Category Archives: Finance

October 25, 2014 · 19:08

Price Waterfall Blooper

I am sad to say, I am sorry to report
we have not seen any fraud of this sort
not a win or a gain, but just sadness and pain
are the man plainly vain, they do not travel by train
it will not go to court, yet the profits fall short

as my profits progress to the basement below
as executives go, with no exit fee show
we will wonder awhile, what results they proclaim
as we now still decide, should we name, should we shame
where is the pee double you sea and its dough

So, yes, is this the beginning of arts, the limericks and the consequences of non-accountability?

You see, there is no doubt in my mind that the initial investigation is only the beginning for both Tesco and PwC. Whatever we may think, we can be certain that if Dave Lewis had NOT rung the bell, the mess would be a lot larger then it is at present. I think we should also ring the bell of honour for the whistle blower, because without it Christmas would have been the grimmest of experiences in the UK.

Let’s take a look to the last two days, when Deloitte got its report out (to some extent) as reported (at http://www.theguardian.com/business/2014/oct/23/tesco-profits-black-hole-bigger), we see a few things that do not add up.

  1. “He dismissed the idea that fraud may have been involved in the accounting blunder: “Nobody gained financially as a consequence of the overstatement of performance.”“, is that so? You see, there are a few issues that we have; I will step over one of them because I prefer to tackle that part a little further down.
  2. Laurie McIlwee (former CFO) as well as Mike Iddon require closer scrutiny. Mike was a group finance director, planning, treasury and tax. When we see tax, we see a person who will dig, trying to find any cent that is deductible, as a good FD should be, and in 13 years at Tesco, he had not seen anything? Seems rather clumsy doesn’t it? The fact that the accounting hole is a little bigger (15 million is not much when you say it fast), also came with the knowledge from Deloitte that the hole was there for a longer while, so basically, the inflated 265 million, means an inflated payment of taxation, how is that ever a good idea?
  3. So consider Tesco, the size and scope of it. They lose a CFO and a FD, and all along NO ONE at Tesco, I state again, NO ONE seemed to offer to pick up the baton for those months? Even if it was at no extra pay and only for 3-4 months, 99% of the financial industry would be chomping at the bit to pick up the baton, so that they can add this to their resume, it gets even better. It is a win won for whomever picks it up, because if that person does well, then the value of that person goes up by a lot and his/her future, whether within or not with Tesco would be a few steps on the large corporate ladder, even with nothing to gain it ends up being a win/win.

Let’s just face it, I am nowhere near next in line to take command of the 591 Signals Unit at Digby, but if I get the chance because the current commander was on the list to become Air vice-marshal, I would get there running, even if I was still in my pyjamas and was holding only a toothbrush. No matter how well my performance would be, if I made it I would be eligible for a nice challenge at GCHQ, a seriously cool way to skip half a dozen steps on that ladder, now consider that NO ONE had these levels of ambition at Tesco? I truly believe that beside the whistle blower a few more had a clear picture that taking that seat from within would turn out to be nothing less than poisoning their career.

  1. “He dismissed the idea that fraud may have been involved in the accounting blunder: “Nobody gained financially as a consequence of the overstatement of performance.”“, now we get to the issue that I have had since day 1.
  2. Consider that PwC had (a reported by the Guardian in an earlier blog) last year; PwC was paid £10.4m by Tesco for its auditing services and a further £3.6m for other consultancy work (a newer version at http://www.theguardian.com/commentisfree/2014/oct/23/guardian-view-tesco-auditing-debacle-pwc-systemic-shambles). This article now shows the following quote: “At the very least, this is a very cosy and lucrative relationship“, which slightly debunks the statement of Dave Lewis via Deloitte regarding ‘Nobody gained financially’; it depends on ‘how’ we regard ‘gain’, when the alternative is losing revenue, remaining at status quo is clearly a gain.
  3. So as we see these two numbers, let’s do a little math, let’s say an auditor makes £65,000 a year (a little less usually), so we now see that the annual fee gives us 153 auditors for a year and an additional 46 auditors for the consultancy for a year, that gives us 199 people going over the books, checking it all. No one saw anything? Now, the reality is not exactly like this, but considering that PwC is one of the big 4, we now have a clear case for some serious questions for 25% of all the large audited companies in the UK, how much taxation was not collected, how many large bonuses and incomes were honoured in such a symbiotic incestuous relationship? No wonder George Osborne has such a hard time, the deck seems to be seriously stacked against him.
  4. There is one more thought that comes to mind, but this one is, as I will happily admit, based on shallow grounds. This was all found by Deloitte in a little over a month, mainly because they knew WHERE to look. But, it is entirely plausible that the whistle-blower just knew about that one thing, what else is there and what has not been found yet?

This is important for two reasons. The first is that it then debunks the statement from Lewis, likely via Deloitte who said ‘He dismissed the idea that fraud may have been involved’, I am not convinced! It took Deloitte to find the obvious over the period of a month. We can consider that the fact brought by a whistle-blower gives weight to intently hiding, if not than this person would have stepped forward internally and the old crowd would have solved it, that did not happen. It is not unlikely that those involved hoped for a quick brush under the carpet, this circus was unlikely anything they ever desired. What was signed off on, by the equivalent of 199 auditors remains a serious issue.

This part we can see in the Guardian quote “The making up of the profits figures was not in a report signed off by PwC. That happened in August – three months after PwC had given the supermarket chain’s figures a clean bill of health. Even then, it noted that there was something potentially funny with the numbers, and expressly warned about “the risk of manipulation” – but allowed them to pass anyway“, so something potentially funny does not warrant digging? Let’s not forget they had the equivalent of 199 people for the year, so plenty of digging resources. If we add the following “It is one of the primary ways in which investors, business partners and regulators can tell the true state of the company they are dealing with“, so not only is there a link to possible fraud, the implied length of this gives reason to suspect intentional misdirection towards investors, which makes the news releases all over the papers on class actions against Tesco a plausible worry for some time to come.

It becomes a much finer point of debate when we consider the following abstract ‘Misreporting in our model covers all actions, whether legal or illegal, that enable managers of firms with low value to make statements that mimic those made by firms with high value. We show that even managers who cannot sell their shares in the short-term might misreport in order to improve the terms under which their company would be able to raise capital for new projects or acquisitions‘ (at http://www.law.harvard.edu/faculty/bebchuk/pdfs/2003.Bebchuk-Bargill.Misreporting.pdf). It comes from a paper by Oren Bar-Gill and Lucian Bebchuk, published at Harvard in 2003.

Now we add what they wrote on page 21 “3.4 Creating Opportunities to Misreport, at T=1 managers decide how much to invest in creating opportunities to misreport earnings. The equilibrium level of this investment decision is characterized in the following proposition“. after that it becomes increasingly mathematical, but behold, the initial text ‘whether legal or illegal’, so if the old Tesco gang focussed on ‘legal’, was that the reason they needed to pay an additional 3 million in consultancy (a clear and admitted assumption on my side), yet is that really too weird a thought? Let’s face it PwC signed off on books containing an additional quarter of a billion, which took some time to create.

I know that incestuous is all about keeping it in the family, but the fact that this could possible all be legal is just a little too hard to swallow.

Could it be that both Corporate Law and Taxation Law within the Commonwealth are in dire need of an overhaul? Some might say that it could be an idea to do this before Christmas, to them I say “Bah! Humbug!“, Monday the 5th of January 2015 will be soon enough. It will give Lord Blackwell, Lord Goodhart, Baroness Goudie and Lord Haskel something to look forward to as some might be enjoying a large roast with potatoes, Yorkshire pudding and thick gravy. The Rt Hon Lord Millett has done more than his share in his long career and his Lordship, as right honourably retired can enjoy a second helping of Christmas plum pudding with custard (unless his lordship prefers the challenge of making corporations a little more accountable then the currently seem to be). I would, as blogger Lawlordtobe be happy to lend a helping hand, but I never studied economy or taxation laws, so I would only get in the way, yet I remain available for assistance if need be. I do reckon that the members of the House of Lords who are members of the Joint Committee on Tax Law Rewrite Bills should consider their calendars, especially if the investigation turns out that the Financial Reporting Council (FRC) will be unable to press any criminal charges, to me and likely to all it should be clear that such levels of orchestration must be addressed!

 

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October 24, 2014 · 21:04

Where the Wild Geese go!

It is so nice to read about how the EU migration is a fact that is here to stay. The subtitle containing ‘56% support in Britain for remaining in union‘ gives a pause for thought, yet what pause should there be and who should be pausing (at http://www.theguardian.com/world/2014/oct/23/juncker-tells-cameron-cant-destroy-eu-migration-rules)?

Party 1, Jean-Claude Juncker on free movement of people and how this is not to be destroyed! Well, Mr Junker, that sounds like a nice option, but when the population of Poland, Bulgaria and Romania moves into the UK, the UK ends up having a massive problem, which is what it boils down to. When we see “three million people from Bulgaria and Romania living in other European Union member states“, we do have an issue to deal with. Then we see the quote “more than 60 MPs are backing a campaign to extend the restrictions for a further five years, saying the British economy has not sufficiently recovered from the 2008 recession to cope with the change and that it will put pressure on public services and reduce job opportunities for British workers” (at http://www.bbc.com/news/uk-politics-25549715), these two facts seem to be ignored by many parties. We see some papers on the let them in side and some opposing that view, yet none of them give us a clear number of who is coming from where and how many from all over are arriving in the UK. Let’s not forget that London is still the place to be (I know, because I still miss it). What the Guardian article only casually reports is the fact that the 56% comes from an Ipsos Mori poll. Now for the good stuff, this comes from 1002 respondents, whilst the UK counts 64 million. So which person signed off on that little part? Perhaps some should consider that anything like this requires a few thousand responses, like, more then at least 5000, not 1002!

Party 2, Alisdair McIntosh, director of Business for New Europe. Many seem to see the benefit of staying within the EU, well nobody is debating that, but you see, Mr McIntosh is speaking for ‘his’ lobby and those people need a level of non-accountability, people in movement are in many ways interesting for exploitation, this has been seen in the Netherlands where immigrants hoping for a new future, willing to work hard are exploited in most inhumane ways. In addition there are also the views on how the influx of immigrants also came with a large influx of smaller crimes (theft and pick-pocketing). The good and the bad is a given fact, yet business is above such accountability, not stating that they are accountable! So yes, Alisdair McIntosh likes the borders to remain open.

