Archive for January, 2011

The second interest rate domino falls

Posted in economics with tags , , , on January 28, 2011 by Tom Leatherbarrow

Just a few quick thoughts on the Bank of England Monetary Policy Committee minutes which were released a couple of days ago and can be read HERE. The interesting bit is of course that a second domino vote has fallen in favour of a rate rise, namely Martin Weale who, along with Andrew Sentence, is now lobbying for a 0.25 per cent increase in the rate.

The minutes read: “The continued elevated rate of inflation, which was forecast to persist, posed a significant risk to inflation expectations and hence to the medium-term outlook … this made more powerful the case which had been building for a gradual rise in Bank Rate.”

The balance has now therefore shifted in favour of a rise in rates by the middle of the year, which will take more money out of people’s pockets. I’ve blogged previously that it is inevitable that interest rates will increase over the medium term but it now looks as if that day is getting closer, even if we are still a few votes short.

The question is of course whether Mr Weale would have voted for a rise had he seen the economic data which came out earlier this week?

Andy Gray saga should bring all punditry into question

Posted in Media, Sport with tags , , , on January 26, 2011 by Tom Leatherbarrow

The best response I’ve heard to the Andy Gray sacking was from a friend of mine last night, “couldn’t have happened to a nicer bloke”.

Personally, I think sacking him has let Gray off the hook. I’d have liked the ridicule to continue for him around every football ground in the country.

There is however a wider issue about football punditry which needs to be addressed. Namely, it’s rubbish!

Match of the Day viewing figures are apparently going into freefall and it is not difficult to work out why. My guess is that the viewers are increasingly seeing through the ‘analysis’ offered by Hansen, Lawrenson, Dixon and Shearer and their views are beginning to irritate.

Twenty years ago your average football pundit was from an identikit. Former player, often a bit of a lad in his time (usually helpfully described as “the thinking woman’s crumpet” by the tabloids) whose only qualification for the job was being able to say, “I know, I’m a former player”.

And who were we, the British public, to disagree. The only people who could disprove what was being said were nerds armed with back copies of the Rothmans Football Yearbook, but they had no means of responding or getting their message out.

All that has changed. There is now a mass of information available on the web, from OPTA football stat’s through to transfer spend information and, most importantly, an army of statto nerds who are willing to interpret it all. These people could tell you the exact pass completion percentage of Xabi Alonso during the 2006 season and illustrate it in the form of a Venn Diagram!

Paul Tomkins, a Liverpool fan for example, has written numerous books on football using statistics to measure the correlation between transfer spend and team performance. His greatest pleasure at the moment seems to be driving a statistical bus through most of what Alan Hansen has to say. Crucially, Tomkins also has a means of getting his message out, his own website called the Tomkins Times.

It was brought home to me recently when I was watching a discussion on Sky News about who the new Liverpool manager should be. Various names were put forward by fans, including Ralf Rangnick and Andres Villas-Boas. The presenter asked a former player in the studio what he thought of the two names mentioned and the former player replied: “I think Liverpool fans are looking for bigger names than that.”

As the discussion continued it became abundantly clear that the former player did not have a clue who either were, despite the fact that Rangnick is one of the most respected coaches in Germany having taken Hoffenheim from the third tier of the Bundesliga to the first and Villas-Boas’ Benfica are currently ten points clear at the top of the Portuguese league.

This just isn’t good enough. Football punditry is going to have to grow up and enter the real world. Former players are going to have to work harder, do some research and not rely on old, tired clichés and generalisations.

The web is changing everyone’s lives. Football punditry is not immune

The Return of Glass Steagall (maybe)

Posted in Banking Reform, business with tags , , , , on January 25, 2011 by Tom Leatherbarrow

Sir Jon Vickers’ speech at the weekend had the desired effect on bank shares yesterday – they dropped like a stone!

Sir Jon, who is currently chairing the Independent Commission on Banking, used the two most fearsome words in his armoury guaranteed to send shivers up any self-respecting pinstripe – Glass Steagall.

For those who want to see the banks brought to heel this is heady stuff. For the uninitiated, the Glass Steagall Act was brought in by the United States in the wake of the mother of all banking crises, namely the Great Depression, forcing through the splitting of investment banking (we like to call them casino banks nowadays, usually made up of derivative trading, currency arbitrage etc) and retail banks (those that you and I have our salaries paid into, the same ones that won’t lend to business).

Sir Jon’s Commission was set up to make recommendations on various banking issues in the wake of our most recent crash, not least a reduction in systemic risk; mitigating moral hazards in banking (that’s code for anything which makes bankers think “we know we shouldn’t be doing this, but it makes us piles of money”) promoting competition and structural reform, which includes splitting.

Will it happen? Who knows, but the suspicion remains that this is sabre-rattling designed to get the banks to come to heel over bonuses, particularly in light of Nick Clegg’s support for the proposal on Andrew Marr’s programme on Sunday (I sense a Clegg u-turn coming on).

Sir Jon, who will instantly catapult to the head of my list of contenders for Man of the Year if he actually does recommend it (what more incentive could he possibly need), is due to report in the Autumn.

My suspicion is that we will have a compromise in the end with the investment arms of banks like Barclays and HSBC becoming subsidiaries with separate balance sheets and all sorts of other rules to stop any future ‘contagion’ infecting our retail banks should another crash occur.

One to watch.

Do we need to police the PR people?

