The King's Speech

Last night I was fortunate enough to attend a screening in New York of the new film from the Weinstein Company, "The King's Speech" with lead actor Colin Firth. The film brings to light a little known part of British history with flair and humanity, depicting the reluctant King George VI in an era before internet and television having to speak publicly as the Second World War approaches - except for one small issue - a chronic speech impediment. Geoffrey Rush plays the Australian speech therapist who works with the King as he grapples with his personal demons against a backdrop of political and royal turmoil - Neville Chamberlain's resignation and the abdication of Edward (for Mrs. Simpson).

I personally see Harvey Weinstein as the cinematic equivalent of an Irish race-horse trainer or boxing promoter, possessing a keen eye for what the Academy voters will choose early in 2011. One of his more recent films, the reader garnered Kate Winslet an Oscar - and I am sure the performance of Colin Firth will result in further trophies for the cabinet, unless the voters adopt an overwhelming feeling of xenophobia.

I personally see a deep irony in the timing of the film against the domestic backdrop of US mid-term elections. Barack Obama may have been the choice of the people in 2008 and a massively gifted orator, however he is facing the test of all politicians - that of learning to cope with no longer being adored.

King George VI was born into his position, could not string a sentence together - though succeeded with help from an unconventional source to articulate the strongest of arguments at a historic moment. Perhaps the recent departures from the White House roster of the 'great & the good' may lead to the discovery of help from a similar, unconventional source ahead of the 2012 General Election.

"It's all about the economy" redux - US Mid-Term elections outcome 2010

The US Congress has been lost by the Democrats affecting dramatically the ability of the Obama Presidency to continue its agenda of change. Congress is now split 185 (D) to 239 (R) seats. The US Senate 51 (D) to 45 (R).

It seems strange to consider it barely two years ago that the Democrats under their new President seemed able to fundamentally shift American politics and the distribution of wealth by the state.

Fears concerning the state of the economy impacted on suburban young professionals who flocked to the Obama banner in 2008. The elderly concerned about potential harm to their health-care entitlement or their pensions drove them to the ballot box. The first time youth vote which Obama captured in 2008 gave the Democrats cause to lay claim to a 'multi-million email address list' which could be mobilised at grass-roots level to continue the change agenda. Last night, as one CNN political talking-head put it, "that mailing list is out of work and probably changed address".

The Wars in Iraq and Afghanistan were not crucial to this election - the armed forces seem removed from the fray and national security is not playing as an issue this time around.

The tea-party influence on certain candidate selection for Senate seats cost the Republican Party dear - they could almost of reached parity with the Democrats were that not the case. 'celebrity' candidates in California were also swept away.

Personally, this is not a fatal wound to the re-election chances of President Obama. Replacements for departed members of his administration need to come out fighting - though with a modicum of common-sense - to get a compromise health care bill. This, coupled with further deterioration in Afghanistan/Pakistan could put him in the 2012 position of fighting an unsuccessful war abroad and failing to make change at home.

The Republican Party need to understand how to harness the Tea-Party and deliver on their promises without losing the center-ground for 2012.

Just the kind of criticisms leveled at the previous incumbent on completing two terms of office...

Restoration Hardware: Needs to shelve its IPO & stock option realisation ambitions to focus on actual 'Hardware'

Recently an article in Reuters indicated the desire of furniture company, Restoration Hardware to seek a stock market listing (IPO) in 2011.

Restoration Hardware seems to have a small problem - namely a lack of inventory of the hardware which it seeks to sell an eager customer base. A second time around customer of Restoration Hardware, I ordered furniture which I was led to believe could expect to have delivered in a couple of weeks back in September 2010, which is now drifting into mid-December 2010 - leaving me decidedly unfulfilled.

The disconnect between the sales & marketing operation and 'customer fulfillment' becomes even more clear when engaging with the curse of the early Twenty-First Century, known as "customer service". Customer service in this instance will not actually inform customers of delivery dates unless you question them like an attorney - and on a repeat basis. Either they are part of a scam to misinform customers or else they are left carrying the can without adequate management information to inform. Bad position.

I think the senior management, who obviously stand to gain from an IPO personally, need to get their operations right. Prospective stock analysts need to think seriously about the inventory disconnect - it may make for a good graph regarding forward orders to sell potential investors in the stock. However, the reality is that the thick glossy catalogue of furniture is not matched by an ability to buy.

Perhaps Restoration Hardware intend to stick it to institutional and smaller investors by creating a fake demand curve, fulfilling it and then cashing out without having concern for the long-term viability of their company ? Another implication of having the corporate headquarters in California could be to inculcate a laid-back culture - precisely when the management needs to be hard-hitting and engaged. Not time for trips to the wine country...

Recently I overheard a restauranteur complaining he had bought and paid for a display piece of furniture for a hot new restaurant and has been left waiting for delivery. Frustrated, he threatened to send his team into the local branch to remove the sample whilst brandishing the paid for receipt. The staff indicated they would call the police - and who would be at fault ?

Whilst the Restoration Hardware idea, product and design is hot, the execution is not. Try harder.

Editorial: Commentary on the unveiling of SDSR Resource outcomes

Editorial: Commentary on the unveiling of SDSR Resource outcomes
October 19th, 2010

Prime Minister David Cameron unveiled the outcome of the Spending Review for the Ministry of Defence in the United Kingdom earlier today.

A scorecard approach to the key points covered by the BBC News website runs as follows;

* "8% cut in real terms" - Does this exclude the MoD running over budget by approximately 10% ? If not, then the cuts are approximately 20% and this exercise represents political theatre.

* "RAF and RN numbers to be reduced" - For the RAF closing bases reduces headcount and is desirable - in the end aircraft availability is the only criteria for size. For the RN it is a little more problematic (as outlined below).

* "HMS Ark Royal will be decommissioned four years early" - The issue for the RN is how will they staff properly the new carrier(s) when they finally come down the slipway ? As usual there is more 'lust' in terms of wanting the capability than there is through-life management.

* "Surface fleet cut from 24 to 19" - A graph drawn for me a few years ago during a meeting a main building showed the trend in the fall of the Fleet since the 1960s - the logical outcome was a surface fleet of 16 - you read it here first ! The key question is how do you protect the carriers and replenishment vessels - with a couple of ships (best case) in dry-dock at a time seventeen ships covering 70% of the Earth's surface is challenging.

* Astute untouched - VERY good news as they will be key for special operations, surveillance and producing effect.

* "Trident delay" - Tolerable as long as the Astute drumbeat can be synchronised to ensure minimal loss of manufacturing skills (and pressure from the supply chain to maximise profit). The reduction in warheads is interesting and suggests cutting the numbers to fit a stretched Astute SSBN design. Vanguard has 16 missile tubes, each capable of carrying 8 warheads (under the START Treaty) implying each missile has 3 warheads. 40 warheads implies 10 tubes each with four warheads and associated shrinkage of the vessel's length (plus some simplification in terms of engineering and obviously, cost). That said Personally this Editor would favour stretching Astute acquisition using nuclear tipped Tomahawk TLAM missiles.

* Closure of RAF Kinloss and Nimrod to be retired - Sad news for the Scottish community - and no doubt the lack of Conservative support was an issue. Nimrod is technologically being outpaced by the likes of the Global Hawk UAV, and time needs to move on. Political pain around the tragic loss of a Nimrod in Afghanistan likely contributed to the decision to retire.

* Harrier retirement and Tornado part retirement - RAF should shed themselves of Tornado at a faster rate than Harrier. This move smacks of a play by the Air Marshals given Harrier is a joint force. Losing Harrier substantially ahead of JSF introduction will kill the skill level of the Fleet Air Arm operating from the new CVF. Very shortsighted from a joint perspective, good play by the perfidious Royal Air Force.

* Extra Chinook helicopters - Simply excellent news - bringing these to bear quickly is essential.

* reshaping the Army - the loss of 7,000 troops is obviously headline grabbing though difficulties with recruitment made the 100,000 target unobtainable. Rethinking the balance between 'ordinary' soldier and SF generation is crucial to ensuring UK usefulness to its Allies given numbers are simply not happening.

