Archive for the ‘updated’ Category
So the England Zombies are looking more like Fast Zombies again. If I’ve bored you by talking up James Milner, I’d like to take this opportunity to claim my bragging rights. Here’s something interesting; back at the weekend, in the depths of self-loathing, the Obscurer published a table showing the teams with various statistics, including shots on goal. It struck me that England were looking rather good on that, and that the top four looked mostly like a plausible semi-final line up. So I’ve put together a spreadsheet ranking the teams by shots on target/matches played.
(oh, for fucksake – it’s fucking google spreadsheets. wordpress.com, get a clue. here.)
Data source here. Having fifa.com in my browser history makes me feel dirty for some reason.
That puts England 5th in the world – quarter finals again – but ahead of all the three possible opponents in the second round, Germany (7 on target/game vs. 7.333 – Google Spreadsheets is lax about sig figs), Ghana, and Serbia, and well ahead of the Netherlands and Italy. Further, out of the top four, Spain aren’t looking a cert to qualify out of their group, and they have an even worse tradition of World Cup choking than we do. This may be daft, sunshine and beer optimism; but it’s daft, sunshine and beer optimism with data.
Update: Well, would you look at that.
I’d like to introduce you to a new project. The other day, I was reading an imbecilic union-bashing editorial by one “Hugo Rifkind”, and I wondered….whose kid are you? Wikipedia informed me that diary columnist (it’s like a journalist but not quite) Rifkind is indeed the former Defence and Foreign Secretary’s son, and he’s “written” a “book” about “the London media world” called Overexposed Overexposure, which kicks the bottom out of the rotting barrel of satire.
And there, I had it – we need a Web site to monitor nepotism, and backscratching influence-peddling more generally. WhoseKidAreYou! There’s been quite a lot of work on designing machine-readable ways of expressing relationships between people, but to start with, I reckon we need a decent wiki server or else perhaps a Django install, and the British journalists section of Wikipedia as a start. We can crowdsource the rest; we’ve got bitterness and resentment on our side, plus a powerful kicker of personal loathing!
We’ll need to hold basic biographical data, plus job and publication history, a link to corresponding Wikipedia data, and of course, the crucial affiliations. Not just WhoseKidAreYou, but also WhoseThinktankDoYou”Work”For. Once we’ve got a reasonable amount of data, we can think about social-graph visualisations and other fancy twirls; we could also do a browser extension that picks out bylines, searches the DB in background, and shows a notification. “Did you know this was written by Christopher Hitchens’ illegitimate son, working for a thinktank founded by Douglas Murray?”
I am deadly serious about this, and I would like your comments. The project isn’t really suited to MySociety.org – it’s far from neutral and it’s explicitly partisan and generally vicious – so it’ll have to be unilateral. I’ve set up a Google group (aka a mailing list/usenet group) over here.
UPDATE: More is here, including how to take part.
UPDATE UPDATE: Hugo Rifkind has been in touch, to point out that I misspelled the title of his book.
OK. So we looked into voice stress analysis and the world telecoms infrastructure. And we concluded that proper VSA – the sort with the peer-reviewed scientific papers an stuff – was technically impossible. Recap; the original VSA research is based on a change in a signal in your voice between 8 and 12Hz, but even the highest-quality voice codecs used for public telephony filter out everything below 50Hz, so a VSA system based on – well – science couldn’t possibly work.
But there was always the possibility that “Nemesysco” had hit on some kind of roaring king-hell breakthrough. Minitrue couldn’t find a copy of the patent that covers their product; you might wonder why there wasn’t a US patent if it’s so great, or why every call-centre workflow system and high-end mobile phone in the world doesn’t have it as a much-valued standard feature, or why Amir Liberman, the CEO of Nemesysco, isn’t incredibly rich.
After all, he’s been hawking it since at least 1998. His company was formed in early 2000, just a tad late for the joy of the .com boom; at the time they were marketing towards consumers and businesses. But, as the venture capital dried up, the stock exchange cursed everything to do with computers, and it looked like a whole world of vaguely technical young sheisters would have to get a job…something happened, and suddenly his product became “Israeli intelligence service technology” that would save you from terrorists.
There is no evidence that Tsahal or the intelligence services ever made use of it, but as reader Chris “Chris” Williams points, there is a certain mana attached to the Israeli military – link your product to them, and it gets just that bit badder. I tell you, it’s the sunglasses.
