Syntagma Digital
Editor, John Evans
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Saturday Ramble: BP — a spill destined to happen?

Big Oil Way back in the halcyon years of the 1980s, I plied a trade as a freelance copywriter in the City of London. My main clients were in telecommunications, especially BT, or British Telecom as it was known then.

BP, or British Petroleum as it was known then, was also a player in my multinational ecosystem. In those days, it was good to be British. Margaret Thatcher saw to that. Now apparently it’s the kiss of death.

Watching the unfortunate Tony Hayward’s crucifixion at the hands of a US Congressional Committee on Golgotha Capitol Hill yesterday, demonstrated how the mighty are only milliseconds away from disaster at all times.

His defeated expression throughout the proceedings was in distinct contrast to that of his predecessor, John Browne, the real progenitor of the string of disasters now haunting Hayward, BP, its shareholders and pensioners, on both sides of the Atlantic.

On Jeff Randall’s Sky programme on Thursday evening, author and scandal-sniffer Tom Bower, reminded us of the precursor to today’s woes. Browne had bought heavily into American oil and turned upper-middle ranking BP into one of the world’s great corporations. Small in height, his alleged Napoleon complex had rendered him invincible in his own mind. And indeed for a long time it seemed true.

Nowadays he’s known as Lord Browne and was brought down by a sex scandal a few years back. One wonders if that was engineered by figures unknown to move him on out of sight.

At the height of his relentless drive for power and status, Browne ruthlessly cut costs and trimmed safety margins as a result. A string of major incidents occurred, involving many deaths and injuries. BP was gaining an accident-prone reputation in the American mind.

When a small pipe, thousands of feet down in the Gulf of Mexico, exploded, killing another 11 workers and polluting the fisheries and environments of countless people living along the US’s southern coastline, the dam of indignation and anger burst. It’s that spillover that now threatens BP more than the actual oil leak.

BP’s rise and fall is pure Greek tragedy. Even a minor godling looking down on the scene from Mount Olympus could have predicted the crash that was coming. In a small way I sensed it too after a final experience with the company in the 1980s.

I was asked to write a chunky booklet documenting and describing BP’s worldwide activities across all its divisions. These days they include, am/pm, Aral, Arco, Castrol, and Wild Bean Cafe, whatever that is. Back then it was chemicals and an array of petroleum products and outlets.

Entering BP’s massive headquarters in the City, I was met by a young woman from Tech Pubs who was to oversee the project. I was delighted to hear that the designer was someone I had worked with many times before and was a leader in his field.

The dampener came when Miss Tech Pubs warned me that the text would be scrutinized minutely by the senior managers of all the divisions, most of whom were engineers. I was experienced enough to expect a solid technical input.

Engineers worldwide have a peculiar way of expressing themselves. Most sentences begin with “Then …”, and the rest tends to be gobbledigook. If you’ve ever tried to master a manual accompanying a technical product, such as a top of the range digital camera, you’ll know what I mean.

Needless to say, everything I wrote was lifted out and replaced with chunks of already existent text written in impenetrable jargon. The broader purpose of the document, that of presenting BP as an inspiring benefactor of the Earth, was totally buried by formulaic spam.

When the final booklet appeared in print form, I was amused to note that the designer had used a small typeface and set the text blocks in a light grey on a white background. They were hardly discernible, except as a design element.

He had also agreed to a personal request to have my name discreetly removed from the cover. Tony Hayward eat your heart out.

For me, the writing was on the wall for BP back then. At its centre was a machine that preferred stale platitudes to vibrant messages, technical ramblings to vivid expressions of purpose. It was a vacuum that is visibly imploding today.

How can this massive international company retrieve itself from a seemingly impossible situation without being bitten to bits or swallowed whole by fat predators?

It should first do penance by admitting the early mistakes made in the John Browne era and the apparent inability to put them right over the last three years. Tony Hayward should go gracefully for the good of the company. An engineer with no public relations or presentational skills is of no use to BP now if it is to survive. So too should the silent Chairman.

I would recommend a massive programme aimed at finding new types of affordable, non-combustible energy, on top of its current commitments in the field.

This should be launched with an immense public relations effort around the globe, but especially in America. I’m assuming, of course, that the current leak and its effects will be cleaned up sometime during 2010, and certainly in time for next year’s fish stocks and holiday season.

Aggressive Big Oil should give way — if only partially and presentationally — to Saving the Planet.

John Evans

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Parish Pump: No more politics

Parish Pump I’ve decided to give up writing about politics on this site. The reason is that, with a new business to run, there simply isn’t time.

Writing about politics is an all-consuming activity. It glues you to 24-hour news almost 24/7. It entices you to read all the serious newspapers and political magazines every day of the year. Add to that, time spent trawling the internet, Googling for clarifications and chasing up leads, plus the background research and fact-checking.

Instead, Syntagma will revert to type and concentrate on a melange of finance, philosophy and technology as in days of yore.

I know I shall be tempted to dip inky fingers into the increasingly murky waters as the British General Election gets near, but be assured Reader, my resolve will hold.

Except, of course, to raise a hearty cheer, and glass, when David Cameron walks into 10 Downing Street as Prime Minister.

The rest is silence …

John Evans

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Davos and protectionism

Parrot At Davos today, Gordon Brown warned that countries should not resort to protectionism to remove their economies from the global slump.

