Who do we trust? Len McCluskey, Jerry Heywood, and SCIENCE!

It seems to be TYR Service! day, so I followed up on a discussion elsewhere about social trust in the UK by analysing Ipsos MORI’s polling series on trust by profession.

Having fiddled with various ways of filtering the data in an attempt to get a readable line chart, I decided to look at net trust – i.e. trust minus distrust – and concentrate on the change in each series, and to compare the average of the first 10 years (1983-1993) to the last 10 years in order to avoid either chasing outliers or throwing away too much data. Then, I remembered the First Canonical Principle of Data Visualisation: if your chart is not a horizontal, sorted bar chart, it probably should be.

The upshot is a bit of a surprise, although the strong increase in net trust (well over a 2 standard deviation result) for civil servants and trade unions stuck out literally whatever analysis I tried. Viva el blob, indeed. (The spreadsheet is here.)

Screenshot from 2014-07-21 14:24:29

And I really, really wasn’t expecting an increase in average trust, although I’m not sure that’s a sociologically meaningful measurement here, especially as “ordinary people” lost 9.83 percentage points of net trust, a 1.3 standard deviation result. The clergy has taken a real beating, for obvious reasons, while scientists did really well (another surprise). TV did poorly. Nothing whatsoever happened with regard to the police.

Business, which I was asked about, is a difficult one; the result here is that its net trust went up, but by so little (0.39 standard deviations) it might well not have changed at all. However, a lot depends on where you stick the pin in the donkey. The rating for 1983 was very low, -40, no surprise, rose from there to -25 in 1993, declined again and hit -37 in 2002. Not surprisingly, it hit -41 in 2009. Perhaps more surprisingly, it also hit -39 in 2005 and -25 in 2006. It’s now at -23, which could be considered a record high. However, it could also be described as fluctuating around an average of -31 since forever; fitting a linear regression through it gives you an R2 of 0.04, aka nobbut bugger all. Essentially all the change is accounted for by 1983, and as we have seen, it reverses to that level whenever there’s a recession and sometimes just for a laugh.

And if you ask specifically about bankers, well…that said, what have those pollsters been up to?

Viva Blob!

It looks like the experiment is over.

The job of Head of the Home Civil Service is being re-integrated with Cabinet Secretary and No.10 Downing Street PS. There’s also going to be a “CEO” who will perhaps be recruited from the private sector, although no names that aren’t civil servants have been put forward. But this job doesn’t have any permanent secretaries reporting to it, so it will be pretty harmless, as is the “strategy unit” run by a Johnson relative.

The original reshuffle was quite radical, aiming at de-emphasising the core civil service, importing the psuedo-private sector property guy Kerslake, and that hardy cliché, “delivery”. It looks like Heywood won.

It’s been a good week for the Blob, which is nothing but a good thing.

Hill

The main response to the nomination of Lord Hill for European commissioner was widely described as incomprehension. This was literally true; nobody understood who he was. But they didn’t fail to understand because Hill is so obscure, but rather because they were ignorant.

Martin Schulz, for example, made a fool of himself as follows:

“I cannot imagine Hill, whose views – in as far as he’s got any – are radically anti-European, getting a majority in the European Parliament,” the parliament president had said….”Today friends told me that Mr Hill is a rather pro-European person by UK standards. I’m very pleased with that,” the German Social Democrat said.

If you asked me I’d have said that as a minister, he was a significant gatekeeper for lobbyists, the 4th highest on that metric among UK-wide ministers. This was especially telling as his network degree was relatively low – people could probably access him fairly easily and get escalated to somebody important.

The explanation for Hill’s lobby-ability turns out, per FT, to be that he is a professional lobbyist himself, having represented Bell Pottinger or rather its clients before founding his own lobbying firm, Quiller, which he later sold to Huntsworth for a lot of money. Now I didn’t know that, but at least I correctly diagnosed the problem.

Also, David Cameron’s appointments process is still unimprovably awful:

Two former financial journalists, Patience Wheatcroft and Sarah Hogg, were also considered by Mr Cameron but were deemed not to have the political skills needed to work in Brussels.

Spam, and the art of negative marketing

I remember reader Ajay wondering how those godawful “Aberdeen Steak House” things around the West End have a business. I can’t find the discussion now, but I recall I told him that their ideal customer was someone for whom paying over the odds for a really bad dinner was an important part of their night out. That’s how they knew they were having a good time, I speculated.

Now here’s a Microsoft Research paper that explains this more elegantly. It examines why 419 spammers are so obvious and their production values are so crappy. Basically, the problem is false positives – it’s very important to the spammer to target suckers and to avoid wasting effort on non-suckers, and because the pool of potential marks is big relative to the pool of suckers, anything that improves the targeting is a disproportionate boost to the spammer’s payoff.