* The fall from six deployable brigades to five leaves only two brigades deployable (on the basis of a third in training, third on deployment, third preparing for Ops) - unless defence planners are treating the three Royal Marine Commandos as a sixth brigade - retaining their own independence in return for playing ball with the Army's deployment schedule ?

* MBT Tank and Heavy Artillery reductions - UK needs to retain skills for high intensity warfare even if it is not on the immediate horizon. A sensible move given the FRES programme was superceded by incremental acquisitions. Replacing Challenger is a big issue and how.

* Reductions in MOD civil servants - challenging insofar as the defence community is increasingly concentrated in areas which have little alternative employment - internal political manoeuvring is going to water this down unless the Government moves fast or keeps its eye on the ball.

UK SDSR Defence Review outcomes - a matter of arithmetic - 18% or 8% ?

UK SDSR Defence Review outcomes - a matter of arithmetic - 18% or 8% ?
Monday 18th October, 2010

There is much being trailed as to the release today by Prime Minister David Cameron as to the outcome of the review of resources devoted to the Ministry of Defence. Traditionally the Conservative Party are keen to be seen as strong and safe on defence and foreign policy. In an environment where substantial cuts are being made across government showing a grip on the issues, especially for a new administration is key.

Which probably explains why the Departmental minister has been sidelined by No.10 which has taken strong control (through the Cabinet Office) of the defence review process. press sources are already trailing the following adjustments to UK force structure;

* Retirement of the VSTOL Harrier (known as the AV-8B by the US) jump jet (CityAM)
* Retirement of HMS Ark Royal (Aircraft carrier and flagship of the Royal Navy) (BBC)
* Reductions to the strength of the British Army of the order of two brigades (7,000 troops) (CityAM)

The consensus which appears to have been trailed to the UK media and which seems uncontested by the Opposition is that cuts to the budget will amount to some 7-8% versus some 20% in other Government Departments (excluding health).

Given that insiders acknowledge off-the-record that the MOD budget has been running some 10% beyond its resource level this would imply a 10.0 + 8.0% = 18.0% reduction.

Hence the need for the PM to lead this announcement. What this means for UK 'Grand Strategy' remains to be seen as the National Security Strategy (NSS) seems to be headlining on the threat to UK global interests from cyber attack.

UK Releases NSS review document: A Strong Britain in an Age of Uncertainty: The National Security Strategy (Cm7953)

UK Releases NSS review document: A Strong Britain in an Age of Uncertainty: The National Security Strategy
October 18th, 2010

Ahead of the release by the Prime Minister of the outcome of the SDSR Defence Review in the House of Commons at 1530hrs GMT (0930 EST) came the release of the foreign policy-led component known as The National Security Strategy (Command Paper Cm7953). A few comments jump off the page at first pass;

The foreword at the outset refers to Britain being both more secure and more vulnerable then ever before which seems to automatically question the logic of cutting resources to security needs. If national security assets are an insurance policy then Britain seems to be going down the "third party, fire & theft" route.

Page four sees The United States of America listed atop that of the international network of alliances, followed by the EU and NATO.

Page five refers to equipment acquisition rooted in the mindset of the Cold War.

KEY POINT: Page nine, a definition of the National Security Strategy of the United Kingdom, "to use all our national capabilities to build Britain's prosperity, extend our nation's influence in the world and strengthen our security. The networks we use to build our prosperity we will also use to build our security".

Page eleven identifies the top four threats in the next five years to UK security; terrorism (including CBRN (i.e. WMD) usage) and interesting flags Northern Ireland as a flashpoint, cyberattack, military crises and major accident or natural hazard.

Page thirteen identifies withdrawal from Afghanistan in 2015 - towards the end of the next US Presidency, and to the end of the first term of a Cameron Government, should the Government go the full five years before seeking re-election.

page fifteen (section 1.15) identifies the need to broaden out UK relationships beyond dependence on the USA and the world becomes more multi-polar.

page twenty-two (section 2.11) reaffirms the UK view of the Special Relationship - "Our strong defence relationship with the US... is exceptionally close and central to our national interest".

page twenty-seven - illustration of a 'risk register' of 15 major risks - which will be reviewed and updated biannually. The methodology (which is a two-by-two "impact:likelihood" matrix standard to any management consultant) is printed on page 37 for those unfamiliar.

Crystal ball gazing and the 2010 UK coalition government

Westminster is rising for the summer after a year where the depth of the fiscal deficit has risen to the top of the political in-tray and a new coalition government of the Conservative Party under David Cameron and Liberal Democrats of Nick Clegg has gone away to make some very difficult decisions.

The Labour Party are clearly out of the picture at present, with a leadership campaign prior to the autumn party conference being the only item of business before any serious opposition to the coalition can be made.

Once the new Labour opposition team are in business obviously their attention will fall on spending cuts, social welfare services and exploiting any potential rifts in coalition ideology (Europe being the obvious one).

The Liberal Democrats are in the trickiest position. Wooed with Cabinet seats and committee chairs to keep them tied in they will face the pain of their council officials. Long the "party of local government" the Lib Dems are going to be backing major cuts to social services which will weaken their support at elections downstream. Europe, Defence and electoral reform will put the parliamentary party in the difficult position of either abandoning manifesto commitments to keep cozy ministerial jobs or be seen as Weak. Handled poorly, this coalition could haunt the Liberal Democrats for a generation.

The Conservatives are looking most comfortable though perhaps ironically individuals look somewhat more shaky, especially messers. Cameron and Osborne.

For George Osborne, the spending review this autumn will be the defining moment of his time as Chancellor of the Exchequer. Asking departments to prepare plans for cuts of 25% (20% ?) and for the order of 20% (10-20% ?) in Defence whilst leaving the massively inefficient Health Department unscathed is interesting.

The intruiging point is his political longevity in the job. Despite his closeness to Cameron, does he have the same relationship as Blair & Brown ? Will David sign off on George's spending plans or will he ask a friend to review ?? If so, who is the PM's "phone a friend ?"

For David Cameron he must know that getting the spending plans wrong coupled with any form of opposition resurgence put him in the position of facing rivals for the leadership. His cabinet contains two former leaders in opposition - William Hague (foreign secretary) and Iain Duncan Smith (social security). The former is part of the star chamber reviewing spending plans and the latter command one of the largest spending government departments after health and ahead of Defence.

Both these individuals know that how they are seen to support the spending cuts will one day come back to haunt them suggesting that they will be reading the fine print of spending cuts exceptionally closely.

For the Conservative Party however, the future is pretty rosy. If the Liberal Democrats weaken they will likely benefit. The odd defector, by-election win, council victory will move the Conservatives towards a position where I would be keen to bet of going for an election in 3 years to get an outright majority and dissolve their coalition.

The Labour leadership election is yet to reach it's crescendo though one would suspect they will have to work hard to make a challenge at the next election. However some positive changes and remember - only a coalition won the last election. A defeat for labour though not an outright win for the Tories.

Much to play for.


- Posted using BlogPress from my iPhone

Location:30,000ft.

The Great 'Ass-Kicking' BP Dividend debate

The Great 'Ass-Kicking' BP Dividend debate
June 11, 2010

Doing the rounds of political circles in London is the suggestion that 'Kick-Ass' President Obama could end up having one of the following options served to him by BP with regard to the dividend;

A) The easiest answer to the US demands of a British registered company not to pay any dividends to shareholders worldwide.

B) Send all the non-US resident shareholders the dividend.

C) Send a letter to the US shareholders asking if they'd prefer;
i. not to receive any dividend
ii. The dividend be sent to President Obama to spend on social welfare programs
iii. To donate the dividend to wildlife charities in the Gulf area
iv. US shareholders to just receive the dividend themselves.

Voting by our impromptu jury suggests the response will be (a) 0% (b) 0% (c) 0% (d) 100%.

That darned free market! Where was 'Kick-Ass' Obama when it came to the US Banks and Hedge Fund owners pocketing salaries in the $ billions such as John Paulson?

Or, perish the thought do they contribute more to mid-term election financing coffers than the oil majors ???

