Everyone is hovering over the swine flu panic button by India Knight

Sunday Times on July 19, 2009

I thought I had swine flu on Wednesday. Perhaps I did - who knows? Except that the massive aching in my limbs - it exhausted me to raise my arms to wash my hair - and general hot grogginess had gone by Thursday. But I suppose that I could have had mild swine flu all week, building up to an exciting and noticeably swiney crescendo. We shall never know.

Happily, I had tried to do my swine flu homework a couple of weeks ago when a case was confirmed at my five-year-old daughter's school. She has a heart condition and an enfeebled immune system, so the news sent me into something of a panic, because I suddenly realised that despite watching endless television reports and reading endless newspaper ones, I didn’t actually know anything - the reports had served only to confuse me.

On the one hand: eh, it’s just flu. On the other: yeah, but you might die. You switch off the telly thinking: really, cheers for that. What do I do now - lie down quietly and wait for the reaper, or march around ticking people off for overreacting because “it’s only flu”? Both options seem reasonable. Which is it to be?

By the time my arms started feeling like lead, I’d already heard the v-e-r-y s-l-o-w recorded National Health Service message you get if you call the swine line, already telephoned various council departments to get a number that would connect me to an actual doctor for advice, already spent 43 (I counted) minutes in the dedicated NHS helpline queue to speak to same. When I eventually got through, the doctor was reassuring: we might have all had swine flu already, he said, without noticing anything dramatically amiss. No, I couldn’t have Tamiflu for preventive purposes, because the epidemic meant my daughter would have to stay on it for months, which, given the lack of information about the long-term effects of the drug, wasn’t a good idea. Calpol and Nurofen, as usual in case of fever, and - well, you know, best of luck.

My GP said much the same thing. My daughter’s cardiologist said he wasn’t overly worried but to check with her immunologist at Great Ormond Street hospital, who said children with my daughter’s condition should take Tamiflu if they actually got swined up. Sounds reasonable, except for one thing: nobody knows if anyone’s swined up because there are no swab tests any more - everyone’s guessing.

We’re not supposed to take our swiney selves or our swiney children into doctors’ surgeries, and doctors are far too busy for house calls, so, as far as I can see, we’re all in the dark. Also, I don’t like the sound of Tamiflu, with its side effects and lack of long-term trials. But then I don’t like the sound of death, either.

No wonder every parent I spoke to last week was in a state of controlled panic - except for the ones who’ve had swine flu, who were all cheerful and said, “Pah, it’s not so bad; you just go to bed for a few days” - although they all said there was absolutely zero support or advice available to them other than: “Don’t go to work.”

This - “it’s not so bad” - had been my take on it until healthy people started dying. Now I’m hovering between, “Yes, but healthy people still die of normal flu - not many, but some, just as some women still die in childbirth and nobody gets pregnant and then starts running around wailing about death,” and, “Oh my God, oh my God, what are we going to do?”

So far I have failed to come up with a plan. I used my low journalistic cunning to sweet-talk two chemists into telling me where the stocks of Tamiflu for my area of London were held, so now I know where to break into if we suddenly find ourselves burning up in the middle of the night. And I’ve ordered some homeopathic remedies.

I know that even writing “homeopathic remedies” antagonises some people to the point of foaming at the mouth, but despite the fact that the rational part of my brain doesn’t actually believe in homeopathy, I find it often works (especially with children). So, armed with my little pilules and the address of the Tami-chemist (crowbar optional), I sit and wait.

Everyone else is sitting and waiting, too. A friend whose son has a condition that affects his lungs wondered whether to send him away, except it would have to be for months and there’s no guarantee that he wouldn’t come home to an extra-virulent, super-horrible strain of the flu.

Another friend sent an e-mail saying she had no idea what was going on but didn’t want to bother her GP, who was so kind and so busy, by asking. A third said much the same thing: “I feel like a poor relation in a Russian novel. I’m slightly too embarrassed to ask for help. And anyway, there isn’t really any help.”

Your Comments

1. Ron Graves wrote: July 19, 2009 12:25 AM. Returnees from Mexico and the US should have been isolated right from the outset. Schools where some pupils were infected should not have been closed to allow potentially infected pupils to roam the streets on the "swine skive" and infect others; they too, should have been isolated (see also events in China if you doubt that). The government's wait and see policy has been a potentially lethal farce, taking risks with public health in the face of a virus which is still very much an unknown quantity and those, like me, in high-risk groups (I have severe COPD), are likely to pay the ultimate price for their inaction and stupidity.

2. Thomas Goodey wrote: July 19, 2009 1:24 AM. "So far I have failed to come up with a plan...and I’ve ordered some homeopathic remedies." Yes, quite.

3. John Orford wrote: July 19, 2009 5:18 AM. The red X is a good idea. Also they should be obliged to call out "unclean" as they walk through the street.

4. Andy Patrick wrote: July 19, 2009 10:11 AM. Swine flu is clearly a very powerful illness. It has all but driven MPs expenses and Gordon Browns' hapless incompetence off the front pages and media headlines. It does seem that this strain of H1N1 poses some threat to otherwise healthy teenagers and young people. Just not in the same way a Taleban IED does, so let's put it into context folks and hope for the best. Besides, whilst I am not complacent about swine flu, I am pig sick of hearing about it!

5. Ray Massart wrote: July 19, 2009 11:02 AM. Thanks, India! After reading your article, this little piggy is not going to market and definitely staying at home!

6. Ruth Rising wrote: July 19, 2009 11:20 AM. Thanks India - best thing I've read so far and seems completely true to my experience. I'm staying at home where I can - with an autoimmune condition - and fear a lot of us are going to pay a terrible price for the government's head-in-sand inability to see where this was going. Yes, no help, no advice, no information - and god knows where the Tamiflu is. Best all wish each other luck, we've nothing much else on our side.

7. Sarah Madden wrote: July 19, 2009 12:24 PM. One of the best, scientifically proven ways to boost the immune system enough to prevent any 'flu is to ensure adequate blood levels of Vitamin D. The ideal range is 40-60 mg/ml (100-150 mmol/l), which can be achieved by adequate sun-exposure with no sunscreen or supplementation of several thousand IU a day of D3 (the bodies own form of D - D2 is toxic at lower levels). If supplementing, it's best to get blood levels tested to determine dosage to correct blood levels. http://www.medicalnewstoday.com/articles/51913.php

8. Alex Warren wrote: July 19, 2009 1:24 PM. Give me strength. So far, other than the virus' ability to continue spreading outside of the usual flu period, there's nothing to suggest swine flu is any worse than the normal flu virus. It should be remembered that flu is a potent infection in itself, not to be taken lightly. However, there's no need for the hysteria surrounding swine flu. The vast majority of the population will get through by taking sensible precautions against infection, and if infected, following the normal advice given to people with flu. Obviously greater concern should be reserved for those with lowered immunity or 'underlying health problems'. These are the people the government should be concentrating their efforts and resources on.

9. Paul Tg wrote: July 19, 2009 1:41 PM. For many kids, swine flu is so mild it's hard to believe one's had it - the many at our school included. What I find funny, but also sad, about this crisis is that those who despise Big Government also complain that it is not doing enough about an illness that has been with us for centuries, and will continue to do so. There would be far less danger to those with compromised immune systems (which as it is, is hard to quantify) if the hypochondriacs and middle-class wingers stayed away from their GP.

10. Alan Thomas wrote: July 19, 2009 5:03 PM. Ok I have stopped foaming at the mouth but the reason homeopathic remedies appear to work, particularly for children, is because people, and particularly children, recover naturally from minor illness without being treated with any remedy whatsoever. Homeopathy remedies are nothing more than phials of distilled water.

11. Julian Morrison wrote: July 19, 2009 7:56 PM. "Homeopathic remedy" and "soluble condom" make about the same amount of sense, and it does no good to say "well, mostly you don't get pregnant".

12. M Pilkington wrote: July 20, 2009 12:07 AM. I had regular flu, or what we call seasonal flu, twice --- once at 15 and once at 18 years of age. There was nothing "mild" about those illnesses. I thought I was going to die. I spent two weeks at home, aching, coughing and wheezing. Is this swine flu different? Symptoms seem more like stomach flu (vomiting) or perhaps like a cold?

13. Christine terMeulen wrote: July 20, 2009 1:46 PM. I'm only worried about my baby grandson and ten years old granddaughter.

14. K Jordan wrote: July 20, 2009 4:02 PM. I really do not understand why the governments of the world are trying (and succeeding) to panic the population and then say things like 'don't panic'! What exactly is in this Tamiflu? Why exactly do they want us to take it? As the facts stand, normal common or garden flu about kills 98% more people every year and they are the vulnerable. Swine flu contributes to kill vulnerable people too. It has not, to date, killed anyone on its own; in other words people have to have serious health conditions before it will take a serious hold and maybe contribute to kill you. So now I go back to my original question, why are they trying to panic us and what are the long term effects of Tamiflu?

15. Mike the Liberal wrote: July 20, 2009 4:48 PM. K. Jordan asks why? Simple: fear sells, especially to the uninformed. If you own stock in the company that makes Tamiflu, you want as much fear out there as possible. Maybe Osama bin Laden can come out and declare he will be launching an H1N1 attack. If you want to prevent the flu, then drink clear fluids, get rest, and eat a balanced meal thrice daily. If you have it, don't go out, but get your most trusted mate to come make sure you're okay. If he or she brings homemade chicken soup, even better! And call your doctor; they are never "bothered" by one of their patients. PS -- The problem with the government is they're not saying "Don't Panic" with big, friendly letters. :)

16. Colin Smith wrote: July 20, 2009 4:48 PM. A few people die of ordinary flu, which is vile. I've had it twice and it knocks you down for months. This piggy flu is a bad cold and a bit of fever. Some people say no, it's awful, really knocks you down - but they usually haven't had so much as a cut finger in their lives, and are of the generation of scaredy whiners. Yes, some immune compromised and chesty people will die, and I'm sorry for them and their families, but until this flu mutates into something very nasty we should just get on with it, wash our hands regularly and make sure we have lots of fruit juice, Lemsip and hankies in store. And a will of course.

17. Adam King wrote: July 20, 2009 6:17 PM. Humans just love to have something to fear: SARS, global cooling, bird flu, mobile radiation, chewing gum, global warming, swine flu. I'll take bets on "Killer green-eyed ferret gangrene" being next.

18. William Shepherd wrote: July 21, 2009. 10.05 AM. Following comment was not permitted by TimesOnline. Ten weeks ago I spent a few days researching swine flu. My conclusions were similar to Mike the Liberal. I share his concern that Tamiflu might turn out to be a big rip-off to taxpayers worldwide. I am also suspicious of the mass vaccination campaign waiting in the wings and will refuse to participate...even if it means a white feather. Click on the face mask on the young woman below to read the 25-articles in my Swine Flu Story or go to http://delicious.com/williamshepherd/dispatches/.  

19. daves s wrote: July 21, 2009 11:26 AM. I had swine flu this weekend. Went to Tesco's late Wed and was served by a sneezing check out girl. Felt rough Saturday, Rougher Sunday and so bad Monday I went to bed at 2.00 p.m. and stayed until 6.00 a.m. Tuesday. Now feeling more or less back to normal except for slight headache. Mind you I had a really vicious influenza three years ago that laid me up for two weeks, and left me feeling rough for another week, so maybe my immune system is up to scratch! Or maybe I just had the Beta version of piglet flu then!

20. A Halford wrote: July 21, 2009 4:12 PM. In response to Mr Graves' comment in particular: Though I understand your concern as a member of a 'high risk' group I feel I must disagree. Of the tens of thousands of confirmed cases (bear in mind this will be a fraction of the total number), the number of deaths cause exclusively by swine flu is less than 10. So, that basic calculations yield a 'death rate' of approximately 0.01%. If one were to include cases that have not yet been diagnosed, that percentage will most likely fall below 0.0001%. So, if the government had quarantined 'mexican returnees' as you suggest, 99.9999% of the time, it would have been entirely unnecessary. The government and the NHS are already criticised for inefficiency on a regular basis, to reduce the efficiency to such a miniscule percentage would be an untenable position from their point of view. To summarise therefore, I contend that there is simply not a great enough mortality rate to advocate the implementation of the measures that you have suggested.

21. Ron Graves wrote: July 21, 2009 5:01 PM. @Mr. Halford That is precisely the sort of short-sighted attitude that enabled this outbreak to get totally out of control. The fact that few have died to date is no guarantee that this won't change. Official forecasts range from 30,000 to 65,000 deaths in the UK. The truth is probably somewhere in between. That is not trivial, as you seem to suggest. And, at this stage, you simply cannot extrapolate, as you have, and come up with anything meaningful. And I don't care how many "innocent" people would have been quarantined, just as long as it caught the infected ones - which is the whole point.

22. Andrew Lyden wrote: July 21, 2009 5:39 PM. With all the hype I think one just has to remain calm, composed and wonder who is making the most money from all this.

 

Midsummer in Tehran

The BBC's team of correspondents logs its reports and personal impressions as the turmoil surrounding the disputed results of Iran's presidential elections continues. All times are Tehran local time - three and a half hours ahead of London time. ie. It is midday in London when it is 3.30 in the afternoon in Tehran.

0930 on Saturday 20th June 2009 Jon Leyne in Tehran

It is still not clear whether the opposition are going to go ahead with a protest called for this afternoon or whether they are going to call it off. There has been no firm word yet either from Mr Mousavi, the main opposition leader, or from Mehdi Karroubi, the other main opposition figure, as to whether they want the demonstration to go ahead. The National Security Council of Iran has issued another warning to Mr Mousavi, saying that if he provokes an "illegal gathering" he will be responsible for the consequences. I certainly sense that the opposition supporters are as determined as ever. When they go out, nightly now, to chant "God is Great" as a gesture of defiance, it is louder than ever before. So the opposition supporters are definitely absolutely up for whatever their leaders instruct them to do, but we have not yet heard firm word of what they have been called to do. Further protests would be very concerning for the government, but also everyone's worry now is what would happen, what sort of force the government might use against the protesters. This really could be a key moment.

1230 on Saturday 20th June 2009 Jon Leyne in Tehran

The opposition leader Mir Hussein Musavi has not made the direct statement himself but his wife, Zahra Rahnavard - who has played a key role in his campaign - has said on her facebook site that the rally is going ahead. If so, this will be the most direct challenge to the authority of the Supreme Leader Ayatollah Ali Khamenei. A huge turnout is expected. Iran and the world will be watching to see how the Iranian security forces respond. The position of the leader himself is beginning to look under threat.

1330 on Saturday 20th June 2009 Jon Leyne in Tehran

My feeling is that whatever Mir Hossein Mousavi says, the people will gather for this demonstration. There is a remote possibility that he might call it off but all the indications are that it will go ahead. Mr Mousavi will turn up, as will defeated candidate Mehdi Karroubi and former President Khatami. I have heard there is a substantial security presence on the streets of Tehran. This really is looking like the big showdown. Mr Mousavi and Mr Karroubi showed what they thought of the offer of a vote recount by not even turning for their meeting with the Guardian Council, according to state television. They have apparently lost faith in the legal appeals process. After all, the Supreme Leader himself has announced that the result is absolutely right and a body so loyal to him as the Guardian Council is not about to overturn it. It is clear now that the battle, or at least the argument, will go on to the street. I have heard increasing numbers of opposition people say, "I would rather die than live in the country the way it is now". That is the mood they are in. They are determined to go out there. We will have to wait and see, with some trepidation, what will go on today. This is a bitter fight for control of this country. Although nobody is saying as much, it really could threaten the existence of the Islamic Republic. This is a battle for control of this country, right to the very top. It is hard to see how the opposition could possibly win this battle without the Supreme Leader being toppled from power, and that in itself would put grave doubts on the whole basis of the system. No wonder both sides are fighting to the last man.

1430 on Saturday 20th June 2009 Jon Leyne in Tehran

We are waiting to see, crucially, whether a planned opposition rally goes ahead this afternoon, in defiance of the Supreme Leader's tough warning. My view is that it is so late now, opposition supporters will turn up anyway, whatever their leaders say. It is a very confused and tense situation. The security forces are out on the streets. They have been issuing dire warnings that they will deal with any unauthorised demonstrations with determination. President Mahmoud Ahmadinejad has hardly been heard from in the last few days. This is all about the position of the Supreme Leader. Any rally, particularly if it is attended by the opposition leaders, would be the most direct challenge to his authority. If it goes ahead and there is a large crowd, that would be a massive challenge to him. If it goes ahead and it is broken up with violent force, that could also damage his position enormously. It is a very, very tense situation. There are huge political issues at stake, if not even the future of the Islamic Republic.

1530 on Saturday 20th June 2009 Jon Leyne in Tehran

The situation is very tense and very confused. We don't have direct, immediate reports from the scene because of course we're not allowed to go there. It's not even entirely clear whether the opposition wanted the demonstration to go ahead. There were a lot of mixed messages through the day whether or not it had been called off. My instinct is that I think opposition supporters are so fired up, they're going to turn up anyway. They've been very good at getting messages between themselves very quickly, so it's possible they might move the demonstration if there are riot police in the planned location. The Guardian Council, the body that is overseeing this election, has recounted 10% of the ballots, a random 10% chosen in the presence of the candidates or the candidates' representatives. However, yesterday the Supreme Leader said it was finished, there was no more dispute over the election. The Guardian Council is loyal to him, so I don't think the candidates have any great faith in this legal process. Two of the candidates - Mehdi Karroubi and Mir Hossein Mousavi didn't even turn up to a scheduled meeting with the Guardian Council today, so I think the process of conciliation is really over now.

