#Horsegate Explained

Bye Bye Ed

Criminal Waste

The reputations of the MOD, and the previous Labour administration, have plumbed new depths as it has been revealed that MOD contracts set up under Labour have resulted in light bulbs (worth 65p) being bought for £22 each and screws worth £2.60 being bought for £103.

This comes at a time when the MOD faces significant and damaging cuts in its budget and operational capabilities.

Liam Fox, the Defence Secretary, has publicly claimed to be very angry. However will anyone actually be sacked for this?

Don't hold your breath!

Conundrum

Question: When is a resignation not a resignation?

Answer: When it is Gordon Brown resigning from leadership of the Labour Party, but not from the office of Prime Minister.

Sugar Backs Brown

Sir Alan "The Apprentice" Sugar has publicly backed Gordon Brown today.

However, is this endorsement really worth the media hype given that the "reality" "business" show The Apprentice shows that Sugar allows people into the final five of his show who have lied on their CVs?

Vile Politicians Stoking The Flames

The attack on Sir Fred "The Shred" Goodwin's home by a self proclaimed "anarchist" group of "banker hating" trouble makers, may well be excused by the media as the work of the lunatic fringe.

However, the flames of the "lunatic fringe's" anger have been fanned and given fuel by the less than restrained outpourings of our political "leaders" (Brown, Harman et al) and a compliant ignorant media who have jumped onto the bandwagon of banker bashing.

Doubtless the banks and their boards have screwed up royally. However, this country's economic plight has been brought about not just by the actions of "greedy bankers", but by a profligate government that wasted billions during years of plenty and the failed tripartite regulatory system that oversaw the years of lax credit and greed.

Those politicians and members of the media who happily divert the public's attention, by blaming the bankers solely for this mess, should remember that in the 1930's in Germany bankers and others were also used by the media, and those that controlled the media, as an effective scapegoat and means to whip the public up into a frenzy.

Those politicians that continue with banker bashing, without acknowledging their own responsibility for this financial mess, are little better than the Nazis of the 1930's.

Inside The Brown Bunker

Exclusive footage of life inside Gordon Brown's bunker in number 10.

The True Colours of The EU

The EU showed its true colours this weekend when faced with the clear rejection by Ireland of the Lisbon Treaty.

Ireland voted "no" by 53.4% to 46.6%. The referendum result against the Lisbon Treaty has thrown the European Union into turmoil because the treaty, which aims to streamline EU decision making, has to be approved by all states.

Were those running the EU in any shape or form interested in the views of the citizens of the EU, this rejection should cause them some period of reflection about where they are trying to take us.

However, it is very clear that those in charge of the EU have no interest in the views of its citizens.

European Commission President Jose Manuel Barroso insists the Lisbon Treaty is still "alive", and has urged other countries to continue ratifying it. French President Nicolas Sarkozy said:

"The others must continue ratification... so that the Irish incident does not become a crisis."

France's European affairs minister Jean-Pierre Jouyet said that Ireland should hold another vote, so that the people vote in the correct way:

"The ratification process must be completed.

And during this period, the Irish will have time to think and see whether, with a few mediations or a request from their part, they can revote."

The EU is only a democracy when the voters vote the way that their leaders want.

Cherie's Memoirs

Those of you who have bothered to read Cherie Blair's excruciating memoirs about her husband's time in office, in which she uses words such as "unmentionables" and "contraceptive equipment" when detailing their sex lives, may be wondering why she brought forward the publication date originally scheduled for October this year.

The answer is simple, it's the money stupid.

Cherie believes, as do many, that Gordon Brown will be out of office by then. She knows that her book, given its tittle tattle expose of the shenanigans at number 10 during the Blair/Brown years, will not sell well once the Blair/Brown years are consigned where they rightly belong, to the dustbin of history.

Ironically Cherie, by exposing her true nature in this book, has provided the world with the clearest insight into the "moral base" of Nu Labour; money focused, self centred and lacking in any form of integrity.