So, let’s cut to the chase. The patent is here, thanks to the Canadian government. The “claims” section described how it is meant to work – there’s even an example implementation in Microsoft Visual Basic (you bastards). Here’s how: it takes samples of speech and identifies “plateaus” – flat bits – and “thorns”. Thorns are defined as:
A thorn is a notch-shaped feature. For example the term thorn may be defined as:
a) a sequence of 3 adjacent samples in which the first and third samples are both higher than the middle samples
b) a sequence of 3 adjacent samples in which the first and third are both lower than the middle samples
Now, all speech is roughly speaking a succession of sine waves; by definition it’s going to fit this. Anyway, they take a control sample of speech, count the plateaus and thorns and compute the standard errors, then they ask the questions they want to test, and do the same thing. They then look at the difference between the values and compare them to reference values to tell if you’re lying.
Where do these reference values come from? It is appreciated that all of the numerical values are merely examples and are typically application-dependent. So basically, the all-crucial message on the screen depends entirely on the sensitivity values you punch in to the thing; perhaps great if you’re trying to bully some random Palestinian, but not so good if you need real information.
Hey, if they only knew Visual Basic and were willing to commit Software Crime, Harrow council could crank the reference values down to zero and deny EVERYBODY their housing benefit.
From this, he reckons he can determine:
Excitement Level: Each of us becomes excited (or depressed) from time to time. SENSE compares the presence of the Micro-High-frequencies of each sample to the basic profile to measure the excitement level in each vocal segment.
Confusion Level: Is your subject sure about what he or she is saying? SENSE technology measures and compares the tiny delays in your subject’s voice to assess how certain he or she is.
Stress Level: Stress is physiologically defined as the body’s reaction to a threat, either by fighting the threat, or by fleeing. However, during a spoken conversation neither option may be available. The conflict caused by this dissonance affects the micro-low-frequencies in the voice during speech.
Thinking Level: How much is your subject trying to find answers? Might he or she be “inventing” stories?
S.O.S: (Say Or Stop) – Is your subject hesitating to tell you something?
Concentration Level: Extreme concentration might indicate deception.
Anticipation Level: Is your subject anticipating your responses according to what he or she is telling you?
Embarrassment Level: Is your subject feeling comfortable, or does he feel some level of embarrassment regarding what he or she is saying?
Arousal Level: What triggers arousal in the subject? Is he or she interested in you? Aroused by certain visuals? This new detection can be used both for personal use for issues of romance, or professionally for therapy relating to sex-offenders.
Deep Emotions: What long-standing emotions does your subject experience? Is he or she “excited” or “uncertain” in general?
SENSE’s “Deep” Technology: Is your subject thinking about a single topic when speaking, or are there several layers (i.e., background issues, something that may be bothering him or her, planning, etc.) SENSE technology can detect brain activity operating at a pre-conscious level.
He can apparently detect that all from a total of two measurements. Note also that there is no mention of Micro-High Frequencies in his patent claims; if they were particularly high, they would probably vanish in the band-pass filters above 3.4kHz….
I have collected these claims across his Web site; I wonder if Harrow council is aware that exactly the same technology is being marketed as a “Love Detector“? Or that another company has ripped off the patent, and he warns buyers that theirs won’t produce the advertised 85% accuracy, even though it’s the same patent? This is scienciness, not science. But then, the point is to scare the poor.
Update: See here.
I was going to fisk the Government’s depressing sudden love affair with the discredited nonsense of “lie detectors”, but I see the Ministry has already done it. Go and read; it’s an instant classic. And as a bonus, there’s a great comment from the Great Simpleton, who you occasionally find in comments here, about some effects of telecoms infrastructure on the welfare state.
It’s certainly all nonsense – the 3G voice codec, AMR Narrowband, includes a band-pass filter between 200Hz and 3.4KHz, as do G711 and G729, so the markers VSA relies on, which are to be found between 8 and 12Hz, will be undetectable on any current mobile or fixed phone. Even the AMR Wideband high-quality voice standard will pass nothing – the band-pass for that one is 50Hz-7KHz. Any sound that does turn up at the VSA, therefore, is an artefact of some kind – a stray cosmic ray, or the acoustic echo cancellation at the local exchange going out of kilter when it produces the synthetic network noise to reassure you the line isn’t dead. (You might be advised not to Skype the benefits office – they’re considerably wider band when they are comprehensible at all.)