Party 3, José Manuel Barroso stated “What I can tell you is that any kind of arbitrary cap seems to be not in conformity with Europeans laws. For us it is very important – the principle of non-discrimination“, but is that really correct? (at http://www.theguardian.com/uk-news/2014/oct/19/jose-manuel-barroso-david-cameron-eu-migration), “the number of Portuguese looking to settle in Britain was up by almost ten thousand people last year, climbing to 30,120 official arrivals who were recorded at British national insurance offices“, which comes form http://theportugalnews.com/news/portuguese-workers-flood-britain/30837. So as we see, the Portuguese unemployment rates are going down, but how many from leaving Portugal and where else are they going to? So, we see that José Manuel Barroso has two hats on, one is still all about Portugal, which we cannot fault him for, but the information is unclear as many ‘hide’ behind percentages, when we see the mentioning of numbers the face changes, like 560 Britons willing to stay in the EU, but what do the other 63,999,440 want? You see, 1002 weighted is in no way a real usable number, not when it is compared to the size of a nation.

These clear thoughts give us two dangers

  1. What is ACTUALLY the best for the United Kingdom?
  2. These simple realities only enable the growth of UKIP (which is not really good for the UK).

Some numbers consider the NHS the most important issue, yet consider what the influx does to an already stumbling NHS, when this falls over, there will not be any support remaining, with all the consequences of those trying to stay healthy when the doctor is not available and those who need help will only get it for a fee, which gives us a clear view on the dangers for the future. David Cameron needs to stop the massive influx that the current infrastructure is less and less able to deal with.

A weakness that gets pressed forward by the UKIP engine, which seems to be driving the people in an incorrect direction. In the end, I feel that there is no way that UKIP is a force for good, but the other parties have been stumbling all over the field trying to statistically trivialise and ignore the issues as reports are posted left right and centre. I truly hope that Scotland was not an empty lesson for the parties at large.

If we are not careful about the game some play and many observe, we will see that soon after the stumbling becomes irrecoverable we will see the people leave for other shores, then what will happen? Because when the system collapses we will soon see that the ‘The Best Exotic Marigold Hotel’ was not just an imagination, consider the cost of living in India and what will happen when a million retirees take their money and move to sunny shores with living expenses at 18% of what it is now. So, what else are some ignoring? Let’s not forget that these people will also cause the brain drain that will hamper growth down the track. Those who ‘rely’ on cheap youthful labour will soon learn that there is a downside to that. In addition, a million retirees spending THEIR money out of the UK is also a coffer drain the treasurer has not fully considered, or the consequence of such a shift.

Well, personally I see an issue that some seem to ignore, but it is the most dangerous one that many face. You see, several politicians, especially in the labour side, will get these scientists to make economic predictions, after which the analysts will get a go to agree with. Yet, all is not clear here, the politician (the absolute worst of referees) will decide, what information the two parties will receive and as such we get skewed results, moreover, there will not be an open debate and we see reusing of certain ‘weighted’ metrics, which will make too many people walk too close to the edge and as such the damage will be done and the politician will start to emotionally scream and hover BEHIND the ‘miscommunication’ sign. The approach of ‘if the result does not fit, change the initial question‘. There is only one problem, the damage will be lasting and debilitating and whilst Mr Politician has a nice dry income with zero risk to him/her self.

All this comes to fruition when we take a look at the NHS issues. You only have to look at the BBC News and look for NHS articles on the site and you are treated to a myriad of voices all with their own street in the passing of the voice. If we go back to 2013, whether it is just NHS, code 111 or GP, there are all kinds of thoughts, each with their own percentage of validity, but in what regard?

When we look at the Article by Hugh Pym, where he talks about punch packing documents (at http://www.bbc.com/news/health-29731646), we see the following: “He is signalling a big shift in the way the NHS in England is managed and organised, in some ways the most radical since the service was born in 1948“, “There should, in his view, be no more top-down reorganisations, but instead the development of new models to suit local needs” and “For Westminster and the political parties, there is one key message – you have to find more money. Blanket demands for cash at a time of government austerity were never going to cut much ice. But Mr Stevens, with the support of the health regulator Monitor, has done some careful financial modelling“.

Of course it is about the money as the NHS costs more than just two bundles of cash, but when we consider terms like ‘careful financial monitoring‘ and ‘no more top-down reorganisations‘ we see a jump in the width with a financial picture that is nowhere close to be estimated. In addition, if we regard my article ‘Concerning the Commonwealth!‘ on June 19th 2014, where we see several options, take especially my quote ‘the Labour IT systems of the NHS have proven that ten billion pound invoice, and yet doing nothing is another non-option‘ to heart! So as we change an NHS model, how much more will it cost and how is IT not ready to deal with that part?

Yet, is Simon Stevens wrong? No! In the foundations of it all he is correct, the NHS needs a massive overhaul, but here we see that part of the politician, the economist and the analyst. It takes but a whiff of ‘miscommunication’ and the UK is down a few more billion, whilst it is dealing with 1000 billion pound overdraft. So, here we see the reason to change the NHS, but not in drastic ways, yet in ways where we see the successful dealings with basic errors which will cost the NHS hundreds of millions a year. the expression ‘he that cannot keep a penny shall never have many‘, comes to mind, we need to make massive changes, but we need to close holes too, If we can save first, we get change to implement iterated evolution, one that does not cost the taxpayer. The problem for Simon Stevens is that this is not sexy and that is not good for (his) image. This is why I have been in favour of a stronger evolution involving Indian generic medicines, it will not help GlaxoSmithKline and its 14 members of the board, but it will make a massive impact on the 12 billion pound bill the NHS is getting and the kickback that is called quality of life for tens of millions of patients. We can never get around loads of medications, but if we get a cheaper generic option for an increasing number of them, the NHS might end up with a much lower bill, yet that part is often not shown in clarity, I wonder why?

 

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October 18, 2014 · 09:43

As we grow expertise

An interesting story broke on the Guardian this morning, the title ‘Senior NSA official moonlighting for private cybersecurity firm‘ should catch our eyes in many ways, but for most of you it will seem wrong. The story is about an official named Patrick Dowd and how he, as an NSA official also worked in the late hours for IronNet Cybersecurity, yet never crossing the ethical boundaries.

You see, many will shout scream and all others of noises, but the plain and simple truth is that this happens ALL THE TIME. If you think that this is not true, then look at accountancy firms, look at Google and look at a host of other corporations. In this day and age, to get ahead you need to double dip your brain power.

Of course when doing this, knowledge, more precisely data cannot go from one to the other, yet the knowledge and the knowhow is there, which is the IP of the person holding the brain (aka the man with the thought out plan). Former General Alexander is heading a firm making well over 10 million a year (I will send him my resume shortly).

The article written by Spencer Ackerman in Washington (at http://www.theguardian.com/us-news/2014/oct/17/senior-nsa-official-moonlighting-private-cybersecurity-firm) gives the right nuance and is a good read. More important, between the lines he seems to be implying the question that follows from ““I just felt that his leaving the government was the wrong thing for NSA and our nation,” Alexander told Reuters“, he is of course correct, can we allow in certain areas to suffer a brain drain. Keith Alexanders pragmatic approach, if properly used earlier could have saved the intelligence hundreds of millions in the timespan 2003-2007; no one seems to be looking at that part. We seem to allow ‘dodgy’ accountants to sign off on unchecked quarters of billions, but when a soldier find alternative usage of his skills in non-criminal ways, we tend to shine the limelight on them. For this I only need to show the Reuters quote “(Reuters) – The new boss of Tesco (TSCO.L) has told staff he expects to be able to give a “clear and accurate indication” of the impact of a 250 million pound accounting mistake when the grocer reports delayed first-half results next week“, whilst trying to Google Pricewaterhouse Coopers reveals not one, I say again not one link that the press has taken one look at that part of the Tesco equation. So we can conclude at present (from the evidence as seen published) that for now, the backbone of the press is nothing more than a shoddy paperback!

Back to the Age of Cyber Alexander the Great, as we see the Huffington post, we see the quote “The FSR itself is a veritable tilt-a-whirl of revolving doors, with a steadily increasing lobbying budget on behalf of its corporate bankers and insurers and a roster of high-placed former government officials. For example, the FSR employs the firm of Barnett, Sivon and Natter to advocate its causes“, The Financial Services Roundtable (FSR) seems to be dealing with its ‘own’ mess by getting the bigger boys on the block involved. Now, whether the use of mess is qualified is depending on the view of where the responsibility of pro-active protection and support should be at. (at http://www.huffingtonpost.com/bea-edwards/the-nsas-keith-alexander_b_5515718.html), but there is no doubt in my mind, that those who would like to be (people like me), who have advanced data skills will have to clear the field to those with catered skills form the NSA, that is just a plain and at times, a little uncomfortable truth. If we look at the CCNA OSI layer as a comparison, then I would cover the layer two and higher, like most of us data boers (South African giggle), yet people like Patrick Dowd have layer one in addition. We all know layer one (physical layer), yet we do not actively interact with it other than a facilitation level. It is there that the difference of a million a month is easily spotted. We can all do it with time, but we were never able to work on that plain, that is where NSA bang for the buck resides. And let us be clear, this is a massive bang for all of the monthly bucks, because if you had not figured it out. RFID blockers are there for a reason, it is not a fab and it is not an overly worrying thing. The people (a very small group at the tip of the pyramid) would gain knowledge of a person beyond your imagination when they scan you as you pass by. The problem is not that you get scanned at times; it is where the flaws start on how thousands lose small amounts every day and no one is ever the wiser. Bloomberg reported in 2011 that hackers took a billion a year, that leak must be dealt with and this is just the small cash drains, when we consider other avenues, the loss of 1 billion might actually be the tip of another pyramid and as such the FSR will needed another game plan.

