Category Archives: Uncategorized

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….

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.

Modest proposal

Mark W has an excellent idea for getting the bank bail-outs off the government’s books:

Gummint invests £50 billion in new bank shares.

AIH, gummint spending is about £50 billion per month.

Solution: for the next one month, all public sector salaries, welfare and pensions payments etc will be paid in bank shares!

Truly, a plan with no drawbacks…

On misreading punctuation

The excellent Rachel North is back. Hurrah! She’s been in New York addressing the UN on terrorism. Hurrah!

However, I had a bit of a double-take moment when I read her ‘I’m back’ post:

“…went to Turkey for 2 weeks with J, read a lot, chilled a lot, went to the Turkish baths a lot, turned extremely brown. Came back, had another week at home with J. Bliss.”

It took a few moments until I realised that was “with my husband J. It was bliss”, not “with excellent Irish greenblogger J. Bliss, with whom I am having a secret and passionate affair”. I think this makes me an idiot…

Another get-rich-quick scheme thwarted

I’m deeply annoyed that I work for a company that places onerous restrictions on my ability to trade shares, even on my personal account – if I didn’t, then I’d pile some serious money into HBOS stock right now…

September 17 update:

Fuckery. That’s £3,000 I would have made, buying at 150 yesterday and selling at 190 today. Lloyds TSB are wiseas, semirelatedly, are Barclays. Also, can the gibbering clowns who think this is the End Of The World / the Collapse Of The Global Financial System / etc please go away? Finally, this.

Unrelated October 1 update:

OK, so WordPress is doing some deeply weird things which stop me from, among other things, writing new posts and editing or approving comments. I’ll let you know when this is fixed…

Second Unrelated October 1 update: