Saturday, October 30, 2010


Last week, I put forward the case that the Welsh Assembly Government was conveniently ignoring the job creating potential of the European Structural Programme.

Not surprisingly, this is an issue that also seems to have been conveniently ignored by the mainstream press in Wales as they continue their message of doom and gloom for the Welsh economy.

I have rewritten the blog entry for my column in the Western Mail today so we will see if there is any further reaction, especially from politicians.

I have also decided to carry out an exercise which is hardly scientific but does suggest that there is scope for job creation across different parts of Wales if the European Convergence programme is applied proportionally.

The table below shows how many jobs could be created across the poorest counties of Wales if the remaining target of 32,000 jobs were applied proportionally according to the adult labour force in each county, which is as good a measure as any.

Of course, it is highly unlikely this will happen, as WAG refused to apply Convergence Funding geographically, but it does give some idea of the jobs that can be created across the fifteen poorest counties of Wales with this programme.

Note that, all things being equal, there could be an extra 2,300 jobs created in Bridgend and an extra 1,100 jobs created on Anglesey.

Given such exceptionally good news, you have to wonder why the First Minister and Deputy First Minister are not bombarding the BBC and the newspapers with press releases about the jobs to be create din their constituencies over the next four years.

Friday, October 29, 2010

New Facebook Search Engine

I have heard rumors that there is a new search engine in the works. Supposedly a based search engine. That is all I really have on the matter. But what a rumor that is... wow.

A Facebook search engine would be huge.

My source is a friend I know personally whom is a rather successful online marketing and advertising consultant.

He admitted, if I am remembering it correctly, that he can not validate it with any certainty (I have to say that he could have been referencing the fact that he had no real details) but I could tell that he believed it 100%.

Did not ask his source, but he has some rather high end contacts, I have always been impressed by him.

I can't help but speculate how it may work. Would it leverage profile popularity, friend volume, or what?

I really am curious to find out more. No doubt there would be major shock waves through out the online search industry.

I have a strong premonition that it will be a separate domain, and separate entity though no doubt under the and Microsoft umbrella.

If anyone knows or has heard anything about this please leave a comment or something. I am so curious.

A new search engine based off seems like a product and online tool that could really add some value and unique ability and more importantly usability. Such a tool would have the leverage of a perspective that no one, including Google, can use or offer. I suppose has an argument to object to that statement but lets be honest with ourselves, they don't.

This new search engine from Facebook could really take from the Google market share.

I suppose it would take from but that would only be important to because Microsoft would be the beneficiary of the search engine revenue from advertisers.


Very interesting.

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This evening, the 12th Wales Fast Growth 50 gala dinner will take place at the Holland House Hotel in Cardiff.

With a full house of 442 guests, made up of the firms and the award sponsors only, we will be celebrating the best of Welsh business in an atmosphere that is very different to your standard business dinner.

Last year's winning company, Unit Construction and Engineers, has already announced a major project in the last few months and it was great to see that another previous FG50 company, Moneypenny, has recently stated that it will be creating an additional 100 jobs in Wrexham.

So which company will win this evening?

Well, I am afraid the result is not officially announced until the 52 page Western Mail supplement on Wednesday but I can reveal is that all fifty companies have made an incredible contribution to the Welsh economy both in terms of employment and increased sales during the worst recession since the 1920s.

More relevantly (and WAG policymakers take note) this growth has, yet again, occurred across a range of industrial sectors.

This year, I have also asked the opinions of the entrepreneurs as to what they would do if they were economic development minister.

As you can imagine, some interesting responses and I will publish these next week.

Wednesday, October 27, 2010


An article in the Independent on Sunday makes a fascinating observation about one of the key sectors expected to grow during the next few years.

According to the paper,

"Leading the way is the food and drink manufacturing sector, which employs nearly 440,000 people and invests more than £1.1 billion a year on research and development – comparable to the automotive sector".

"The Food and Drink Federation said that over the next seven to 10 years the industry needed to hire 137,000 new recruits. Angela Coleshill, FDF's human resources director, said of that total, 45,000 people are needed to fill higher-skills roles such as senior management and technical positions. The sector's population is ageing and, in the next seven to 10 years, around one-fifth will retire," she said. "Our big challenge is replicating this knowledge and people." The total number of apprenticeships in the sector had doubled in the past 12 months to 2,500, she added, but this was "still not enough".

Indeed, as the Welsh Assembly Government notes, the Welsh agriculture and food production industry is undergoing a transformation designed to realise its full potential as a major force in the economy.

Given this, you have to wonder why the food and drink sector was NOT chosen as one of the six priority sectors for the economy?

Tuesday, October 26, 2010


As this blog has been pointing out over the last few days, the UK economy seems to be in better shape than many had predicted.

According to the Office for National Statistics, Gross Domestic Product (GDP) increased 0.8 per cent in the third quarter of 2010, compared with an increase of 1.2 per cent in the previous quarter.

Whilst some (notably the BBC) have tried to spin this as decrease, the ONS rightly point out that allowing for the recovery in Q2 following the bad weather at the start of the year, the underlying growth in Q3 is broadly similar to that in Q2.

More importantly, it would seem that growth is taking place across the entire economy.

For example, services output rose 0.6 per cent in the third quarter, compared with a rise of 0.6 per cent in the previous quarter.  Total production output rose 0.6 per cent in the third quarter of 2010, compared with an increase of 1.0 per cent in the second quarter. Finally, construction output rose 4.0 per cent in the third quarter of 2010, compared with an increase of 9.5 per cent in the previous quarter.

The question, of course, is whether this growth will continue?

As pointed out on Monday, the private sector is currently sitting on around £65 billion of cash (with a similar amount due to be generated this year) and that, hopefully, will be reinvested back in the economy over the next twelve months, especially in privately funded construction projects.

The relative weakness of the pound at the moment also means that manufacturers, as well as internationally traded services companies, can take advantage of exporting opportunities and this will continue into next year as the rest of the global economy recovers.

Most importantly, the real situation contrasts starkly with those in the media and politics who have been trying to talk the UK economy into another recession.

Thankfully, such doomsayers have been proved wrong this time and one can only hope that confidence now returns to both business and consumers over the next few months and so helps to bolster the economy further,

Buffet Takes a Big Step in Passing the Tourch - Todd Combs... Who?

Warren Buffet is in my opinion the best investor and most talented business man that was born in the last 100 or so years.

Today as I read the Wall Street Journal I learned that Warren Buffet named Todd Combs as a Successor of Berkshire Hathaway.

Who is Todd Combs

He is a finance guy that runs a hedge fund in Connecticut. This hedge fund by comparative measures is a microscopic 400 million dollar fund. He will now be crossing over into big money, billions and billions.

Well that 400 million dollar responsibility is about to turn into a 100 billion dollar responsibility. Buffet plans on putting him in charge of about 100 billion in assets.

From the best I can tell Buffet is going to take his time with Mr.Combs but a 100 billion is a 100 billion.

congratulations to Todd Combs and may his time with Berkshire Hathaway bee all that Buffet wants it to be.

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During the CBI conference yesterday,  the UK Government announced a £200m scheme to create a network of elite Technology and Innovation Centres.

The centres will bridge the gap between universities and businesses, helping to commercialise the outputs of Britain’s world-class research base.

According to Business Secretary Vince Cable, the centres will  allow companies to access cutting-edge technologies that would otherwise be beyond their reach and take ideas from the drawing board to the market place. They will play a key role in helping firms develop new products and processes so they can grow and prosper.

