Banks, bankers and pension funds

Whenever there is a recession it is customary to seek out a scapegoat, although a modern economy is far too complex and sophisticated for it to be the fault of any single group. Currently the scapegoat appears to be "bankers", although that phrase is employed without thought for what it actually means. In one sees a banker can be almost anyone who works for a bank, including the teller who takes your deposits over the counter, and enables you to withdraw money through human interaction rather than via the more impersonal (but convenient) ATM. However, no-one is blaming bank tellers for the current state of the economy; rather it is the bankers at the top of the banking tree who are to blame. The recession, largely off the back of the financial crisis which began in the USA in 2007, is the fault of excessive risks taken by those on the Boards of Directors of banks. Now, I am not entirely sure where the line is between an "excessive" risk and an "acceptable" risk; the presumption in the rhetoric seems to be that the latter are those which succeed, while the former are those which do not, which is logically absurd.


That bankers are neither inherently good nor evil seems to me to be obvious. That some bankers have been provided with bonuses of which they are entirely undeserving is a matter of fact (the finger points squarely at Sir Fred Goodwin). That this requires change is self-evident. However, not all bankers are Sir Fred Goodwin. Investments, both financial (as made by banks and other financial institutions) and real do not always prove to be profitable. However, I would argue that there is no need for additional regulation of banking per se. Perhaps regulation of the conditions under which bonuses can be paid (superior performance comes to mind!) can be justified, but this ought to apply to all industries, not just banking. But this is largely a question of governance, not of banking itself. And good governance of any company comes via its shareholders, not solely from outside bodies. Good regulation comes from thoughtful consideration of the issues in the long-term, not from a knee-jerk reaction to current populism (of which politicians are all too fond). And who are the major shareholders of most UK listed corporations, including banks? This would be the UK pension funds, who for too long have been largely passive investors in their shareholdings.


For many years I have been arguing the case for a change in the governance of UK pension funds. As things stand, contributors to pensions and pensioners have little incentive to worry about the make-up of the trustees of their scheme. Most trusts are made of representatives of the employer and the union which represents the bulk of employees. In the USA things are more democratic: all contributors have the right to elect the trustees of their scheme, with a selection of candidates and their biographies being sent out at the time of election. The biographies include those characteristics which are likely to make a candidate seem attractive and talented to become a pension fund trustee. If such a system of electing trustees were imported into UK pension funds there would be a sea change in the governance of these mighty financial institutions.


Assuming trustees were elected to serve a number of years (rather than one, which could lead to short-termism), they would be much more directly accountable to pension contributors than is currently the case. This does not mean that such trustees would do the bidding of those who elected them; one would hope they would due able to take a more dispassionate, objective view of investment strategy! However, current trustees are largely anonymous and likely to act in the interests of the small groups from which they have come, rather than pensioners and contributors, whereas democratically-elected trustees would need to be closer to understanding and incorporating the views of those they represent. One major change this is likely to lead to is increased "shareholder activism" on the part of pension funds. If this were the case, pension funds would be taking a stronger view on how banks were being run, including the way in which bonuses were paid. Indeed, pension funds would require greater detail on bank financial strategy which would make the banks significantly more accountable to their shareholders, and hence to the general public (most of whom are pension fund contributors or pensioners.


In the mid-1970s (1976) the management guru Peter Drucker wrote an oft-overlooked book, The Unseen Revolution: How Pension Fund Socialism Came to America. If the governance of pension funds were altered as I have argued above (and elsewhere) it would lead to improved governance of banks (and other corporations) eliminating the kind of rhetoric which leads to all bankers being scapegoats for the current recession.

Adrift on a sea of ignorant bliss?

A large passenger cruise liner has been at sea for some weeks, the passengers enjoying the sun, sea, good food and camaraderie aboard. Then, one day, the engines cease working and a small hole is discovered in the hold. Water is trickling in, slowly at first but faster with each passing day. But the ship remains listless at sea, adrift hundreds of miles from the nearest shores.

At first no-one feels it right to inform the passengers. The captain sets crews to work on plugging the ever-increasing hole in the hold and on trying to restart the engines. Neither works, so the captain sacks the workers. If the engines are not working there is no need to employ and pay those who would normally be running the ship nor the engineers who maintain the engines. And there are nowhere near enough lifeboats to save even a small minority aboard, even assuming those lifeboats could make it the hundreds of miles to land.

At this point an SOS radio message is sent out requesting help. But the response is slow. After all, the messages from shore come back, if you got yourself into this mess you should get yourself out of it. But food is running low, and with no engines the tropical heat is becoming unbearable without air conditioning. The passengers start to become restless and want to know what is happening. When they find out that this situation has been going on for some time they become hostile and aggravated. Food is on low rations (except for the captain and his immediate crew, of course). So further SOS calls are made.

Eventually the captain is informed that a small emergency flotilla has been established, and will be leaving shortly to help make emergency repairs to the cruise liner, and bring food and fuel and other supplies for the crew and passengers.All seems to be improving on board the ship, although water continues to flood into the hold at an ever-increasing rate. The ship is already listing heavily to one side.

The captain responds to the call from shore, telling them to not yet send the emergency aid. He first needs to organise a vote and see if the flotilla is acceptable to the passengers and crew. The captain advises the rescue team he will send them the result of the vote in a week or so.

Obviously, the scenario above is patently absurd, yet it mirrors the tragedy unfurling daily with the Greek economy. The Greek government is barely able to pay its debts; it has permitted its citizens to enjoy the luxury of their sunbeds in ignorance of the truth for too long. After a great deal of faffing around, eventually the other countries of the eurozone, led by France and Germany, organise a rescue package. Just when things are starting to look better, the Greek PM insists on putting the rescue package to his Parliament and also to a referendum of the people. Absurd! When political and economic leadership is called for in Greece, there is the cowardice of the pretence of democracy. All the while the problems of the Greek economy are having ripple effects felt, first in neighbouring European countries, and also in the rest of the world. While Athens sinks in the mire, Papandreou continues with his fiddling about, failing to take the important decisions for which leaders are usually elected.

The natural reaction to all this is to put out of joint the noses of those who had laboured long and hard to agree a rescue package. This may also have taken too long, but for Greece to run round and bite that hand that would enable it to continue to feeds its citizens smacks too much of cutting off one's one nose to spite one's face. If it is a matter of pride, the Papandreou needs to be reminded that pride comes before a fall. Rarely before in the field of human conduct has there been so much foolishness from those who ought to know better in such a short space of time.

At the time of writing it is hard to predict whether or not Greece will continue to remain a member country of the eurozone (the European single currency). The odds seem stacked against. But with or without Greece the euro will plod on a Europe's single currency. Should Greece decide to exit the eurozone its ability to raise funds on the world's capital markets will become severely compromised, leading to likely default on many Greek borrowings around the world. The near future of the world, and its possible medium-term destiny has been compromised by the inadequate leadership of one man: Papandreou. He will join the pantheon of ancient Greeks, known not for their heroism, but for their tragic qualities.

New year, new start

When I was a young child I thought it a bit peculiar that the school year started in September, while the calendar year—which I considered to be the year proper—began on January 1st. Surely the school year should coincide with the calendar year?


This confusion was originally made all the worse when I was told by my teachers at cheder (Jewish studies classes held after-school in another place) that there were four new years: the Jewish calendar new year of Rosh Hashana (typically in September of October), a Jewish "new year" for trees (Tu b'Shvat, around February or so), the birthday of the Universe (1st Nissan, sometime in Spring), and the secular or calendar new year. But with a year or so of thought it made sense that the school year coincided with the Jewish new year.


This year the Jewish new year is quite late on the secular calendar, the last week in September. Yet next week my University starts back, and my youngest daughter begins are her new secondary school. My son, who is a little older, starts back the following Monday. And so, as this week ends a new school year is about to start, some two weeks after the start of the English Premier League! Summer—which has never really made much of an appearance in London—is now officially over: the new year is starting with a vengeance.


Under normal circumstances going back to work or school after Summer is something of a two-edged sword. On the downside there is the prospect of obligations being enforced, while the upside is a chance to renew friendships and start over with something approaching a clean slate. As a schoolboy, I used to pledge not to deface my textbooks each new school year, a pledge that I was never able to keep (I still possess most of my school books!). As an adult who is a University lecturer, I usually approach each new year with renewed vigour and energy. I am usually excited and energised at the prospect of meeting a new group of students and, in some cases, becoming reacquainted with students with whom I already have an established relationship. However, for personal reasons this has been a dire Summer, full of traumas and disappointments—the least of these being the poor weather—so I am less motivated than is normally the case as we rush headlong towards September.


It would be an exaggeration to say that I am indifferent to the start of the new academic year, and I remain hopeful that reconnecting with colleagues and students will invigorate me. I hope that Spurs' early season performances will have a similar impact (although the 3-0 loss to ManU had the reverse effect). And despite my personal circumstances the world itself has given us plenty to talk about this Summer: as well as the "Arab Spring" and the continuing battles for democracy in the Arab world, there is the ongoing financial "crisis" and the continued prospect of a double dip recession. And with today's news that Steve Jobs no longer feels his health permits his continued full-time efforts at Apple, the world continues to astound and amaze, surprise and delight, and confound and confuse, all in equal measure.


Whatever, your role, your job, your circumstances, I hope we all enjoy the new start that comes with a new year, and the end of Summer is always a new year!

American angst

The debt problems currently plaguing the US government are showing that country's politicians at their angst-ridden and undignified worst. The world's largest democracy, and one which holds itself up as a model for other countries, is proving to be less than worthy. Were it possible it would be an invitation to bring many high-profile US politicians to account for bringing democracy into disrepute.


The cause of this undignified mess is, of course, the debt problems facing the Federal government. Unseemly arguments between the President, the Senate and the House of Representatives are doing little to deal with this financial time-bomb, likely to go off before the week is out. If ever there was a time to put partisan politics to one side and do right by the ordinary people the politicians are supposed to represent, this is it. However, US politics is not driven by rights and wrongs, but by fierce brand loyalty down the generations to one party or another. On that score we could perhaps blame the electorate: in a democracy you get the politicians you deserve! However, one would hope that politicians would show some evidence of leadership, to go beyond simple representation of the citizenship. A forlorn hope indeed.


So what is the cause of this political in-fighting? In simple terms the US Federal government has borrowed beyond its means. For ordinary people, firms, and smaller countries, borrowing beyond one's ability to repay can be fatal, both financially and otherwise. However, as the late J Paul Getty once noted, "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem." The US Federal government debt is of the order of $14 trillion. Whether or not that is a large amount is entirely dependent on the ability of the borrower to repay.


