RICK SANTORUM
Rick Santorum seems to have thrown a spanner into the otherwise well-oiled machine that is Mitt Romney's campaign for the Republican Presidential nomination. The former Senator from Pennsylvania won all three contests up for grabs this week, in Colorado, Minnesota and Missouri. Romney must have been particularly concerned about his third place in Minnesota, behind libertarian Ron Paul.
Santorum is the sort of modern politician, who could only succeed in America. He is, by European standards, extremely right-wing, illiberal (he is anti-gay) and very religious. Unfortunately, there are a lot of people in the U.S., most of them in the Republican Party, who think like him. They also tend to vote in the primaries, so he has a chance to win the nomination, even if Romney has a C.V. eminently better suited to running the biggest economy on earth.
The U.S. has an odd political system. On the one hand, it really is a winner-take-all contest, a choice of only two candidates being narrow, viewed in world terms. On the other, there are so many checks and balances built into it, that extreme Presidents find it difficult to get anything done. Having said that, I for one would find a President Santorum alarming. The last thing we want in a troubled world is politics based on smug moral and religious certitude. Tony Blair was enough for one lifetime.
Walter Blotscher
Thursday, 9 February 2012
Tuesday, 7 February 2012
ALBERTO CONTADOR
Alberto Contador is without doubt the best stage racer in cycling today. He won the first six Grand Tours (those of France, Italy and Spain) that he entered, and only lost last year's Tour de France in July because he had tried to win it after dominating the Giro in May, widely held to have been the toughest ever.
Now, however, he is out of the sport. Yesterday the Court of Arbitration in Sport gave him a 2-year ban for doping. At the 2010 Tour de France (which he won), a random doping test found that his urine contained a microscopic amount of the banned substance clenbuterol, a medication often given to cattle in order to beef them up. Contador's story was that it was due to a steak that he had eaten during the Tour, which had been brought up to France by a friend from Spain. The Spanish cycling federation freed him on the grounds that he had not knowingly ingested the banned substance. UCI, the world cycling body, appealed; and after a very long delay, CAS upheld their claim.
Unlike (say) EPO, clenbuterol is a funny substance within the anti-drug regime. First, the rules call for zero tolerance, rather than a minimum threshold; so any trace constitutes a breach. Secondly, although the drug is banned for use in livestock within the E.U., it is not elsewhere in the world. So some athletes - including cyclists - caught with it in their systems have been let off, because it happened in (say) Mexico. Contador's problem was that Spain is a country that bans it, and he could not plausibly demonstrate how the meat in question could have become contaminated.
A 2-year ban is often the kiss of death for a professional cyclist, not least because Contador will now be stripped of his victories in both the 2010 Tour and 2011 Giro. However, in this case, it has been backdated until 5 August 2010, meaning that he will be able to race again in 6 months' time. This will allow him to compete in the Vuelta - for which he must be the hot favourite - but not the Tour de France.
The relatively light ban suggests that CAS believed that there were some mitigating circumstances, presumably the fact that the recorded dosage was highly unlikely to have had any affect on Contador's performance. Expect calls for minimum thresholds to become more vocal in the future.
Walter Blotscher
Alberto Contador is without doubt the best stage racer in cycling today. He won the first six Grand Tours (those of France, Italy and Spain) that he entered, and only lost last year's Tour de France in July because he had tried to win it after dominating the Giro in May, widely held to have been the toughest ever.
Now, however, he is out of the sport. Yesterday the Court of Arbitration in Sport gave him a 2-year ban for doping. At the 2010 Tour de France (which he won), a random doping test found that his urine contained a microscopic amount of the banned substance clenbuterol, a medication often given to cattle in order to beef them up. Contador's story was that it was due to a steak that he had eaten during the Tour, which had been brought up to France by a friend from Spain. The Spanish cycling federation freed him on the grounds that he had not knowingly ingested the banned substance. UCI, the world cycling body, appealed; and after a very long delay, CAS upheld their claim.
Unlike (say) EPO, clenbuterol is a funny substance within the anti-drug regime. First, the rules call for zero tolerance, rather than a minimum threshold; so any trace constitutes a breach. Secondly, although the drug is banned for use in livestock within the E.U., it is not elsewhere in the world. So some athletes - including cyclists - caught with it in their systems have been let off, because it happened in (say) Mexico. Contador's problem was that Spain is a country that bans it, and he could not plausibly demonstrate how the meat in question could have become contaminated.
