Carillion Ponzi Scheme

The collapse of one of the U.K.’s largest engineering firms, Carillion, has generated a lot of media coverage as well as featuring in today’s Prime Minister’s Question time (or PMQs as it is known).  At this event, the Tories evidently found Labour Leader Jeremy Corbyn’s questions to the PM re this debacle humorous. More fools them! 

To me, the Carillion case looks like a Ponzi scheme. The company went for growth more or less regardless. But, the growth was essential to survival, for like any Ponzi scheme, it depended on new customers to provide cash and confidence in order to keep cash flowing to pay suppliers, and keep the banks, shareholders and, ultimately, the government, sweet.  This is also called ‘deception’. 

Unfortunately, continuous growth cannot be depended upon.  For one thing, the government’s austerity policy led to reduction in the number of contracts in the pubic sector, thus jeopardising continual growth. Underperforming or problematic contracts further jeopardised the slim margins upon which Carillion operated.  So, things started to unravel. 

Profit warnings were issued. The hedge funds started to short Carillion — always an indication that there are problems.  Meanwhile, the government, a major Carillion client, continued to dish out large contracts to Carillion, partly because the government didn’t want to be the stakeholder that brought the company down by not giving it more contracts. One side effect of this is that many of the various outsourced suppliers took this as an indication of confidence in continuing business with Carillion. 

As things unravelled, the banks (with Carillion loans of £900k) lobbied government to help out (cf. bank meltdown of 2007-8). The govt refused. Inevitably, things completely unravelled, with Carillion heavily in debt, and with only £29 million in the kitty (which means that it may have been trading illegally if i were cash flow insolvent).  

The CEO and executives have secured their own financial interest — their salaries and bonuses can’t be ‘clawed back’.  The pension fund is around £540 billion underfunded.  Thousands of suppliers — mostly SMEs — are in danger of going under. And hundreds of thousands of employees are in danger of being without an income. 

The government, which is complicit in this dreadful state of affairs, has already started denying/avoiding complicity — thus the Tory MPs laughter in today’s PMQs.  And like all Ponzi schemes, many will suffer.  But I’m not confident that this Tory government will do anything that will seriously change the neoliberal approach that has given rise to this appalling state of affairs.

Who am I?

Today I learned that I was adopted. I’m 79, so this came as something of a surprise. How did it come about that at this advanced stage of my life, I learned something about myself that at least some others knew, but which had been hidden from me for nearly 8 decades?

It started out with a recent DNA analysis, in which it was revealed that 23% of mine was Polynesian.  This was a surprise, as nothing in my known family history hinted at this, since my father was born in Sydney of English descent, and my mother was born in England, also of English descent. So, I contacted a cousin in New Zealand, where I was born, and asked her if she had any leads which might reveal where the Polynesian part of me came from. (As my son also had had his DNA analysed by a separate organisation, which produced a 10% ‘Oceanic’ component, there clearly was something Polynesian somewhere.)  Without really believing it possible, I suggested that maybe there was an adoption, possibly my own.

Today I received a letter and some documentation from my cousin. It arrived just as I was preparing lunch, and my wife opened the package, so while I was in the middle of cooking beef stroganoff, I heard my wife say “You’re adopted”.

This information raises as many questions as it answers.  Unfortunately, the generation which might have some answers are all dead, and few of my cousins will have any knowledge of my adoptive status, nor probably any interest. Quite simply, I imagine that in the past this was something that wasn’t discussed, and that after a while, people — including even my parent — forgot that I was adopted. Now, it’s only because oner or two cousins have been exploring family history that this has come up, and more significantly, only because of the questions raised by my DNA analysis, and subsequent contacting my cousin, that it has come to light.

Now I’m wondering whether I’ll go through a sort of revere equivalent of the five stages of  grief and loss : 1. Denial and isolation; 2. Anger; 3. Bargaining; 4. Depression; 5. Acceptance. At the moment, my feeling is one of regret — of not having known when my parents were alive. But thoughts on that, and a request for my pre-adoption birth certificate form the New Zealand Dept of Internal Affairs are matters for another day. Meanwhile, I end 2017 knowing a lot more about who I am but with a great deal more remaining to be discovered in 2018. 