Keith Alexander saw this niche that was ignored for far too long and with the help of Patrick Dowd and others like him they are looking at changing the game and drastically reducing the losses. In a game of billions, 20 million would be a steal at twice the price. In the age of cutting down, a market hole was found and IronNet Cybersecurity is filling that niche nicely. Consider that the Securities Industry and Financial Markets Association (SIFMA), the Consumer Bankers Association and the Financial Services Roundtable (FSR) are only the beginning. It’s such a nice view where we see a former General turned data visionary could become the founder of a billion dollar company. This is not a boast, when we see that outside of the US the digital theft age is a lot more than just a simple 9 figure number, the exact amount is not known, we know of the fact that it is, but not how much, but when it is hushed up to this intent, we can safely assume it is to some extent worryingly high, so as such IronNet Cybersecurity is not the first, but it is likely to grow faster and larger then all others for simple reason of skills and access to knowledge, two elements the others do not tend to have to that degree on these fields.

What will be next? That is the question which is not answered with the final quote, but it shows a much larger field then many considered “Compounding the potential financial conflicts at the NSA, Buzzfeed reported that the home of chief of its Signals Intelligence Directorate, Teresa Shea, has a signals-intelligence consulting firm operating out of it. The firm is run by her husband James, who also works for a signals-intelligence firm that Buzzfeed said appears to do business with the NSA; and Teresa Shea runs an “office and electronics” business that lists a Beechcraft plane among its assets” If you think it has no bearing then think again. As the requirements for data retention grows as stated in more than one nation, the clear limits to skills and people, which have been noted by me and several others to some extend over several months, where do you think these telecom companies will get the consultants and knowledge from?

These places refused to grow expertise when they had the chance, pushing the need forward again and again, now these consultants are pretty much all that is left and training in house staff will get a lot more expensive soon enough, good business is where you find it, and it seems that Keith Alexander and Teresa Shea saw that companies were painting themselves into a corner, they only had to wait until the first one realised that they had no place left to go.

The consequence came to them as easy as eating pancakes, the cherry they got for free!

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October 17, 2014 · 10:37

About them copyrights

It’s all good and fine to get through the day, to read on how it is all ‘sooo’ virtual, so available. Yet, in the end, is this ‘the truth’? Consider when we see the article, again the Guardian (at http://www.theguardian.com/technology/2014/oct/15/taylor-swift-uk-itunes-out-of-the-woods), so we could say how it sucks to be Taylor Swift at this point. You see, when you use the ‘excuse’ “due to a new strategy my record label is working on in the UK“, we can safely assume that this is about something else. Likely commission, possibly ‘better’ kickbacks, or better margins, yet overall the fans will suffer and they are now looking at other means like uploaded records to get their music.

I wrote about such events in ‘The real issue here!‘ where I stated “So, almost 20% end up buying the discs (implying 80% will not)“, I had written about such issues in gaming, in movies and as Taylor Swift will soon learn in music too.

By playing for tougher deals, you end up losing a lot. And in this case, as I see it Team Swift only have themselves to blame. Just like the gamers of day old were ignored by the US at large, music fans will not tolerate delays on such events. That is the drawback of the digital age. When you offer it NOW, you better offer it to all. So when we see the quote “Out of the Woods is likely to be available for at least some of Swift’s fans in the UK soon, then. But many will have turned to other means to hear the track: for example, there are already a number of uploads of its audio to YouTube“, you better believe that fans will find another avenue. In the end, her real fans will buy it one way or the other, yet Taylor lost out on a vibe that could have gotten her a few hundred thousand, perhaps even a million additional downloads. She will miss out on that one this time.

So is this fair to Taylor? Does that matter? When you decide on a strategy that leaves one out, that one will either find an alternative or will move on to something else. Such is life. In gaming, when this happened in the 80’s, people had no choice but to copy or wait for outrageous prices. So, those with copied games got to play it, those who had no contacts ended up waiting in excess of one year. The digital age now has given us the option to get it ANYWHERE fast, usually at a base price and often as fast as day one. In the age where product outstrips demand by a lot, the digital age becomes a different field. An opportunity missed is a chance lost, not delayed. Music is exactly that to a massive group (the Taylor Swift fans will always buy), but that leaves a large group missed and it loses out to potential new fans, but is that a given?

No it is not, yet we see that the digital wave tends to attract the curious, those who get one song and then learn that the music is interesting to seek out more. Through Audio Galaxy in 2000-2001, I got to know the Corrs, Bond, and a few others. Now, I have almost all their albums, which I bought in the record store, it started with one simple song. That market relies on the new waves of songs, not anticipated waiting.

So, is this me changing my view on copyright? Not entirely, when a movie comes out, one should buy it. I have no issues with buying a movie or watching it in the cinema, so when I decide to buy a game, movie or album, when it is released, I expect it to be released. When we get an alleged form of discrimination where the consumer is discriminated against, should such injustice not be fought? I am not talking about a simple delay like we tend to see it in games, where movies tend to be out in the US one moment, and a few weeks later the rest sees it. That part I have no real issue with. Yet, in the case of Star Wars Episode 1, where the movie was released in May in many places, it would take 5 months until it was released in the Netherlands, for a movie like that, such a delay was just unheard of and as such an illegal download of the movie was circulating within a few days. Many would still see it on the big screen, but not all. Evidence of such events have been seen for decades, so why would the team of Taylor Swift be this ‘uninformed’ (ignorant might be a better word) in thinking that the fans would accept it, and beyond that the rest would just ‘wait’ for a girl named Taylor Swift?

Some might, most will not.

And if you want to consider alternatives, then think of the time, the line and the timeline. Our world is changing, it is less about the product that is convenient for us, it is more and more when it becomes convenient for them, not us (cinema and TV marketing has been all about that for far too long). We could read it as a form of maximised profit, yet overall it is about marketable momentum. That is seen as we see at present that ‘analysts’ already are stating that they predict ‘Star Wars: Episode 7’ will make $1.2 Billion at the Global Box Office. The movie is nowhere near release and these predictions are already made. As we see that this movie is coming out in 2015 as a summer release, so much can go wrong! And we are already been ‘tailored’ to fit a 6 week gap.

People are still in a financial depressed era. Even though it is now starting to pick up, the longevity of our economy is currently not a given, with the Tesco issues still  in play in a hardy way, there is a real issue in the UK, even though there unemployment is now down to 6%, yet overall the cost of living is still rising faster than most of the incomes correct for, so as such, income is still not in the level that we see where people en mass (especially those with family) can just go to the cinema. The last movie to really make it was Avatar in 2009; it was a unique wave not unlike Titanic, they are still the first two movies in the all-time box office records. So, at present SW7 is already ‘anticipated’ as one of the top 6 movies of all time. That, whilst the first Avengers movie, making 1.5 billion, took the cake in 2012 and the anticipation of the second movie is extremely high on many minds. Beyond that there will be Fantastic Four, Pan (with Hugh Jackman) and at least three additional movies are on the list for the summer of 2015. Now consider that until the economy is truly repaired families might have the option to see two of these movies. What are the chances that they choose Star Wars? There is no denying that Star Wars will be very high on the list of many, but then so are the Avengers. That is if nothing else happens, like new games, new records and shifting time lines.

So as we see the escalations of ‘needs’ and ‘options’, we will see a change on how people perceive copyright and translate this into the ‘right to copy’, welcome to the new economy of those who cannot afford it!

So as we see what team Swift thought would be and what Team analyst expects it to be. I would state that the truth is nowhere in the middle, and that the truth is revolving around two points of flexible perception, whilst a placement of either is not a given either positive or negative, but what will be, is not linearly in the middle of what would be and that what is expected to be, that what is, is not a given ever in marketable approaches!

But what ‘might be’, requires us to take another look at what we see that is currently done to us. As we are all reduced to ‘product to purchase’ and no longer regarded as ‘consumers to buy’, we see a changing market of expected anticipation.

Is this a negative evolution of marketable industries?

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October 13, 2014 · 21:05

A matter of Jurisprudence

Another morning, another moment we see another round of iterated news. Just now I noticed another article placed 5 hours ago (5 hours after my previous blog) on how 2 more senior directors are moving out. The first one “company secretary Jonathan Lloyd, who advises the board on legal and governance issues, had resigned and was serving out his notice until March 2015“, the second one “Ken Hanna, chairman of Tesco’s audit committee, is also set to step aside as a non-executive director as the company’s chairman reshuffles his management team“. The news was in more than just one source. The quote “‘His resignation is not connected to the current investigation. It’s his own choice; he’s got a new job with another listed company,’ a Tesco spokesman said“. All this might be true, but let us be fair, if it was not HIS choice, would we hear this from either Jonathan Lloyd or Tesco?

This got me looking into another area. I got the impulse after seeing a PDF (at http://www.chadbourne.com/files/upload/dandoliability.pdf).

In there we see the following under the title ‘General Duties of Directors under the Act‘, “To promote the success of the company for the benefit of its members having consideration to: (a) the likely consequences of any decision in the long term” as well as what we see at 3.5 under Common Law Duties, where we see “At common law, a director is obliged to exercise a reasonable degree of skill and care in carrying out his/her duties. The standard of care involves both an objective and subjective element”. In other words, the director is required to exercise that degree of skill which might be expected from someone having both: ‘his own particular knowledge and experience‘ as well as ‘the general knowledge and experience which might be expected of a person carrying out the same functions as those carried out by that particular director‘.

For those who kept their eyes on my blog articles on Tesco, are you seeing the issues that are now in my mind?

I talked about negligence on several moments, I iterated parts of these and wondered about several questions, especially the fact that the press has been lacking in digging into these matters. Now a simple Google search led me to the PDF by Chadbourne & Parke. The Guardian could have had decent insight a mere 23 minutes by bus away (a little over 3 miles), so why does it take a non-journalist from the other side of the planet to connect the dots?

The PDF is a mere information piece, perhaps a little advertisement and it states that you needs proper legal advice, yet, not one paper has been digging into that pile have they? I did not get my law degree in the UK, yet I do get the gist of it, more important, the deeper I dig, the clearer the view seems to become that others are ignoring it. So, are these all just imaginations of conspiracy theory by me the blogger? This is clearly a question the reader might ask themselves. Yet, am I accusing of issues being covered up? I am to some degree, yet at the foundation I am questioning the information I read and I wonder why others, those who should be asking and digging on ‘issues’ are not doing that.

