All posts by John Band

Obligatory Manuelgate post

Andrew at Wongablog has the best take on this: it wasn’t a ‘prank call’ in the “we’ll call someone out of the blue and harass them” sense, there wasn’t any deliberate intent to offend Andrew Sachs – and the man is a holocaust survivor who’s most famous for a very funny and very offensive portrayal of an ethnic minority character in a very funny and very offensive comedy show, so is just about probably maybe big enough to cope with being targeted with lewd humour by a pair of DJs.

I accept the call shouldn’t have been broadcast, given that Andrew Sachs hadn’t cleared it and in fact proved to be offended by it. Bad BBC, slap on wrist, etc. But if you read the whole transcript rather than tabloid scare quotes, it is extremely funny.

The joke’s based on a classic piece of British humour: there’s a fact hanging over the conversation that the protagonists absolutely, totally know they shouldn’t talk about, develop an obsession with the fact as a result, end up blurting it out, try to apologise, but ultimately end up making things a million times worse by not being able to stop referencing the fact that they’re obsessed with. The end result is painfully cringeworthy, horribly inappropriate, and yet hilarious.

Now where have I heard that one before?

If this was a deliberate reference by Ross and Brand, then they are among the best comedians of a generation. If not, then the fates claim that title.

Update: have just been reminded of our man Wilde’s take on this kind of mass-moral-panic nonsense: “the British public is never so ridiculous as when engaged in one of its periodic fits of morality”. ‘Nuff said, pretty much.

Update 2: BBDO is the winner.

Update 3: Sorry, that was a lie, The Daily Mash is the winner.

Update 4: Russell Brand’s resignation speech is genuinely a masterpiece of class (especially where he makes the point that he’s held off making a public apology because it’s absolutely none of the public’s business – it’s between him, Ross, Sachs and Baillie – and he’s now making a public apology because he regrets the harm that he’s done to the BBC, rather than the offence caused to the idiots). This whole episode has increased my respect for Brand so much, although I still find his voice kind-of annoying….

Violence most horrid

It only seems like a few months since the biggest “idiots failing to understand numbers” issue was that of crime… oh, for those heady pre-recession days when people had nothing more to worry about than lamenting that crime was a major problem despite it generally not being one.

The latest row, which has unfortunately given ammunition to the ‘all crime stats are lies because my uncle’s neighbour’s nephew’s dad’s dog got STABBED! with a KNIFE!!!’ brigade, is about police forces wrongly classing minor-ish violent crime committed with the intent of inflicting majori-ish violent crime as ‘other violent crime’ (in line with how the courts treat these offences) instead of ‘most serious violent crime’ (in line with how the statistical guidelines say you should treat these offences).

Mark Eaton has an excellent piece on this, using the old stats, the new stats and BCS data to make the point that the reclassification changed nothing significant (not least, because only criminal justice wonks look at these subcategories anyway, with reporters and politicians alike dealing solely in ‘reported crime’, ‘reported violent crime’, and specific types of offence). Hooray for the BBC for hiring him and saving me a job…

Furniture, nudity thereof

If anyone uses the phrase ‘the cupboard is bare’ when referring to the UK’s current economic position, this is an excellent indicator that they are entirely clueless about it. For one, it’s an embarrassingly trite and twee metaphor, unlikely to be used by anyone literate; for two, it paints an entirely false picture of the government’s financial situation (also, note that the government precisely and exactly did pay down the national debt as a proportion of GDP, which is the only figure that matters, during the boom times, which makes criticising them for not doing so particularly weird).

As Chris highlights (while also, correctly, pointing out that the current ‘sterling crash’ isn’t one at all – if it were, the pound would have fallen significantly against the euro, which it hasn’t. Rather, it’s a dollar/yen rally), people are still falling over themselves to lend the government money at very low interest rates. That’s an indicator that outside of cutesy-talking-point land, serious people accept there’s plenty of, err, cupboard-room.

While I’m here, a couple of points on the Centre for Policy Studies report that purports to show the UK has a ginormously terrifying public debt. For a start, it’s written by a Tory MP – aren’t think-tanks producing this kind of report supposed to maintain some vague pretence of not being entirely motivated by partisan hackery?

Content-wise, it’s the same report the CPS churn out every year, with the figures slightly updated. And as always, it’s spun ridiculously: the angle is approximately “when you include the PFI Enron accounting, Network Rail’s nationalised in all but name-ness, bank bits, various other dodges and public sector pensions, the national debt is enormous”. In fact, the only non-trivial sums it identifies are PFI payments – which it exaggerates by a factor of more than three by failing to follow anything even vaguely resembling accounting standards, as I’ve already pointed out here – and public sector pensions, which are an order of magnitude larger than any of the other factor, and are the only way authors of this kind of paper can get from “the national debt is 42% of GDP instead of 39%, nobody cares” to “oh my god, the national debt is 150% of GDP and we’re all ruined due to Evil Labour”.