More importantly, no decision has yet been taken as to where the centres could be based but a spokesman for the Department for Business, Innovation and Skills confirmed that locations in Wales had not been ruled out.

Given this, I fully expect the Welsh Assembly Government to start making the case now to Vince Cable to get him to locate a number of these centres in Wales.

We are already have the high specification buildings in place all over Wales in the form of Techniums, a number of which have struggled to attract commercial return in the last few years. That is an advantage that no other region has - the infrastructure already in place for the development of these elite technology and innovation centres.

Wales should get at least £10 million of this investment if we applied the Barnett formula but we should be going for more, given the real need for the Welsh economy to focus on developing more innovative businesses.

The real question is whether WAG is prepared to fight for such investment or, as we have seen over the last week, will revert to a victim mentality that this country simply doesn't deserve.

Monday, October 25, 2010


Ed Milliband, in a speech to the CBI yesterday, made the following statement:

"Despite all the talent in engineering and work in our universities, I fear Britain still suffers from an anti-manufacturing bias.

The way to support British businesses who want to lead in the industries of the future isn’t for government to do nothing. Government action can make a difference, and government inaction can make life harder".

As the new Labour leader is in his honeymoon period, but did anyone bother telling him that between 1997 and 2007, manufacturing as a proportion of national wealth reduced from 20.7 per cent of the UK economy to 12.7 per cent.

In Wales, it went from 27.6 per cent of the economy in 1997 to 17.6 per cent of the economy in 2007.

Is that what he meant by government action to support manufacturing?

It is also worth noting, and something that the Labour Party finds hard to deal with, that the contribution of manufacturing to the economy under John Major's administration stayed approximately the same across the UK and actually increased in Wales.

Rent to a Ghost?

Rent a room in these hard financial times. Room with a ghost and save on rent.

I was reading the USA Today, the business section, and they had a survey poll as they always do as far as I know.

The question being asked...

"Would You Share Your Home with a Ghost for Free Rent?"

the results were split pretty evenly.

The results were as follows...

  • Yes - 51%
  • No - 49%

I was thinking to myself... Would I really share my home with a ghost in exchange for a pass on the monthly mortgage or rent payment?

I think I would. I would really want to ensure that the ghost was not evil. Could not harm me.

But given that there was some reasonable assurance that I would not be plagued or haunted with regret for such a personal finance decision then I think I would be game for housing a ghost. 

I figure it would be just in time for Halloween.

What would you do??? 

Please leave an answer and your reasoning in a comment below.

This is a great question.

Sunday, October 24, 2010


In the midst of all of the doom and gloom from the commentariat and the odd Nobel economist, it was fascinating to read yesterday’s piece from the Telegraph’s editor Philip Aldrick which spelt out clearly what many have simply ignored, namely that the private sector is ready to grow the UK economy.

Please take the opportunity to read the full article, but some of the main debating points are as follows:

  • At the end of last year, UK businesses were sitting on a £65 billion cash surplus – the difference between profits and capital expenditure – and are on course to replicate that in 2010. By comparison, in the early 1990s, corporates were on their knees. Once more certainty is achieved, corporates will want to do something with all that money and the UK could be on “the cusp of the mother of all investment booms here."
  • The Budget delivered businesses £7bn of tax cuts – shifting the burden of the net £8bn tax increase on to banks through the new levy and on to shoppers through higher VAT. The message was clear: creating jobs is more important than individual living standards.
  • Between 1994 and 1999, Canada, Sweden and the UK each tightened fiscal policy by about 7 percentage points of GDP – roughly the same as the 8 percentage points the Coalition intends to shave off spending by 2015. As a result, over the five years to 1999, public sector employment fell by 50,000 in Canada and Sweden, and by 294,000 in the UK. But, at the same time, private sector jobs increased by 1.7m in Canada, 250,000 in Sweden and by 1.95m in the UK.
  • The Treasury expects 490,000 public sector jobs to be lost in five years – with the bulk being cut at the end of the consolidation period. But they will be more than offset by the 1.8m jobs the Office for Budget Responsibility (OBR) expects to be created in the private sector.
  • Britain's recovery is all about jobs. More jobs mean faster economic growth. More jobs mean greater income for the Government and less outlay through the benefits system. More jobs mean a more stable social and political system. David Blanchflower and others arguing for larger Government stimulus, make exactly the same point – but they see the public sector as the job provider.
  • Official employment numbers have also been encouraging. According to the ONS, some 308,000 jobs were created by private business over the three months of the summer – which more than offset the 22,000 public sector job cuts. The good news was, however, tempered, though, by the fact that 166,000 of the new jobs were part-time and that there are now more people in part-time employment looking for full-time work than for many years.
  • Merfyn King noted that more than half a million jobs will probably need to be created in businesses producing to sell overseas – compensating for fewer employment opportunities serving UK consumers or the public sector. According to the Ernst and Young Item Club, exports are picking up and will add 1.3pc to GDP and another 0.6pc in 2012. 
  • Growth has outstripped all projections this year. Just three months ago, GDP was forecast to rise by 1.3pc in 2010. Expectations are now for 1.6pc. This week, the ONS publishes third quarter growth numbers that are expected to reaffirm the strength of the recovery – a robust quarterly rise of 0.5pc.
  • There have been four consecutive quarters of growth, and none of the leading forecasters are predicting a double-dip – not the Bank of England, not the OBR, not Item, not Fathom, not the National Institute of Economic and Social Research.
  • By the time the cuts start to take effect, the UK will be about 18 months into the recovery – not dissimilar to the gap between the end of the 1990s recession and the start of the subsequent fiscal consolidation that set Britain on course for the boom of the past decade.

Given the focus on public sector spending and employment, it is good to finally read a very different viewpoint that focuses on the role of the private sector in leading the UK out of recession and into growth.

Friday, October 22, 2010

Bank of America - Ruining a Good Thing at WaWa's

This is based on a personal experience and is a personal post. It is about both Bank of America and WaWa.

I love WaWa. I am a sucker for innovative businesses that just do things right. WaWa is one of these businesses.

WaWa stays competitive in large part by creating cheap pricing on everyday items. So stuff like cigarettes, coffee, use of the ATM, and gas are priced extremely competitively compared to the surrounding competition whom ever those poor souls may be.

I needed some cash the other day and their is a WaWa located conveniently to my home. I know they don't charge for their ATM use which is a deal that they have worked out with their bank or credit union.

So I checked my balance and then withdrew 20 dollars.

Then a few days later I check my bank statement. I was charged 4.00 dollars by my bank which is Bank of America.

They charged me 4.00 or 20% of what I took from my account.

Think about this WaWa paid for the location and electricity that was needed for this transaction. Their bank supplied the cash, and all of this was provided free of charge to me. Then Bank of America has the nerve to charge 4.00 dollars.

Man that really hurt my finance feelings.



There have been various questions raised during the last two weeks whether the private sector can compensate for the loss in public sector jobs.

Certainly businesses are giving it a good go – the latest figures on employment growth in the private sector show that businesses in the UK have already created an additional 308,000 jobs between March and June 2010.

However, another 650,000 jobs need to be created to get the private sector back to the record 23.76 million employed by business in March 2008.

If 450,000 jobs are cut within the public sector, this will be equivalent to a reduction of 7.4 per cent. This will take public sector employment back to the levels of employment last seen in March 2003.