A 2-year ban is often the kiss of death for a professional cyclist, not least because Contador will now be stripped of his victories in both the 2010 Tour and 2011 Giro. However, in this case, it has been backdated until 5 August 2010, meaning that he will be able to race again in 6 months' time. This will allow him to compete in the Vuelta - for which he must be the hot favourite - but not the Tour de France.
The relatively light ban suggests that CAS believed that there were some mitigating circumstances, presumably the fact that the recorded dosage was highly unlikely to have had any affect on Contador's performance. Expect calls for minimum thresholds to become more vocal in the future.
Walter Blotscher
Monday, 6 February 2012
CHINA
China had long had economic muscle, but it is beginning to flex its political muscles as well. Three recent developments.
First came the shift in America's military strategy, which puts more emphasis on the Pacific Region, including the stationing of troops in Australia. The U.S. is particularly concerned that spats between China and its neighbours over uninhabited rocks and the sovereignty boundary lines in the South China Sea will increase tensions.
Secondly, both China and Russia vetoed last week's U.N. Security Council resolution condemning the violence in Syria. That was despite diplomatic efforts to placate them, which resulted in a watering-down of the original text.
Thirdly, today's "ban" on Chinese airlines' participating in the E.U.'s emissions trading scheme. Air transport has since 1 January been included in the scheme, which levies a charge on flights within E.U. airspace based on carbon emissions. China is not alone in disliking this scheme, but has been more vocal in its response.
China faces a once-in-a-decade change of leadership this year, and so values stability above all else. 2012 will not be a year of concessions, in the U.N., E.U. or anywhere else.
Walter Blotscher
China had long had economic muscle, but it is beginning to flex its political muscles as well. Three recent developments.
First came the shift in America's military strategy, which puts more emphasis on the Pacific Region, including the stationing of troops in Australia. The U.S. is particularly concerned that spats between China and its neighbours over uninhabited rocks and the sovereignty boundary lines in the South China Sea will increase tensions.
Secondly, both China and Russia vetoed last week's U.N. Security Council resolution condemning the violence in Syria. That was despite diplomatic efforts to placate them, which resulted in a watering-down of the original text.
Thirdly, today's "ban" on Chinese airlines' participating in the E.U.'s emissions trading scheme. Air transport has since 1 January been included in the scheme, which levies a charge on flights within E.U. airspace based on carbon emissions. China is not alone in disliking this scheme, but has been more vocal in its response.
China faces a once-in-a-decade change of leadership this year, and so values stability above all else. 2012 will not be a year of concessions, in the U.N., E.U. or anywhere else.
Walter Blotscher
Saturday, 4 February 2012
BARBARIANS AT THE GATE
The book to read (re-read, in my case) after Liar's Poker is Barbarians at the Gate. The former is about the bond market during the 1980's; the latter is about mergers and acquisitions and leveraged buy-outs. In particular, it's about the scrap to win the late 1988 buy-out of the American food and tobacco company RJR Nabisco, a battle eventually won by LBO specialists Kohlberg, Kravis, Roberts.
BATG is not as funny as Liar's Poker, it is written more in the style of a thriller. But it's a good read nevertheless, since both books are, at the end of the day, about financial excess and terrible decision-making.
RJR was a sprawling conglomerate run by a cheerful Canadian called Ross Johnson. Johnson's mission in life was to have a good time, using the company's cashflow to pay for it. RJR had a fleet of eight corporate jets, and corporate apartments for most of the senior staff. When Johnson moved the company's headquarters from Winston-Salem to Atlanta, he had a new hangar built at Atlanta Airport; his only comment on the design plans was to make them bigger. He schmoozed his Board by putting them all on consultancy contracts, and not small ones either. In terms of business, Johnson was not very good; his big new idea, a smokeless cigarette called Premier, was a disaster.
A company like that cried out to be knocked into shape by cutting out the fat, and running it properly. Investment banks queued up to entice Johnson to go for a management-led LBO, which would be the biggest in history. Johnson liked the idea of being his own boss, but not the cutting the fat bit. He squared the circle by opting to team up with Shearson, Lehmann, a bank that had not really ever done an LBO before. Shearson's boss was so desperate to become a player in the market, that he agreed to let the management team of 7 people have (for free) a slice of the deal that could have netted them US$1.9 billion (and you think that Fred Goodwin was greedy!). One of the recurring themes of the book is a succession of top Wall Street financiers saying to themselves or other top Wall Street financiers "we've got to do something about Ross' management agreement", but never actually getting around to doing anything about it.
