Money, money, money

Why is the answer to bankrupt banks always to pour millions more into them?
There is a risk in almost everything we do.
Walking, cycling, driving all have inherent risks. Take a job and you risk being made redundant or sacked at some point. The benefits outweigh the risks, but there are still risks.
Put your money in a bank, in stocks and shares or under the mattress and there is a risk your money may go down in value, or vanish altogether.
Putting it in a bank is actually less risky than anything else. Here in the UK, our banks have a guarantee scheme which promises to pay out up to £50,000 if the bank holding your money goes bust. Most of us don’t have £50,000 in our bank accounts, so the payout will be much less than £50,000 x number of customers.
Presumably an insurance company has sold each bank a policy which will pay out the customers’ money if a bank does go bust. This spreads the risk, which is something financial companies love to do. There is still a risk, but it is being managed by the banks and the insurance business.
So why does the Government have to step in and pour money it does not have into the bank to prevent it going bankrupt? Why don’t they let banks go bust so that other banks may see the writing on the wall and mend their risky ways?
Extending the argument, why do European countries have to stump up money they do not have to prevent Greece from defaulting?
A country which wants to join the European Union has to pass a financial test. If a country fiddles the figures to get in, or goes off the financial rails immediately after getting in, it runs the risk of being kicked out of the EU and told to find another currency and another sugar daddy.
Surely the hard-headed markets would think more of an EU which acted with this rigour then one which endlessly borrows or prints more and more money to keep a failing country and the investors who unwisely lent said failing country money from feeling the chill.
We are in the financial doldrums. Governments are cutting costs left, right and centre in an attempt to get their debts under control. But governments are still able to come up with zillions to guarantee that banks won’t go bust. It doesn’t make sense.
This is the nonsense which has sparked demonstrations by people from all walks of life who are simply fed up being told by politicians and bankers that it has to be done.
Politicians and bankers are insulated from the recession. The rest of us are not.

Bright spark needed

I went to Metro’s ecovelocity show at Battersea this week to see what new ideas are coming from the motoring world. There were battery-electric cars, fuel-cell cars and frugal petrol-engined cars.
It’s just like the very early days of motoring. In 1903, Benz would sell you a petrol-engined car, Gardner-Serpollet would do you a nice steam car and Krieger could supply an all-electric model. And if you wanted a hybrid, Messrs Hart would sell you a petrol-electric car ‘in which the electrical power is generated by a 4hp Darraq motor coupled with a dynamo slung in the centre of the frame’.
Who would have thought then that the technology which would win would be the one which required an explosive fuel, to be stored and sold in every town and village in the land.

We now have filling stations wherever you want to drive, but burning petrol to get about will soon become as anti-social as burning coal to keep warm. We need to find a better way.
Cars powered by electricity are the future, but will we store the electricity in batteries, or generate it on the fly with fuel cells? That is the key question.

You can buy a battery-electric car right away. Nissan and Mitsubishi will sell you something which looks just like your present gas-guzzler and Vauxhall will, too, next year.
It is easy to recharge - you just plug it in. But recharging takes hours and gives you far fewer miles than a tank of petrol. So you would have to change the way you use a car. A petrol car can take you to the supermarket or to Newcastle. A battery-electric car can go to the shops, but it will roll to a stop if you try to drive it more than 100 miles.
There are two other drawbacks: the electricity you use to charge it will be generated by a power station guzzling powdered coal, so you won’t be quite as green as you thought you were, and the large batteries under your seat will need to be replaced after a certain number of recharges, just like the batteries in your phone or your laptop die after a time.

A fuel-cell car doesn’t have these drawbacks. Refueling will be as quick as filling up with petrol - just pump in the liquid hydrogen. And you will be generating the electricity to drive your car as you go, so full green marks.
There are two major snags. You cannot buy one yet. And there is no way to fill one up yet.
London has fuel-cell buses running silently around the city, but there is nowhere for Joe Public to fill up.

Honda are backing the fuel-cell. They have a fuel-cell car being used now in Japan and the US where there are hydrogen filling stations. There are plans to get similar stations set up here in the UK and Honda are working out how to provide you with a hydrogen-producing pack which will fit in your garage and can top up your domestic electricity while it works.

I think the fuel-cell will win.
Most people won’t want a car which limits how far they can go and takes hours to recharge.
Most of us will carry on with our petrol cars until something similar turns up.
I also think Honda are on the ball with their generate-at-home idea. With opinion turning against big power stations using coal or nuclear power, the idea of us all generating our own electricity is appealing. We need a bright spark to develop the technology to do it.


This was written in September. And lo, in October, I came across this TED talk which reveals that bright sparks are, indeed working on this. Listen here:
http://www.ted.com/talks/justin_hall_tipping_freeing_energy_from_the_grid.html

Current affairs exam paper

Question 1:
Reconcile the following statements:
The Government says we must reduce the deficit NOW, ignoring Labour appeals to do it more slowly lest it upsets the recovery.
The Government says we should reform the banks slowly, lest it upsets the recovery, ignoring Liberal appeals to do it NOW.

Lets adore and endure each other

Why does there always have to be someone to blame?

According to the media and the politicians, we are constantly in a fury about someone who must be censured, sacked, or bombed without delay.

Are we? Or do the shouty people want us to be furious so they can get the credit for sacking or bombing the problem away?

Look at the recent furies: Immigrants - too many. Bankers - lunatics. MPs and their expenses - cheats. Arab despots - cruel. Bent newspapers - awful. Who will be next?

Andy Worhol said we were all going to be famous for 15 minutes. Maybe we are now going to be infamous for 15 minutes. The fickle finger of fate will point at us one day and Newsnight, Channel 4 News, the Daily Mail and Parliament will all be howling for our blood like the witchfinders of old.