1650 on Saturday 20th June 2009 A BBC Correspondent in Tehran

I'm in the centre of Tehran close to Enghelab Square, where the demonstration was supposed to have been held. But there's a huge security presence here, thousands of men from every possible service: police, Revolutionary Guard, military police, the riot police in full riot gear, and the much-feared basiji - religious paramilitaries who see themselves as the shock troops of the Islamic revolution. It's impossible for any groups of people to get through these to Enghelab Square and hold their demonstration. If this continues and the opposition can't find some way around the fierce security then the protests against the results of the presidential election will have been defeated, at least for the time being. The real strength of the protest has been its ability to get huge numbers of people together into the streets. Now, the government has trumped that and shown it has the power to lock down the city centre and regain the streets.

1920 on Saturday 20th June 2009 A BBC Correspondent in Tehran

At first it looked as though the government's tactics had worked. Thousands of police, militiamen and secret policemen blocked off the streets leading to the two main squares, Enghelab and Azadi, where the demonstrators had been planning to hold their gatherings. All they could do instead was to wander along the streets aimlessly, not even daring at first to chant or shout. But the police couldn't be everywhere and halfway along the aveue leading from one of the squares to the other, I watched a crowd slowly gather and begin chanting, setting fire to rubbish bins and throwing stones at the police. They had achieved the critical mass they needed and more and more demonstrators joined them. Near me in the crowd a man was shot in the arm and the air was thick with tear gas. I saw another man whose arm had been slashed by a razor wielded by a secret policeman. The confrontations are still going on and a big column of black smoke from a fire is hanging over the city centre.

2230 on Saturday 20th June 2009 A BBC Correspondent in Tehran

We have this daily cry now from the roofs of Allahu Akhbar - God is Great - it's an opposition protest and night after night it seems to get louder and longer. Tonight was the loudest and longest I've heard, and that really symbolises and shows you the mood of the opposition here. Whatever happens, whatever the government is putting up against them, they seem more and more determined to press on.

Daily Summary at 2214 on Saturday 20th June 2009 A BBC Correspondent in Tehran

The Islamic republic of Iran continues to move into unknown territory. Today small groups of demonstrators held running battles with police. Security forces were everywhere in central Tehran in the late afternoon and early evening. As I spent a couple of hours driving around in heavy traffic I could see thousands of men, some uniformed members of the military riot squads, some units of revolutionary guard, and everywhere basijis - militiamen who look like street toughs. The security men were deployed on every street corner, in long lines down the sides of the roads, and in all the main squares. The basijis wore riot helmets and carried big clubs. It was designed to intimidate, and while I was there, it was working. There were hundreds in Enghelab [Revolution] Square, close to Tehran university. Traffic was being allowed to use it, with the drivers being eyeballed by the men with clubs who lounged in thick groups wherever you looked. All this was happening against the background of a city open for business, where commercial life was going on. Shops this evening were not shuttered. The streets were jammed with cars, with mopeds and motorbikes buzzing around them. The pavements were full too. Some of the people looked as if they were waiting for some leadership, for a demonstration that they could join. From time to time small groups would come together and try to move down the street together chanting and clapping. I saw one group of demonstrators, perhaps 400-500 people, walking briskly down one side of a major road in the city centre. Bystanders were waving and making gestures of support. Then, very quickly, tear gas canisters were fired into the crowd, and they broke and ran. It was a hot, windless evening, and the gas hung over the streets, prickling noses and eyes long after the demonstrators were dispersed.

2140 on Sunday 21st June 2009 Marcus George in London

Jon Leyne has been the BBC's Tehran correspondent for the last two years and he was due to stay for one more. But this afternoon the BBC confirmed that he had been told to leave the country. The reasons for this aren't known. Whatever they may be, Iran's leadership has eyed the BBC with increasing suspicion since the launch of BBC Persian-language television in January. The expulsion ends a week of relentless pressure on journalists. On Tuesday, the authorities imposed severe restrictions, barring foreign journalists from covering the opposition's daily protests against the election result. And throughout the week, broadcasts by international news networks to Iran - including the BBC's - have been jammed and their websites blocked. Domestic media have also come under extreme pressure. According to one campaign group, more than 20 prominent Iranian journalists and bloggers have been arrested. Several opposition newspapers have also been closed down. Before the election, Iran was known as a difficult place to work for journalists. Now, those challenges have become even greater.

Gold bugs at last have their perfect trinity by Ambrose Evans-Pritchard

China has doubled its bullion reserves and left us in no doubt that it will spend more of its $40bn monthly surplus on hard assets rather than the toxic paper of Western democracies.

23 May 2009

The world's top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993. Britain has become the first of the Anglo-Saxon ‘AAA’ club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores. Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes - three times the Brown-gutted reserves of the United Kingdom. Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a ‘Paulson Real Estate Recovery Fund’, reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play. He may be wrong, of course. In his early fifties, he belongs to the baby-boom cohort most psychologically vulnerable to the 1970s ‘paradigm-error’. And perhaps he has never lived in Japan.

It is striking how many of those most alert to the deflation danger are either veterans of Japan's Lost Decade or close students of it: Albert Edwards at Société Générale, Russell Jones at RBC Capital, Nobel laureate Paul Krugman, the Fed's Ben Bernanke, and Athanasios Orphanides, who helped draft the Fed's study on the Japan trap. “People always thought Japan's bond yields had to rise, but they kept falling and Japan is still not really out of deflation,” said Mr Edwards. Indeed, 20 years after the Nikkei peaked at over 39,000 it stands today at 9,280. Interest rates are 0.01pc. The yield on two-year state bonds is 0.34pc. Still there is not a whiff of inflation.

A number of readers have written to me in tones of polite reproach asking why I fret about deflation when governments everywhere are spending and printing as if there was no tomorrow. I admit to being tortured by self-doubt, like others grappling with this extraordinary situation. What we know is that inflation is already negative in Ireland (-3.5pc), China (-1.5pc), Thailand (-0.9pc), Korea (-0.5pc), US (-0.7), Japan (-0.3), Switzerland (-0.3, Spain (-0.2pc). The eurozone may be negative by July. Alistair Darling said Britain's retail RPI inflation used to set wage deals will be minus 3pc by September.

Does this constitute deflation in a meaningful sense? Not yet, perhaps. But it is moving too close for comfort in a world stretched by extreme leverage. The economies of the US, Japan, the eurozone, and Britain have been contracting in ‘nominal’ as well as ‘real’ terms - which smacks of the 1930s. The ‘yen GDP’ of Japan has shrunk by 10pc in one year; the ‘euro GDP’ of Germany has shrunk 6.2pc, and Italy's by 4.7pc; the ‘dollar GDP’ of the US has shrunk 3.3pc. Debts are not shrinking, however.

GMO's Jeremy Grantham says in his latest note, Last Hurrah and Seven Lean Years, that the market value of equities, houses and commercial property in the US reached $50 trillion in the boom. This ‘perceived wealth’ sustained $25 trillion of debt. The crash has cut this wealth to $30 trillion, but the debts are still there. America's debt-gearing has exploded, as it has in the UK and Europe. This looks awfully like Irving Fisher's ‘debt deflation’ trap of 1933. It will be a long slog for households to bring their debt-to-wealth ratios down to manageable levels.

You can argue - as do UBS, Merrill Lynch, ING, and Capital Economics, to name a few - that massive global stimulus is merely struggling to off-set a massive deflationary shock. So how will gold fare in a ‘Japanese’ stalemate world where neither inflation nor deflation gets the upper hand? The eight-year rally that has lifted gold from $254 to $959 may lose momentum for a while. “The air is getting thin up here,” said John Reade, precious metals guru at UBS. “Rich investors are no longer rushing out to buying gold bars as they did after the Lehman collapse. Still, we think it is highly significant that both China and Russia - two of the biggest holders of foreign reserves - are both buying gold,” he said.

Personally, I remain a gold bug out of fear that the most corrosive phase of this crisis lies ahead. There are two more boils to lance: Europe and China. As the IMF keeps telling us, Europe's banks are still covering up their vast toxic debts. Nor has the G20 begun to address the root cause of the global crisis, which lies in excess exports from East (aided by currency manipulation) to an over-spending West. China is putting off the day of reckoning with its crisis response, which is to build yet more plant to flood the world with yet more over-capacity.

For ‘political bears’ the risk is that the EU polity fragments under strain, and that governments restrict basic markets to defend themselves - whether by imposing exchange controls to stop bond flight, or shutting derivatives markets used as hedges, or putting up trade barriers. We will find out if and when unemployment hits 10pc in America, 12pc in Germany, and 20pc in Spain, or if migrant workers rampage in Shenzhen. Some call this the ‘Armageddon case’ for gold. That is going too far. However, gold has outperformed Wall Street's S&P 500 index by 500pc so far this century, as if able sniff out trouble in advance. Such runs tend to finish with a ‘parabolic’[1] blow-off before they die. Mr Paulson may yet make another fortune, whatever his reason.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5373570/Gold-bugs-at-last-have-their-perfect-trinity.html

Comments: (36)

1. D Rumsfeld on May 24, 2009 at 06:15 AM

Gold in deflation times does very well. If you look at gold stocks during the 1930s depression they were the stellar performers. Gold is on the rise and the parabolic stage is yet to come i.e. rise in price similar to what happened with the dot-com bubble and the like. I would not be at all surprised to see $3,000/oz plus within 2-3 years - something central banks would hate as it would mean a lack of faith in fiat currencies. The world's printing presses are turning, but as they do, they devalue their currencies. You refer to Japan and rightly try and extrapolate to other countries. Where gold is concerned you have to take into account that China and Russia view gold as a safe haven. In Europe the Germans, French and Swiss are very pro-gold. Inflation is going to come. It is the only way that countries can devalue their debt. If you take Geitner’s debt projections for the USA, which most people think are too low, by the end of 2011, at an interest rate of just 4%, the yearly payment will be about $650bn/year. If you assume that debt rates are say 10% higher and that the US will have to pay a higher interest level to attract bond buyers, then the yearly interest level rockets to over one trillion dollars. Can any country afford one trillion dollars of interest payment every year and growing? You will get high inflation as the world's debt levels are simply unfundable and this is very positive for gold.

2. Neville on May 24, 2009 at 06:22 AM

Inflation on essentials and deflation on non-essentials is what we have here. That means that gold is trapped between a rock and a hard place which in the end means, like a volcano spewing larva, it has nowhere to go but up into the sky before hitting the ground. In the 45 years that I have been stock-broking I have never witnessed such economic chaos worldwide as we have today. The gross mismanagement of the world’s assets by political leaders as well as big business is appalling. The debt mountain built up, the forests of fiat money awash in the system are all warning signs that the path is now clear for gold to do what gold will do and that is, like the man says, go parabolic. There is a book named The Measure of Gold written by the late Dr J W Busshau who was chairman of Goldfields S A. In this book he described how the worlds monetary system of the day would have to be unraveled (1950s). This book is now worth reading more than ever, as the crisis we face is probably 1000 times worse than the one he wrote the book about. Looks too as if we are in the end game of shenanigans before a revisit to the old rule book.

3. Fazsha on May 24, 2009 at 06:22 AM

My recommendation is the 1/3rd approach: 1/3 gold in your hand ; 1/3 dollars in your hand; 1/3 DOG Short Dow 30 Proshares. Gold is in a clear up pattern. Meanwhile, the banks could collapse, leaving us with a shortage of currency. Finally, the banks could survive but the corpse could be overwhelmed by the debt, and will fail.

4. Charlie Welsh on May 24, 2009 at 06:23 AM

I agree with your brief assessment of China's policy response: re-vamp their production base in the expectation of profiting from another global boom. What is it about these export-dependent economies that they seem incapable of realizing that they are a central part of the imbalance conundrum that caused the crisis in the first place?

5. Nevvy on May 24, 2009 at 06:27 AM

A parabolic blow-off in gold was last observed in 1980 when it ran up to $ 850 US an ounce. The rise was only stopped by Paul Volker cranking US interest rates to double figures. Gold then fell until 1992 (the Brown bottom) it was $292 at the low.

6. Ron Mahabir on May 24, 2009 at 06:33 AMmargin: 6pt 0cm 0.0001pt; text-align: justify;">Over the next 3-5 years, gold will experience a major bull market. An oil shock and global currency devaluations are the next major predictable crises, but how can individuals play these? Gold.

7. G on May 24, 2009at 06:42 AM

Regarding the US, I've had poster e-mail: ‘Cash or book entries it doesn't really make any difference, regarding inflation, as it is one and the same’. They both create inflation. I disagree. For example, let's say my employer sells products in retail outlets and pays me a salary by check or EFT. Then let's say my employer's money originated from funds created by retail sales (paid in cash or credit card) that moved through the economy over and over and over again, constantly recycled via cash/check/credit card payments by consumers to clerks at registers in retail outlets throughout America. These payments were collected and deposited in bank accounts which then sent checks (written by the retail outlet) to pay my company’s bill for product sold to the retail outlets for resale. A certain volume of money (paper dollars at some point and/or credit) in the existing system actually changes hands over and over and over through the various layers of companies, various salaries, bills paid, gas bought, materials, mortgages paid, cars bought, rent paid, tuition, doctors paid, food purchased and so on constantly moving being recycled like ‘rain’. Substantially increase this supply of money and it’s supposed to cause inflation, right? However, TARP, Federal Reserve, US Treasury and 10 or 15 other welfare programs bailing out the World’s Elites furnished ‘book entry’ funds that started life as a number and made one or two electronic transfers as ‘book entries’ but were then parked on a bank's balance sheet for all eternity as capital or US Treasuries. Very little (if any) will find its way to a company as loans, the average Americans pockets or retail sales of any type anywhere in America or the World. My point is that this money isn't going anywhere or being recycled; it just sits on the balance sheet for years as this depression continues to build. Please, explain to me how TARP and related moneys cause hyperinflation? If they’re not moving into the system they can't cause anything...no movement into loans, pay or buy anything…it just sits...a big number on a piece of paper or in a computer…transferred from the Federal Reserve to a bank...it just sits... a ‘nothing’.

8. charlie dimmock on May 24, 2009 at 06:56 AM

Gold will have its day when the world finally comes clean. The amount of money being spent by the US and others is frankly madness. Every stimulus possible is being done and now the world too is becoming, to use a poker analogy, ‘pot committed’. The train to hell cannot be stopped; the dollar will collapse, followed by the euro, pound, and Yuan. What’s left is gold and the ‘parabolic’ rise in the price of gold per ounce will match the DOW probably at 5000. From there it’s a guess where it goes. Put your pension in gold at least for 24 months from here.

9. Prakash on May 24, 2009 at 07:22 AM

US banks seems to be short gold futures in a big way on the Comex. Are the banks seeking a sweet revenge this time?

10. Alec on May 24, 2009 at 08:37 AM

Paulson will lose his well-pressed and pricey shirt on this foolish bet. Once stimulus is spent, it becomes a dead weight of pure debt, ensuring that eventual deflation will not only be absolutely inevitable, but also more ferocious than it would be otherwise. The amount of debt embedded in the system already is so huge it's impossible to inflate out of it. It's deflation without an end from here.

11. desde londres on May 24, 2009 at 09:08 AM

What Japan suffered in the 1990s was asset deflation, not price deflation. The Japanese consumer price index only dropped 1% on average for the decade but assets prices, especially house prices, plummeted. They are two similar concepts but with completely different effects. While the former provokes reduction in the living standards, the latter relatively improves it…but only for a short period of time. Regarding gold: if its price was determined by the offer and demand, the price would easily reach $5000 per ounce. If the government were to make each $ redeemable by the amount of gold it possesses, we’d arrive at $1.569 trillion / 286.9 million oz. = $5,468.80 per ounce. If the governments were forced to back their currencies with gold and they had to go into the market and buy the gold needed to restore faith in their currencies: total Central Banks reserves (including gold holdings) = $4.8trn, divided by 929.6 million ounces total gold reserves held by all official institutions that issue currency = $5,246 gold price. In the 1970s gold rose from $35 to $850, a factor of 24. Our low in 2001 was $255. Multiply that by 24.28 and you get a gold price of $6,214 per ounce. Why will this never occur? Because its price is manipulated and controlled by the central banks through the intervention in the Comex, the CBGA, the Gold Carry Trade, and more recently, through the ETFs. The gold price has little to do with inflation or deflation, economic environment or future perspectives but a lot to do with government control.

12. Charles Lee on May 24, 2009 at 09:50 AM

Hmmm....everyone thinks gold is a cert bet..... Seems like a very good reason to avoid gold.

13. Voland on May 24, 2009 at 09:52 AM

Nice article, Ambrose, free of any anti-Euro schadenfreude. One feels you're finally talking straight about the abysmal depths of this crisis. Gold confiscations are now of course a fear, as is factionalization, protectionism, and war. Ultimately there's no way to play this - we're all sitting around waiting for the black swan. Plagued by self-doubt, indeed? Buy land. Pay off debt. For the next five years at least the money game is toast - time to concentrate on the intellectual life, hunker down, and try and get through without losing your shirt.

