Hopes and fear in Noeth Africa and Arabia

As with the news media it has been difficult to know on which country to focus as reports of civil unrest and insurrection appeared from Algeria in west north Africa, Libya adjacent to Egypt and with Tunisia to the North, Jordan across the canal isthmus, the Yemen to the south of Saudi Arabia, in Iraq and Iran and then within the gulf itself Kuwait and Bahrain. It was quickly evident that the cause of the unrest or the form and extent of unrest was different although the precipitating cause was the success of what had happened in Egypt where mass civil disobedience protest had been successful despite the use of civil and private force, the apparatus of a police state and the stubbornness of delusional rulers.

I write this in an emotional and clear headed state because of the way events have unfolded over the last days.

Al-Jazeera UK provided an excellent account of what has happened in Egypt over the past three weeks, with the giant swings of emotions from expectations a week Thursday crushed in the political blindness and personal pride and obstinacy of the 30 years in power ruler as he and his vice president made one last hopeless call on the country to return to previous normality. They were met with a resounding angry no and renewed determination which led to the ecstatic celebrations a week Friday, renewed this Friday as with the approval of the Military Council, hundreds of thousands congregated around the country.

They were also there to remember the dead and to remind the Military Council of their expectation of the changes they require. The Military Police were present in the form of their band playing the national anthem and national songs and marches. Over the past week the Military Council has continued to issue communiqués saying that it will only continue in its present role until a new constitution and elections bring a new President and civil administration. It has said that existing treaties especially that with Israel will be honoured. It has arrested three former government ministers after placing two or all three under house arrest and frozen their assets. It has also taken action against one businessman amid reports that some of the most wealthy had already left the country in a fleet of private jets. It has called on the Commission preparing the new constitution to bring forward proposals within two weeks. It has said it will not field a candidate in the election for the new President. However it retains control of the Internal media and nothing has yet been reported which has come to my attention that the strict censorship controls are beginning to be lifted. Nor has there been evidence presented on the dismantling of the apparatus of the police state or the release of political prisoners. There is also no evidence that the tourists have commenced to return in any numbers. The stock exchange is yet to reopen. However there are no reports of violence or civil unrest. If the Military Council wanted any reminder of what will happen if it now fails to meet state commitments and timetables events elsewhere should keep them focused.

For a time the most worrying development appeared to be that in the small state of Bahrain, a collection of small islands with the largest of the 33 only 11 miles by 34 and an overall population of 1.2 million and where Britain had a major influencing control until the early 1970’s. And still has a base, together with the USA who uses the World Heritage site harbour for its Middle East Fleet. The Harbour area has also become the base for developing financial and commercial services and next month the International Motor Racing Grand Prix series commences as it has over recent years. The Crown Prince and his son are educated and enlightened men who have made important changes over the past decade and appeared unlikely causes of the decision to attack peaceful demonstrators in the middle of the night with the maximum force causing a a number of deaths and serious injuries. The shocked response of the USA President and British Foreign secretary summed up the fear that instead of learning the lessons of Egypt, forces within the country, perhaps under the influence of the Saudi’s had decided to try and tough it out

Bahrain is located next to vast Saudi Arabia with the other small gulf state of Qatar close by and where the longest connecting causeway is to be built, It sits midway in the Gulf with Kuwait and Iraq at the inner end, with Iran across the water and United Arab States and Oman at the mouth.

Iran has had and continues to have covetous intentions on Bahrain and other Gulf States and there have been previous uprisings in the part of the oppressed Shia majority and both these factors together with the movements in Tunisia and Egypt has made the regime and its Western Allies, notable the USA and the UK Jittery. The underlying problems are deeper and as elsewhere embrace the basic desires for democratic involvement and opportunities, freedom of expression, and potential for economic advancement.

The country has been ruled by the same family for 200 years and control and their ruler has been absolute although it does have a Prime Minister, uncle of the King and other family members hold the overwhelming majority of senior positions in ruling Council. It has developed a small Parliament which quickly became divided between Sunni and Shia religious groups seeking an Islamic state and when the voting went against the intentions to create a secular state in which women and Muslim interests were to be given roles.. Howver the Shia were largely excluded from government and other positions in the state by the Sunni minority and there was also significant corruption

It is my understanding that the regime did introduce recent improvements in wages and promised political and economic reforms in response to events in Tunisia and Egypt, but any good will was destroyed by the callous and brutal suppression of protesters on the roundabout area just outside the city centre. The government then accused the demonstrators of possessing guns and other weapons, refuted by eye witness reports from the international media.

As in Egypt the country has developed an educated and cultured middle class and the regime has supporters who benefited from government jobs and the profits from oil revenues and the older industry of pearl fishing. It was this middle class and often western educated and travelled section of society that is likely to have exerted influence on the King to control his relatives. It is also understood that the American president and British Foreign Secretary had direct contact with the crown prince after reports of 10 people killed and 500 injured. This immediately led to calls for the regime to be replaced.

However the Crown Prince appears to have intervened and in speeches in Arabic and an in English to CNN it is evident he is upset and determined to bring about change and investigate the events of the past days. The security forces have been withdrawn from the streets and protestors allowed to return and take control of the roundabout area setting up camp with food and medical supplies. It seems the absolute monarch has pulled back from the brink but whether this is enough to save him in the long term will depend on the action taken over the next days and weeks. Once you turn your guns on peaceful, albeit determined demonstrators, you are unlikely to be trusted again. The Crown Prince has to prove he was not responsible by arresting and prosecuting those who were responsible, even if they are also members of his own extended family.