It is often the case that the amounts borrowed during "good" times are apparently easily serviceable. However, the problem arises when the times are no longer "good", and it becomes more difficult to repay the interest, let alone any capital repayments. This is something which has affected almost every government on the planet, most noticeably Greece and Eire. Now it is the turn of the US to deal with what is seemingly a no-longer serviceable debt. And the politicians are unable to agree on the details of how best to deal with the situation. The simple solutions amount to a few elements: (1) reduce government spending making more funds available to reduce the burden of debt over the next few years; (2) increase the taxation levels to help fund the debt; (3) some combination of both. The Republicans favour 1, the Democrats 2, and the President is arguing for 3. The closeness of the deadline suggest that only 3 will serve, yet the two main parties continue to quibble over the details. It is the modern equivalent of fiddling while Rome (in this case Washington DC) burns.


If Greece defaulted on its debt then it would find it more difficult to borrow in future. It would be regarded as a risky proposition. Its bond ratings would plummet, leading to higher interest rates on any future loans it might be able to organise. Modern history has shown this with Mexico and Argentina. However, the USA is on a different scale. Any default could be seen as possibly temporary—the result of the immaturity of bickering US politicians—or it could be seen as much more dangerous. A default by the US Federal government could lead to an implosion of the world's financial markets. The collapse which was narrowly avoided when Lehman Brothers went bankrupt could once again become a reality, a reality which no rational person wishes to contemplate. Financial economists refer to this as systemic risk: the possibility of the collapse of the financial system. For ordinary people it means the end of the world as we know it. No credit, a failed banking system, markets which seize up, etc etc.


All we can do is hope the US politicians will come to their sense before the eleventh hour. Only time will tell if sense will prevail, or if we really do stand on the edge of a financial precipice.

Summertime blues?

Summer in England is inconstant. One day the weather will be warm and sunny, the next cool and rainy. In fact, replace "one day" with "one hour" and the same applies. The predictable thing about the weather in England is its unpredictability. For some this is a cause for complaint; for others, myself included, it is one of the key attractions of living in a temperate climate on one of a series of islands off the north-east coast of continental Europe.

Now matter how unpredictable the weather in England, it is virtually guaranteed to remain within given limits. The possibility of snow is zero, although there can be the occasional day or two of tropical heat. It is this limited range of possibilities which makes the unpredictability attractive.

The same can also be said for English politics. In many ways it is even more predictable than the weather. I would argue that this is characteristic of a modern, stable democracy. There is no chance of an English version of the Arab Spring. The same is true of most of England's national neighbours. The main source of volatility is from second-generation migrants who are torn between their cultural roots and the culture of their adopted homeland. Experience shows that by the third generation most incoming families have become assimilated, even when they maintain connections to their roots. After all, isn't the stability why such migrant families moved in the first place?

Even where finance and the economy is concerned, there is a limited range of unpredictable volatility. For the individual or individual family the volatility may seem much more of a concern, although even then it is typically a relatively short time before they return to a more acceptable state of affairs than exist during an economic downturn (I speak from experience).

For those living in less developed countries the situation is much more parlous. The Horn of Africa is one location where unpredictability is also within a limited range, but the norm within that range is less than attractive. Famine due to severe weather conditions is much more commonplace than anyone with a conscience would regard as acceptable. When accompanied by war, or internal conflict, the situation on the ground is exacerbated for ordinary families. Warlords and others will accumulate whatever produce exists, making the famine all the worse by excluding most people from access to it.

Such a situation is now current in eastern Africa. Twice we have seen Bob Geldof and others run global charity concerts (Live Aid in 1985 and Live 8 in 2005) to raise funds to stem the tide of poverty in Africa and elsewhere. Despite these huge and laudable efforts, the problems remain. They would appear to be inevitable. Despite the fund-raising and the intellectual efforts of Development Economists, and the goodwill of well-meaning politicians, people continue to die from starvation in Africa. This does not mean that the world should shrug its shoulders and do nothing, or turn a blind eye; rather we need to look at this problem from a different, more radical perspective. That requires some other things which are also afflicted by famine: (i) the will to succeed, (ii) the acceptance of radical, entrepreneurial ideas.

However, the world is a cautious, conservative place, with people everywhere afraid to embrace new ideas and suggestions. Some people, as we have seen, are so fundamental in their beliefs that they would prefer to main and kill rather than even hear new ideas which might possibly come into conflict with their own. To bow to these pressures—the inertia of the status quoⓒ—is to accept what currently is; a form of surrender, which is inimical to human progress. New ideas need to be granted a full hearing, especially where problems exist which have seemed to be intractable for a ling time. Those who decry such inventiveness are themselves modern Luddites who would be happy to see us return to a contemporary dark age. Such people are easy to spot: their favourite word is no; their inability to listen to  or make persuasive argument is their obvious characteristic. Such people give me the blues.

Avoiding death and needing taxis

In the wee small hours of Friday night/Saturday morning we had a fire at our home. Already asleep, we were alerted to the fire by the fire detectors. My wife's presence of mind enabled her to grab our foam fire extinguisher and put out the fire while I got the kids out of their bedrooms to safety. As luck would have it, we got away lightly, with the only major damage being to to hot water and heating system. There is soot all over the upstairs floor of our house, smoke in the walls and carpets, and some flooding in the living room below, but compared to what might have been without smoke detectors doesn't bear too much thinking about.