14. Mr Barnett on May 24, 2009 at 10:08 AM

Gold will not be going anywhere until the Fed and Comex stop manipulating the price of it (and silver) to make the dollar and bonds look good. This is a major scam the American government is pulling on the world yet nobody does anything about it. The Americans would say it’s for the greater good, but its still a scam whichever way you look at it.

15. Michaelsykes on May 24, 2009 at 10:11 AM

I agree that the trade imbalance between east and west is the root of the problem and that the solution requires that the imbalance is adjusted. So, where are the policy initiatives to bring this about? What should they be? Buying gold may be as good a hedge as there is, but this is reacting to the symptoms of the disease and does not address its causes. Our own Bank of England in its Inflation Report is focused solely on stimulating nominal demand; how to enable consumers to borrow and spend more. It seems to be busily digging to make the hole we are in deeper. We need a clear vision of what needs to be done and credible policies for doing it.

16. Stephen Marchant on May 24, 2009 at 12:00 PM

Never have I seen so much uncertainty in both the political and economic area of the UK and the world as a whole. What I see is that half of the World's population in the BRICs wants to increase their wealth and the minority in the developed nations are trying to hold on to what they have. This state of uneasy equilibrium cannot persist. Savers in the UK just want to maintain the value of their wealth and in so doing are moving away from paper money and other paper assets. People want something they can hold, which means the real necessities of life like commodities. Houses will also be a sound investment (subject to government taxation policy) once they return to realistic values. I am sure many of us will hold a small percentage of our wealth in gold as a fall back option in the event things go badly wrong.

17. Xhtt on May 24, 2009 at 05:05 PM

Naturally, the world economy has to recover. Hence the gold price will have to come down as a result of the US economy recovery in the next one to two years. Talking about the demand, take a look at Chinese jewelry stores? No one there. People are hunting for 50% discount or even more discount on cloth, shoes, handbags but not gold.

18. Wilson Siu on May 24, 2009 at 05:27 PM

Using Japan's deflation scenario as a comparison is fundamentally wrong. 1. Natural resources are traded in $, never in Yen; 2. Yen is not the world's reserve currency, the US dollar is; 3. Japan is a huge creditor nation, US is a huge debtor nation. If the US dollar is not the reserve currency, Japan as a case study is correct. However, the US, not only has to deal with domestic liquidity issue, it also has to deal with the greater picture. The US can choose between losing a decade, or having a decade but leads to inflation around the world, and importing part of the inflation back into its economic system; thereby, leading to a lower living standard for its citizens. The first thing I learnt from my economic studies in college was that, there is no free lunch. Somehow some of the professors who taught that forgot Econ 101.

19. Peterg on May 24, 2009 at 05:42 PM

Does this article, and all the comments submitted, mean that I should be increasing my holdings in mining stocks i.e. Peter Hambro Mining, Kazakmys, et al?

20. Michael Fremlins on May 24, 2009 at 07:57 PM

“Britain has become the first of the Anglo-Saxon ‘AAA’ club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.” Well, Mr A-P, you said that Britain had to bail out the banks. After your wish came true, what did you think would happen to the UK's credit rating?

21. Robespierre XIV on May 24, 2009 at 08:16 PM

Hedge funds, banks and governments may short gold mining stocks forever but it is China, Russia and individuals that buy physical gold as a hard asset commodity. Gold mine production is falling worldwide. Paper debt obligations seemingly have no end in sight. Gold does not create wealth, it protects it. The worldwide economic recession will not end in a year or two. We will not pass our debts on to our grandchildren. They will pay them off with inflated currency. It was ever thus.

22. Codematrix on May 24, 2009 at 08:43 PM

“US banks seems to be short Gold futures in a big way on the Comex. Are the banks seeking a sweet revenge this time?” Actually, this was the case. Goldman Sachs and JP Morgan are now starting to cover their shorts as they have very little, if any, gold available to them. Read on: http://meltdown2011.com/2009/05/04/ goldsilver-manipulation-over-in-30-days/

23. Augustin Serra on May 24, 2009 at 10:03 PM

I see your point with the European banks, but fail to understand why you think “China is putting off the day of reckoning with its crisis response, which is to build yet more plant to flood the world with yet more over-capacity.” China isn't developing capacity to flood the world, it's developing capacity because it's becoming the world's biggest market. The Chinese domestic demand will outstrip the US within 20 years. The Chinese domestic market is already 1.5 times larger then that of the EU. The real issue with Chinese demand for gold was something you so clearly developed in your ‘copper stockpiling’ SDR theory a few weeks ago...and nothing has changed in those few weeks. China has a strategy and the economic development of the country and increased wealth of 1.5 billion people is part and parcel of that.

24. FT Fellow Traveller on May 25, 2009 at 06:27 AM

I am endeavoring to recall the GPS co-ordinates which locate that area where there are engraved stones. Upon these engraved stones must be the caveats that the USA will never resort to a currency change, whereas federal law mandates the exchange for, nominally, green dollars, for ones which are purple, or say, orange. Where the officially federal government stated value for this new money is $100.00, or even $1,000.00 ‘old dollars’. Evidently there must be such a location for every argument here has, as a ceteris paribus assumption, that the US dollar will never be officially devalued…just because it hasn’t been yet? Such a droll argument! I have some ‘Old Francs’ and some ‘New Francs’ and now some ‘French Euros’, which tells me differently! For the life of me I cannot understand the disparagement of a 4000 year old ‘money’, which is what gold represents. As the US dollar being the ‘reserve currency’ of the world question? I also have an old Roman silver denerius (sp?), in a case. That was the money for a 500 year old Empire, which is now no more. I posit that, nowadays, the accelerated living pace will make present day Empires, equally extinct, in far less time. 'Nuff said.

25. Doug Bebb on May 25, 2009 at 06:29 AM

BR wrote, “The gold price has little to do with inflation or deflation economic environment or future perspectives but lot to do with government control.” This sentiment was recently explained by Martin Armstrong, from his jail cell, in an article available at: http://www.scribd.com/doc/15475184/Understanding-the-Real-Economy-51509 . The perceived relationship between gold and inflation is typically mis-specified in the financial literature, leading to erroneous conclusions. According to Armstrong, the actual relationships are: currency = shares in the political state; bonds = issued by government are nothing more than a derivative option; shares = in the corporate world are a hedge against domestic inflation; gold = is the hedge against government instability. While there is likely to be some overlap between the onset of serious inflation and loss of government stability as evidenced by currency crises, the distinction is clear. Gold is not the preferred inflation hedge. Increases in the price of gold herald something more ominous than inflation.

26. Alex on May 25, 2009 at 06:37 AM

Like Voltaire said, all fiat currencies eventually revert to their true value, zero. Precious metals are the only way for a person to maintain their saved wealth's purchasing power in such times. Once a currency has been debased (legally counterfeited) out of existence by a corrupt government, then that government's days are numbered as there is no longer any reason to support a government which steals the life's work of its citizens through the silent tax of inflation. Our world is highly interdependent, especially upon liquid energy sources. As declining production becomes more evident, crude price levels must rise. A basic problem soon appears in that an economy can no longer grow without ample petroleum supplies. Our economic system has a fatal flaw in that the currency in circulation must constantly grow or the whole thing folds up. We've painted ourselves into a corner folks. The morons who run the banks, central banks and various governments do not have a clue as to the potential problems on the horizon. It's always best to be prepared months or years in advance than be a minute late. Remember Argentina and learn the lessons from there.

27. John on May 25, 2009 at 08:54 AM

In the end you can't eat gold can you? One thing is certain you can't put all your eggs in one basket like the banks did.

28. Greg Armstrong on May 25, 2009at 09:31 AM

He's telling you that he expects the price of gold to go up exponentially before it finally stops and reverses course. Pull a long-term chart on almost any tech company (preferably on a linear scale) up to, through, and after the ‘tech bubble’. Then pull the same chart on the DOW, S&P, and NASDAQ. Compare them, adjusted for time differences. You'll see amazing similarities. Gold, as a counter-market play, will be going up while equities are falling. But it will follow the same basic long-term pattern. As equities come down, gold will rise. As the equity markets bottom, gold will peak. By almost any measure, equities must still fall another 70 to 80 percent to return to their long-term mean. And gold is just beginning its long bull run to ‘who knows what’? I see people throwing around $1500 an ounce and $2500 an ounce, but we are yet very early in this cycle. And this is a major cycle by historical terms, which will only end after extreme extremes on all ends. So I'm comfortable in prognosticating $10000 per ounce for gold before its bubble pops and other things start returning to normal (bringing gold down hard and long for 3 to 5 years running, and eventually settling at roughly $1000 per ounce or so).

29. RMJA on May 25, 2009at 11:57 AM

In the short term, gold will become currency again. Then, long term, it will be oil. Then, it will be food. Then, there will be not enough of anything except guns, and when your ammo runs out, knives.

30. desde londres on May 25, 2009 at 12:39 PM

There are a few missing things in this debate about the future gold price: a) the price of certain commodities is not openly based on offer/demand as with other products. The entire current economic system is based in the existence of one global currency, the $, and the fiat money created by the banks (blessed by the own governments, remember the SEC last decade) with ratios of 1:20, 1:30 (and for GS,1:350) and to preserve this system, certain prices ‘must’ be controlled and ‘supervised’ by the ‘authority’, hence the gold price will grow, yes, but to at controlled prefixed rate; b) the only way to go back to a gold standard system would be the confiscation of all the private gold (as FDR did in the 1933), the monetization of the US debt, the effective devaluation of the $ and the re-assignation of the gold price held in vaults by the central banks to current levels (from $42 to let's say $900). That way, the banking system crisis would be immediately over (not amended, just over); c) even if that happened, who would be the main winner? Who holds 60% of total gold reserves? And who holds the vast majority of US Treasuries? Anybody believes those T-holders would allow that to happen? ; d) nevertheless let’s assume that the gold price jumps to $2000. Would it mean that we all would be richer? Gold is the constant. If everything else goes down, does that make you rich?; e) soaring gold price would eventually lead to hyperinflation. Hyperinflation is historically attached to political fall-outs (Germany, Argentina). In that scenario, would you be allowed to save you wealth when everything else falls apart? Are we sure that gold price…at $5000, $10000...is good news just because you hold gold?

31. Nolen Cox on May 25, 2009 at 05:23 PM

I also am scrambling to save my retirement assets. The unanswered question is how much will you invest in returning our nation to the constitution? As the Obama administration understands there is an opportunity for ‘change’ in every crisis. They want a paradigm change to a Marxist economy. Will enough Americans pledge their lives, sacred honor and fortunes to salvage our liberty and economy? The question is not how the dollar, gold or the economies will do, but how will freedom and liberty do? It will survive and increase only if we invest. Without liberty and freedom we will be standing in line for our rations like peasants in other once free countries. Liberty and freedom are economic aberrations. They are not normal. Just look at the nations of the world. We desperately need to restore the Constitution to enjoy its fruits of liberty freedom and prosperity.

32. Joe on May 25, 2009 at 08:24 PM

One thing I don't understand is how buying gold will help if the economy/country collapses. When you buy gold, you don't get to keep it in your basement, do you? It's just paper telling you that you own gold. The Obama administration has already shown it is willing to change the rules mid-stream in other contexts. It is therefore very hard to imagine a situation where the government will allow people who invested in gold to keep enormous profits while the rest of the economy goes to hell. If you are banking on things getting really bad, it seems you will have to consider the threat of desperate governments going after any revenue sources they can find (or demonizing those who are accused of undeserved profits) and changing the rules to take those profits away.

33. Rob on May 25, 2009 at 10:30 PM

The parallel with Japan is important and worth considering, but there is a crucial difference between Japan and the US. Japanese individuals own around 18% of global investible wealth - the US around 31% - or at least these were the figures before the crisis and subsequent stock market corrections. (Maybe Japan is now slightly higher and US slightly lower.) However the Japanese hold their investible (ie liquid, non-real estate) wealth almost all as cash and in Yen, and never really had a high allocation to anything else even in the boom days. Whereas the US has very high allocations to all asset classes (equities, mutual funds, bonds, etc) and a large allocation overseas (foreign stock markets etc). So in Japan, when their crisis hit, deposits stayed in the banks, and the banks used these funds to buy the swelling issuance of government bonds rather than lend the money into a bust economy. Bust US banks will have the same desire to seek ‘safety’ in government bonds rather than lend to bust companies and consumers. But in the US, where investors are more adventurous, will their money stay in low interest cash deposits, allowing the banks to park it in the ever expanding volumes of US Treasuries that are in issuance? My guess is that sufficient funds will seek decent return opportunities elsewhere…which would be bad news for the dollar and treasury yields, and good news for gold and real assets such as land.

34. hugo Mandeville on May 25, 2009 at 10:50 PM

Unwise, so why should the wise now pay for the fools? He who lost when gambling should take his responsibilities; either restarts from scratch or hangs himself. The problem with our society is that we have allowed all kind of fools to reign over us. It is time to reverse the trend.

35. DominicJ on May 26, 2009 at 10:10 AM

“When you buy gold, you don't get to keep it in your basement, do you? It's just paper telling you that you own gold.” Nope. I know people who have gold bars bricked up in walls and people who have gold stored in a vault in Switzerland.

36. Bill in NC USA on May 26, 2009 at 07:25 PM

Dominic J. Yes you can buy gold and silver and keep it in your house. Go to Apmex.com or Monex.com to buy it in the USA. England must have places to buy it. If you buy some, don't tell anyone you have it. Don't trust anyone. Your kids will tell others kids at school. Some folks keep it at their bank in a box. That works well until the bank is shut down on a Sunday night. Some folks are taking 30% of their total wealth and buying gold and silver. Some folks buy more than that. When paper fiat money and bonds drift downward, gold and silver are the place to be. A Gold Maple Leaf 1 oz. costs the going spot price plus a $30 commission fee. Don't pay much more than that. Silver 10 oz. bar is spot price plus a $ 10 Commission fee. Don't over pay for this stuff. China knows that the US Gov. Bonds are just paper junk. The US Dollar is paper junk. Get out of paper investments now before the rush.

 

New Order...

The Israelis are blowhards when it comes to Iran. They have been pumping out unending propaganda for years about Iran in the hope that they would persuade their catspaw, the USA, to whack the country on their behalf. The election of Obama has wrecked that particular dream.

Now the Israelis pump out propaganda suggesting that they will do the job themselves, in the hope that this will deter the Iranians. It won't. The Israelis simply do not have the means to attack Iran. The only logical attack route is across Iraq, whose skies are still controlled by the USA. They would be turned back by American fighters at the border if they tried it.

They do not have enough tanker planes to support the sort of bomber fleet that would be required to mount an effective attack. They would not be able to offer any search and rescue facilities for the Israeli pilots brought down during the attack. The most important Iranian nuclear facility, at Natanz, is too deeply buried to be breached, even by bunker buster bombs.

The Israelis are fearful of the Iranian response, which would be savage. Their reactor at Dimona is easily reachable with long range Iranian missiles, as are their oil refinery complexes at Ashdod and Haifa. Industrial and civilian targets throughout the Gush Dan area would be wide open to attack.

The Israelis are in no danger of nuclear attack by Iran, sitting as they do on a stash of 200-400 nuclear warheads, acquired by clandestine means. Mutually Assured Destruction (MAD) works.

What the Israelis are campaigning for is the maintenance of their convenient nuclear monopoly in the Middle East, their final insurance policy in the event of defeat in conventional warfare.

...Old Problem

Excellent analysis...but you forgot a small trifle. When Iran gets the Bomb (for peaceful purposes) it doesn't end there. The nations of the Middle East, while hating Israel, do not fear it...while they do fear Iran. So they will also have to get the Bomb. What you are condoning is not only a Nuclear Iran, but a Nuclear Middle East.

Source: the above comments originated in response to an article on the prospects for gold by Ambrose Evans-Pritchard in the Daily Telegraph on 23^rd May 2009...the first (New Order...) authored by 'Charles Lee' and the second (...Old Problem) by 'Al Berkowitz'.

The Book of Benjamin

1. And it came to pass that young Benjamin, that is called Nat-an-yahu, was chosen to rule over the children of Israel, in place of Ehud.

2. And Benjamin had been chosen because he had promised his people that the smiting should continue as heretofore, even an hundredfold.

3. And a voice came to him in the night saying, “Rise up, Benjamin, and go unto the House that is called White.”

4. “And there ye shall find the Messiah, who is called O-bama, which is to say wonderful, counsellor, exciting, a real breath of fresh air.”

5. And Benjamin did as we was commanded, that he might pay homage to the new King.

6. And O-bama looketh on him and liketh him not.

7. And O-bama saith unto Benjamin, “Hearkeneth unto me, thou son of Lik-ud. Gettest thou this straight. Things have changethed around here since the days of the Burning Bush (so named because he burned everything that is in sight).”

8. And Benjamin was filled with dread at these words of O-bama, for he feared that the days of smiting might be over.

9. And O-bama saith unto the son on Net-an-yahu, “Know you that I am looking for a settlement.”

10. And Benjamin replied, “I can sell you one, a very nice one, built only last week in the land of Judea, with a pool, an avocado farm, its own road and a wall to keep out the Hamas-ites, the Araf-ites, and all the other -ites.”