Indeed, public sector employment will still be around 250,000 higher than it was when Labour won their second term back in May 2001. To compensate, the private sector has to grow by only 1.9 per cent (and it grew by 1.3 per cent between March and June 2010).

On a regional level, Wales currently accounts for 5.7 per cent of all public sector employment in the UK. Therefore, given that the UK Government has indicated that a maximum of 450,000 jobs may go across the UK public sector, that means around 25,500 public sector jobs could be lost in Wales.

That is a slightly different estimate to that given by the First Minister in the Western Mail today, where he claims that 38,000 public sector jobs will go in Wales. Where he gets those figures from, I don't know, but whilst they may fit in with his half empty view of the Welsh economy, they do not tally with official statistics (do journalists ever check what the Government tells them?)

Even if we assume his distorted data, Carwyn Jones forgets to state that will means that the Welsh private sector will only have to grow by around 4 per cent over the next five years to compensate for this loss in public sector employment. Ironically, such growth would still leave the private sector in Wales employing 50,000 less employees than it did in 2008.

To be fair, this does not take into account the jobs that could be lost as a result of potentially lower procurement with Welsh-based firms. However, as the public sector, even with best estimates, spends only half of its £5 billion expenditure in Wales, there could be room to compensate for this by increasing contracts with Welsh firms.

So, we have a rough idea of what needs to be done to grow the private sector in Wales to deal with public sector cuts. It is just a shame that the Economic Renewal Programme has no targets on jobs to be created via government programmes during the next five years and therefore cannot help us with WAG's expectations in terms of employment growth in the private sector.

Surely, given the 'vision' of the One Wales Government, a growth of  less than 1 per cent per annum in the private sector over the fourth term of the Assembly must be at the bottom end of Ieuan Wyn Jones' expectations of his plan's outcomes, yet this is all that would be needed to compensate for the loss in public sector jobs in Wales.

However, it would seem that whilst politicians and journalists have been wallowing in the doom and gloom, no-one has focused on the one silver lining that Wales has in terms of funding which is aimed specifically at improving the economy.

Unlike any other region of the UK (with the exception of the county of Cornwall), Wales actually has access to an additional £2 billion of European Structural Funding for the period 2007-2015.

To date, £1.4 billion of European Structural Funds have been committed to 193 projects. However, only £286 million has been paid out by WEFO so far, which means that over a billion pounds of expenditure is still to take place in the Welsh economy, and that is only in those projects that have been approved by WEFO.

There is still another half a billion pounds waiting to be approved for other projects in the pipeline.

So that means that over the next five years, there will be around £1.6 billion spent on European funded projects in Wales,  which is roughly equivalent to the worst estimates of the decline in the Welsh budget by 2015, although if you take the official UK Government line that the cuts in the budget amount to only £500 million, it demonstrates that Wales is better off.

The most important aspect about this funding is that it is ringfenced and not subject to any cuts from Westminster. That is a competitive advantage that the other devolved nations in the UK simply do not have.

What effect will this will have on employment?

Well, the Welsh European Funding Office (WEFO) have suggested that, for the West Wales and the Valleys,  36,000 gross jobs will be created in Wales as a result of the main Convergence programme.

Given that WEFO have estimated that only 4,000 gross jobs have been created so far, then we can at least expect a further 32,000 jobs to be created from the European funds available to West Wales and Valleys between now and 2015.

That also doesn't take into account the other outputs from the programme, including:

  • funding for 450,000 participants on training programmes (140,000 participants to date) 

  • investment in the private sector of £370 million (£46 million to date)

  • 8,500 new businesses (only 2,000 created to date)

  • 24,000 businesses assisted (only 4,300 assisted to date)

  • I wonder if any of the economists predicting doom and gloom for the Welsh economy have take this funding and these potential future outputs into account, a situation which at least gives us the opportunity to cushion a large part of the blow from the reduction in public expenditure.

    Perhaps those journalists, who seemed to have become an integral part of the Labour Party's press machine, should look outside of the press releases fed to them every day and look at the advantages that this nation possesses, not least in the £1.6 billion of unspent European funding.

    Finally, shouldn't our politicians, rather than talking down the Welsh economy through their constant carping about the state of the public sector, be looking to maximise the opportunities that will be created through this funding and go out there and emphasise the advantages we have from the £1.6 billion of European funding that is there to be spent on jobs, enterprise, training and investment.

    Update: As if Carwyn Jones wasn't bad enough, the Deputy First Minister has joined the whinging in an article in the business pages of the Western Mail. Whilst two thirds of the article consists of moaning about the settlement for Wales, the remainder, interestingly, doesn't tell us how many new jobs will be created as a result of the Economic Renewal Programme  "concentrating on areas with the greatest potential for jobs and wealth creation – with special emphasis on research and development". Not surprisingly, European funding programmes are not mentioned at all. Now I am naturally assuming that the ERP is going to create jobs and the highly paid civil servants in the Department of Economy and Transport know how many. perhaps, it is time they got round to telling the rest of us?

    Thursday, October 21, 2010


    Is the Welsh Assembly Government, aided by the mainstream press in Wales, in danger of giving Wales a victim mentality?

    The constant moaning that is prevalent amongst Ministers in Wales, fuelled by Welsh journalists and broadcasters, may play well amongst the party faithful in the run-up to the Assembly election but is it the image we wish to portray to the rest of the World?

    It is clear from various opinion polls that the public accepts that there has to be a reduction in government expenditure and, more relevantly, that the last Labour Government is responsible for the financial mess that we are currently in.

    Indeed, the indications are that Wales would have received the same level of cuts even if Labour had been in power.

    Perhaps what worries Carwyn Jones and the rest of the government is that whilst they were planning for cuts of £500 million every year until 2014-15, they will instead have to find savings of £500m over the next four years in total. The UK Government has also offered to work closely with the Assembly Government to consider the Holtham Report on reforming the Barnett formula.

    Imagine all the indignant press releases that have had to be scrapped as a result of the announcement.

    What the public now expects from the Welsh Assembly Government is a responsible approach to reductions in expenditure.

    It also expects the government to get off its arse and actually fight Wales’ corner in a positive manner, make the most of what it has already and take advantage of the few opportunities within the CSR.

    For example,

    • maximise the use of the European Structural Funding bonanza of £2 billion, which is currently woefully underspent, to deal with some of the deep rooted social and economic problems rather than on WAG pet projects
    • work with the financial and professional institutions to ensure that Wales, unlike in previous years, gets its fair allocation of high street banks' proposed £1.5bn Business Growth Fund to help fund businesses
    • create an alliance with Westminster politicians across the South West England to make a clear and unequivocal case for the electrification of the Great Western Line
    • make sure Wales gets a number of the “elite network of research and development intensive technology and innovation centres”, based on Germany’s Fraunhofer institutes that Vince Cable will be spending £200 million on by 2014
    • develop a strategy to get a higher proportion of the £1 billion in funding for a green investment bank and lobby to make sure that the £1 billion funding towards building one of the first power stations in the world with technology to capture and permanently store carbon emissions comes to Wales
    • lobby to devolve other areas of funding from Westminster, such as university research funding, which would create tens of millions of pounds for higher education in Wales 
    • work with industry to make a business case for Wales to be the centre for developing offshore wind technology and manufacturing - Osborne announced £200 million for this area and for supporting the upgrade of ports to support the industry.
    • start planning now to take full advantage of the construction of the Wylfa B nuclear power station for the benefit of the North Wales economy

    Of course, it suits both Labour and Plaid to play the victim card but it can be overplayed, especially in the context of devolved politics where the decision on how to actually spend the £15 billion Welsh budget is ultimately up to the Assembly Government.