Practice Makes Perfect....

I passed!  Yesterday, after some months of preparation and hundreds of miles of driving, I passed the Institute of Advanced Motorists Road Smart (IAM RoadSmart) advanced drivers test.  I even got a first!

Aside from being well chuffed at this, the whole experience has been quite enlightening from the viewpoint of training, trainers and being trained.

What is quite clear is that motivation is above all important.  I opted to do this, I wanted to do it, and I was prepared to put time and effort  into doing it. Although I may be able to get a discount on car insurance, this wasn't my reason for preparing and doing the test. My motivation was that after driving for over sixty years, it wasn't a bad idea to give some serious thought, time and activity to improving my driving, having reached an age when deterioration is, alas, inevitable.

Driving is a peculiarly personal activity, about which people (especially men) are very sensitive. I soon learned that I had a number of habits which needed to be abandoned or improved, starting with handling the steering wheel (two hands at all times) and going on to reading the road, anticipating by looking well ahead (Eyes on Main Beam to use the jargon) and generally pre-acting rather than reacting.  Much stress was put on driving lawfully (i.e. Not breaking speed limits) and safely, but 'with spirit' (i.e. If it's safe to do so, driving at the speed limit, but not beyond it).  Importantly, from the viewpoint of learning, I had to be prepared to take feedback and advice, and apply it. This, according to my Observer, is not what some trainees are prepare to do ("I always drive this way, so....")

There is a certain amount of jargon and acronyms: POWDERY and IPSGA, for instance. The latter relates to on the road behaviour: taking in, processing and giving out Information, Positioning the vehicle, Speed, Gears and Acceleration.  And so on. The idea is that all of this stuff will become an automatic part of one's driving.

And therein lies the rub: converting the explicit to the implicit. As this almost invariably involves some measure of changing ingrained habits, doing so is really challenging, and involves a lot of self awareness, self observation and analysis over quite a long time. There's a big lesson there for training: don't expect people to change habits overnight and encourage self criticism, but not to the extend of demoralizing the trainee.

The role of feedback is also very important. My Observer (they're not called trainers) is very good eliciting evaluation of performance from me before offering feedback.  She's also good at giving feedback while I'm driving; in other words, feedback during performance rather than afterwards.  This provides an opportunity to alter behaviour during a training session and receiving feedback (and encouragement) when it improves.

Practice is also very important.  I don't actually do much driving these days, so I made time to do some longish drives along a variety of road types in order to put lessons into practice.  This demonstrated very clearly that without practice, old habits and new skills won't quickly change or become habitual.  This is an obvious lesson which applies to virtually everything.

In my last session before the test, my observer did a demonstration drive (she'd done one or two at the start of my sessions) which proved very helpful.  So, there's a role for modeling target behaviour -- and commenting on and explaining it.

Lastly, an important part of the training is doing a commentary on driving while driving.  My Observer suggested that it's useful to think you're talking to a passenger who can't see, i.e you have a make believe interlocutor.  The test includes doing a commentary, and I think it helped me as it shows the tester not only what you're doing, but clarifies why you're doing it. It also demonstrates your powers of observation(the I part of IPSGA) and what you're making of what you observe as far as decisions re your driving are concerned.

I wish I'd done this test years ago, not only because of its effects on my driving, but because of the insights it has provided for training. My conclusion is that it's a good thing for anyone involved in training to become a trainee from time to time (it doesn't have to be driving!) so as to be reminded of what is involved in training from the trainee's viewpoint. It really is quite illuminating!

Destabilizing times

These are seriously destabilizing times.  Brexit alone is bad enough. But now we have civil war in the Labour Party -- a reprise of Cavaliers v. Round Heads.  Meanwhile, the Tories are undergoing their own civil war, with blonde headed cavalier BoJo being promoted as leader against opposition from Anyone But Boris. That anyone may prove to be the Home Secretary, sponsor of the Snoopers' Charter and removal from the European Court of Human Rights.

Meanwhile, I'm trying for to understand what 'democracy'  means in the context of UK politics.  Example: around 250K grass roots Labour members helped get Corbyn elected as party leader, while around 9 million people voted the now former members of the Labour shadow cabinet to parliament.  Both claim democratic legitimacy.  For the time being, the party which should be HM loyal Opposition appears to have abdicated its role in favor of domestic civil war.

