The News - According to Travellin Bob

I’m a bit of a news junkie really.  I can happily spend hours reading the BBC website, mainly the Sport section but also the News, as well as the Guardian and Independent sites, and comparing notes……that way you get a more rounded view of what’s going on, and the various prejudices from the individual hacks writing the pieces tend to cancel each other out.  I watch BBC World News a lot too – in many places I’ve been to it’s been my only English language tv station – and CNN from time to time (although it tends to be a bit too US-slanted for my taste, and in Mark McKay has probably the most irritating sports presenter in television history).    I know, I’m a sad bastard really…..

The other thing I enjoy is the Comments sections that frequently follow news items or blogs, and I’m continuously amazed at what people say.  Yahoo News is the worst offender – their reports tend to be badly written and essentially distilled from other sources like Reuters, AP or other news sites and papers: very little is original content.  But the comments!  Nowhere have I seen such an outpouring of ill-educated, semi-literate and xenophobic nonsense gathered together in one place!  No matter what the story (I use the term in its loosest sense) the Comments are bound to be flooded with anti-government abuse, racist hate-speech and pathetic attempts at humour that fail to crack a smile.  It never ceases to amaze me.

But it’s interesting to see some of the stuff being written.

Over the past couple of days for instance:

 

Another day, another banking scandal.

When all this financial crisis kicked off four years ago with Lehmans collapsing (and it’s incredible that it was that long ago!), a number of other banks, mainly in the US started panicking – as did the US government and regulators.  With good reason – Lehmans nearly brought down the US economy and its aftershocks were felt world-wide (and indeed continue to be so).  Had another bank gone belly up that would have been that, given the size and inextricably linked nature of the global economy nowadays.  All this led to a collapse in confidence in the banking industry, whose participants – and indirectly that includes me – are being portrayed with breathtaking inaccuracy and bile, as Evil Incarnate.  The knock-on effect has been a collapse in confidence in many economies, especially in Europe, where banks have had to be bailed out all over the place – Allied Irish in the Republic of Ireland, RBS and Lloyds in the UK, Dekia in Spain to name just a few.  That in turn has led to Ireland calling for an EU bail-out to avoid a national bankruptcy, Greece struggling for three years to avoid doing likewise, and Spain, Portugal, and Italy all waging their own battles.  Even Germany and France, the powerhouse economies in the EU, are struggling.  It’s a sorry state of affairs, not helped by politicians, of every flavour, whose main commonality is a breathtaking lack of knowledge and experience in a banking industry that they seem hell-bent on destroying, being unable to reach any kind of a consensus on what needs to be done to sort out the mess.

I’ve posted a few columns on here previously, defending bankers, and I make no apology for that now.  I completely agree that there are a great many people employed by banks who are motivated solely by greed, and whose actions have been indefensible, frequently encouraged by a prevailing culture, particularly in investment banking, that profitability is everything and will be hugely rewarded.  But the vast majority of bankers – whether at an executive level or behind the counter of your local branch – are pleasant and honest people, dedicated to providing a good and risk-free service to their customers, and to earn a reasonable wage to keep their families in food, clothes and housing.  So there has been a lot of completely unjust criticism leveled over the past years, and it shows no sign of abating.

Which brings me finally round to the story behind this subtitle.

One of the US banks that needed help when the shit hit the fan was an outfit called Bear Stearns.  They were an old firm, leading players in the major government bond markets in the US and elsewhere, and especially in the mortgage bond markets that were at the root of the Lehmans demise.  They were also criminally negligent, greedy, and liars.  I worked in their London office for a few years, back in the 90s, and I can safely say it was the most unpleasant three years of my working life, so the news that broke this week does not surprise me in the least.  There were people there at that time who would happily screw their own families to make a buck, and it was a culture that came from the Chairman down.  When the regulators and US government realized that the company  was about to do a Lehman, they also realized that following the similar near-demise of Merrill Lynch (another massive bank – and coincidentally former employer of mine) that was averted only by a government sponsored take-over by Bank of America, Bear too had to be saved at all costs to avoid the entire US banking industry (and hence economy) collapsing.  So they persuaded JP Morgan Chase to take over Bear Stearns – which they did, over a weekend.  It was clearly a rushed job, and in hindsight perhaps not done particularly well.

Because it turned out that when JPMC bought Bear, they saddled themselves with billions of dollars’-worth of mortgage backed securities that were, essentially, worthless.  Toxic is probably too kind a word to describe it.  It also became clear that there was a lot more of it around that Bear had managed to sell to its customers and other financial institutions, by misrepresenting the value and quality of the securities in question, and the supporting mortgage assets.  Let’s be honest here – by lying about the things.

