Wednesday, February 01, 2012

Bart Simpson Was Right

Remember the episode of The Simpsons called Bart The Genius where little Bart finds himself in a class of over achievers and has to give an example of a truism, he chooses, "You're damned if you do and you're damned if you don't." Well I couldn't help thinking of Springfield's most famous age resistant resident when the news emerged that Sir Fred Goodwin had been stripped of his knighthood.

The reason had nothing to do with any sympathy for the former banker but more to do with what would appear to be a populist gesture by a PM who seems to be bending to public opinion with each public utterance. This is great if its the way forward, the country can be run by genuine democracy where we all sit at home and choose A, B, C or D as the options, a bit like the studio audience in Who Wants To Be A Millionaire, but of course it wouldn't work would it because life isn't like that and what we have seen for the second time in a week is what amounts to a lynch mob getting its own way.

Stephen Hester and Fred Goodwin are, apparently, the publicly unacceptable faces of capitalism, the former the victim of the last Government's desperation to make sure that RBS would operate properly if brought into public ownership, the latter apparently singlehandedly responsible for starting the worst recession since World War Two. Personal debt in the UK may be greater than in any other developed country in the world but we need to blame somebody and with Goodwin and Hester we do at least have two real people rather than the fuzzy concept of 'the Government' and as tabloid journalists know only two well greed is good but only if you are the greedy and not the starving.

Goodwin joins a small but select list of those who have lost their titles, Anthony Blunt, Robert Mugabe and Lester Piggott being three of the more famous losers. It also brings into question the whole honours system, a system that can apparently reward you on the one hand for your services to an industry and then seven years later, in a pique of revisionism the likes of which we haven't seen since Tony Blair apologised for some misdemeanour of our Empire building ancestors, it is taken away. Where does this leave Sir Victor Bank (no that really is his name), Sir Callum McCarthy who were also involved in the beginning of the recession, what about Sir Michael Jagger, he hasn't produced anything of musical note in decades, or Sir Jackie Stewart who hasn't been competitive in Formula One since 1974? Yes I know I'm being flippant with the last two but then the whole honours system has made itself the target for flippancy with this latest episode. Fred Goodwin didn't need the knighthood in the first place and the loss of title probably won't much difference to him on a day to day basis but it does set an interesting precedent for the times we live in. Goodwin didn't do anything illegal, unlike Blunt and Piggott, he was simply a pawn in a much larger game where the rewards for most participants are far greater than any of us can comprehend and unless you instigate a bonus system that boths gives and takes away these things will happen.

The machinations of the city are a puzzle to most of us, even those of us who have studied economics and politics for a greater part of our lives and we are basically happy enough for things to be left that way, until of course we are called upon to support the industry through bailouts. It's interesting to see how the drop in value of RBS shares has got everybody so animated this week. I don't remember there being much discussion when the shares were increasing in value. Of course the rise and fall of shares in a nationalised company really only has substance if you choose to make political capital (no pun intended) out of it. In most circumstances the decision of a company to not pay a bonus (or to defer it) and retain profits would increase the value of its shares not decrease them. However the city plays to its own rules and the screaming about the loss of dozens of schools and/or hospitals is in itself is an interesting concept because the value of the taxpayers stake only crystalises upon its sale and of course that value can go up and down at the whim of the city and the traders whose bonuses depend on its value increasing. So Hester not taking his own 'valued added' option has led to the taxpayer losing some of its 'value added' option (albeit on paper only) and yet when the fuss is over and the share value increases we will all be winners with the city taking the biggest slice of the win. No wonder people are so cynical these days! 

9 comments:

A Northern Bloke said...

A good post, Paul. I'm reminded of a story a few years ago when a convicted drug dealer rescued a drowning man from the sea whilst out walking. There was an outcry when it looked like he might get an award for bravery.

Paul said...

Thanks Shy. It is a strange world we live in isn't it?

Span Ows said...

I agree, a good post and now all the doubts are coming out re UK being "open for business" or not. You're right he didn't need and shouldn't have got the knighthood but the Jock mafia saw to that. he is getting 32K a MONTH as a pension (presumably along with many other goodies he has tucked away) so I doubt he gives a toss.

Span Ows said...

Also the noise to de-robe (you know what I mean!) convicted peers is growing, probably with good reason, MPs too. Kick them all out. Shred didn't even commit a crime.

Paul said...

It's fascinating to see the way this is gaining momentum, when will Sir Mervyn King lose his title?

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