The John Smith 2009 top-ten awards

The John Smith 2009 top-ten awards

1. Most understated quote

“The Treasury may not have secured the best price for the advice.”

(National Audit Office referring to £107.1m paid to accountants, lawyers and bankers between September 07 and March 09).

2. Most inappropriately named executive

Sir Fred Good-win

3. Most appropriately named executive

Bernard Mad(e)-off

4. Best monetarist trick

Quantitative easing

5. Best UK prime minister by default

Sir Mervyn King

6. Worst UK prime minister by default

Gordon Brown

7. Greatest global blood-sucker

Goldman Sachs

8. Best UK sucker

Alistair Darling

9. Best white-knuckle ride

FTSE 100

10. Most hated activity

Investment banking or UK Government borrowing (equal 10th)

More at www.jgwalkersmith.co.uk

A gift to Mammon

A gift to Mammon

We have survived again. The gift to Mammon and the gifts to everyone we know and just about everyone we ever knew. If you are a child of the Western world, then the gifts are so numerous that like all things en-masse they are not special, not wanted and absolutely not appreciated. The giver makes no sacrifice and the child must know this. My granddaughter is so bored with ripping off the paper that she leaves the room and starts skipping with her old rope in the hallway. Why can’t we learn? Bring back the money box and the rainy day. Don’t chastise her later on for wanting her own way all the time. It is your fault, not hers.

Eaten too much of the wrong things – again. Drunk too much and tried too hard to keep up the mindless banter about things that don’t matter with people you would not normally choose to be with. What is worse, there is still New Year to come. If I decide to go that far.

More at www.jgwalkersmith.co.uk

Getting Wet On Rainy Days

Getting wet on rainy days

A recurring theme in the Credit Crunch Diary and in certain articles (such as The Parable of the House Builders) and in discussing the role of a good financial director of any business (including UK Ltd), has been the vitality of building reserves, getting some financial muscle on the skeleton – even a touch of fat.

Just think about this. The Bank of England in its latest report has claimed that if Britain’s biggest banks had put aside 20% of the cash they paid their staff and shareholders in the eight years preceding the credit crises, they would not have needed bailing out by the taxpayer.

For a banker to have built such a reserve does not strike me as overly prudent. But then, as we know, prudence was found murdered quite some time ago.

More at www.jgwalkersmith.co.uk

Saab Is Scrapped

Saab is scrapped

My credit crunch diary spoke much about the big global motor manufacturers: how sales plummeted, the demise and bankruptcy and pull-out and how ownership changed fundamentally.

Aside from what was generally thought to be a good sound engine and individually quirky design, Saab must at one point have been an attractive business proposition or else why did General Motors buy it? However, that is now sadly all history. I wrote in the past that the company was returning to Sweden. That was premature. Then it was going Dutch. Now that too has failed. Saab is in tune with the scrappage schemes and is to be scrapped.

Once again the Chinese have done the clever thing and bought the technology and someone may pop up and buy the brand name. Not that that is much consolation for the UK’s 80 dealerships. Seems there is not much national pride left, at any rate in Sweden. Have been considering a little holiday there but probably won’t bother now especially as Volvo might well be next.

More at www.jgwalkersmith.co.uk

Sheer brilliance

Sheer brilliance

The more time passes in the death throes of this UK administration, the more I become convinced that the brown stuff is brilliant. Brilliant at borrowing money, brilliant at spending money and now brilliant at pledging money. There is a direct correlation between sheer brilliance of this kind and the knowledge that none of this money is actually his and in six months time (as now) there will be absolutely no accountability.

Just brilliant.

More at http://www.jgwalkersmith.co.uk

Reparations

Reparations

Last week over three days I helped my son smash up an old patio and throw all the debris into a mini-skip before laying a new one. The reparation is estimate to add £5,000 to the value of the barn. I occasionally stay at the barn overnight.

The materials used were:-

12 new slabs

One ton of hardcore and one ton of slate chippings

Half a ton of builders’ sand and a bag of sharp sand and two bags of cement

Wooden battons, sundry screws and nails.