Quite how the hell public sector pensions should be accounted for is a tough question, and not one which has been satisfactorily resolved anywhere by anybody. However, suggesting that the UK is particularly screwed because of Labour’s incompetence and dodging, when actually the problem has existed forever and in every developed economy, is grossly dishonest. It also doesn’t represent debt in the sense of ‘people who have pieces of paper saying you’ll pay them and who’ll sue you if you don’t’ – it’s just a promise from politicians to be nice to old people, and we all know about the iron-like unbreakability of politicians’ promises…

[*] Yes, Network Rail’s GBP20bn debt should be included in the headline figures, as it’s government-guaranteed and not secured against tradeable assets. So should the real PFI number of c.GBP30bn; together, these add an extra 4-5% of GDP to the official national debt figure. I’m happy to confirm for the benefit of readers who question my political neutrality that these should be classed in the national debt proper and that Labour are slippery sods for not doing so (although on the other hand, they were the first ever UK government to move to GAAP for public sector accounting and are one of the first globally to adopt IFRS).

The banks shouldn’t be: it doesn’t make sense to view debt backed by tradeable financial assets as part of The National Debt, since it doesn’t represent money that’ll have to be paid back out of future taxation. At worst, we’re on the hook for the difference between the value of the banks’ mortgage books now and the long-term value of the relevant houses, cushioned by homeowners’ wiped-out equity. Even if we have a two-year depression and house prices fall 40% from their peak, the loss potential isn’t high.

In which your host is proved right

Every prediction I made in this piece from 2005 on 24-hour drinking has proved to be correct: on-trade alcohol consumption has fallen, levels of alcohol-related crime haven’t changed; pubs haven’t made any extra money; but puritan idiots have continued to rail against the rule change anyway.

The most offensively stupid puritan argument is that ’24-hour drinking hasn’t cut violent crime, so it was a failure’. No – the point is, it means that law-abiding people can go out for a drink without having to obey insane rules created to stop soldiers in the trenches getting jealous of civvies back home during WWI. That is a good thing in its own right. If drink-related violence had risen, we’d need to weigh the good against the bad. Since it hasn’t, we can say that the licensing law changes are an unequivocally good thing, and crack open some booze to celebrate. Hurrah!

(it’s also worth noting that on this issue, the Tories are lying crooks who should be run out of town on a rail. Quelle surprise…)

Evidence-based policymaking

Quoth our illustrious mayor (via):

I am informed that, thankfully, there have been no fatal accidents arising from collisions between cyclists and articulated buses in London since the introduction of articulated vehicles.

Serious incidents are defined by TfL as those where a cyclist may have required treatment, including in hospital. There was one serious incident involving a cyclist in each of the years 2005/06 and 2006/07, and two in 2007/08.

In other words, the data collated by TfL and accepted by the mayor clearly shows that bendy buses are not dangerous for cyclists.

As Tom from Blairwatch says,

At this point you checkmate him by pointing to the reams of documentation on gyratory systems and perceived cycling safety, particularly referring to Parliament Square, Elephant and Castle, Aldgate etc.

Indeed. The mayor isn’t pro-cycling; if he were, then he wouldn’t be adjusting the traffic flow to make cars faster and more dangerous, or pretending that something completely harmless to cyclists is a threat to them. He’s a traditional Tory ideologue, who hates public transport, urbanites and the poor, and loves cars, suburbanites and the wealthy, wearing an extremely skimpy green veil.

The implications for the next Westminster elections are pretty obvious. I can understand wanting to get the current lot out, and I can understand the argument that a Tory government might be less bad than the plausible alternatives. But if you’re voting Tory, don’t delude yourself they’re some kind of NuLabLite and that all you’re opting for is a change of leader – they’re still the party of Michael Howard and Mrs Thatcher, and a vote for them is an endorsement of the whole Thatcherite project.

(I might be being unfair – it’s just about possible that the mayor has no understanding of evidence-based policymaking, and genuinely doesn’t realise that the statistics are a bloody good reason to cancel his hare-brained scheme. I’m not sure that hoping the future PM is merely an idiot rather than a dishonest ideologue is a wonderfully optimistic position to be in, though…)

I endorse this product and/or service

While I’ve spent a few days been being assortedly sunburned, rained upon, terrified and crushed on our fine inland waterway system, dsquared has sort-of-broken his ‘not commenting on the current crisis’ rule. Read it.

Yes, of course there’s some TWST, WT? to it, but the conclusion that Western banks’ loans exceed their deposits because the decision was taken at a macro level (and a long time ago) for Western economies’ imports to exceed their exports is pretty hard to deny. Even if it’s not as satisfying as saying ‘those bastards in Canary Wharf stole our money’.