To expand on my comment over there, though, someone already markets a voice-stress analyser application for Windows Mobile smartphones. It’s probably mostly witchcraft and social engineering, but it’s very likely easier to do the opposite; either filter out the frequency band that is meant to be the marker, which could maybe sound weird or be too obvious if you could hear it at all, inject noise into that channel, or create a synthetic signal. That would be the hardest of the three to implement, but it would provide some interesting affordances – you could choose to sound more untrustworthy. If you could hear it, that is.
The only thing this achieves, then, is to deny some people their bennies entirely at random. Which is, of course, a highly political act.
Update: See here
Those crazy Canadians, eh? It looks like they’re about to do that rare thing in a Westminster-type constitution, throw out the government on a confidence vote and substitute another. Not just that, they’re going to do that even more rare thing in a Westminster-type constitution, form a multi-party coalition. Not just that, they’re going to have a German-style toleration agreement with a party that isn’t in the government. Woo. It also looks like the Canadian prime minister is trying to do something weird to the constitution to save himself, and there is a chance of a good crisis.
So why don’t we have a look at how this rarely-used function works? It’s not just Canada, after all – Anthony “Nate Silver before there was Nate Silver” Wells‘ swing projection currently shows the next election ending in a hung parliament, with the Tories 26 seats short of a majority. And there’s also some interesting TYR research related to that. I was saying in one of Wellsy’s threads that the polls almost seemed to make up two distinct series – one which showed the Tories with a steady lead north of 10 points, one which was much lower.
So I got the data for the last three months, split the polls into two groups, one with Tory leads of 10% or above and one with the lower ones. First observation – in the last couple of months they’ve practically alternated. Second, the lower ones show a marked downwards trend. I graphed them against a common timeline, drew trendlines, and computed the R-squared values. Here’s the chart.
The high delta-cee series has raging volatility, but no trend. But the low delta-cee ones are marching steadily downwards with R2 = 0.77. Clearly, the variance in the polls is widening sharply, but it’s only happening on one side – the bounds of the probable take in more and more chances of Tory failure. So, sitting back in Whitehall and reading this, what file would you ask to see? Surely the one on “Change of Government”.
Unfortunately, although the system provides for elective government with oversight and a legislative development environment, it’s not terribly well documented. There is no canonical procedure for an unplanned change of government, or for an inconclusive election – this is left up to the implementer. However, according to Peter Hennessy’s The Prime Minister, the procedure used last time, in February 1974, goes like this: the PM stays PM until he resigns or another PM is appointed. This is clearly Pythonic – the variable PrimeMinister is a pointer to an object containing the PM’s name, and we can change it at any time. This variable is scoped to the namespace it is declared in, unless explicitly referenced.
But who appoints the PM? I’m indebted to the folk at Making Light for this idea, but it’s all down to the distributed head of state protocol. The answer is – depending on your local implementation, the Local Distributed Queenship Node. It’s a bit like DNS, but for State authority; there is a root zone DQN, who is an old lady from Windsor, but she is also the LDQN for the UK. Any LDQN can subdelegate part of their zone to another they create. Some entities – like Canadian provinces – look up the root first, but they are routed back to their national LDQN via the constitutional equivalent of a CNAME. Now, the use of the LDQN’s powers is subject to the approval of Parliament, so there is a sort of AND gate here.
But it’s worth pointing out that the root DQN operator was appointed by an Act of Parliament; it’s actually quite like a German elective monarchy, with an unusually long time-to-live value. And the operative word here is “live”.
Anyway, the LDQN has the right to set the value of PrimeMinister, but this has to pass a check with the majority of the lower house of parliament. Let’s see some code:
while len(parliament.opposition.members) < len(parliament.government.members):
...govern()
...else:
.....if election==False:
......ldqn.send(NOCONFIDENCE)
.....else:
......ldqn.send(NEWPARLIAMENT)
When the LDQN catches one of these signals, strange things happen. NEWPARLIAMENT is straightforward; the LDQN sets PrimeMinister to the leader of the majority. But what if there is no majority? Unfortunately this bit is largely undocumented. And what about NOCONFIDENCE?