Cherie is to be congratulated for that at least!

The Crocodile Tears of Labour MPs

The current furore erupting within the Labour party over the abolition of the 10p tax band is causing Gordon Brown a few headaches.

Labour MPs are rushing to the media to proclaim their disdain for the abolition of the 10p tax band, and are claiming that they will do everything in their power to stop it.

All very nice and heartwarming.

There is one small fly in their ointment.

The announcement about the abolition of the 10p tax ban was made last year, front page in the media, the day after the budget.

Why have these MP's taken a year to raise the matter?

Could it be that the local elections are less than a fortnight away, and they are worried about their seats?

Whilst the abolition of the 10p band may well be a foolish move, the crocodile tears shed by these MP's carry no weight.

Their constituents should be more than a little concerned that it took a whole year for these people to wake up to the fact that this change was to be made.

They are not fit to hold office.

Hillary Clinton and Heather Mills

"God Bless Heather Mills"

The Hillary and Bill Show

Those members of the Democratic Party who are contemplating their choice of presidential candidate, Hillary or Barack, may think that the desire of Hillary Clinton to fight on until the bitter end reflects her burning ambition to lead the USA as president.

In some respects this may be true. However, her prime motivation and that of her husband is that they have nothing else in their lives other than the desire to hold high political office.

They made a pact decades ago to stick together to gain high office.

In the event that Hillary loses the nomination, she and Bill will be forced to confront the reality of their lives; namely that they have nothing else.

Such is their fear of being forced to confront their inner demons that they will move heaven and earth to avoid them, even if it means destroying the Democratic Party in the process.

Those contemplating which candidate to vote for need to bear that in mind as they make their decision.

To Hillary and Bill it's not really about the presidency, it's about Hillary and Bill.

It always has been.

The Value of Non Doms

Whilst the government, the treasury, HMRC and those with an axe to grind against wealthy foreigners do their best to drive them out of the UK, they would do well to remember that the two people chosen to lead the newly nationalised Northern Rock out of its crisis (Ron Sandler and Ann Godbehere) are both non doms.

How's that for irony?

Snouts in The Trough

MPs often bemoan the fact that the public don't take them seriously anymore, don't trust them and are apathetic about voting.

However, before lecturing us about our shortcomings, they should look closer to home and address their own shortcomings.

The current scandal involving Derek Conway, who claimed £50K allowances for his son (the self proclaimed "Queen of Sloane") to do bugger all, is a fine example of why people have little time or respect for politicians.

MPs need to get their noses out of the trough, then people may show them a little more respect.

The Yob Epidemic

The British media is making much of the current "yob" epidemic, that is allegedly engulfing towns and cities throughout the UK.

Scarcely a day goes by when the media, and publicity seeking politicians, aren't "tut tutting" about yobbish drunken behaviour perpetrated by youths on the streets of Britain.

Whilst it may vent their spleens to "tut tut" about it, very little constructive solutions are produced as to how this behaviour is to be curtailed and controlled.

The refrain is usually:

1 Something must be done

2 Society is to blame

3 The parents are to blame, and

4 Let's ban something (eg drinking under 21, yet we are still happy for 18 year olds to die in Iraq)

The root cause of the problem is varied:

1 Lazy parenting

2 The granting of "human rights" to an ill disciplined, moronic mass of teenagers who have yet to develop intellectually or socially

3 Too much money being given to children by over indulgent parents

4 Lousy role models in the media

5 Invisible policing from the local police forces

The solution is difficult, but not impossible:

Those yobs that create a disturbance and a nuisance on the streets should be punished in a way that hurts them the most, ie hurt their egos. They should be sentenced, not to prison where they learn nothing more than how to commit more crime, but to a period in the stocks where they can be humiliated by their fellow citizens.

Drunken yobbery can be resolved by a session in the stocks, and by the tattooing (for say a month) on the foreheads of the yobs the following phrase:

"I am a drunken yob"

Any shop or pub found serving people with said tattoo on their heads, would immediately lose their licence.