    As the First Minister has made absolutely clear, he is committed to protecting the concessionary fares scheme, free prescriptions, free swimming and free breakfasts and milk for primary school children. However, if these universal benefits are delivered as a result of cuts in the NHS or schools when those budgets have clearly been protected at the UK level, then the majority of the Welsh public simply won’t stand for it.

    More relevantly, he can’t then blame the UK Government for such a decision.

    Tuesday, October 19, 2010


    Yet another interesting omission yesterday by the mainstream press regarding the defence review and its effect in Wales.

    While much of the focus was on St Athan, the UK Government also made the decision to upgrade the air transport fleet with A400M and A330 aircraft, replacing the Tristar and VC-10 from 2013.

    So what effect will this have on Wales and the Airbus plant in Broughton?

    Well, according to Mark Tami, Labour MP for Alyn and Deeside, thousands of Flintshire jobs could have been put in jeopardy if the Government had backed out of the contract as Mr Tami feared that the scrapping of the agreement could put future projects at risk.

    In addition, the Flintshire Chronicle reported that, according to  Mr Tami,

    “The A400M is the best product for our armed forces and for the British taxpayer. It will help ensure the UK aerospace sector has a strong and purposeful future. The Government should do what is right for Britain and back the contract.”

    Can we therefore now see headlines such as:

    "Thousands of Welsh jobs saved by Government decision to buy military planes" or

    "Local MP welcomes UK Government decision to secure future of Welsh Aerospace industry".

    I thought not.


    Without the BBC, one would seriously wonder where the news output in Wales would be, given the cutbacks across the rest of the Welsh media.

    The high level of professionalism and quality within BBC Wales puts many other regions of the UK to shame.

    However, during the last few weeks in the run-up to the Comprehensive Spending Review, I know that some have questioned the “impartiality” of  the BBC when it comes to reporting the decisions to be made by the UK Government.

    Perhaps one day, some eager politics student will undertake a doctoral dissertation to examine, in detail, the view expressed by reporters and commentators on our publicly funded TV channel since May of this year.

    In the meantime, such criticisms are not helped by examples such as the report on today’s BBC Wales online news on the rail electrification which does stretch the balanced view many of us have come to expect from the BBC.

    According to the report,

    “Plans to electrify the Great Western Main Line - which would also benefit Wiltshire and Bristol - were attacked by the Conservatives when they were announced by the previous Labour government last year.”

    Attacked? Is that really the case?

    As far as I am aware, the plans were not “attacked” at all and, according to a Welsh Conservative Party spokesman in February,

    “We recognise that electrification of the rail line from London as far as Swansea is a major requirement for the future of the South Wales economy. It will also be an important way to improve efficiency and reduce carbon emissions from rail. But Mr Hain and the Labour Government need to be honest about where the money is coming from and what other schemes they intend to cut to deliver electrification in the current spending cycle, especially after Lord Mandelson announced cuts to the transport budget”.

    So there was a questioning of the affordability of the scheme but that can hardly be described as an "attack", and as the BBC should know, there was a commitment within the Welsh Conservative election manifesto to “supporting electrification of the Great Western rail line to South Wales, with a commitment to developing a high speed rail link to Wales”.

    Of course, whether it goes ahead is another matter but, as those who read my blog entry earlier this week, there are those of us within the Conservative Party who continue to fight for the improvement and certainly, I know other Conservatives are doing the same.

    I mentioned the excellent Bow Group report which proposed that the Great Western line should be upgraded before the new line to the North West is constructed but there are also others campaigning hard even within the last few weeks to get this investment approved.

    For example, it was recently reported that Rod Bluh, Conservative leader of Swindon Borough Council, launched a campaign in Parliament in support of the electrification of the Great Western main line, alongside Swindon’s MPs Conservative Robert Buckland and Justin Tomlinson. Mr Buckland, MP for South Swindon, said: “Times are tough with capital public spending but it's up to us to lobby Government and keep the project on the road. I will keep banging on the Government’s door until I'm blue in the face.” Mr Tomlinson, MP for North Swindon, said: “It is a real priority to work together to deliver this much needed improvement and it will drive our future economic success.”

    In Bristol, Libdem council leader Barbara Janke launched a campaign in Parliament in support of the electrification of the route, calling for the coalition Government to press ahead with plans put forward by the previous Labour administration. Mrs Janke, attending the campaign launch alongside Conservative MP Chris Skidmore and Lib Dem Stephen Williams, argued that the North of England often did better out of government funding settlements than the South, and said it was time Bristol got its fair share.

    Yes, questions have been asked about the cost of the electrification of the line but that is hardly an “attack” on the plans. However, there are clearly Conservatives who continue to keep pressing the case, something that is conveniently ignored in this report. Certainly, the Welsh Conservatives Economic Commission, when it reports later this year, will continue the fight here in Wales.

    I know this is the season for purple prose, led by our the new Shadow Secretary of State "Savage" Peter Hain  but let’s please have a more balanced view of the spending debate within the great institution that is the BBC.

    Indeed, I leave the final say on this to David Melding, commenting on a call by former First Minister Rhodri Morgan for the electrification of the Great Western line, a comment that would have added some real balance to the piece.

    As David noted “We have been critical of Labour’s failure to electrify any of the railways in Wales during their 13 years in power, while 35% of railway lines in England have been electrified. It is a pity that Rhodri Morgan was not more vocal about improving the Welsh railways when he was First Minister."

    Monday, October 18, 2010


    Last week, the National Assembly's Enterprise and Learning committee investigation concluded the 16-24 year old NEETs (Not in Employment, education or training) were being "failed" by the system.

    According to their report, Wales has a higher proportion of Neets than anywhere else in the UK and the committee noted that "it is deeply worrying that so many of our young people are still being failed by the system."

    Predictably, the Welsh Assembly Government dismisses this findings by stating that it has invested £49m into training and education for NEETs.

    However, is that money actually reaching its intended recipients?

    One of the main sources of funding for programmes to support young people is European Convergence Funding. Indeed, there is an entire European Social Fund measure that is dedicated to “supplying young people with the skills needed for learning and future employment”.

    According to the Welsh European Funding Office, £108 million of European funding has been allocated to the measure. So far, ten projects have been approved which will draw down £62.3 million of funding.

    However, given the report from the Enterprise and Learning Committee, the question is whether this money has made a difference.

    Well, it would seem that if we examine the summary of expenditure claims for these European funded projects, there may be a problem. The table below shows the EU Grant paid by WEFO to project sponsors. This seems to suggest that, as of 15th June 2010, there has only been £3.7 million of eligible expenditure to those European funded programmes targeted to helping young people and only £2.3 million of EC grant drawn down.

    If that is really the case, then the Welsh Assembly Government certainly has some serious questions to answer as to why European funding, which is probably the only pot of money we have that is protected from the UK Government’s expenditure cuts, does not seem to have been spent on those that need it the most.

    Given the concerns expressed by the Enterprise and Learning Committee, you have to ask why no-one has picked up on this issue and made inquiries as to the progress of those projects that are being funded to support NEETs through European funds.

    But the issue may be more widespread than that.

    As the table below shows, if we examine all projects funded through European funds, then of the £1.4 billion committed to date, only £286 million has been claimed and spent by those running programmes (and WAG is the organisation which has the largest number of projects in both value and number).