“This is a time not just for individual, national measures to deal with the global financial crisis. This is the time … for the world to come together as one.”

Heaven help us, he’s getting Messianic again. A classic case of fantasy working overtime.

Sanity from Pascal Lamy, Director-General of the World Trade Organisation (WTO), who said that moves towards protectionism during a downturn were expected.

Reference: Sensible protectionism is not a sin

John Evans

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Sensible protectionism is not a sin

Protectionism The word “protectionism” is on almost everyone’s lips these days. It’s viewed as a bogey word, depicting the worst that could happen.

The fact is, it’s as inevitable as cold weather in winter. In some senses it’s also necessary.

When danger advances, creatures retract to safety. Think of crabs, snails, hedgehogs, wood lice … humans. The flight to safety, as financiers call it, is as natural as autumn rain. It will happen. It is already.

Globalization is fine in the good times. No-one turns away a good deal when there’s no risk, even if it arrives from a far-off country. When we perceive high risk to be involved, we withdraw to what, and whom, we know, in our own communities.

We can’t buck human psychology. We shouldn’t try. Only socialists do that. It wastes precious energy and resources.

The time has come to rebuild our home infrastructure and rethink the way we are governed. Anyone who believes that is not necessary should consider the mechanics of how we operate a variety of our affairs now: The State of the Union.

Latterday protectionism is happening over trade — think U.S. car subsidies — and also in financial markets. Foreign banks have all but pulled out of Britain, leaving massive holes in our ability to borrow commercially and domestically. That is a major part of the problem we face.

Did anyone in the UK with a Post Office savings account know their money was held by the Bank of Ireland? They do now!

We may be lucky that the situation is “only” as rotten as in 1931, especially as 1933 was when the really bad things began — like Major (later General) Patton leading a sabre charge of the U.S. Cavalry against 25,000 starving war veterans in Washington DC. That sort of thing couldn’t occur now, could it? Don’t count on it.

The fact is we’re set on a trajectory that will bring us close to a 1933 scenario. Let’s do ourselves a favour and accept that. We can then set about putting our individual houses in order by retracting to what matters here and now. When the time arrives, we will be prepared for the economic winter to come.

Bleating on about “global solutions” that are never solutions, even in the good times, but merely sticking plaster pretences to save face, is about as counter-productive as it gets.

This is not pessimism, it’s an acceptance of human psychology and having the guts to face up to it. If the worst catches us by surprise, we have only ourselves to blame.

Britain as a nation has always faced the tempests bravely, with fortitude, stoicism and humour. Our leaders need to start preparing the country for a prolonged period of acute discomfort. When we know the worst, the best in us will emerge.

The good news is that when we hit rock bottom, the only option is to rebound.

But will we have rebuilt our public domain by then, so that we can be first onto those bright sunlit uplands?

John Evans

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Let’s play the blame game

Celeriac It’s fascinating how the gathering slump has changed topics of general conversation. Nowadays you can catch shoppers in supermarkets discussing the price of Hungarian credit default swaps over the celeriac counter.

Each generation has its version of the Schleswig-Holstein question. Ours is probably the state of the Baltic Dry Index.

As the Iraq war did more to disseminate geographical knowledge of the Middle East than the entire schools system, we are all passable economists these days.

So, since amateur Keynesians are everywhere stalking the land, let’s consider who is really to blame for the problems we all now face.

After much digging around, we can report that, contrary to many attempts to blame investment bankers, as well as retail banks and their customers for the financial fiasco, real seed culpability lies with politicians of the left interfering in the workings of what are sometimes laughingly called “free markets”.

Here’s the timeline:

1977. President Carter passed the Community Reinvestment Act which forces commercial banks and other financial institutions to supply sub-prime mortgages for social housing to low-income borrowers.

1997. With President Clinton in office, Wikipedia reports: “In October 1997, First Union Capital Markets and Bear Stearns launched the first publicly available securitisation of Community Reinvestment Act loans, issuing $384.6 million of such securities. The securities were guaranteed by Freddie Mac and had an imputed AAA rating.” Collateralized Debt Obligations (CDOs) and their near kin were born, with U.S. government approval.

Note that in 1997, Gordon Brown and Tony Blair were coming into power in Britain with a policy of free financial markets and a light-touch regime for regulating the City of London. Can such atrocious bad timing possibly be an accident?

For ten years as Chancellor of the Exchequer, Gordon Brown turned his back on the growing madness in the mulched-up derivatives markets, which he clearly did not understand.

When President George W. Bush arrived a few years later, he was almost immediately swamped by the terrorist crisis of 9/11 that dominated the whole of his Presidency and comprehensively wiped out his authority during his first term.

So the financial crash in August 2007 that has turned a drab cyclical downturn into an event of historic proportions, was started by the liberal interventionism of two Democratic Presidents. The implied government guarantee provided by Freddie Mac (now insolvent) also allowed the securitization of toxic debt and sent an arrow through the heart of financial stability around the world.

Both Presidents and Freddie Mac clearly had the best of intentions, but history tells us that when governments skew the marketplace, the worst is more likely to happen than not.

Let’s hope the lessons are learned or we’ll all end up eating celeriacs for supper.

John Evans

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