Parents should stop giving their children so much pocket money. A child/teenager with too much money in their pockets will simply buy shit or booze/drugs. Therefore take their spending power away from them, and they won't be able to buy booze.

Parents should be made fully responsible for the behaviour of their brats, up until the age of 18. When their brats are caught breaking the law, the parents should have what is most dear to them confiscated by the state; namely their TV's, CD's, pc's and mobile phones. Should that not work, then their benefits should also be targeted.

Like it or not, they should be made to take responsibility for their brats.

Local police forces that seek to remain invisible, in spite of complaints by residents of yobbish behaviour on the streets, should be sued for failure to provide adequate police cover.

None of the above will be easy to implement. However, it will produce results.

The EU Constitution - The Longest Suicide Note In History

Much has been written about the proposed EU constitution; there are those who claim that it is a blueprint for the future of the EU, and there are those who claim that it is the harbinger of a new European dark age.

Now that it has been placed into the deep freeze, ie killed, by the leaders of the EU I would like to add my "two cents" to the discussion. However, unlike other commentators, I will be brief and get to the heart of the matter.

The EU constitution was destined to fail for the following reasons:

• It is over 300 pages long, no voter (or indeed politician) on the planet could possibly understand it. The American Founding fathers wrote a constitution, which was a success, of a mere 20 pages.


• The US constitution begins "We the people..", the EU constitution begins "His majesty, the King of the Belgians..".


• Those countries that ratified the constitution did so via their own politicians, they did not trust their people to support it. Two of the three countries that trusted their people, France and the Netherlands, were given the two finger salute. In other words, the citizens of the EU do not want a European constitution.


• The US constitution was written with the support of the people, who had just fought the War of Independence. The EU constitution was written by an isolated political elite, who did not consult the people.


• The EU constitution attempts to impose an outdated model of state intervention on the citizens of the EU. Many of those citizens live in countries that have abandoned state intervention, in favour of free market economies. Until the member states of Europe agree as to whether they want a free market or outdated state intervention, the European project will go no where.

Any new attempt to revive a European constitution will have to take account of the above points, if it is to have any hope of success.

The Top Ten Reasons Why ID Cards Are Bollocks

I went down the pub last night, for a drink or two; and it is fair to say that, in the spirit of annoying our elected representatiaves, an elegant sufficiency of booze and cigarettes were consumed.

During last night’s celebrations, we mused on the top ten reasons why ID cards are bollocks (how sad is that?). Here is our top ten:

• ID cards are the tools of choice of dictators, during peacetime. Don’t take our word for it ask Churchill, Bush or Thatcher; all of whom have said the self same thing.



• ID cards can easily be forged, eg visit www.myoids.com



• The alleged purpose of ID cards is to prove someone’s identity, this can already be done with ease via eg; passports, NI numbers, driving licence or birth certificates to name but a few. Therefore ID cards are unnecessary.



• Foreigners passing through Britain do not have to hold ID cards.



• Proof of identity is no deterrent to terrorism, the determined "loon" is perfectly happy letting the world know his/her real name in a suicide bombing.



• Whilst we may be "waging war" against others, we are not "at war"; there is no external threat to the existence of this nation, aside from the internal threat posed by Labour.



• The cost of implementing, and managing, ID cards is prohibitive.



• The IT requirements, necessary to effectively manage the huge database envisaged by Labour, are not feasible. No IT project implemented by politicians, of any party, has ever worked properly or met budget.



• ID cards do not have to be carried by individuals, therefore their purpose is negated.



• ID cards will not be issued to every citizen of Britain until 2014. Labour claims that we are all in danger, yet she is taking 10 years to address that threat.

Do you not think that Labour is being a little slow here?

Could it be that we are actually not in as much danger as they would have us believe?

This list took us around 5 minutes of alcohol fuelled deliberations to create, ie it was not very difficult to pull Labour’s arguments to shreds.

