DAVID'S SOAPBOX

I have been taking far more interest in the American presidential election and the way the world is lurching from financial crisis to financial disaster than I have in respect of previous American elections or recessions.

The purpose of this article is not to dwell on the American election as that is a matter for the Americans.

As can be gleaned from my last soapbox, I am taking a close and interested look in why it is that my clients and I are all getting poorer. Whilst this happens politicians and public sector workers are getting richer. I say “richer” because their salaries, pension funds and all the perks that go with their jobs are increasing where the private sector is struggling to make ends meet as well as paying for this.

Over the years I have come across very many interesting people as clients. Many are self-employed and there are several who have made personal fortunes.

I recall last year telling a client how I did not play golf, do not particularly enjoy eating food, rarely drink alcohol and can go for days at an end without any, have no hobbies, do not particularly like socialising and wining and dining and remain completely faithful to my wife. I pointed out I had no problems in working a ten or even twelve hour day for week after week if the work was there to be done. “You sound like a really sad bastard” he responded. He then said “but actually you are not – you are quite a cheerful, happy sort of person”.

The same could be said of many of my clients who have their own business and yet devote the majority of their time to it without external hobbies or interests.

I would like to say the same about my clients’ personal habits as I have about mine but I am not, of course, in possession of such information.

I have noticed that self-made businessmen, from the simplest business with minimal profits to the multi-millionaire, have many common features.

They only look at their wristwatch in order to make sure they are not late for appointments. They tend to work on the principle that they finish work when the job that needs doing is finished, not when the clock reaches a certain time.

They are single-minded in their pursuit of furthering their business interests.

Many of them are perfectionists.

Sometimes they are in partnership with someone else but in the vast majority of cases they are in complete control of the business they operate.

They occasionally whinge about the stress and strain but by and large they are a cheerful bunch and thoroughly enjoy what they do.

Many of them suffer from a problem with delegation. When they delegate they find the job is never done as well as they would have done it or so they think.

There must be throughout the length and breadth of the British Isles countless people of this sort, of different races and religions.

I am reminded, however, that there is another way of doing business both in my job and in many other sectors of the economy.

I call this the “big is better” syndrome.

Catchphrases sometimes sum up life in just a few words – of the 5 below 4 are ones I made up!

One of my favourites is “it is important to have standards no matter how low they are”.

Another is “if you have 50 wankers all working individually in the same job and they all join together to create a partnership of 50 people what do you get? The answer is you still have 50 wankers”.

Another is “don’t buy the most expensive house in the road because the others will drag the value down, buy the cheapest and the others will then drag your value up”.

Another is “he has achieved more than his abilities should have allowed him to”.

Another is “don’t believe your own propaganda”.

There are also a couple of my all time favourite sayings. These aren’t catchphrases but are just so beautifully politically incorrect that I cherish them.

They are:-

“It’s the winning that counts, not the taking part”

and

“Nobody remembers who came second”.

For sports fans, highlights must be the winning of the World Football Cup in 1966, the winning of the World Rugby Cup and on those occasions when we win the Ashes.

So winning is good, winning makes you feel better and, charitably, perhaps winning is what drives businessmen on.

Not being a masochist I decided that I should only look briefly at the evidence recently given by the failed Bank Chiefs to a Commons Select Committee.

Their excuses for losing billions of pounds were interesting but it was clear that each one had caused his Bank to embark upon a huge expansion policy designed to attract business away from the others. We must not forget that. They all wanted to be King Kong not only here but also internationally.

It reminds me of the firms of solicitors who merge to create huge firms thereby in their mind creating a better service for the public. Does it really?

I will accept that a small firm like ours is never going to attract a multi-national company. The big London and provincial firms are welcome to their business. The companies in question are continually being sucked up to by other firms of solicitors and often the business is dependent upon a key person within the company. When they leave, so does the business which normally goes to their successor’s pet firm.

The banks used to provide a personal service and conducted their business in a cautious and orderly manner.

I can see that in the rush to grab their share of the market size became important and this was often created by a combination of a take-over of smaller banks, dealing with exotic barely understood derivatives and a bucket shop style lending. Catchphrase 2 above could just be appropriate in some cases.

However, this begs a number of questions.

