Today witnesses the resignations of both the Archbishop of Canterbury and the Chief Executive of the FSA.
God and Mammon at a stroke?
Friday, 16 March 2012
Monday, 5 March 2012
Tories urge Osborne to spend £25bn Royal Mail pension windfall
To smooth the way to Royal Mail’s privatisation, the £25bn pension fund is being transferred onto the Government’s books as an asset.
The ongoing pension obligation will be met from current revenue, ie taxation, and will not appear on the Government’s books as a liability.
How Robert Maxwell would have laughed.
The ongoing pension obligation will be met from current revenue, ie taxation, and will not appear on the Government’s books as a liability.
How Robert Maxwell would have laughed.
Wednesday, 15 February 2012
Scottish credibility
What is about the Scots these days?
Twenty years ago there was a popular music hall stereotype of Presbyterian frugality and even stinginess.
Today’s Scotsman spends uncontrollably, like a WAG on amphetamines, over-extending and ruining the Bank of Scotland, then the Royal Bank and now Rangers FC.
Should they achieve independence what will Standard & Poor or Moody’s make of their credit rating?
Twenty years ago there was a popular music hall stereotype of Presbyterian frugality and even stinginess.
Today’s Scotsman spends uncontrollably, like a WAG on amphetamines, over-extending and ruining the Bank of Scotland, then the Royal Bank and now Rangers FC.
Should they achieve independence what will Standard & Poor or Moody’s make of their credit rating?
Monday, 13 February 2012
Bonus row not anti-business?
It’s not every day that your GOM finds himself in a measure of agreement with Mr Miliband, but this time he surely does have a point.
Let’s put the argument for bonuses first.
Some people, under some circumstances, are motivated by them. Not everyone and not all the time, but they can make a difference to business outcomes.
Bonus schemes are not confined to fat cats. Traditionally salesmen, factory workers on piecework and a host of people on modest earnings have a component of their take home pay based on “results”.
Bonus payments based on bottom-line business results represent an efficient way of controlling employment costs. When profits rise, pay rises. When profits fall, pay falls. It’s simple and good for business. (Note that this argument does not apply in the public sector.)
On the other hand.....
There is no established psychological relationship between output and the input, between the quantum earned and the effort put in. It’s not clear that people on sky-high packages work any harder or smarter than their predecessors on more modest incentives
Bonus schemes which are based on complex packages of results often do not make a lot of sense to the layman, the investor or the accountant. The increase in the level of bonus earnings of investment bankers over the last 20 years is a huge multiple of the increase in profitability or share price. One winner but lots of losers.
Some incentive schemes encourage behaviour that can be very damaging in the long term. Andy Haldane of the Bank of England has recently put forward a compelling argument that incentives based on RoE (Return on Equity) rather than the more inclusive RoA (Return of Assets) are in part responsible for the banking crisis.
The pay aspirations of the fatter cats are increasingly based not on absolute performance, but on perceptions of relative worth (by comparison with peers). Benefit consultancies use comparative (top quartile) indicators as the basis of their recommendations. This is logically inflationary.
So some bonus schemes, some of the time, can be “bad for business” if by that we mean bad in the long term for the investor, the middle-ranking employee and even the customer.
But all this is too rational. Much of the current furore is not about the principle at stake but the quantum. The gap between the highest earners and the median has gone skywards, and no-one has found a convincing argument to justify what looks like piracy. And as long as it looks like piracy, walks like piracy and quacks like piracy, it will be judged to be piracy and public opinion will put other values ahead of what may or may not be good for business.
After all it was ultimately public opinion that led to the abolition of slavery, and there were plenty of people around then who argued that this would be ruinous for business.
Let’s put the argument for bonuses first.
Some people, under some circumstances, are motivated by them. Not everyone and not all the time, but they can make a difference to business outcomes.
Bonus schemes are not confined to fat cats. Traditionally salesmen, factory workers on piecework and a host of people on modest earnings have a component of their take home pay based on “results”.
Bonus payments based on bottom-line business results represent an efficient way of controlling employment costs. When profits rise, pay rises. When profits fall, pay falls. It’s simple and good for business. (Note that this argument does not apply in the public sector.)
On the other hand.....
There is no established psychological relationship between output and the input, between the quantum earned and the effort put in. It’s not clear that people on sky-high packages work any harder or smarter than their predecessors on more modest incentives
Bonus schemes which are based on complex packages of results often do not make a lot of sense to the layman, the investor or the accountant. The increase in the level of bonus earnings of investment bankers over the last 20 years is a huge multiple of the increase in profitability or share price. One winner but lots of losers.
Some incentive schemes encourage behaviour that can be very damaging in the long term. Andy Haldane of the Bank of England has recently put forward a compelling argument that incentives based on RoE (Return on Equity) rather than the more inclusive RoA (Return of Assets) are in part responsible for the banking crisis.