In the end, after many twists and turns, the Shearson/management bid was topped by KKR. Johnson resigned before he was fired, and had to console himself with a US$53 million golden parachute. Nabisco profits rose by 40% the following year; though they needed to in order to service all the debt taken on to fund the US$25 billion deal.
What goes around, comes around. And the only thing you learn from history is that you don't learn anything.
Walter Blotscher
The book to read (re-read, in my case) after Liar's Poker is Barbarians at the Gate. The former is about the bond market during the 1980's; the latter is about mergers and acquisitions and leveraged buy-outs. In particular, it's about the scrap to win the late 1988 buy-out of the American food and tobacco company RJR Nabisco, a battle eventually won by LBO specialists Kohlberg, Kravis, Roberts.
BATG is not as funny as Liar's Poker, it is written more in the style of a thriller. But it's a good read nevertheless, since both books are, at the end of the day, about financial excess and terrible decision-making.
RJR was a sprawling conglomerate run by a cheerful Canadian called Ross Johnson. Johnson's mission in life was to have a good time, using the company's cashflow to pay for it. RJR had a fleet of eight corporate jets, and corporate apartments for most of the senior staff. When Johnson moved the company's headquarters from Winston-Salem to Atlanta, he had a new hangar built at Atlanta Airport; his only comment on the design plans was to make them bigger. He schmoozed his Board by putting them all on consultancy contracts, and not small ones either. In terms of business, Johnson was not very good; his big new idea, a smokeless cigarette called Premier, was a disaster.
A company like that cried out to be knocked into shape by cutting out the fat, and running it properly. Investment banks queued up to entice Johnson to go for a management-led LBO, which would be the biggest in history. Johnson liked the idea of being his own boss, but not the cutting the fat bit. He squared the circle by opting to team up with Shearson, Lehmann, a bank that had not really ever done an LBO before. Shearson's boss was so desperate to become a player in the market, that he agreed to let the management team of 7 people have (for free) a slice of the deal that could have netted them US$1.9 billion (and you think that Fred Goodwin was greedy!). One of the recurring themes of the book is a succession of top Wall Street financiers saying to themselves or other top Wall Street financiers "we've got to do something about Ross' management agreement", but never actually getting around to doing anything about it.
In the end, after many twists and turns, the Shearson/management bid was topped by KKR. Johnson resigned before he was fired, and had to console himself with a US$53 million golden parachute. Nabisco profits rose by 40% the following year; though they needed to in order to service all the debt taken on to fund the US$25 billion deal.
What goes around, comes around. And the only thing you learn from history is that you don't learn anything.
Walter Blotscher
Friday, 3 February 2012
A GALA EVENT
Halfway through the third year at gymnasium (sixth form) in Denmark, the students have a big party. They all get dressed up in their finest, dance a special dance, change out of their finest and then go off and get very drunk. Their proud parents come to the first bit, but then get shunted off home so that they don't become too embarassing.
This year, the party is this evening. My 17-year old daughter has just gone off to the pre-gala class dinner, clad in a long black evening gown and looking very pretty. I shall have to go home and shave.
Walter Blotscher
Halfway through the third year at gymnasium (sixth form) in Denmark, the students have a big party. They all get dressed up in their finest, dance a special dance, change out of their finest and then go off and get very drunk. Their proud parents come to the first bit, but then get shunted off home so that they don't become too embarassing.
This year, the party is this evening. My 17-year old daughter has just gone off to the pre-gala class dinner, clad in a long black evening gown and looking very pretty. I shall have to go home and shave.
Walter Blotscher
Thursday, 2 February 2012
A CREATURE OF HABIT
After my shower this morning, I cut my toenails. And as I was doing this, I became aware of how much I (and, I suspect, you readers) am a creature of habit.
Three examples should suffice. First, when I cut my toenails, I always start with the right foot, and go from second toe to little toe, leaving the big toe until last. Then I do the same with my left foot.
Secondly, when I shave, I always start with my left cheek, from the sideburn down, followed by my right cheek, then the chin and neck, and finally the moustache area.
Thirdly, when I iron a shirt, it is always in the order collar, stock, cuffs and front buttons, sleeves, the shirt itself and then the collar once more.
