Financial and business news and articles
Posts tagged Editorial
Brown draws flak over role in handling military budget
Mar 14th
Cameron uses prime minister’s questions to challenge Brown over military funding claims made to the Chilcot inquiry
It was possibly the most supercharged prime minister’s questions of the year so far. At 12:09pm last Wednesday the ritual jousting turned toxic as David Cameron challenged Gordon Brown’s testimony at the Iraq inquiry days earlier.
Brown had told the Chilcot inquiry that he never refused urgent requests for more military funding. Cameron did not believe him, citing two former chiefs of the defence staff who had criticised the prime minister for offering the inquiry evidence that was “disingenuous” and “dissembling”.
Several Labour backbenchers could not hold their tongues. But, they roared, Lord Guthrie and Admiral Lord Boyce were “Tories”. The implication was damning; these men might once have been characters of honour whose duty was to serve the nation but now their criticism could be dismissed as readily as, well, Cameron’s.
It was a poisonous putdown. In their view, the opinions of two of the most powerful figures in modern military history had become corrupted to the extent they were no longer impartial.
Some blamed Sir Richard Dannatt, the former army chief, for politicising the military. After all, Dannatt’s consistent criticism of defence spending in Afghanistan had preceded reports that he would become a defence adviser to the Conservatives. Beyond the hullabaloo over political bias weighed against genuine concern over soldiers’ welfare, the debate boils down to whether Guthrie and Co have a point? Did Brown starve the military of funding when he was chancellor, leaving the forces short of vital equipment?
The answer may depend on whose side you are on. Guthrie and Boyd remain adamant that Brown mishandled the defence budget when chancellor and that his prudence meant, for instance, fewer troop-carrying helicopters in Afghanistan, one of the most vexing issues facing commanders in Helmand province. Their critique was bolstered by an inquest verdict hours before Wednesday’s Commons exchange. Four soldiers were unlawfully killed after troops were given “inadequate” training, according to Wiltshire coroner David Masters.
Brown, too, remains unmoved. He told Cameron that “every request” made by defence officials for “urgent operational requirements” was met. In fact, said the prime minister, £18bn had been invested in Afghanistan and Iraq on top of the military budget. In real terms, spending was up. The Tories, claimed the prime minister, cut it by 30% in the 1990s. But the truth, as so often, is somewhere in between.
Analysts point out that the MoD has a long-term core budget while the additional cost of fighting wars comes from the Treasury reserve. Many believe this dynamic fuelled disagreement between Brown and the military men.
However, the future for defence spending appears less ambiguous. Swingeing cuts are a certainty. Days before last week’s PMQ, the defence select committee bemoaned a £21bn funding gap for scheduled military projects. If they win the election, the Tories will have to preside over huge cuts in military spending. The question is, will Guthrie and Boyd sit quietly on the sidelines when that happens?
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Doing good – by comparison
Mar 14th
A personal finance comparison site set up by Beat That Quote and Oxfam promises to donate two thirds of its takings to charity
Savers who take out a new Isa or switch providers could raise money for charity at the same time by using a comparison website set up by Oxfam.
Comparison sites are typically paid commission by whichever product provider the customer selects. This can range from a couple of pounds for a credit card to hundreds of pounds for a life insurance, pension or annuity product. CompareForGood.com – a collaboration between site Beatthatquote.com and Oxfam – will give more than two-thirds of the commission it generates to charity. The remainder will be used to run the site.
Compare for Good allows consumers to compare thousands of products, including loans, mortgages, credit cards, current and savings accounts, pensions, annuities and investments. Isas, for example, are arranged with instant access accounts at the top of the table, followed by those with a fixed term.
Compare for Good was developed by entrepreneur Ivan Massow, who set up an insurance advisory firm for gay men and people with HIV in the 1990s. He said: “We estimate that every household has two or three credit cards, plus two or more insurance policies – home, car, travel – that will need renewing each year. If people use Compare for Good to switch deals, that’s quite a lot of potential income for Oxfam.”
Charities have suffered a fall in donations during the recession, but Cathy Ferrier, Oxfam’s director of fundraising, said: “This website means people can support Oxfam even when money is tight.”
The site will soon be adding a utilities comparison service, enabling visitors to make sure they are on the most competitive tariffs. The 4%-8% cuts in consumer prices announced by the big six providers – npower, E.ON, Scottish and Southern Energy, EDF, Scottish Power and British Gas – during the past few weeks are much smaller than expected given the drop in wholesale costs, which have fallen by 60% since their peak in the summer of 2008, according to energy consultants McKinnon & Clarke.