If it is that easy for us "ordinary mortals" to pull her logic to threads; why does Labour still persist in her plans, and why has the "Leader" of the "Opposition" committed political suicide by supporting the introduction of ID cards?

The End of The Olympics

The Greek government has blamed the unchecked spending on the 2004 Olympics as being the reason for Greece's growing budget deficit.

Seemingly, because of accounting errors and "omissions", this deficit is likely to grow.

The latest figures from the EU show the deficit at 6.1% of gross domestic product, more than double the cap allowed by the EU.

Prime Minister Costas Karamanlis told the Parliament:

"The burdens we face from the past are very large..".

The cost of the 2004 Olympics is now being estimated at being $12BN. The Greek government has until the end of the month to explain to the EU how it will lower the deficit.

In a statement on the Finance Ministry website, the blame is pointed directly at PASOK, the socialist government that ruled Greece in the lead-up to the Olympics.

Additionally, there is the nagging question of what to do with the now redundant white elephants that made up the Olympic infrastructure. These are costing around $100M per annum just to maintain.

In respect of the breaching of the EU deficit rules, I would imagine that some form of political "fudge" will be made. The EU is notorious for allowing its members to break the rules, this will be no exception.

After all, if the then Greek government had been honest about the costs it would never have been allowed to join the Euro.

The EU will never admit to the fact that it had been conned.

With regard to the $12Bn cost, this is surely proof positive that the Olympics as a whole need to be totally reformed and scaled down.

No one in their right mind should even think of hosting them, if they are going to cost this much.

The trouble is that politicians' egos overrule common sense.

Maybe it is now time to abandon the Games, and for countries to spend their money on something more productive instead.

The Rotten Core at The Heart of Britain’s Financial System

It is often assumed by both the public and the politicians that, aside from the occasional scandal such as the Maxwell fraud, Britain’s financial system is well run and relatively honest.

After all, the UK has a plethora of rules, regulations and watchdogs (such as the FSA) governing; the stock market, financial advisers, pensions, auditors and all the other components that go to make up the UK’s financial system.

However, I am firmly of the opinion that this “confidence” is based on nothing more than hubris; and that, in fact, we live in country that has a fundamentally rotten financial system.

I would like to cite a number of examples that support my view:

The Endowment Mis-selling Scandal

The endowment mis-selling scandal, of the late eighties and nineties, readily springs to mind as one of the major failings of our financial system. As has been well documented, the life assurance companies used the bull market to create a totally unsuitable, and useless product, that they aggressively sold in the manner of TV sets and washing machines to over 8 million unsuspecting home owners.

The theory being that the bull market would create high yield returns on this product; that would not just pay off the mortgages of the hapless holders, but would also give rise to a modest surplus. Needless to say, what the life assurance companies did not bother to clearly tell people was that their commission charges would rob the product of much of its initial value, and that their projections for growth were totally unrealistic.

It now turns out that the 8 million holders, of these white elephants, are facing shortfalls of over £40BN. Although, in theory the policyholders can try to claim compensation, the life assurance companies are using every excuse in the book to slow the process down in order to avoid paying compensation. To date a paltry £1BN has been paid to those seeking redress.

The FSA, although they offer some fall back position for those refused compensation by the life assurance companies, do not have any intention of “rocking the boat” too hard. The FSA refuse to acknowledge the fact that the life assurance companies perpetrated the greatest financial scandal in the UK in living memory.

Pensions

Needless to say the results of the endowment policy mis-selling scandal have, coupled with the ill thought out tax raid by Gordon Brown on the pension’s industry, destroyed peoples’ confidence and willingness to invest in life assurance/pensions policies. The British people are facing a pension black hole that will leave the majority of pensioners, over the next few decades, living in penury. The politicians have failed the electorate, by allowing the electorate the self-delusion that they will forever have increasing standards of living without having to work harder. Instead of telling it straight, that people are going to have to work beyond what is considered to be the normal retirement age of 60-65, the government fiddles while “Rome burns”.