So now we await the clean-up and repairs. The loss adjuster from the insurance company has been very helpful and reassuring. Currently we are getting quotes to pass on to the insurance company for approval. Having never had to deal with an incident like this before has made it all the more traumatic, and in a sense a leap into the unknown. Rationally, the worst of it for the time being is being unable to have a hot bath or shower, but who faces these things rationally? In our house there has been a return to the 1950s, with kettles of water being boiled for hair washes. A cold shower is unpleasant and not something to be undertaken lightly, if at all. Even James Bond only runs the water cold for the last 30 seconds of a normal shower.

The timing of the fire was not optimal, if such a thing was even possible. But to be without hot water in Summer is better than in Winter. However, my son's bar mitzvah is on the horizon, together with all of the final arrangements which need to be made to ensure a memorable occasion for him. As such we are juggling too many demands on our time. And this in the knowledge that it will be several weeks before we can even think about a return to a normal life. We have guests coming in from overseas for this occasion, as well as a home-based reception. This fire will make the bar mitzvah memorable, but not for the best of reasons. The need to deal with builders, plumbers and the quotes and estimates, means that I will probably be unable to get to the airport and collect my guests next week. I will have to call on the services of taxis (Darren: are you reading this?) to ferry people from Heathrow.

As if that was not enough there is also the need to work and earn a living, and do the "school run" twice each day. There is an American saying that "when life throws you lemons, make lemonade", but everyone knows you need more than lemons to do so. We have been thrown an overload of lemons, but without water and sugar all we can do is drown under them, experiencing their sour, bitter taste. I am sure that in the fullness of time I will look back on this experience with a wry smile, but for now all I can manage is a somewhat-forced sense of perspective: at least no-one was hurt. It could have been so very much worse.

As someone who spends his professional hours lecturing on the risk-return tradeoff (in financial and economic contexts), and thinking about financial risk management I have naturally tended to apply my knowledge to this incident. Consequently I cannot speak highly enough of the importance of smoke detectors and foam fire extinguishers for managing personal risk at home. My family and I owe our lives to these appliances.

Demography and other impostors

I like to think of myself as a family man. I like to spend time with my kids. I try hard to listen to what they have to tell me about their lives, despite having a personal tendency to talk rather than listen. I like my kids; they are nice people. And they are growing up quickly. Despite a two-year age gap between them, they are both on the cusp between being children and being adolescents. I suspect that too many of us adults have forgotten what a difficult time adolescence can be, and end up being quite unsympathetic to this natural transition from childhood towards adulthood, which is the root cause of what was once renowned as "the generation gap".

Much as I love to spend time with my children, I also enjoy the quiet time at home when they are in school. This routine will be shattered on Thursday this week, when both of my kids will be at home. This is because teachers at both of their schools will be on strike, hence the schools will be closed on "health and safety" grounds. At first I was irritated by this break into my sacred time alone, but then I considered the issue much more closely, and understood that this strike has been called because of what can only described as an attack on the pension rights of the teachers. I use the term "attack" not as hyperbole, but because that is what is the government's policy truly is.

A pension is a long-term contract between employee and employer, by which a portion of the employee's wages are deferred in order to provide an income after retirement. The deferred wages (int he form of so-called employee and employer contributions) are placed into a pension fund, which invests the monies in the various financial (and other) markets, hopefully generating returns which will provide a decent level of retirement income (pension). Any changes to a contract must surely be negotiated to an agreed conclusion by both parties; anything else must surely constitute a breach of contract. And, although there may be a logical rationale behind the government's decision to change pensions (raise the retirement age, increase the level of contributions, move from defined benefit to defined contributions), to do so unilaterally seems to me to be both legally questionable and ethically wrong.

My interest in pensions began back in the late 1970s. Between doing my Master's degree and my PhD I spent time as a filing clerk for Sotheby's London office. At that time a number of pension funds were engaged in the purchase of fine art. Despite having little but a layman's knowledge of pensions or pension funds at that time I was bemused by this strategy. One consequence of this was finding myself undertaking a PhD thesis on the investment behaviour of UK pension funds. Back in 1980 I recall vividly reading the report produced by the committee chaired by former Prime Minister, Harold Wilson, on the functioning of the financial system. It was then that my attentions were drawn to what has since become known as the "demographic time bomb", whereby society is ageing. We have seen increasing numbers of pensioners and reduced numbers of people of working age. This is one of the rationales underlying the current government's position on pensions. However, more than thirty years have elapsed since I first learned of this demographic time bomb.

Some would argue that it is unfair to the current (coalition) government to blame them for the current attack on pensions, when so many governments have previously failed to grasp the mettle. However, it is not the issue of pensions reform which I am criticising; rather it is the way in which this has been approached in a dictatorial fashion by the government. In a democracy the government is elected to represent the people, including teachers. When democratic government tries to dictate to the people it is in breach of its mandate, and cannot be surprised when people react strongly in opposition. If the government believes its actions to be correct and appropriate it needs to make the case and convince those who will be affected. There needs to be an attempt at consensus. There has been no such attempt. Thus, although I agree that pension reform is increasingly crucial and that the current system is rapidly approaching a tipping point, I remain firmly in the camp of the striking teachers. I shall look forward to spending Thursday with my offspring, and hope that the strike forces the government to rethink how best to go about reforming pensions, not how to impose it on others.

Young Lions on morphine?

