9 November 2017

A Lens on the Week

UK

SEX SCANDAL: Just six MPs and one official!  The list of Labour activists subject to sexual allegations is much shorter than the list of Tories.  Goodness knows why.  Perhaps they haven’t got to the bottom of it all yet or perhaps Labour members are too busy reading socialist texts to misbehave.  Or is the wine served at Labour functions just not good enough to make you want to drink too much of it?  Those who read the lists will have their theories but the interesting question is why there are separate lists at all.  Take the Tory list as an example.  Someone took the trouble to pull together a list of largely unverified allegations against MPs and officials and they can hardly have done so without stumbling across allegations about members of other parties.  Those, however, they decided to leave out.  Why?  It makes you wonder why they decided to publish the list in the first place.

One possibility is that the purpose of publishing was to protect women.  That would be laudable, typical of the public spirit which runs through the veins of the political class, in tune with statements made by some of the victims who have bravely if tardily spoken out.  But if that is so, why the focus on a single political party?  Surely everybody who has been indulging in sexual bullying would be on the list.  It is not that then.

The alternative is that there is a political motive.  If the list had been published by the Labour party or the Lib Dems that would be the obvious answer but we are told that it was compiled by Conservative researchers.  What did they stand to gain?  Did they have a burning grudge against their own party?  Had they themselves had some unpleasant experience in the loos?  Were they paid by the press?  By the Russians?  It is all very odd but there is a story there and in the febrile state of Westminster that story will eventually come out.

OFFSHORE MONEY: The press must be having a wonderful week. There is another scandal in the offing with the suggestion that the Duchy of Lancaster which funds the Queen invested money in companies set up in offshore tax havens.  The report in The Times is careful to say that the Duchy obeyed the law and acted properly, and without the Queen’s knowledge.  What it doesn’t say, however, is that many forms of investment fund have to be set up offshore on the basis that UK investors in those funds pay full UK tax on any profits they make.  There the usual reason for investing is to take an interest in the assets of the fund, not to steal a march on HMRC.  Of course the muddling up of participation in investment funds with tax avoidance arrangements may just reflect the difficulty journalists have in grappling with the technicalities.  On the other hand the press would do anything to push up circulation at the moment and mixing the truth with flashy but misleading allegations is the sort of stunt we have come to expect.  Maybe they and those Panorama people ought to be regulated?

 

International

CATALUÑA/CATALUNYA: Señor Rajoy in Madrid and Senyor Puigdemont in Brussels continue to play their game of tactical blunders.  Coincidentally, the match between the UK’s Michael Adams and Poland’s Radoslaw Wojtaszek in the European Team Chess Championship currently taking place in Crete featured the Catalan Opening, described by The Times’ chess correspondent Raymond Keene as “a variation that is problematic for both sides.  The advantages and disadvantages are so subtly nuanced that the slightest inaccuracy by White can lead to the instant dissolution of White’s natural advantage from the opening phase, resulting in sterile equality.  Conversely, any almost imperceptible slip by Black can convert a slight inferiority into a nagging permanent disadvantage.”  Thus, hidden away on the MindGames page of Times2 last Tuesday, Mr Keene inadvertently made the week’s best political comment (outside of Shaw Sheet), and probably the best comment on the whole Catalan saga so far.

SAUDI ARABIA: How Señor Rajoy must wish that he was Crown Prince of Saudi Arabia rather than prime minister of Spain.  While Mariano Rajoy sits and frets, waiting for Belgium to decide what to do with Carles Puigdemont and the four other Catalan ministers wanted in Spain on charges of rebellion, sedition and embezzlement (they were spared custody by a Belgian court last Monday), Crown Prince Muhammad bin Salman of Saudi Arabia launched an anti-corruption campaign which immediately led to the imprisonment of 38 of the country’s richest and most powerful figures – princes, businessmen and ministers.  (Two more princes have reportedly died, allegedly while resisting arrest.)  True, the Spanish authorities have at least managed to imprison eight Catalan ministers, and the Saudi accused are being detained in a luxury hotel rather than in a dank dungeon, but the Crown Prince is still way ahead of the game, especially if those accused of corruption are also political rivals and opponents of reform, as some critics claim.