Corporate Governance

Corporate governance, so long thought of as being well established and effective in Britain, is failing lamentably. The boards of many companies are made up of directors and non-executive directors from a small clique of friends, and contacts in the City, who sit on each other’s boards. These people, instead of seeking to ensure effective and robust management in the interest of the shareholders, in fact more often than not sit passively; nodding through a host of half baked business plans, and the most greedy of executive remuneration packages.

I can certify that, more often than not, the primary qualification for being selected to serve as a non executive director (a position that in theory is meant to oversee the actions of the main board, so as to safeguard the interests of the shareholders) is that they have probably served in the same company before, or have certainly got “the right” connections. The concept of robust, proactive, independence doesn’t apply.

Directors of companies are routinely lambasted for awarding themselves, like pigs with their heads in the trough, inflation busting pay and pension packages. Politicians wring their hands, and shed crocodile tears, lamenting at this practice. However, once they have left ministerial office, each one of these “champions of the people” soon finds their way on to the boards of the companies that they were criticising.

Post Enron and Sarbanes Oxley the UK has, in its normal slow unhurried way, put together via the Higgs/Smith reports and the Combined Code a set of guidelines for companies and executives to follow with regard to corporate governance. However, it is not compulsory; all the company has to do, if it wishes to ignore these guidelines, is to write a few notes in the accounts.

Companies that are increasing their internal control and review procedures, not I may say because they want to, but because Sarb-Ox has forced them to; are complaining loudly about the increase in audit fees. It seems to me that it is not unreasonable that, because a greater amount of work is required to be done by the audit firms, they will have to charge more.

Audit Firms

Audit firms are not entirely immune from the rotten stench that emanates from the UK financial system. I well remember as a trainee auditor witnessing the booking of extra hours, that were not in fact worked, to the timesheet of a well known FTSE company; so that the audit fee could be justified to the FD of the client who, not unreasonably, had asked to see a breakdown of the hours worked.

A few years ago, audit firms, having felt the pressure of the market were forced to find ways to cut costs. Their brilliant and inspired solution was to create the concept of “risk management”, and audit only those areas that were deemed to be high risk; system compliance tests, which took up a lot of time, were thrown out of the window. The audit became a cheap and cheerful “risk management” exercise; whereby the real money was made by selling on added value services, such as consultancy.

In 2000 I attended, as an observer, an Arthur Andersen training course in Chicago; the mantra “forget about the audit, hard sell the high margin add ons” was pumped into the participants at every opportunity.

The consultancy advice usually given to the hapless client was to outsource mainstream functions such as; internal audit, tax and treasury to yes, you’ve guessed it the audit firms. I would say this, if Arthur Andersen had not been the first to “cop a fall” over lack of segregation of practices and excessive greed with its Enron and WorldCom debacle, then one of the other big firms probably would have done so.

Now they are forced to segregate services, and as such are reverting to the old “tick bash” routine in order to keep fee incomes high.

There is one other fly in their ointment. With the Enrons of this world came mega sized law suits, something that the accountancy firms and their insurance firms do not wish to pay for. This has caused something of a stand off with the government; Gordon Brown wishes for uncapped liability of audit firms, the audit firms are arguing for a cap. Their secret weapon is that if they don’t get a cap, they will dump certain “high risk” clients; this would leave the government with the responsibility for reviewing these companies’ books of account. In other words, the audit firms are holding the government to ransom; and trying to pass the risk of errors and omission in their working practices on to the shareholder and tax payer. Nice trick isn’t it?

The Stock Market

Those of you who are still not convinced that the financial system in the UK is rotten, should take a look at the stock market; and ask yourselves whether the ordinary investor, with a modest portfolio, can make money to the same degree as the big market players.

Monitor the swings and movements in the share price of any share, that you care to pick, over a few months; and watch the buys and sells preceding the announcement of any news that affects the share price, such as a take-over bid. In the majority of cases you will see that there are significant buys/sells (depending on the nature of the announcement), prior to the news being made public. That is not coincidence, but the result of the news being leaked to a few well connected “players” in the market.