    There was a time when the Welsh political classes and press had an enormous interest in the management of European programmes in Wales and an early failure even cost Alun Michael his job as First Secretary back in 2000. 

    If Wales has hundreds of millions of pounds available to help our economy and it is simply not being spent, then urgent questions need to be asked as to why, during a time of economic hardship, we are simply not accessing the only source of financial support that is relatively immune to UK Government cuts.

    Sunday, October 17, 2010

    Verizon vs AT&T - Comparing iPad Data Plan Financial Value

    In my last post I reported that Verizon and AT&T will soon be selling the iPad in all retail locations. The iPad will be available through these two companies before the month of October is out. I believe the exact date is October 28th.

    I made no effort to hide my personal feelings about this notion. I was very transparent about my excitement and anticipation for the new Verizon option. They will now add competition to AT&T's data plan solution for iPad owners and users.

    I want to prove my point. I wanted to do a post comparing AT&T and Verizon iPad data plans.

    The comparisons I have below are simple. I took the lowest cost lowest value plan for each company and calculated the Dollar per GB ratio for each plan. I did the exact same thing for the highest cost highest value plan of each company. Below are the results. I don't want to say I told you so but I told you so.


    • Best value = $12.50 per GB
    • Worst Value = $60.00 per GB
    • Now that is the AT&T I know and love.
    • Great job guys way to bend over the struggling American consumer. What a service.


    • Best Value = $1.25 per GB that is literally 1/10 of the cost of AT&T.
    • Worst Value = $20.00 per GB which is a 1/3 of the cost of AT&T.

    So you can spend 1000% - 300% more for a AT&T data plan or you can take that money and pay for your iPad data plan with Verizon as well as 3 - 10 plans for your friends depending on your social life.

    Decisions, decisions.

    BUY Verizon

    iPad - Soon Sold by Verizon and AT&T Retail Locations

    Apple has announced that they are planning to allow both Verizon and AT&T to sell the iPad out of their retail locations.

    The iPad will be available for sale at all Verizon and AT&T locations starting at the end of October before Halloween.

    This coolest part about this deal is that Verizon is involved. Verizon will be able to offer some much needed competition to AT&T data plans.

    AT&T has not exactly been value orientated when it comes to developing data plan options for the iPad.

    Any how, the bottom line is that this finance blogger is excited to here the good news that Verizon is becoming apart of the Apple wireless product data plan options. At least in some shape or form.

    Related Articles

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    Online Advertising Industry Doing Well

    Consumer Credit on the Decline

    Verizon vs AT&T - Value of Data Plans for iPad


    Not surprisingly, there have been an enormous amount of stories in the press during the last couple of weeks in the lead up to the Comprehensive Spending Review.

    I will be appearing with Eurfyl ap Gwilym on the Politics Show later this morning and I am sure we will have an interesting discussion. However, what has interested me, as someone on the periphery of politics these days, is the sheer hypocrisy shown by members of the Labour Party during the last few weeks.

    You would have thought from all the tweets, facebook entries and press commentary that the Labour Party is completely innocent in all of this and they, of course, would never have envisaged any type of cuts.

    Well perhaps it is time to remind the Labour Party, and some of their friends in the press, of what the last Chancellor of the Exchequer said earlier this year after his March budget.

    For example, a report from the BBC noted the following:

    "Experts say Mr Darling has postponed the major decisions on departmental spending, and what is widely expected to be substantial cuts in many areas, to a spending review expected in the autumn.
    The chancellor warned in his Budget speech that this review would be the "toughest in decades".
    Asked by the BBC's Political Editor Nick Robinson to accept the Treasury's own figures suggest deeper, tougher cuts than those implemented by the Thatcher government in the 1980s, Mr Darling replied: "They will be deeper and tougher - where we make the precise comparison, I think, is secondary to the fact that there is an acknowledgement that these reductions will be tough".He added: "There may be things that we don't do, that we cut in the future. We will have to decide what precisely we can do within the [spending] envelope I set. What is non-negotiable is that borrowing is coming down by half over a four-year period."

    And to reinforce the message, he gave an interview with Channel 4 the same evening in which the spectre of deep reductions in public expenditure was admitted.

    We all know that there will need to be reductions in the level of government expenditure to deal with the massive debt that this country has amassed. Osborne knows it, Cable knows it and Darling knew it, which is why he postponed any difficult decisions until the CSR.

    Of course, we won't know what areas a re-elected Labour Government would have had to cut but Labour MPs and AMs shouldn't kid themselves, or the public, that there wouldn't have been major cuts in key areas if Alistair Darling had been making the announcement on Wednesday.

    Indeed, as an interview with Francis Maude in today's Telegraph suggests, there can be savings made without cutting jobs - an estimated £100 million has been saved since June alone. It is hard to believe previous governments did not come up with any of this sooner but as Maude says "Labour just didn't bother. It can be done but you have to bother".


    It would seem that Chris Huhne is about to announce that Anglesey is to be the site of a new nuclear power station, creating around 5,000 construction jobs with a further 1,000 people employed in the operation of the station.

    According to the Telegraph last night

    "The list of areas earmarked for power stations to be built by 2025, according to sources close to the Department for Energy and Climate Change (DECC) is: Bradwell in Essex, Hartlepool in County Durham, Heysham 2 in Lancashire, Hinkley Point in Somerset, Oldbury in South Gloucestershire, Sellafield in Cumbria, Sizewell C in Suffolk and Wylfa Head on Anglesey".

    As I have said before, this could mean that there is a great opportunity for Wales to become a real centre of expertise in this sector, and it is now up to the Welsh Assembly Government to ensure that European Structural Funding can be used effectively to help build up value added projects for the new power station. For example, helping to create an energy technology park around the new development and ensuring that the skilled workforce needed for the power station and its construction are sourced locally are just two simple examples on how the project could benefit the Anglesey economy.

    I fully expect WAG to announce a detailed strategy for supporting the Wylfa B development and how it will benefit the local economy over the next few months.

    Whilst Anglesey will be celebrating, some in South Wales will be in a very different mood, if the Independent is to be believed.

    According to a report out today, "Chris Huhne, the Secretary of State for Energy, will tomorrow jettison the world's largest tidal energy project, rather than make the taxpayer foot an estimated bill of £10bn to £30bn for the untested technology".

    I am sure there will be those who will be outraged at this decision but, as the Independent comment section states, "a realistic, economically hard-headed green strategy is right to discard tidal power in favour of the "holy trinity" of low-carbon energy: nuclear, clean coal and wind".

    The battle now is to ensure that Wales is in a position to take advantage of government policy in these three areas. Certainly, North Wales could be reaping an economic bonanza in terms of nuclear and wind but it is now imperative that South Wales fully participates in any plans for clean coal technology.

    Saturday, October 16, 2010


    In their election manifesto, the Conservatives pledged to begin work immediately to create a high speed rail line connecting London and Heathrow with Birmingham, Manchester and Leeds as a first step towards creating a national high speed rail network to join up major cities across England, Scotland and Wales.

    The second stage would involve the delivery of two further new lines bringing the North East, Scotland and Wales into the high-speed rail network.

    On Wednesday, we will find out whether this will actually happen. However, let me nail my colours to the mast immediately.

    In my opinion, if the UK Government is to build a high speed rail link, then it should start with the Great Western line from London to the West of the country, including Wales.

    Why should this be the case? Is this blind patriotism on my behalf? Well, only in one eye.

