May 2010 Archives
Whilst the censuring of the US cheese-to-gum conglomerate Kraft by the Panel was welcome this week, the latter pulled back from firing two-barrels at the firm and its advisors for misinforming investors during the takeover battle over its so-called promise to keep open the Cadbury Somerdale plant.
As I made clear repeatedly during the takeover saga, the 'Somerdale pledge' was never a credible promise given the needs for big job cuts after the takeover and given how far investment had gone in Poland.
Yet the 'offer' was repeated frequently by Kraft despite warnings from unions and others that more care was needed.
The Panel's decision to issue its first public reprimand for three years did trigger the welcome resignation of the Panel's new Director General, Peter Kiernan - who by the way had advised Kraft on the ÃÂ£11.6bn hostile takeover of Cadbury.
As predicted in earlier Post blogs (see here for example) Jaguar Land Rover announced today that it will indeed begin assembling cars in China.
JLR CEO Carl-Peter Foster said today that "we will need to manufacture at least two models in China... We'll take one to two years to set it up, but first we will need a partner."
That the raises the question of whether it is looking for a Chinese partner for a Joint Venture - as is often preferred by the Chinese government as a way into the market.
The move comes as no surprise; most auto firms produce near end markets and have operations in Europe, Asia and North America for example. And with China growing rapidly, and a middle class keen to gobble up JLR products, it makes sense for the firm to be there.
After the lift-and-shifts of MG Rover and LDV, the move East will raise fears in the UK of a further hollowing out of our manufacturing base, but JLR said today that the move into China is not a shift out of the UK, and that it is planning to take on an extra 1,000 temporary workers this year, linking to the start of Baby Range Rover (or 'Range Rover Coupe'?) production next year.
The stresses and strains are here again. (Not the Eurovision Song Contest on Saturday.)
The 3-month dollar Libor rate (the amount banks charge each other for short-term loans) has started a worrying surge. The London Interbank Offered Rate (LIBOR) for three-month loans in dollars has spiked yet again at 0.54 today. It will go higher.
The reasons for this may be many-faceted - but I think it is most likely to be much more simple: we are about to fall over a cliff again. A series of big banking collapses across Europe and internationally could be around the corner.
When I blogged last month that the UK taxpayers should have got their shares out of the UK banks while the holding was in profit, I did suggest this was a dead cat bounce and, lo and behold, we are in negative equity again. We would now make a loss.
The LIBOR situation is fed, I believe, by a new feeling out there that banks will actually be allowed to fail - this time. The moral hazard is now riding again.
I'm desperate to begin this blog with a self-indulgent comment on Dundee United's fantastic victory in Saturday's Scottish Cup Final, but I can't think of a way of sneaking in a reference without it seeming artificial or contrived. Ah well...on the assumption that we will retain the trophy next year, I'll just have to put my (tangerine and black, obviously) thinking cap on to see if I can manage to be appropriately subtle in 12 months' time.
In the meantime, I thought I'd pass comment on a story that may well have slipped unnoticed under your radar. All is not well north of Hadrian's Wall. The cause of the furore can best be summarised by this (genuine) headline: "Pro-England Mars Bars could be hard to stomach for some football fans". Yes, that's right - we're in "Chocolate bar shows shocking football bias" territory.
Now it's looking like the recession is over, I wonder if we are going to see the return of the flamboyant job title.
It's a well-known fact that during austere times, the sillier or more self-deluding your job title is, the more likely you are to be made redundant.
Post-recession, the new boy on the marketing job title block is:
'social media manager'
But is this is a silly job title or not ?
Read Chris Tomlinson's article about flamboyant marketing job titles in last Thursday's Birmingham Post
The First Test starts on Tuesday. Not against Bangladesh. But it is the Test day for Vince Cable: he will surely need to jump one way or the other.
For on Tuesday the Ecofin ministers meet to decide whether they are going to punish Hedge Funds by regulating them. This, part of a drive by right and left in Europe to take on the speculators. Will Vince be happy to be in the wrong team on this one?
Hedge funds are essentially vast pools of unregulated money derived from God-knows-what, from God-knows-who-or-where. Their lack of transparency is their raison d'etre. Don't be fooled by the title 'hedge fund'. That's there to make them sound respectable and astute.
Since the single biggest attraction of hedge funds is that they are...well... unregulated, the intention is to regulate them out of existence in Europe in their present form.
Are Cable and Osborne going to jump different ways? Will the coalition agreement force either's hand?
Well, what an exciting week!
At long last, we can expect the TV schedules to slowly get back to something like normality - and not before time, as this election has played havoc with the record facility on my cable box.
We are facing a massive financial crisis.
The problem is, the politicians and the media have their eyes on the wrong crisis - on a crisis which is pressing and needs attention, but neverthless the wrong crisis.
The real crisis is not the deficit. Most people agree that all the parties, broadly speaking, accept that the deficit over the medium term needs to be addressed. Yes, it will involve tax rises and austerity measures we weren't told about in the general election campaign.
That's not the crisis. It pales into insignificance next to the real crisis: we are about to undergo another banking collapse and a complete failure of the financial markets.
The French and the Germans know this and are readying themselves. The UK politicians have been holed up in a completely unreal election campaign and are unaware of what is about to hit them.
Pathetically, UK politicians, media commentators, business leaders, bankers, financiers and traders in this country have their heads in the election fall-out sand.
In an astonishing feat of infantile navel-gazing, they have spent much of the time since Thursday actually thinking that UK political developments need to be framed within the context of what the markets might think about it on Monday morning: laughable. On Monday morning, the UK deficit and judgments upon the weakness or not of the UK government will be a minor side-show.
The fact is, the markets are actually the problem, the markets are the crisis itself, not the deficit. They are out of control. They have lost control of actual economic reality and are about to implode, threatening not a 'double dip', but a depression. Only strong assertive action by politicians will deal with this. The markets will need to be tamed, not feared.
The bond traders, the derivatives dealers, the ratings agencies, the hedge fund managers and the bankers, following the decisions of governments around the world to save their sorry assets have actually merrily carried on as before and are in danger of bringing the whole edifice crashing back down. They will destroy themselves in the process.
Who cares who actually forms the next UK government and in what permutations? They've caught the wrong train. Global Financial Crisis Part 2 is about to hit. Advice to Clegg: give it to Cameron and keep out. You don't want the next 6 months on your watch.
Angela Merkel knows it. Nicholas Sarkozy knows it. Even some hedge fund managers know it. The impact of the Greek financial crisis on Thursday was the most important event in the UK, not the general election.
With the public sector, such as elected council members, chief executives and directors, we've done a Leadership Summit with Jonathon Porritt and all the 14 local authorities across the WM. We've presented evidences about what the competition is doing (Manchester, London, Leeds, Berlin, Amsterdam...), what we can learn, what the opportunities and risks are. At the end of the session, we identified several areas, such as procurement and civic leadership where we could work with them to accelerate changes. Jonathan Porrit reflected there was still a lot of work to be done with the public sector leadership in the WM...
Sustainability West Midlands (SWM), our regional version of the national sustainable development commission, is on the hunt to find the people who are driving the sustainability agenda and will help the West Midlands (WM) to create green jobs and meet its CO2 reduction targets.
Developing a low carbon economy is the herculean task of Dr Simon Slater, Chief Executive of SWM, who has to negotiate, persuade and influence on a daily basis leaders from both public and private sectors, and convince them to join with the other partners of SWM to help realise the positive and achievable vision for a low carbon economy for the region by 2020.