And now we have the slaughter at Istanbul airport.  Turkey has been much bad mouthed recently in the referendum campaign, and its president isn't exactly a leader who commends himself to democrats, but no country should suffer the outrages that have been committed last night, presumably in the name of a movement that has no time for democracy and employs destabilization as a means of achieving its own benighted aims.

UP THE CREEK

Have been watching the BBC news. As predicted, Game of Thrones is in full swing, the news being dominated first by the Labour version, then, more briefly, by the Tory one.

What is almost beyond belief is that the Labour shadow cabinet, instead of unitedly and repeatedly emphasizing the unsuitability of the favored Tory candidate, BoJo, as PM, they are telling everybody about the unsuitability of their own leader to lead their party!  This, remember, is the Opposition.

Finally, what some commentators are pointing out,but which many people seem to have overlooked, is that it is the government which is responsible for activating Clause 50 and the 'divorce' proceedings, and not leading members of the Leave campaign.  So far the government has remained silent. Quite possibly, the government, which promoted remain, have few plans on hand on how to deal with Brexit.  It's abundantly clear that the Brexit brigade have no plans. So, the country really does appear to be drifting up shit creek without a paddle!

Post Referendum Reflections

Reflections on the Referendum

Nothing has revealed the need for political reform more starkly than the outcome of this referendum, whose conduct by the 'winner' was based on an age old strategy perfected 80 years ago by Joseph Goebbels:

1) Have a simple, focused goal, e.g. Leaving the EU
2) Identify a grievance -- or preferably several.
3) Create a narrative in which 1) is presented as the means of fixing 2) despite lack of causality between them
4) Ensure that the media promulgate the narrative. Truthfulness is optional. Populist and nativist appeals are crucial.
5) Front the campaign with a 'personality' from the elite, masquerading as guardian of the interests of ordinary man, helping to feed the media with a constant stream of sound bites which play to populist and nativist prejudices and grievances
6) Repeat a few simple mantras at every opportunity together with statements of plausible deniability for extreme statements and acts of supporters
7) Prepare a range of convincing excuses for the inevitable chaos to follow a win and lack of competence to carry out withdrawal and realignment negotiations. (Just heard one from Daniel Hannan to the effect that "people aren't children and will understand that changes will take time". Another one: "we didn't promise that we would stop immigration". Yea, right.)

There is a disconcerting similarity between the strategy above and that employed by many mischievous and malign regimes, from Nazi Germany to North Korea to the Trump presidential campaign.  Meanwhile, the millions of voters who were duped will soon start to experience buyers' remorse -- too late.

Now there are two parallel Game of Thrones going on in the Conservative and Labour parties over their leaderships (both parties being well beyond their sell-by dates as revealed by the divisions and alignments in the referendum campaign).  These games will provide the media with much copy to divert attention from the problems that withdrawal from the EU is already showing up.  The less than helpful attitude of soon to be erstwhile EU partner nations in managing the withdrawal will be depicted as perfidious Europe attacking brave go-it-alone Blighty -- further 'evidence' to justify withdrawal from the EU.

Btw, do you remember that with the collapse of the Soviet Union, the end to the Cold War, and the Peace Dividend that this entailed, we were invited to rejoice in the end of history and entry to a sunny upland of continuing peace and prosperity?  So last century....

EU Referendum: Why I voted to remain

Trying to make sense of the referendum

 Note: I wrote this a couple of days before the referendum

Sovereignty: in all important respects (e.g. War) the UK is a sovereign state. The status of EU legislation has been established by Parliament, and cd be changed.  The majority of UK law is not simply a direct translation of EU legislation, and much of it appears to be concerned with regulations.

Red tape: the EU itself is concerned with reducing the amount of centrally created legislation and regulation, and moves are in hand (which will be greatly supported by the UK) to both reduce the amount of such legislation and to give more autonomy to national parliaments.

Democratic deficit: the EU law making process is not as undemocratic as alleged (key decisions and legislation are passed by the Council of Ministers and by the Parliament), but it could be more so.