    As the Conservative Bow Group suggested earlier this year, Brunel’s superbly engineered Great Western line could and should take priority over the high speed line to Birmingham and the North, especially as some have suggested that it seems to have been designed all those years ago with a 21st century ultra speed railway in mind.

    Yes, at a time of government cuts, it could be the cheapest option for 'piloting' the high speed railway network.

    The Bow Group suggests that:

    "such a strategic reassessment could deliver a valuable early win of a high speed line to Bristol, Wales and the West, possibly even in advance of a high speed line to Birmingham and the North. This would make use of Brunel‟s superbly engineered Great Western railway which, “still remains one of the world‟s most extraordinary engineering achievements; almost dead flat for 82 miles from Paddington to Wootton Bassett, with long straight alignments linked by curves of huge radius, it seems to have been designed as a twenty first century ultra high speed railway. Electrified and resignalled, it would be potentially capable of operating at over 200 miles an hour."

    Certainly the cost would be far less than the proposed northern route and would demonstrate the viability of upgrade and the effect it would have on the Welsh economy.  For example, the British Chambers of Commerce has estimated that approximately 70 per cent of travellers to and from Wales utilise English airports, particularly Heathrow. It has suggested that

    "high speed rail to Cardiff has the potential to reduce journey times from London to the Welsh capital to 70 minutes. Currently, First Great Western services can only travel at 125mph between London and Bristol Parkway, while the speeds that can be attained in South Wales are much lower. Between the Severn Tunnel and Newport the maximum line speed is 90mph, whereas between Cardiff and Swansea the maximum speed on the majority of the line is 75mph. High speed rail offers the potential to dramatically reduce these times. With a direct connection to Heathrow, the journey time between Heathrow and Swansea can be halved from three hours to just over an hour and a half. Such drastic reductions will allow Wales, and the West of England, to promote themselves to international business as a location offering fast connections to Europe’s main hub airport and, with a link the continent too. Faster commuter travel will also significantly widen the labour pool for businesses on both sides of the border."

    Indeed, the absence of a direct train between South Wales and Heathrow adds significantly to journey time and to Wales’ ability and that of its businesses to connect to the rest the world, limiting productivity. Given the years of underinvestment into the rail network in Wales, isn’t it time for Welsh politicians from all parties to work alongside colleagues in the South West of England to lobby the government to make the Great Western line a priority for electrification?

    Indeed, you have to wonder why no-one has yet used the Bow Group report as the spur to ensure that the Great Western line becomes first in line for the high speed railway investment proposed by the the coalition government.

    p.s. Syniadau has also blogged on the Bow Group document, although as far as I know, its conclusions have yet to be picked up by the BBC in Wales.

    Friday, October 15, 2010

    Online Advertising Spending Round Up

    Well the overall economy, the housing market, and consumer credit may be struggling but there is one side of the economy who missed the recession memo.

    The online advertising and marketing industry is popping like never before. The entire industry seems to be doing well. All the usual suspects are turning big gains in revenue, profits, and of course possibility.

    In this post I want to take a look at the mechanics of what is driving the ever increasing online advertiser spending.

    Display Advertising

    Google has seen a huge jump in online display advertising. is operating at over 100,000,000,000 monetized page views annually. This means that they (my speculation) have another 700,000,000,000 page views to figure out how to monetize.

    I would say things are looking pretty good on that end.

    Display advertising overall for Google is projected to create 2 or 3 billion of revenue this year. Though this is maybe 10% or even less of total revenues for Google, the fact that it is even worth mentioning is a huge breakthrough for google who for the longest time was simply not competing in the display adverting market.

    Overall Google profits jumped about 33% year over year.


    Break Down of the Display Advertising Market Online

    Total Display Advertising Market is 8.6 Billion

    • AOL  -  4% -  $344,000,000.00
    • Google - 6% - $516,000,000.00
    • FaceBook. - 10% -  $860,000,000.00
    • Yahoo! - 15% - $ 1,300,000,000.00

    What I think is particularly interesting about this break down is that the numbers imply that the giants of the online industry are only accounting for about 1/3 of the total display advertising market.

    Other big ones I can name from off the top of my head are which is a network. See the display below...

    Then there are some large websites such as which have to make a dent.

    Any how one thing for sure is that the display advertising dollars and industry have a lot of room to grow and have a lot of uncertainty in exactly who and what will work for the long term and why.

    It is going to be an exciting ride.

    I am sure that finance bloggers are going to be all over this thing.

    Thursday, October 14, 2010


    “We need a radical overhaul of higher education in Wales so institutions see their primary function as serving Wales and its students".

    Wednesday, October 13, 2010


    As promised, some thoughts on the Hugh James Exchange debate from last night.

    Apologies for not doing it sooner but I left the house at 6am this morning for a trip to North Wales and have only just arrived back.

    Overall, it was an interesting evening and many thanks to Hugh James for inviting me.

    My one and only complaint was the format, which meant that it was not so much a debate as a speech, followed by question and answer session with very little time for the panelists to put any views across in any real detail.

    Of course, that did not apply to the Deputy First Minister, who was given around fifteen minutes to set out his stall for the ERP and then the rest of us were given one minute to respond. We were then peppered with questions from the audience on a range of matters.

    It did get quite heated on occasion as the Minister continued to try and toe the party line about all 190,000 firms in Wales would benefit from his policy of high speed broadband as opposed to the 10,000 that WAG currently works with. 

    The fact that the vast majority of the 190,000 are one man bands in sectors that will benefit very little from high speed broadband seemed to have passed his briefing people by, as did the statistics that a small number of companies will always create the majority of jobs.

    Tellingly, he did not respond to the question whether inward investors would also have to repay any grants or why only Welsh companies in six sectors would qualify for financial support.

    However, what was most disappointing was the Minister’s attitude towards devolution.

    At a time when the funding of universities is critical and he had emphasised the importance of higher education to the economy, I challenged him to raise the issue of devolving university research funding to Wales with the UK Government, thus releasing a further £120 million for university research in Wales.

    This he refused to do, stating that, in his opinion, there was enough research going on in Wales and that what was needed was to commercialise more ideas.

    Yes, incredibly, the leader of Plaid Cymru - the Party of Wales - refused the option to devolve more funding to Wales!

    And the debate was over. I was disappointed that I didn’t get to use the red hot information I wanted to on the evening but that can wait until the newspaper column on Saturday.

    On reflection, I was slightly miffed at not being given any real opportunity to put my point of view across as you would in any normal debate but I am more than happy to engage in a second round at any time as long as I get more than one minute to put my view across!

    One other thing - I know some of audience from last night are regular observers of this blog so would value your opinions on the evening and how it went.

    Tuesday, October 12, 2010


    Later tonight, I am taking part in the Hugh James Exchange event, "Economic Renewal: the right direction?".

    The keynote speaker is Deputy First Minister, Ieuan Wyn Jones AM and I am one of the three panelists which also include David Davies of Axiom Manufacturing and David Stevens of Admiral Insurance.

    I am really looking forward for the opportunity to finally discuss the Economic Renewal Programme, especially as I have just come into possession of a document that, to put it bluntly, is dynamite.

    Will report back later.


    Some startling, if not wholly surprising, results from the BBC study examining which parts of Wales are most resilient to any spending cuts.

    Data from Experian research undertaken for the BBC suggests that the south Wales valleys of Rhondda Cynon Taf, Caerphilly, Merthyr Tydfil and Blaenau Gwent were among the least resilient in Wales.