Well, in practice it works like this. The existing PM gets a crack at forming a coalition, in the case of NEWPARLIAMENT, or talking the rebel MPs around, in the case of NOCONFIDENCE. In the early 90s, John Major’s government actually experienced a NOCONF event but succeeded in passing a renewed confidence vote the same night. In this case, there is a need for an explicit confidence vote. If the PM doesn’t get this, or can’t form a coalition? He or she may try to call ldqn.dissolve_parliament() to trigger new elections, but this will not be granted if there has just been an election. Instead, the behaviour of the root LDQN on the last two occasions this happened was to give the PM a go at forming a government, then set PrimeMinister = LeaderOpposition.
If the leader of the Opposition can’t form a government, then a new election would be called. In the code:
if ldqn.audience = NOCONFIDENCE:
...newGovt = (PrimeMinister).formGovt()
...if newGovt == True:
.....vote.confidence(PrimeMinister)
...else:
.....if len(parliament.opposition.likely_members) > len(parliament.government.members):
........newGovt = (LeaderOpposition).formGovt()
.....else:
........ldqn.dissolve_parliament()
if ldqn.audience = NEWPARLIAMENT and parliament.overall_majority == True:
...newGovt = (LeaderOpposition).formGovt()
elif ldqn.audience = NEWPARLIAMENT and parliament.overall_majority == False:
...newGovt = (PrimeMinister).formGovt()
...if newGovt == True:
.....govern()
...elif newGovt == False:
.....newGovt = (LeaderOpposition).formGovt()
...if newGovt == True:
.....govern()
finally:
...parties = [len(party.members) for party in Parliament.parties]
...newGovt = (leader(max(parties)).formGovt()
...if newGovt == False:
....ldqn.dissolve_parliament()
Fuck me, this constitution lark is more complicated than you think, especially when you remember that this whole outlandish signalling cascade isn’t specified in primary legislation at all. And frankly, it’s clearer in Python than English. Bugs in the process have caused serious trouble in the past, notably in Australia where the LDQN experienced a catastrophic partisanship error in 1975. But then, that’s what you expect from code that’s in permanent beta.
Worryingly, the Canadian prime minister seems to think he can avoid his fate by having his LDQN, Governor General Michelle Jean, prorogue Parliament. Normally, prorogation automagically triggers dissolution, which further triggers elections. But obviously that’s not what he wants; he just wants the squabbling parliamentary rabble to go away. One hopes the civil servants are firm with him; due to the poor specifications, in 1974 we had to rely on them to get it right on the night. (Update: Anyone spot the deliberate mistake?)
Back in the spring of 1997, the sterling trade-weighted index stood at 93, exactly the average since 1990, and the deficit (PSBR at the time) was 8% of GDP (See note). This, according to the Conservative Party, was a golden legacy Labour were squandering. Now, the sterling trade-weighted index is at 93, exactly the average since 1990, and the Treasury is forecasting a deficit (PSNCR this time) of 8% of GDP. This, according to the Conservative Party, is national bankruptcy, brought about by the Labour Party for its own inscrutable ends (dog whistle: they’re all communists).
Further, according to the Conservative Party, the State should establish “an institution to lend to small businesses”. (Hey, we could call it the Industrial Reorganisation Corporation, or maybe the National Enterprise Board – that one has just the right sound to it, no?) Let’s recap: first of all, the Bank of England was right to lend taxpayers’ money to Northern Rock. Then the Government was wrong to do so. Then the Government was wrong to nationalise Northern Rock because it put taxpayers’ money at risk, and (dog whistle) they’re secretly plotting to take over all the banks. Instead, the Government should have the Bank of England pay for it because its funds suddenly weren’t taxpayers’ money any more. The same procedure was followed for Bradford & Bingley, but the Conservative Party also held that there was no need for this because everything was really OK.
Then it turned out to be not OK at all, and for a while the Conservative Party kept schtum. The Government came up with a plan, which was rapidly taken up by every other OECD nation, to (essentially) underwrite an absolutely huge rescue rights issue for several banks, to guarantee wholesale interbank lending, and to top the whole lot off with a fiscal reflation. The Tories were silent. Now, with this actually in place, they are incoherent with rage; things are so bad, apparently, that the assets of NR, B&B, RBS, and HBOS are worth absolutely nothing and the interbank guarantees will all be called in (even though most of them will net-out). However, things are still not actually so bad that we need the reflation.