In 2009 opensecret reported that BP spent some $16m on Federal lobbying. and some $3.5m in direct campaign contributions.

Lets see what this weekend portends - England versus USA in the soccer world cup and a scheduled call between President 'kick-ass' in the red corner and 'nice guy' Dave Cameron in the blue...

Publication of Spending Review 2010 - the Government’s approach

08 June 2010

Spending Review 2010 - the Government’s approach

The Chancellor of the Exchequer George Osborne and Chief Secretary to the Treasury Danny Alexander today announced details of how the next Spending Review (SR) will be conducted. The SR, due to conclude in the Autumn, will set spending limits for every Government department for the period 2011-12 to 2014-15.

The timetable for the review, the process and guiding principles that will underpin the Government’s approach to setting spending limits are set out in the Spending Review Framework presented to Parliament today.

The Spending Review Framework sets out how the SR will:

require departments to submit their initial plans to deliver their priorities before the Summer Recess and demonstrate that they meet a tough new set of criteria to deliver value for money. The criteria cover questions such as: is the activity being funded essential to the Government’s priorities, does the Government need to fund the activity, and can it be provided more efficiently?
start a period of external engagement between the Government and all parts of society including; the private sector, the general public, voluntary/charitable organisations and experts, in order to obtain the best ideas from those most involved in and affected by public services
establish a new Star Chamber chaired by the Chancellor and Chief Secretary and drawing on the expertise of other senior Cabinet Ministers to ensure that the Government challenges every department’s spending plans to ensure that they deliver more for less. Other Cabinet Ministers will be considered to join the group, once they have settled their department’s budget.
seek input from the brightest and best individuals in this SR by establishing a Spending Review Challenge Group of experts – both from within Government and outside – to act as independent challengers and champions for departments throughout the process. Their remit will be to think innovatively about the options for reducing public expenditure while balancing priorities.
require each Secretary of State to appoint a Minister with specific responsibility for driving value for money across their department, identifying savings opportunities and playing an important role in challenging spending in all areas, including on contracts and programmes.
comprehensively examine areas such as: social security, tax credits and public service pensions as part of the process
end the previous administration’s complex system of Public Service Agreements that relied too heavily on rigid targets and instead ask departments to publish business plans that show the resources they need to put in place in order to protect key frontline services and deliver on their objectives.
Tough decisions need to be taken in order to reduce the unprecedented deficit. The Government is committed to achieving the bulk of this through reductions in Government spending, rather than tax increases, while protecting the quality of key frontline services.

This SR is not just about cutting spending and setting budgets. It will be a complete re-evaluation of the Government’s role in providing public services. The SR will look at what services the Government should be providing and how to get more for less.

Chancellor of the Exchequer George Osborne:

“This is the great national challenge of our generation: after years of waste, debt and irresponsibility, to get Britain to live within its means. It is a time to rethink how government spends our money.

“We didn’t choose the terrible economic situation we inherited. But we can work to put it right, to deal with our debts, to set our country on a brighter economic course, and show that we are all in this together”.

Notes for editors

The Spending Review Framework can be found on the Spending Review section of the HM Treasury website.

Last year, Public Sector Net Borrowing was the largest in Britain's peacetime history. The March Budget forecast the UK deficit to be 11 percent of GDP this year. According to the IMF, the UK has the highest deficit in the G7 and G20.
The Government has made clear that the bulk of the reductions in the current structural deficit will be achieved through reductions in spending.
On 24 May the Chancellor set out how the Government will reduce spending this year by £6¼ billion by cutting waste. This was the first step on the road towards restoring good management of Britain’s public finances.
Even tougher decisions will be required at the Spending Review. The Spending Review will set out the Government’s spending plans for the next Parliament, setting departmental budgets for the years 2011-12 to 2014-15.
In the Budget, the Government will set out the overall path it will pursue for the public finances, against which the OBR will judge its fiscal policy. This will include setting the path for expenditure in the next SR period, which will give a clear sense of the scale of the challenge.
To ensure that the SR looks comprehensively across the whole of Government expenditure, it will also cover significant elements of Annually Managed Expenditure, where the risk is taken by the Exchequer as a whole, including social security, tax credits and public service pensions, setting out plans for savings and reform in these areas.
To ensure that resources are prioritised within tighter budgets, departments will be asked to prioritise their main programmes against a tough set of criteria to ensure value for money in public spending. The criteria:
Is the activity essential to meet Government priorities?
Does the Government need to fund this activity?
Does the activity provide substantial economic value?
Can the activity be targeted to those most in need?
How can the activity be provided at lower cost?
How can the activity be provided more effectively?
Can the activity be provided by a non-state provider or by citizens, wholly, or in partnership?
Can non-state providers be paid to carry out the activity according to the results they achieve?
Can local bodies, as opposed to central Government, provide the activity?
The Government is determined to take decisions in a way that is in line with its values of freedom, fairness and responsibility. Therefore the Government will:
Deliver its guarantee that health spending will increase in real terms in each year of the Parliament, and that 0.7 per cent of GNI with be spent on overseas aid by 2013;
Limit, as far as possible, the impact of reductions in spending on the poorest and most vulnerable in society, and on those regions heavily dependent on the public sector
Protect, as far as possible, the spending that generates high economic returns
Make further savings to fund the priorities set out in its programme
To lead collective decision-making in Government on spending, the Prime Minister has appointed a Committee of senior Cabinet Ministers - the Public Expenditure Committee (PEX/Star Chamber). Chaired by the Chancellor of the Exchequer and supported by the Chief Secretary, the PEX Committee will advise the Cabinet on the high-level decisions that will need to be taken in the Spending Review. The membership of the Committee will be:
Chancellor of the Exchequer (Chair) – The Rt Hon George Osborne MP
Chief Secretary to the Treasury (Deputy Chair) – The Rt Hon Danny Alexander MP
Foreign Secretary – The Rt Hon William Hague MP
Minister for the Cabinet Office and Paymaster General – The Rt Hon Francis Maude MP
Minister of State at the Cabinet Office – The Rt Hon Oliver Letwin MP
The Government will require the input of the brightest and best individuals to achieve the optimal outcome in this Spending Review. Therefore, it will form a Spending Review Challenge Group of experts – both from within Government and outside – to act as independent challengers and champions for departments throughout the process. Their remit will be to think innovatively about the options for reducing public expenditure and balancing priorities to minimise the impact on public services.
The Government is determined that this Spending Review process will be open, responsible and fair and conducted in a way that protects the poorest and most vulnerable in our society. Over the next few weeks, the Government will begin a process to engage and involve the whole country in the difficult decisions that will have to be taken.
The Government is committed to greater transparency to enable the public to hold politicians and public bodies to account, and will build on the actions it has already taken to publish raw public spending data from the Combined Online Information System (COINS). It will publish more user-friendly subsets of COINS data by August 2010, and has committed to publishing online all new items of central Government spending over £25,000 from November 2010.
The Government will also organise a series of events over the summer to discuss and debate various aspects of public spending. The line-up of events will incorporate many of the key areas that need to be considered as part of the overall SR process. A range of people will be invited to these events, to make sure that they represent a wide spectrum of expertise and viewpoints. Invitees will include members of think tanks and interested groups, academics, representatives of local government, business and trade unions, and public sector experts and watchdogs such as the Audit Commission.

The Obama Administration and the BP Gulf oil spill crisis - pause for thought

The Obama Administration and the BP Gulf oil spill crisis - pause for thought
June 7, 2010

An ideal situation for the US administration - or is it ?

The terrible spill of oil in the Gulf and the struggle for BP to stop the spill, let alone contain its effects would on the surface offer an open goal for the Obama administration to demonstrate their environmental credentials, talk tough and use a whipping boy a foreign owned firm.