    Whilst the point of the BBC study is clearly focused towards the potential effects of the Comprehensive Spending Review, I wonder whether anyone will actually ask the most obvious question of all, namely does this not demonstrate the failure of the Welsh Assembly Government to make any real inroads into the issues facing our poorest communities?

    After three Labour led Assembly Governments, an Assembly budget that has nearly doubled since 1999, and two tranches of European funding worth over £3.2 billion, there seems to have been no real progress in terms of developing a sustainable economy within the South Wales Valleys.

    Of course, the knee jerk reaction will be to blame the Conservatives and the proposed reductions in public expenditure that have yet to happen but shouldn’t the Welsh Assembly Government be taking more responsibility for their own policy failings here?

    Did no one bother to ask whether the WAG policies of the past twelve years were actually making a difference to the poorest parts of Wales?

    Why, with a Labour Government in Westminster and Cardiff Bay, were no serious policy initiatives developed to specifically help the South Wales Valleys? What were all those Labour MPs doing at the time when there were still serious problems within their communities?

    Why didn't Labour Ministers in WAG look to lobby their colleagues at Westminster to develop policies which could have included an "enterprise zone" which covered the whole of the Valleys and could have created a more favourable business environment?

    Indeed, it is not as if there has not been calls for a more regionally focused economic development policy in Wales before. For example, the Global Entrepreneurship Monitor project did examine the differences in entrepreneurial activity between the various areas of Wales. For example, the 2007 report showed that:

    “the most deprived areas of Wales not only have much lower levels of entrepreneurial activity than more prosperous areas, but that there is a long term trend of lower levels of business ownership in these communities. This suggests that enterprise policies have, to date, not acted as a catalyst to regenerate the poorer areas of Wales. The GEM report shows that one the key reasons for this is the negative attitudes towards entrepreneurship by adults in these areas. This is due to lower levels of social contact with entrepreneurs, perception of good start-up opportunities and, most importantly, perception of possessing start-up skills. To address this enterprise deficit, a dedicated programme of training, advice and support should be available to help increase the entrepreneurial intention and activity rates in the more deprived areas of Wales. Such interventions could, if it brought the most deprived areas up to the current Welsh average for entrepreneurial activity, create around 4,000 new firms every year in the poorest communities”.

    Yet whilst this report was passed onto government officials with the recommendation that greater resources should be put into the South Wales Valleys to encourage entrepreneurship, nothing was done. I am sure there are many more examples of the evidence staring officials in the face and simply being ignored.

    And it would seem nothing has changed.

    More recently, I pointed out that WAG's own research demonstrated that within the poorest areas of the Welsh economy, large firms only accounted for 29 per cent of all employment growth between 2003 and 2006. This is despite a grant regime that is more generous than for any other part of Wales. In contrast, for those more prosperous parts of Wales that have a limited ability, due to European regulations, to offer grants and support to business, large firms accounted for 63 per cent of all employment growth. Simply put, the SME sector has been critical in creating jobs within the poorest parts of our economy whilst the majority of large firm employment has been created within those areas of Wales that have limited provision for grants.

    Given such facts, one would have thought that the natural policy implication would be to support and strengthen the SME sector within those more deprived areas, yet the new ERP is essentially abandoning any direct support to small firms within the South Wales Valleys.

    Indeed, it is therefore disappointing that there is very little detail as to how the new Economic Renewal Programme will help change the economic resilience of the South Wales Valleys over the next few years? In fact, the Heads of the Valleys is mentioned only ONCE in the whole document, and that is in relation to piloting more active, personalised support for unemployed and economically-inactive people.

    We have heard the term that "something must be done" in relation to the South Wales Valleys for far too long.  Recently, Leanne Wood called for a Minister for the Valleys and whilst it is not often that Ms Wood and I would agree on any matter, I think she is absolutely right on this matter.

    At the very least, we need to have a coherent policy from the Welsh Assembly Government on how it could, and should, address the deep economic and social problems of one of our most deprived areas. If we can raise the prosperity levels of the South Wales Valleys, it will benefit the whole of our nation.

    Monday, October 11, 2010


    Two major events this week, namely Philip Green’s review of government spending and Lord Browne’s long awaited review of university fees.

    With regard to Lord Browne’s review, which has been heavily trailed in the press, the former BP chief executive is expected to propose a lift in the cap on tuition fees to around £7,000 a year, with the possibility of some universities charging more for certain courses.

    This of course, only applies to England, as higher education is a devolved issue and the question for Leighton Andrews, the Minister for Education, is whether Wales will also adopt the recommendations or whether he will take a very different view of how to fund the university sector in Wales.

    I am sure some in Wales will try and make political capital out of this but it is worth noting that the Browne Review was set up initially by the last Labour Government so it can hardly be called a Tory plot to increase tuition fees. One can only hope that we can have a mature debate on this issue as there is a real need to close the gap in funding between Welsh and English universities.

    With regard to the review of government procurement by Sir Philip Green, the owner of Topshop and BHS, initial reports suggest that the government may be able to cut swathes of waste from public services and that financial controls across Whitehall are "lamentably bad". Indeed, it is probably no coincidence that this report is coming out a week before the Comprehensive Spending Review.

    It is expected that Sir Philip’s findings will show that hundreds of millions of pounds have been wasted on unnecessary rents and sloppy purchasing across Whitehall, with different departments failing to come together to push down prices on a range of products by buying in bulk.

    It will also show that Government Departments often have no idea what they are spending taxpayers' money on. For example, thousands of civil servants have been given BlackBerry devices even though their work is nine to five and that police uniforms for different forces were ordered in separate job lots from the same suppliers, wasting millions of pounds.

    What caught my eye was the suggestion that £20 billion a year is spent on property alone, with £10 million going on renting empty offices, including in central London.

    Given this, surely it is only logical that any recommendations from the Green review must seriously examine whether it should start moving its offices out of the most expensive part of the UK to relatively cheaper regions such as Wales. However, as the debacle over the closure of the Newport Passport Office shows, Whitehall officials still have a long way to go before they break their London-centric mindset, although the financial savings identified by Sir Philip may give them little option.

    Saturday, October 9, 2010

    The Social Network - What Do You Know About Success?

    Most people have a complete ignorance of what the cost and risk is of becoming extremely successful and extremely rich.

    Do you want to know?

    Are you sure?

    In the world of finance, if you pay attention, you will discover that potential earnings (at high levels) can do strange things to people.

    I am referring to what I am predicting is going to be a once in a lifetime movie experience.

    On the level of Forrest Gump, Fight Club, and Donnie Darko.

    The Social Network


    In just over three weeks’ time, the twelfth annual Fast Growth 50 list will appear in the Western Mail.

    It will celebrate, yet again, the best of Welsh entrepreneurship at a time when the economy needs it the most.

    Yet, surprisingly, there continues to be some doubts expressed within the Welsh business community as to whether the development of fast growth businesses in Wales should be supported by the business and policy community.

    Certainly, such an opinion runs contrary to much of the evidence which demonstrates the critical role of such companies, in terms of employment creation, innovation and exporting performance, to regional and national economies all over the World.

    Let us first examine the job creating impact of fast growth firms.

    A recent detailed economic analysis of employment change amongst SMEs showed that whilst fast growth companies represented only 6 per cent of all UK firms employing ten or more people, they accounted for more than half the job growth in the UK.