FOOT-IN-MOUTH DISEASE: President Trump’s calls for severe punishment for Sergeant Bowe Bergdahl (on trial in a military court for desertion in Afghanistan) backfired when Bergdahl was given a dishonourable discharge instead of a long prison sentence.  The judge considered the president’s comments to be a mitigating factor in the sentencing, and the defence called them “an unprincipled effort to stoke a lynch mob atmosphere” which “cast a dark cloud over the case”. Similarly, Trump’s tweets demanding the death penalty for Sayfullo Saipov, the man accused of last week’s New York terrorist attack, will make it harder for a court to pass such a sentence, according to a number of former federal prosecutors and other legal experts who say that such attempts to prejudge the case make it more difficult to ensure that justice is done.

At a parliamentary foreign affairs select committee meeting last week, Boris Johnson suggested that Nazanin Zaghari-Ratcliffe, the British Iranian woman arrested and imprisoned in Iran last year, may have been training journalists in that country.  However, Mrs Zaghari-Ratcliffe, who was arrested on mysterious spying charges and tried in a closed court, has always insisted that she was simply on holiday in Iran, visiting her parents with her child. She lived and worked in the UK as a charity project manager at Thomson Reuters Foundation, and neither her job nor the organisation is involved in training journalists.  But it seems that the authorities in Iran have seized on Boris Johnson’s comment, however ignorant or misinformed or simply careless it may have been: three days later, a court hearing informed her that a new case against her has been opened, as training journalists could amount to “propaganda against the regime”, a charge which could add another five years in prison on top of the five years she is currently serving.  Ironically, Boris Johnson was replying to a question asking what the government was doing to help her.

 

 

Business

BIGGER – BUT BETTER?  The era of challenger banks – those specialist banks that arose post crash, with much encouragement from the Treasury and regulators alike, seems to be moving into a new phase; possibly the end game.  The concept seemed a good one – new specialist banks with no baggage from banking disasters who would be real competition in terms of service and products to the big old banks – and small enough to be allowed to fail.  Several made good progress – particularly Aldermore and Metro Bank, and TSB, spun out of Lloyds, but others faced serious competition, especially on the business finance side from non-bank funders – insurers, debt funds, and peer to peer lenders.  Royal Bank of Scotland tried to spin its Williams and Glyn’s business out as a specialist regional challenger bank (a big one) but when that failed it established a fund to help other challenger banks with liquidity and funding.  That apparently has had no great success; not least because the challengers have become prey for others.  TSB went to the Spanish bank Sabadell who wanted a beachhead in the UK, Shawbrook to a couple of hedge funds, and now Aldermore is to be sold to the largest South African bank, FirstRand, also looking to diversify into the UK.  The price agreed is £1.1bn, based on a share price which has risen 75% this year, no doubt tempting the shareholders to take an attractive profit.  Aldermore will continue to expand with the benefit of FirstRand’s systems and capital – and FirstRand’s existing business, MotoNovo, a car leasing financier, will come under Aldermore’s wing and utilise deposits from Aldermore’s sterling base.

OIL SWINGS HIGH: The oil price has moved into a new range over the last few days.  The market has in recent years seen short sharp price movements and then periods of stability, trading within new ranges.  So we have seen the $100 a barrel plus era, followed by a rout as the price descended a staircase to the $20 era; and back up again in steps to a range around the mid $50’s. Now the price over the last two weeks has breached $60 and is still rising – $64 at the time of writing.  The immediate cause is plain to see – potential turmoil in Saudi Arabia as the reforming Crown Prince cracks down on corruption in the kingdom and, more dangerously, has to deal with political dissent to his reforms.  That is worrying the oil market which thinks that there may be disruptions to the Kingdom’s oil supplying role – and also that the Crown Prince may be looking at the strategy of OPEC, the oil supply semi-cartel in which the Saudi’s play a leading role.  OPEC has been cutting supply (in cooperation with Russia whilst it does it) but economic growth around the world means that demand for oil has grown.  The question, as always, is can the price be pushed up further if supply is held down?  In the long run, certainly not – alternative power supplies and western shale and fracking will put a cap on that, but if it can be done in the shorter term, then there will be a big boost to the Kingdom’s finances (and Mr Putin’s).  The oil analysts are in two minds as to what happens next – the American market could very quickly pump more oil from Texas and from the shale fields, as could the Norwegians; and the US has large coal reserves for power generation; but OPEC members are now seeing the benefits of supply restrictions and the cartel may hold this time.  In which case the next barrier is $70; maybe fill your central heating oil tank now…

 

 

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