Posted in Media, PR with tags , , , , on January 24, 2011 by Tom Leatherbarrow

The resignation of Andy Coulson as David Cameron’s chief spin doctor (God I hate that phrase!) tears another gigantic hole in the carefully constructed News International defence that all this phone-hacking nonsense was the work a single rogue reporter.

What is becoming clear is that both News International and the Metropolitan Police are now in deep trouble over this issue. Sienna Miller and Paul Gascoigne have recently joined the list of celebrities who are actively pursuing claims against the newspaper and there are demands that the police themselves be investigated for their conduct of the investigation with a public inquiry.

If we do get a public inquiry one clear avenue of investigation is the role that PR people played in the decision to limit the scope of the investigation to the hacking of Prince William’s phone, whilst ignoring all evidence that thousands of other phones had been tapped including, potentially, the then Prime Minister (Gordon Brown) and various other politicians, many of whom were working in security sensitive roles.

The New York Times in its mammoth piece on phone hacking published late last year claimed (subsequently denied) that communications people within the Met played a key role in persuading officers to limit their investigations by reminding them of the close relationship the Met enjoyed with the tabloids and the positive reporting granted to them.

If this is the case, and it remains a matter for conjecture, then it adds a further layer of concern about the role of PR in the publicising of police operations (witness the raid on Harry Redknapp’s house which was carried live on GMTV).

Certainly, there can be little doubt that the media is sailing very close to the wind in terms of prejudicing fair trials by some of their reporting. The question is to what extent are PR people behind some of these stories and tip-offs?

My own (albeit developing) view, is that those working in PR in the criminal justice system may well need to be policed (and protected) with a Code of Practice which details what can be told to the media and when.

The problem, of course, is that stories are often planted to aid an investigation in order place pressure on a suspect. This seems legitimate but the danger is that these tactics become the norm and go into everyday use rather than being used sparingly.

I’ve no idea who should be responsible for drawing up such as Code (the CIPR, PRCA?) or whether it would work, but I certainly think there needs to be a debate about it.

Apple has made a rod for its own back

Posted in business with tags , on January 18, 2011 by Tom Leatherbarrow

The most extraordinary thing about yesterday’s news from Apple was not the news itself but the investor reaction.

Fortunately, for Apple, the public holiday in the United States meant that the firm was sheltered from an investor hammering following the news that CEO Steve Jobs is going on medical leave, but that didn’t stop tech’ stocks around the world from going into freefall and Apple shares being marked down 9 per cent in Frankfurt. All eyes will be on New York when the markets re-open today.

As an individual who still struggles to sync’ his Blackberry and has never owned an iPad, iPhone or iPod, the whole Steve Jobs cult has somewhat passed me by. However, as a business story this one is fascinating.

We have had personality cults with CEOs of listed firms before. Jack Welch at GEC in the States and Lee Iacocca following his extraordinary turnaround of Chrysler in the 1970s. Over here Lord Weinstock was lauded for his stewardship of GEC Marconi and Lord Hanson was much respected for his eye for a corporate raid. But institutional investors, whilst wary, did not sell huge stakes when any of them stepped down.

With hindsight you can’t help but wonder about the wisdom of letting a man who has suffered from pancreatic cancer be so high profile during the launch of the iPad, but then again who was going to tell him that he was not allowed to attend a launch. He is the boss.

I’ve no doubt that an army of PRs are today advising Apple on what to do next. But I doubt whether fixing the Steve Jobs cult will be quick. Certainly, continued posting of good numbers every quarter will help as will the promotion of other individuals in the company.

One suspects however that what Apple really need to do is come up with another brilliant bit of technological wizardry, sell millions in advance orders and then have a healthy looking Steve Jobs announce at the launch, in front of the world’s media, “I had nothing to do with this, I don’t even know how to turn it on.”

Events dear boy, events!

Posted in business, economics on January 11, 2011 by Tom Leatherbarrow

I had planned to start the blogging year off (albeit belatedly) with an optimistic look forward to what we can expect this year, both economically and politically, but events have, once again, somewhat overtaken me. The shooting of a Congresswoman in Arizona certainly deserves a mention (an excellent article by Richard Cohen in the Washington Post can be read HERE) as does the Government’s refusal to take on the bankers at RBS over their bonuses (I mean we only control 70 per cent of it for #*%$’s sake!).

However, media reaction to the British Chambers of Commerce economic numbers have got on my goat today. Instead of concentrating on another set of outstanding numbers from the manufacturing sector we have more fears voiced about a double-dip recession and a bemoaning of the poor performance of the service sector in Q4 of last year.

Frankly, putting hyperbole to one side for the moment, this was to be expected. What we are hopefully seeing is, at best, a slow but sure rebalancing of the economy, away from services and finance and towards manufacturing (this is no bad thing) and at worst just a reaction to the weakness of Sterling. Consumers in turn are slowly deleveraging their personal debt which leaves slightly less money to spend on the high street, hence the 0.3 per cent drop in like for like sales.

I’ll go out on a limb. Barring a massive unforeseen shock to the economic system we aren’t going to have a double dip. I’ll go further, I can actually see the UK economy coming out of this fairly quickly by mid-year. Why? Because we have a very flexible labour market, we are not in the Euro and interest rates are at historic lows. All we need is for the banks to lend business some money and all will be right in the world.

Right, back to those positive thoughts!