11. But O-bama laughest not (and not because he hath heard the joke before).

12. “I am serious,” he told the son of Net-an-yahu. “From now on there will be no more settlements of the kind that ye describe.”

13. “And nor will there be any of the type that you describe,” saith Benjamin privily to himself, under his breath.”

14. And so the son of Net-an-yahu returneth home, pondering in his heart the words of O-bama, but not deeply or for too long.

Here endeth the lesson which is never learned. Source: Private Eye No. 1237

This is the first part of a dialogue about the removal of the Speaker of the House of Commons, Michael Martin in May 2009. 'House of Ill Repute' begins with a letter to the Daily Telegraph by the former Referendum Party candidate Peter Etherden and some remarks by the Times of London columnist Matthew Parris, followed by an article by the former Scottish Old Labour MP, George Galloway, who now sits in the Commons as the Respect MP for the London East End constituency of Bethnal Green and Bow (after removal of the Labour whip). The dialogue is then opened up to the public by reproducing a selection of comments on Galloway's article. These comments are continued here in the second part of the two-part dialogue 'Everything But The Truth', which ends with two useful background pieces from Private Eye, masquerading as Comment 130 from petros0717 and Comment 131 from GavelBasher. [Ed.]

MP Salaries
Letter to The Daily Telegraph 12th May 2009 - Unpublished

When I stood as the parliamentary candidate for the Referendum Party in Oldham West and Royton twelve years ago, I included in my draft election address, a pledge that I would draw the average local wage from my Westminster MP’s salary and place the balance in a lottery for social benefit claimants in the constituency.

On reading the draft, Priti Patel at party headquarters phoned me up. She agreed with the salary sentiment but felt it was a distraction from the Referendum Party’s core message that Brussels, and not Westminster, now ruled the country and that this coup d’état had been carried out by stealth and disinformation without the consent of the British people. I think she made the right call.

At election time I picked up two and a half percent of the vote (good for a single-issue party) and Michael Meacher went on to retain the seat with more votes than all the rest of us put together. I had stood up to be counted and had put James Goldsmith’s money where my mouth was. Edmund Burke would not have been displeased and nor was I.

The Referendum Party was a single-election as well as a single-issue party. At the next election the British National Party arrived in Oldham and grabbed half of my meagre pickings, taking the rest, in equal measure, from disenchanted old and new labour voters and from the imperial wing of the tory party. Perhaps I did more harm than good?

But in one regard I was ahead of the game. In my policy for MP salaries.

Yours sincerely

Peter Etherden
69 Fore Street, Buckfastleigh, Devon TQ11 0BS;
Tel: 01364 642674: Mobile: 07847 226945; email: etherden@churchillians.net

The Daily Telegraph
111 Buckingham Palace Road, London SW1W 0DT
Tel: 020 7931 2000; fax: 020 7931 2878; email: dtletters@telegraph.co.uk

The Speaker of the House of Commons by Matthew Parris
The Times on Thursday 21st May 2009

Observing [from afar] that the British are in lynch-happy mood, and preferring not to return to a torched London flat, I must be very very careful how I defend Mr not-for-much-longer Speaker Martin. First, then, my Martin-sceptic credentials. Of course, he was right to resign: in 2000 all of us parliamentary sketchwriters thought that he should never have been elected in the first place. My Times sketch called him a drongo, and I was called an English snob by the Scottish media.

Since then, carried by his staff (despite his unfortunate habit of sacking them), Mr Martin has been lacklustre and supine. But still there is something disgusting in the sight of MPs who happily accepted his cosy connivance in their little tricks now taking kicks at the humbled figure who saw himself more as shop steward than adjudicator. Those who knew all along what the public only know now, but have found their tongues and their courage just lately, do not impress.

So off into the wilderness goes Mr Scapespeaker, with all our sudden indignation on his back. And for what? For being what Labour’s fixers chose him to be: pliable. It sticks in the craw to see Gordon Brown’s people putting it about that Gordon handed him the black spot. Mr Brown and his predecessor promoted a Speaker who wouldn’t make waves. Now Mr Brown sucks up to public opinion by insinuating that he is dumping the Speaker for not making waves. “Oh for a quiet corner,” as Cassandra, of the Daily Mirror, once put it, “an aspidistra, a handkerchief and the old heave-ho.”

Speaker Martin: Prize Scalp for English Snobs by George Galloway
The exit of this working-class Scot may bring glee, but will do little to affect the required overhaul of the Commons.
Guardian Wednesday 20 May 2009.

English snobbery can do a morris dance of delight at the political demise of the Speaker, Michael Martin. The bigots have put the taigs back in their place. Above all the MPs desperately seeking solace from the evisceration of the expenses scandal hope this will be enough to staunch the haemorrhage in public confidence.

For a certain class of Englishman every Catholic is a Mick and every working-class Scot is from the Gorbals. In fact, Michael Martin - it was always Michael! - has no connection to the Gorbals, but his elevation was a fillip to both: the first manual worker to sit in that ancient seat and the first Catholic since Cromwell to surmount the still considerable prejudice. Thanks to Speaker Martin my grandson Sean enjoyed the first Catholic baptism in the House of Commons Crypt since Cromwell turned it into a stable.

His accent never cut through the cut-glass ceiling, he appeared mentally sluggish and the arcane vocabulary of great parliamentary occasions seemed beyond him. His tearoom skills are what had landed him the job. He lay in wait for a generation of MPs to charm avuncularly. Government office was never likely to come his way, and a remaining parliamentary lifetime of high teas and grand tours seemed ample compensation.

But that which seemed charming and solicitous offstage in the warren of Westminster was cruelly exposed in the unforgiving glare of the television lights. It was Martin's bad luck to have been caught up in a maelstrom of crises and public odium. He did not invent the discredited system of parliamentary allowances – that came largely under the "distinguished" speakership of Lord Weatherill and became especially lucrative during the golden era of Betty Boothroyd. Under both, MPs believed that allowances were but a supplementary salary, their receipts notional and in any case highly secret. The consistent deferment of recommended salary increases, the tearoom mafia would nod and wink, justified this deceit.

But caught in the white heat of this unprecedented focus, the former sheet-metal worker melted. He might have avoided the complete destruction had he decided to leave over the Damian Green affair where policemen were allowed to trample through the parliamentary estate on a political witch-hunt of an opposition politician merely doing his job. If Martin didn't know they needed a warrant to be there he was too stupid to be Speaker; if he knew but turned a blind eye then he was too wicked. But that was also an opportunity. He could have admitted an error, apologised humbly and gone back to Springburn with a grain of respect left. MPs might have even shaken his hand for doing the decent thing while looking over his shoulder for a successor.

Martin's fall from grace is necessary but not sufficient. The election of a new Speaker in this parliament will be effected by the same people who brought it into disrepute. Similarly the "constitutional convention" now being touted would merely be a conclave of the self-regarding great and good and the conclusions would crucially lack credibility in the harsh public spotlight. Only a new parliament where the public have cast judgment on those who have disgraced our political life can be trusted to set in place the new dispensation.

We need a revolution in public life, halving the size of the lower house, and directly electing the revising chamber – all by proportional representation. We need transparent and contemporary disclosure of all financial details – publish the income tax returns and all details of perks, outside jobs and jollies. Party funding and election spending decisions must be part and parcel of the reform. None of this can be done by the current discredited House of Commons.

This article was first published on guardian.co.uk at 07.00 BST on Wednesday 20 May 2009. It appeared in the Guardian on Wednesday 20 May 2009 on p30 of the Comment & debate section.

Comments

1. AntwnPowell
7:18 am. We need a revolution in public life, halving the size of the lower house, and directly electing the revising chamber – all by proportional representation. Agree completely, and we need to get rid of the monarchy, Elizabeth the Last has been shown to be completely useless in performing her constitutional duty. She should have disbanded Parliament and demanded a new PR type voting system.

2. Robert69
7:21 am. Spot on about the speakers. In the right direction about the reform of Parliament. I have yet to hear or read any word like that from any other MP.

3. papertiger3030
7:21 am. One of the more revealing statements yesterday was Mr Martin referring to his 30 years in the House, indeed, he was elected in 1979. So is he a former sheet metal worker or a professional MP of 30 years standing? How long was his sheet metal career? Which is more relevant? After 30 years in the House he should have been pretty familiar with it; he was familiar enough with the system to claim his own expenses no problem. And as for being a Catholic, I'm sure most people care as much as they did that Betty Boothroyd was a woman. I have a friend who came here 20 years ago as an asylum seeker. Is he still a refugee or is he a highly paid management consultant? Martin was in deep shit because of his actions, not his accent, religion, or a job he last saw 30 years ago. GG: Fired a blank on this one.

4. Thoughtfull
7:23 am. As an Englishman, Southerner and probably a snob in your opinion thank you for telling me what I think about Scots. FYI. As a catholic I've never been called a mick, nor did I know I was meant to think everyone in Scotland came from the Gobals, and I hadn't even heard the word taig before... my interest in your article peetered out at that point, Wow you are opinionated about Englishmen. As far as this mess goes I think ALL parties are just as guilty and now we just need to get the rest out. Anyone else want a General Election, I know I do.

5. MoveAnyMountain
7:23 am. I actually agree with George Galloway. Not about the snobbery of course. There is no way that an Upper Class Speaker, Catholic or not, would have survived. (Although perhaps Betty B would have because to sack her would have been ungentlemanly.) Rather the Speaker is being thrown to the wolves by the scum in both Houses in the hopes that the plebs will be satisfied. This is the British tradition - the Oligarchy we have always been ruled by has always needed a token sacrifice when things go wrong. I still have no pity for the f**ker. His wife charged me over 4000 pounds for taxis so she could go shopping. F88k 'em both. He is merely the first of many. Many times many with luck. In the meantime, anyone know what Gorgeous George charged for?

6. Anglophobia
7:24 am. He would have been thrown overboard even if he were the Duke of Marlborough. Probably more quickly, in fact. I don't think he should have been sacrificed, but it's juvenile to think it had anything to do with his being Scottish. As an aside, it's strange how George Galloway's writing style resembles Conrad Black's. It has the same tone of polysyllabic infallibility.

7. sparerib
7:24 am. Only a new parliament where the public have cast judgment on those who have disgraced our political life can be trusted to set in place the new dispensation.

8. leftleast
7:29 am. This comment has been removed by a moderator. Replies may also be deleted.

9. BillVanAmsterdam
7:30 am. Yeah, but George, even you have to admit, letting the busies in to search a member's office, without a warrant, wasn't the smartest thing he could have done. And his own record on expenses was not really 100% transparent. He was let off lightly in the past. I'm sure he's a lovely bloke and under different circs, I'd be glad to share a pint of heavy and a ha'f with him, but as Speaker he was a bit of a Wullie.

10. SoCalifornication
7:31 am. Politicians are like diapers. After awhile they need to be changed since they are full of shit.

11. MiskatonicUniversity
7:32 am. Given George has managed to speak in only four debates this year and participate in 9% of votes, I'm not sure this MP was the best pick to defend the institutions of Parliament. As for Michael Martin, I'm a Scot, I believe I even have some distant family from the Gorbals, but I have nothing but contempt for Martin. I don't regard it as "working class" to hire uniformed chauffeur-driven cars to take me around the place and stand waiting at the public expense while he visits the centre or Celtic Park. Did he mistake himself for the Queen? Nor do I regard it as "working class" to claim £75,000 of public money on a £400,000 house he already owns outright while at the same time living for free, at tax-payer expense, in a Westminster grace and favour house. I'd say Martin's behaviour was no-class, not working class. Given Martin's appalling record at fleecing the public, what on earth draws George to defend him?

12. Patr
7:33 am. "Michael. we salute your courage, your strength, your indefatigability". Or "You have been found out you thick and useless excuse of a Speaker who has done the square root of SFA for your constituents whilst claiming thousands in expenses to let Mary Hen go shopping and the family go on their hols with TaxPayer funded Air Miles. Your partisan abuse of the honoured position of Speaker and the opportunity you had to show that a Scottish Catholic ex-sheet metal worker could rise to become Speaker, and show all those who doubted your ability that it was possible, were blown away in a sea of self-interest and inverse snobbery. Your treatment of Major General Peter Grant Peterkin, one of lifes great Gentlemen (even though he is an ardent QPR supporter) showed what a miserable champagne socialist does when elevated to a position that is truly miles above their natural pay grade. Begone O useless one and do not put the last Taxi home on your ever growing expenses tab." Now let us rid Parliament of that other Scottish Con man, the Fierty Fa Fife, old McCavity himself. When he goes I will open my bottle of Speakers Single Malt, order a double portion of mince and tatties and play "Shower of Scotland" on my Rolf Harris Stylaphone.

13. Zerotolerance
7:36 am.English snobbery can do a morris dance of delight at the political demise of the Speaker, Michael Martin. The bigots have put the taigs back in their place. Above all the MPs desperately seeking solace from the evisceration of the expenses scandal hope this will be enough to staunch the haemorrhage in public confidence. Hardly. Michael Martin's problem is not that he's Scottish. It's not even that he's done anything particularly wrong or bad. It's just a tragedy of bad timing. The right analogy would be with Neville Chamberlain and Winston Churchill. He's an ordinary man who's found himself in an extraordinary situation and manifestly is unable to cope. It's hard not to feel for him on a personal level - would you want the pinnacle of your career to be some question for a Trivial Pursuit game? We need someone of courage, insight, and vision to start the process of restoring public confidence in Parliament. He is manifestly not that man. Now would be a good time for our latterday Churchill to step forward.

14. Waltz
7:38 am. Speaker Martin wasn't fit for purpose, that's all. If you enter a donkey in the Derby, don't blame the racehorses when the donkey trails in last.

15. Kerensky
7:39 am. What a complete load of nonsense. This guy should stick to wearing a cat suit on Big Brother. If other Scots feel this way then I feel sorry for them. We could keep a bio mass power station going for years from the chip on Galloway's shoulder. Martin was useless full stop. He had difficulty stringing two sentences together. Whether he was born in Scotland and was working class was totally irrelevant. To describe Martin as working class is as silly as describing Andrew Carnegie as working class because he was born into real poverty in Scotland. Through his exploitation of the expenses system Martin is now middle class with all the trappings. MPs such as Jimmy Maxton would have been ashamed of Martin's antics. Those who have been in the Labour Party for a long time recognise a machine politician when we see one. They have the same mental attitude as minor communist apparatchicks in Eastern Europe in the 1950s. Forget about debate. It's about getting your trade union mates to dominate the local GMC with delegates and silencing the minority voice. At heart they are really conservatives not radicals. I wonder have many members there are now in Martin's constituency. I would not be surprised if it was a shell and that when the by election comes the Labour Party in Scotland will have to bus members in. I'm surprised that anyone can take Galloway seriously. He makes Comical Ali look like a Greek philosopher.

16. Tetleyteaman
7:39 am. Leftleast - fantastic post. Question for George - if you despise the English so much how come you are (barely) sitting at Westminster and not in Holyrood? Leave aside the Celtic snobbery and just look at the Speaker's record. That is why he was booted, and hopefully he will be the first of many.

17. Soddball
7:40 am. How do you spot a well-balanced Scot? He has a chip on both his shoulders. Martin exemplifies that sort of Scot - chippy, pompous and with an inbuilt assumption that the reason he hasn't risen higher is class snobbery. It isn't that, it's because he's useless. Good riddance to Martin.

18. haward
7:40 am. George old bean. Speaking as a Scot , an apostate Catholic , but not from the working class I think that you miss the point. Michael Martin went because he misread the anger of the people & the Commons. The snobs will rejoice but their snobbery was in no way the cause of Martin's downfall. He should not be the only one to go. I hope that your expenses are in order? Those who bilked the system should be chucked out. If you did it I hope you go too.

19. nimn2003
7:43 am. George, often have sympathy with your point of view, but on this you are dead wrong. Regrettably the job was beyond Martin's capabilities, and a friend should have pointed this out to him years ago. It was only because of his background as a 'solid working class lad' that he managed to hang on so long. There are better targets, George, please try again.

20. Howdidthishappen
7:44 am. Utter shite. This is the same garbage that Blears comes out with. Why do the people that always criticise class turn a blind eye when the same people are worthless or corrupt? I've always found it strange that the 'Speaker' is inarticulate.

21. desklamp
7:47 am No George, all this class stuff is pure old Labour/Guardian. The bloke appeared to be utterly lost in the job & should have been sacked when he allowed the scuffers in! Nothing to do with class, in fact if he was 'real' working class what was he doing in that pig sty with the freeloaders anyway? Nobody comes down harder on a bloke who is poor at doing thier job than the working class, as you would know if you had worked in a factory or shipyard, we do have pride you know!

22. JamesCameron
7:48 am. "We need transparent and contemporary disclosure of all financial details - publish the income tax returns and all details of perks, outside jobs and jollies." I presume this would also include "expenses" from UN Oil for Food Appeal, all children's "charities", and the interesting sources of cheques sent to former wives.

23. Dormsville
7:48 am. Actually, if you can get past the title, the article itself is not too bad. But I do find this continual "it's all them English bastards' fault" tirade from the haggis-bashers utterly tiresome (and idiotic.) I've come to the point now wherein I'd love to see Scotland break away. Good riddance. Take a great big angle grinder to Northern Ireland and tow it out into the north Atlantic, while you're at it. Nothing but an almighty drain on our resources. Both of 'em.