Benjamin Franklin is reputed to have said that the only things in life which were certain are death and taxes. The truth is that the only thing in life which is certain is uncertainty itself. Nowhere can this truth be more self-evident than with the English weather! As I write, in the middle of "flaming June", the weather in London has been increasingly uncertain. A fortnight ago we were being warned of drought conditions. No sooner had that been reported on the news than the skies opened up and we were treated to a downpour of seemingly Biblical proportions. Even on a single day the weather in London has been so changeable that it is impossible to know how to dress on a given morning.

Life is full of uncertainties. None of us know in advance when we shall pass on, nor when we shall be fit and well or ill and infirm. Parents want the best for their children, for them to exceed their own accomplishments, but this too is uncertain. Some people will make provisions for dealing with life's uncertainties, while others will acknowledge the fact of life's uncertainties and try to live for the moment; enjoying where possible what life has to throw at them.

Of course, for most of us there is a balance to be struck. We want to protect against those of life's uncertainties for which such provision is possible, while also trying to enjoy the moment and not anaesthetise the joy out of living. When it is possible to insure against uncertainties, it is because institutions have arisen which can calculate the probability of a given event (such as insurance companies), without being able to guarantee to whom such an event will impact. Economists refer to such situations as being of risk rather than uncertainty. Investing in the stock market is a situation of risk; life expectancy in general is one of risk, but of uncertainty for any given individual.

When it comes to football the distinctions between risk and uncertainty can be equally blurred. The result of any given match is one of uncertainty, while the winners of a football competition over the course of a season is one of risk. Nowhere has this blurred distinction been more evident than in the EURO under-21 competition, hosted in Denmark.

Last night the England U21 team were dismissed from the competition after failing to win any of their three group stage matches. At the start of the competition they had been hailed as one of the favourites, along with Spain. But England's failure to progress mirrored the failings of the senior team in last year's World Cup in South Africa. Given the players at the manager's disposal, their track record playing for their individual clubs in the English Premier League (EPL) and the facilities available, it remains one of life's unanswered questions as to why English sport is so conspicuously unsuccessful in international sports, especially football?

Watching England U21s over the past week or so, the notion that a team is built in the image of its manager seems questionable. As a player, Stuart Pearce was renowned for his lion-hearted spirit, his passion and commitment. His young players this past week failed to manifest such characteristics. While able to defend stoutly, there was a distinct lack of creative flair, with too few goal-scoring chances being carved out. If I had to had to pay to watch these England performances I might have been inclined to ask for my money back! Something appears to happen when good EPL players turn out for the English national team. The usual excuses of a long hard season are trotted out, but somehow these do not apply to foreign players who ply their trade in the EPL. The fault, therefore, must lie with the management team. After all, as the old Russian saying goes: a fish rots from the head. Time to go fishing for something fresh?!

Football and the sacrifice of managers

Karren Brady is well-known as a TV personality via her appearances on "The Apprentice", but is also a renowned businesswoman in the world of football. In March 1993, at the tender age of 23 she became the managing director of Birmingham City Football Club. She managed the company flotation in 1997, and is often seen as being responsible in her off-field capacity for the club's promotion to the Premier League in 2002. In 2009, following the takeover of Birmingham City by Carson Leung, she left and was appointed vice-chairman at West Ham United, when it was taken over by the men who had brought her to Birmingham City: David Sullivan and David Gold. With one week remaining in the Premier League season it was Karren Brady who pointed her finger at manager, Avram Grant, and told him "you're fired!"


Karren Brady grew up immersed in the world of football, as her father, Terry, had been chairman of Swindon Town and a director at Portsmouth. Her success at Birmingham City is renowned. The current short-term failure of West Ham to remain in English top-flight football ranks alongside the failure of England's bid to host the 2018 World Cup. In August 2009 she had been appointed Chairman of the 2018 World Cup bid Advisory Board. However, no-one can be successful in every single one of their endeavours, and men and women who prove to be long-term successes will often point to their failures as a stimulus and a learning experience which helps them gain later success. It may well be that West Ham will prove to be a long-term success under Brady's leadership, but for the present her actions in sacking Avram Grant leave a bitter taste in the mouth.


Success in football, as in other areas of business and life, is a matter of performing at or above the level of expectations. If expectations are set too high then failure will undoubtedly ensue; if set too low then success will be achieved, but it will remain a pyrrhic victory. Avram Grant had been appointed at West Ham to manage the team and prevent relegation, a task in which he clearly failed (for whatever reasons). However, to sack a manager with one final game remaining, a game which would not prevent relegation, seems to be almost pointless. It is not ruthless management, but an exercise in passing the buck with a degree of spinelessness. Surely if Avram Grant had the qualities desired to achieve West Ham's goal ex ante, then those same qualities would be desirable in achieving promotion from the Championship to the Premier League in 2011–2012? If that is not the case then surely Brady got it wrong in appointing Grant in the first instance, and perhaps it is she who should resign? After all, he was appointed manager at West Ham having just managed Portsmouth to relegation from the Premier League!


But football is not like that. Supporters will always require a scapegoat for failure to achieve the expected. Sometimes they will accuse the Board of being responsible for failure, but more often than not it is the manager who will be sacrificed. Avram Grant had previously been sacrificed as manager of Chelsea, when his team there failed to achieve success in the Champions League (they lost the final),  the League Cup (they lost the final), and came second in the Premier League (on the last day of the season). Chelsea had the decency to terminate his contract at the end of the season. However, it should be remembered that he only became manager in September 2007 following the ignominious sacking of José Mourinho. Prior to that Grant had been Chelsea's Director of Football.