The second flashpoint this week has been Libya, a socialist republic with a military dictator. This is a large country but with a comparatively small population of 6.4 million and where just over a quarter live in the capital city of Tripoli which remains the power base for the one of the most well known leaders in the world Muammar al-Gaddafi. For approximately 450 years 1551 to 1911 the country was controlled by the Turkish Empire and then by Italy until 1951 with substantial colonization by its people who formed 20 percent of the total. There was a substantial killing of the Bedouins who resisted with about half killed in battles or in camps. After a United Nations supervised independence led by its King a military coup in 1969 took place led by Gaddafi then a captain with other junior officers.

The Revolutionary Command Council of 12 came into being at that time and have remained in power. Unlike many Arab countries there is an established organisation of elected Local People’s congresses, some 1500 in total thus or one congress for every 4250. There are 32 regional congresses and the national Peoples Congress, There is considerable control over the media although criticisms are possible and initiated as a means of bringing reform. It is understood that the protests todate, which appeared small scale at first are calling for an end of the Gaddafi regime rather than for democracy. It is also a protest about who has power with the second city of Bengazi having been home for the opposition with the capital Tripoli being the power base for Gaddafi. Bengazi was where the monarchy had its palace nearby and the city has many of the institutions and organisations usually associated with a state capital.

Following the revolution Gaddafi closed the American and British bases and partly nationalised the oil industry. His approach was socialist rather than Communist but established close links with the Soviet Union and supported the Palestinian Liberation movement and other terrorists groups. In the 1980’s Libya was alleged to have been involved in a terrorist bombing in Berlin which killed two USA servicemen with the consequence that the USA undertook a bombing raid which led to several civilian deaths, including the adopted daughter of the Leader.

Over recent years the international issue has been the bomb in a USA plane in mid air over Scotland which in addition to the death of those on board the plane there were also deaths on the ground as well as destruction of buildings. Eventually a Trial of suspects took place in a trial of Netherlands and then the release of the only individuals convicted on grounds of terminal ill health, but after his return was greeted nationally in Libya he has remained alive. This issue created official tension between the USA and British Governments although in reality both the UK and the USA have been interested in developing relations with Libya because of its oil in land and off shore

The change in approach by the UK and USA took place after 9/11 and again following the action in Iraq Compensation has been paid to the families killed in the mid air explosion and those affected by the USA bombing. The regime has remained authoritarian with international concern on civil rights.

The latest information is that between 100 and 200 people have been killed with hundreds of other injured as the regime has announced it will not tolerate the protests. However in Bengazi the city administration, including the police and army units have sided with the protesters hence the decision of the national government to introduce its national guard/elite forces, including professionals bought in to try and ensure that the city remains within the regime. It may be threat the troops within their city military compound fear being over run and lynched and are therefore reacting with more and greater force defensively. It is difficult to see how the situation will end without further bloodshed.

The third flashpoint where deaths have been reported is the Yemen with its population of present 20 million and located at the end of the Arabian Peninsular. This is yet again a very different situation where there has been long standing problems between North and South Yemen

The country gained independence from the Turkish Empire in 1918 and established a monarchy until 1962. The North part of the country became a republic with the UK controlling the south and the port of Aden as a Protectorate. A communist form of government was formed in 1970 and the north and south became united only in 1990. The problem is that the Yemen has dwindling natural resources with 35% unemployed and an increasing and young population with 46% under 15 and a growth rate expected to result in an increase to 60 million by 2050.

Russia and China did provide help in the 1950’s. There was a return of over three quarters of a million citizens expelled from Saudi Arabia contributed to the unrest and civil war in 1994. There has been a close involvement between the Yemen and Somalia with 700000 Somalia citizens already in Yemen when another 100000 were accepted as refugees following their civil war and this may have matched the various moves of Yemeni into Somalia over previous centuries. There are also plans for a bridge linking the Yemen with Djibouti. The country contains several World Heritage sites.

After the civil war in the Yemen the International Monetary Union provided help to make fundamental economic reforms. The country was an ally of Saddam’s Iraq and backed the 1990 invasion of Kuwait.

It is has a democratic structure with a seven year term President, a 301 seat six year Parliament where the Prime Minster has to command two thirds support. The is universal suffrage at 18 but only Muslim’s may hold elected office. The first President elected in 1999 was re-elected in 2006 with international observers confirming that there had been some violence, violations of press freedom and allegations of election fraud. There is a religious based independent judiciary. There are also reports of corruption.

More recently there have been indications of just how volatile the country has become with an insurgency in he South in 2009 and an incident where official information is limited where either USA directly or the Yemen military under direction dropped bombs or rockets of what was believed to be an Al Qaeda training camp in the country in which 60 civilians, including 28 children were killed.

There are an estimated 70000-80000 Yemeni in the UK, with a quarter of this number in France. As with many fo the Gulf and North African states the population is divided into tribes as well as religiously between Sunni 52% and 46% Shia. There is a gulf between the ambitions of its constitution, Internationally agreed civil rights and everyday practice.

So far the protests have been on a massive scale and the number of death comparatively small, caused not by the intervention of government forces but from clashes between different interests. Whereas Egypt and to some extent Bahrain has the economic and financial base in which to address unemployment, poverty, and civil rights, it is difficult to believe progress in the Yemen will be possible without substantial foreign investment and financial help, unlikely while there is support for extreme Muslim beliefs and the worst of a Muslim state where women, critics and non believers have no rights and are severely discriminated against.

I was pleased to hear the USA Ambassador to the UK confirm my understanding and the reports of responsible commentators that there is not conflict or contradiction between having concern about Muslim extremists and having added worry over what will happen as more and more Arab countries become politically and socially unstable, and welcoming the of the general population to want to engage in democratic processes, to have an independent judiciary, a non political police, army and internal security services, in wanting an open media, equality between those of different and mixed genders, of providing equal opportunities for citizens regardless of their beliefs or lack of belief systems and so on.