Even though the cost of sending out spam is minimal, this is only the first step in the process – once a mark responds, the attacker starts to incur costs. Non-suckers who respond will get wise at some point, leaving the attacker with a loss. Because suckers are rare, it’s hard to find a way to predict who might be a sucker. So the optimal strategy is to broadcast as widely as possible, but to tailor the message. The reason why they look like only a real sucker wouldn’t spot them is that they’re specifically designed to be easy to spot, so as to put off the non-suckers. An upshot of this is that the people who get their kicks by stringing 419 spammers along may actually be doing useful work.

I suspect this phenomenon – essentially the opposite of advertising, a sort of negative marketing – is much more common than we may think, and that it explains much else beyond terrible restaurants. Boris Johnson comes to mind, as do quite a few other politicians. In a low-turnout context, it ought to work, especially if you can put off the non-suckers from voting at all.

Big Sportsday 2.0: Yorkshire

So yer big french pushbike sportsday. Having run away from the London ‘Lympics, you may be surprised to learn I was back in Yorkshire for it. The explanation is simple – it went through the village I grew up in twice, a unique distinction. As our old neighbour’s slogan goes, so good it’s coming twice. And despite being a Huge Event, as an entirely temporary and nomadic project, it’s hard to use it as a pretext to knock down a council estate.

My biggest impression was a sort of weird carnival of mobility. Bicycles, motor vehicles, and aircraft appeared in a very brief period of historical time, very close together and a surprisingly long while after the emergence of steam power. The cliché example would be that the French newspaper that sponsored the first Tour was called L’Auto and then retitled itself as L’Équipe. The link with the growing mass media ought to be obvious. The experience on the days literally smelled of diesel, with the waves of publicity vehicles, motorbike cops from all over the country, gendarmes, incredibly low-flying media helicopters, Garde Republicaine troopers from the French president’s security detachment, and such. It’s surprising how many big engines, indeed helo turboshaft engines, are needed to keep up with some guys on bikes.

Unlike football, say, the geographical scale of the Tour is far more than you can appreciate directly as a spectator. They hammer by and then they’re gone. Much of the driving about by all sorts of officials in big cars and distributors of samples seems to be an effort to take your mind off this. But this is part of the point. It was originally designed as an Edwardian nation-building project, something that would get people to take part in the imagined community known as France. It’s still very much like that. In fact, the pain in the arse of closing roads in a motorised society even helps. Putting it on requires a really big social mobilisation to organise it all; you know it does when your neighbour’s on the committee. In many ways, the actual race is an excuse for the participation.

And this was about the first project I can remember that was organised on a Yorkshire-wide basis. The participation was very real, not least because all the people like me who had obviously headed back up north. We literally danced in the streets of Addingham, or at least the Swan pub car park, which has front doors onto it. That’s good enough for me. This sort of mobilisation, of course, tends to obscure or postpone important conflicts and divisions, which is probably why I was openly cheering Chris Froome’s epic dash through Sheffield in the shirt of Team…Sky. Oy.

That said, folk yelled “South Yorkshire Mass Murderer” at their contribution to the route escort, roidy-looking guys in Iraq-merc shirts and BMW 4x4s doing nothing of obvious use, so don’t think we’re going soft. The police festival was something else – West Yorkshire looking astonished at people smiling, and trying to ride their motorbikes as if for a royal funeral, the national escort group showing off a little, and the French cops (I counted three varieties of French cops) doing their hell on wheels act.

Let’s hold that thought, though – the first Yorkshire-wide project in years. There seems to be a push on. Here’s York Council leader James Alexander calling for “devolution”. George Osborne, of all people, thinks the trans-Pennine railway needs money and Labour-leaning trainhead Paul Salveson comments. Wakefield council leader Peter Box wants independence for Yorkshire, although I think he’s trolling. The physical reality of this is that Box is the chairman of the West Yorkshire combined authority, which is a bit like the West Riding in that it integrates Leeds, Bradford, Wakey, and Kirklees councils. Box is the chair presumably because Wakefield is the historic capital. There’s even a movement. Even Clegg has been offering warm words, although fuck him. Labour people are making the running across these efforts, although in another sense the party likes the idea of a bigger Northern structure.

I’ve blogged before that devolution seemed to work very well for Scotland, Northern Ireland, Wales, and London in the sense that they were the only regions not to see falling real median incomes. That sounds good, although London was a case of standing outside when it rained money. The Vale of York ‘kippers sound worse. Also, Uncle Jimmy would have been on this like the proverbial tramp on chips.