Grant's track record suggests that he is a knowledgable and talented football manager, but not necessarily a lucky manager. In their excellent book The 90-Minute Manager: Business Lessons from the Dugout (2002), David Bolchover and Chris Brady list several desirable qualities in a top-flight manager: integrity, passion, ability to relax, analytical skills, hunger to learn, attention to detail, ability to get things done, insatiable appetite for accomplishment and results, self-belief, enthusiasm, people skills, ruthlessness, presence, and luck. As they note, "Great managers need to be lucky." Grant is serially unlucky. Against this we may cite the example of Sir Alex Ferguson, a man who took several seasons in the hot-seat at Manchester United to achieve any form of success. Had the Board listened to the supporters in the early years of his tenancy, Ferguson would have been sacked and never had the opportunity to become the most successful manager in English football, achieving 19 top-flight League titles to-date. Ferguson was lucky to have had the confidence of the Board, who must have felt he would ultimately bring success despite the failures of the early years. Should Sir Alex ever retire his successor will be handed a poisoned chalice, weighed down by the weight of expectation of success of a Manchester United manager.


There are, of course, many, many other examples of how important it is to manage expectations, especially of the supporters, select a manager with the appropriate qualities (as listed above) and stick with him through thick and thin. Boards of Directors need to put in place and maintain a long-term strategic perspective that the team manager is not always in a position to do, with a focus on trying to win the next game! The problem with the sacrifice of managers is that Boards of Directors fail to heed the words of Shakespeare: "The fault, dear Brutus, lies not within our stars, but within ourselves." A lesson that surely extends beyond football to every line of business and individual life!

Football, antisemitism and the Baddiels

In recent weeks the Baddiel brothers have commenced a campaign which aims to rid antisemitism among supporters of football. The campaign has been designed to run parallel to the more general "Kick Racism Out of Football" campaign, which has run with some (albeit limited) success over the past few years. The main thrust of the Baddiel-sponsored campaign has been a short film focusing on the use of the term "Yids" by supporters of Tottenham Hotspur, which they regard as being antisemitic per se, and also as an encouragement of antisemitism. Both of these are arguments which I would refute in the strongest possible terms, my view being based on having been a Spurs' supporter for a little more than a half-century!


Quite naturally, the unveiling of the Baddiel campaign received significant coverage in the foremost Jewish newspaper in the United Kingdom, the Jewish Chronicle (www.theJC.com). Equally naturally points of view have been espoused in the Letters to the Editor section. Recently, the view espoused by the Baddiels was taken up by a supporter from Arsenal, although his awkward attempt at humour based on the age-old Spurs-Arsenal rivalry treated the subject with less gravitas than it deserved. It does not happen frequently, but on this occasion I was moved to respond, and sent my own perspective on the debate to the Jewish Chronicle, which they duly printed in Friday's edition. Unfortunately, the online edition does not include letters, so for those interested yet unable to obtain the Jewish Chronicle, I reproduce my letter below:

The rambling hyperbole of Stephen Ryde (JC, April 29), lack of intellectual rigour and its reactionary conclusion do little to treat the subject of antisemitism with the seriousness it deserves. His argument is all too similar to that which argues that women who wear short skirts are asking to be raped: wrong on every possible level. As for the outlawing of the use of particular words, this has no place in a modern, democratic society where freedom of speech is valued.

I would like to refer Mr Ryde to the learned article "When is a Yid not a Jew?", by John Efron, Koret Professor of Social History at Berkeley University (http://bit.ly/luikAu). The use of the term "Yids" and, more frequently, "Yiddos" began in the late 1970s as a reaction against the antisemitic chanting of other teams, most notably Chelsea, Arsenal and West Ham. It can be seen in exactly the same vein as the use of the term "nigger" by sections of the African-American community. It is a classic case of turning a term of derogation into s badge of honour. This has taken place for so many years, that the term "Yid" has now become commensurate with "Spurs supporter" in football grounds around the country, with many younger supporters having little or no idea of the original defamatory use of the word.

Any campaign to reduce antisemitism is laudable, although as with anything the battles need to be chosen with care. In selecting Spurs supporters and their chanting of "Yids", the Baddiels are on shaky ground. They need to begin their campaign by cleaning up the mess in their own back-yards first: Chelsea continue to sing "Spurs are on their way to Auschwitz" and make gas chamber noises. When Jewish support at Stamford Bridge deals with this issue (instead of joining in, as sometimes happens) then the campaign will be able to claim a degree of progress.

Stephen Ryde is wrong. As a Jewish supporter of Spurs for nigh on a half-century, I shall continue to join in with my fellow supporters chating of "Yids" and "Yiddos" in the full knowledge that this is a reaction against antisemitism, not an encouragement of it.

As a postscript, I support any attempt to diminish hatred of any description, be it racism, antisemitism, gender bias or ageism, but believe that football supporters are not necessarily the right focus, as they mirror the views of society in general. Ultimately, antisemitism is the oldest hatred in the world, a hatred which has been fostered by 2,000 years of propaganda by the Church and, more recently by elements of the Muslim world, often under the thinly-veiled guise of anti-Zionism or anti-Israel. But hatred is hatred, and we can only hope that those who perpetrate it will end up hoist by their own petards. The Baddiels may have the very best of intentions, but those are the paving stones on the road to hell.

The Middle East is on fire (allegedly)

The past month has seen a remarkable turn of events in the world. The people have taken to the streets to protest in countries where such things are usually frowned upon, except when they have been orchestrated by government agencies against some external "enemy". This time, the people have been protesting against internal matters.