I was interested by a recent Fox Chanel programme although drawing different conclusions. The programme wanted to warn everyone against encouraging movements supported by Shia adherents because some, notably the present controllers in Iran appear to have taken aspects of their bible teachings literally. The basic premise of Christian, Jewish and Muslim faiths is a resurrection after life of heaven and where there is a hell for those who whose life has involved acts of evil and which is controlled by devils. The Christian/Muslim/ Jewish literalists therefore see human earth world existence as a test period leading to an eternal post human existence in heaven or hell and that helping to bring the coming/second coming is to be encouraged.

All the three religions which originated within a small area of the Middle East and North Africa have their book of Revelations and period of the Apocalypse with the four riders heralding war, famine and death. There is the call of the martyrs for vengeance followed by earthquakes and natural disasters of increasing severity.

The angels then sound the trumpets to mark the destruction by fire, the poisoning of rivers and springs, plagues of locusts and a war in which a third of the population of earth are destroyed.

There is then further chaos and destructions in which the sun scorches the earth in great heat, the is a great earthquake and the final physical battle between the forces of good and evil where the rivers flow with blood.

There is victory by good over evil so that the devil is imprisoned for 1000 years, he escapes makes war but is then defeated. There is the last judgement where is settled those who are to be cast eternally into Hades and the lake of fire and those to are enter a new heaven replacing the old as God is revealed or words to this effect.

What this all mean in practice has been the subject of continuous interpretation by individuals since the words were first written or said, not by the originals such as Christ or Mohamed, but by subsequent followers. Unfortunately one of the most literal believers now has supreme power in Iran and therefore the sooner he is removed from his position the better for all of us and most of all for the majority of Muslims, just as there needs to be proportional action including war on those who seek to promote their own power and influence by exploiting situations of extreme poverty, religious suppression and intolerance in the name of a God and assisting in bringing about the end of human days by promoting chaos and destruction

The behaviour of the USA, the UK, Russia, China, Germany and other nations in the past, and recent past in countless instances towards Arabic and African nations and in to the colonization of Asia and Central and South America had contributed to the distrust, the suspicion and fear.

One can therefore be hopeful and fearful by the events this week in North Africa and Arabia.

The future of Egypt 2011

Slowly the reality of life in Egypt for the majority of citizens unfolds on the television screen across the world for those who are able and willing to pay attention to what is being said and shown and what is not. It is not just a revolution of the people on the streets for democracy and the rule of law we are witnessing but a fundamental change in the position of the governments of the United States of America, here in the UK and of the original and new members of the European Economic Community.

These are now changes which must not fail because of the inevitable impact on those on the street whose identity has been broadcast across the world on the various news media’s. There is the risk of the regime reasserting its authority and retreating to its old ways and of the regime looking to China for political and financial support.

The form of the changes is a matter for the Egyptian people to collectively determine such as the powers and length of term of the head of state and the balance of power between the head of state and Parliament. There should be contested elections for the Presidency and Parliament and such elections should be free from individual bribery, intimidation and violence as well as accurate voter registration and vote counting. There also needs to be greater attention to the rule of law and a major curb on the activities of internal security and police forces. Present controls on the domestic and overseas media must be abolished. My assessment is also that President Mubarak needs to relinquish all power quickly and a time table for the implementation of change agreed with all the principle interests within Egypt.

I believe there are several dangers arising from this people’s revolution. The most worrying is that while the President, Mubarak, maintains his position, in fact as well as in name, a point which the new Vice President has said on international TV more than once, the secret forces for maintaining his power will remain and those who have been interviewed expressing the aspirations and their concerns will be systematically rounded up, tortured and imprisoned or worse as they have been over the past sixty years of autocratic regimes led by military trained individuals.

It has to be noted that while Western governments have called for an enquiry into the organised murderous attacks on peaceful democratic protestors the new Vice President said that the President had ordered an investigation into the uprising and the forces behind it and that those responsible would be severely punished. Several of the main TV channels misinterpreted his words in the same way and it has looked as if many media editors, analysts and presenters have forgotten the history of the regime.

It is vital that that media is not intimidated and remain in situ until occupation of the Square ends and then maintains a close watch until the agreed changes begin to be implemented and their effectiveness monitored. I have in mind what happened in Hungry when the tanks rolled in and again in Tiananmen Square. It is also vital Egypt avoids a rapid descent into civil war followed by years of revenge and repression by one side on the other

I am also concerned that without some immediate settlement between the parties and interest, there will be those willing to switch allegiance from the USA to China which is anxious to gain a stronghold in the North Africa and the Middle East as they have been doing in the rest of the world. The Chinese already have a regime similar to that in Egypt and are as strongly opposed to religious controlled states. There are also those in the USA and the West who will favour this option as preferable to idealistic democracy or a religious controlled state. It also has to be remembered that Egypt switched dramatically once before from the USSR to the USA.
Thirdly there is the danger of the emergence of an fundamentalist anti USA and UK Muslim autocracy in Egypt as it quickly developed in Iran.

I am told that the structure of Muslim faith in Egypt is different from that in Iran and that those Muslims who are members of the Muslim Brotherhood in Egypt accept that in any change they will become active partners in the development of mixed society. First is has to be noted that 90 percent, yes ninety percent of the Egyptian born population of over 80 million are of the Muslim faith by birth and that the majority observe the call to prayer five times a day. The majority of the remainder are Coptic Christians.

It has to be said that the Muslim brotherhood is presently the strongest organised political force in Egypt second to the ruling political party. Recent events, especially the martyrdom of several hundred, will have already enhanced their position and while the majority are genuinely peace and partnership wanting, in reality it is the minority of activists with their agendas and missions which always dominate the majority.