Yet the jewel was in 5.1, where we see “To a large extent, these mainly relate to duties of internal management, e.g. the keeping of accounting records; the preparation of annual accounts; the filing of documents with the Registrar of Companies and the keeping of the statutory books of the company. Failure to perform these duties or to ensure that they are performed may result in fines both for the company and the defaulting directors. Directors may also be subject to imprisonment“, so when we see this does it not seem interesting on how quickly some are leaving the field for a ‘better’ option?

This all brought me to Re D’Jan of London Ltd [1994] 1 BCLC 561. It is a UK Law case and quite the one at that became the main precedent which is now codified under s174 of the Companies Act 2006. “He did not show reasonable diligence when he signed the form. He was therefore in breach of his duty to the company“, how does this relate?

Is it about filling in a form? No, but when we regard s214(4) of the Insolvency Act 1986, we see the same approach as we see in a mere PDF by Chadbourne at 5.1, there is a visible need for “general knowledge, skill and experience“, but how do we see the term general knowledge? You see, the Tesco issues are stated in regards to ‘specific knowledge’, as we see the changes as they had been pushed through before the Dave Lewis change. This all gets me back to Rebecca Shelley at Tesco. First of all, there is no accusation here, there is no indication that she did anything wrong. So why does she pop up on my radar, because she is a woman? No! Tesco has several, some even in higher places then Rebecca. Let’s take a look that I saw on the Birchwood Knight site (at http://www.birchwoodknight.co.uk/news-article/tesco-hires-rebecca-shelley-for-group-director-of-corporate-affairs-role-151).

Here we see the following quote “As part of her corporate affairs role, Rebecca will be responsible for government and media relations, investor relations, internal communications and corporate social responsibility (the legal affairs and other elements of Lucy Neville-Rolfe’s brief are being split into another role)“, am I reading too much into this?

Consider the (former) flying parts of Tesco. When we see the need and the issues involving legal matters, was the revamping of the role as Rebecca Shelley received it a niche part of what should have been? This is where I see ‘general knowledge’ versus ‘specific knowledge’. It is my personal view that Rebecca’s role should be a lot more senior, especially in light of the revelations we see in the papers, am I that wrong? If she had the legal sides to her role, how much earlier might we have seen the overstatement, or the Gulfstream issue for that matter? These issues are in relevance towards the place I am trying to see, places the press does not seem to be looking, the place that readers as well as half a million Tesco employees should be aware of. I will go one step further, as I see the issues in play, as I see the matters of non-transparencies as well as an indicated lack of information towards the shareholders gives reasoning that they might want to evolve the role of Rebecca Shelley to the board. Especially in light of the massive changes Tesco is likely to face.

Yet, legally speaking, there are additional questions when we look at http://www.ibe.org.uk/userassets/briefings/ibe_briefing_31_tax_avoidance_as_an_ethical_issue_for_business.pdf, was the Gulfstream a form of tax avoidance? None of this is illegal, but it comes with ethical questions and as such I wonder how much the shareholders knew or should know. If tax avoidance is avoiding social obligation and as such it could damage public trust and reputation, does the link now make sense? The argument that shareholders want maximised value, which means a minimised taxable footprint, so how are choices made? More important why am I the only one who seems to be asking the questions that have relevance and am I alone digging into this?

One final step regarding the Chadbourne paper, at 6.15 we see “that directors of companies must make certain disclosure statements in the directors’ reports. This applies not only to information which the officer actually knew of but also information he would have known about if he had conducted a reasonable enquiry. However, the provision goes further and requires the director to confirm that, so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware. A director has a duty to exercise reasonable care, skill and diligence when preparing the directors’ report. In determining a director’s liability under the Act, the statutory test is that a director will commit an offence if he knew the statement was false or was reckless as to whether it was false and failed to take reasonable steps to prevent the report from being approved“, which just raises additional questions. Yet, consider the following in light of all I wrote and quoted about the issues on generic and specific tasks, the issues on “which the officer actually knew of but also information he would have known about if he had conducted a reasonable enquiry” becomes an issue when the board is so niched that reasonable inquiry is no longer an option. It would in my mind place the role of Rebecca Shelley at the centre of it all, yet with the legal part removed we would see a hindrance there too. So as you look at the events that the press wrote about, the parts I wrote about and the questions I have been asking. I mentioned in the early beginning of Tesco regarding orchestration in the article ‘The orchestration has engaged‘, yet I thought it was external, is it possible it had been internal and the involved parties are clearing the field really fast at this point?

But there is one more issue, especially if I want to remain true to the title ‘A matter of Jurisprudence’, s370 Enforcement of directors’ liabilities by shareholder action (as seen in the Companies Act 2006), we see under s370(1)(a) “in the case of a liability of a director of a company to that company, by proceedings brought under this section in the name of the company by an authorised group of its members;” there are a few other issues which give question on how enforceable this would be, yet consider the issues we have seen, what more should be looked at? Consider chapter 6 of the same act ‘Voidness of provisions protecting auditors from liability’, now consider “for exempting an auditor of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company occurring in the course of the audit of accounts”, now we get Pricewaterhouse Coopers in the mix. There is no indication at present that PwC is at fault in any way, yet when we see the issue regarding small change (read 250 million), when we regard that this inflation was not just straight through, but as I see it (a clear assumption) the fact that it required a whistle-blower, indicates that the inflation was decently buried. Was it buried well enough for PwC? That is the question. The implied extra 3 million in consultancy might have been valid, considering the size of Tesco, so where is the negligence? There might not be any at all, but consider that the Tesco executives took PwC for a ride and it was not found and it was signed off on, when THAT becomes visible, what will happen to the value of PwC, if a mere 250 million can topple a 70 billion pound company, what would be the impact on PwC for not finding it?

Perhaps that is a conspiracy theory, evolving as the facts seem to fit (or fitting the facts as they seemingly evolve), but are they? Even I question that what I find, but I will ask questions none the less, something the press has not been doing in any way, shape or form.

 

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October 12, 2014 · 23:49

How the press became redundant

I wonder whether the press corps, or the press corpse we might call them, are aware of what they are working on. Did they consider the events? It is such an interesting wave when we see the consequences, yet those who write about them don’t seem to be too fussed about the reality of the facts. So shall we take a look?

Fact: ‘He abandoned this post to become CEO of Tesco effective of 1 September, 2014‘ (at http://online.wsj.com/articles/lewis-to-become-tesco-chief-executive-a-month-early-1409312947)

Fact: ‘Tesco reveals it overstated first-half results by £250m‘ (at http://www.ft.com/cms/s/0/67fb8db4-421e-11e4-9818-00144feabdc0.html#axzz3FvJ9DhJP)

There was a fallout, as we would expect, yet to what extent are we confronted with facts and to what extent are we introduced to the real events.

From October 3rd onwards, we have seen news in regards to the gulfstream that was apparently ordered in 2013 (at http://www.bbc.com/news/business-29488777), now let’s take a look at the quotes “Tesco has confirmed it has taken delivery of a new private jet worth £30m, a week after major errors were discovered in the company’s accounts” and “Tesco paid for the jet 20 months ago and is required to take delivery”. How interesting this news (not really), in addition we see the news from the Guardian (at http://www.theguardian.com/business/2014/oct/03/tesco-corporate-jet-gulfstream-supermarket), with the quote “Tesco’s new chief executive, Dave Lewis, moved quickly to defuse a situation likely to anger investors who have seen the value of their shareholdings halve this year. No Tesco executives will ever board the jet, as he has put it up for sale – along with the rest of the Tesco fleet, which includes a Hawker 800 and two Cessna Citations” and “To charter a G550 for a 12-hour flight would cost nearly £67,000 – more than twice the average UK salary of £26,000” and finally “In a further irony Tesco has only retrenched from overseas markets in recent years. It has shut down its US chain Fresh & Easy, pulled out of Japan and scaled back its ambitions in China”.

So how about the following questions:

  1. Why was the board not grilled initially?
  2. Why do we not see the press going after the ‘departed’ managers?
  3. So, why are the shareholders up in arms? Were they not informed of these purchases?

That entire issue becomes odd when we consider the fact that there was retrenching moving away from the international scene and no one asked questions? Was the purchase not approved 20 months ago? Was it not reported? No one seems to ask or investigate those questions, it was ordered 20 months ago, was there no down payment?

Personal note: Can I offer a deal on one citation? I can raise $20.00 (pretty much all I have left)

‘Tesco Workers Want The New CEO To Know About The Unpaid Overtime They’re Working‘ (at http://www.businessinsider.com.au/tesco-unpaid-overtime-2014-9)

Let’s take a look at the quotes “Six of them mentioned, without being prompted on the issue, that they or their staffers were required to work unpaid overtime“, so when we consider gov.uk “Employers don’t have to pay workers for overtime. However, employees’ average pay for the total hours worked mustn’t fall below the National Minimum Wage“, was that taken into consideration? What is stated in the contracts on working overtime? Those are issues that are a given and have been a known quantity, so why does this pop up now? Let’s not forget the quote “Lewis, who started his new job earlier this month“, from an article on September 8th, the man has had the function for only one week. So is this article by Jim Edwards at the Business Insider anything but a hack job? It is even more interesting that the name Philip Clarke does not come up once in the entire article, who was in charge whilst this mess was growing, were the overtime issues properly investigated? 6 out of 500.000, I think that the business insider has other issues to explain. This article did not just pop up, a mere week after Dave Lewis got to be in charge, questions should be asked! (especially at the desk of Business Insider)

This takes us to the Guardian article (at http://www.theguardian.com/business/nils-pratley-on-finance/2014/jun/27/mark-carney-interest-rates-tesco-barclays), the quote “Half the City is playing the game of fantasy chief executive, and some former Tesco directors have been muttering darkly about Clarke’s supposed strategic errors and how the company’s woes shouldn’t be dumped on former boss Sir Terry Leahy” gives us the issue that there are several problems in the works, when we consider “This boils down to a simple question: do investors believe Tesco should cut its prices deeply, take the fight to Aldi and Lidl, and accept that profit margins of 5% are no longer viable?” gives us the question that this is all a year after the gulfstream was ordered, why was the order not cancelled at this point? The article has an interesting paragraph: “Do Tesco shareholders really want to sanction a price war, which would mean accepting a lower share price, at least in the short-term? Most, one suspects, are not convinced by Clarke’s strategy but still hope he might be proved correct. Another profits warning would force them to get off the fence. If it doesn’t happen, Clarke ought to be safe. But a warning after three years of heavy capital investment would surely force a strategic rethink“, what was decided by the shareholders? This article came on June 28th 2014, 8 weeks before Dave Lewis took the reins, so what happened in these 8 weeks? More important, it seems that no criminal investigation into Philip Clarke has been reported up to now. Before we even consider whether there are criminal charges yes or no, we see overstatements by a quarter of a billion, we see a 50 million dollar plane delivery and there are questions of the process of reporting, towards the shareholders, within the corporate structure, an oversight of transparencies and a stronger indications that the board of directors is either inapt or uninformed, which seems to point towards strong levels of negligence, possibly criminal ones. The press seems uninformed and unable to inform, so why the half-baked (as I see it) levels of the active press?