And now, years later, it’s all come home to roost as the New York DA has filed a suit against JPMC for in excess of USD20billion in damages.  Now I feel very sorry for JPMC here – the crimes, when proven (as I’m sure they will be, should it actually get to court) were committed by people working for a company that essentially no longer exists as an independent entity, and who quite possibly are no longer employed by JPMC or anyone else in the industry.  And yet the blame, and of course vitriol in the blogs and comment sections, is being heaped squarely upon JPMC’s  corporate shoulders.  In an ideal world, JPMC would not have touched Bear with a barge pole – it’s hard to think of two banking organizations more polar opposite than those two – and would therefore not have become embroiled in this business at all.  The government and authorities who now seem intent on prosecuting them brokered the entire merger, and it seems to me hypocritical in the extreme to pursue this case. 

But pursue it they will, until an out of court settlement is somehow brokered – but whatever happens, JPMC will always be guilty in the Court of Public Opinion.

A Business Bank – just don’t let the Civil Servants run it!

And now today, the Right Honourable Vince Cable, the Business Secretary in the UK Coalition government, announced at his Liberal Democrat Party Conference that the government is to invest a billion pounds into a “business bank” to provide capital for new businesses, and hopes that a similar amount will come from private investment.   He says this is being done because businesses are finding it increasingly difficult to obtain capital from high street banks – which, given the amount of criticism that he and other politicians have been heaping upon them for the last few years is hardly surprising – so they need an additional source of funding.   Now in the old days, this additional source would have been – the investment banks.  Or the stock markets.  Or venture capitalists.  In fact, the very lenders who are now being pilloried and threatened with being regulated out of existence  

You see my point, I hope.  This constant ill-informed criticism of the financial services industry has made all of these traditional “additional sources” highly unpopular and seemingly untrustworthy lenders, even though they generally are not.   It seems that start-ups are now less than willing to go to such sources for their capital requirements, and conversely high street banks are less than willing to risk making an investment in a start-up company. 

It seems to me that we have now reached the point where Cable (and he has been consistently one of the most vociferous complainants in the anti-banker lobby) and other politicians should actually shut up.  Their criticism has made the lending business grind to a halt (the very thing they have been demanding for months should not be allowed to happen), and starting a business bank is an expensive and unnecessary course of action.   The government would be far better employed in helping re-build public confidence in the existing banking industry, and ceasing this constant carping would be a good start.   But I’m not going to hold my breath waiting for that to happen – politicians, generally speaking, seem more concerned with saying the right thing to please their constituents and retain their seat in Parliament than being seen to do the right thing.  The Court of Public Opinion would much rather see and hear criticism, no matter how ridiculous, of banking (or whatever happens to be the current pantomime villain) than see and hear praise or conciliatory actions.  As would news editors – it makes for far better copy.

The other issue with this business bank idea, it seems to me, is that as a government-sponsored bank it would presumably be run by civil servants – or at least civil servants would hold senior positions in it.  If that were not the case, then it would be just another bank, after all – and hence should be subject to all the problems that go with that status.  From a political point of view, God forbid that should be the case!  Frankly, after the third news story, that is the last thing I would want.

Over the past year or so, there have been a number of rail franchises up for renewal in the UK.  The most lucrative is the West Coast Mainline, run for the past several years (with increasing success and profitability) by Virgin Trains.  Recently, the bid process ended and the Department of Transport, in its infinite wisdom, handed the franchise to FirstGroup, a combined road and rail operator, effective December this year.  Virgin immediately lodged a protest and insisted that the numbers in FirstGroup’s bid didn’t add up – there was no way, said Virgin, that FG could spend as much cash on new trains and infrastructure and give as many cheap tickets without losing money hand over fist and compromising passenger satisfaction (and as a worst case go bust and require government rescue).    Sour grapes, yelled the Court of Public Opinion, you’re only saying that because you lost.  Rubbish, said the Minister of Transport (since replaced in a Cabinet re-shuffle), the bidding process was completely fair and above board and we awarded the contract to the company best able to provide value for money and quality service.  Undeterred, Virgin obtained an injunction preventing the handover until the bidding process had been reviewed again. 

Today their action was totally justified, as the new Transport Secretary scrapped the entire bidding process and contract, returning operations of the line to Virgin.  He cited serious errors made by the DoT in coming to their decision in favour of FG, suspended four civil servants directly involved in the process, stated clearly that there was no blame attached to any of the bidders (including Virgin and FG – there were two other losers) and that the cock up was entirely the Department’s fault.  He also stated that a total of GBP40million would be refunded to the bidders to cover the costs of their bid submissions. 

Let’s leave aside the question of how each bidder could spend an average of ten million quid preparing a document stating how they would run a railway line and make money as well as providing a good service (I can only assume that the likes of Deloitte’s and Accenture or other consulting firms were involved, and the bulk of these costs cover their fees).  Let’s also leave out the astonishing appearance of an apparently honest politician (not a hint of cover-up or trying to blame someone else here).   The issue I have is that it seems CIVIL SERVANTS got their sums wrong, and made completely the wrong decisions – and these are the sort of people Mr. Cable is presumably considering should be responsible for running a business bank, lending money.

