Saturday, September 29, 2007

The Land of Incompetence

Came back the other day from the US and was immediately confronted with the usual rain and gloomy weather that one should expect from the UK in October.

That, in general, fails to "rattle my cage" and I was not terribly upset by it - all after all, if it was sun what I was after, I could have as well stayed put in Italy and enjoy long, laid back days at the beach eating pasta and sipping Chianti...

What really depresses me is that, after more ten years of failed public sector projects and ideas, a bungled (and messy) tax credit system, the display of complete incompetence during the recent banking crisis, and, lest we forget, the Iraqi catastrophe, still Labour (and, of all people, "tax-&-spend" Gordon) still enjoys a lead in the polls.

Really - what on Earth possess the British public?

Can the vast majority of Englishmen and women be so totally blind to the astonishing incompetence that permeates now all walk of the Public Sector?
Can the youths be all so busy getting drunk and getting laid that they are ready to forgive a Government that lied to the Country and allowed hundreds of thousand of lives to be lost?
Can the elderly have all gone so hopelessly senile that they have completely missed how their health is being jeopardised by the awful mess the NHS is in?

I will accept that Cameron's Conservatives can hardly lay claim to competence and infallibility (what in the name of God are the Tory right-wingers up to? giving Labour another ten years in government?) but it would be extremely difficult (I'd say impossible) to beat Labour on incompetence, failed Public Sector projects and generally wasting taxpayers' money on a grandiose scale.

Lest we forget:

  • Metronet - the poster-child of the PFI, the very creature of Mr Brown's warped economics - going bust, after sucking (and wasting) £11bn of public money, leaving London's Tube modernisation programme in total disarray;
  • the IT upgrade of the Benefits Department, that had to be abandoned after spending hundreds of £'m, and getting absolutely nothing;
  • the Dome (need I say anything?)
  • the Olympics budget - nearly quadrupled (and we are still 5 years away) with very little to show for it;
  • the complete failure to modernise the NHS, which, after £'bn of investment, still boasts the worst rate of cancer survival in Europe and the worst record in fighting infections (MRSA, anyone?);
  • the tens of £'m wasted on the ID cards project, with realistic estimates of the costs at more than 10 times the Government's estimates (and it hasn't even started yet...)
  • tax credits for working families (as if the others are sitting idle...): quite apart from the absurd complexity of the scheme (another brainchild of Mr Brown) it has resulted in hundreds of £'m lost in "overpayments that cannot realistically be recovered, ever" (even by the Inland Revenue's own admission);
  • the Home Office - a sick joke of incompetence, waste and complete lack of accountability: now multiplied by two, with the likely duplication of most office functions with the creation of the Ministry of Justice (as it's obvious to anyone, but the self-serving politicians, by multiplying the number of bureacrats one only multiplies the level of incompetence and waste);
  • and on and on and on...

But then, maybe, it is quite possible that after ten years of bureacratic incompetence people have become so used to it to consider it an acceptable norm - no longer to be outraged by officials wasting, literally, billions of pounds on ill-conceived, and worse-executed, initiatives and projects.

The Land of Incompetence, indeed.

Sunday, September 23, 2007

Saving the banks

So, last week, to save Northern Rock from a devastating "run" (that would have, as panic runs go, naturally have ended with the bank running out of cash and being declared insolvent) the Chancellor -- with enthusiastic support of the FSA and the Bank of England -- stepped in and, essentially, said that taxpayers' money was at hand to guarantee all depositors' moneys.

Nothing wrong with it, surely?
These are, for the most part, ordinary people, like you and I, and deserve to be protected by the nasty consequences of global finance markets turmoils, and the greed and incompetence of the 'fat cats' bankers. Do they not?

Well, yes, in a sense, but the real question is, at what price?
The immediate consequence is that the 'run' has ended, Northern Rock has been spared more dire consequences, other banks (C&G and Alliance & Leicester were rumoured to be next) have escaped unharmed, and ordinary folks are safe in the knowledge their hard-earned money will be there when they need it.

An unqualified success for all involved, then?

A well-known concept in economics is that of 'moral hazard': that is, investors and bankers are more likely to take greater risks than would be rational (sub-prime lending, anyone?) if they know that someone with big pockets (the State) will step in and save them if things go horribly wrong (as they do, almost invariably).

In other words, we have witnessed today that some banks and institutions are "too big to fail" and that the Government, for political expediency, is well prepared to squander taxpayers' money to protect the above-mentioned 'fat cats'.

These bankers, in fact, by investing large sums in riskier assets have indeed generated excess returns in good times, and pocketed large bonuses (the last 3-4 years have seen monumental increases in City bonuses, usually paid around Christmas' time) - but, when the time came to pay for the deed -- that is when these 'riskier' assets prove to be, well, riskier, and the most foolish were exposed, big Nanny State intervened to save their necks.

it is only too easy to predict that, next time round, the bets will be bigger, the risks greater and the heights from where to fall higher - but, no matter, our Tax monies will be there to save and protect City bankers, no matter how greedy, incompetent or foolish.

Well done, Mr Brown - indeed a worthy achievement for a Labour PM.