Now, apparently, although the Government should not be spending any taxpayer funds, it should also be lending them directly to industry to substitute the banks, which you will recall there is nothing wrong with, but which are also worthless.
On top of this, Private Finance Initiative costs are now, according to the Conservative Party which invented the things so as not to include them in the national debt, part of the national debt. If they really believed that, this would imply that Ken Clarke, John Redwood, Malcolm Rifkind, and William Hague should be drummed out of the party as a gang of fraudsters. Hey, they were plotting to conceal the government’s true indebtedness in sinister Enronlike off-balance sheet vehicles!
All these funny figures are necessary to keep Gideon and Dave from PR from being caught deceiving the House of Commons. Why? Because he decided to say that the UK “has the debt levels of Italy”. Italy has a national debt equal to 103% of GDP; the peak forecast figure for the UK is 57%. But if you torture the data enough, by reclassifying the PFIs, by deciding that all those square miles of Victorian terraces with HBOS mortgages don’t keep the rain out any more, by capitalising all the future public pension liabilities (but strangely not the “unfunded nuclear missile liability” or the “unfunded tax break for Conservative client groups liability”) you can kindasorta get there – if you have absolutely no intellectual integrity at all, that is. After all, if you did that, you’d have to do the same for the Italian public sector as well – and can you imagine what that balance sheet would look like if it had to roll up all those retired posties’ pensions to an infinite horizon? If you want any more of this stuff, try Daniel Davies.
The ideal response to this is already available, thanks to Mark Easton of the BBC.
We might as well report that the date, 2008, is a record number of recorded years. More than in any other year since records began 2008 years ago. Beating by one the record held only last year, of 2007. And that if the trend continues we will see another record number of years recorded in the year as early as next year.
Bravo! Remind me why we have to put up with these fucking people. Meanwhile, for everything else, I think it would be better to spend more of this money on capital investments rather than a VAT cut. Which apparently puts me in harmony with the political party I’m a member of. Perhaps I should take maverick lessons.
Update: Mea maxima culpa. As part of our commitment to quality, I feel compelled to note that the figure of 8% of GDP, £46bn, was the government deficit at the peak in 1993-1994; it was down to £28bn in 1996-1997. It remains true that 8% now is no worse or better than 8% then.
Oh yes, gleeful leftie hacker tournament after the BNP did a 0.16 megarecord datafart. My effort contains absolutely no personally-identifying data; it’s made with this guy’s count by region and population data from National Statistics, to show the number of BNP activists per 100 citizens in each UK region. People kept asking for that kind of information, so I made it. Note that the g-spreadsheet guy used classifications that don’t quite map to NatStats’ regions, so I decided to assume that his “South Central England” was the West Midlands and “Midlands” was the East Midlands, and total Yorks & Humber and North-East to match his “North East England”.
Update: Well, in the end I used his numbers by county to create a table that matches the regions. Here’s a new and correct visualisation that shows Yorkshire where it should be, in the lead. Ernst Wilhelm Bohle lives!
Information is filtering through that an Antonov-12 has been lost on take-off from Al-Asad airbase in Iraq on Thursday. So far there is very little available, but we do have a few facts. The ASN is currently describing it as operated by “Falcon Aviation” and states that the entire crew of 7 died. We’re getting a lot of Google traffic searching for the registration S9-SAO, which is with British Gulf International Airlines (BGI rather than BGK), an An-12BP with the serial number 346908. The aircraft seems to have been sold by the Russian air force directly to BGIA during its Kyrgyz phase.
Falcon probably refers to Falcon Express, the local affiliate of FedEx that has repeatedly showed up chartering dodgy An-12 and Il-76 operators into Iraq. (This is why the Viktorfeed shows their movements.) There’s an interesting thread on PPRuNe in which it’s said that new hires on their own fleet of Beech 1900s and Fokker 27s were told to watch Air America. (This one’s pretty good too.) Interestingly, searchers are coming from both *.fedex.com and dhl.com hostnames.
