Archive for December, 2011

My Man of the Year

Posted in Uncategorized with tags , , , , , , , , , , on December 22, 2011 by Tom Leatherbarrow

And so we finally come to the awards season’s least sought after accolade which, as far as I know, no previous recipient has either acknowledged or added to their CV.

Where to start? Well, 2012 will probably go down as a bad year for journalism, but some individual stars have shone brightly. Nick Davies in The Guardian has played the key role in uncovering the phone hacking scandal, whilst the great Robert Fisk in the Independent has continued to shine a fascinating light upon the Middle East. Simon Jenkins in the Guardian has taken it upon himself to bang the drum for an economic demand stimulus with a series of brilliant articles.

However, my Journalist of the Year is Peter Oborne who this year taken his profession to new heights with a series of comment pieces that have been brave (taking on various Daily Telegraph sacred cows) and full of insight. Whilst others were flailing around looking for the causes of the summer’s riots, Oborne nailed it with a coruscating denunciation of City Fat Cats, MPs and a number of our business leaders. “How can we”, he asked, “expect good behaviour from the populace when our leaders can’t behave themselves?” At the last count nearly 5,000 people had left comments on the Daily Telegraph website in support of his position.

There have been many great sporting stories this year, not least Rory McIlroy winning the US Open by making the golf course at Congressional look like Harborne Municipal! However, when Darren Clarke won the Open Golf Championship at Royal St Georges in July he rescued a career that had seemed in permanent decline following the death of his wife Heather from breast cancer. His victory proved that good things happen to good people.

For me, 2011 has been the year of the common man. The dignity, spirit and extraordinary bravery shown by the Japanese people after the tsunami in February made complaints about austerity measures at home seem like small beer. Equally, the Arab Spring has brought a welcome blast of democracy to the Middle East which even the Saudis have taken heed of. Finally, the Occupy Protesters around the globe have shown that in the era of social media the ‘Silent Majority’ can quickly spread the word and remain mute no more.

Back at home the Speaker of the House, John Bercow, deserves special mention for putting the House of Commons back at the centre of political debate with a series of brave decisions which have flown in the face of what the Government wanted. From phone hacking, through to the Hillsborough debate and on to the Eurozone crisis he has played a key role in giving the legislature its pride back.

John Vickers, he of the Independent Banking Commission, deserves special mention. Despite extreme pressure from banking’s vested interests, he has put forward a series of balanced and pragmatic proposals for the future shape of our banking system. Now it is up to the politicians to implement them.

The big story this year has been phone hacking and it has thrown up all manner of heroes. Hugh Grant has found the role of his life turning the tables on ex-News of the World hack Paul McMullen with a brilliant expose in the New Statesman. He has been ably supported by Steve Coogan who delivered one of the best lines at the Leveson Inquiry, “they’re like the Mafia, it’s just business.”

However, there is one individual deserving of special mention. He has been threatened by Rebekah Brooks, who allegedly called the Prime Minister in an attempt to get him to stop his investigations; his own phone has been hacked and he has had private investigators snooping around him and his family. News International has done its worst, but he has continued on his quest. Most importantly, his forensic examination of Rupert Murdoch in the Culture, Media and Sport Select Committee provided one of the TV highlights of the year and pointed the way forward for MPs. If our Select Committees are to become more like Senate Investigating Committees, more MPs are going to have to learn his cross-examination skills.

My Man of the Year is the Labour MP for West Bromwich, Tom Watson.

If I may, I’d like to take it upon myself to thank everyone who has read this blog in 2011.  I hope you have found them informative and entertaining. I will return in the New Year.

Merry Christmas

My Villain of the Year

Posted in Person of the Year with tags , , , , , , on December 21, 2011 by Tom Leatherbarrow

It’s that time of year again when we award the achievers of 2011, in other words we honour the good, the bad and the downright evil! And what a year it has been, to use a phrase beloved of Louis Walsh on X-Factor, “This could be the most competitive year ever, I just can’t call it!”

I will announce the Villain of the Year today and tomorrow our Man or Woman of the Year so that we can finish on a high note before Christmas.

Without further ado then, my first nomination is a man who has turned the headquarters of world football into an episode of The Sopranos. Sepp Blatter was re-elected this year as President of FIFA in an election so rigged and ridiculous it would have shamed North Korea. That he continues to bestride the world game and make absurd public statements amply explains why international football is dying on its feet.

Monumental PR cock-up of the year goes to the Church of England. That it failed to find parallels in the scriptures with the Occupy Movement’s entirely peaceful protest outside St Paul’s is remarkable. That it continues to stand side-by-side with the moneylenders beggars belief.