The Egyptian Government with the support of Israel was right to learn the lessons of Iraq and immediately deploy substantial military forces along the borders to ensure there is no infiltration of” trained armed fighters into the country. President Mubarak and his Vice President, the USA President and Secretary of State Clinton, Prime Minister Cameron and Foreign Secretary Hague have all been right in expressing the need for orderly, planned and considered change.

Fourthly there is the danger that the expressions for an idealistic democracy and idealist expression of human rights will spread not just to neighbouring Arab autocracies but to Europe and to the UK in particular in such a way to create international instability and domestic chaos.

The issue of student loans has already been used by some extremists to bring violence to the streets of central London. Recently there have been moves to clear the activist camp from Parliament Square prior to the Olympic games next year. It is easy to imagine that if this proposal is carried out the result could be a similar outburst of popular support for the principles involved. Whereas the actual Square in Cairo is more akin to St James or Green Park, Parliament Square with the link along Whitehall to Trafalgar Square would bring the British Government and its administration to a halt as well as road traffic movement in central London. I can see Mr Cameron or any British Prime Minister and Home Secretary allowing that to go on for more than one day without forcibly removing participants who exceeded the original permission.

I have written separately about my concerns that with the dramatic changes in the composition of London and other cities and some towns, and the extremes of wealth which the financial system pursued by the Brown Bush era encouraged, that the present requirement, however necessary and essential for our economic future, to reduce employment and wages in real terms and through additional taxes and price rises, was creating a dangerous and potential revolutionary situation, especially if legitimate and desirable letting off steam protests on the streets, was allowed to become violent towards people and towards property.

The tactic of fermenting trouble to identify the extremists and introduce new controls is an established method used by all governments with the only differences that British Governments have been more skilled and effective than most, if not all others. We had an organic system which successfully enabled idealists go through the process of protests into political and administrative management, and sometimes leadership, counterbalancing the feudal tendencies of the land owning aristocracy and the amoral personal wealth acquisitiveness of the global entrepreneurs who are without national loyalties or social consciences.

It has been heartening to hear both opposition and supporters of the regime in Egypt talking of their love and loyalty to their country. I suspect that only a small percentage of English born men and women would genuinely talk in such terms whatever their political outlook. Since writing the above Mr Cameron has echoed my thoughts with his speech on the shortcomings of a multicultural society. What is needed is a balance between the dictatorial autocratic police state of the extreme right and lift or conservative militarism and the ungovernable and unstable anarchy of uprisings. Multiculturalism can work if there is an overall sense of identity and loyalty, but without it there is the potential for disaster.

I say all this as someone who has never visited Egypt or talked to Egyptians and who has had no inside knowledge of the workings of national and local government for close on two decades, but who would nevertheless be surprised if at their core things had significantly changed.. I have also has kept a constant eye on Parliamentary debates, the 24 hour news channels including Al Jazeera and Fox. and on newspapers such as the Daily Mail and the Daily Telegraph.

In this respect I suspect I have greater knowledge of the present and past situation in Egypt than most of the millions of tourists, with over one million from Britain, who visit the country each year, the majority staying at resorts along the Red sea, taking trips to the Valley of the Kings at Luxor and along the Nile river will know or care about the lives of those they encounter.

They may find out that those employed in Tourism will use part of their income to provide a life above subsistence for their relatives, living elsewhere in the country. This is not a criticism of the holiday maker but a reality of holidaying as it has become.

There are also those British Citizens who have married Egyptians and moved there, maintaining contact with their family and friends in the UK, who may also make visits and therefore have a good understanding in relation to the lives and position of the person married.

There will also be those who conduct business or have employment, usually on a limited contract basis. There will also be Egyptians who work in the UK and those who have requested and obtain political sanctuary. They will have made contact with some British citizens communicating something of daily life and the issues confronting the people in general and themselves in particular.

I do not know the overall numbers involved in this way except that there is an estimated 2.7 million Egyptian citizens living abroad (and said to contribute over £5 billion in 2009 from remittances). The majority of these have moved to other Arabic speaking countries with in Europe Italy having a large concentration. They will have already influenced public opinion in the countries where they reside and work.

Educated people all over the world will also know that Egypt was one of the early civilizations with a history of over 6000 years. I have Ancient Egypt in the Time Life Books series, and Ancient Civilizations by John Hayward covering the Near East and Mediterranean.

For many in the UK their knowledge of more recent history is based on the stories of Julius Caesar, Mark Anthony and Cleopatra from Shakespeare and the Cinema. In 1972 there was the Exhibition in London of the treasures and remains of Tutankhamen and I briefly looked at the catalogue and pictorial reminder before commencing this writing. Another source which has brought Egypt into British consciousness is the Agatha Christie work Death on the Nile

I also have a splendid Time Life Picture and prose book on the sights and sites of Cairo and only a few days before the present uprising, I mentioned my intention of re reading the quartet of novels by Lawrence Durrell and set in the Egyptian second city and port of Alexandria, created and named after Alexander. This work provides an interesting dimension to the normal lives of the people in that city before military rule became entrenched.

For people of my generation our “factual” knowledge of recent history commenced at school with the creation of the Suez canal and the British involvement at first financial which developed into the political. The country became independent in 1922 with a democratic constitution implemented in 1924. I became more aware of the country the year after I left school with the coming to power of Colonel Nasser and his nationalization of the Canal which led to the brief war and a petrol crisis and petrol rationing again not long after the rationing imposed as a consequence of World War II had been brought to an end.