In other news, something weird in the feed got my attention. What on earth was “Deutsches Rettungsflugwacht” doing around the region? It seems that someone has been using their IATA two-letter code as if it was a three-letter ICAO code, or rather that Dubai Airport doesn’t know the difference. IATA DV is SCAT, a Kazakh-based operator started in 1997. What did we find there, then? Well, Yak-42 serial 4520422306016, which is an old friend. As 3C-LLL at Air Bas, then UN-42428 at Irbis, this aircraft is a Bout veteran; operating for Sudan Airways and Air West, it made regular trips to Iraq and Somalia in 2004-2005. At the time, the DXB Web site gave aircraft types as well as times, destinations, flight numbers etc, so it was the first individual plane I was able to identify – they only had the one Yak-42. Like the rest of the Irbis fleet, it’s been keeping a low profile since the company shut down in a hurry in June 2006.
The registration is now UP-Y4210. SCAT also used to have Tu-134B serial 63285, then UN-65695, which belonged to long-blacklisted and shutdown Boutco GST Aero, and interestingly, also to UTAGE in Equatorial Guinea, a company involved in the Christmas Day 2003 3X-GDM crash.
Update: JACDEC confirms it as S9-SAO.
So, if World President Brown was to ask me what to do about the headless Viktor Bout empire, and the operators like it, what would I say?
Here’s what I’d do: Let’s draw up a big list of dodgy airlines. Better, let’s use rules; ex-Soviet aircraft, or old 737s, based in the UAE, registration in certain West African, Balkan, or Central Asian states, routes mostly to Middle Eastern and African destinations, and (especially) aircraft bought from or sold to other airlines in the list. We could implement it in software quite easily, at least to provide a filtered list for humans to review.
And then, whenever they land anywhere with trustworthy civil authorities, let’s invoke the long-standing right of any landside state under the Chicago Convention to do an immediate safety inspection, a ramp check as they say in the trade. Naturally, quite apart from crawling over the plane with feeler gauges, that will involve checking all the documents; the manifest, the tech log, the ops manual, the QRH, the pilots’ licences and log books, the air waybills for everything on the manifest, the aircraft registration documents… And, of course, whilst we’re at it there’s no reason why Customs and Immigration shouldn’t search the hold.
If anything is out of order, we’ll ground the plane; if anything is really bad, we’ll seize it; if anything is outright criminal…yes. It may sound a bit hopeful, but consider some of the blog’s back pages. We’ve seen UN-11007 hurtle off the runway in Riyan, officially full of fish but they burned all too well; the An-12 was registered in Kazakhstan to Air Bas, operating from Sharjah, but was working under yet a third and unknown AOC, that of “RPK” – a company which doesn’t seem to exist. In Sudan, an Ilyushin-76 crashed working for Jet Line International, registered to Aerocom, on lease to East-West Cargo. One of the old Irbis Il-18s was grounded in Pakistan after a terrifying flight, several times overloaded with passengers, during which one of the pilots passed out with hypoxia.
It seems to be a defining condition of arms traffickers in the air that the aircraft make sense from one angle, usually that of the UAE authorities; as soon as you look at the details the whole picture dissolves. Here’s another example:
During a ramp check in Beirut, it was discovered that the aircraft’s operating documentation was split among all these firms; the insurance policy applied to a different plane, the tech log was from Ariana, the MEL (the list of the minimum equipment required for safe operation) was the American Airlines one, later replaced by a Swazi one that hadn’t been approved by the Swazi authorities. These institutional flaws complemented a long list of physical ones. None of this should be surprising; UTA’s chief pilot wasn’t qualified on the B727 and neither was anyone else there. The tech manager was trained on the Lockheed Tristar and DC8, and the strong impression is given that literally no management structure for 727 operations existed…
So, I’m delighted to see this report from SIPRI, always sound on the issue right back to the 90s, which suggests exactly that. You can get it here. Of course, being a bunch of Swedes or at least in Sweden, they’re a lot more serious than me – they’ve got studies an stuff and tables and data. But don’t take my word for it. Read the whole thing
Now, the same people are trying to get a change in European Union regs through the European Parliament to make this job easier. You might want to tell your MEP about it, especially if they’re a member of ALDE – the European Liberals.
Update: Here’s a specific talking point.
Lobby for, and support amendments and mechanisms by the relevant EU actors: European Commission DGs, the European Council, the European Parliament and concerned member states “to formulate and implement effective measures using existing EU instruments and regulations that will further reduce the number of air cargo and maritime companies involved in destabilising or illicit small arms shipments to Africa”.