The big media story this year has been phone hacking and it has thrown up a cast of characters who have lied, obfuscated and stabbed each other in the back. James Murdoch has amply illustrated why he is unfit to run a public company, whilst Rebekah Brooks has mercifully departed public life. The Big Daddy of them all, Rupert, remains in place, but his appearance in front of the Select Committee suggests his time is drawing to a close.

There is one other individual involved in this story who deserves special mention. When he appeared in front of the Leveson Inquiry Paul Dacre, editor of the Daily Mail, completely misjudged the tone of the proceedings and was exceptionally rude, arrogant and aggressive towards the judge and his inquiry. One suspects he will get his comeuppance when Leveson reports next year.

2012 is a big year in American politics, it’s just that the Grand Ol’ Party hasn’t realised yet. The cast of non-entities declared in the Republican race range from the barking mad, Michelle Bachmann, through to yesterday’s man, Newt Gingrich, and the transparently not up to the job, Rick Perry. The one half-decent candidate, Mitt Romney, is not acceptable to the Republican base because he is a Mormon. What has happened to the party of Abraham Lincoln?

On the subject of politics, Europe’s political leaders have this year covered themselves in failure. I’ve lost count of the number of EU Summits which have cost millions but made not one iota of difference to the European sovereign debt crisis. Chief protagonists are Nicholas Sarkozy and Angela Merkel who are putting the livelihoods of millions at stake in order to carve out positions for themselves in upcoming national elections.

Colonel Gaddafi would have been a prime candidate for Villain of the Year, but I am opposed to posthumous awards and must therefore highlight the role of another Middle Eastern despot. He has steadfastly refused to read the writing on the wall and has set the army on his own people, to date killing more than 5,000. Of equal concern is his impact on the Middle Eastern peace process. Henry Kissinger once said that, “you can’t make war in the Middle East without Egypt and you can’t make peace without Syria.” We all know how this one is going to end, it’s just a question of when and how much bloodshed it will take.

My Villain of the Year is President Bashar al-Assad of Syria.

What Vickers has done with banking we must now do with pensions!

Posted in Banking, business with tags , , , on December 19, 2011 by Tom Leatherbarrow

A very quick take (it’s my day off) on the Government’s announcement over the weekend that it intends to implement ‘in full’ the recommendations of the Vicker’s Commission on Banking.

In effect this means we are having a ‘Glass Steagall-lite’ ringfencing of investment banking from retail banking in the UK.

Two points. Firstly, this is welcome news (well, not for the banks but the rest of us should be happy!) but the worry is that full implementation does not start until 2019. Plenty of time for the influential banking lobby to try and water down the proposals. This Government (or for that matter any future Government) must stand firm.

Secondly, the Observer’s story yesterday concerning a leaked powerpoint presentation for the Government put together by Dr Christopher Sier, which details the secret fees being charged on pensions contributions is, to say the least, alarming. Apparently, “the charges are spreading and are so steep that savers may find they get less back in retirement than they invested in savings accounts and pensions over their lifetimes.”

All this proves that it is not just those involved in trading complex credit derivatives that need to be brought into line.

Why manufacturing is winning (and what the rest can learn from it)!

Posted in business, economics with tags , , , , on December 14, 2011 by Tom Leatherbarrow

Another week, another extraordinary series of meetings with companies either supplying to the manufacturing sector or actually making stuff themselves. I’ve travelled to Cannock to meet a machine tool workholding manufacturer to be told that they physically can’t take on any more orders until the end of January. One of their big clients told me a day later that they have just had their best November ever (yes ever). In fact, demand is so strong they are putting their prices up!

All the time the media drips negativity. As one of my clients put it to me, “it’s like living in a parallel universe.” So instead of regaling you ever more with these little anecdotes from the world of manufacturing which seemingly turn reality on its head, I thought I would try and assess why the sector is doing so well.

Firstly, manufacturing is lean, my god is it lean! Years of living at times hand to mouth has made the sector focus like no other. Automation and robotics have driven cost out of the production process and it doesn’t stop there. I’ve seen Pan-European marketing departments staffed by two (count them) two people. Structures so flat, they are positively pancake-like. The result is margins strong enough to absorb inflationary pressures and economic downturns without slash and burn cost-cutting.