But if you add these cuts to those made last year, E.ON has reduced bills by £112 in total, Scottish and Southern Energy by £97, nPower by £94 and British Gas by £170, says comparison website Uswitch.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
For the record | the week’s corrections
Mar 14th
“Goldman Sachs and its role in a Greek tragedy” (Business) said European currency swap transactions “enabled the country to join the euro in 2001″. In fact, the swap transactions were executed after Greece adopted the euro. The piece also said Goldman Sachs “helped Greece meet eurozone limits on government borrowing”. This was incorrect. The criteria set by the EU included a debt-to-GDP of less than 60%. Before entering into the swap transactions, Greece’s debt-to-GDP ratio was 105.3%. After the transactions the ratio stood at 103.7%.
Steve McQueen in the film Bullitt drove a green Ford Mustang in a chase through San Francisco not “a cop car” and in The Great Escape vaulted a motorbike over the fence at the Swiss border not a “concentration camp” (Big Picture, Review).
“Why we should celebrate the end of Asian Network” (Comment) misattributed remarks made by Malik Meer in a Guardian article to Asian Network presenter Adil Ray. Apologies.
Write to Stephen Pritchard, Readers’ Editor, the Observer, Kings Place, 90 York Way, London N1 9GU, tel 020 3353 4656 or email reader@observer.co.uk
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Martin Rowsn on seven days of BA strikes
Mar 13th
More than half a million travellers to be hit by strikes on successive weekends from 20 March
Entente cordiale: Sarkozy speaks warmly of Brown at Downing St
Mar 13th
French president says Britain needed ‘bang in heart of Europe’ and tells Cameron he doesn’t understand Tory euroscepticism
Coming from opposing ends of the ideological spectrum, Nicolas Sarkozy and Gordon Brown aren’t supposed to be political brothers in arms.
However, at a Downing Street press conference yesterday the French president chose to lavish praise on the prime minister, coming close to siding with him on the issue of Europe and saying Britain was needed “bang in the heart of Europe”, while expressing regret at David Cameron’s decision to quit the European People’s Party.
“If you ask me whether I would prefer the Tories to remain within the EPP, the answer is yes. The EPP is a good bunch of people. Opening up to others is a very good thing,” Sarkozy said.
He went on to meet the Tory leader later at the French ambassador’s residence in London, but the Conservatives said he only pressed the point of their decision to quit the EPP in passing. The meeting between the two sides had been very warm, the Conservatives said.
Brown and Sarkozy said they had made progress on bridging their differences on the future regulation of off-shore hedge funds, and they hoped a compromise agreement on a directivecould be reached in time for an EU finance ministers meeting next Tuesday.
The Americans are opposing adirective that means US hedge funds – or funds operating from London, but registered for tax outside Europe – would need authorisation from each of the EU countries. Sarkozy spoke warmly of the prime minister, saying: “I have found in Gordon Brown a convincing and convinced reformer, and hand in glove we have tried to find the right answers when the economic and financial crisis almost swept us all away.”
He added: “I know we have differences: he is British and I am French. He is a socialist and I am not. That is not as serious as the first point. We have always worked in a spirit of partnership and trust.”
The French have been building contacts with the shadow cabinet in a series of meetings, but remain perplexed by Tory scepticism, saying they cannot find the intellectual basis for this criticism.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
How others see Mary Robinson – and how she sees herself
Mar 13th
New clothes, new hairdo – How others see Robinson
“She stood at the dangerous cross-roads of sex, politics and religion for two decades and emerged not merely unscathed but with the respect of even her most ferocious enemies.”
Irish Times columnist Fintan O’Toole, in 1996, when Robinson was briefly touted as a successor to Boutros Boutros-Ghali as UN secretary-general
“She has to have new clothes and her new look and her new hairdo, and she has the new interest in family, being a mother and all that kind of thing. But none of us, you know, none of us who knew Mary Robinson very well in previous incarnations, ever heard her claiming to be a great wife and mother.”
Pádraig Flynn, Fianna Fáil politician. He later apologised
“Robinson presided over little more than an intellectual pogrom against Jews and Israel.”
Academic Michael Rubin on the 2001 world conference against racism in South Africa, from which the US and Israel withdrew
I felt shamed, shamed, shamed’ – In her own words
“I was elected by the women of Ireland, who instead of rocking the cradle, rocked the system.”