24. Euphranor
7:48 am. English snobbery can do a morris dance of delight at the political demise of the Speaker, Michael Martin. The bigots have put the taigs back in their place. There may be people in Glasgow who think in terms of 'taigs', as there certainly are across the water in Ulster, but in England? Who? I suppose you'll be telling us that the reason the Tories dumped Iain Duncan Smith was that he too is a Catholic. Still the Son of the Manse would seem to be safe(ish), on these grounds at least.

25. Ebert
7:50 am. Of course there was snobbery and of course class plays a part in this affair. But Speaker Martin also gave the appearance of incompetence and an unwillingness to let us know what his fellow MPs were up to. Without the latter, the former would have been irrelevant.

26. MilesSmiles
7:51 am. What a load of rubbish. Why do you go to this discredited "politician" who has had his own hand in the till for a biased article like this? Why don't you publish an editorial accusing Galloway of wrongdoing. He could have bought Buckingham Palace with all the money he's won from defamation lawsuits. Let's remind people of the facts. Galloway was had up by a kangaroo court in parliament, prevented from adequately defending himself, and all because he was alleged to have used parliamentary resources to help his charity. His charity...All the time the rest of them were up to their ears in spending public money on themselves for dodgy second houses and 8 thousand pound televisions. And yet Galloway is supposedly the bad guy.

27. crompton
7:54 am. There is a peculiarly Scottish thing about religious differences. I am a Catholic, none practising, working class and from Toxteth in Liverpool, so close to working class Catholic, not from the Gorbals. Years ago I teamed up with an Orangeman from Ulster and we became great friends, a third member was added to our team who was from Scotland. He told me and my Orange friend that his minister had told him that the Pope keeps a thousand concubines in the Vatican. Even Billy (for that was the name of the Orangeman) laughed. But the Scot was serious. Now we are witnessing the other side of the same coin from GG. George, nobody in England, and I daresay Ulster, gives a FF that Michael Martin was a Catholic, still less that he was a Scotsman, or a sheet metal worker. He is a dunderhead of the first water who was as incompetent a Speaker as could have been found anywhere in these British Isles. Anyone with an ounce of sense in his position would have moved to make the House squeaky clean as soon as they could. Instead of which he spent £100k of our money trying to reverse a decision to let us see how our employees were spending our money. If you need any evidence of how thick he was it's there in the last sentence.

28. RobinPercival
7:55 am. George Galloway may be right in terms of the power of snobbery of some of those gleeful that Martin is going. But the truth is that he is going because he seriously misjudged what was needed in terms of the reform of parliament. Of course the process of reform must be extended and widened to include such areas as electoral reform (PR is a must); fixed term parliaments (removing the power of the PM to play party politics with the timing of an election); disestablishment of the Church of England; a new constitutional relationship between England, Scotland and Wales predicated on the sovereignty of all three nations; a commitment to work with the Governments in Ireland (North and South) to end partition and build a sovereign and democratic Ireland. Also state funding for political parties and a clear constitutional position for the Head of State. Of course to make all that work we need radical, progressive political parties, but at least it is a beginning!

29. Carliol
7:56 am. What a silly article. Where is the evidence that allowances were more lucrative under Boothroyd? What a cowardly untruth. Galloway clearly has not heard of the Motive Fallacy: even if the accusers are snobs (and many would dispute that), this does not alter the substance of the accusations. Martin had lost the confidence of the house, had presided over a moral and PR disaster that undermined the Commons, and was generous to himself in his own claims. He had to go. I would like to see Galloway's claims - he looks so smug on TV that he reminds me of "the cat that got the cream". Absurd.

30. manonfire
7:56 am. George Forget the infidels, George! We need to over here in Baghdad, George. It's so much worse now your good friend has gone George. It's not just the Americans killing us, it's US killing us! Brave George of the Britain, please help us again, George! Allah and George be Praised Abdul.

31. MJTValfather
7:56 am. @leftleast - Excellent post - I couldn't have said it better. George Galloway has had a long track record in rabble-rousing. Normally it has been (I understand) on behalf of the agendas of Hezbollah and Hamas. However it is refreshing to see that he has finally turned his attentions to his own country. Scotland.

32. sheffpixie
7:56 am. George. We probably do need a revolution of a sort but this. The bigots have put the taigs back in their placeand this for a certain class of Englishman every Catholic is a Mick really don't resonate in the England I live in and hasn't done for a very long time.

33. curious
7:59 am. Must the Guardian give space both to George and to the chip on his shoulder? There's a decent point in here, but the classist/nationalist guff is embarrassing.

34. 29FR
8:00 am. Just when you thought there was a limit to the ways of being wrong, along comes another permutation. Thanks GG. Btw, the gulf between what you say and what you are is much wider than that of any moat owning Tory toff...

35. Radicalyoubet
8:01am. Well done George, but lets move on to the real Issues here and now, Both Cameron and Clegg have again stated in interviews yesterday they both paid monies back to us the taxpayer. Right if that is factual someone in Parliament must stand up and point out this out. They are tainted through their own mouths, and for these two Shysters now demand a General Election is only to cover over their footprints.

36. Lehih amra
8:05 am. You know, until I read this piece I hadn't even realised that the speaker was Scottish, and I certainly didn't know he was working class. Thanks George, now I know. But what do those two things have to do with anything? A bit pathetic, really, especially the racist comments about Morris Dancing.

37. BlearsRage
8:09am.This comment has been removed by a moderator. Replies may also be deleted.

38. OldBagpuss
8:14am. Oh pass the kleenex please! George you are worse than the horrible 'Gorbals Mick' crowd - worse because you know full well what you are saying. British politics is seriously disfigured by the absence of a credible left, as will be seen in the forthcoming election for Martin's seat, when your lot (the Sheridan lot) will be spitting blood and fathers at the other lot - and the BNP, incredible as it is to contemplate, may well skin them both. You and Martin - in your different ways - helped to destroy the British left, and Tommy Sheridan buried it in Scotland, bad cess to the three of you.

39. DeeDee99
8:16 am. “It was Martin's bad luck to be caught up in a maelstrom of crises and public odium.” That’s utter b*llocks. Martin was ultimately responsible for the 'system' of expenses; he knew precisely what was going on because he was 'at it' too - creaming money off the taxpayer; gifting money to relatives; taxis for the wife; holiday jaunts - all paid for by us. He acted as the roadblock to reform; when told directly by subordinates that the system was being exploited, he told them to shut up and not rock the boat. He wasted hundreds of thousands of taxpayers pounds trying to prevent disclosure under the Freedom of Information Act. And that's without going onto his disgraceful partisanship; the Damian Green affair; his rudeness to Kate Hoey and Norman Baker and his complete incompetence in carrying out his job in the Chamber. It was not 'bad luck'…most of it was self-inflicted. He was part of the Scottish Mafia that has ruined the UK over the past 12 years, and hopefully the remaining members will be out of Office themselves very soon.

40. BlearsRage
8:19 am. This comment has been removed by a moderator. Replies may also be deleted.

41. Alphamail
8:35 am.Oh yes it was white, middle class, English plot. I mean it would have to be wouldn't it? He was unfit for the role, in fact he was probably not exactly cutting edge as an MP. Speaker should be one of the best not one of under-mediocre. By convention the speaker should have been a Conservative as Betty Boothroyd, who was delightfully described elsewhere in this paper as "getting a bit haughty", which I think translates to made Labour stick by the rules, was from the Labour benches. When you flout one convention it starts to become easier to ignore others, like being non-partisan. Michael Martin never upheld the role or else Brown would have been hauled over the coals for never answering the questions at Prime Minister’s Question Time. Blair I think was famously told by Betty it is PMQ not Opposition questions. Then of course we have his dreadful judgement with allowing the police to enter Parliament to search and arrest a member, opposition of course, then throwing the Sergeant at Arms in front of train to save himself. Anyway so apart from all that it was snob's plot with no basis...

42. Forlornehope
8:36 am. I'm a Scots engineer (yes I know it's a bit of a cliché), and I am delighted to see the back of Speaker Martin. He was a joke and a disgrace to the nation. There are plenty of "working class" Scots, men and women, who are intelligent, articulate and a credit to Scotland and the United Kingdom. He is not one of them, nor for that matter is George Galloway!

43. Cassiopeia9000
8:38 am. Mr Galloway, I do confess that I have no idea what you are waffling on about. What is this certain class of Englishman to whom you refer? I've never met anybody who even remotely resembles that silly description. Mr Galloway, when I recommended that you ought to go to Egypt and get stoned, I didn't mean literally. How's the weather in Canada, old chum?

44. lierbag
8:42 am. 'His tearoom skills are what had landed him the job.' Is this a euphemism for some sort of esoteric sexual practice?

45. tommyjimmy
8:47 am. If Martin didn't know they needed a warrant to be there he was too stupid to be Speaker; if he knew but turned a blind eye then he was too wicked. Quite. So what's your problem with a man who's either too stupid or too wicked to be Speaker being forced out? But that was also an opportunity. He could have admitted an error, apologised humbly and gone back to Springburn with a grain of respect left. And he didn't. Same question. As a fellow Scot, George, can I ask that if you must continue making a fool of yourself, at least stop using my country as a justification for your bigotry. Ta.

46. Mantissa
8:55 am. This comment has been removed by a moderator. Replies may also be deleted.

47. twiglette
8:59 am. Since this debacle obviously has nothing to do with Martin being either Scottish or working class, I fail utterly to be swayed by Mr Galloway's argument: it seems he has a different axe that he is grinding - a pity, because he was so eloquent on Iraq, and on Palestine.

48. zazar
9:00 am. Thank you for making your own prejudices so clear to we English snobs Mr Galloway. The only person that comes across as a bigot after reading this rant is you, dear George.

49. Doctordunc
9:03 am. It's amazing how many people have commented on this article without reading it! Read it through, and you realise that this article does not defend Michael Martin (indeed it condemns him quite harshly) and it certainly doesn't suggest that his fall from grace is due to his nationality or religion. It does suggest that there are bigots - Westminster snobs - who will rejoice to see the back of him, and I suspect that is true. Martin has made a number of mistakes, but there were some - particularly some Tories - who had had it in for him long before these mistakes, and that did indeed seem to be based on prejudice. I actually think that removing the Speaker will be viewed quite differently by many in the country as scape-goating one man, to try and get another 50 or so off the hook.

50. Bleedingheart
9:07 am. Ah think wee Georgie has a chip on his shoulder against the Aenglish!

51. Mercurey
9:08 am. It must be sign of British industrial decline that it is only in relation to the Speaker I hear sheet metal worker. If I were currently a metal sheet worker (yes him) I would work very hard to disassociate myself from Martin. Working with metal sheets in Scotland were the least of his problems. A man out of his depth, and out of touch. Especially from the egalitarian thoughts of metal-sheet workers. We may never hear of metal sheets ever again after June.

52. Torheit
9:11 am. This comment has been removed by a moderator. Replies may also be deleted.

53. Maidmarion
9:11 am. It seems to be the Scottish Labour card in preparation for a dodgy by election, "try the politics of envy try sectarianism and if that fails, racism , otherwise we'll have the postal voting" George used to be in the labour Party doncha know? As a Scot, living in Glasgow for 42 years I refute the snobbery angle, I refute the religious angle and I refute the racist angle. The man had fought hard to protect the greedy interests of MPs, himself included ,now he has paid the price. And what a price ! Gold plated pension and a seat in the Lords from whence he can claim expenses. Jings my heart bleeds! More heads needed Georgy boy! Interesting that 300 years have elapsed since this has last happened. The beginning of the end? Come on you English demand an English Parliament and let us go!

54. Smoky
9:12 am. Martin, like you Mr. Galloway signed the Scottish Claim of Right. Probably the most racist document ever openly promoted in the UK. Brown, Darling, Falconer, Reid, Steel, Menzies-Campbell and a load of others that came down into the territory of the Auld Enemy have caused the trouble that now besets England. Look upon Martin as a casualty of war and I hope that our troops soon catch up with you and your partners in crime and stand you up against a wall and stone you with hard boiled haggis.

55. belgianmagritte
9:13 am.Yes, it does seem as if two different people wrote the article. The first part is juvenile. I'm a 58-year-old English Catholic, formerly from the working class, and I've never been called anything at all because of my religion. It might be different in Scotland but English people do not care at all. I've always thought most English people have quite an affection for the Scots. Wasn't the Scots accent voted as one of the most popular accents in the UK in some poll or other? Any time I turn the BBC on the service is positively drenched with working class accents. A Scot I met here outside the UK mildy mocked me for my Brummy accent (which apparently non-Brummies everywhere in the UK find hilarious!). I think the writer ought to realise that shallow victim-mongering is now deeply unpopular.

56. Kuba
9:17 am. Good piece. The first Spring-cleaning in the house for 300 years...

57. Fomalhaut88
9:20 am. Tell me someone, with all this talk of Martin being the victim of snobbery, where was this snobbery when Betty Boothroyd was speaker? Her parents were textile workers...and her background surely could not be described as "toff", could it? She became Speaker, and there was never a word of complaint about her. In steps the brave George Galloway, that force for unity in a crisis, talking of snobbery and Catholicism and background and prejudice. He never fails. This guy Martin simply could not unite. He was not impartial, nor was he seen to be impartial. Without that, it ain't going to work, and no amount of bleating about the potential divisions of background, religion or snobbery is going to change that.

58. MartynInEurope
9:21am. If CiF is an accurate reflection of the mood of the country there are going to be an awful lot of people voting for the racists and homophobes of the British Nazi Party come the next elections.

59. circa1943
9:23 am. Sacking the speaker is a pathetic attempt at a diversionary tactic, as is GG's sad attempt to muddy the waters by playing sectarian and racial cards simultaneously. Why blame the speaker if MP's in general can't interpret their rule-book? from the Green Book : "The principles are: Claims must only be made for expenditure that it was necessary for a Member to incur to ensure that he or she could properly perform his or her parliamentary duties. Members must ensure that claims do not give rise to, or give the appearance of giving rise to, an improper personal financial benefit to themselves or anyone else. (Members should consider) How comfortable do I feel with the knowledge that my claim will be available to the public under Freedom of Information?" Note the "will" and ask yourself, were they greedy, just stupid, or both?

60. Billlogan
9:34 am. This article is typical of George Galloway as it is a rant based on his personal prejudices and not truth. I lived in England for two years and never once heard the words taig or mick used as a reference to Catholics or Irish people, only Paddy, and usually in a friendly way. I wish that I could say the same thing for my native working-class West of Scotland and George should know better because when he suffered personal bigotry it was at the hands of Scottish Rangers supporters when he experienced it personally. What George should do is watch a recording of Speaker Martin's statement on Monday, and if he is honest he will consider that his reading performance was not worthy of a 10 year old and certainly not acceptable for a man in high political office. There have been other speakers who didn't have cut-glass accents and have been very efficient at their job. George Thomas for one, who certainly sounded like an ordinary working-class Welshman from the valleys to me.

61. Cassiopeia9000
9:36 am. Belgian Magritte, It might be different in Scotland but English people do not care at all. I've always thought most English people have quite an affection for the Scots. Wasn't the Scots accent voted as one of the most popular accents in the UK in some poll or other? The Scots accent on a man is rather delicious. Hubba hubba. I have a slight Brummy twang too, living in Birmingham. But I've spoken to Americans who are rather enamoured of it, so it's not all bad eh? Or should I say innit. =)

62. Wans
9:38 am. This comment has been removed by a moderator. Replies may also be deleted.

63. BarcelonaBill
9:40 am Anyone who things there is no element of snobbery in this should look at the Daily Mail's snide digs at "Gorbals Mick" that they have been running all week.

64. PrettyStr8Guy
9:43 am. Surely some anti-Scottish prejudice is perfectly understandable when the leadership of their greedy incompetent bankers and politicians has brought the country to its knees?

65. Fourprovinces
9:47 am. I think GG is pretty-much correct, ever since Michael Martin was elected Speaker there have been those out to get him - he was immediately christened Gorbals Mick by some of the right wing press here. They believed that they had ownership of the greatest ceremonial position in the land and were miffed when this working-class Scot of Irish descent usurped their position. He was their target from day one and the snobs got their scalp. GG also concedes that MM's performance wasn't always up to scratch and that he made a strategic error over the Damien Green affair but if he was upper middle class he would probably still be in place now.

66. farga
9:48 am. Yes, and in the next election it is becoming increasingly clear that the English will send another Scot packing from his east end constituency - if he has the guts to stand....not that he's ever there. ps, I'm Scottish.

67. Danny69
9:49 am. This comment has been removed by a moderator. Replies may also be deleted.

68. rafferty
9:54 am. Ignore all the insults George, they can't help it they are that type of Englishman we Scots can't stand. Most of them still don't understand that Thatcherism has got Britain in the mess it's in. If only it were as easy as getting rid of Michael Martin. It is the whole system that stinks. Personally I would get rid of that German family at the top of the pile and work my way down. Bye the way don't anyone bother insulting me 'cos I have better things to do and I am away out dressed in my string vest and kilt.

69. LordSummerisle
9:55 am. Thanks to Speaker Martin my grandson Sean enjoyed the first Catholic baptism in the House of Commons Crypt since Cromwell turned it into a stable... and this means what to the electorate precisely?