Announcements by the US Government of investigations would seem to back this up. However, much like the Defence Industry, Oil is of a global nature and punishing BP might well be punishing US jobs and industry. A quick glance at the 2009 Annual Report for BP;

* 35% of Global Revenues (some $84 billion)

* near 50% of Global expenditure on Capital Expenditure investments and acquisitions

* $650 million in taxes to the US Government

* 22,800 employees (near 30% of global workforce)

* over 90% of employees in high-value refining / production / Exploration

Meanwhile, whose responsibility was the damage to the oil well in the first place ? The NY Times reports (June 5) 'In Gulf, It Was Unclear Who Was in Charge of Rig' - BP ? the Well owner ?? oil services Halliburton ??? or the exploitation company Transocean ???? - Sounds like a job for Hong Kong Phooey...

HM Treasury announces UK government cut-backs - implications for defence ?

HM Treasury announces UK government cut-backs - implications for defence ?
May 24, 2010

More years ago than I care to remember one of my University Professors issued an essay list from which I chose the subject of 'are defence reviews solely driven by financial concerns'. I remember making a spirited defence of the importance of coherence in defence and foreign policy.

As the years have progressed and my work in the defence industry evolved I see a somewhat different picture. Following the May 2010 General Election in the UK the new Chancellor of the Exchequer announced today ('Government announces £6.2bn of savings in 2010-11') immediate Government spending adjustments ahead of the June budget. In the statement available from the HM Treasury website the new Chancellor, George Osborne made the following comments,

"Today the Government has taken the decisive action necessary to start tackling the UK deficit and secure the recovery only 10 days after taking office.

Savings will be taken out of budgets, without affecting the quality of key frontline services, as set out in the coalition agreement. In addition to £6.2bn of savings in non-protected departments, savings in health, defence and international aid will be reinvested in front line services in those departments."

What can we infer from the statement for Defence - a touchy subject for a fresh government with major commitments overseas ?

Firstly, this financially driven imperative cuts across the SDSR started under the Labour government and halted during the election by the MOD. It would appear than a Departmental effort to re-run the 1997 process is being hi-jacked by a political and Treasury driven effort to re-run the mid 1990s 'Front Line First' review under the Conservatives and Malcolm Rifkind aimed at exactly what is being pitched now, transferring resources from the tail to the teeth of Britain's armed forces.

This instead of new resources.

What outcomes can we expect to see ? I think the most worried part of the MOD must be the Royal Navy. Given the directives to MOD officials to evaluate all recent contracts for get-out clauses, plus the lack of enthusiasm for the Conservative in Scotland leads to a lack of desire to award ship building contracts to Scottish, Labour and Union driven yards.

Plus the new Ministerial team is principally Army sympathetic - Junior Ministers representing Aldershot and having served with the Special Forces are unlikely to listen to the Admiralty - especially if there is a way out of naval shipbuilding projects.

This could be highly deleterious to the long term national interest. Having written a Doctoral thesis on the collapse of the CVA-01 aircraft carrier program in the mid 1960s one can see how vulnerable the program is. That said, the RN prevaricated for a few years over specification and industry configuration to deliver the program when resources were relatively plentiful.

In addition the challenge of maintaining a 'drumbeat' in construction of nuclear submarines has also been a constant pressure which the new ministerial team may be less sympathetic towards.

The Royal Air Force one could suspect will downsize their stations further and one could see a strong effort to redirect or else cancel Eurofighter Tranche 3. This would be a good move from the perspective of making back-bench Eurosceptic Conservative MP's happy IF the financial penalties can be in someway mitigated.

Iranian Nuclear program gathers pace - and divides its opponents

Israel must Be today feeling somewhat reticent about the Iranian deal backed by temporary United Nations Security Council members Turkey and Brazil. Iran has agreed to deposit some half of its current stockpile of processed uranium with Turkey, though has given no assurances about freezing or dismantling its nuclear program. The United states is dismayed its foreign policy agenda is foundering over the one thing guaranteed to upset domestic popular opinion - being seen as weak on the issue of the spread of WMD's.

However, it is surprising the State Department did not see this coming - Iran is a master-class in playing foreign policy games to protect its national interests. Turkey felt sufficiently neglected by its NATO partners and the US in particular that it closed its borders to the use of force against Iraq in 2003 and additionally has had the US President acknowledging the Armenian massacres of the early 20th century which are still are a sore point for the Turks. These issues combined with EU dithering over admitting Turkey left the Iranian issue as a clear one for the Turks to become engaged with - especially as they are neighbours.

For Brazil the issue is one where as a BRIC the nation can show it has some clought in foreign policy with the beautiful benefit that Iran is literally on the other side of the world. Likely mutual trade interests abound between the two nations.

It is probably fair to say, on reflection that the USA and Israel probably share some of the responsibility for this outcome. Iraqi Weapons of Mass Destruction in the 1980s and 1990s should have provided the opportunity for Israel to declare its stockpiles - or even eliminate them or have them transferred to the US for safe-keeping. Then joining the Nuclear Non-Proliferation Treaty would have left the nation with a superiority in conventional weapons and a strong moral position against anyone in the region developing them. There is a precedent by the way for unilateral nuclear disarmament and it was South Africa in the early 1990s - Israel's closest partner during the previous decade.

The position of the State Department under successive administrations resulted de facto in no substantial pressure on Israel to think through its possession of a nuclear deterrent which takes us to the situation we have no - any country seeking to become a regional player or hegemon knows that they have to develop the nuclear bomb. Lesson from Iraq: if you dither over development - or develop the capability above-ground, it is highly vulnerable to air strike.

These factors combine in a country which wishes to acquire a nuclear deterrent and possesses the 'will & skill' to simply get on with it. Israel defence planners has feared the development of an islamic bomb and now they seem close to having to realise this fear.
Choices are few, trying a re-run of the osirak reactor strike on Iraq in 1980 are not straight-forward, plus the aircraft have to fly across the middle east to reach the target.
The real way to catch the Iranian fox is to have had them spend billions on trying to acquire the weapons and then change the rules of the game;

One way is to develop an effective missile defence (though the cold war showed that MIRV'ing warheads and having lots of missiles could overcome a defence) or,

Second to declare or get rid of your own capability so as to paint Iran as the bad guy should they pursue development further. Not a pretty story.

And now for something completely different... Wall Street sequel Money Never Sleeps in Cannes

The Cannes Film Festival 2010 is set against a backdrop of economic troubles, ash clouds affecting flight schedules and dull, overcast skies.

I keep imagining the film festival as a setting for a zombie movie given the pallid stares of film critics on their 20th film in a few days, Z list celebrities touting their wares and a raft of unwashed, unkept photographers jostling for snaps in a foreign land.

Last night I was able to watch a screening of the upcoming release Wall Street 2: Money never sleeps - one of the two big Hollywood movies here at Cannes alongside Robin Hood. Wall Street 2 stars Michael Douglas, reprising his role of Gordon Gecko from the 1980s original. Shia LeBoeuf plays the new kid on the block learning of the travails of high finance being used as a tool to recpaitalise Gordon as well as make money for 'the barracuda' who indirectly caused the suicide of LeBoeuf's mentor via the take out of the mentors brokerage firm.

The plot of the film draws on the backdrop of federal bail-outs of the investment banks like Citibank and the death of others such as Bear-Sterns. There are also a number of cameo appearances and insider type jokes such as Charlie Sheen turning up briefly to talk about taking over the Blue Star jet firm of the original film and turning into a world leading private jet brokerage firm (which, by the way actually exists in real life).

The film feels different to the original as it lacks the father-son relationship between Martin and Charlie Sheen, plus the film feels less like an introduction to how wall street really works which made the original an enduring film. On the plus side it is visually very well done capturing the stock market collapse of 2009. The film feels more emotionally driven tan the cold, hard film of the 1980s and I would have like to have seen more of the Gecko and the Barracuda going head-to-head the limit being one scene where Douglas's character makes one of the more memorable lines, "If you stop talking lies about me, I will stop telling the truth about you".

Brolin and Douglas are very strong actors in the film as is the brief role at the start of Frank Langella who I felt delivered the strongest performance of all having seen some of the shock first hand and fall-out in Wall Street over the past couple of years. I think there was some mis-casting though I hope the film does well as one of the best (and first) efforts to capture recent events by Oliver Stone (who of course appears in this film).