Following the six day war with Israel Sadat took over following the death of Colonel Nassar and dramatically ended the alliance with Russia, by expelling their advisers and turning to the United States who helped finance the army and indirectly helped to establish the present day regime. Egypt effectively became a dictatorship one party state. This suited the USA in terms of having access to oil, keeping the Suez canal open and creating a buffer between Israel and more hostile Arab countries. It can be assumed that should the present regime reassert its way of doing things the mob will be organised to protest and ransack the USA and British Embassies and I noted that the wife and family of the British Ambassador was among those leaving Cairo as the week of developments progressed

The USA, UK supported strategy, appeared to fail when in 1973, Egypt motivated by wanting to regain land lost in the six day war, joined Syria in a surprise attack on Israel and with the USA and Russia both intervening before a mandated UN ceasefire. While technically Israel won the war, Egypt won the peace. Sadat visited Israel in 1977 and signed the peace Treaty in 1979 which although gaining back the Sinai territory, horrified the rest of the Arab world and led to the country’s expulsion from the Arab League of nations. This was only temporary and the Headquarters of the League is now based in Cairo.

A Muslim fundamentalist then assassinated Sadat in 1981 which is when Hosni Mubarak took over. This background is essential to understanding the outlook of Mubarak and his trusted military and political establishment and the acceptance of his domestic policy and police state controlling any opposition and limiting the economic development of the agricultural and urban working classes. It was a good life for those who were educated and obtained government positions, including the officer class in the funded and weapons supplied army by the USA.

However this is an oversimplification of the position of what happens when such a regime is allowed to flourish and where the dictator is feted in the USA and in Europe over three decades, especially, since the revolution in Iran and the rise of a Fundamentalist Islamic state and the crushing of its secular middle class and followed by 9/11.

The constitution recreated to ensure that there was only one agreed candidate for the Presidency with each term lasting six years. While in theory the power is divided between the President and Parliament, the President has the final say, and often the first say, on everything, moreover he controls the one political party allowed to have power, and he appoints the Prime Minister and Ministers in the government individually as well as regional governors. The country also operates under emergency law and used international concern on individual acts of Terrorism to give the police, open and secret, more power to maintain, surveillance, torture and imprisonment without fear of being challenged. Similar but not to the same extreme and outcome as what has happened in the UK in that the anti terror legislation resulted in local and other authorities gaining significant powers over individuals and their rights.

It is not accurate to say that the West and the USA in particular ignored the domestic tortures and suppression of political opposition but there was de facto acceptance of the situation in Egypt and in several other friendly Arab countries, because of increasing dependence on their oil and the fear of Muslim extremism.

A domestic movement for change commenced in Egypt in 2003 with the objective of democratic reform and greater civil liberties. The President decided to hold a multi candidate Presidential election in 2005 and then convicted and imprisoned the main opposition candidate who accused the regime of vote rigging and election fraud, of violence by pro Mubarak supporters and police brutality. The regime intimidates and bribes people into defending its interests. The outcome is that the overwhelming majority of voters, some 75% did not vote, and many of those who did were required in order to keep their government contracts and individual jobs. The regime also has complete control over all forms of media and with the military having the latest spy planes and spy satellites it can control the Internet and the telephone system, including mobile phones by monitoring everything and everyone or closing down to suit its interests.

This is why Presidential/Government/political Party tactics towards the uprising was not a surprise to those involved, or its capacity to say one thing to the other countries especially the USA, and to present a different view to its people via the media and anticipate that it will work as it has done for decade upon decade.

However the genie is now out of the bottle in such a way and which will impossible for things to go back as they were before without risk of achieving the very thing that is feared most, another revolutionary Muslim autocracy next door to Israel with a military capacity better than Israel. I have tried to explain why Western style democracies, particularly the USA and the UK are between a rock and a hard place when considering how to react to the latest developments and the TV coverage..

While democratic reforms and civil rights are important to the educated and the middle class Egyptians, its the basics of human survival and the opportunity to progress which is the interest of the majority, and why political and religious radicals have and will continue to be successful because they address these issues, providing social care for those who are deprived, sick and disabled.

Egypt had been able to make economic progress since World War 2, in five ways: Transit tolls from the Suez Canal, petroleum and gas productions, the maintenance of a large army who have nothing to do but train, the creation of the Aswan dam and the development of Tourism with the creation of the Red Sea holiday resorts and visits to the ancient sites such as the Valley of the Kings and the Pyramids and trips along the Nile river and to the museum of antiquities in Cairo.
The Canal remains important because the alternative around the South African Cape of Good Hope takes such greater time and is therefore that more expensive. However it is not wide and deep enough to accommodate the latest super tankers whose size compensates for the extra costs. Closure of the canal as happened for six months 1956/57 and between 1967 and 1975 hit the Egyptian economy as it did the international trading nations. The closure for 8 years reveals how stubborn the President and his regime can be.

Just as the Canal remains a national government operation so does the National oil company and which in turn owns 70% of natural gas which with petroleum products is a major export. While total production of oil and gas is only a small percentage of that required by China, the USA and Europe we would be badly affected if the supply is reduced, halted or directed to one country such as China. Until alternative energy sources are developed on the same scale petroleum and natural gas will continue to make a major contribution to the economy

To understand the significance of the military in Egypt all I need to say is that Britain with its ongoing involvement in Afghanistan and Europe together with its recent involvement in Iraq has a force of 175000 men and women while Egypt which has not needed to fire a shot in anger for over three decades has a force of nearly 1 million in fulltime and reservists with some 800000 eligible for national service each year aged 18 and continuing for three years

It is also important to understand that there are 5 military headquarters including Cairo, Alexandria and Suez and several active armies equipped with the latest arms and technologies provided by the USA and which includes the separate Presidential Guard. Only China with two and a quarter million, the USA one and a half, India, Russia and Korea with over million together with Iran, Turkey and Pakistan have more military in active service. Israel has the same as the UK.