If we consider the Tesco PLC Annual General Meeting 2014 (at http://www.tescoplc.com/assets/files/cms/Notice_of_Tesco_PLC_Annual_General_Meeting_2014.pdf), we see at the first part: “1. To receive the audited accounts for the financial year ended 22 February 2014, together with the strategic report, directors’ report and auditors’ report on those accounts. The directors are required to present the annual accounts, strategic report, directors’ report and the auditors’ report on the accounts to the meeting“, that sounds nice, but in a 12 page document, which I admit is just a notice of the meeting, we see several references and an overall ‘dividend’ of as stated “To declare the final dividend of 10.13 pence per Ordinary Share recommended by the directors“, was that including or excluding the 250 million balloon act? If including, what is the dividend after that? So what was in play to begin with?

In addition in another Guardian article (at http://www.theguardian.com/business/2014/jun/27/uk-growth-figures-awaited-as-tesco-faces-agm-business-live) on June 28th we see “Shareholders may also quiz CEO Philip Clarke about the 310 separate, undeveloped sites across the UK which Tesco owns, but hasn’t developed. Enough to build 15,000 new homes, as a Guardian investigation has found“, really? So what about that gulfstream prices at 20% of the inflated amount, where is that one in the books? So this opens another door for Dave Lewis. What if these sites get converted to houses and as such people can get a Tesco mortgage? It is long term, it offers a stable future and it gives you a consumer base as you open a small Tesco on one of the plots. Tesco must change, yet to what extent?

Yet one other article from June 30th showed “Clarke repeatedly refused to bow to shareholder pressure to set a target date for when its US business Fresh & Easy – which has been in the red since it launched in 2007 – would finally begin to turn a profit“, so after 7 years there is a profit? Why was there no stronger investigation in regards to these parts? Why was there no real tally of the Tesco corporation in the Guardian and pretty much every other paper?

Now we see the following (at http://www.theguardian.com/business/2014/oct/10/tesco-sell-financial-footing-blinkbox-dobbies-dunnhumby), written last Saturday by Zoe Wood. The title is kind of catchy ‘Passed their use-by date? The businesses Tesco could sell‘, oui oui Zoe!

“Analysts think Lewis needs to find £2bn-£3bn, either from the pockets of big City investors or selling some of the family silver – or both – if it is to have a sure financial footing from which to recover from this year’s collapse in profits and the accounting scandal that has exposed a £250m black hole in expected first half profits“. First of all, these analysts are not really worth the paper they write on. This all went by them as there suddenly was a whistle blower, as such, before that none of them wondered on how there was too much (like a quarter of a Billion) in the report and until the blower of the whistle, they kept pretty quiet. I feel at times that the Monday morning quarterback is a better judge then these analytical experts. Then there is “But some retail experts think it strayed too far when it started investing in trendy restaurant chains, tablet computers and video streaming services“, is that so? It seems that the tablet sold like hot cakes and was a good alternative to the iPad and its competitors. As for selling its assets the first being ‘Dunnhumby’ “The accounts for that year show a pre-tax profit of £67.6m on sales of £165m – a year when it paid Tesco a £140m dividend. There’s no doubt Dunnhumby’s services are valuable but getting someone to part with £2bn might be a stretch“, this might be true on several counts, yet are these dividends part of the 1.1 billion profits? If not, then we are not told the whole thing, if yes, then losing 10% of the profit is not a good thing, more imp0ortant, who owns the data, who owns the parks and who is in charge? Data of this magnitude has multiple applications and additional value. Yes Lewis might want to focus on retail, but getting a shave on road to the guillotine is also questionable. Some say, if that is all that is left, then the shave is extremely important. I state, data is treasure, you only need to combine it with the right databases and you open up an entirely new branch from the initial base, which would all be Tesco’s if it is currently all Tesco’s. The important part is shown in the part of Tesco Air, the quote “Kansas Transportation’s accounts show Tesco spent £29m flying executives around the world in private planes between 2005 and 2012, but with fewer countries to visit the company’s airfare bill will probably come down anyway“, so we see on average four million a year. How many did fly? Can anyone explain how negligent acts are not investigated? Is there a case for criminal investigations? How many executives and where to? If we consider London – Tokyo business class and it costs Business Class at £1,290, it means they either flew 3100 executive, or one executive for 8 years EVERY DAY. Is anyone seeing the writing on the airplane yet? You see, in my old job we has a VC, a Sandhurst graduate. He had one massive rule (actually he had 12 of them), the rule was in place since 1992 at least. ‘Rule 4, Don’t give our profits to the airlines‘, that rule made perfect sense 12 years before the financial collapse; it should have been a biblical rule from 2004 onwards with every big corporation.

You might think that getting rid of several executives would solve it, but consider the amounts and the level of actions from long before Dave Lewis stepped in, why was this not sanitised on a massive scale al lot earlier, which gets me back to the actual AGM’s, what was discussed, what was presented and where are these documents? It feels so right to quote baby Herman from ‘Who framed Roger Rabbit‘, “this whole case smells like yesterday’s diapers!”

I can understand that the press was to some extent unaware, yet no one dug into this, why is all this managed by Kansas Transportation, were they in the AGM documents, with every small fact I get loads of additional questions, questions that I did not see anywhere in the press, so what else did they miss? Seeing it mentioned now by Zoe Wood does not count in my books, this should have been on the front page a lot longer before this.

Yet, most of the issues here we see that they ask questions of the CEO Dave Lewis, which makes sense as he is Mr Big Boss, yet the other members are not chased for answers. Why not? It seems that these people were there when massive issues were bungled. The article only has one issue that bothers me, it is not with the writer, or how she wrote it, it is an excellent piece, yet this part “Tesco is thought to be soliciting offers for Blinkbox, which was set up by former Channel 4 and Vodafone executives to create a competitor to Amazon’s LoveFilm and Netflix. If a buyer cannot be found the heavily loss making streaming service could just be closed down. “The inherent value of Blinkbox is its relationships with content providers,” says Ken Olisa, chairman of technology merchant bank Restoration Partners. “It’s an example where content is king.”” troubles me. ‘If a buyer cannot be found the heavily loss making streaming service could just be closed down‘, so why not let it close down? Why pay for the bungling of others? When we consider the part ‘The inherent value of Blinkbox is its relationships with content providers‘, so if there is enough content, there should not be heavily losses. Yes, it all depends on customers, yet content draws in customers. Is the content of good value? There is more when I look at the website. If it is so clued in, why are Nextgen consoles not there, why is the Tesco tablet not mentioned there? Seems to me that either this is not updated, especially as the Nextgen consoles were here in 2013, it seems to me that if you want a growing interest, being the first in Nextgen seems to be a high priority.

There is more, yet when we consider the issues in play, like Tesco Mobile, I see opportunities ignored, the fact that the chips are down seems to be a massive push for the siblings of Tesco to put them into high gear. Perhaps this is done, which would be fair, but the press is not noticing any of that, which makes me wonder whether things are not happening, or whether the press seems to be looking at issues wearing very specific glasses. I honestly cannot tell which, yet considering the Sony Mobile debacle, we see options for Tesco to swoop in and grab some revenue (as Sony lost 2.4 billion), there are more avenues, yet I wonder whether I should state them now, or should I wait and see what else the press at large is missing over the coming week.

Should be more fun to wait, I reckon!

P.s. Consider the AGM PDF, how come PwC is nowhere to be found in press mentions (if they are there then only in the most shallow of mentions).

 

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October 11, 2014 · 12:02

Intentionally not that bright?

On average, why do you not give your $2 (or £1) to the junk sitting at the entrance to the underground? Why are you hesitant to give the same to the drunk half passed out on the street? This is not a question of morale, or on the idea that you might have a ‘Samaritan’ bone in your body. This is purely human nature, we all do ‘good’ things at times, we give to the red cross, the Salvo’s, yet when we know that the money will go into health endangering acts, like money so the junk can buy more drugs, how do we feel then?

I tend to not give any!

I do my share, the daffodil, the heart foundation, starlight, legacy; the list goes on for a while. I do not give a boatload, but I definitely spend dollars on good causes. These causes make sense and I feel that there is a moral obligation to do things for those less fortunate than me. Yet, knowing a junk will buy more drugs stops me from giving, and yes there are no exceptions. I do not think my way of thinking is out there, many follow my lead. So why do I read ‘Poor nations ‘pushed into new debt crisis’‘ (at http://www.theguardian.com/business/2014/oct/10/poor-nations-debt-crisis-developing-countries), how moronic (read: overly simplified silly) is the act of giving loans to a group that cannot control a budget? When we see “Jubilee Debt Campaign says as many as two-thirds of 43 developing countries it analysed are at risk over next decade” as well as “Coinciding with the World Bank’s annual meeting in Washington, the anti-poverty campaigners accuse the international lender and other public bodies of “leading the lending boom” to poor countries without checking how repaying debts will divert resources from cutting poverty“. I would change that in how can we make international lender accountable for their own bad choices?

Not unlike Wonga ruling (at http://www.theguardian.com/money/2014/oct/03/payday-lenders-repay-loans-wonga), these nations should get those loans expunged and the international lenders will just lose their money. They will of course disagree, but the entire loan issue is getting massively out of hand and those enabling them get paid no matter what. This needs to stop.