The services used were:-

Hire of mini-skip

Hire of wacker machine and sundry tools including heavy pick and hammer

42 hours of labour at £15 per hour.

The total cost came to £1,290 plus vat at the special temporary rate of 15%.

I mention all this since I have designated the barn as my second home and sent the total account to my local MP who has agreed, since I am an exemplary citizen, to lose it in his next claim and reimburse me accordingly.

As honest taxpayers, it is only fair to put you in the picture and at this time when the latest round of MP’s claims is much bigger news alongside the PBS. The MP agrees with me that this is a good time to claim such a trifling sum.

More at - www.jgwalkersmith.co.uk

The return of long-termism

The return of long-termism

Years ago I was a member of the Long-Term Planning Association. I have no idea whether it still exists. It, and its members, attracted much cynicism not least after the author of a best-selling book recalled that, as the corporate long-term planner, he returned home from the office to be greeted by his wife with the words “Hello darling – and what have you long-term planned today?”

I predict that in 2010 there will be a leitmotif. It will be the return of the long-term planning mindset. I know from personal experience that it is one thing to manage when things go well. Quite another when things start to go wrong: when the market starts to move away. So we shall see a sea-change in 2010. The short-termism at the heart of the financial crisis of 07-09 and the short-term crisis management, both monetary and fiscal, characteristic of the second half of 2009, will be history.

The entire global system will shift to a longer-term focus. The whole culture of sod the future, someone else can take care of that, will go. Good worthwhile pay packets will only be forthcoming from proven long-term success. Top managers will call the bluff of short-term whizz kids, if they want to all congregate in Hong Kong, so be it. China will be (actually is) as focussed on a solid tomorrow as anyone.

John Maynard Keynes famously put it “In the long run we are all dead”. True, but there is a whole load of bright children following on and we owe them a future. A spot of altruism would not go amiss. Your resolution for 2010: “Think tomorrow”.

More at http://www.jgwalkersmith.co.uk

Sweets from a sweetie

Sweets from a sweetie

The Lord of all Business thinks it would be quite wrong for the quintessentially British Cadbury to be Krafted into a chocolate bar; whilst admitting that he can do little about it. How normal an approach in these oh-so-illogical times.

It was quite o.k. for our steel to go Far East and our Ports to go Middle East and our airports to go Spanish and our utilities to go European mainland, but sweet crème eggs – good gracious me no. And in any case, they have only just cottoned on that dark chocolate is best, leave the little darlings alone.

Chapter 10 of my book Violets hints about Cadbury’s perceived superiority over a then competitor, although granted we were in a cake mix and not a milk chocolate one.

The board of Cadbury will duly reject the Kraft bid today. But like eating too many out of the Milk Tray selection, the sickly feeling comes later.

More at http://www.jgwalkersmith.co.uk

Chelsea Not On Top

Chelsea not on top

This headline will not be recognised by football fans. But we are not talking about the premier league but rather impending relegation from the building society league.

Twice in the past year I have blogged disparagingly about Chelsea Building Society. First when its Annual Report disclosed the level of remuneration paid to its top people coupled to the admission of bad loans in the Icelandic direction. Secondly about the reported mortgage fraud in its buy-to-let book. The sum of these Icelandic and fraud losses amounted to some £85m. I had a personal interest to the tune of a sizeable one-year bond paying 6.75% that was unbelievably high for the times. Needless to say, it came out of Chelsea on maturity. I also pointed out that Chelsea wasn’t Chelsea but Cheltenham.

So, there is a touch of irony in that it is Chelsea bondholders who, by writing off half of their investment and having coco for supper, will allow the society to be taken out by Yorkshire Building Society. It seems there was just nowhere else to run. The second irony is that whereas I thought 6.75% was high, the coupon on the reduced contingent capital is a whopping 13.5%.

Good luck Yorkshire, you are now in charge – one hopes.

Comment and much more at www.jgwalkersmith.co.uk