UK Machinery of Government: Establishment of a National Security Council

Establishment of a National Security Council
May 12, 2010

One of the lesser-reported activities of the new Government in the United Kingdom this wednesday was the formation of a National Security Council (NSC).

This would seem to replace the DOPC or MISC Cabinet Committee on Defence and Overseas Policy which morphed in July 2009 into the NSID (OD) Committee (or Ministerial Committee on National Security, International Relations and Development, Sub-Committee on Overseas and Defence.)

NSID (OD) had the following composition (5);
* Prime Minister (Chair)
* Secretary of State for Foreign and Commonwealth Affairs (alternate Chair)
* Chancellor of the Exchequer
* Secretary of State for International Development
* Secretary of State for Defence

Other Ministers, the Chief of the Defence Staff, the Chairman of Joint Intelligence Committee and the Heads of the Intelligence Agencies may be invited to attend as required.

NSC has the following composition (8);
* Prime Minister (Chair)
* Deputy Prime Minister
* Chancellor of the Exchequer
* Secretary of State for Foreign and Commonwealth Affairs
* Home Secretary
* Secretary of State for Defence
* Secretary of State for International Development
* Security Minister.

Other Cabinet Ministers, including the Secretary of State for Energy and Climate Change, will attend as required. The Chief of the Defence Staff, Heads of Intelligence Agencies and other Senior Officials will also attend as required.

The NSC appears an effort to better integrate foreign policy and homeland security into a one-stop Cabinet Committee at the price of near doubling the standing representation - risking a slower reaction in a crisis situation.

Establishment of a National Security Council
May 12, 2010

The Prime Minister is to establish a National Security Council (NSC), which will oversee all aspects of Britain’s security.

The Prime Minister has appointed Sir Peter Ricketts (Permanent Undersecretary at the Foreign and Commonwealth Office) as his National Security Adviser, a new role based in the Cabinet Office. Sir Peter will establish the new National Security Council structures, and coordinate and deliver the Government’s international security agenda.

The Council will coordinate responses to the dangers we face, integrating at the highest level the work of the foreign, defence, home, energy and international development departments, and all other arms of government contributing to national security.

The Council will be chaired by the Prime Minister. Permanent members will be the Deputy Prime Minister, the Chancellor of the Exchequer, the Secretary of State for Foreign and Commonwealth Affairs, the Home Secretary, the Secretary of State for Defence, the Secretary of State for International Development and the Security Minister.

Other Cabinet Ministers, including the Secretary of State for Energy and Climate Change, will attend as required. The Chief of the Defence Staff, Heads of Intelligence Agencies and other Senior Officials will also attend as required.

The inaugural meeting of the NSC will be chaired by the Prime Minister this afternoon. The Council will discuss the situation in Afghanistan and Pakistan, and review the terrorist threat to the UK.

Daily Telegraph newspaper in early effort to court the Cameron's missing shady financing

May 14, 2010

The Daily Telegraph newspaper wins the early award for seeking to ingratiate itself with the Prime Minister and his wife today. Journalist Becky Pugh writes as to "Which Smythson notebook would you give to which Cabinet minister ?" and seems to have a memory lapse as to informing readers that Samantha Cameron, "about to redefine the notion of having it all" was paid as Creative Director to Smythson over the past few years.

When you delve into the Smythson story it becomes somewhat more interesting - after all a salary of 400,000 pounds to design a diary collection which only changes colour season to season raises the 'cui bono' question ? Given Smythson's private ownership were people paying Samantha to buy access to opposition Leader David Cameron and keep his annual earnings declared to Parliament clean and sleaze-free ?

Kelso Place Asset Management and Venrex Investment Management became involved in 2005 and the Smythson business was sold to Greenwill SA (part of an Italian Group) last December - six months before the Election. Whilst Kelso Place is quite transparent online Venrex by contrast is rather opaque.

The really interesting fact is that Venrex Investment Management is led by Mark Esiri, like David an Old Etonian and as described by the Daily Telegraph October 12, 2007 as "an old Etonian, friend of the Cameron's and lives nearby in Notting Hill".

Time will tell as no doubt will David Cameron's first honours list. Will Any of the leadership team of Kelso and in particular Mark Esiri pick up an honour for funding Samantha and David during the opposition period ? Well done Becky.

No Blackberry's please, we're British...

May 14, 2010

Big news in UK politics today - mobile and smartphones are banned from the Cabinet by the new Prime Minister (perhaps apeing the 2007 decision of the French Cabinet) and the new Foreign Secretary is off to Washington to try to educate America as to what a Coalition Government looks like whilst pledging undying loyalty to the Special Relationship. Clear evidence of change of which Sir Humphrey would be very proud, with the new Government sticking to what Appleby suggest as "masterly inactivity Prime Minister ?"

In any event the major posts seem settled between the Conservative Party and the Liberal Democrats with the junior positions and House of Commons Committees yet to be staffed.

One would expect Cameron to take a 'death by kindness' approach to the Lib Dems - employ them all in Committees over his own party in order to a) keep the Lib Dems busy and cozy avoiding a Lib Dem back-bench revolt and b) keep his own back-benchers hungry for office of any kind blaming the need to keep his partners on board.

The Conservatives seem to be busy acting akin to the alien race known as the Borg in Star Trek - absorbing the Liberal Democrats into the Tory Party and tying them in to a long-term coalition - minus any interest in Europe, the Euro and electoral reform.

On proposition making the rounds whilst UK PLC is fatigued following the election is to create fixed terms of Parliament and preventing votes of no-confidence forcing a General Election. A very sharp practice recognising the real threat that Labour can turn itself around over the next few years and come back strong seeking a fresh chance to govern. BBC quoted British expert Professor Peter Hennessy, of Queen Mary University of London University, who told the BBC it looked like "very very iffy politics indeed"

Whilst readers in the united States may see fixed terms as logical - akin to the US Presidential system just think of the weaknesses inherent in such a move. By clearly marking out the end of a term, the ability to make decisions becomes highly constrained as people adopt a 'wait-and-see' strategy.

One suspects an intriguing autumn political season with the key issues being how long before the Lib Dems start to want to see any kind of policy executed and the Labour Party's leadership reposte.

24 hours being a long time in politics...

Unlike many pundits I believe one should acknowledge when the judgement call does not work out. The Labour-Liberal Democrat pact to win the General election appears to have come to nowt and following meetings tonight one suspects the Conservatives and Liberal Democrats will take over the task of running the UK political system.

This could be a big opportunity for Labour. The negotiations likely failed to overcome the enthusiam of many newly-minted MPs being prepared to share power versus having no power as a dominant opposition.

One of the interesting issues is how many ministerial and committee positions the new administration will share between the Parties.

For Labour one can only assume a flurry of calls into number 10 by those seeking to be placed on the outgoing Prime Ministers honours list. Sir Alistair Campbell anyone ???

Former PM's memoirs - Yes, Prime Minister - BBC comedy

A classic piece of Yes Prime Minister and one for Gordon Brown's colleagues to think about...

Gordon Brown resigns as a precursor to Lab-Lib coalition government

Gordon Brown resigns as a precursor to Lab-Lib coalition government
May 10, 2010

I wrote a week ago in this column that it was likely that Gordon Brown's departure would be a likely consequence or pre-cursor to a Labour-Liberal Democrat party link-up to govern Britain as a coalition following the indecisive 2010 General election.

I would forecast firstly, that the Labour leadership election will be fought between David milliband and Ed Balls with Peter Mandelson as kingmaker (Again). May Shakespeare in general and MacBeth in particular be assimilated by all candidates in the Party ahead of the summer campaigning. Perhaps Machiavelli would be best though one suspects Mandelson has bought up all the available copies at bookseller Waterstones.

In terms of Gordon Brown, I remember well his love of Cape Cod and summers in the East Coast of America. I think he will enjoy the anonymity of America where press interest in the UK election has been scant and more focused on what America dislikes or is rather confused with about Britain - "how can an election or a sport end in a draw ?"

With regard to him seeking a finance post abroad - the current head of the World Bank was appointed in July 1, 2007 for a 5-year term. If Gordon can position himself well he will have ample time to write his memoirs and campaign for the role (especially should Ed Balls win the leadership contest - giving GB help and support). Given that Robert McNamara was head I think there is a natural fit for Gordon Brown.