Sarah-Jayne Clifton, director of the Jubilee Debt Campaign, makes a good case, yet overall she is not willing to far enough on one side and is treading where she should not on the other side. Let me explain this. At the end, the quote is “As such, the campaigners are urging the UK government to push for policies that support developing countries in increasing their tax revenues by clamping down on tax avoidance and evasion“.

No, no, no, no, no! That is not a good idea!

Pushing for policies tends to be a slippery slope (even though the approach is not that bad), in addition, the issue with developing countries and their tax push is only one side, which is the wrong side. These developing countries need to take a hard look on what they are spending these loans on and WHO they are enabling in the first place.

Let’s take a look at a few quotes from the past years and see how they fit in: “Ana Olivera took office on Friday promising to streamline the overweight administration of Uruguay’s capital“. Seems like a good approach. It must sting the Americans to no end that the elected official is a communist. OK, Ana Olivera is only mayor of Montevideo, but that village contains well over 50% of the population of that entire nation, which gives the mayor loads of political power. Uruguay is sometimes called the Netherlands of Latin America, because of its social approach, yet Uruguay is almost 5 times the size of the Netherlands and a mere ferry ride away from Buenos Aires (in case you want to have some cosmopolitan fun). There is method to my madness and here it comes. When we see the news in the International Business Times (at http://www.ibtimes.com/uruguays-economy-will-struggle-unemployment-inflation-it-will-grow-4-percent-2014-1540214), an article from last January where we see that some nations can get a decent grip on their debts, although inflation remains a worry for now. Bloomberg had some additional issues (at http://www.bloomberg.com/news/2014-02-19/uruguay-s-growth-pushing-inflation-above-target-bergara-says.html), “Uruguay, a nation of 3.3 million people wedged between South America’s two largest economies, has since become less dependent on trade with Argentina“, it gives rise to worry about inflation, yet it seems that they are staying on top of it for now.

This links back to the other ‘poor’ nations. These players seem to be given an unofficial charter of bad financial management. If it were just one or two issues, no! When we see the report that two thirds is in the high risk zone of getting a new debt crises, even though most of them got their debts written off, we can clearly see the proverbial pattern of junkies. This of course makes for the analogy that it turns the international lender as a debt dealer at best and as a debt pusher at worst. So, here we see my part of disagreeing with Sarah-Jayne Clifton. We need to put into place clear policies on how loans are to be allowed in the first place. How these nations are currently held to account (and accountable)! If we see a structural failing, then we have a duty to deal with that weakness and deal with the implied ‘pain’ from such irresponsible actions. Yet, governments and ‘overseers’ of these lending institutions seem not to be willing to do just that, we can assume we know the reason, but that is just listening to gossip ;-).

However, as I go for the expression of being artistic, there is this story about being black and that story is played by a pot and a kettle. How can we push for responsible, budgeted governing when the big players involved seem to be unable to do just that (USA, United Kingdom and Australia, but to name a few). Is it truly conspiracy theory inclined to claim that governments are over enabling banks and financial institutions? I am very willing to accept that I am wrong here, but the numbers all speak into my favour (towards my train of thought), so what is the link?

Consider the impact of Neoliberalism. Consider how the term changed usage and to a certain effect the value and application from the 1930’s, the 1980’s and it seems that the concept is changing again. In the 30’s it came from a desire to avoid repetitive economic failures that were visible up to the early 1930s, this resulted in the gesture of blame towards economic policy of ‘classical’ liberalism. Then later on it had shifted in meaning from a moderate form of liberalism to the radical and privately held transactions between parties, set in a ‘free’ (read: unaccountable) environment, free from intrusive government restrictions, tariffs, and subsidised capitalist set of ideas. Is it not interesting how this version as we see it now, is all about what it was with added non taxability and non-accountability? It is a new form of Neoliberalism with a twist that is all about enabling the wealth driven and the wealth begotten, yet in that view neo liberalism is not just a ‘new’ kind of liberalism, it is not just based on ‘old’ values of civil rights, freedom of the press, freedom of religion, and free trade. It is enabling non-accountability, non-taxation and even non-prosecutable to a certain extent. So the freedom they have been given are evolving into a total form of freedom where they obscure, device and decide, whilst the people get saddled with the bill of their appointed exploitation.

How is that liberal in any way, shape or form?

There is none more part we can look at. It comes from the paper ‘Neoliberalism and the Global Financial Crisis’ by Sharon Beder (at http://www.uow.edu.au/~sharonb/GFC.html).

The paper has a very fitting part where the topic headline reads ‘Financial Market Coercion‘ and we see “Whilst the IMF and the World Bank enforced the Washington Consensus on poorer countries in desperate need of capital, other more affluent countries were forced into adopting the same formula by the world’s financial markets. Their vulnerability to these markets was facilitated by financial deregulation“. This is what we see in action. Additional we see: “Financial deregulation was demanded by business interests, particularly large financial firms and transnational corporations that wanted to be free to move their money around. The economic argument for financial deregulation, supplied by free market think tanks and economic advisors, was that the free and unregulated movement of capital is more efficient, because capital can move to where it gets the best returns (Helleiner 1996, 194, Bell 1997, 103-4).”

Yet in that part, it does not state the one issue that is massively in play for governments on a global level. This is read in the part “free and unregulated movement of capital is more efficient, because capital can move to where it gets the best returns“, but what is does not state, which it should “free and unregulated movement of capital is more efficient, because capital can move to where it gets the best returns, absolvent of taxation and financial duties“. Now we get back to these ‘poor’ nations. Yes, they are getting pushed into new debt crises, as the facilitating business branches are all about getting money out and not paying for taxation which was enabled by neoliberalism (their altered version of) as I see it.

Is it not an interesting part that we now see the scary view that a Uruguayan communist shows more social responsibility then the ‘free west’ has shown in the last decade?

As I stated it before, when you make banks and big business the facilitator for the future, you will see that their only future you end up with is their own selfish needs. This is why the push for policies by Sarah-Jayne Clifton worried me; she might end up giving the keys to that group of people that should never have access to the keys in the first place, not if a nation wants to do anything for its people. Is there a better solution? It seems that either we go the Uruguayan way and deal with inflation dangers, yet the other way is equally drenched in risks and dangers. The first order is to set up the right policies that keep large corporations tax accountable. They might ‘threaten’ to walk away and to go to Paris or something like that, yet a nation has a multi-million consumers market. If a firm cannot do business, in the end, they stop from being a business and someone else steps in. We need to stop the greed that these investors represent. I am however at a loss to give a clear answer of what will actually work. There are too many variables and not enough people ready to stand up for that what must be decided upon, so we stay in an impasse, a status quo that had stopped being just that years ago, we just do not see clearly how much we lose every day, so we continue the status quo as is.

 

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October 10, 2014 · 09:54

Billion dollar blame

Some do it quick, some do it with conviction, some take a life time and some don’t experience it at all. You might want to guess on what naughtiness I am talking about. It is simple negative profit in a firm. Some seem clear, some are to be expected and some are just plain ignorant.

We could rephrase them as the alphabet, like A is for Airline that’s lost in the queue; B is for banks, who lost more than a few. But then, that nursery rhyme would get boring real quick. The issue is not Tesco, not as we read in Bloomberg: ‘Bank of America Lost $2.7 Billion in a Maze of Accounting‘, it is simple overreaching. First the car industry, now the mobile industry is getting hammered. It would be fine to just blame Apple, who does have a stake in this, but in the end the true culprit is what I call ‘lack of vision‘.

Sony is downgrading its profits to far below zero. It is projecting a loss of 2,140,000,000 at the end of the current financial year. So we are talking about a loss so big, I personally believe is that those ‘idea-illogicals’ are still with their heads in the pre-recession era, they keep on believing that the old ways still work. Guess what! That time is gone, the financial institutions and banks changed that game forever.

The electronics empire initially forecast a $466 million net loss by the end of the current financial year, but has now informed investors that the projected loss has been revised to $2.14 billion. That is the budget for a small nation, so how is Sony still around? Well, that is not about that part of the equation, but it is an interesting question to consider for the future. The biggest issue is with their mobiles and we should wonder how they are currently surviving. I have nothing against Sony mobiles, I have had Nokia mobiles, I have Sony mobiles and mobiles from Ericsson and currently I use a Motorola. The entire mobile market is plummeting, Apple is doing fine, but overall they are likely to see a peaking of profits too.

Why?

Well, like those in the car industry, the people behind them are just not too clued in. They listen to ‘experts’, ‘analysts’ and from there they think that they comprehend their customers. They get market research, get 1000-2000 responses, weigh the hell out of the data and they consider that they have the knowledge.

Guess what, it does not work that way!

True investigation takes more, takes longer and takes actual preparation. Some half-baked set-up, which is quickly designed on Monday, live on Tuesday, data collected up to Thursday and reporting on Friday can work for some parts to get a general idea, but in the end, you will not get the ACTUAL wisdom you need. And guess what, it is not just Sony doing this; there are a few other larger players. Apple, Alcatel, BenQ, HTC, Motorola, Nokia, Samsung, Siemens and Sony Ericsson et all. All of them have several models; most of them are not that cheap.

To this I add two facts. The first one is the economy. It has been 10 years when the 2004 crash came, that hit many people, then the 2008 crash that turned a massive amount of people over the brink of poverty. In that decade the consumer lost close to 21% of purchasing powers. In that decade, the bulk of all people lost a job, or was retrenched at least once, was forced to live on a frozen income, whilst prices of food and housing kept rising and many are not dealing with their debt, so that part is also hanging round their necks as an anchor. The consumer markets ignored that part and now they see the fallout, a fallout that could have been clear to them for at least 3 years, so the writing is not just on the wall, it is a massive neon billboard that was ignored by those who should not have done this (at http://www.cnet.com/au/news/sony-forecasts-2-1-billion-loss-this-year-due-to-its-smartphone-business/)

There is additional ‘evidence’, which is seen here in the quote “The Company blamed the ‘competitive environment of the mobile business.’ Sony has been hammered by competition and an inability to find distributors in key markets such as the US“, I consider that to be a statement of falsehood. Why?