70. panchopuskas
9:58 am. If this had been published in the Daily Mail he would have a point. They consistently called him "Gorbals Mick" which is, as GG points out, bigoted and insulting. But in the Guardian? And whose fault was it that he got caught up in the expenses row? Did some Southern Englishman march him up to the cash till and make him hand in his bills? It was a fair cop, guv (or Jimmy, in this case). Oh, and leave Cromwell out of this. Great man that took us out of the middle ages and got rid of autocratic monarchy.

71. allycloud
9:58 am. I was trying to come up a sensible response to this nonsense, but all I could come up with is: George Galloway, please shut up and go away! You are the personification of everything that is wrong with modern politics. Your attempts to make out like the Speaker was forced out because of snobbery are a nice attempt to take the focus off why he was forced out and why at the next election a large number of MPs will also be shown the door. The House stinks of corruption and its time for a spring clean and a general election. Signed, A Glaswegian Catholic (although not a former sheet metal worker)

72. Marionmack
9:59 am. English snobbery. For a certain class of Englishman every Catholic is a Mick.

73. MerkinOnParis
9:59 am. Not one of your better ones George. The suggestion that incompetence can be covered up under the taigs card is what allows the NewLab mafia in the West of Scotland to flourish.

74. RedmondM
10:00 am. Of course the process of reform must be extended and widened to include such areas as…a new constitutional relationship between England, Scotland and Wales predicated on the sovereignty of all three nations; a commitment to work with the Governments in Ireland (North and South) to end partition and build a sovereign and democratic Ireland. Why is the solution for Ireland the reversal of partition, whereas the solution for Britain is complete partition into 3 nations? If the three nations are to be sovereign, does that mean leaving the EU, or will it just be 3 regions of the EU taking their orders from Brussels /Strasbourg?

75. pallasathene
10:01 am. Sheet-metal worker, my arse! The last time Martin touched a bit of sheet-metal was running his hand over the lustrous wing of a chauffeur-driven Mercedes E-Class taking him to Celtic Park. Which we non-sheet-metal workers paid for.

76. bdonegan
10:04 am. I'm Irish, from a Catholic family, so I don't have any of the prejudices you talk about George. But Mr. Martin sounded more like a snob than anything when he defended his privileged colleagues. I do hope thought that he isn't just some kind of sacrificial lamb and that real reforms will be made.

77. Wans
10:08 am. Wow, my comment's been deleted for posting George Galloway's voting, speech-making, and expenses record from the House of Commons? Ok, this time without making any comments or inferences:
http://www.theyworkforyou.com/mp/george_galloway/bethnal_green_and_bow

78. Martynineurope
If CiF is an accurate reflection of the mood of the country there are going to be an awful lot of people voting for the racists and homophobes of the British Nazi Party come the next elections. Evidence please for this claim.

79. kiwiinlondon
10:14 am I'm disgusted by George's invective toward 'English snobs' and have to observe, as a Kiwi of English/Scots descent, that in the years I have been here I have become increasingly aware of the time warp that people who share George's views in the UK seem to live in. George's outburst is the sort of juvenile religious/race/class rubbish I would have expected from a teenager from a very deprived background in 1950s New Zealand, not from a man who has seen as much of the world over as long a time as George and in the first decade of the 21st century. The rest of the article is quite sensible and reads as if someone other than George actually wrote it. The expenses scandal aside, the UK parliament was descending into a parody of itself under Mr Martin. I observed him on numerous occasions and he seemed to be using the incomprehensible and manic cook from the old Muppet show as a role model in his absurd partiality and mood swings, a very poor choice for the role of Speaker but pretty much in line with most of the decisions imposed by the Blair/Brown regime. Apart from being almost incomprehensible, he was a bumbler and a stumbler, with bizarrely inappropriate responses to crises or challenges which ultimately led to his undoing. But for all that, I was increasingly coming to feel sorry for him as he was so patently out of his depth and his going is probably, I imagine, a relief for him as much as for the House. The idea that he will be elevated to the peerage makes me gag, however - my sympathy does not extend to a desire to see him preening in ermine-trimmed splendour. The very idea is a mockery of the concept of nobility, but he won't be the first or the last absolutely inappropriate elevation to lordly status. It is to be hoped that parliament and parliamentarians can reform both themselves and the lower and upper houses. But with attitudes such as George's, I fear it will be a long hard slog to rebuild a political system fit for purpose now and for the coming years and not for the past.

80. steverandomno
10:16 am. Is there any issue for which you can't find a way of using a racial argument? The way you cynically exploited race to unseat one of the most down to earth, decent and honest (if a little quirky) MP's of our time was appalling, as you well know. This issue has nothing to do with race and everything to do with the sort of cynical self-interest you exhibit so frequently.

81. StephenGash
10:18 am. There is a lot of bleating about Michael Martin being made a scapegoat. This is being said not least in his Glasgow constituency. The first woman Sergeant at Arms springs to mind, hung out to dry by Michael Martin. To many, he is a typical Scot. A congenital credit claimer when things appear to be going right, and a pathological buck passer when things go wrong. Regardless of where he is from, Michael Martin has been the worst Speaker ever. Good riddance. It wasn't that long ago we read in the Guardian's pages from a Scot called Fergusson bragging how the Scots run everything. How many times have we heard and read how Scots "made a disproportionate contribution to the Empire and UK"? Of course that isn't a backhanded insult to the English, Welsh and N. Irish is it? Now they are taking some well-deserved flak, they whine 'racist'. They can dish it out, but just can't take it. It is no surprise that a Scot, Foulkes, brought sectarianism into the Michael Martin debacle. It is no surprise that another Scot, Galloway, brought in class as an excuse for his ineptitude. Scots are the most divisive people in these islands, even the Irish didn't mention religion. It is time the Scots did the rest of us a favour and voted SNP, and demanded a referendum on independence ASAP - and then choose independence. A Scot accusing anybody else of discrimination is risible. Get back to your Clan, George, and see how many votes you and your party command in Scotland. It may have escaped your attention that there are dozens of Scottish MPs misrepresenting their constituents in England, even if you are one yourself.

82. Rumi
10:21 am. 'For a certain class of Englishman every Catholic is a Mick' - would that include the Duke of Norfolk (whose family has remained Catholic since the Reformation)? The Scots have done very well in modern politics and very many have seats in England. How many English-born MPs represent Scottish constituencies? For what it's worth, I was raised a Catholic and my parents were Irish. I have no idea what you are talking about here George. - apart from appealing to a misguided sense of grievance.

83. Marionmack
10:22 am. Martyn in europe. “If CiF is an accurate reflection of the mood of the country there are going to be an awful lot of people voting for the racists and homophobes of the British Nazi Party come the next elections.” But it isn't. And there won't be.

84. Rebuttal
10:22 am. Imagine the fuss there would be if, instead of "a certain class of Englishman", someone had written "a certain type of black person" or "a certain sort of Jew".

85. rantboy
10:26 am. what's wrong George, Mr Martins future is assured , the snobs have lost he will be elevated to the house of lords , and there is the problem with British politics we can vote people in but we cant seem to get rid of them .

86. Bangorstu
10:27 am. Given the alleged anti-Semitic insinuations Galloways' campaign used against the Labour incumbent during his election campaign, I suggest he's the last person to lecture anyone on racial bigotry. Still, since he's proved himself to be completely out of touch with reality in these islands he seems to be par for the course for MPs. Obviously being Scottish, working class and Catholic are more important qualifications for a job than actual talent and probity.

87. LordSummerisle
10:35 am. @MarionMack “But it isn't. And there won't be.” ... and when there isn't the one thing you can be sure of is that the posters and bloggers who've been overstating the BNP's likely share of the vote will be congratulating themselves and claiming that it was their warnings which prevented it from happening.

88. BlearsRage
10:37 am. Sorry, I got deleted for calling him a chippy Scot, but he can call us English snobs. Quality moderation guys, cracking job on the consistency front, as ever.

89. Bengalim
10:40 am. Not another Scotchman with a chip on his shoulder! Never mind, you soon won't have a reason to hang around England any more because come the election the English snobs will have another scalp, though not a prize one this time - assuming you dare stand again, you wee scunner.

90. LordSummerisle
10:40 am @BlearsRage. If ever a blog demonstrated that The Guardian has different standards for above and below the line, this is it.

91. pont
10:41 am. DeeDee99."He was part of the Scottish Mafia that has ruined the UK over the past 12 years," Nothing to do with Neo/lib economics dreamed up by Milton Freidman, and implemented by Reagan/Thatcher then?

92. holbeck
10:43 am. Several posters have already shot down the "to a certain class of Englishman, every Catholic is a Mick" nonsense. I had never heard the word "taig" until I was posted as a Potential Officer to a recruit training barracks where the training battalion was a Scottish cavalry regiment. About a quarter of the POs were Catholics, and we were baffled by the constant use of the word "taig" in a pejorative sense by the NCO's who ruled over us. It was so meaningless (as was the prejudice behind it in an English context) that none of us took any offence whatsoever. Someone else here (Four Provinces) claims that the mysterious English establishment snobs hated Martin from the start for being Scottish "with Irish roots", which is laughable. I've gone through life as a Catholic with an Irish surname, and thanks to my parents' choice of education have moved in these "establishment" circles since I was a small boy. Newsflash: none of these people give a toss where you come from, or what religion you are. Also, find me a posh English family that doesn't have Irish/Welsh/Scottish members in the past couple of generations. In addition, Speaker Thomas and Speaker Boothroyd had backgrounds just as humble as Speaker Martin's. However, they were competent and impartial, and enjoyed the support of the house. Where were these mythical establishment snobs then?

93. lierbag
10:45 am. Reading some of the gushing praise for Martin now being ladled on by MPs, you would think that this was a man whose very raiment had the power to cure affliction just by touching it as he passed by - instead of someone acting as figurative head of the most corrupt parliament this country has suffered in nearly a hundred years - and whose recent, not entirely disinterested actions, largely served to try to shield MP's activities from rightful scrutiny. I'm also getting fed up with all this 'working class' and 'sheet-metal worker' crap currently being churned out - as if Martin had been leaving for home every evening for the past thirty years to mend horseshoes, or beat swords into ploughshares, rather than happily riding with everyone else on the Great Westminster Gravy Train.

94. pont
10:46 am. Maybe we should bring back the England v Scotland football match, so that we can try to dissolve some of the antipathy showing up on this thread.

95. jonboy75
10:47 am. So, the working class boy done good. are we supposed to ignore the fact he preferred a cover up of the expenses? this was complete self interest. given his background he should know better...ordinary people are entitled to be disgusted by his, and others, extravagant spending habits at our expense. This has nothing to do with class. what really strikes us as unforgivable arrogance is the attempted cover-up...apologise as much as you like, I will never forget that

96. Blondy2
10:51 am. I agree with Galloway on little, but he's spot on here. Of course Martin went through incompetence. But to say that there hasn't been a class-based attack on "Gorbals Mick" for a very along time is to be completely ignorant. The Daily Mail constituency laps it up and there are sniggers aplenty in the leafier shires at the moment. Quentin Letts has had a permanent hard-on since Monday.

97. rednorth
10:52 am. Well George, as you can see, while half the posters are busy denying that such bigotry and snobbishness exists, the other half are proving that it does. But I wouldn't let the tabloid-tory boys who've overrun this sight overly concern you, they are not representative of the great mass of English opinion, for whom Michael Martin's background was entirely irrelevant. Michael lost his job because a) he was incompetent; b) the troughers needed a handy scapegoat.

98. toba
10:53 am. Thanks to Speaker Martin my grandson Sean enjoyed the first Catholic baptism in the House of Commons Crypt since Cromwell turned it into a stable. How sad George that you chose to support the indoctrination of your grandson into the fallacious lunacy of the catholic church.....or did young Sean make a personal choice to accept trans-substantiation and other associated claptrap, having weighed it up against the relative merits of, say, Jainism? btw, your record of attendance in the House is notoriously bad.....do you even remember what MM look like or where he sits? Or was Betty (or even Bernard) there last time you were in?

99. Chesney01
10:53am. English snobbery can do a morris dance of delight at the political demise of the Speaker, Michael Martin.
Oh boy, another Jock with a chip on his shoulder. “For a certain class of Englishman every Catholic is a Mick and every working-class Scot is from the Gorbals.” Really? Strange then that I have never witnessed that attitude. “His accent never cut through the cut-glass ceiling” What a stupid remark. His accent didn’t cut through my very working class northern accented ceiling either. The man was an incoherent speaker who should never have been put in the position he was. He appeared mentally sluggish. Correction, he is mentally sluggish – witness his handling of the expenses fiasco over a long period of time. His tearoom skills are what had landed him the job. In that case stop the election for a new speaker, my wife is the right person for the job. But what got Martin the job was the kind of inverted snobbery which you are portraying in this piece. Has someone paid Galloway for writing that rubbish?

100. brackley1
10:58 am. If Michael Martin, and George Galloway for that matter, are Working Class then I'm the Duke of Edinburgh. They are both affluent by any standards. Indeed, Michael Martin's wife is much to posh to travel by public transport. Michael Martin was booted out because he's bloody useless and used our money to defend the House of Commons rip-off culture. As an Englishman I find George's suggestion that all Englishmen are snobs offensive, particularly coming from a man who spends more on dinner than I receive in a week.

more comments

This is the second part of a dialogue about the removal of the Speaker of the House of Commons, Michael Martin in May 2009. The first part 'House of Ill Repute' can be found here. 'House of Ill Repute' begins with a letter to the Daily Telegraph by the former Referendum Party candidate Peter Etherden and some remarks by the Times of London columnist Matthew Parris, followed by an article by the former Scottish Old Labour MP, George Galloway, who now sits in the Commons as the Respect MP for the London East End constituency of Bethnal Green and Bow (after removal of the Labour whip). The dialogue is then opened up to the public by reproducing a selection of comments on Galloway's article. These comments are continued in 'Everything But The Truth', which ends with two useful background pieces from Private Eye, masquerading as Comment 130 from petros0717 and Comment 131 from GavelBasher. [Ed.]

Comments on an article by George Galloway, MP (continued)

101. GraemeW77
Thanks George! Thank you so very bloody much! And now all the anti-Scottish keich comes seeping onto these pages once again. The same suspects, the same accusations of everyone but England ganging up on the, the same pre-school knowledge of economics and government, the same half-arsed dribblings on the so-called "Tartan Raj" that redefine the term "stuck record", the same sort of crap that is driving 4 nations towards separation, something you (I gather from your regular column in a Scottish tabloid) and I do not want. Michael Martin may have been a welcome break from history in terms of his background, nationality class, faith, but any fool can see that this did not beget his relative ineptitude in the Chair. Morons like leftleast can't separate them in his crazed little Englander ramblings which, frighteningly, have been recommended by 58 people! But let's not play the little Scotlander either.

102. unclebad
“...and every working-class Scot is from the Gorbals” Not surprising really is it George? I mean, you certainly like to pretend you're from Glasgow rather than your less street cred home town Dundee.

103. FatCat08
So he's a Scottish Catholic ex-sheet metal worker. So what? He is being judged on his performance as a speaker and MP and has failed. More than failed in fact. I suspect there is no chance a Scottish Catholic ex-sheet metal worker will ever become Speaker again. This is bad news for Scottish Catholic ex-sheet metal workers

104. Danny69
And I too have had a comment deleted for describing George Galloway's comments here as bigoted. The sheer hypocrisy, the pure double standards observed at CIF are breathtaking. George Galloway is allowed to pen this ill-intentioned piece about English snobs but anyone that criticises him is censored! The Guardian today has more in common with the ideological journal of a Stalinist state.

105. pipersson
Bring on Vince Cable and watch things improve....and I'm not a Lib Dem, just a believer.

106. DingaB
His nationality had nothing to do with his incompetence. His religion had nothing to do with his inarticulation. I was amazed at the way he stumbled and misread his own speeches on the last two days. He made many mistakes, and I feel he should have gone some time ago. But...He never wore a cat suit and played at the feet of an actress.

107. pont
How many insignificant people will be sacrificed, before the salivating masses, cheered on by the tabloids will be sated? I am assuming that the bloodlust will peter out before the real criminals are held to account.

108. Roosterbooster198
I think that squandering vast sums of taxpayers' money trying to prevent taxpayers from being told how their money was being squandered had something to do with him getting the boot, George. He was a fucking disgrace. Now he gets a seat in the Lords where he can continue coining it in. Oh, and a £1.4 million pension pot, courtesy of the taxpayer.

109. steverandomno
I don't believe George Galloway is a bigot, because I don't believe he believes the majority of the things he says that are interpreted as bigotry. He is guilty of the far worse crime of exploiting others bigotry for self-interest. It is morally and ethically barren behaviour, symptomatic in the worst leaders of our recent history.

110. OldBagpuss
Michael Martin may have been a welcome break from history in terms of his background, nationality class, faith, Agree Graeme, though Betty Boothroyd had background, class as well as gender - no idea what religion she was and don't care. It's quite funny - I suppose - to hear my Lord Foulkes, George Galloway and Alex Salmond all singing from the same hymn sheet. The function of an internet troll is to generate heat and prevent real discussion - it occurs to me that Galloway's whole career has been that of a political troll, someone who, for whatever reason, spreads political carnage. He was my MP for a while, and a fine constituency MP he was too in those days. He really did help constituents - but has been a disaster for the left.