The International Monetary Fund Managing Director was appointed November 1, 2007 though the term of service has varied much and little is offered as to a guide to the length which is served. Suffice it to say the current head is a Frenchman who stood against Sarkozy, the current President and is a healthy socialist economist with a reputed appetite for engaging with young economists in an unconventional manner.

One could not imagine Gordon Brown as heading up the European Central Bank or the EBRD given his distinct lack of enthusiasm for Europe on a day-to-day basis. The ECB appoints for a non-renewal term of eight years, the current President was appointed in 2003 so could be up for renewal as early as next year, so who knows ?

I shall leave for another entry my vies on the likely impact of a Labour-Liberal coalition on the Conservative Party leadership but suffice it to say that we continue to live in interesting times....

Conservative quandry 2010

David Cameron must have a headache today.

Over the weekend it became public news that the Liberal Democrats have been holding parallel discussions with the Labour Party following the indecisive outcome of the UK's 2010 General Election.

Strategy A: In David's mind must be to stand back from forming a coalition and alienating a section of his own Party (former leaders like Iain Duncan Smith who are bitterly opposed to Liberal Democrat support for the Euro). With the largest number of seats in the House of Commons the Conservatives could block any policy created by the coalition, ensuring a repeat of the early 1970s which translated into a near two decade run for the Conservatives.

However, if you pursue strategy A what chances are there of surviving as leader for upto 5 more years ? There must be a real temptation for someone to challenge him having done the ground work to become the next Tory Prime Minister.

Strategy B: Do a deal with the Liberal Democrats. Somewhat fraught, despite the record of cooperation at local council level given Lib Dem enthusiasm for Europe, the Euro and a referendum on the voting system. Lib Dems must be ultimately suspicious of Conservative support for electoral reform.

Strategy C: The high-risk one of declaring the Lib Dems and Labour as having no mandate to govern let them fail to agree and forcing a second election. Labour coffers are likely empty at this point to rally for a second round of campaigning and despite a number of new MPs not wanting to re-run for office this could deliver the outright majority and avoid a lot of poltical heartache downstream.

Given Mervyn Kings comment that the victor of this election will likely be out for a generation this does not seem to be the prize to win (unless you can feel the heat of the pack of prospective Conservative Leaders breathing down your neck).

President Obama in social media memory loss incident

A weekend speech by the President to students talking of the evils of social media and information as entertainment was widely reported in the US press today (example).

Should it seem somewhat strange that it was the same social media leveraged by the 2008 campaign team seeking an edge in the election against John McCain and the Republican Party..?

On of the risks of electoral hubris is clearly believing that your platform now lies beyond anything which a conventional election strategy can deliver. Personally, I believe that access to information plus a style of education which enables young students to be focused in its use is one of the wonders of the modern age.

Stand by for 2012 apple users to campaign against the President's new found social media illiteracy...

Who reads the papers? - Yes, Prime Minister - BBC comedy

Yes Minister: Gallup opinion polls

Did IQ's drop Part II... Peter Cook in Whoops Apocalypse.

UK Election: Latest polls before the real poll

Courtesy of ParliamentWatch blog
May 5, 2010

There's been a glut of opinion polls tonight, as everyone attempts to have the last word. All the eight organisations who have been regularly polling have the Conservatives in the lead - but no-one is forecasting an overall majority. The Liberal Democrats and Labour could be neck and neck in the popular vote, but as we have previously reported, the Liberal Democrat seat count will be lagging well behind.

The averages of the 8 polls are : Conservative 35.5%; Liberal Democrats 27.5%; Labour 27.4%. Using our previous model, this would translate into Conservatives 287 (39 short of that elusive overall majority); Labour 243 and Liberal Democrats 88.

There are some big BUTS however. No-one is assessing turnout, and therefore the propensity of those sampled actually to put their crosses on ballot papers. Secondly, there is no information about the postal vote. Many of the ballot papers appeared in letter boxes when the Liberal Democrat tidal wave was at its greatest. Most of those papers are already sitting in town halls waiting to be counted.

And there may well be regional variations. One poll in the north east puts Liberal Democrats ahead of the overall trend. The latest poll in Scotland shows little change except an increase in Conservative support, but this would only result in two seats changing hands. The extra Liberal Democrat support may therefore be concentrated in England. Some seats are vulnerable to very small swings at this general level of support, so local campaigning and a tactical squeeze (including the last minute Labour plea for tactical voting) might have a greater impact on a handful of seats. There's little information about UKIP tactical voting, if any.

One interesting aside was in an ITV poll that said that 81% of people supported the proposition that the party getting the most votes (as
distinct from seats) should lead the new Government. Which means there may be an undercurrent of support for fairness (proportional representation) in the allocation of seats, an issue which will simmer through and beyond the savage economic measures that whoever wins is likely to introduce.

Like the Terminator, we will return with further comment when real results replace speculation.

UK Election 2010 Forecast: 654 Politicians will likely decide who forms the next Government of the United Kingdom

The BBC website has made available a visual means of viewing how the various opinion polls will translate into seats in parliament and therefore the likely winners in tomorrows election.

The Three polls included are all from today -
Labour Conservative (Tory) Liberal Democrat
Poll of Polls: 272 270 79

ComRes: 258 289 75

YouGov: 288 261 72

The outcomes therefore would be a hung parliament in all three scenarios. The question becomes who will yield the most to the Liberal Democrats in terms of ministerial positions to form the next (coalition) government.

My own money is on the incumbent being most desperate to hold to power ie. Labour-Lib Dem (which does have a preceedent in the early 1970s). I suspect also the price of this coalition will be a Labour party leadership election within 12 months to end Gordon Browns Premiership.

Whilst obviously dissapointing for the Conservatives I think the election will, as Mervyn King as suggested be a poison chalice for the victors - the last coalition Lab-Lib pact led to near 20 years of Conservative rule under Margaret Thatcher then John Major. Perhaps this is the best outcome for the UK.

Possibly a style-over-substance issue however David Cameron and his Notting Hill public school set do not seem to have broken down the barriers to making the UK people feel entirely comfortable with them.

"Did IQ's drop whilst I was away ..?"

I noticed the BBC running an item on a presentation concerning jobs and employment conducted by Conservative Party leader David Cameron recently.

Did nobody think about the political satire "Whoops Apocalypse" from the 1980s with Peter Cook as the Prime Minister having people jump off the white cliffs of Dover as a means of dealing with unemployment ?



Obviously 'Denzel's had a haircut"...

UK Political System implodes... Iron Man 2 released tomorrow !!!

I received via email an invitation to a one-day conference entitled, "The implication of the UK General Election for the Obama Administration". Sad, but true.

The UK election has barely registered a blip in the United States and amongst the New York media. The story of the Labour candidate who played his likely crushing constituency loss into a "worst ever Prime Minister" comment appeared in a small piece on page 28 of the New York Post newspaper this morning.

For the average US citizen the UK seems a long way away and a sort of living historical theme park which provides a crop of good villians for the cinema as well as [positively] distorted views of British influence and power via James Bond.

The British military contribution in Iraq is not mentioned since the decision to withdraw and the effect in Afghanistan go basically unmentioned. Whilst our Armed Forces presence has some acknowledgment in Washington circles - outside of the appreciative Pentagon it goes largely unknown and one suspects unrewarded.

In the USA the British election is seen is much simpler terms as a Conservative victory bolstering spirits of Republicans for the mid-term elections this autumn and an eye on 2012. Unfortunately few across the Atlantic appreciate the nuance of British political ideologies and find confusion that Tony Blair is widely seen as the successor to Thatcher - not a Conservative !

Whilst the quality of oratory and debate in British politics is widely admired across the Atlantic few American politicians would wish to trade the raw power of the United States... Meanwhile the release of the sequel to Iron Man dominates the airwaves.

Goldman Sachs: No glory to be won...