The pay aspirations of the fatter cats are increasingly based not on absolute performance, but on perceptions of relative worth (by comparison with peers). Benefit consultancies use comparative (top quartile) indicators as the basis of their recommendations. This is logically inflationary.
So some bonus schemes, some of the time, can be “bad for business” if by that we mean bad in the long term for the investor, the middle-ranking employee and even the customer.
But all this is too rational. Much of the current furore is not about the principle at stake but the quantum. The gap between the highest earners and the median has gone skywards, and no-one has found a convincing argument to justify what looks like piracy. And as long as it looks like piracy, walks like piracy and quacks like piracy, it will be judged to be piracy and public opinion will put other values ahead of what may or may not be good for business.
After all it was ultimately public opinion that led to the abolition of slavery, and there were plenty of people around then who argued that this would be ruinous for business.
Wednesday, 21 December 2011
Gregg's knowingly undersold
In some parts of the UK, Gregg’s is the luxury option. “Pound…” is now the branding prefix of choice.As part of our regular contribution to the end-of-year economic stocktake, GOM is pleased to bring to the attention of the nation his eagerly anticipated annual Mince Pie report.
In 2009 GOM concluded that Greggs' pricing power had become more prominent; and that the offerings of Konditor & Cook were not three times better than Gregg's. Scroll forward to 2011, and the floor has been lowered.
The strategic drivers of the mince pie industry are commodity prices, labour rates and availability, premises costs and, above all else, asset utilisation. The killer strategy is asset utilisation. Get them in your shop and then sell them a cup of tea for 80p.
Mince pies December 2011
Pret a Manager
Price each: 1.25p
Price 11/ 08: no price benchmark for 2008 available
Light pastry case, not the usual biscuity crumb; pastry star reinforces communistic branding; vague dusting of icing sugar; more pastry than filling; filling moist but not liquid, not excessively sweet nor too tart, fat currants, hint of spice
Konditor & Cook
Price each: £1.00p
Price 11/ 08: 112%
Case is convincing pastry that has been acquainted with a rolling pin; thin & light case with satisfying fatty flavour; mincemeat maybe lacking spice & seasoning, not moist, no distinguishable individual items of fruit
Sainsbury's Taste The Difference
Price each: 29p (if 12 are bought)
Price 11/ 08: 86%
Fetching star-shaped aperture in centre of top, rather reminiscent of PaM; rather too much biscuit crumb; distinct aroma of brandy; fat, moist fruit; overall effect is of dough rather than mincemeat; not light; pie is more rigid than foil container
Gregg’s
Price each: 30p
Price 11/ 08: 111%
Moist filling; reasonably tart; case a bit more like pastry; slightly malformed with 30% slope; presentation not particularly uplifting; dusting of icing sugar; sold individually; paper/ cellophane bag; cold shop
Pound Bakery (branches throughout North West England)
Price each: 25p (4 for £1)
Price 11/ 08: no price benchmark for 2008 available
Adequate; possibly handmade; not as good as Gregg’s, but cheaper; and tea or coffee for 80p
The research was conducted between 5 and 21 December by our highly-trained, fearless field force of mince pie inspectors.
Monday, 19 December 2011
Thursday, 15 December 2011
RBS makes case for Eurozone membership
A letter in today’s Times asks (of the failure of RBS) “what compensation will be paid to the taxpayers, private investors and pension funds that have lost millions…?”
One can only assume that this is an ironical question, since the compensation could only come from the taxpayer, and would represent in moral terms a very quaint form of redistribution.
The fact is UK banking will remain too large to fail and therefore be accountable for failure until we are part of an economy that has other revenue-producing industry sectors of similar scale.
It is, sadly, hardly likely that the UK will develop such industries in our or our childrens’ lifetimes.
Is this not the best, if most humiliating, reason why the UK should be part not only of the EU but of the Eurozone itself? The UK’s version of unrestrained capitalism and an ineffective political oversight have led to the loss of control of both our moral compass and our financial future. For the worst possible reasons membership of an industrially diversified Europe is our only hope.
If they’ll admit us.
One can only assume that this is an ironical question, since the compensation could only come from the taxpayer, and would represent in moral terms a very quaint form of redistribution.
The fact is UK banking will remain too large to fail and therefore be accountable for failure until we are part of an economy that has other revenue-producing industry sectors of similar scale.
It is, sadly, hardly likely that the UK will develop such industries in our or our childrens’ lifetimes.
Is this not the best, if most humiliating, reason why the UK should be part not only of the EU but of the Eurozone itself? The UK’s version of unrestrained capitalism and an ineffective political oversight have led to the loss of control of both our moral compass and our financial future. For the worst possible reasons membership of an industrially diversified Europe is our only hope.
If they’ll admit us.
Subscribe to:
Posts (Atom)