At what level were these transactions being approved?

What degree of due diligence and supervision was there in respect of some of the more exotic derivative type transactions and bucket shop style lending? See catchphrase 1 above. Just how low level was some of this stuff?

Were people being promoted beyond their ability merely because of an absence of an alternative suitable person to employ or promote? See catchphrase 4 above.

There are hundreds more questions one could doubtless think of but I think you get the drift.

You had rapid expansion of the banking system generally but were there really enough able people running it to ensure that it wasn’t going to collapse?

It seems to me that if you offered money to any fool for him to go and buy something he can and will go and buy it.

I wonder what went on in the minds of these people who had under their control sums of money that they had only ever dreamed about with which to buy assets and expand an empire which, the larger it got, the safer they must have felt and the more they got paid. Catchphrase 5 comes to mind. Was there some mutual ego scratching between the government and these masters of the universe? The so-called Thatcher greed cult pales into insignificance compared to this lot.

Did the banks think that because of their mere size and throughput of business, no matter how dubious, all would be well because if enough business was flowing there would be huge profits.

We now know that this was a nonsense. Money was chasing money but it was often the same money chasing itself in a circle with people taking bits and pieces for themselves on the way. As for sub-prime lending – see catchphrase 1.

The mere size of the businesses must have given those involved a feeling of security. How false was that? Was there a sort of “we must win” cult flowing through business where each large company sought to out do their competitors. The lesson they had not learned was that winners can soon become losers. Think of the English Football team’s four plus decades of failure since 1966. Think of the English Rugby team and their fall from grace. Do you recall what happened when England went to Australia after winning the Ashes. The answer in each case was became losers and sadly that is what the banks’ became but at our expense.

So if I ask myself who does more for this country – my individual hard-working thrifty clients or large organisations who have succeeded in losing billions, guess my answer.

For this country to re-establish its former wealth it is going to need the likes of my clients and the many people like them, who run their own business and work all hours God gave them, to do it. It is not going to be done by getting 50 people altogether, calling them partners, and expecting them to perform any better than they did as individuals.

Now the fact is that neither I nor the vast majority of my clients can get by without at some stage in our business lives needing some financial assistance. So we need the banks and we need them to be in good shape.

Ever since the Labour Party came into power the Chancellor of the Exchequer, the person responsible for the country’s finances, has up until when he became Prime Minister, been Gordon Brown.

Now I hate to say this but surely one of the jobs of the number 1 honcho in a major government department is to see into the future and decide what is good for the country not just today but in the medium and long term.

Thanks to the last Conservative government managing to wash inflation out of the system and balance the books, Gordon Brown took over a healthy economy.

Gordon Brown appears to have been friendly with several of the main banking honchos some of whom have got Knighthoods.

Billions upon billions of pounds were hurled into the public sector, often for very little or no return.

No money was put aside for a rainy day.

Is there any sign of contriteness on Gordon Brown’s part? No. On the contrary, there is a set pattern or answers.

The familiar response is either that it is all the Americans’ fault or that the Conservatives would sit back and do nothing, whereas he is all action. However, poorly thought out action based on a headline for today is not the answer.

To the extent that we have to pick up the tab and make up the shortfall created by wasted policies, such as the pathetic VAT reduction of 2.5%, it means we are going to have to pay higher taxes in the future for a poorly thought out exercise.

Gordon Brown’s inability to come to terms with the fact that he may have been partly responsible for the recession is concerning. It would be concerning in a junior or even a senior minister but in the case of a Prime Minister it is surely a serious character flaw.

Whilst I never liked the man particularly, Tony Blair would never have allowed a situation to develop whereby he could not with a little bit of charm, an odd remark here and there and a bit of humble pie, turn a cock-up to his advantage. That was the nature of the man and one had to admire him for it, whatever else one might think of him.

I am not convinced that bigger is better. I believe that the future lies, as it always has done, in the individual entrepreneurs in this country who are prepared to make sacrifices in their personal lives and the time they spend working in order to create some form of financial security for themselves and their families. In doing this they take risks but they are normally measured risks and they create jobs. It is both sad and unfair that many of these will be wiped out as a result of the greed of the international banking system and the incompetence and short-term policies of politicians of many nations, not just ours.