Secondly, manufacturing is flexible. What was clear from the downturn of Q4 2008 and Q1 2009 was that workers and management now have a compact which is akin to one of our Prime Minister’s favourite phrases, namely, “we’re all in this together.” Employees and management across the board were willing to take pay cuts in order to keep their company going. The result has been that skilled workers have been retained to take advantage of any upturn.

Three, manufacturing is hungry. Years of scrapping to put food on the table has made the sector ultra-competitive. If there is a contract out there to be won, heaven and earth will be moved to get it. If necessary, business theory will be turned on its head. Years of build to order and theories of reducing finished stock in order to improve working capital are being thrown out of the window. If customers are demanding product now, then we’ll just have to reduce lead times by holding more product.

Four, manufacturers can see the upside in the current economic uncertainty, namely historically low interest rates. Money is cheap (if you can find a source) and it is being used to invest to improve and become more efficient which, in turn, improves margins and makes the sector more competitive.

Finally, manufacturing is used to being ignored by Government. There are no special favours or opt-outs here. This is a sector used to standing on its own two feet, with precious few grants and incentives available. Yes they would like reductions in VAT for capital investment but they’re not holding their breath.

In short, my view is that manufacturing can offer a roadmap for other sectors, let’s just hope it can keep it going well into 2012.

Cameron’s Veto: is this a Waterloo or an Arnhem?

Posted in economics, Politics with tags , , , , , on December 12, 2011 by Tom Leatherbarrow

Sometimes it is best to wait before blogging on events. I took this view on Friday before commenting on David Cameron’s veto at the EU Summit. Better to wait and think through the implications before hitting the keyboard.

Depending on which newspaper you have read over the weekend, individual views on the veto will differ. If you are a Telegraph or Mail reader it is likely to be the greatest British victory on the Continent since Waterloo. Guardian and Independent readers will doubtless form the view that the UK is about to be thrown out into some sort of diplomatic nuclear winter. Readers of the Economist will probably conclude that the Prime Minister didn’t really have a clue what was going on and hopelessly overplayed his hand!

So what is the truth of the matter? My own view, having given it much thought, is that the leaders of the UK, France and Germany are engaged in a game of high stakes poker with bluff and counter-bluff the order of the day.

Whilst this may seem like a European issue, national considerations are playing a key role. The French President, deeply unpopular at home, faces re-election on April 7th. He faces his electorate with an economy tanking, rising inflation (anybody who has been to France recently will notice how expensive it has become), a cut in his country’s credit rating and his major banks all but bankrupt. Out of the fog, his election strategy is becoming clear. He intends to say: “It’s not my fault, it’s those Brit’s and their dodgy banks who have infected all the rest. But don’t worry, I’ve thrown them out of Europe, so vote for me!”

Chancellor Merkel does not face re-election until September 2013, but if she is to stand any hope she needs to whip the rest of Europe into shape double-quick. However, the German public is deeply unhappy with having to prop up other countries. They haven’t gone through years of fiscal austerity only to go bust bailing out the Greeks and Italians.

Similarly, Frau Merkel’s strategy is also becoming clear: “It’s not my fault, we need much closer fiscal integration to make sure we, sorry I mean the EU, has oversight of other country’s budgets so they can’t do it again. Vote for me!”

Of course the irony is that European leaders still think they are in charge of events. The reality is that the bond markets will have as much, if not more, say in how events unfold. The key point of last week’s summit is that it did absolutely nothing to solve the immediate liquidity crisis that is enveloping the Eurozone. The ECB still can’t buy bonds, we have no Eurobond, yields are going through the roof (as I write Italian ten-year bond yields are up by 15 basis points and rising) and the ratings agencies are downgrading as fast as they can type.

So what is the PM’s game? Like his European counterparts he is also looking over his shoulder at the Eurosceptics within his own party. My guess is that the PM has made the calculation to temporarily appease the Tory right in the hope that he sees the back of President Sarkozy in April. Alternatively, the whole Eurozone could go bust and break up at which point last week’s veto won’t make a blind bit of difference.

The nightmare scenario for the PM is that the French socialists fail to get their act together and split their vote, which last time let in Jean Marie Le Pen of the National Front. In 2007 the socialists had to swallow their pride in the second round of voting and get behind Sarkozy to keep Le Pen out.

We are therefore in the extraordinary situation that a British Conservative Prime Minister is hoping for a socialist victory in France so that he can get rid of his arch-enemy and, he hopes, break up the Merkel/Sarkozy relationship.

Today, the Prime Minister basks in the adoring headlines of the right wing media comparing his triumph to Waterloo. He must hope that the reality is not more like an Arnhem, where a flawed strategy and faulty intelligence led to annihilation.