111. GraemeW77
Prettystr8guy. "Surely some anti-Scottish prejudice is perfectly understandable when the leadership of their greedy incompetent bankers and politicians has brought the country to its knees?" No it's bloody not!

112. Roosterbooster198
And we also need a reduction in the number of Scottish MPs - they are greatly over-represented. Not should any of them be voting on English affairs. No need to thank the English taxpayer for bailing out Scotland's shitty banks. Oh, you didn't.

113. pont
As Lord Snooty pointed out to me, these things are bound to happen when you let the lower orders into positions of power - well minor positions of power - eerr superficial power positions.

114. Voluspa
I'm a Scot and a Rangers fan George but I agree with much of what you say. Oh and whilst I am about it I must say straight away I'm not keen on your views on Scots independence, abortion, Arab armies, your hatred of the Huns etc but giving that sub-committee a more than deserved hiding at the US Senate I'll always admire you for. For what it’s worth George 'taig' is too old fashioned for the English and they've never heard of 'Tim-alloys' either. They use 'Mick' and 'Paddy' George but all that has stopped since around about the time the IRA stopped its mainland campaign - seriously. The English now love the Irish George, didn't you know? It's the Scots who are the 'new Irish' as is self evident from the disgraceful anti-Scots bile written by many posters on here. English people have been brainwashed to think the Scots are to blame for their ills. Centuries of misrule by a ruling elite manifest most recently in their embrace of Thatcherism and ordinary English people's refusals to do anything about them have ultimately created this mess. If anything these "Scottish" BritNat careerists such as Brown et al whom I as a ScotNat detest for their neglect of Scotland (have any of you seen the state of Martin's Springburn constituency?) probably did at one time believe that they could create a British utopia. But the rot is too deep, they've been seduced by the trappings of Westminster's faded imperial power and now they're all being scapegoated whether they're as guilty as Martin is or as innocent as someone like Prentice is. England needs a revolution. But you think you're above that so all you're going to get is token reform. Until England dispenses with the nonsense of tradition and entrenched privilege and demands a working, elected and accountable democracy with the people as sovereign and an elected head of state then it'll be more of the same I'm afraid. Oh and the quip that the Scots are well balanced because they have two chips on their shoulders is a direct appropriation (my how the English love to appropriate Scottish resources) of another Celtic supporting Irish-Catholic-Scot's work; that of Billy Connolly who originally applied this metaphor to the Australians. He was a welder by the way but not from the Gorbals. Like Martin he was from Anderston. Yeah, I know small world isn't it.

115. GraemeW77
“To many, he is a typical Scot. A congenital credit claimer when things appear to be going right and a pathological buck-passer when things go wrong.” “It is no surprise that a Scot, Foulkes, brought sectarianism into the Michael Martin debacle. It is no surprise that another Scot, Galloway, brought in class as an excuse for his ineptitude.” “Scots are the most divisive people in these islands,” “A Scot accusing anybody else of discrimination is risible. Get back to your Clan, George, and see how many votes you and your party command in Scotland. It may have escaped your attention that there are dozens of Scottish MPs misrepresenting their constituents in England, even if you are one yourself.” ”No need to thank the English taxpayer for bailing out Scotland's shitty banks. Oh, you didn't.” These remarks are making me feel very queasy. Galloway's article and comments such as the above from the likes of Stephen Gash (Glaswegians will note you have a very apt surname, considering your beliefs), left least (and they are scarily prevalent and even more frighteningly and frequently recommended) represent the cry of “Anyone's fault but mine!” and the worst of British blamemongery and chippiness. I find it laughable that English and Scots alike cry racism while being so pejorative about their fellow Brits in the same breath! The foaming nationalists from either side of the border belongs on a BNP, ENP and SNLA website and is worthy of the 18th century days of Lord Bute. It makes me sick and will sadly, over time, drip-drip-like, drive a lot of reasonable rational people away from and out of Britain and leave the racists to self-destruct. So again George, thanks a bunch for adding slops to the ocean of mire.

116. rednorth
English people have been brainwashed to think the Scots are to blame for their ills. Utter rubbish. The main criticism I would level against the English with regards to Scotland (and Wales and the North of England) is that they have forgotten it exists, indeed, that is a useless appendix to the South's prosperity. The Hooray-Henries covering this thread in spittle are a tiny minority, but I see they do have their Scottish counterparts.

117. rightwinggit
I can't quite follow this article. GG says that it was right for MM to go but then that he whines that some people didn't like MM because he was a Catholic, working class etc. He helpfully links to Wikipedia to define "Taig". The first sentence of the article reads "Rarely heard outside Ireland and Scotland, taig is the most vitriolic slur word in use against Irish Catholics..." Er so how many Englishmen were calling MM a Taig? Mick is short for Michael, didn't you know? I personally know three Michaels who call themselves Mick. Some people, including me, call the Prime Minister El Gordo. Is that Fattist, Caledonist or Hispanist? As far as I am aware, Mick is also used in America as racist slang for Irishmen. No-one is accusing Michael Martin of being Irish are they? The worst you can really say is that he didn't come from the Gorbals. For whatever reason, the Gorbals is more famous outside of Scotland than Sprinburn. It is probably because the word is more memorable. Chelsea is more famous outside of London than Bethnal Green. So what?

118. GraemeW77
"It makes me sick and will sadly, over time, drip-drip-like, drive a lot of reasonable rational people away from and out of Britain and leave the racists to self-destruct." To clarify, I meant leave Britain to self-destruct because of the racists. I'm all for bigots exploding!

119. MrsBroon
As a Scot I hold with none of Mr Galloway's remarks. There is a reasonable way to lose your inferiority complex Mr Galloway, get out of England. Michael Martin was proved useless on Monday and needed to go. I have not ever found in England the amount of bigotry that exists in the West Coast of Scotland and therefore that case is busted. To all the racial abuse featured on these pages may I say I have the cure. It is called Independence, people like Brown, Galloway etc are the enemies of my country just as they are of yours.

120. wotever
Who are you kidding, George? Martin didn't get the heave because of his roots. I'm working class Glaswegian and I thought he was useless, too! Allowing the police into Parliament over the Damien Green palaver was bad enough, but spending our money in an attempts to block the Freedom of Information rules applying to the thieving gits in the house was a straw too much. Anyway, since when was he a 'working class man'?? Not many people in Springburn are retiring with millions in the pension and a cushy job in the Lords. He should be retiring to Barlinnie after the job he's done!

121. LenFirewood
George Galloway - please take your racism elsewhere - I may be English by birth (half welsh by 'blood') but I am also from a staunch working class background (Oldham - the home of those 'dark satanic mills' etc). I fully agree that Michael Martin had to go because he was 'accident prone' and incompetent, couldn't speak well and had a horrible tendency to cast blame elsewhere for things that were within his responsibility. He demeaned his high office with his conduct and conspired to keep the public in the dark about issues of public interest. His going isn't the end of the matter and he isn't a 'scapegoat' but rather a very necessary step in an ongoing process of 'cleaning out the stables'. This has nothing to do with his nationality, race or class and for you to come here and insinuate that is very small minded of you to say the least!

122. PrettyStr8Guy
Graeme W77 - you make such a good point: "No it's bl**dy not!" articulate and eloquent in a way Mr Martin can only dream of, that I'll amend my earlier post: "Anti-Scottish prejudice is unjustified - the rest of us should be glad that the leadership of their greedy incompetent bankers and politicians has brought the country to its knees." NB. to help you with your manias: my background is Anglo-Irish Catholic.

123. perfidy22
“For a certain class of Englishman every Catholic is a Mick and every working-class Scot is from the Gorbals.” George. The fact you see no irony in making this statement speaks volumes about the level of your debate.

124. KillingTime
Is this for real? You seriously expect people to take your accusations of bigotry seriously when within the first couple of paragraphs you not only reveal, but appear to revel, in your own bigotry.

125. GraemeW77
Prettystr8guy. Should read. "Anti-Scottish prejudice is unjustified - the rest of us should be glad that Scotland does not equal 5 million Fred Goodwins, Gordon Browns or Michael Martins" We don't all have £700k per annum pensions. A few bad bankers and politicians do not a nation make! Shall I walk ya through it again? Clear? M'kay!? M'kay....

126. Mercurey
I wonder how many sheets of metal you can buy for £70,000 a year.

127. Wyrdtimes
Oh yes we need a revolution all right. An English revolution leading first to an English Parliament then later to an independent England. Bring it on.

128. singingpores
Um, George doesn't really say that Michael was ousted because he was Scottish, he says there are plenty bigots out there who will rejoice at the downfall of a Scot of humble origins. This is perfectly true - take a step over to the telegraph comments pages if you need some evidence. In fact, George also suggests that Martin was over-promoted and not equal to the monumental events he has had to confront: 'Martin's fall from grace is necessary'. It is possible to simultaneously believe that a) Martin was not and never up to the job, b) he had to go and c) it is a pity that his demise gives succour to the kind of people who delighted in calling him 'gorbals mick'.

129. Jillox
Was Mr. Martin not considered good enough to sit in his own Scottish Parliament?

130. petros0717
Tony Blair and accountants PricewaterhouseCoopers jointly helped push through a rule change in 2004 that brought the MPs' expenses scandal to the heart of government. Without Blair's new rule, explicitly designed to boost ministers' expenses, many of the current frontbench embarrassments would not now be an issue. Here is what happened. The Senior Salaries Review Board looked at MPs' pay, using a survey of MPs prepared by PwC, and the firm was happy to support a point pushed by the Prime Minister. Its reports said: "There were comments made about the rules which require ministers and other paid office holders to elect their London residence as the main residence and the constituency as their second property. The rules mean that the ACA [Additional Costs Allowance] is used against costs on a property which in many cases has been owned by the MP and his or her family for a significant number of years and where the mortgage is typically low." The report makes it clear, ministers complained that because they were deemed to live in London, they could not 'flip' homes in order to claim higher expenses; they could only claim on their generally cheaper properties outside the capital. According to the review board, the rule was dropped in February 2004. Hazel Blears' property ladder, Maria Eagle's flipping, Caroline Flint's new London flat, the bulk of Shahid Malik and Shaun Woodward's expenses and Kitty Usher's war on 'bad taste' Artex all depend on the 2004 rule change, as do the bulk of Gordon Brown's own additional costs claims. The Commons members' estimates committee of senior MPs says it changed the rule in February 2004 to reflect the concerns in the PwC report. The former PM's support for the change was no random act of greed (indeed Blair did not personally use the change to raise money himself, relying instead on a complex mortgage transaction on his constituency home). He was actually trying to increase his ministers' income while publicly appearing to keep a lid on their headline pay - following a model set in 1985 by Margaret Thatcher, who, trying to hold back public sector pay and wanting MPs to appear to set a good example to teachers and the like, had introduced the crucial change in the Additional Costs Allowance which allowed MPs to begin claiming their mortgage costs rather than simply hotel bills and rents. Thus began the great Westminster property speculation game - Blair simply extending the perk to his London-based ministers who were always whingeing that they didn't earn enough.

131. GavelBasher
So what job was Speaker Martin doing? This is the question Matthew Parris raised about "the humbled figure who saw himself more as shop steward than adjudicator"...a question explored in the Gavel Basher column for Private Eye (Number 1237; 29th May 2009) entitled Called to Ordure [Ed].

"What crocodile tears were shed after the glorious obliteration of the Commons Speaker. The day after Michael Martin accepted the inevitable and announced he would resign in June, relieved MPs continued to rush up to his chair to show their solidarity. Among them was health secretary Alan Johnson, who gave Martin a handshake and a fraternal wink. Can this be the same Alan Johnson whose 'friends' just two days earlier had been putting it about that he thought his brother trade union veteran Martin was a complete liability in the Commons chair? Labour whips are furious that they have lost their pet Speaker. Feeling the loss most keenly is John Spellar, who led the applause for Martin in the Commons lobby on the day of his resignation. The entire whips' office lined up like a cricket team clapping a batsman off the pitch at the end of a big innings. Spellar, a hard-nut shop steward, had long plotted with Martin groupies to keep the freedom of information act at bay and ensure that the whips' backbench lobby donkeys got their full entitlements. With chief whip Nick Brown going on Radio 4 to say that "Michael was one of us" and another whip, Barbara Keeley, in tears at his departure, Labour's party managers are no longer bothering to pretend that they saw Martin as a genuinely non-partisan figure - which is, after all, the whole point of the Speaker. Martin was seen not just as 'one of us' in the chamber and the Fees Office, the Commons expenses fountain over which he presided with such benign grace. Labour class warriors regarded the former steel factory convener as a symbol of their swagger over the political system. Having now seen Martin explode so messily, Labour's heavies are proving bad losers. Backbenchers who stabbed Martin in the front have been booed and hissed in the chamber. Political hacks who wrote about the Speaker with insufficient respect have been called 'racist' and Jim Sheridan (Lab, Paisley & Renfrewshire North) has demanded that such journalists be expelled from the Palace of Westminster for "abusing the facilities." The response from Martin's mafia to this setback suggests that if Labour doesn't win the next general election, we could have a job dragging them out of Downing Street. The person who has really pissed off the old Speaker thugs is Labour's Gordon Prentice (Pendle), who was the first to stick in the knife in the chamber on the day before his resignation. Prentice collaborated with Tory backbencher Douglas Carswell (Harwich), and shortly before the two men attacked Martin in front of a packed chamber, they were to be seen in deep discussion with one another in the corridor just behind the Speaker's chair. Perhaps they were discussing the pressure and abuse they were encountering for organising a motion of no confidence in Martin. Prentice sits for a Lancashire seat but he is a Scot, educated in Glasgow. This wrecked the whips' absurd case that all the criticism of Martin was being got up by English public school toffs. The voters of Pendle may recognise Prentice's courage; but if he manages to hold on to the marginal seat, it will not be thanks to any help from the Brownite party machine. When Betty Boothroyd stood down as Speaker in 2000, the same Gordon Prentice organised hustings for the large number of candidates for the Speakership. The one person who refused to take part? Mick Martin. If he had been exposed to examination in front of MPs at that point, he might have betrayed his inability to string a sentence together. Speakers, by custom, have to be dragged to the chair - a symbol of the reluctance they are meant to show. Yet Martin had long been campaigning for the job. How can we be sure of that? The morning after Martin and his Glaswegian machine politics had won him the Speakership, Martin came across Prentice in the Commons tea room. "Ah, Mr Hustings," he said sarcastically. "This was where I held my hustings," he added, pointing to the Tea Room tables. This was a Speaker, let us remember, who not only hired Carter-Ruck as his official spokesmen (running up a characteristically hefty bill for the taxpayer), but who was also proposed and seconded by those fine upstanding figures, Peter Snape (now Lord Snape, one of the peers investigated by the Sunday Times) and Ann Keen (since outed as one of the most notorious expenses claimers in the Commons). In their speeches on 23 October 2000, they spoke at length about Martin's Glaswegian upbringing. Snape almost pulled out an onion as he claimed that Martin had first gone to work in a "second-hand boiler suit and a pair of boots" and praised his "even temper" - something which often deserted him over the next nine years. Snape went on to attack "a media obsessed with plots, counter-plots and tittle-tattle" and even made a wisecrack about journalists who "put the wrong name on their expense accounts". As we now know, it was not just hacks who fiddled their expenses."

Barclays’ Painful Deal by Robert Peston

17:50 UK time, Thursday, 9 April 2009

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/04/barclays_painful_deal.html 

Barclays says that it has sold iShares - a provider of specialist stock-market funds - for £3bn. But it's not a sale in the sense that most of us would recognise. Because it has lent the buyer, the private-equity house CVC, £2.1bn of the purchase price. In fact Barclays' continued exposure to iShares seems even greater than just those loans, in that the deal adds £2.7bn to what the bank shows on its balance sheet as its so-called risk weighted assets.

That said, Barclays says that through the miracle of how banks do their accounting there will be a useful addition to its capital resources, its buffer against losses on lending. Some would argue that extra bit of buffer has been acquired at the steep price of selling a growing business at a knockdown price into a buyer's market. Which only goes to show quite how desperately Barclays - like most banks - needs capital, even if it has avoided the indignity suffered by Lloyds and Royal Bank of Scotland of getting that capital from us, from taxpayers.

What's even more delightful for the purchaser, Barclays will pay CVC £120m if it rats on the deal by securing better terms from another bidder (there's also provision for both Barclays and CVC to receive between £34m and £120m if either side walks away for other reasons). And for some Barclays’ employees who have stakes in a subsidiary of the bank, BGI, there's a lovely windfall from the deal, in the form of a cash dividend and a more than doubling of their holding in BGI. Barclays' president, Bob Diamond, will receive £4.7m in cash and a substantial increase in his interest in BGI.

So to summarise: Barclays is providing the buyer of iShares most of the finance to "buy" iShares; the purchaser will receive £120m, if Barclays secures a better offer; and the transaction has triggered handsome rewards for some Barclays' employees. In normal times, that would be seen as a deal so bad for the bank that shareholders would be volunteering to throw themselves off Beachy Head. But Barclays' share price rose more than 12 per cent today. To state the obvious, these are not normal times, these are credit-crunch times: and, I guess, if a bank can raise capital in any way at all without tapping taxpayers, that's seen as good news.