Who is the US Attorney's superhero ?
April 30, 2010

1970s children's cartoon show Hong-Kong Phooey starts out with the question, "Who is the Super-hero ?" emblazoned across the US media today is the initiation of criminal proceedings against Goldman Sachs investment bank (triggered perhaps by political dissatisfaction with the Senate hearings).

GS's share price has fallen 8.42% today in today's trading session thus far. More importantly the name is being dragged through the reputational mud. So much for the money spent on lobbying and maintaining the GS alumni network.

More interestingly are the references to the US Attorney's office in Manhattan - noone is mentioned by name as leading this prosecution. Does this mean it is a political game being played for which no aspiring attorney wants to be smeared. After all, how does one finance their election campaign after going after an investment bank with rather deep pockets ?

One would suspect, were there a robust case that an ambitious Attorney would go public into battle with an eye on being a future NY Mayoral candidate, Senator, President etc.

For Goldman Sachs clearly the bank's share price will recover though sadly the reputational blow even if reduced to the odd joke on bulletin boards will remain for a generation as will the general impression that "it was Goldman Sachs fault" - forget the other banks and institutions playing this game - however the US Government own stock in the others - so expect a willing conspiracy of silence amongst the rest of the industry.

It's never easy being Number one!

UK Election 2010: Quick Reference Guide

The UK Parliament which started under the Premiership of Tony Blair and changed mid-term with the same Labour Party, though with Gordon Brown as PM, is now facing re-election on May 6, 2010. Since the 2005 Election all three main political parties have switched leaders.

The UK Political system centers on the House of Commons (equivalent to the US Congress) with some 650 members of parliament (MPs - Congressmen) each responsible for a geographic constituency (US - Congressional District). Unlike the US system of mid-term elections of their Congressmen and women the UK system involves all MPs being eligible for re-election at a General Election under a first-past-the-post (ie. most votes wins) system. The number of MPs each Party garners leads to the Party with the most being chosen to form the Government by Her Majesty, the Queen (the British Head of State).

2001 Election Statistics 2005 Election Statistics
Labour - 413 Labour - 356 (324 seats required for a political majority)
Conservative - 166 Conservative - 198
Liberal Democrat - 52 Liberal Democrat - 62

Total votes cast - 26.3m - 27.1m

Political surveys (polls) conducted throughout the election show a tight race with Labour trailing the opposition Conservative Party. However, the rise of the Liberal Democrats, in part through the Conservative blunder of allowing them fair and equal air-time in the first three televised Prime-Ministerial debates makes a coalition Labour-Liberal party more likely. The last precedent for this was during the early 1970s and the dark days of the OPEC oil crisis. Of course, the outcome of this was the election of a Conservative administration which held office for near two decades thereafter.

The election I think can be seen as a re-run of the 1992 election. Although the Conservative Government of John Major was seen as weak the electorate were just not ready to trust Labour. Whilst a coalition or lame-duck Labour win will preserve some careers the likelihood of a conservative government following the next Labour or coalition administration is 100% likely. Coalitions do not get re-elected.

However, for the Labour Party one could suspect a quick putsch to remove Gordon Brown within 12 months of a election victory. If the Conservatives will inherit the next part of the UK political story, a few Labour leaders-in-waiting will want to get their place in history secured - and fast.

A Conservative loss traditionally triggers the resignation of the leader and a change. One could suspect William Hague's moment has come to re-assert his mantel as the most likely next Conservative Prime Minister. I remember meeting him and his wife Ffion at Conservative Central Office in the early 2000's - she wore knee high leather boots.

Commentary on the final British Election Prime-Ministerial debate

Commentary on the final British Election Prime-Ministerial debate
April 29, 2010

This evening the three party leaders Gordon Brown (Labour), David Cameron (Conservative Party), Nick Clegg (Liberal Democrat) held their third and final public debate together televised by the BBC which I was able to view from New York via internet.

Sartorially the opposition party leaders wore ties echoing the colour of their party (Cameron Blue & Clegg Orange) whilst Gordon opted for a purple tie (blue & red!).

Early in the debate the issue of efficiency savings came up - playing to Brown's knowledge of financial issues. Unfortunately Gordon continues the bullfrog-like gasping for breath mid-sentence though powerfully referring to the 1930s as the risk of budget cuts.

Also the leaders all indicate the Ministry of Defence (MoD) will not be spared the efficiency cuts - some 6 Billion pounds. Under Blair the Gershon efficiency savings have struggled to deliver after the initial push of the Office of Government Commerce in the late 1990s. The MOD was only mentioned in the context of Gordon Brown maybe or maybe not providing rises to the defence budget.

Nick Clegg appears to come across more as a moderator "here they go again" and less as a political party leader - which might translate into positive votes on May 6th, 2010.

David Cameron looks like he has been in a spa for several days - facials, sun tanning and botox ?! Gordon Brown looks exhausted though combatative.

The second discussion revolved around taxes - the incumbent government indicated the priorities for spending - policing, education and health care. Brown was combatative focusing on class differences (conservatives - inheritance tax) "unfair & moral".

The third question focused on remuneration in the financial sector. Interestingly, the Conservatives started out wanting to increase regulation and to tax banks (a variant of the windfall taxes of the late 1990s?) and to block banks from participating in certain activities. Liberal Democrats state no cash bonuses for board level bankers. Labour push the saving of voters deposits by nationalising banks and therefore their protectors.

Bizarre follow up by David Cameron that Labour hitched the economy to the City of London, despite the pivotal role of the Thatcher Government in privatisation during the 1980s and financial services liberalisation.

NIck Clegg articulated a good argument for simple methods to improve the state of the manufacturing base and hit out at the bailout of the Royal Bank of Scotland who were involved in the Kraft:Cadbury acquisition which led to job losses in the UK.

Dear Democrat strategists, the GOP already has a clearly defined critical path to Election 2012

Dear Democrat strategists,

How long ago must the election of 2008 seem where none could stand between your candidate and the highest office in the land.

Whilst mired in a health care reform many are sceptical of, public prosecution of a leading investment bank with spurious evidence and a conflict in a place where no Great Power has claimed meaningful or lasting victory your political opponents nearer home have a clear route to making your Presidency but a single term in length.

1. MId term elections 2010: As the Washington Post reported, the GOP are targeting three key Senate seats; the seats of the President, Vice-President and Majority Leader which will be highly symbolic and take full advantage of the protest vote.

2. Keep your political support base on the boil: Sarah Palin's role in the next election might well be as a stalking horse seeking to itch to a future President's wagon or Cabinet however she is using her name recognition and charisma out on the lecture and speaking circuit. Expect some intruiging language (can she top Charlton Heston ?) in her headline address at the National Rifle Association's annual conference in North Carolina on May 14, 2010. Mitt Romney is meanwhile busy courting the traditional power-base of the Republican Party endorsing candidates for 2010 (and therefore himself for 2012?).

3. Celebrate Past Success and galvanise support: 100 years since the birth of former President and Republican icon Ronald Reagan is due in 2011. Expect events and positioning of the Party and prospective candidates plus the California celebrations will represent the close of Govenor Arnold Schwartznegger's period in office - if only the USA would relax their laws to let him run as a candidate in 2012...

4. Have a clear election platform: A 2012 GOP election platform will likely be based on the following themes;

- Taxes and roll-back of Government.
- End the commitment to Afghanistan and bring the troops home.
- Stop interfering in Wall Street - reform could be damaging for the Democrats and seen to errode American competitiveness in the global economy.
- Pick up the renewable energy baton from the Democrats and wrap together entrepreneurship and innovation messages.
- Over-turn health care reforms which are overly complex - and then leave well alone.

UK Election: Conservatives relying on US input for Prime-Ministerial Debates

Catherine Mayer of Time Magazine wrote on April 26, 2010;

The American Connection

Referendums and recalls aren't the only things that Cameron has borrowed from the U.S. His rhetoric has a familiar ring to it. "Change vs. more of the same is the big clarion call," Cameron tells TIME. "The change we need, the change we believe in, change we can trust, change that happens — call it what you want." He has taken more than slogans from Barack Obama's 2008 campaign — the President's former White House communications director and campaign adviser Anita Dunn, for one. Dunn, together with Bill Knapp, her partner in the Washington-based consultancy Squier Knapp Dunn Communications, is helping with preparations for three potentially pivotal televised debates pitting Cameron against Brown and Nick Clegg, the Liberal Democrat leader. Cameron hopes these jousts will help him finally seal the deal with voters, many of whom are still suspicious that at heart the Tories don't really like the messy, multicultural, open and nondeferential society Britain has become since the Conservatives last held power. "People want to know two things," he says. "They want to know that things really will change, but also they want reassurance that the Conservative Party itself has changed."