While from the outside it seems that these popular uprisings are aimed primarily at removing dictators (however apparently benign) from their entrenched positions of power, this is not necessarily how it all began. The first protests which reached a critical mass were in Tunisia. Although these ultimately achieved the downfall of the President, the original stimulus was a combination of high unemployment (especially among the young) and increasingly high food prices. It is true that even western, high-income countries are suffering from similar economic issues. However, in the west we are much more accustomed to regard these circumstances as impersonal, brought about by global or local 'market forces', and perhaps beyond the ability of government to remedy. Indeed, in some countries government is already regarded as having too much interference in the economy! In countries like Tunisia, this is not the case: government is often a key agent in determining prices, through the use of taxes and/or subsidies, and is therefore readily identified as the source of unemployment and unwelcome price rises.


Once events developed in Tunisia, there has been something of a domino effect, of which the protests in Egypt, Libya and Bahrain have been the most high profile. There have been protests in Iran as well, although the government there has clamped down on them in its usual ruthless manner, and worked hard to prevent news of such events leaking to the outside world. Of course, although it is essentially a Muslim country, Tunisia is not in the Middle East; it is in north Africa, on the coast of the Mediterranean. Only Bahrain, and perhaps Iran can truly be said to lie in the Middle East. But whatever the geographical location, a large number of Muslim countries under dictatorship are finding the ground shifting under their feet.


While Tunisia and Egypt have seen the status quo completely ruptured, there is still a long way to go before full closure occurs, with new (democratic) government institutions in place. Things elsewhere are not yet at such an advanced stage, with Libya looking rent asunder by civil war. Protests in other places, such as Jordan, have been much more mild, seeking reforms of a more minor nature. But whichever way one views the world, there appears to be an increasing thirst for democracy. And this can surely be no surprise. Once the people of a country begin to experience degrees of economic affluence, brought about by economic growth, they will see to also achieve political affluence. This was also the case in eastern Europe (the former Soviet Union) in the late 1980s, and also countries like South Korea. Although the transition may have taken longer, this is also the tale of western Europe and north America. Economic growth leading to greater distribution of political power: democracy in whatever way, shape or form. 


And surely such 'revolutions' will ultimately reach all countries tainted by tyranny? Kim-Jong Il, Ahmedinejad, Qaddafi, and others of your ilk: take care. The world is watching, and waiting. Your downfall is a matter of when, not if.

The beautiful game

Some years ago it became apparent that playing competitive football was no longer an option for me. The body took longer to recover from each match; stretching beforehand was seemingly taking almost as long as the first half, and warming-down was no longer desirable but essential. Of course, all footballers—professional and amateur—face a time when a decision to stop playing has to be taken. Fortunately for me there was an alternative: coaching.


During the 1980s I had lived and worked in the United States. At that time it seems that there were far too few coaches with experience of playing the game. With an English accent, I was approached by players at the College where I was working as a Lecturer, and asked to help out with the men's team. I rapidly discovered that there is a huge difference between playing and coaching. I was fortunate to find a coaching clinic which enabled me to start on the coaching ladder, and acquired a coaching license under the auspices of the United States Soccer Federation (as it was then called).


During my decade or so in the United States I was privileged to coach mens' and womens' college teams, as well as mens' and womens' high school teams. In addition, I also had the opportunity to coach on various soccer camps during the Summer months. However, in many ways the highlight was helping to establish soccer programmes for girls in the western Carolinas. In 1987 I was invited by Briggs Sherwood to help start a girls' programme in the Asheville NC area. We started with between 6 and 12 girls playing soccer on recreational basis, and rapidly expanded. Soon there was a selective "travel" team. By the time I moved back to London in the early 1990s there was a full recreational league for girls in the Asheville-Buncombe area. I understand that this now numbers several thousand players, with full-time administrators and coaches! From little acorns might oaks develop.


When I returned to the UK, I was fortunate to be instrumental in helping start the nascent internet football competition, being the founding coach of the Internet Hotspurs. This was a team drawn from subscribers to the Spurs-List, an online forum for Spurs' supporters. The first ever match played was when we travelled to the midlands to play the Leeds team ("internet Lard"), and shortly thereafter we played in the first ever WorldNet: the internet version of the World Cup! The Internet Hotspurs also played in a high profile match against the Internet Gooners, a game played at Clarence Park, St. Albans before a crowd of about a hundred, and covered by .Net magazine.


Currently, I have the honour to coach my son's team, HMH U13 B. One of twenty teams organised by the HMH club, this sees me return very much to my roots in coaching. Back in the late 1970s I was a member of the north London Victoria Boys' and Girls' Club, and I was approached by Nick Sonnenfield  to coach a team of U10s. which I did until moving to the USA in 1982. HMH is headed by the same Nick Sonnenfield! As I write I had expected to be coaching away in St. Albans against Harvesters South, but a late phone call informed me that the match was called off due to a frozen, unplayable pitch. Hopefully, my text message to all of the parents of my players got through in time to save them from making an unnecessary journey up the A1.