In addition to the Presidential guard, there are a further 350000 individuals employed in the Internal national security service, including riot control, and which has several command Headquarters, and these are additional to the official police service. I do not have police numbers but it can be assumed there are half a million involved and like the army they need something do in addition to ongoing training. They are paid for and provided with weapons and equipment by the USA

These structures together with the war fighting equipped airforce with a spy plane and Satellite surveillance and Navy (ships previously provided by Russia and China) provides the opportunity to educate the 800000 national service entrants each year in the ideology of the regime as well as Egyptian national history and culture.

By my reckoning there is one soldier, security or police man for every 60 people in the country so that most families will have someone involved or has been involved. While the hierarchical authoritarian structure implies an obedient chain of command, the existence of different command structures and a substantial national service involvements means that the position of the military leadership is crucial to how the political and civil state functions.

The creation of the Aswan High Dam between the 1950 and 1970’s together with the earlier embankment dams protected the land from flooding, provided significant new growing farming lands, provided 12 additional generators of electricity, improved river travel and launched a new fishing industry in Lake Nasser. The economic impact has been substantial and significant
The final development issue is tourism, particularly, the development of the Red Sea Resort with its own International airport. The figures I have seen indicate that 500000 people are flying in or out of Egypt every week to see the historical sights or leisure at the Red sea. The impact of this number in terms of employment, provision of services and purchasing power is of increasing importance to the economy.

The tourist industry has been hit before with the Muslim extremist attacks at Luxor killing 58 people in 1997 and bombings and other attacks 2005-2007 including in Cairo and the Red Sea resort. Just when it looked as if the pressure was off tourism, the beach at the Red Sea resort had to be closed last year because of shark attacks and now this. It is understandable that those who run the tourist industry as well as those employed will have become angry and frustrated at the turn of recent events. The violence against peaceful protestors has done great damage which only a new and stable regime will begin to change international public opinion.

The government has denied responsibility although it is noted that the denial does not include the President or his Political Party. IT is interesting that to day the President and the executive Committee of the political Party have announced their resignation. The attack was planned and co-ordinated. It is also possible that army soldiers may have been hoodwinked by the advancing pro Mubarak people into thinking they had come to join the protestors and it looked as if two of the deaths came from the tanks who may have misjudged and hit protestors instead of shooting above their heads.

While rising food prices and the international monetary crisis has impacted on Egypt as elsewhere and its internal and external debt has more than doubled during the past decade and brief look at the percentages in terms of gross domestic product and international trade appears to me to indicate that over the past decade there has been variable management with better control of the external debt over the years 2005-2007. There was major denationalization a decade before followed by the encouragement of small and medium size private enterprise which has been increasingly successful. All the progress in coping with the international capitalist crisis together with the significant increases in foreign investment is now in peril with each day of the non violent insurgency continues.

I was aware that the country had a large population than the UK over 80 million and 60 million but no concept of its comparative size, twice that of Spain or Texas and California combined and 30th in the world overall dwarfing many of its neighbours. However the nature of the land means that 99% are concentrated on 5.5% which obviously has implications for industrial and manufacturing development and the economy of the greater number of the urban population.

The population has been increased with refugees from the Sudan where the number is believed to be anything from half a million to 3. There are said to be 70000 refugees from Palestine and 150000 recently arrived from Iraq, The position of refugees has already be questioned by human rights and aid organisations and will be a matter of concern as the President and Vice President have started to accuse foreigners for causing and trying to effect the outcome of the uprising.

Earlier I identified the threat of the uprising turning into a Muslim fundamentalist autocracy. The facts are that 90% of the population are Muslims with the majority of the remainder Coptic Christians. The present law does not provide for a religious based political party and this will have to be amended under any level of democratic reform.
The media has had a negative impact having been strictly controlled and censored so that the expression of anti President and anti government views is forbidden. The development of technology in surveillance with monitoring, postal, telephone and internet communications gained from impetus with the additional measures brought in after 9/11. The government is now able to close phone and internet communication as well as use to its own advantage and detriment of any opposition. The sad aspects of this is that Egypt has been regarded as being in the vanguard of Arabic art and culture.

So what is to happen next as the country cannot afford the continuing disruption and fear? For me the issue is not whether Mubarak stays as President but the extent to which there is immediate change visible to those insisting on controlling the central square, combined with stopping the violence against protestors and the taking of action against individuals, opposition parties and allowing the domestic media to report a balance account of what has and is happening. The rest of the world will also need convincing that real change is underway.

One view on the future of Christianity

In the last of the present series about the future of Christianity Cheri Blair, wife of former British longest serving Prime Minister and a practicing Barrister, asked the question, why is the Christian Church failing in Europe but thriving in the USA? Only 14% of the population in the USA claim to have no belief in any form of God whereas the percentage is 44% in the UK and 69% in Sweden.

In the programme Cheri did not address the question of the existence of God, or the historical validity of the Bible and the evidence for reported life of Jesus of Nazareth. She started from the basic assumptions of faith, of people with faith attending church. She asked questions of Anglican and Catholics Leaders in the UK and then went on a visit to the USA, speaking to such individuals as the Rev Jesse Jackson and the wife of President Bush.

Three things emerged from the programme. The first was not about Christianity but about Cheri Blair. The programme confirmed my hunch that she is planning a political career, on similar lines to that of Hilary Clinton, or perhaps she is even more ambitious with being Britain’s first elected President when after the death of the Queen Elizabeth, the country decides on radical reform with an elected head of State the abolition of the House as a chamber with titles and disestablishment of the Church of England.