All three examples are not just "well, I usually do it like that", but "I always do it like that, every single time". I did think it was because that was how my mother taught me to do it when I was little. But then I remembered that she doesn't shave, so I realised it must have something to do with me.
Walter Blotscher
After my shower this morning, I cut my toenails. And as I was doing this, I became aware of how much I (and, I suspect, you readers) am a creature of habit.
Three examples should suffice. First, when I cut my toenails, I always start with the right foot, and go from second toe to little toe, leaving the big toe until last. Then I do the same with my left foot.
Secondly, when I shave, I always start with my left cheek, from the sideburn down, followed by my right cheek, then the chin and neck, and finally the moustache area.
Thirdly, when I iron a shirt, it is always in the order collar, stock, cuffs and front buttons, sleeves, the shirt itself and then the collar once more.
All three examples are not just "well, I usually do it like that", but "I always do it like that, every single time". I did think it was because that was how my mother taught me to do it when I was little. But then I remembered that she doesn't shave, so I realised it must have something to do with me.
Walter Blotscher
Wednesday, 1 February 2012
EUROPACTS
It is important to realise what the latest Europact may do, and what it certainly won't do.
25 of the 27 E.U. countries (the U.K. and the Czech Republic being the naysayers) have agreed to enshrine in their respective national laws an agreement limiting public sector budget deficits. In fact, existing E.U. legislation already had this; there were limits on deficits (3% of GDP) and debt (60% of GDP). However, when France and Germany, two of the biggest countries, broke these limits during the noughties, they got away with it, not least because they were big. Putting the agreement into national legislation, rather than leaving it at the E.U. level, makes it more likely that Governments will adhere to it next time round.
But making a crisis less likely in the future will do absolutely nothing to sort out the existing one. Indeed, since almost all countries are currently outside the proposed limits, getting from A to B will necessarily involve Governmental belt-tightening. Reduced Government (net) spending automatically reduces overall economic demand (unless the private sector and/or net exports make up the shortfall, and they don't seem to be doing that); so fiscal stringency today may well make the situation worse rather than better.
I think Angela Merkel, architect of the pact and general schoolmistress of the E.U., well knows this. However, she was both determined to put the longer-term measures in place (in order to placate domestic German voters fed up with feckless southerners) and aware that the E.U. only embraces radical change when there is a crisis. The risk, of course, was that the whole Euro zone would implode before the longer-term measures were in place. She has managed to avoid that - just. And once the national Parliaments have duly done her bidding, I fully expect her to reduce her hostility to greater intervention by the European Central Bank and/or some kind of Euro-area bonds, the two things needed to sort out the current mess.
In other words, and despite criticism from many quarters, I think she has played her hand with impressive skill.
Walter Blotscher
It is important to realise what the latest Europact may do, and what it certainly won't do.
25 of the 27 E.U. countries (the U.K. and the Czech Republic being the naysayers) have agreed to enshrine in their respective national laws an agreement limiting public sector budget deficits. In fact, existing E.U. legislation already had this; there were limits on deficits (3% of GDP) and debt (60% of GDP). However, when France and Germany, two of the biggest countries, broke these limits during the noughties, they got away with it, not least because they were big. Putting the agreement into national legislation, rather than leaving it at the E.U. level, makes it more likely that Governments will adhere to it next time round.
But making a crisis less likely in the future will do absolutely nothing to sort out the existing one. Indeed, since almost all countries are currently outside the proposed limits, getting from A to B will necessarily involve Governmental belt-tightening. Reduced Government (net) spending automatically reduces overall economic demand (unless the private sector and/or net exports make up the shortfall, and they don't seem to be doing that); so fiscal stringency today may well make the situation worse rather than better.
I think Angela Merkel, architect of the pact and general schoolmistress of the E.U., well knows this. However, she was both determined to put the longer-term measures in place (in order to placate domestic German voters fed up with feckless southerners) and aware that the E.U. only embraces radical change when there is a crisis. The risk, of course, was that the whole Euro zone would implode before the longer-term measures were in place. She has managed to avoid that - just. And once the national Parliaments have duly done her bidding, I fully expect her to reduce her hostility to greater intervention by the European Central Bank and/or some kind of Euro-area bonds, the two things needed to sort out the current mess.
In other words, and despite criticism from many quarters, I think she has played her hand with impressive skill.
Walter Blotscher
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