But only for 15 minutes. After that, no matter how dastardly it was, the scandal can be put to one side and replaced by the next awful thing.

And not in the summer. When the politicians and the media stars are at their Tuscan villas, the anger subsides. Normal life can flourish.

Enjoy it while you can. Come September, they will be back, the political parties will have their conferences and we will all be told who to be angry about again.

Or, we could take the advice of the best graffiti in London:

Witchhunt

The hacking scandal has provoked the biggest witchhunt for many a year.
Rupert Murdoch, the News of the World, News International, the police, Sky, David Cameron are all being burned at the stake.

The News of the World are clearly guilty of doing dodgy deals with private investigators and the police. Those deals may have brought them stories no one else knew about - the exclusives Sunday papers need because no ordinary news happens on Saturdays - but if they had stopped to think, they would have realised that it would look bad for them if those deals were ever revealed.
But no newspapers stop to think. They all focus on the next publication. Anything further ahead will be tackled when it arrives. Anything which happened yesterday or further back is forgotten, unless a writ turns up. There is no forward planning, no ‘where do we want to be in six months, a year, five years’. It’s all about tomorrow’s paper.
Newspaper managers ought to think a bit about the future, but they spend too much time fire-fighting what the flaming journalists insist on doing today, whatever the cost, and what they did yesterday which five lawyers want to sue them about. It is more difficult than running an insurance company and requires managers who know how to balance the freedom journalists want with the restrictions the law places on companies.

The police are clearly guilty of not investigating the dodgy deals done by the private investigators and by their own officers. They never have been good at sorting out their own mess. Senior management at fault again.

David Cameron is guilty of not checking out the skeletons in Andy Coulson’s past before hiring him to look after the Government’s skeletons.

Rupert Murdoch is guilty of not separating his businesses well enough and not separating himself from the picture well enough. Murdoch has been the devil to the Left since the Wapping battles over his British newspapers. He is the devil to many American liberals because of Fox News. He has not raided the pension fund as Robert Maxwell did, or upset the shareholders as Conrad Black did. All he has done is be a very good businessman.
Labour MPs are now demanding that he should not be allowed to buy complete control of BSkyB because of the dodgy deals done by the News of the World.
The News of the World is part of News International. BSkyB is a separate company. Different managements. Different corporate ethos. No one has suggested that Sky News has done anything wrong.
The only link between the companies is Rupert Murdoch.
He must make sure that a problem in one newspaper does not infect the whole business.


One final thought. The Guardian has been investigating this story for many months. Who is it getting its information from?

The sporting business

In business, companies are judged by how much money they make.
In sport, teams are judged by how many matches and championships they win.
A company wants customers to buy its stuff or use its services. It employs people to make attractive stuff, or deliver must-have services to achieve this.
A sports club wants fans to buy its stuff and watch its matches, but the money this generates is not the main object of the exercise. Winning is.
Building successful teams is an expensive business. It takes time.
According to fans and managers it takes money, too, but sporting life is not that simple. Even if you have unlimited funds, as Manchester City and Chelsea appear to have, you cannot build successful teams instantly. It takes time.
And there is a further complication in football. The employees are all stars. Temperamental, big-headed, stupid stars. You can pay them ridiculous money and give them daft contracts, but if you don’t produce a winning team for them to bask in, they will break their contracts and go to another team.
You could do it without stars. Find some bright youngsters and turn them into a winning team. This takes even more time. And on the way, some of your youngsters turn into stars.
You could try running it like a business. Treat all the players as assets and buy and sell them when the time is right. Mike Ashley is trying this at my club, Newcastle United. It makes winning very difficult and it annoys the paying customers, but football finances have been as stupid as the stars for many years. Who is to say this is the wrong approach?
Sport is much more difficult than ordinary business, so why do businessmen get involved?
Glory. Fame. Crowds chanting your name. You don’t get much of that making widgets.
Nor do you get the venemous hatred sports fans will heap upon you if you fail.
It’s a high-risk venture.

A bright light in a dark world

The bigger Google gets, the louder grow the cries from politicians and media commentators to investigate it, curb it, emasculate it. Sarko is the latest.
I trust Google more than any politician. As far as I am aware, Google never went to war with anyone.
Google started off with a brilliant idea: Make it easier to find stuff on the Internet.
Larry and Sergey made that idea work, but it didn’t make any money.
So Google came up with another brilliant idea: Make it easier for people who want stuff to find people who are selling that stuff.
Larry and Sergey made that work and made shed loads of money because the people who sell stuff have discovered that it is much better to pay Google to find the people who want their stuff than it is to pay for advertising in publications or on television, where very few of the readers or viewers want their stuff.
I’m all for people who make ideas work making money from their talent. The world is full of people with good ideas. Very few make those ideas work. Larry and Sergey earn their success.
And Google do good things with all their money. They provide Internet services for the general public to use free. I use Google Mail to communicate, Google Docs to write stuff, Google Photo to show people my pictures, Google Reader to read stuff, Google Maps to find my way. All for nothing. Brilliant.
If companies want to use Google’s Internet services, or if Joe Individual wants to use them excessively, Google charge them. That sounds fair.
The shouty people want Google to reveal more. The more I find out about Google, the more they seem better than the rest of the world. They treat their employees better than most companies do. I would love to be clever enough and young enough to work for Google.
How many companies tell the world about their philosophy as clearly as this?
http://www.google.com/about/corporate/company/tenthings.html
When politicians act as fairly as Google do, I’ll take them more seriously.
When the companies employing media commentators treat their employees as clever, valuable parts of the business, I’ll listen with a less cynical ear.
Leave Google to do what Google does so well. It is a shining light in a gloomy world.