And it has, to the extent that it is not surprising to see consultants associated with Obama helping the British cousins of the U.S. Republican Party. There's a huge gap now between American conservatism and the touchier-feelier variety promoted by Cameron's Conservatives. Thatcher, a hero to many on the U.S. right, laid the foundations of a long British boom that has only recently ended. But Thatcherite economic reforms came at a social cost that earned Conservatives a reputation — in the phrase of a party chairwoman — as "the nasty party." So Cameron has been at pains not to embrace Thatcher's legacy but to rid the party of it. Launching the Tory manifesto on April 13, he promised a return to an inclusive "one nation Conservatism" in place of the polarized and polarizing ideology of the Thatcher years.

Read more.

Goldman Sachs Senate testimony: Theatre - Washington style

As I previously wrote not long after the crisis broke, the Goldman inditement by the SEC is setting the stage for a political push to reform some of the worst (2009 vintage) practices.

The more interesting question is the value of the alumni network of Goldman Sachs. The A-list of Goldman people in senior government positions is quite extensive and institutions such as the consulting firms McKinsey and Arthur D. Little would pride themselves on installing former employees into positions where future business can be leveraged plus provide intelligence as to what is going on.

This would imply that either the SEC move was known to a few people and Goldman had no substantive warning or that they had zero ability to head off the legal action. Additionally the money invested in lobbying seems to have been placed with people who were asleep at the wheel.

One would expect a few heads to roll once the dust has settled.

Second, what does this crisis portend for the lifeblood of American politics - campaign financing. The banks chose to bet on Obama and made very healthy contributions to Democrat coffers in the 2008 election. As they say in New York, one would suspect that they (wall street) "are over it".

UK Election: commentary on the second Prime Ministerial debate

Five different polling organisations rushed out instant polls on the winner of last night's leaders' debate on Sky News. It's very noticeable that newspapers favouring the Conservatives before hand have trumpeted Cameron as the "winner". This does seem to be very selective reading of what passes as "facts" in this case. Three out of five polls had Clegg in the lead, and the average of the five was:

Nick Clegg (Liberal Democrat) 33.4%
David Cameron (Conservative) 32.8%
Gordon Brown (Labour) 27.6%

So Cameron, the man who would be Prime Minister and who was lauded to the heavens just a few weeks ago, has managed to haul himself up from last to second, on the basis of less than a third of those responding. Which isn't very impressive.

What is very interesting is the self-selecting poll on Facebook, which presumably is somewhat skewed towards younger people. At the time of writing, over 60,000 people had responded, with the totals:

Clegg 48%
Cameron 27%
Brown 25%

In effect, voting starts next week BEFORE the final debate on BBC, as postal votes are expected to start arriving on people's doormats. In my own constituency the Liberal Democrats seem to have been fighting for those postal votes (a legacy of a previous referendum, with a high degree of take up) by blitzing voters with literature. Very little is evident from the other Parties, implying no steam or they are waiting to go fro a late push. Which might be too late if many people have voted and the recent surge in support for the Liberal Democrats is cemented.

UK Election Polls 20 April, 2010

UK Election Polls 20 April, 2010
April 20, 2010

Just as the Icelandic volcano unexpectedly changed the landscape of European travel, so the first ever debate on TV between the leaders of Britain’s main political parties had a game changing impact on the prospects for the General Election now under way.

Up to that fateful 90 minutes podium to podium confrontation last week, the story of British politics had been: The people don’t want Labour and Gordon Brown again, but David Cameron’s Conservatives haven’t sealed the deal. Then Nick Clegg for the Liberal Democrats hit the screen for the first time as an equal – and the future was different.

Over the last six months, Cameron’s Conservatives had been flat lining under the 40% they need under the UK’s warped political system to make the breakthrough into an overall majority.

As the campaign started, the first 12 polls of April showed the Conservatives on 39% +/- 2%; Labour 30%+/- 2%; Liberal Democrats 19%+/- 2%, with 95% confidence. That would mean the Conservatives the biggest Party, about 10 seats short of a majority, but with everything to play for.

Then came the debate. Clegg was a palpable hit. He came over as the new man, the nice man, with policies people liked. He won the debate in a canter. His personal approval levels have soared to a net positive over negative of 78% - something not seen since Winston Churchill led the nation to victory in the Second World War.

His Party ratings have followed suit. In ten polls conducted since then, the averages have changed to Conservative 32% (down 7%); Labour 27% (down 3%) and Liberal Democrats 30% (up 11%) – all of course with the ranges and confidence of the early April poll of polls.

With these numbers, the Election outcome picture is entirely different. Not only would Cameron not be Prime Minister of right, he wouldn’t even be leading the biggest Party! The Liberal Democrats become king-makers or coalition partners, sitting on more than 100 seats. This is a level they haven’t seen since Lloyd George was the last Liberal Prime Minister after the First World War nearly a century ago.

And such is the skew in our constituencies, and the impact of the small parties like the Nationalists, Labour would have the most Members of Parliament even though it would have the smallest share of the vote of the “big three” parties. By combining with the Liberal Democrats, either the Conservatives or Labour could command an overall majority!

These are of course only opinion polls. It’s real votes in real ballot boxes that count at the end of the day 9that day being May 6th). But Clegg and his Liberal Democrats are suddenly more credible than ever nationally (despite running many of the major cities in England) and they’ve energised the Election, especially among younger voters.

There are two more debates, the next one on Thursday. Anything can happen. But at least for now, in the UK, politics is no longer boring!

Cui Bono: The strange case of the US regulator SEC and investment bank, Goldman Sachs

The weekend saw a rather bizarre case reported in the US press of the Securities and Exchange Commission (SEC) decision to prosecute the investment bank Goldman Sachs and one of its traders in the case of practises around packaging 'toxic assets' (sub-prime mortgages) and the transparency around their sale to the public.

The case is bizarre at first glance as firstly, Goldman Sachs lost $90m themselves and second that much of the case is around the involvement of John Paulson, the man who a) advised the fund on the composition of assets and b) the man who benefitted principally by shorting the fund he advised Goldman to create and c) who earned a personal paycheck of $3.5bn is not at all implicated in the scenario.

The fact that there are no images of federal agents making arrests or offices being stormed for documents implies that the case is a spurious fishing exercise at one level. Additionally the it was reported that Goldman Sachs had known for 9 months of the pending SEC action.

However by Monday morning the political strategy underpinning the choice has become far clearer. The Obama push for financial reform in an environment of blossoming financial markets creates a need to remind the body politic of the evils of unbridled capitalism (from a Democrat perspective) defining the timing of the SEC card being played by the Obama Administration, leading to five key questions;

1. Will Goldman Sachs make a stand on principal that it acted ethically or will they fold and settle quickly and quietly ?

2. Where was the influence of the Goldman alumni network with the Obama administration ? Is the influence of the network on the wane ??

3. Can Goldman Sachs win the case on behalf of itself and Wall Street ?

4. What will this case do for Democrat fundraisers going into the mid-term elections and the US elections in 2012 ? One would suspect a Republican platform along the lines of "enough punishment - lets get back to making money" will garner far more political interest and campaign funds not only from Goldman though additionally from other institutions fatigued, and fearful of another four year punishment beating.

5. Who will ultimately be the political whipping-boy for the financial crisis ? Clearly Bernie Maddoff is not a big enough fish - although he did immense damage he was not hauled in chains to Washington. One could suggest that looking backwards to the likes of Michael Milken (as a superficial level) that the person seem most to benefit from a situation becomes the real political target for action.

Witness round 1 in a multi-stage campaign.