Local rivalry

A bit more about RBS and HBOS. One thing that sticks out for me is that sense of two institutions with a bitter local rivalry, both with serious resources and ambitions, but perhaps not quite up to the standards they set for themselves, with an identity built on chippy bitterness. We’ve seen that somewhere before on this blog recently, and that was based on long-running class-based divisions too, and that ended up in utter degradation too.

I know, by the way, what you readers want. Going by the stats counter, you want more Jimmy Savile content. You love it. The data doesn’t lie. Here, a review of “Not the” Dan Davies‘s biography, and an interesting quote.

The wooden doors slid open, releasing a cloud of smoke and two large, unsmiling men in their 50s. “Frisk him,” barked Jimmy Savile, who had stepped out of the lift behind them and was wearing a blue shell suit with chevrons of red and white on the shoulders.

I was pinned to the wall and searched before Savile finally called the men off. He chuckled and extended his hand, introducing them as Mick Starkey, a West Yorkshire police inspector, and Jim “The Pill” Cardus, a retired pharmacist. “Meet the Friday Morning Club,” Savile trumpeted before ushering the men out of the front door to the flats.

So that’s a moonlighting copper…and a retired pharmacist. The Friday morning club was the coterie of cops he had breakfast with. Now I don’t think you usually look to pharmacists for private security services. Most of them seem rather retiring, mild-mannered sorts. You do, of course, look to them for the supply of drugs.

Now here’s the bank disaster book you should read.

So I advised you not to read Iain Martin’s Making it Happen, but advised you to read Simon Carswell’s Anglo Republic. Reviews of books on bank failures seem to have become an occasional series, and at least it’s somewhat less depressing than Jimmy Savile, so here we go.

Yes, yes, you should absolutely read Ian Fraser’s Shredded: Inside RBS, the Bank That Broke Britain. This is probably the definitive work on the British and Irish banks in the Great Bubble and the ensuing Great Financial Crisis. The best thing I can say about it is that it stinks of work.

You should probably also read Ray Perman’s Hubris: How HBOS Wrecked the Best Bank in Britain, but it’s not essential.

Where Iain Martin skates over the surface, Fraser drills into the icy depths. Where Martin is glib, Fraser is forensic. Where Martin defers to Scottish Toryism, Fraser mauls anyone and any institution he sees. As the Glasgow Herald‘s business editor, he is a bruising hard news reporter rather than an opinionator, and this shows. He has simply done much more work – reviewed more documents, interviewed more people – and he seems to despise pretty much everyone involved, probably the best course.

He brings out the degree to which RBS was, in many ways, a sort of regional development bank/politicians’ pork barrel. For example, Lord Younger, who Fraser repeatedly points the finger at, intervened to keep it from being sold in 1981 specifically on the grounds that it was important to the Scottish economy and that it was necessary to reserve a sufficient number of major appointments for Scots. Jobs for the nobs, you might say. He follows Younger repeatedly dipping in and out of Tory politics and the Royal Bank’s board throughout the 80s. He makes a strong case that RBS was as much the Scottish Tories’ bank as Hypo Alpe-Adria, say, was Jörg Haider’s. Not that he spares Labour or indeed the SNP.

This wasn’t just pork barrel politics. Fraser argues that the Scottish Tories did have some ideas for the future of the Scottish economy, as expressed through the SDA, and RBS took the lead in financing them, especially because its CEO and then chairman, Sir George Mathewson, came directly from the SDA. To some extent, as Perman points out, it carved up the market with Bank of Scotland – RBS took on the engineering and semiconductor fab stuff, Bank of Scotland the oil. It was far from the first time they had come to an agreement.

He also points out that the relationship between the two banks, which swung between vicious rivalry and a quasi-cartel, was rooted in the depths of Scottish history, with the Royal being associated with the Whigs and the “Old Bank” with the Jacobites, the “Old Bank” with rural and provincial Scotland and RBS with Glasgow’s industries. One thing in which they were unanimous was sectarianism – neither bank employed a single Protestant Catholic within Glasgow before 1978. When you realise that, according to Perman, Scotland’s density of bank branches was so high that chequing accounts didn’t sell because nobody bothered when they could just pop into the bank, this is incredible.

Fraser also gets it, in that he is quite clear that financialisation, deregulation, and housing bubbles were a thing and that they were rooted in policy, policy that was decided by government, by ministers with faces and names. He puts the story directly in the context of Thatcherism and after, and he points the finger, again and again.