EU Federation: the UK is already absolved from becoming involved, and there is some drawing back from this among EU members. Even if a confederation of Eurozone members takes place, the U.K. Is outside the Eurozone and will not be involved                                                                                                                      

EU Immobility: the difficulty of fixing such matters as the monthly removal to Strasbourg, though widely regarded as wasteful and inefficient, cannot easily be changed except by agreement of all member nations, a change to the treaty, and national referenda. Unless such impediments in governance can be changed, other reforms will likewise be stymied. This is a real cause of concern if much needed reforms to the EU are to be successful, but in itself is not a reason for withdrawal.

Trade treaties: these are less concerned with tariffs than with regulations and the EU provides the  Holy Grail as far as these are concerned.  Establishing trade treaties post Brexit wd involve both the EU and those countries with which the UK wished to trade.  These negotiations wd likely be tortuous. Also it is doubtful that the UK has the expertise to conduct such negotiations.  Furthermore, it is unlikely that any countries will enter into a treaty until the UK's post Brexit trade relations with the EU are clarified -- and this could take years. So, there is likely to be a trade treaty limbo which could be damaging to the UK economy. In any case, the U.K. will be negotiating from a position of weakness, and China and India, for instance,  are unlikely to be offering advantageous conditions to the UK.

Economy: everyone seems to agree that there will be a post Brexit dip.  Retrieving the income foregone will involve stimulating extra growth from a position of  weakness.   Furthermore, short term effects can have long term consequences, all of which are difficult to predict, adding to medium to long term uncertainty.

Meanwhile, the presence and position of international companies in the UK post Brexit are also uncertain, since their presence is largely determined by entry to the large European market. (80% of UK car production is exported).  Further complicating the situation are the supply chains which involve EU sources of components for UK made products. In addition, the status of the U.K. as a financial services centre will almost certainly be affected, particularly as Paris and Frankfurt are keen to benefit.

Immigration: this issue has been thoroughly contaminated by the Referendum.  Successive governments have failed to address it effectively.  Furthermore, domestic policies have exacerbated the situation, e.g. Inadequate ESL support, withdrawal of funds to local governments in areas receiving large numbers of immigrants, framing immigration and immigrants as a problem.  Future governments must do better.


It is clear that controlling immigration post Brexit will not be easy, and it is likely to be even more difficult given what wd probably be a porous border between Ireland and the U.K. Instead of receiving legal immigrants, the U.K. would be likely to suffer from increasing numbers of illegals who wouldn't be tax payers.

Employment: Successive governments have failed to predict manpower requirements, and provide effective education and training (e.g. Decent apprenticeships) to fill jobs, many of which are filled by immigrants.

The U.K.is lightly regulated as far as employment is concerned, and this appears to leave gaps for exploitation, such as the recruitment within the EU of workers to be employed at below the UK living wage.  This is a domestic issue which requires a domestic solution.

Identity politics: this has been exploited by UKIP in particular, and, like immigration, has not really been adequately addressed.  There is an irony in this in that both the French and Spanish are taking measures against the contamination of their languages by English, and there are EU requirements regarding TV and films regarding 'European' content and origin. Unfortunately, in the UK identity politics seem to be aligned to a peak Blighty view of British culture and way of life, which is inimical to an internationalist orientation.

Domestic politics post Brexit:  the austerity agenda will be given a boost (as already indicated by Osborne's emergency budget) and the review of UK laws, even though carried out by the civil service, will basically be the responsibility of the government.  If this government is more right wing than centrist, the opportunity will doubtless be taken to strip out as much EU inspired legislation concerning environment, employment, human rights. In any case, this process will be greatly complicated by the integration of EU and UK law, and UK case law derived from this.

Further starving public services of funds in the name of austerity will doubtless hasten privatisation in the name of efficiency and cost saving.

Though only mentioned in passing by most commentators, the effects on Brexit on the Northern Ireland peace process could be damaging. As to Scotland....

International status of UK: it is difficult to avoid the conclusion that it will be diminished rather than enhanced by withdrawal from the EU.  Peak Blighty has no resonance with the world outside the UK except as content of TV drama.

Overall, I see no significant benefits in withdrawal from the EU, and many problems.  I am minded to vote REMAIN.