On Fraud

The other day a member of an organised crime gang was convicted of a two month campaign of blackmail and intimidation against an innocent businessman. The man’s car was torched and he was threatened with serious injury. He and his wife were left traumatised.

The perpetrator had 25 convictions for various crimes, including wounding, and had served a ten-year sentence for armed robbery. He was by any standards a violent, unrepentant career criminal, and a danger to those around him.

He got six years.

A few days before, a young conman was found to have deprived a number of already affluent investors of a total of £21 million by means of an elaborate scam involving a fake dealing room.

He got seven years. I know which one I would rather see inside, and which I would be happy to walk past on the street.

We have this weird attitude to fraudulent crime. Banks can indulge in organised behaviour that is deliberately designed to deprive customers of their cash, in exchange for products they do not need, but this need not be followed by any criminal action. As it happens, one of the recent banking misdeeds that came to light involved the depriving of customers of a sum in excess of £23 million, which should have, logically, attracted a tariff slightly higher than our amateur fraudster.

Two other things about our scam artist. These were affluent investors, not widows and orphans, who presumably knew their way around the financial world. But they were happy to entrust their money to a smart-talking 24 year old. There must be some degree of contributory negligence or contributory stupidity.

Second, such scams generally involve the offer of returns that are substantially and implausibly more than you could possibly expect to get elsewhere. There is a saying in the investment world, if it looks too good to be true, it generally is. A degree of contributory greed there, too, perhaps.

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The Disappearance of the Middle Classes

A report by a couple of labour market economists confirms something I have long noticed to be true. A large chunk of the middle class has disappeared.

Come back with me to a Friday afternoon in 1973, and the bar of the local suburban golf course. A number of individuals, all men, are gathered. The local solicitor. A City stockbroker.  A teacher at an independent school.  The bank manager.  A businessman who runs a chain of prosperous grocery shops. A doctor. Two middle ranking executives, at Shell and Unilever. Throw in a senior national newspaper columnist, if you wish.

They all enjoy equally high standing in the community, and probably roughly the same salaries.

Scroll forward four decades. The study found that the bond between the top 1 per cent of earners and the nine per cent below them had been severed, as some of the above shot ahead and others declined sharply, and lost status.

The local solicitor has not only seen his earnings from basic services such as wills, probate and conveyancing decline, but he or his equivalent today is also facing the threat of competition, in a deregulated industry, from providers who do not come from within the legal profession.

The teacher will have seen his earnings and status decline, too, unless he is one of the new breed of “super-heads”.

The bank manager has ceased to exist, his function taken over by a call centre and algorithms that decide where the loans go.

The businessman has been Tescoised, his business wiped out by ruthless supermarkets. His equivalent will probably be an immigrant or second generation such, using his family to keep the shops open all hours as the only means of survival.

The two middle-ranking executives will have been delayered, as huge swathes of such work disappeared at such multinationals

The doctor will have done rather well on the new salaries the profession enjoys. The stockbroker, likewise, though his equivalent will be working in a much more stressed, pressured environment. Neither will have much time for golf on a Friday afternoon.

I may have missed one out.

On Cigarettes, Again

Many years ago I used to attend press briefings at one of our biggest makers of cigarettes. You would walk into the auditorium and, barely visible through the clouds of cigarette smoke, there would be a row of people waiting to take your questions, almost all puffing away like beagles. The product would be widely available in convenient receptacles, in case you felt like joining them. I think they were making a point.

It barely seems credible today, like smoking on the Tube. Both are wildly illegal now, a very nasty fire at Kings Cross having put paid to the notion that it is a good idea to light up in a sealed container some way underground.

In those days, if you claimed smoking was not very good for people’s health, a glossy document would arrive, full of figures and charts, written by people some with letters after their name, which would conclude that the case for any sort of health risk was not yet proven. Heaven knows where they found those professionals with letters after their names, who by their very training must have known better, but the case against smoking was, to be fair, a little less concrete than it is today.

We still have two large cigarette producers based in the UK. I spoke to someone quite senior who works for one of them this week. I have never dared ask the question: how can you? How do you square it with your conscience, working for a business whose main product will kill one in four people who choose to consume it over an extended period?

If you were living in an area of high unemployment, and the only factory in town was making fags, I can see how you might explain it. The habit is legal. Why should I deprive my family on a point of principle?

The senior people at these companies, the marketing men, the PR and HR professionals, the technicians, the executives all the way up to board level, all have skills that are highly transferable. They could work for any large corporation. They don’t have to work for one that kills people. What do they tell their friends, over the dinner party table? And I bet not many of those educated professionals smoke.