Well, that is always the real question. Consider the list I gave earlier. Siemens has lost a large share, Ericsson lost it as it united with Sony (the company in question), Alcatel was never the largest party in this and neither is Siemens. Huawei is relatively new and several smaller ones do not make the list any more (like NEC), so overall Sony should have consolidated its visibility, but it did not and neither did Nokia. Apple, Samsung and HTC grew, yet overall Sony should not have lost THAT amount, which means that there is more. I blame the over flooding and iterative consumer model as one reason, such a model cannot be sustained if you cannot grow the customer base and that part is currently diminishing and will keep on diminishing for another 2 years. We can no longer afford a new mobile or car every year, in all honesty, we never could, but that part is mainly the result from the pushed idea of ‘ego’ and peer pressure.

The second quote that gives the ‘frying pan’ and ‘the fire’ expression is: “While its Xperia Z3 flagship is making its way into the US through T-Mobile“, many consumers have had enough of being held over a barrel by telecom providers, the ‘new’ mobile is less and less an incentive to hold on to a solution, that side only works for business customers and they too are shopping in the margins. The final quote is “companies such as Google and Microsoft are laying out plans to broaden their reach into the emerging markets with more affordable smartphones“, that group is now targeting the ACTUAL consumers that are available. Huawei had an advantage there, but they are quickly losing that advantage as they emulate Samsung and HTC more and more.

You see, in this day and age, mobile makers have been pressing the ‘exclusivity’ option just a little too long and now the towers break down. You do not have to believe it, but not unlike the car industry, we do not need 7 models with 22 configurations. That image is created by advertisers, finding people telling you that ‘choice’ is all about ‘individuality’ whilst they try to sell that same package to millions; it is a fake concept as I see it. Yes, we want some choice, but the consumer driven industry took that way over the top. That same issue we have seen in mobiles for some time now and the bigger players, coming with half a dozen models are now finding that they are selling ‘hot’ cakes from a fridge in a place where there is no electricity. So why the ridiculous amounts of ‘add-ons’?

Apple avoided most of the issues by having one phone in 3-4 options, where memory was the choice. We do not need 8-12 models, having one phone, which does most, would suffice. Then we get the issue with price, smaller models cost some, or need a ‘contract’, in my eyes it is an interaction of pimping and harlotry for customers, but who is who is not clear to the consumer. Consider that many do not have $800 for a phone, yes we get options for cheaper, but many providers offer a lot less at that point, whilst a generic cheaper phone would be the solution to many, brands are ego pushing the more expensive models at any given opportunity. Although Huawei seemed to have nailed the market, they seem to slowly start making the same error the others are making. Consider that Huawei offered a 4G phone for less than half the price (unlocked and free of contract) than many other providers, so why would we pay twice the price?

Let’s not forget that many providers are no longer delivering a reliable mobile. If it has android than it is likely that the phone is forcing Google search down our throats, whilst forcing people to store all data on a Google account, so that they can copy the data. Apparently there is a way to switch that off, but the result is implied to be so disgustingly customer unfriendly, that we are starting to wonder whether criminal charges are in order. Now, my Motorola suddenly got ‘enhanced’ buttons at the bottom, where it seems that there is a software overlaid button that FORCES me to Google search. How was that MY choice?

So, in the age of data, the market will soon belong to the mobile maker that will respect the customer and BY DEFAULT, let the person choose what they want to do with their data, photos and other smart phone parts. This is all linked, because where confidence dwindles, people are less likely to choose a smart phone and more likely to go back to the old days of the Nokia 1100 (with silver LCD screen, offering voice and SMS only, oh and it avoided bank security for a little while).

It is my firm believe that if big boys like Sony, Nokia and others want to turn their market around, they will need to take time to ACTUALLY learn their customers’ needs and not force corporate choice as customer wishes down the throats of these consumers. For example, instead of 19 Nokia Lumia models make 4 with one extra landscape option. If you only need 5 models, you can simplify the process, down production costs, distribution complications and get a better return. It is just a crazy thought, but what do I know. I thought that the Lumia was gorgeous, but I am not paying $935 for a phone, not in this age of theft and pickpockets, especially as phone insurances are getting less and less affordable. Sony should consider that same idea. Do you think Apple was lazy? 2 phone models, each with three memory options, which means two models each with three memory chip options. NO! Apple foresaw the complicated BS that others face and as such they have more than a small corner in the market. This is odd as the main component for a phone is its battery and Sony has always had superior battery technology, so Sony should have been the number one choice, but alas, that is not the case, so why do we see a contender with a superior key part run a market at minus 2000 million? Beats me, but someone is clearly asleep at the wheel.

Of course, I admit that I am oversimplifying the entire issue, but am I so wrong? I do not think so. I will admit that I missed a few issues in this, but as Sony is at minus a lot and others have a dwindling market, I feel that I am onto something. I am also certain that people have had enough of data collection and these mobile players to use their consumers as off the books revenue piggy banks, the first one to change the wheel on that process might end up owning the market. For those who would ‘ignore’ that path, remember that no matter how ‘valuable’ that data seems to be, once the customers walk away, you end up without data and without people using your product. Sony has the option to bounce back, but that window of opportunity is small and quickly getting smaller as Google and Microsoft are tapping into their own worlds. Sony might have not have that many options left and they forgot the one lesson Miyamoto Musashi instilled upon them almost 450 years ago: “If you do not control the enemy, the enemy will control you”, they forgot this lesson as well as the fact that ego is as much an enemy as an actual opponent, especially as ego is not regarded as an enemy until it strikes after which it gets named Hinan!

 

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October 5, 2014 · 22:41

The cost of doing Business

It is the guardian again, not in anything specific; however generically speaking there is an issue that requires visibility.

Let’s take a look at the following headlines: “Ebola is in America – and within range of Big Pharma“, “How bet365 profits from Chinese punters who risk jail for gambling” and “Brutal competition batters supermarkets the world over“, here is the cost of doing business.

How is it relevant?

That is the first part, this is not about relevance, and also, these issues are not linked (as far as I can tell), but they do have something in common (other than that they were all in the Guardian on October 5th 2014). Let’s take a look at big pharma. The article comes from Julia Kollewe and is a good read, from the article I got the following parts:

“Unfortunately, the standard economic model for drug development, in which industry takes all of the risk in R&D and gets a return on investment from successful products, does not work for diseases that primarily impact low-income countries and developing healthcare systems” and “GSK is developing a malaria vaccine that could be ready late next year and is expected to be sold on a not-for-profit basis. Its success rate was only about 30% in infants but better in toddlers, although final clinical results and data on the effect of a booster are still due“, last there is “Turner says two commissions are looking at alternative financial models. One idea is that governments could underpin the economic cost of drug development by committing early to buy the first 2m doses of a new vaccine, for example“. How is any of this ‘just accepted’? Let’s take a look at GlaxoSmithKline. It made 25 billion in 2013 with a net income of well over 5 billion (20% net income is amazingly good). Is that not enough? Is the issue not on how they come up with something, how it becomes a solution and then they make a fortune. So, why must they get ‘a set government incentive’? Why are we allowing for governments to bank on failure? Is their continued existence not based upon proven success? Now let’s take a look at the BBC article from May 10th 2012 (at http://www.bbc.com/news/business-17993945) where we see: “The programme obtained confidential tax agreements detailing plans to move profits off-shore to avoid what was a 28% corporate tax rate at the time. Those involved include pharmaceutical giant GlaxoSmithKline (GSK)“. So, not only are they ‘avoiding’ certain due invoices to the Coffers of Osborne, they want pre-ordered and ordained solutions? An anointed decree of set maximised profits. It reads like these boards of directors have a spine no stronger than a paperback, one that is comprised of balance sheets I might add.

So, as we say goodbye on how big pharma will find new ways to get loads of cash on possible medicinal solutions, we should take a look at number two.

‘Brutal competition batters supermarkets the world over’, the article states ‘observer writers’ yet gives us no names. When we look at certain parts we see a view that is incomplete, but seemingly not inaccurate “Aldi has made huge gains in market share in Australia, from about 3% in 2005 to 10% this year“, this means that the two running the show (Coles and Woolworths), will get a third to deal with. There is more to the entire situation, as we look at the price of milk in Australia “The battle for the hearts and dollars of Australian consumers has distressed the dairy industry, threatened small shopkeepers and prompted a Senate inquiry“, yet is that it? Consider that the dairy market is suddenly downgraded in revenue in excess of 20%, how can that be fair or even good to the supplier and when that is no longer an option, how will the consumer pay for milk when offers will dwindle to 2 suppliers? Then what will the market do?

Last there is ‘Revealed: how bet365 profits from Chinese punters who risk jail for gambling online’, which is an interesting article by Simon Goodley. It is the subtitle that gets us the first part “Bookmaker ‘rotates website addresses to keep ahead of authorities’, says employee“, which already implies that the cost of doing business and ethics are no longer in synch with one another. Ethicality has become a nuisance, especially when a business is actively ‘keeping ahead of the authorities‘.

Then we read “The gambling group says its legal advice is that it has broken no law by taking bets from the country“, is a local law the only part of legality?

When we consider Part 2 of the Serious Crime Act 2007 (UK), we see at sections 44 through to 46, three inchoate offences of intentionally encouraging or assisting an offence; encouraging or assisting an offence believing it will be committed; and encouraging or assisting offences believing one or more will be committed. Is that not the implied part of the ‘alleged’ crime when we see the term ‘keeping ahead of the authorities’?

When we look at section 48(3) we see that a person can only be found guilty of the offence under section 46 (encouraging or assisting offences believing that one or more will be committed) if the offence or offences that the jury find the defendant believed would be committed are specified in the indictment. Yet, this is not enough, for the most, it is not clear to me whether this applies to crimes outside the UK, however In Part 1 section 4 we see “For the purposes of section 1(1)(a), a person has been involved in serious crime elsewhere than in England and Wales if he;

(a) has committed a serious offence in a country outside England and Wales;
(b) has facilitated the commission by another person of a serious offence in a country outside England and Wales; or
(c) has conducted himself in a way that was likely to facilitate the commission by himself or another person of a serious offence in a country outside England and Wales (whether or not such an offence was committed).”

This seems to give enough to warrant it all (if the Jury would agree on this). So why is there such an abundance of acts and actions?

