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Music for Harry Redknapp

Banking News

I noticed last week that some commentators felt a bit uncomfortable with the treatment of Stephen Hester and Sir Fred Goodwin.

The general feeling was in certain quarters that the baying mob* had got their way and that well, if that was the bonus that had been agreed (for Hester) then why vilify him for (initially) accepting it? He had done a good job for the taxpayer after all and it all smacked a bit of the politics of envy.

In the way that news develops, Goodwin it appears, now garners sympathy. “Alex Ferguson wouldn’t lose his knighthood if Manchester United were relegated” was a defence put forward on Goodwin’s behalf.

Och! I suppose they are valid points in some respects but really it seems to me that they add up to commenting about the colour of an apple that is rotten to the core.

When I come to power the first things I’ll ban are bankers bonuses and the honours system.

As for the Fergie analogy, I think to use that properly you would have to wonder what would happen if Manchester United were to find themselves in a Sunday pub league with me starring at centre forward to properly reflect on the scale of Fred’s misconduct.

Yesterday Lloyds Banking Group announced 1,000 job cuts which brings their total to nearly 32,000 cuts since 2008.

On Monday, Lloyds director Truett Tate left his position voluntarily.

He will however continue to be paid.

He will be paid £816,000 in the next year.

Lloyds Banking Group is 40% owned by the taxpayer.

Where’s my pitchfork*?

Fred bare

Yes, poor old Fred Goodwin – or Badyin as he became affectionately known.

Then

Now

Stripped of his soubriquet, de-knighted and down and out on thirteen grand a week.

About three years ago I wrote this wee crochety jingle for him (thanks to the Kinks for the tune!)

Dedicated Follower of Money

I’ll bet Lord Archole of Weston Super Mare is relieved that unlike Freddie and Robert Mugabe, he didn’t do anything to bring the honours system into disrepute.

I saw this quote on the BBC:

IoD director general Simon Walker told the BBC he did not approve of the decision, given Mr Goodwin had not been convicted of crime.

“To do it because… you don’t approve of someone, you think they have done things that are wrong but actually there is no criminality… is inappropriate and politicises the whole honours system,” he said.

Ooh! it looks like it has to be its first outing of 2012!

 

Hester Rancid

I have no personal animus towards Stephen Hester.

However I do wonder what particular skill is required to re-structure a company by getting rid of 30,000 positions in it, thus qualifying for a near million pound bonus?

Perhaps being a complete bastard and having no conscience would assist in this regard?

Sir Fred Goodwin could have done it.

There will be a good few who could have done it for far less.

Hester though is not alone in being grossly overpaid.

There are company executives, top sports people, entertainers, media people and politicians raking it in.

I heard recently that Tony Blair “earns” £12.5 million annually.

His tax bill?

£300,000.

Anyway Mr Hester has had a good look in the mirror and examined his conscience bowed to media and political pressure and decided to waive his bonus.

When’s the revolution starting?

The Last Resort?

This morning’s Telegraph reports:

“A total of £36.2bn was wiped off the UK’s biggest companies on Monday as the FTSE 100 dropped 2.6pc. European markets lost more. The Stoxx Europe 600 index fell 3.2pc; the French CAC and German Dax sank 3.4pc each; Italy’s MIB dropped 4.7pc and Spain’s Ibex fell 3.5pc. US markets also fell, with the deadlock on plans to cut America’s debt driving the declines. The costs of insuring Spanish, Italy and French debt rose.

Investors were shocked by the rapid downward revision of the Bundesbank’s prediction: five months ago, the central bank forecast growth of 1.8pc in 2012. On Monday in its monthly bulletin it said Europe’s powerhouse economy could suffer “pronounced” weakness if the eurozone debt crisis continued.”

Jose Maria Aznar, the prime minister who led Spain into the euro in 1999, said the European Central Bank (ECB) may have to stand in as lender of last resort “to avoid a disaster”.”

Now this set me thinking. Until now my image of a ‘lender of last resort’ was something like this:

And not this:

However as a lender of last resort, the principle will be roughly the same. So you take your gold or your iPod (or your national debt) along to the pawnbroker.

You remember fondly buying the iPod on a special offer at Asda for £180. The pawnbroker looks at it and has a sharp intake of breath. “Hmmmmm fourth one of these I’ve seen this morning and the model’s now been updated – I can give you a tenner”.

So you decide to hang on to your treasured possession meantime and thank the pawnbroker. You say you’ll “think about it”.

“Don’t think about it for too long – it’ll be £7.50 tomorrow” says the pawnbroker with a cheery smile as you leave.

So here we stand on the verge of a repeat of the 2008 crisis, but this time with added raspberry sauce, sprinkles and a flake.

Most of the various governments borrowings have been made with a notional value of their reserves which no longer apply.

No-one, not even the most qualified financial expert, would dare predict what is going to happen next.

We’re doomed.

City Losses

I wrote here in September 2008 that Manchester City had become the richest football club in the world by virtue of their wealthy Arab owners/benefactors. I expressed concern on what effect such ‘investment’ was having on the people’s game.

This morning The Sun reports that City in fact lost around half a million quid PER DAY in the last financial year. As the club mounts an assault on the Champions League this could bring them into conflict with UEFA’s FFP (Financial Fair Play) rules and even see them banned from the Champions League.

City’s total income for the year was a very impressive, indeed whopping, £153 million. However their wage bill was £174 million.

Mind boggling.

At a guess, I’d reckon that figure would be more than double the wage bill for the entire professional game in Scotland.

In other news I see Hearts have two interested parties in Vladimir Romanov’s majority shareholding in the club.

I doubt if Sheikh Mansour is interested.