,000 over five years in second home allowances.

By the way, the amount claimed by both Osborne and Cameron was in excess of £26,000 per annum each, sounds familar, If the cap fits wear it.

Friday, October 1, 2010

RAMPANT CAPITALISM; TIME TO REIN IT IN

By Marjorie Smith

IT'S TIME TO REIN IN SOME OF CAPITALISM'S WORST EXCESSES

There is an opportunity for Labour to stand alongside its natural support-base and re-engage with voters who have real concerns about the impact unregulated or '''self-regulated” capitalism has had and continues to have on their daily lives.

It should be obvious that the way in which the private sector chased the short-termist holy grail of shareholder value so as to enrich themselves with self-determined bonuses has had a deleterious effect on our society as a whole. What a whole generation of business leaders did was to abdicate their fiduciary duty to their employees, their customers and, in reality, their shareholders, by pursuing business strategies that almost totally focussed on the bottom line, so that they could report record profits.

However, these record profits were, more often than not, recorded at the expense of medium and long-term commercial objectives. A whole culture of outsourcing of internal services, large-scale lay-offs, sale and leaseback of fixed assets etc. etc. allowed a large number of companies to have their asset value hollowed out all in the name of enhancing 'shareholder value'. The corporate parasites that undermined the host bodies they were supposed to be accountable to actually revelled in a climate of large bonuses and adulatory coverage from the right wing press, whilst all the time, the companies/conglomerates they were responsible for started to bleed red ink on their balance sheets.

The high profile casualties such as Enron, WorldComm, Northern Rock, RBS, Halifax, etc etc, are just the tip of the iceberg when it comes to the utter commercial carnage unregulated/self-regulated capitalism has wreaked on business ethics in the Anglo-Saxon corporate world. You didn't a ludicrously over-priced Masters Degree in Business Administration to see that the prevailing ethos in the commercial world was being reduced to a simple continual driving down of costs (no matter how it was to be achieved or how commercially wrong-headed it was nor what the long-term outcome would be) all in order to increase reported year-on-year profitability.

What compounded this utterly wrong-headed strategy was the lionization of a golden circle of business leaders, who apparently could do little wrong and who moved from Chief Exec post to Chief Exec post.
All the time trousering huge and disproportionate bonuses as they downsized / outsourced /merged /acquired / lease-backed / etc. etc. Many of these self-same people have now been exposed for the charlatans they really were, yet they they were allowed to act like supernatural beings for far too long.

Any fool, with a modicum of knowledge of derivative trading, packages of securities mortgages and a scant knowledge of the sub-prime market in the USA could have easily predicted what would be the outcome of the reckless antics of US mortgage providers and the financial institutions that backed them, yet the regulators did nothing.

It didn't matter, to the City of London and the Treasury or City regulators that balance sheets and profit and loss accounts were becoming about as reliable as the reported figures contained within a Soviet five-year plan or that the long-term effects of such turbo-capitalistic corporate ethics would have a disastrous outcomes in a manner for many companies just like Mao's wrong-headed 'Great Feap Forward' had for China.

"It appears that modern capitalism is developing a form of rapid behavioural convergence that completely contradicts the accepted norms of competition theory."

This degradation of business ethics also led to rampant totally illegal collusion in different business sectors, although the worst abuses took place in the financial sector. For example, the day before the infamous judgement by the Supreme Court over bank charges, the Chief Executives of all of the major banks in the UK held a meeting to discuss how they would deal with the outcome of the ruling. This in blatant disregard of the law about collusion between 'so-called' competitors. The self-same banks even had an illegal teleconference between themselves the very next morning to chart a way forward and how to have a coordinated response to the ruling.

Self-regulation in the City has also led to a plethora of anti-competitive practices in the financial sector as Banks copy and imitate each others' business practices (e.g. charges on customers, hard-sell techniques to sell other financial products etc etc) rather than find ways of competing by being innovative. Adam Smith's 'hidden hand of the market' has been replaced by the 'subtle underhand of the cartel'.

"These 'intuitive' cartels are intensely anti-competitive, they lead to abuse of their dominant position especially in relation to smaller competitors and they are usually an anathema when it comes to consumers interests."

It appears that modern capitalism is developing a form of rapid behavioural convergence that completely contradicts the accepted norms of competition theory.  In that companies in the same business sector imitate each others commercial practices so as to establish a de facto cartel without needing to covertly collude. All that is needed is to use information technology to get rapid feedback and continually monitor competitors' activities, prices and conditions of sale so as to constantly align oneself with the behaviour of your main competitors. It seems that the old rules of accepting that three or more large competitors will ensure competition no longer applies and the Banks are the greatest example of this.

These 'intuitive' cartels are intensely anti-competitive, they lead to abuse of their dominant position especially in relation to smaller competitors and they are usually an anathema when it comes to consumers interests. They need a fresh approach to competition policy that should ensure that the interests of the consumers come first and that no commercial institution is either above the law or 'to big to fail'.

Yet, this Conservative government expects the State to nationalise the losses of these massive financial institutions so that they can rebuild their balance sheets at the expense of the public purse and then   quickly return to a commercial normality that is completely opposed to the interests of most taxpayers.

Osborne and his ilk, have made no mention of the voracious appetite of the City of London for easy money and its role in incubating and sustaining the culture that led to the financial crisis. They instead intend to return to an era of 'light-touch regulation' of the financial markets, whilst all the time trying to blame the state of the public finances on Labour profligacy.

This a narrative that must not be allowed to become an accepted fact. Labour can still turn this crisis of post-industrial capitalism to its advantage and that is by being on the side of the people who have to pay the price for the naked greed of those who eagerly exploited the conditions created by Thatcher in the mid-eighties and who prospered because New Labour was in thrall to her heirs.