The second is that instead of being a traditional Catholic she is at the forefront of arguing for women to have equality in the church and indirectly she questioned the continuation of the Church of England and even more indirectly the Monarch after Queen Elizabeth. It was evident from what was said that the Catholic Church with the present Pope is retreating even more into the establishing the purity of the faith and against modernism. An old friend from her youth in Liverpool who became a priest comments that the Catholic church has always been against change and that even to day if he took his ministry to prostitutes and gays he would expect to come under fire from within the church in contrast to the reported approach of Jesus of Nazareth. One British Church Leader could offer no explanation why the attendance and active participation was significantly falling.

Cheri suggested that one explanation has been the involvement of Europe in too major World Wars, with the occupations, the impact of the bombing of the civilian population, something with was not experienced in the USA and even in Civil war citizens woman and children, the elderly and sick were not directly affected in general. One has only see to the reaction to 9/11 to appreciate the difference between the experience of the two countries such as the decision not to take action to prevent the destruction of Coventry for example, despite having advance intelligence, because to do so would have revealed the extent to which we had penetrated their communications code. Several thousand were killed and injured un addition to the destruction of the city centre. Such actions, including the holocaust would test faith although there is little evidence in fact that it did, quite the contrary in fact as the churches thrived. Cheri argued that the change in the UK occurred with the freedom of the sixties which were significant greater than girls wearing short skirts and the impact of the contraception pill. For me issues such as the development of weapons mass destruction condoned by the Christian religions, the condoning of racial persecution and intolerance, the acceptance of Western wealth and third world poverty and sickness were also factors which challenged the authority of the older generation of the old order in the UK who I felt then and still do had become hypocrites unchristian.

In the United States various factors have created a different situation with perhaps the most important being the separation of the state from religious beliefs. This meant that traditional faiths could flourish with the establishment of Catholicism as a major force with the waves of immigrants from Italy, Ireland, Poland, Central and South America. Similarly there have been influxes of people of the Jewish faith in the early part of the 20th century and then again before the Second World War commenced and afterwards. Given that many of the early settlers went to the USA in order to achieve religious freedom it is not surprising that Protestants now accounts for over 50% of the population, that there are hundreds of different faiths and that many of the major new faiths originated the USA with each having several million of followers.

There has also been a strong movement, or movements is more appropriate to bring those with different doctrinal and practice preferences together

The consequence of this has been the growth over the past two decades of the mega church community, Cheri Blair visit one which was original established by a small group of young people who were dissatisfied with the religions of their childhood. To day they have created no one but several mega church buildings which from the outside look more like shipping malls or cinema multiplexes arena auditoriums with sating for 20000, cinema seats, large screens and full amplified audio visual presentations but proclaiming the basic and original Christian messages. The establishments provide places for a comprehensive range of activities and for a major involvement in all forms of charitable works. The positive aspects are the sense of equality and opposition to racial and other prejudices and the impression that participation is for as much or as little as individuals want, but the approach is to provide a total approach for life rather than just as religious fix once a week, not different to go to a football match or rock concert, opera and other forms of entertainment sport and group experience, However the feeling that this could be a weekly injection of religion which enabled people to go on with their life as before remained.

The cultures of post World Wars I and II Britain were very different from that in the USA in the same period, but the enlargement of the European Community and globalization does provide the opportunity for new approaches to become established. However I am not convinced that the older established churches, particularly the Catholic Church and the Churches of England and Scotland are able to adapt themselves, or that there is the momentum for the same kind of developments in the UK as in the USA. It would be necessary for the Monarchy and the Aristocracy to removed from government and the disestablishment of the Church of England.

I was awake in time for the Anew Marr Show where Greg Dyke was Greg Dyke and the discussion ranged from Bankers, MI5 and Torture, Margaret Thatcher and Jane Goody. There was a good and balanced piece on the death of Ivan Cameron and the approach to disabled children and support for their parents. I also enjoyed a piece of Radio Caroline and the disbelief some young people have that there was no popular music on the BBC radio and we had to listen to Radio Luxembourg.

I watched part of the League Cup where Manchester |United were not on form having rested a number of key players and Spurs had opportunities to win during normal time and then in the period of extra time, but were hopeless with the penalties kicks failing twice in the first three which Man United took successfully. Prior to this I watched Newcastle lose at Bolton 1.0 enjoying a lunch of roast pork joint and roast potatoes. Followed by grapes. Later I had a gammon salad

During the morning I had felt in the mood for Bach first with the Organ and the well known Toccata and Fugue which is the headline piece on of the first classical Long Play record in my small library, followed by a record of Cantatas, his Violin Concerto and then a two album of the Brandenburg’s. I listened to some Cantatas, a harpsichord concerto and some of the Brandenburg. I am listening to the cello suites 1-4 while writing.

Immediately after the Cheri Blair Programme I was transport to the late Victorian Countryside with Lark Rise to Candleford where the eldest sister of the dress store who was the at the cusp of polite good behaviour and scandal avoidance and the local policeman an authority figure in the community have a brief clandestine affairs during the period each year when the husband devoted himself to garden in preparation of the autumn show and his wife had taken to her bed in a form of protest at her dis-satisfaction with the state of their relationship. Mention of the dress shop reminded of an early episode when a piece of coloured ribbon was bought to brighten the life of the wife of the stonemason who was also feeling under the long marital weather and mothering. As a child I was also fascinated by pieces of coloured ribbon bought to adorn dresses made to pattern by my birth mother who became most skilled although it was an elder sister whop had stayed at home in Gibraltar to make the clothes for the family of seven sisters and four brothers. She used a pedal movement machine just after the war and then bought a small table top model which I learnt to use although only on sewing small patches of cut offs together.