    The study, undertaken by academics at Aston and Kingston Universities, demonstrated that 11,530 high growth firms in the UK were responsible for 1.3 million out of the increase in 2.4 million new jobs between 2005 and 2008. Simply put, UK high-growth firms, on average, tripled their employment over a three-year period.

    Similar results have been found for other countries. For example, fast growth firms in the United States represented only 3 per cent of all firms but were responsible for 70 per cent of gross job growth.

    However, job creation is not the only contribution that fast growth firms make to an economy. Research has also shown that fast growth firms are more innovative, especially in terms of introducing new products to market, are more export orientated and more productive than the vast majority of small businesses. This is not too surprising, as the majority of growth firms tend to combine existing input factors in novel ways which results in an innovation that enables them to outperform the market.

    More importantly, such fast growth firms are found across all sectors.

    For example, a study from the OECD found that, contrary to the perceptions of many policy makers, only around one third of growth businesses are in high technology sectors. Indeed, high growth firms are as likely to be found in declining sectors such as textiles as they are in biotechnology and IT. Whilst many high growth firms are innovative, this tends to manifest itself in different approaches to marketing, organisation or distribution e.g. WalMart in shopping, Starbucks in food retail and Amazon in book selling.

    Other studies have shown that it is not particular sectors that characterise fast growth firms but other, mainly internal organisational characteristics. For example, factors such as the importance of close contact with customers and a commitment to quality of the product or service are critical in achieving a competitive advantage.

    As twelve years of the Fast Growth 50 project has demonstrated, many fast growth firms have strong connections with their customers and, as a result, are more responsive to customer requirements within a changing business environment

    Of course, given such success, one could argue why such fast growth firms should be supported by government when they would appear to need less than your average business?

    Simply put, this is a case of supporting winners, rather than picking winners and the broader social benefits fast growth firms generate for the economy as a whole can, as the research has demonstrated, be significant in terms of jobs and earnings.

    Of course, the real question is knowing the sort of support that is needed by such companies.

    Research by the Finnish academic Erkko Autio, currently based at Imperial College London, has shed some light on this. By examining different policy mechanisms from across Europe, Erkko concluded that there are a number of criteria that need to be considered before devising policies to support growth firms.

    First of all, policies need to involve close collaboration with private-sector service providers to implement sustained and focused development efforts. In particular, programmes to support growth firms should be proactive (i.e. in identifying and inviting prospective growth firms to join the programme), nurture an image of professionalism and involve seasoned managers who have experience in rapid growth themselves.

    Growth programmes should also consistently address managerial motivation and skills, focusing on highly customized management development activities that involve experience sharing and apply an interactive approach. Finally, they should link grants and participation to growth aspiration and achievement of milestones and, most importantly, be prepared to accept casualties.

    Unfortunately, there have been very few programmes developed in Wales that would meet with the majority of these criteria over the last two decades. This suggests that it is not the principle of providing support to growth firms that is flawed, but the actual practice of implementing such programmes successfully.

    Having grown their total turnover by over £300 million in a period of two years, and during the worst recession since the 1920s, the 2010 Wales Fast Growth 50 will demonstrate, yet again, the entrepreneurial potential at the heart of this economy. Surely, such potential should be given every possible support to blossom even further and to create wealth and employment across the economy?

    Given this, you have to ask serious questions as to why the Welsh Assembly Government has scrapped its growth programme as a result of the recent Economic Renewal Programme. Surely, now is the time to provide support for those firms that have the greatest potential for employment creation?

    Indeed, as the CBI noted back in 2006, government “must ensure that the needs of growing businesses are at the heart of the business support network”.

    I couldn’t agree more and if we are to develop a more dynamic and innovative economy, then we must support those dynamic and innovative businesses that have the potential for growth.

    Friday, October 8, 2010

    MERS - Failure of Mortgage Security Registration

    MERS - Mortgage Electronic Registry System

    MERS which is an abbreviation for Mortgage Electronic Registration System has been the ultimate authority and primary database of mortgage security registration and is where the records for proof of ownership has been kept since 1997.

    MERS was created to make it easier, and less costly to trade mortgage backed securities.

    It has worked wonderfully until now. The authority or MERS is now up in the air. The problem is that the actual paper work can be hard to track down and many homeowners have challenged lenders on the proof of mortgage security ownership. The big question looming is whether or not the authority of MERS will ultimately stand.

    There is talk about actual transactions being rescinded because of this controversy.

    Now I am all for homeowners catching a break. Trust me I think what needs to happen is to hike interest rates up but slash the principle of these mortgages via loan modification. When I say reduce principle I am not talking one or two points. I think we need to be slashing 20 - 35 percent off of these troubled securities.

    But back to my point if it comes to unwinding transactions that have already been processed then we are gonna have a problem. Everyone is going to have a problem. Who knows what the ultimate fate of the United States as a Nation would be if any sort of activity like that would take place.

    On a brighter side of this whole things many big lenders have halted foreclosure proceedings in 23 states so that they can figure this whole thing out. I think this could be exactly what the US needs to start over. Just think about it. lenders are going to be a lot more willing to work with homeowners in financial hardship if foreclosure is a 3 - 5 year uncertainty.

    Homeowners would be able to obtain mortgage solutions that work. Loan modifications would have to cut principle and interest rates to levels that are feasible. There is no doubt about that. What other choice would lenders have. They would be faced with one of two options. They can either work with the homeowner to find a solution that creates a sustainable mortgage payment for the homeowner, or they can try and wait out a storm of uncertainty and zero cash flow not to mention increased costs.

    Either way the homeowner wins because they are able to stay in their home which will be rent free. Imagine how much money a family could save over a two or three year period. By the time they were evicted they would have enough for a down payment on another home. That would be a great way for many folks to get their personal finance issues resolved

    I am really crossing my fingers that we don't take this too far. I think everyone is pissed off at lenders but lets not forget where we all keep our money. If Bank of America goes you can rest assured that the country that you know and love will go with it.

    On a whim I wanted to add one other thought.

    There is a nonprofit group known as NACA which was started in the late 1980's by a guy named Bruce Marks. He has been fighting for homeowners and the American consumer for decades and he fights dirty.

    Trust me every homeowner should thank what ever forces that you may believe in that this guy is on their side. When it comes to protecting homeowners this guy throws every rule out the window and will do his best to ruin anyone or anything that stands in his way.

    I am writing about him here because I think he is a great candidate to act as a leader in whatever solution comes of this mess. He cares about homeowners but at the same time he understands how the economy works and what needs to happen to preserve the Nation that we all call home.

    This is opposed to many advocacy group leaders and politicians who may want to stand up for homeowners no matter what the cost to lenders. then their is the other extreme of those who can be bought or purchased by the banks one way or another. Which in all honesty, big banking dollars can buy almost everyone. seriously this is not a notion to take lightly. A billion or so dollars will make a man or woman do unspeakable things.

    So I just wanted to throw Bruce Marks and the NACA a line. If you are not familiar with that organization then I suggest that you check it out.

    They help homeowners who are in need of debt help. It cost money but nothing is free despite what you may hear in the media. I am really getting sick of this notion that debt help should be free. Where do you think money for organizations such as HOPE NOW or the like come from? Straight from the lenders.

    I really wish one of the major news and media organizations would take some time and expose the mess that regulatory and political actions have made. These parties involved have destroyed any chance of an affordable debt help service option with incentives inline with the consumers best interests.

    I have mentioned this idea  in a prior post about the FTC debt settlement laws and nonprofit debt management groups. I encourage you to check it out.