For me coaching initially was a way to stay in contact with the beautiful game when my playing days were numbered. Something of a vicarious pleasure. However, since then the rewards have become much more manifest. The great relationships a coach makes with his players is something which transcends time and space. The young teenage girls I coached back in Asheville in the 1980s are now grown women with children of their own, many of whom continue to enjoy the beautiful game. Facebook (for example) makes it easy to stay in touch with these wonderful people, and see how the chain continues with new, additional links down the generations. The values of a team sport with room for amazing feats of individualism was well understood by the Victorians, the original founders and codifiers of the game. While the upper echelons of the professional game have lost their way, as have some of the key broadcast personalities, the game remains beautiful because its destiny, as was its history, lies in the hands of the ordinary people who play and coach, often on a purely voluntary basis.

New Year (2011) musings

With the Xmas and New Year's festivities now over, the UK is slowly returning to its pre-holidays routine. Early this morning, while the sun had yet to rise, I saw children and young people once again in their school uniforms waiting for their school buses, looking glassy eyed in their early morning mental haze. Adults waited for public transport and drove their cars, presumably to work, equally as glassy eyed. The passage from holiday mode to work mode is a slow drift, and it may be a week or more before the leisurely pace of the holiday season gives way to the more usual hectic pace of London life.


The British coalition government has visited upon us its latest offerings to diminish the public debt: rises in VAT and an increase in fuel duties. The idea of looking forward to a better year than the one that has just finished is already taking a battering, and once the haze lifts the British will (suddenly?) realise how much worse off they will be this year than in 2010. Higher taxes, reduced public services, and a slew of supposedly radical reforms (typically ill-thought out and introduced without full and proper consideration) will increase the woe of those of us in employment while doing little (less?) for those out of work. And there is every possibility that the numbers of those out of work will increase significantly in 2011. Naturally, the current government will let us know in no uncertain terms that this is all the result of the profligacy of their predecessors, as governments have done since time immemorial. I suppose there is some degree of reassurance in the constancy of blame-apportionment by British politicians!


So what can we expect differently this year than last? The most immediate difference is that this time last year we were awaiting a UK general election. Unless something quite unforeseen occurs the current government are unlikely to resign and call another election. But their policies will be a sure signpost as to what is to come. For the first time in a generation or two student activism is on the rise. Similarly, we have seen an increased level of trades union opposition to government cuts. Is there any likelihood that this will cause the government to change their mind and alter their policies? Hardly! So, while we are unlikely to see any return to the heady days of industrial and political conflict of the late 1970s, we are already seeing a strong move away from the consensus politics which seem to have been much more the norm in the past 25 years or so. And with the Labour party having selected the wring Miliband brother as its leader, we can expect little by way of effective political opposition.


Africa continues to remain much the same: AIDS continues to run rampant, wars and conflicts remain in place, dictators remain unchallenged, and poverty remains the norm for ordinary, blameless millions of African people. The Middle East remains a tinderbox, where war could break out at any time, especially with the West unwilling (or unable) to rein in the nuclear ambitions of a hostile Iran. It remains increasingly unlikely that the Arab nations will see Israel as anything but a regional state: it has the wrong religion, too much of a European cultural basis, it remains a democracy, and is too convenient as an excuse for all of the flaws in those Arab countries. Any criticism of Arab countries, their politics, or their way of life is always countered with arguments about "the occupation". Were the really a concern for the ordinary Palestinians this could have been dealt with decades ago; but for now "the Palestinian issue" continues to be a good way to distract Arabs away from the internal problems in their own countries, something which has been used by every known dictator for centuries. And, as we might expect a withdrawal of Allied troops from Iraq and Afghanistan in the next year or so, it will be interesting to see if they move to a more normal state of affairs or implode if there is a vacuum!


And what of Europe? The EU has been under economic pressure, with some commentators wondering if the single European currency would survive. And why should it not? There have been worse economic crises faced by countries that that facing us now, and little changes as a result. After all, as the old saying goes: it's the rich what gets the pleasure, and the poor what gets the blame. Have you seen any corrupt politicians or bankers who may have played fast and loose with other people's money down at your local unemployment centre? Of course not. The problem is that politicians often feel they have to be seen to be making laws to restrict risk-taking activities, whether or not that will actually help things in the longer run or not. Most laws enacted nowadays have a tendency to inflict further restrictions on freedom, particularly of the ordinary person. I suppose the main argument in favour of the current UK government is that they have abolished the notion of introducing ID cards!


There is not a great deal to say about the USA: Americans say enough about very little of substance. The US is a very narrow democracy, with little difference between the two main parties to warrant comment. For all of his apparent flaws the President has made strides in areas where previously no progress was able to be made: health in particular. Similarly, everyone is talking about China, but what remains to be said which hasn't been said before? Surely as the rest of the high-income world comes out of recession, China will find itself having to deal with higher global prices and facing consequent inflation at home. Latin America remains relatively stable, with little to note except Brasil's first female president. Congratulations, Dilma!


But I have saved the best for last (almost): David Beckham. It is said that he wishes to come to the English Premier League (EPL) during the US soccer close season. This 35 year old footballing icon could bring his high profile status to an English team, and work on his own fitness. He would be a boon to the younger players of whichever team he joins, as his attitude and talent would rub off (or there would be a positive externality, as Economists call it!). It would raise even further the overseas profile of the EPL, which is already the most-watched League in the world. We all wait with bated breath to see if he will be given permission by his current employers: the L A Galaxy.


Finally, congratulations to the England cricket team on retaining the Ashes. It is always good to get one over on one's fiercest opponents. And for an England cricket team to beat the Aussies so decisively enables me, in common with so many other Englishmen and women, to engage in some very pleasant schadenfreude. May I take this opportunity to wish you all a happy and healthy 2011 in which some of your dreams come true.