When there is little news coming out about a company, more often than not the market makers will adjust the prices to shake out sellers or buyers; there is no reason for these price movements, other than to panic smaller holders into adjusting their portfolio which in turn generates commission for the market makers.

Consumer Debt

I will take as my final example the house price bubble that has grown over the last few years. As I write this, the effect of the recent interest rate rises by the Bank of England seem to be slowing the price rises down or indeed may even have pricked the bubble. The fact that this unsustainable rise could be allowed to continue for so long is damming in itself. However, the real issue is what has been sold on to the unsuspecting, and financially illiterate, consumers on the back of the bubble.

In the eighties, as already noted, we had endowment polices; now we have equity release schemes designed to consolidate credit card debt to encourage borrowers to borrow more, and spend on short term consumption. Borrowing long to spend short is recipe for disaster, as Weimar Germany and the world discovered to its cost in the 1920’s.

Loan companies have been allowed to aggressively target their advertisements at the most vulnerable, financially illiterate, people in society; without any regulatory interference. The interest rates on many of these debts bear no correlation to the risk profile of the loan. Instead they reflect the lending company’s “greed pricing grid”; which is the in house pricing model utilised by the lender to identify the maximum rate of interest that it can charge without losing customers to other lenders.

The result is that consumer debt in the UK now stands at over £1 trillion, which in my view is unsustainable. As house prices start to deflate many people will find themselves in a situation with negative equity; unable to move house, or restructure their finances. They will be saddled with an unsupportable level of debt for the rest of their lives.

Now, taking all of the above into consideration, do you feel that the financial system in the UK is well regulated and honest?

The Butler Report

Lord Butler’s report has, much like the earlier Hutton report, exonerated the government and individual members of the government from blame; in relation to taking the UK to war on the false premise of Iraq possessing weapons of mass destruction (WMD).

Butler has achieved this neat side-step by working on two mistaken assumptions:

• He has assumed, that with respect to the evidence on WMD; all parties and processes connected with the collation, processing and dissemination of the evidence functioned unsatisfactorily. Therefore, if all were to blame, no one individual could be held personally responsible or singled out for blame. He assumes that the UK government still operates under the principle of collective Cabinet responsibility.

Unfortunately, the pretence of collective responsibility has long since been abandoned by Prime Minister Blair; who has little interest in the seeking the approval or counsel of Parliament, or his colleagues in the Cabinet.


• Butler also noted that if Prime Minister Blair had not really believed that there were WMD, then he would never have used that as an excuse for war. Butler holds to the belief that once the lie had come out, after the war, the Prime Minister’s position would have become untenable; ie it would have been irrational for the Prime Minister to lie.

However, Butler ignores one very salient point, that is exactly what has happened. There were no WMD, and the Prime Minister is having to explain how this “error of judgement” occurred.

Butler’s reasoning is honourably based, for he believes that public servants and politicians should act with honour and integrity.

Unfortunately they don’t.

Protecting individuals from specific blame is the act of an honourable man. Unfortunately, the politicians that he protects are not honourable; and have readily in the past sought scape goats to protect their own positions, when errors of judgement and incompetence threaten their privileged positions.

The argument that it would be irrational for Blair not to tell the truth, shows how little Butler understands Blair. Blair did not care whether there were WMD or not, the possibility of there being WMD was enough to use in his argument to take the UK to war.

Blair, as a lawyer, knew that whatever the outcome of the search for WMD he would always be given the benefit of the doubt; ie that he acted in the best interests of the country. It could never be proven that he had deliberately lied, it is after all still an essential part of the law that you are innocent until proven guilty.

I am afraid that Lord Butler, being a man of honour and integrity, inhabits a world that has long since ceased to exist; which is exactly why he was chosen to prepare the report.

An honourable man cannot be accused of deliberately colluding with the government in a cover up.