Selected Comments (from the first 100 of 260 comments by 14^th April 2009)

10. GlenisDevereux

This is how banks make a loan: Debit Loan Account $100; Credit Current Account ($100) The "Cr Current Account ($100)" is money - New money they just made up! That's all money is: Universally Transferable Bank Debt - This has some rather interesting consequences:

11. moraymint

Hmmm. What if, in the fullness of time, that £ 2.1 billion loan leaves a hole in Barclays' balance sheet and the taxpayer needs to step in once again (not inconceivable)? Remind me how much the Barclays guys are taking out of this deal? I think Bob Diamond alone may be raking in £10 million. This had better work for Barclays over time or Bob Diamond could find himself in exile with another well-known ex-banker...and the taxpayer in even deeper hock. Perhaps it's a case of once a banker, always a banker, regardless of how much taxpayer cash is thrown at them? Time will tell.

31. laughingblacksheep

#11 moraymint

Barclays has taken exactly zero from the government. I know lying politicians and reporters pretend "the banks" have been bailed out but actually only a few have.

35. KenHarvey

#31 laughingblacksheep

Every bank in Britain has in fact taken monetary assistance from the government. They have taken that assistance in the form of a substantially increased guarantee of depositors’ funds. Take that assistance away and virtually every deposit taking bank in Britain would have to close its doors the next day. I can't recall ever having heard of a dodgier sounding sale of a substantial asset and I have to wonder what it was that induced the share buying public to push up Barclays' share price today.

55. laughingblacksheep

#35 KenHarvey

Hate to break the news to you but the "guarantee" is pointless and worthless. Pointless because most of the deposits are not retail but wholesale deposits which the government is not guaranteeing and worthless because the government simply cannot make all the retail deposits whole - it doesn't have the money - and if you paid attention you'll see they didn't actually formally say they would make you whole upon collapse, they said your money was "safe". Dodgier sale? It is almost certainly a tax avoidance measure. You sell at par - so there is no Capital Gains Tax and you "lend" the money which is then given to you so there is no principal risk and you bump the interest level to make up the difference.

37. John from Hendon

So Barclays had to sell iShares to improve its capital ratios - that is it needed the cash. This deal shows just how desperate a seller Barclays has become. Why? What possible explanations can there be? My feeling is that the degree of desperation of the sale speaks volumes about the state of something within Barclays. I see no other rational or logical explanation. Barclays resisted Government help to keep its books from being examined by outsiders and paid 14 percent for its capital - now this move just compounds my concerns.  What are its external auditors doing and what will they do, for it seems to me that this sorry mess of very expensive capital and desperation selling point only one way and that is that there must be grave concern about something in the accounts or on the balance sheet of Barclays (or indeed not on the balance sheet!)! I can see no other explanation can anyone else? If they are as sound as they claim why can't they get money and sell things, like other sound banks? (And yes I know that no banks are trying to do much at present and this also points to problems within Barclays.)

30. laughingblacksheep

#13 John from Hendon

It avoided government cash because it was obvious that the strings that were attached to the deal were to start lending to the government's PFI deals to keep them going and to be a political football whenever the government had some embarrassing news to bury. If you think that not going to the government suggests something dodgy - look at RBS and HBOS. What you are saying is borderline defamation....

37. John from Hendon

#30 laughingblacksheep

OK, but that does not explain why it was forced to borrow from Middle Eastern investors at a reported 14 percent, does it? Why would it have to pay such an extraordinary high risk premium? It is a commercial operation and would have only done so if the cost of any other means of financing its capital base was even more expensive, wouldn't it? Why? I can't see anything obvious in the accounts to explain such a premium or the need to take only£ 0.9 billion cash for iShares when the reason for selling it was ostentatiously to get more cash? What is your explanation for these very very expensive deals? And by the way the reported reasons stated do not mention being forced to finance PFIs, rather they refer to the increased flexibility - this flexibility is coming at a huge price and we can only assume that this price is for some reason internal to Barclays worth paying, but why? There will be a commercial reason or set of reasons.

57. laughingblacksheep

#37 John from Hendon

Firstly, Barclays didn't raise cash at that cost. Secondly they raised it in the aftermath of the collapse of Lehman Brothers and most people were lucky to raise any capital. The fact that they could was a vote of confidence. At the time, people - such as this "reporter" - laughed at Barclays for paying that amount but one only has to see the damage the government inflicted in Lloyds to see how smart the bank was. As usual the government was lying about "hands-length" management. The commercial reason is that it doesn't want to be forced to lend to worthless government initiatives - as RBS and Lloyds are being forced to - and to spendthrift mortgage holders - such as NR. Finally, the deal is probably structured this way for tax and accounting purposes. Why sell for 4 billion and give away 18% in tax when you can go through this and pay zero? I suspect that Barclays doesn't need the cash rather it needs the perception that it has the cash.

16. glanafon

If you have something which you have to get rid of, and if you sell that something by providing the funds for the buyer to buy, which sounds like a loan to me, do you make a commission on the sale, a commission on the funds provided, and a bonus for just doing your job. With the proviso that if it goes wrong somebody else pays the bill. Is that how it works?

18. AComprehensiveGirl

Other news outlets are stating that Barclays have a further 45 days in which to seek a more favourable deal for this sale - so does this mean that any rewards to Barclays staff will have to go on the back burner until such deadline has expired? If so, then I trust that the financial regulators will take that period of time as an opportunity to go through the books with a fine toothed comb.

20. icecreamsnow

To be honest, it's the likes of CVC that created this mess in the first place. Which well-run, profitable household name was purchased by CVC and saw "Increased productivity" (i.e. 10-20% of the workforce being fired) "Like for Like Sales Growth" (trashing the fledgling respect the company was getting in specialist markets by  importing cheap tat from China) "Well positioned" (an estimate £180 million of debt) and "Strong supplier relations" (repeated rumours of an investigation by the OFT). What sane, intelligent bank would lend a company without any real assets £400 million to buy a good, profitable company in the hopes of making more by floating it on the stock market several years down the line?

22. AComprehensiveGirl

It is being reported in the Telegraph that around 200 Barclays’ bankers will share a whopping 150m windfall, as a result of this deal. Apparently, the 4.7million for Bob Diamond will help make up for him forgoing last years' bonus - he had to manage on a paltry 250,000 pounds salary, bless his cotton socks - oh, not to mention the 7.5m previously committed cash award. In other words, 2008 was not such a good year for Mr Diamond, well, not compared to 2007 when he earned 21million pounds! Truly beyond the comprehension of my little brain. How can anyone be worth that sort of money?

26. newsjock

Banking needs to be simplified. There are too many variants (should that be deviants?) in the banking process to allow professional chicanery to flourish. It is nonsense to sell an enterprise to another party and lend them a whopping chunk of the money to buy the business. THEN have penalty courses to protect the buyer. Money in an account is an asset. A loan is a debt. A bank must ALWAYS hold at least 110% more money on account than it lends to others. Banks must carry insurance, properly underwritten insurance to cover any potential bankruptcy conditions. No gambling with assets. End of story.

49. hodgeey

#26 newsjock. Your 110% idea is a non-starter. Our system relies entirely on banks lending money based on little or no reserves. How else could the continuous expansion of debt be maintained? Everything runs on debt, which is a euphemism for mortgaging our (and our children's) future, in the certainty that if things go wrong prudent savers will always bail us out.

42. Wee-Scamp

Bank "sells" subsidiary to private equity company... boss gets huge bonus…nothing new being created here just a bucket of money (debt) being pushed around.

43. splendidhashbrowns

I seem to remember that when this sale of iShares was first suggested, a price of some 6 billion was mooted. That was revised down to 4 billion because of the tough market out there for sellers. Then we get to 3 billion. Tell you what, take it off our hands for £0.9 billion and we'll loan you the rest. It's good to see the directors of Barclays are still able to liberate cash bonuses from a reputedly profitable arm of their bank. Good luck to all Barclays’ shareholders...I think that you may need it.

44. mickthebish

Another fine example of selling of the silver wear before going cap in hand to the tax payer for another hand out. Any one that thinks because a bank has not yet been bailed out by the tax payer is thriving is deluded, as has been quoted here a number of times there is no bank not affected by this crisis, because they all follow one another like sheep. In my opinion a great deal of fraud has and is still being carried out by those in high places. Has any one called in the police yet? Better hurry up or the crooks will be long gone, with their bags of swag.

45. SelfStyledBanker

The loan to the purchaser of an asset is not exactly an unknown practice, particularly in banking where, after all, lending is rather common. If they hadn't borrowed a large portion of the funds from Barclays, presumably CVC would have borrowed them from another bank or finance house. I can only guess Barclays are charging a pretty penny on the loan and wanted to get in on the deal as part of the sale. The other questions you raise are rather more interesting, in particular how desperate Barclays is for the capital benefit (and what other bad news is yet to come) and the bonus to Diamond and his (shall I call them) colleagues for what may well be a bad deal. I can't help but wonder that the bad news for Barclays is simply not yet out in the open. The bank is a lot more aggressive in its risk positions, tax aggressive deals and aggressive accounting attitudes than either HSBC or RBS; it's managed to have rather better capital position generally because it's management failed to complete a 'done deal' purchase in 2007 (of ABN Amro) in anticipation of which it raised pots of capital from mostly sovereign wealth funds and middle east investors. I simply can't believe that with such a risk appetite, management 'success' through more luck than skill, and what looks like a fire sale of a good business, that Barclays isn't sitting on rather more bad news than it would like to admit. Maybe Diamond knows he should take his bonuses now before he too is working for Her Majesty's government...

56. laughingblacksheep

#45 SelfStyledBanker

What makes you think Barclays is "desperate" for capital? From what I can see, Barclays has played this crisis perfectly. They rightly avoided the clammy grasp of the government who are in the process of destroying the banks they own. They were laughed at when they raised "expensive" capital - mostly by this "reporter" - but now they are sitting pretty whilst RBS and Lloyds have to lend to dodgy PFI deals to keep the government's support intact and so we can pretend for another year that things are great in the UK. After the election who cares?

48. DouglasAllen

You continue to tow the government line and continue to 'blog', I dare say report as that is too objective strange ailments of financial news. As a Barclay's shareholder this report infuriates me somewhat. Barclays' funded the iShares sale to instigate a quick and efficient sale. By doing the financing in house at BarCap, there were no fees to paid to a third party investment bank and less chance of a deal falling through. This just reads like a big fundamental misinterpretation of how capital is raised through IB's. You also note Barclays' may have to pay CVC £120 million if deal falls through - however, you fail to realise that if another deal was to be negotiated, it is likely Barclays' would obtain a margin greater than this £120 million and thus bank a further profit. Another fact worth noting (you didn't), Barclays' holds warrants on future profits. So what you describe as a desperate sell in a buyers market is far from the truth when Barclays' will continue to reap the rewards. I also sense not only from yourself but from posters on this blog a sense of longing for Barclays to lose it's independence as a bank. Why? You'll have to pay for it. This confidence sapping reporting is utterly absurd, especially on a matter to which the public would usually take no interest. Peston did you take such a negative outlook when RBS acquired ABN Amro? I think not....and look where that has led us. Good luck with a job in a bull market.

53. Tatruth

A bank that just can't help itself but add to its debt…I mean assets; a bank that claims it has superior risk management than its rivals; a bank that claims it has a level of probity above that of its sector; where is this deal different to the crazed undervaluing and illegal kickbacks from IPO's of the tech boom? This deal is clearly legal but reeks of the presently legal but bad practice deals at Enron and WorldCom; not their even more dodgy practices. Driving acquisition/wealth creation through asset price linked debt. Who benefits? Not Barclays’ shareholders who've just lost one of the most profitable parts of the bank. Oh yeah that might be the directors who've hugely undersold a business but all retain an interest so when it get's sold at market price they make millions more. Ha a new dawn in banking. Where is that different to underpricing an IPO, selling the stock to a client and demanding a kickback from the profits? One's legal and one's illegal but both are designed to stiff holders of common stock. Who benefits?

62. bankbiz

Might I suggest two things for people to do before forming an opinion on Roberts "report": (1) - Look at post 48 for the exact way that this deal works and not just the bits that Robert has picked out so as to kick Barclays yet again (no matter what this bank does Robert thinks its wrong)! (2) - A few weeks ago Barclays finances and capital reserves were put under an "extreme stress test" by the FSA prior to any participation in the Govt's APS. Barclays did in fact come through this with the FSA reporting back that the bank's finances were in very good shape. I certainly do not remember Robert posting this news on his blog probably because it was a bit of good news about a British bank and further proof that Barclays have been able steered a good course through all of the madness of the last 18 months. Robert it is time that you started to focus on getting good news as well as bad out to the public and to stop this continuous knocking of the banks so as restore confidence in the system, our economy and thus getting us out of this recession quicker which will be a benefit to everyone.

88. SovereignJaguar

The vast majority of the above comments demonstrate that most people do not understand banking. This is hardly surprising as banking is not like any other business. When a customer goes to his bank for a loan of, say, £1,000 the bank puts £1,000 in his current (cr) account and the £1,000 becomes a loan (dr) account. According to some that is creating money. But the bank cannot go on doing that without the capital requirements necessary to enable that loan to be made. In simple terms, out of every £100 deposited in the bank about £10 has to be retained to keep cash in the tills and to cover running costs. That leaves about £90 which the bank may lend, provided that the total amount of all monies lent is below the ratio of lending against capital that is required, formerly by the Bank of England and now the Financial Services Authority in meeting what are referred to as Tier1, 2 & 3 requirements. There are other considerations but the above is aimed at keeping it simple. The need for sufficient capital is therefore a vital component of how much any bank can lend. Put simply that capital consists of the shares in issue plus the total of all deposits held. Customers can withdraw those deposits and if enough of them do so at the same time then we see a run on that bank (the cash in the tills would be roughly 10% of what is needed). And that is where the essence of banking comes in - the risk factor. Risk is the prime concern of every real banker. Unfortunately we have seen the banks 'taken over' by businessmen who are not bankers (a few of them were but they decided to ignore the vital importance of risk). Banking cannot recover completely until those in charge are of the old school of so called boring bankers, those who understand and work with risk as their prime concern.

90. horreur

Here is the situation: (1) CVC wants to buy iShares for £3billion. (2) Barclays accepts £0.9 billion upfront, and takes a rate of interest (e.g. L+3%) on the remaining £2.1 billion. (3) The remaining £2.1 billion is secured against the iShares franchise, so if CVC can't pay up, Barclays seizes the business back. Ergo, Barclays now has less risk on their books, since cash came in through the door, and they do not lose money if iShares goes bust, only if CVC and iShares go bust ‘simultaneously’.  Less risk = lower capital required. Sadly very few posters here even know what bank capital is, let alone have the required understanding to comment in an educated manner. This isn't dodgy accounting in any way, shape or form, and as others above have said is a common method of vendor-financing.

94. gemba

# 90 horreur

Whoa there...In any selling activity there are only 4 possible outcomes: (1). Unhappy seller, unhappy buyer (government take over of banks); (2). Happy seller, happy buyer (illegal drug dealing); (3). Unhappy seller, happy buyer (fire sale); (4). Happy seller, unhappy buyer (Tesco) So in the case of the iShares deal which is it, who is the patsie or are they just "drug dealing"?

95. extremesense

#94 gemba

Fine, you're obviously far superior in knowledge, however, a bank selling a part of itself to a private equity firm and lending them the money to do it doesn't sound right 'vendor financing' or not. Haven't you realised that the game is now up? If Barclays hits big trouble and needs money, we, the taxpayer, will have to stump-up even if the government let it fall - because the government has insured deposit. Just how much will it cost for Barclays to demerge iShares and seize the business back if CVC can't 'stump-up' (let's face it, it's possible)? Yes, I know that it's tax deductable for Barclays if CVC can't pay, however, that means we have to pay.

96. gemba

#95 extremesense

Look all they've done is extend CVC a line of credit - like when you buy a car with financing. As people have said above, CVC would have to borrow from somewhere, so it might as well be BARC - everyone happy. How much will it cost to demerge iShares? Who knows...but naturally this is taken into account when pricing the loan. There's a trade-off here. Do you think it would have been better for them to just accept £0.9 billion upfront and leave it at that. There is a shortage of cash in the market these days if you haven't noticed! This deal is a good deal for Barclays because they've raised capital in the market which makes the business safer. If CVC goes belly-up then Barclays gets iShares back or sells it to someone else and they will have had the benefit of the interest and loan amortisation in the meantime...

97. sagamix

This is not an arm's length commercial transaction, it's a piece of what they tend to call Financial Engineering - a misnomer of the first degree since absolutely nothing is created - and if nothing is created but some people get (say) five million pounds richer, then somebody else is poorer by the same amount.  You can guess who that somebody is, can't you?

100. horreur

Shame for Barclays that it has to get rid of a star performing unit, but a trade off between raising more capital or being taken over by the government is a no-brainer. Barclays/investors=happy. As for CVC, they've immediately become one of the top-2 biggest players in the ETF market. CVC=happy. Of course, remains to be seen who will be happier over the long run...could be a brilliant piece of biz for BARC if the ETF sector consolidates and margins are reduced over the coming years as they will have sold at the top of the market. On the other hand they are still retaining some equity so they'll share in any upside.

 

compiled by William Franklin on Tuesday 14^th April 2009