The finger points at Thatcher, but more directly, it points at Sir Steve Robson, architect of tripartite regulation, inventor of PFI, and RBS director. It points at Mervyn King for basically ignoring financial stability, and being a dick. It points at Bernard Jenkin, the Tory spokesman at the time of the creation of the FSA, who is quoted worrying about its terrifying over-might. It points at Alan Greenspan, for bubbles. It points at Gordon Brown, too, for sucking up to bankers generally, although it also accepts he wasn’t wrong about responding to the crisis.

Most of all, it points at Fred Goodwin, who it paints as a wanker, bully, and bungler of epic proportions, a sort of financial Iain Duncan Smith. One of my favourite details is that he specified the colour, trim, and upholstery of the RBS fleet of Mercedes to match the corporate identity by exact Pantone shade number. Another is that he persuaded 111 Squadron RAF to regularly take him up in the back of a Tornado F3.

But the best one is probably that in mid-2008, already 18 months after the top of the bubble, when RBS did its doomed rights issue, he stood up at the annual lunch for NatWest pensioners to badger them to buy more RBS shares. That failing, he compiled a list of executives who didn’t yet own enough RBS paper in order to mulct them as well. Anyone who put money in at this point lost 90-odd per cent of it.

And RBS, by 2008, was ruined in so many different ways. There was the US trading operation, Greenwich Capital, and its enormous pile of super-senior leftovers from US subprime CDOs. There was the merger with ABN-AMRO, which seems to have happened mainly because Goodwin was scared of his semi-mentor Emilio Botin, and which was a superb, fractal clusterfuck in every possible way. The Scotsmen blame the Dutch, and the Dutch the Scotsmen, but the truth was both that ABN-AMRO was in a terrible state and also that RBS had no idea what to do with it, like the dog that finally caught the car. And then there was the commercial property. Any one of these could have finished them, but as it turned out they did them all.

There is a huge amount of material here on RBS’s personnel practices, on its history of dubious dealings with some of its clients, on the pharaonic head office project, and on the surprisingly louche careers of some important people involved. Goodwin, for example, worked in his past career in accounting for a Touche Ross, later Deloitte, partner who was also censured and forced to pay a £40,000 fine by the accounting profession over his role in the Barlow Clowes fraud. He later shows up auditing RBS after Goodwin overruled the bank’s procedures to give Deloitte their business.

An important point in both books is the time factor. When Goodwin got up on the stage to sell the rights issue to the NatWest pensioners, the peak of the bubble in the autumn of 2006 was already 18 months in the past. But the RBS commercial property lenders were actually increasing the size of their book and taking on increasingly wild projects and dodgy clients. Similarly, across town, Perman makes clear that HBOS’s binge on commercial property didn’t really get going until after the bubble had burst. Both of them accelerated full tilt into the wall.

So the Dutch blamed the Scots and vice versa. Similarly, the Yorkshiremen blamed the Scots and the Scots the Yorkshiremen.

Perman gives some interesting insight about HBOS, which after all destroyed Yorkshire’s bank as well as one of Scotland’s. The Scots considered Halifax scary and a bit fast, thanks to its emphasis on sales. They called them the Haliban. Halifax had to be a bit like that because it was almost exclusively a retail bank, and Bank of Scotland wanted it precisely because it had so many retail savers on the books. This provided capital that the Old Bank could use in its commercial banking activities. The Halifax side saw it differently; rather than complementing Bank of Scotland, they wanted to turn it into a bigger Halifax.

So who won? The mortgage lenders in Halifax deliberately hit the brakes in 2006, changing their pricing and terms to retain existing customers and back off on growth. Although this was later, crazily, reversed and the executive responsible was sacked, by then it was too late to make any difference. In the meantime, the commercial lenders went absolutely berserk. Two-thirds of the total accrued losses at HBOS were attributable to commercial property lending, run out of the Old Bank. It may well be true that Halifax was more important as a contributor to the housing bubble, having led the charge early on, than as a casualty of it. But then, Andy Hornby seems to have responded to the slow-down in Halifax retail by egging the BOS commercial team on.

Also, apparently its board met the announcement of 125% LTV mortgages, self-certification, etc. with “mute astonishment”. Famously, the thing about dumb insolence is that they can’t do you for it. Mute astonishment has in common with dumb insolence that it looks a lot like saying and doing nothing.

In some ways, Fraser especially is perhaps too critical. So you get a blast against RBS for not being likely to make a profit these days, and then another against it for not shrinking fast enough. Which is it, then? But on balance, there is plenty of blame to go around.

TYR Pub!

It’s been a while. How about a TYR Pub! meetup?

Update: OK, no point buggering about any further. Let’s say the 11th July. And let’s say 7.30pm at the Queen’s Hotel, Crouch End Broadway N8.

Thort.

Sometimes you look around the Internet for just the right blog discussion and only then realise that it’s the one you will have to write.