You couldn’t make it up, could you?

I’ll sue you!  No, I’ll sue you!!

Finally, we have the continuing Phone Wars:  Apple versus Samsung (and anyone else who dares produce a roughly rectangular smart-phone that includes a touchscreen user interface).  This story is truly ridiculous, and again has been running a few years now.

Apple started it with their iPhone.  A game changer if ever there was one, and an idea that has taken the world by storm and changed the way we look at mobile phones for ever.  It was innovative and looked lovely, even if the first model was a bit clunky and unreliable.  The second was better, but initially had signal problems because of the way the aerial was positioned – Apple fixed it quickly, and successive releases have built on that design, adding new bits and pieces, and tweaking things here and there.  Being Apple, they of course charge a ludicrous price for it, and also being Apple (and hence uber-cool) everyone buys the things by the ton.  Incidentally, can someone explain to me how the new iPhone 5 can have an entry level model in the US priced at USD199, whereas in Malta recently I saw an old 4S (the preceding and now outdated and replaced model) was on offer at one store at a “reduced price” of EUR 499 – by my reckonings three times the American price – and you’re not even getting an up-to-date spec!

But since the phone’s introduction, other companies have come up with their own smartphones, and a lot of them are much better than the iPhone.  HTC, Nokia and (especially) Samsung with its Galaxy range have all come up with devices that look better, work better and often have much better functionality than the iPhone, which now looks boring and dated.  The screen is smaller, it looks less attractive and chunky, the picture quality seems less good than the others….the list of differences is long and getting longer by the release.  Apple’s response, rather than working hard to innovate and come up with something new and fresh to blow the opposition away as they did previously, has been to throw millions of bucks at the legal professions and launch lawsuit after lawsuit, alleging theft of intellectual property rights, patent infringements and God knows what else.  Samsung (Apple’s main target) has predictably responded by counter-suing on the same grounds. 

The results are interesting.  Whenever the case is heard in America, and in particular Apple’s own California back yard, they win the case – most recently a billion dollars was awarded against Samsung and a range of Samsung devices (mostly outdated and replaced anyway) banned from sale in the US.  Yet when the case is elsewhere (and they are going on all over the world – Europe, the Far East, Australia to name but three locations) then Apple tend to lose.  No-one seems to be winning outright, and sales seem unaffected.  The new I5 is the fastest selling new phone ever, but Samsung is still selling more phones globally than anyone else – unsurprisingly, because its flagship Galaxy S3 is a bloody fantastic piece of klt.

It all seems ridiculous to me.  How can you accuse someone of copying the shape of your phone and complaining its rounded rectangle breaches copyright?  Sorry, but for the most comfortable and efficient use a rectangle is the best shape to have and there are only so many ways of changing it.   To me, it’s like Adidas suing Umbro because the latter’s new football is round – well, yes, balls generally are.  Other complaints are concerned with way data is transmitted wirelessly – Apple say everyone else is copying them.  Analogy: Adidas complaining that Umbro’s valves (for pumping the ball up) is the same shape as theirs.  Touchscreen interface?  OK, tell me how else you can use of them without using your finger to swipe across the screen and activate something.

Crazy, absolutely crazy.   The only people happy about the situation are the lawyers, who are creaming off huge fees from all the participants – costs that are no doubt being passed along to the consumers, you and I.   And to what end?  Apple fanboys will still stupidly queue round the block for a week to get their grubby little mitts on the latest release, no matter how crappy it is…..because it’s an Apple, dude!  The rest of us  (dare I say the more sensible punters?) will probably look at a number of alternatives and buy the one we think best – be it a Galaxy S3, the HTC One (almost as good), or the Nokia Lumia 900 with its Windows 8 operating system.  Or something else entirely – Blackberry perhaps, or the  new Motorola Razr that looks pretty sexy. 

I’ll be interested to see what happens next after last week’s classic Apple fuck up (undoubtedly their worst ever).  The new iPhone 5 dropped Google Maps entirely from its range of pre-installed apps, and replaced it with its own version, Apple Maps.  The trouble is it doesn’t work.  Users have bombarded the company with complaints because the maps are totally inaccurate and hence useless.  There have been reported errors like the London Eye being relocated to the Welsh coast, and Stonehenge to the centre of Edinburgh.   This all forced Paul Cook, the Blessed Jobs’ replacement as CEO, to issue a statement of apology in which he blamed software glitches (no, really?) and recommended that people use “alternatives like Google and Nokia Maps instead”.  Say what you like about him, but Jobs would never in a million years have allowed something that serious and stupid to have happened.