He Says, She Says

I once sat as a juror, in one of my many spells in the jury box, in what I would describe as a “he says, she says” trial. The facts were simple enough. She said that during an altercation he said something about her which constituted a criminal office. He said he didn’t. That was all, as a jury, we had to go on.

The judge made it clear that we had to reach a conclusion “beyond all reasonable doubt”. This is the criminal burden of conviction. He stressed this several times. It is, plainly, impossible to decide beyond all reasonable doubt whether something was or was not said some months previously, not having been there, and with no recording evidence, CCTV cameras, whatever.

You can only say, he looks like the sort of person who might have done that. She looks a bit shifty. God help us that juries should decide, one way or another, on such a basis.

We acquitted him. The judge then made it clear to us, in not so many words, that the whole thing might be seen as a waste of time, but he couldn’t possibly comment.

A large number of sexual offences are “he says, she says” crimes. This plainly does not apply if there is evidence of injury. If there is not, in many cases the two parties may have emerged from a bedroom, having both entered it willingly, with diametrically opposed accounts of what took place there. This explains, rather than some inherently misogynistic bias to our judicial system, why so few accusations of serious sexual assault make it to the courts, and why so few end in conviction.

Sorry, but that is how it is. Now, suppose the “he says, she says” events had taken place three or four decades ago. How clearly could you testify, in the witness box, over events that happened then? Would anyone seriously suggest such a case should come to court?

In the case I took part in above, and in some more high profile cases recently, there must be a suspicion that the authorities said, rather than take a sensible view let’s wash our hands of this and sling it over to a jury trial. We can’t be blamed for anything that subsequently happens there.

The Winter Olympics

Putin is keen to put his stamp on the Winter Olympics now opening in Sochi because he wants to try to expunge the memory of the last time such an event was held on Russian soil, the 1980 Moscow Olympics, which was boycotted by a number of Western teams.

It is worth remembering why. The previous year the Soviet Union invaded Afghanistan. This was in support of a prime minister, Hazifullah Amin, who was more to their tastes and was engaged in a bitter civil war with the local Islamic fundamentalists as he tried to westernise the country.

We had been doing the same in Afghanistan for decades, when we ran India. Amin was not exactly one of the good guys, leading a Communist government, but he was against a tradition that kept women in subjugation, indulged in honour killings and the usual savagery towards unbelievers.

The response of the West, ie the Americans, was to ensure those same Islamic fundamentalists were armed to the teeth with modern weapons in the hope that the war would bog the Soviets down in that intractable country. This duly happened, the Russians left and the theocrats took over.

Someone remind me what happened then.

There is another interesting historical point relating to the Winter Olympics. Sochi was once the capital of Circassia, a state on the Black Sea that was nominally independent. The Circassians were known for their blond hair and blue eyes, and were much favoured by the Ottomans as slaves and slave-soldiers. They were also predominately Muslim.

The Russians annexed it in the mid-19^th Century and decided to dispose of the Circassians. The Czar’s troops invaded and indulged in what we would today call ethnic cleansing. Villages were destroyed, inhabitants massacred or forced out. Half a million or more are reckoned to have died. There was a Circassian diaspora, mainly to the Ottoman lands, of about the same number. Precise figures are, for obvious reasons, not known.

There are now considerably more of Circassian descent living elsewhere than survive in their ancestral land. There is an official Circassian Genocide Memorial Day, May 21.

Not a lot of the above is known outside of Russia, and the subject is a sensitive one there, having to do with the country’s uneasy relations with the Caucasus.

The Winter Olympics are held on sites built above the bones of people who, by some reckoning, suffered in one of the first genocides of the modern age.

Had an Olympic event been held on the site of an outrage committed by the British, say, in Amritsar, I imagine the fact would be more widely appreciated.

Irrational Markets, Again

Those outside the City or with little interest in economics will probably not have come across US non-farm payroll numbers. This dry-sounding monthly statistic, a measure of how many are employed in the US economy outside agriculture, is one of the most watched of world economic data.

It gives a snapshot of the strength of the US economy. The numbers can veer around wildly; one month some years ago the US economy added some 750,000 new workers, the equivalent of wiping out about a third of the UK’s unemployed.

It varies because the US job market is much less regulated than ours. It is easier to fire people when times are hard, and so employers are quicker to hire when they feel they need to. I leave it to you to decide if this is a good thing.

Some believe the figures are also wildly unreliable, for a variety of reasons, but as I say, they are closely followed. I have argued, and most would agree, that the practice of quantitative easing (QE), buying up government bonds as they are issued and so using public cash to stimulate the economy, aka “printing money”, acts as a wild distortion that makes it hard to read where markets are going. Including stock markets, which is where I come in.