You see, the three articles are unrelated, but together they show a massive change in morale and ethics, the kind that people tend not to get back from. This might be the UK (to some extent), but it is clear that these events have been a fact in the US and are starting to get a more stringent grip to the acts of people in both Canada and Australia.

Now for the part that is linking these three views together. Let’s be clear, that this is a personal link, and as such it is debatable on many levels and also that is up to you to agree and disagree. I am not here to path the road for you, I merely speak of where the next place is, and how you get there is up to you. The press seems to favour emotion over logic (to a certain degree), you see, logic is all about reasoning and emotion is about (rashly) acting. The press gets more signals from the emotional reader, so as we react to soaps and reality TV, the press is having a field day cashing in on a league of events, all informative (in their viewpoint), yet overall not that result driven. Is it for that reason that we see a growing calendar on ‘human events’?

As we look at the big pharma piece we see a growing lack of ethicality. They state one thing, whilst pressing other avenues. The statement of moving in one direction, yet not willing to go the entire distance is something entirely unacceptable. We see the stories on how it is all so expensive to create a drug, yet the other side is not told, on how the top 20 are making in excess of half a trillion dollars, whilst in addition their net revenue is around 25%, which is one of the strongest profit margins. At this point we need to take a look at the initial premise of ‘pre-ordaining’ 2 million vaccines. How unbalanced is all this and with margins that large, why are they allowed these tax breaks?

The Bet365 issue could be regarded as an act, likely to be recklessly criminal. If there was no crime, these places could live on a static IP and we would not see the phrase ‘keeping ahead of the authorities‘. We have entered a stage of living where morality is not just taking a backseat, it is leaving the room, add to that a rapidly declining system of ethics and we end up with a change into chaos. You would wonder how a government would allow for that. Well, that is where the issue becomes murky. I think that for some time now, we have been living under a false pretence. Not unlike Sweden, where in 1917 the King’s powers were considerably reduced, becoming a figurehead with only limited political authority. A change that was done in that case for the good of the Swedish people, yet in many other nations big business made a similar change, only they did not remove power of those elected, as a long term strategy they placed themselves ABOVE the law. This is shown in several of my blogs and the acts BBC showed involving GlaxoSmithKline is only the smallest of examples. I discussed this in my blog ‘The Sanctimonious pretender‘ on August 30th where I stated: ‘Big firms consider leaving the Netherlands, says KPMG report‘, the quote “Some of the Netherlands’ biggest companies are considering leaving the country because of the worsening climate for entrepreneurs, according to a new report by consultants group KPMG“. Well, this is not about worsening climates, this is because nations with a monarchy require a fair bit of accountability, which is why the Netherlands and the United Kingdom has seen much stronger measures for the protection of the people and less so in favour of Big Business.

It is important that we seek solutions that require accountability for all, not just those who are not too rich. It is a tall order, but it can be done if we work together. We accept that there is a cost of doing business, but the view as agreed upon seems to differ as to what big business accepts as a valid cost and what everyone else thinks is a valid cost.

In a world of rapid degeneration of values like Ethics, Morality and Accountability we need to make sure that we see a stronger focus in these three values, if not, standing up to big business might no longer be an option.

 

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October 3, 2014 · 22:09

The orchestration has engaged

It is nice when the world falls apart, when you look at the abyss in front of you softly stating: ‘It cannot get any worse!’, then you feel a foot pressing against the lower spine of your back as you lose your balance and fall down. The last thing you hear is ‘Guess again!’

This is how certain news events felt the last few days. I am not referring to the McCain family, who states that the press has not learned anything, post-Leveson. Was anyone surprised?

My issue is with Andy Street at the John Lewis department store (at http://www.theguardian.com/business/2014/oct/03/john-lewis-boss-andy-street-says-france-finished). In light of Tesco, I wonder what drives this person. Yes, we all know that John Lewis is upper class shopping, yet is that reason for whatever you think? Apart from your freedom of speech, which I will not hinder, my question becomes, in light of your remark “He told the gathering of entrepreneurs that the award was “made of plastic and is frankly revolting”“, so not only are you a snob, the element grace is just not within you. Fair enough! Yet, consider that as you got recognised with an award, you should consider the 3 G’s, “Be Gracious, Be grateful, Get off!” (Thanks Paul Hogan for that jewel!)

I am all for freedom of speech, but I am also in favour of accountability. So when I read this: “Street advised his audience: “If you’ve got investments in French businesses, get them out quickly.” The eurozone’s second largest economy is struggling for growth under President François Hollande and the country’s finance minister admitted last month that it will overshoot the EU’s 3% budget deficit target this year. The French economy has been hampered by low growth and poor tax receipts in recent years“, I wonder how often Mr Street got hit with the silly stick in the hours before he spoke these words.

The second issue I see is also from the Guardian (at http://www.theguardian.com/business/2014/oct/02/warren-buffet-tesco-huge-mistake), this is an entirely different matter. We all make mistakes, so when a billionaire admits to this with the headline ‘Warren Buffett: ‘Tesco was a huge mistake’‘, it is not that big a deal initially, but then I went to think it through. Why is there such a massive overreaction in regards to Tesco? Yes, the profit was overstated; however, Tesco made over ONE BILLION! Can we please wake up now? In a year where most nations are doing worse than zero per cent, in a time when the straps are on so that we recheck every dime we spend. Tesco made over a Billion. Yes, I saw the statements ‘too big to fail‘, but in this instance I do not agree. In the case of the Dutch SNS Reaal, that place LOST a Billion, Tesco MADE a billion, so can we please wake up and not overreact?

So, when the response comes, ‘Well Lawrence, you seem to be overreacting here a little above average’, my response would be ‘darn right!’

You see, the initial events, of Blackrock moving out, whilst this is a drop on a plate, is what I personally see as a form of orchestration, a few big wigs who seem to be hoping on massive write offs for Tesco. There is something so darkly unethical about such actions, that these greed driven profiteers would endanger the incomes of tens of thousands just to get a nice dividend. This is what it looks like, am I right?

That remains to be seen, but overall the fight is not done yet. Tesco is not sitting still and the new Tablet as it launched just now could be another incentive, especially if we consider where Tesco could also be active. If this is the budget option, with Tesco Mobile in the Netherlands, This gem could find many happy homes during the Dutch Sain Nicholas feast (which is on December 5th), in additional to the Christmas celebrations, as many Dutch do both instances. Tesco is not done by a long shot and the activities that we see give me the impression that several actions do not seem to be about ‘cutting losses’, but as stated on many occasions that I am not an economist.

So, when I see this article http://www.independent.ie/business/irish/billionaire-mike-ashley-bets-on-tesco-bounce-back-30616710.html, where Mike Ashley, who owns Newcastle United takes a 43 million pound share believing that Tesco Shares will bounce back, I say “well done Mate!”, two thumbs up for this man. Now, let’s be honest, as this man seems to be a millionaire a thousand times over, 43 million will not seem like a big dent in his wallet, but the fact that this man is willing to enter more cash then I will ever make (even if I grow to the ripe old age of 14645), the entered amount will boggle my mind for some time to come.

This is one of the two parts where disbelieve is still on the front of my mind. Let’s be clear, I get the entire write off, loss of share value, yet the actual occurrence, especially with a billion in profits is too strong to be just a jittery action from the market. The fact that Blackrock moved out to this extent is still an issue. It left me with two options, either they know something Dave Lewis has not been told yet, or they wanted a curve so that they can make a sweet deal down the track. Let’s not forget that the value write off is just on paper, it is like a virtual event. Blackrock did not hand over these billions in gold or actual cash; we are seeing the fallout of virtual value (as I see it). And this all gets me to the final quote, which was also in the Warren Buffet article and had been mentioned in earlier articles. “UK fund manager Neil Woodford – who decided to sell his stake in Tesco in 2012 after its first profit warning – said last week it could be a long time before any of the British supermarkets became good investment prospects again“. Why?

You see, if he sold his shares earlier, fair enough. Yes, we see that Sainsbury is lowering expectations and shares have fallen there too. I think that all supermarkets will have to change their entire approach. We see that places like Aldi and Lidl are growing, especially in Australia where Aldi is now more and more a common sight, yet over here Woolworths and Coles remain. The same applies to England, in the end people need food, so these places will remain locations where food is bought and yes, as Tesco mobile remains competitive, people will come for that options too. All that is a given, so why such a massive overreaction?

This is at the heart of my foundation for suspected orchestration. If you are in the UK, then take a look at the papers and the degree that they are looking at Pricewaterhouse Coopers. They did the auditing for Tesco, so why is not every reporter looking at PwC and seeing what links might be there, which is not an accusation, but consider all the redigesting we see on several papers, they all mention PwC in a casual way, when they have been auditing Tesco for some time. Only the Times (at http://www.thetimes.co.uk/tto/business/industries/banking/article4214689.ece) had done so, yet the full article is not available to me as I am not a subscriber (one of the reasons why I stick to the Guardian).

There are two more quotes the first is “Shorting Tesco has been a profitable bet” and “Traders gamble on falling share prices by borrowing equities from other investors and selling them in the hope of later buying them back cheaper – known as shorting” The latter quote comes from http://www.thisismoney.co.uk/money/news/article-2772107/Dont-shred-thing-new-Tesco-chief-warns-staff.html, so it is a way to make money, even though it seems unethical, the act is not, but one could call it questionable. This is the one moment where I need to ask the one question in regards to the given scenario. Let me first add the following quote “Lewis’s ‘no shredding’ order will be seen as a sign that he is determined to get to the bottom of the problem.  It also indicates that the group fears the errors – whether or not deliberate – may extend deep into the company“, as well as “Cantor Fitzgerald analyst Mike Dennis said: ‘A discrepancy of this size suggests this is not just the behaviour of a few individuals, but behaviour instilled by the senior management team“, which is where I was all along. Is this the case and if that part was known to 1-2 insiders, could this be the reason for certain action? What if Blackrock dumped its part to cause a stronger downfall, so that they can buy it again later with a much more interesting profit curve, which makes up for a lot more than the small loss they had, what happens then?

All valid questions, I just wonder if those who have actual answers are willing to give them, because it looks like a slippery slope of massive proportions. As this happens to the one place that feeds a nation, how will the people react should evidence of intentional tampering ever be shown?

Then how angry will the people get?

 

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