Inaugural address as president of Ireland, 1990
“As president directly elected by the people of Ireland, I will have the most democratic job in the country. I’ll be able to look [the PM] in the eye and tell him to back off.”
“I felt shamed by what I saw, shamed, shamed. I have such a sense of what the world must take responsibility for.”
On visiting Somalia in 1992, when, uncharacteristically, she broke down in tears
“In a society where the rights and potential of women are constrained, no man can be truly free. He may have power, but he will not have freedom.”
“Mrs Robinson means something private to Nick and I.”
On deciding to take her husband’s name not because it was traditional, but because she had to fight to marry him
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Brave new dystopia
Mar 12th
Patrick Blower: Livedraw: Imagining England along the route of the proposed London to Birmingham hi-speed rail when it opens in 15 years
Lehman Brothers collapse: what the FSA’s evidence reveals
Mar 12th
Documents show the concerns held by the Financial Services Authority about the ability of Barclays to maintain a big enough capital cushion if it proceeded with the takeover of Lehman Brothers
A series of intense transatlantic phone calls between US and UK regulators made during the frantic weekend that ended with the collapse of Lehman Brothers are detailed in the Financial Services Authority’s first documented account of the bank’s demise. The account is based on confidential information it would normally not have been able to disclose.
While the FSA chief executive Hector Sants refused to give evidence in person to a court-appointed US bankruptcy examiner, the regulator submitted written evidence which shows the US authorities made repeated attempts to convince the UK to change its rules to make it easier for Barclays to take over the ailing US bank.
The FSA said under UK law it would not have been able to make its submission public but that Barclays had consented to the release of conversations it held with the UK regulator that weekend.
The documents show the concerns held by the FSA about the ability of Barclays to maintain a big enough capital cushion if it proceeded with the ambitious takeover and the worry that even if the bank could satisfy the capital requirements “the aggregate level of risk might still be unacceptable”.
But they lso show Barclays decided not to make a formal bid as Lehman’s long-term liquidity position was uncertain and the US authorities could not provide a guarantee to support Lehman’s trading positions beyond the change of US president in January 2009.
The dilemma of how to deal with Lehman’s burgeoning liabilities before Barclays could formally complete the takeover – which, under UK listing rules, requires a shareholder vote, which can take months to organise – is at the heart of the calls made that weekend, before Lehman collapsed on Monday 15 September 2008.
The series of calls – which began on Thurday 11 September 2008 – culminated in an exchange at 3pm on Sunday 14 September – just hours before Lehman collapsed – between the FSA’s then chairman Sir Callum McCarthy and Christopher Cox, the chairman of the US Securities and Exchange Commission. In the call, Cox urged McCarthy to waive the listing rule which required Barclays to hold a shareholder vote on the deal and which would have taken weeks and left Lehman in limbo unless the US authorities were prepared to guarantee its trading positions.
McCarthy made it clear that there was no precedent for such a waiver and that Barclays had not asked the regulator to consider such a move.
Just two hours earlier, at 1pm, McCarthy had told Timothy Geithner – now the US Treasury secretary but then the president of the Federal Reserve Bank of New York – that without a guarantee from the Federal Reserve Bank of New York Barclays was faced with providing an unlimited guarantee of prior and future exposures of Lehman.
The documents show that on the Sunday lunchtime the “FSA remained concerned about whether Barclays could structure a transaction which would enable it to maintain the necessary core tier one capital ratio” but that the Barclays chief executive John Varley had telephoned Hector Sants, his counterpart at the FSA, at 4pm on the Sunday to admit that Barclays had decided the deal could not be done.
Varley had told Sants of his bank’s ambition to buy Lehman on the previous Wednesday and had made it clear that the bank had three main criteria before proceeding with a bid:
• a high level of certainty of completion with the necessary support of the Federal Reserve to ensure this
• liquidity support from the Federal Reserve
• a discount on Lehman’s net asset values.
Sants stipulated that the FSA would need to know what impact the deal would have on Barclays’ liquidity and capital and that the regulator would “not countenance a drop in the Barclays core tier one capital” below the minimum set out by the regulator.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Keep porn out of politics?
Mar 12th
Lib Dem leader Nick Clegg has defended Anna Arrowsmith, a parliamentary candidate who runs an “adult entertainment” company (she also has an MA in philosophy). Do you think the porn connection will harm her electoral prospects?