Today, Friday, the non-farm payroll figures undershot expectations. This should be bad news, because it suggests the US economy, the world’s biggest, is not doing as well as we thought. You would expect markets to fall, and they might well have done. Instead US markets rose, on the counter-argument that this weakness means that QE will continue, and so will that economic stimulus.

This apparent paradox has been true for several years now. In a parallel universe, those non-farm payroll numbers might have wildly exceeded the most optimistic expectations. The markets might then have fallen, on the assumption that QE would decrease. Or they might have risen, because a stronger US economy benefits us all.
Markets where two different outcomes could each equally prompt two different responses are, almost by definition, irrational. It suggests that, when things get back to “normal”, we could end up anywhere.

London Transport

This morning my journey into work was disrupted by “signal problems” at my local station. This meant that the journey was significantly more difficult than on Thursday or Wednesday when, we are told, London was thrown into chaos by a strike by the RMT union.
When Bob Crow and the RMT cause disruption by exercising their legal right to withdraw their labour, for however specious a reason, there is outrage, and calls for changes to the law to prevent this. (How? By shackling them to their seats? Perhaps we could have a large bare-chested man with a drum behind them, beating it to keep time.)

When our journey is disrupted by our awful, decrepit transport system, whose level of reliability would be regarded as a disgrace in any other capital in the developed world, we shrug and say, just one of those things. The average Tube or rail commuter can expect to face delays, minor or hugely inconvenient, caused by technical problems several times a week. We regard this as normal.

This is despite the billions over the years thrown at private sector companies to put these technical problems right, or the years of deliberate disruption, sorry, “planned engineering work”, at weekends, which seems to have left the transport system no better than it was a decade ago.

We never question where that money went, or how much longer disruption caused by planned upgrades to services is likely to last. Or indeed if it has a finite time span. Something is wrong here.

Job Satisfaction

Couldn’t resist this one. Sorry.

http://www.thepoke.co.uk/2014/02/05/when-you-have-an-i-hate-my-job-day-consider-this/

Irrational Markets

These are very odd markets. The abrupt falls in share prices this year could be the usual typical January and February declines after the year end surge, or they may be about to make those forecasts, widespread, that the FTSE-100 will hit 7,500 by the end of 2014 look rather silly.

I was talking to the head of a large UK company with much of its business in the US, who spends a lot of time there. He made an interesting point. US shares are valued even higher than the London market, to the extent that US investors are running scared. They know those valuations don’t make sense.

They are equally spooked by emerging markets, for obvious reasons. They are looking towards Europe for value. His share price tends to react favourably in the afternoon, London time, as US investors come in.

This suggests two things to me. UK shares may continue to see some support from US buyers seeking what they perceive as value. Until interest rates start to rise, quantitative easing tapers off further and bond yields return to “normal” levels.

Then that support may evaporate. And as we know, when such reverses take place, they take place very quickly indeed, and the effects can be alarming.

Middle Class Vested Interests

I worked with Michael Gove for some years and can confirm that he is a genuinely decent man, a politician who came into politics to make life better for his fellow citizens. Brought up in fairly modest circumstances, he gained a scholarship to go to a good school and his prime motivation is to ensure that as many pupils as possible today get the best possible education.

My teenage daughter went to 6^th form college, where it is fair to assume she absorbed the demonisation of Gove by the staff there and others of the educational establishment, that amorphous mass of naysayers and foot-draggers that he himself calls The Blob. She genuinely seems to think he has a personal animosity towards the young, all of them. Teenagers are prone to silly ideas.

Gove is up against that constant of the advantaged professional classes the Middle Class Vested Interest. The same is true of those who have tried to reform the NHS or other parts of the health establishment.

They have an inbuilt advantage, these MCVIs. They are articulate, and present well on the Today Programme, where half a dozen of them – that soft-voiced Scotsman who used to speak for the BMA, the woman from the NUT – have become fixtures, on speed-dial on the producers’ mobiles.

What they have in common, aside from that voice of sweet reasonableness, is the determination that the people they represent do not want change, that the practices enshrined in their professional codes of conduct must never be amended and that those privileges their members enjoy are not to be eroded in any way. No matter that it might be to the benefit of the people they are pledged to teach, or treat, or serve. And that the money is always there, somewhere, to support the status quo.

They are no different from any other  knuckle-dragging trade unionist, but that articulacy and voice of sweet reason is very difficult to combat, as Gove has found out. The one vested interest that Mrs Thatcher never dared take on was the law, although some of the lawyers’ privileges are now being eroded by market forces and the arrival of competition from outside the profession.

And which profession is disproportionately represented in Parliament? Indeed. Funny, that.

(Disclaimer – my daughter, who designed this website, is actually incredibly intelligent and I’m lucky to have her around. Her opinions are her own, as mine are.)