If we think we've got problems with Fred the Shred!!

In the United States there is the ticklish $165m problem of retention bonuses for AIG, we have the smaller problem of the pension pot of Fred the Shred, who built and then destroyed Royal Bank of Scotland (RBS) with the help of a few others on the way. I am not that interested in the size of the pension pot but in the fact that business mogul and now new Labour minister Lord Myners ending up holding the pension pot baby.
I have read many an article extolling the gifts of Lord Myners and I remember seeing him in the City of London holding two enormous briefcases followed by a PA holding more stuff. That is how important he was. Now, Lord Myners has been left holding the baby and that is something British civil servants are there to prevent. However, in these rarified circles, everyone has amazing pensions, Fred the Shred, Lord Myners and especially the civil servants.
Lord Myners has found out the hard way about politics. He has to take the can for a relatively minor detail in the scheme of things while his political bosses can escape more major indiscretions. Lord Myners will have found he has a raft of political enemies and quite a few are probably located in the Treasury.

Zombie banks!! Don't you just love them.

There seems to be more alarm over the Zombie banks in the United Kingdom than about the paying of RBS pensions to Fred the Shred and Lord Myners etc. It was thought that one of the main factors of the deflation or lost decade in Japan was the failure to clean up the balance sheets of the prinicipal banks. These were stuffed full of bad debts and stopped the Japanese institutions lending to businesses.
The situations are not strictly comparable in the sense that the Japanese property bubble was so big.
However, in the UK there is a marked reluctance of the main banks to confess to the full range of lending horrors. Negotiations between the UK Treasury and Lloyds Banking Group have stalled. The CEO of the British bank, Eric Daniels, is apparently trying to keep the state's shareholding at below 50 pct. He does not want to suffer the fate of Royal Bank of Scotland (RBS), which will be 95 pct owned by the UK Treasury.

I should not be too pessimistic about UK bail-out

In recent posts I might have been overly acerbic about the non-elected Lords and Ladies, who are leading the bailout of the British economy and its banks by
HM Government. On reflection I would have to say Lord Myners, Lord Turner and Baroness Vadera know what the problems are and are working hard to resolve them. However, I must admit that I have changed my mind about the UK Chancellor Alistair Darling. Originally, I thought he was just a stooge of Prime Minister Gordon Brown but he has worked hard on the rescue packages. Apparently, Darling has earned a grudging respect from the business sector.
www.searchaccountant.co.uk
I also thought for a long time that Bank of England governor Mervyn King should have been sacked. Crimes include being an Aston Villa fan and letting Gordon Brown cronies infiltrate the monetary policy committee. However, King has eschewed the normal delphic comments of central bankers and has said it as it is. He warned about possible bank nationalisation, which has virtually happened at the Royal Bank of Scotland (RBS). He also exercised the power, rarely exercised, of central bankers to talk down the currency. Probably, this was useful in terms of reviving the economy, since it will take time to produce effects.

Am I just being hysterical over national bankruptcy?

Today Lord Mandelson is saving the foreign-owned car industry in the United Kingdom.
Long-term the car industry would always relocate to where the customers are and that is basically China and the Far East. Unfortunately, you don't want the industry to relocate now given its ability to create direct and indirect jobs. I am sure Tata would prefer to make Jaguars in India and that was the original plan behind the acquisition of the UK manufacturer from U.S auto group Ford.
So am I just being hysterical over Albion going bankrupt, if long-term the country is not going to have a car industry with all of its exports and R&D?
I read a brilliant article by Roger Bootle in the Daily Telegraph rebutting UK bankruptcy but if you read economic commentators around the world they are arguing that major economic shifts are happening. For instance, Western living standards are going to decline and savings rates will return to normal levels, even in the United States. Things are serious when President Obama's Treasury Secretary is unpleasant to China about exchange rates.
www.searchaccountant.co.uk
I suppose Lord Mandelson, Lord Myners, Lady Vadera and Lord Turner are working hard to prevent UK bankruptcy. However,we are all hostage to how long the recession will last. Chancellor Alistair Darling has predicted a recovery in the second half of 2009 but if the recession lasts for longer then the pound could take some serious damage. I know it sounds suicidal but I would increase taxes now, which would ease the pain later on. This might lift sterling but to expect a manufacturing renaissance on lower exchange rates is just a delusion. I would try and encourage the retail buying of UK government bonds and gilts.