It’s not about the Scots, it’s about the institutional memory

So, we’ve been talking about the UK side of the banking crisis on Crooked Timber, and the discussion has taken a mildly anti-Scottish turn.

Now, that’s just wrong – although three of the UK’s largest retail banks pre-crisis were technically Scottish companies (Lloyds TSB, HBOS and RBS), only RBS was genuinely run out of Scotland by a Scottish management team. HBOS was, in all meaningful rather than purely legal senses, created by Halifax’s takeover of Bank of Scotland, just as Lloyds TSB was created by Lloyds’s takeover of TSB.

However, it does lead onto an interesting alternative point: if you take ‘failure’ to mean ‘bankruptcy, administration or emergency takeover for a token fee’, then all the major failed UK banks (RBS, HBOS, A&L, Northern Rock, B&B) are non-London banks – and all of the major non-London quoted banks (the Co-Op is, err, a co-operative) have failed.

Yes, two of the London banks are emerging markets banks that happen to be British-based for historical and cultural reasons (sure, HSBC has a UK presence, but it could nonetheless be closed tomorrow without destroying the group, while Standard Chartered doesn’t even have that), and therefore haven’t been significantly squeezed by the problems faced by UK mortgage banks. Still, Barclays derived 40% of its 2007 revenues from UK retail and commercial banking and doesn’t appear to have been wiped out, while Lloyds TSB is almost exclusively a UK retail bank [*].

Another point made on the thread is that the failed banks, aside from RBS, are primarily demutualised building societies, failing on their both home turf and their desired new ground and dying as a result – like Stringer Bell. But that doesn’t explain why the London former building societies (Abbey/Santander and Woolwich/Barclays) sold out to banks for large premiums when they had the chance, while all the regional ones kept going, or selling themselves to other former building societies for stock, until they hit the ground.

Update: Daniel points out that Abbey actually managed to post a massive loss and destroy value whilst property was still booming and money was cheap, after its US wholesale loans business went titsup in 2002, and that this was a driver behind the 2004 Santander takeover. While this is true, the bank was still worth £10bn and was still a viable independent entity at the time of the buyout – to me that’s not quite in ‘failed bank’ territory…

My theory, for what it’s worth, is that the biggest driver for UK bank success/failure was indeed buiilding society demutualisation, which created institutions that had to answer to external shareholders but didn’t have the real banks’ long history of having to balance liquidity risk and shareholder expectations. Lloyds, HSBC and Barclays have long institutional memories of previous bubbles, crashes and disasters; the former building societies don’t. So the first lot could resist the pressure from shareholders to crank up risks for greater returns, while the second lot couldn’t.

The theory has two main flaws: it doesn’t cover RBS, and it doesn’t cover why the London former building societies sold out when things were good.

I think they’re vaguely related: RBS, with its ‘swashbuckling plucky raider’ image, led the path down which the other demutualised banks followed.

The people involved genuinely thought they were creating a new model of UK financial services with London no longer at the centre – and for the former building society guys, the fact that a real bank with a 350-year history was doing the same kind of geared expansion (international acquisitions rather than domestic mortgage share, but it was still buying revenue with risk) vindicated their model.

Meanwhile, the London demutualised guys, with more contact with the established industry and no comparable sense of regional pride, viewed themselves as second-tier London banks who did exactly the same thing as the serious players but slightly less well – and therefore accepted large wodges of cash to sell to people who knew what they were doing as soon as it was in their shareholders’ interests to do so.

The one bit I don’t quite understand is why RBS behaved like a comedy bank instead of a serious one. Well, “shareholders blinded by charismatic guy who gets excellent returns when things are good, and who says that his brilliant ideas have transformed the company so that old concerns about recession are no longer relevant” probably has some relevance, but that shouldn’t be enough. Were Edinburgh’s business establishment so enthused by the concept of a real national champion that they overlooked the risks RBS was running? Or were the big London banks just lucky, and in fact RBS was a ‘but for the grace of God’ play?

[*] the theory falls apart if you think Lloyds is taking the current round of government capital because it’s in trouble. My view is that it’s taking it so that it can get HBOS’s assets for next-to-nothing and ensure it remains as liquid as it currently is no matter what happens. That could be spin – but if so, then Lloyds’ City PR firm deserve every penny they’re getting and more.

Just in case…

I’m doubtful that RBS will fail, despite some informed commentators’ beliefs to the contrary.

However, in the event that it should collapse, I’d like to be the first person to suggest that the Deloitte partner who led the BCCI liquidation would be an excellent choice of administrator…

Update: fail prediction FAIL. If the government is forced to take a majority stake in your company, you’ve failed.