I think I’ve said before that I find public sector accounts incredibly weird. Here’s a great example; it’s a very good FT story on the bank nationalisation plan and how it affects the national finances. Bizarrely, the £25-50bn of government bond issuance required to raise the money probably won’t count towards the public sector net cash requirement (what used to be the PSBR in John Major’s days of sound finance…not!); it’s a “financial transaction” and these are excluded.
Well, that makes a weird sort of sense; the liability on one side is matched by an asset (the stake in the banks) on the other, the net change in the government’s cash position is zero (at first, but even later, any dividend paid on the preferred stock would at least balance the interest payments). The next bit, however, gets really strange; although it’s not counted as new public borrowing, it is counted in the figure for the national debt. It’s debt, right? Yes, but if the government was anything else but the government, the increased debt would be matched on its balance sheet by the stash of bank shares. It being the government, however, it’s not.
Now, it gets really counterintuitive when it comes to the really big money – the £250bn guarantee for wholesale bank lending. Apparently, if the Government (as suggested) charges the banks a significant fee for the guarantee, this will force it to take the full wad on its books as a liability of the public sector. (Even though most of any transactions among the eight participating banks will add up to zero; if Lloyds lends Barclays £1bn and Barclays lends HBOS £1bn, and Barclays then goes bust, the state guarantee would only come into it if Lloyds and HBOS couldn’t agree to settle the transaction between themselves.) If the Government offers the guarantee free of charge, however, the rules on public sector contingent liabilities mean they can keep it off the books. Yes, you heard that correctly; it’s in some sense financially better for the state not to receive quite a lot of money.
Anyway, in these weird times, let me propose a weird solution. The Government has promised to put manners on the banks in return for the £50bn, pressing for executive pay restraint and measures to help small businesses. Some people are concerned that they won’t be able to make this stick because preference shares don’t come with a vote. I disagree; whatever the formal terms, anyone who fronts up as much as half of RBS’s capital base is going to have several billion votes, and indeed it looks like the CEO is going to be sacked as a condition of the deal. It’s a question of political will.
EDINBURGH, October 12th: Crowds cheered as the giant statue of Sir Fred Goodwin was torn from its perch by a Royal Engineers’ armoured tractor. As the news spread this morning, a mob gathered around the base of the monument, unavailingly beating it with sledgehammers and dragging at it with ropes. Eventually, Sergeant Mick Kelly’s Chieftain AVRE arrived. After a few minutes, its engine roaring, the huge vehicle succeeded where they had failed and the dictator’s figure crashed into the dust. In a sinister orgasm of rage and contempt, the mob beat it with their shoes, spitting and jeering as the ruin was towed through the streets….
Like I said, it’s a matter of political will.
However, it will be much easier to hold the Government’s feet to the fire about this if they do have formal rights to intervene, as well as safer, as unwinding the stakes in a hurry in order to punish a recalcitrant bank wouldn’t be easy. One option is to buy ordinary shares as well as the new preference ones, and have the Treasury Shareholder Executive manage them; the numbers involved would put the Government in a position to insist on a seat on the board and extensive influence over management. However, this would be riskier, as ordinary shares don’t have the charge over cashflow the preferred kind do, and it would also spook the market even more, as issuing the new shares would dilute the existing shareholders.
It would also be affected by weird public accounting, as this would make the banks into public-sector entities and therefore bring them on the Treasury’s books; in which case, only their liquid assets would be counted against their debts and the national debt would therefore reach unheard-of proportions.
But there’s another option. For many years after privatisation, the Government held so-called “golden shares” in a range of ex-nationalised industries considered to be strategically important. For example, that in Rolls-Royce gave the Government a veto over changes of ownership and the right to reserve the top management positions to British citizens. Some of them were abandoned in the early 2000s at the request of the European Commission; notably those in BAA plc. Now, these shares were legally structured as “special preference shares”, and the Office for National Statistics didn’t consider them to be sufficient state control to put BAE, RR, National Grid plc, BAA and the rest on the books – but they certainly granted the Government special rights over these companies. In fact, they still do at BAE Systems and Rolls.
Update: Oh well, here comes the shock and awe. Sod golden shares, preference shares, whatever – it looks like we’re in for the whole hog, 75% of RBS’s market cap, voting stock, Government directors, sack the board, don’t open the London Stock Exchange…fuck, did they just say that? Looks like the opening of the books must have been quite a dramatic event.
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