The relationship is ended with the help of the younger sister and other good neighbours and other situations in the episode are nicely resolved to leave the audience with good feelings, including me.

Having complied that Lost had lost some of its integration and cohesiveness with the first episodes, last night was excellent with the back story on Locke’s suicide which was in fact a murder by guess who (Ben), and we find that Locke’s body along with the although Jack and Hurley, Kate, Sayid, Sun Hwa and Ben. The plane is hit by the white light turbulence that is moving the island in place and time and only Jack and Hurley and Kate find themselves back on the Island. In this episode the rest/some of the passengers have crashed on the island and one of them meets up with a female who has been under the custody of Sayid on the plane and mentions that she has found Locke who did cores not member being among the passengers. He says the last thing he remembers is dying. He then flashes back to when we last had knowledge of him after returning as part of the Oceanic six survivors, in Tunisia where he is contact by Charles Widmore who explains that he was on the Island but ejected by Ben and that the six need to return in order to prevent catastrophe with Ben at the heart of the trouble and offers to help him find and persuade the others to return together, giving him a false identity and a helper. Locke meets resistance from everyone contacted and then his helper is killed, (he learns by Ben subsequently) who comes to hospital where he has been taken after the shooting and subsequent car accident and where he is the process of committing suicide. Ben stops this, is given information by Locke where upon Ben strangles Locke and fakes his death as the suicide he was originally attempting. Back on the Island after the crash Locke goes to see some injured survivors and this includes Ben. One of the other passengers asks, do you know and him and Lock utters what will become of the great lines of TV drama. Yes. He killed me!.

The future of the Monarchy and Mr Paul Burrell

Is the UK heading for a Republic when Queen Elizabeth dies? Long then may she reign. This thought struck me not because of media interest in the inauguration of Barack Obama as the next President of the United States but the way the media has featured to attitude of Prince Phillip with his slitty eyes comment in days long since passed, then Prince Harry with his Nazi fancy dress and then suddenly bringing to light a three year old video of him calling a colleague a popular race name among a large section of British folk, then Prince Charles reported as doing something similar in relation to someone at the Polo club. Despite apologies and defences the matter has continued to be discussed, as it was on Question Time Thursday, and the behaviour condemned by heavy weights of the three main Political Parties. By coincidence, I presume, there was also an interesting, but purpose odd programme, on the former butler of Diana, former Princess of Wales, Paul Burrell during which serious allegations against a member of the Royal Family were resurrected..

British Politicians and media have always been understandably two faced on the issue of race. I say understandable because it is morally right and socially desirable that in principle everyone in the UK is treated with fairness and given similar opportunities regardless of their racial ethnicity, their country of origin, their parental background and present social status. It is wrong in principle for anyone to be handicapped because of the colour of their skin, because of their parents or other family members, because of their religious and political views, their sexual orientation, where they live, or how they spend their time and money.

I say in principle because their are some exceptions to everyone being treated with fairness and not handicapped by their behaviour. However this does not refer to their colour, or parental background for example but to what they have personally done or not done in the past. Someone who has committed murder should be viewed with continuing suspicion whether they are in prison or not. They should be given the opportunity to demonstrate that they have reformed and able to fit back into society and be eligible for its privileges. Because they have completed a prison sentence does not mean that their slate should be automatically wiped clean. Similarly if someone has been guilty of fraud or straight forward stealing money, they should understand ongoing caution about them being put into any position where they have access to or control of the funds of anyone other than themselves. Human beings can fundamentally change their behaviour, their beliefs and the language they use, but it is wise to be cautious about anyone with a pedigree of crime or anti social behaviour. There are issues in relation to their marital partners and their children which will affect ho society responds to them as parents.

What I object to, and believe is counter productive, is when politicians, the media and others in public positions try and pretend that the UK has not been a racist country or pretends that racism and other forms of prejudice has not only be ingrained into every aspect of British life but continues to thrive. I have met tens of thousands of people in my lifetime and I have not met anyone who is not prejudiced about something or someone. For a decade in Germany almost everyone was not just members of fascist organisations but supported Hitler and Nazism, just as the majority in Communist countries believed in Communism and supported the Russian style of state authoritarianism. And these beliefs did not just suddenly stop when Germany surrendered in 1945 or the Berlin Wall was demolished. A large number of people continue to hold their beliefs until the day they die, but also learn to keep their views private, preferably to themselves. Remembering the Jesuit principle of give me the child for seven years and I give you the adult, by the time most children started school in the UK in the last century their beliefs and attitudes were already fashioned and it is only within the past decade with the significant growth of nursery education that new generations will not be imbued with the beliefs and attitudes of their parents to the same extent as previously.

Therefore it is important that politicians, the media and those in authority continually reinforce what is acceptable and what is not, while understanding the extent of the problem and the nature of the change required. It is especially difficult for some whose lives are under constant scrutiny, and where a lot of money can be made by disclosure, to be always on their guard against saying or doing anything which will be interpreted as offensive or unacceptable to some section of society, or to their contemporary society in general. I am therefore surprised and disappointed that Prince Charles and one of his sons have not yet grasped that even in their private society it is important to avoid statements and behaviour which will cause offence and more importantly further undermine the likelihood of the monarchy surviving Queen Elizabeth. At a stroke all the good work of military service and good causes has been undone.

This brings me to the programme on Paul Burrell. There was an air of revolution in London and around Britain when the former Princess Diana died. It has taken a decade for the combined efforts of the Monarchy, Government, the UK media and two dodgy enquiries to reach the position when for the time being other issues have replaced nationally expressed concerns about her death. Even Mr Al Fayed appears to have dropped his efforts to establish the truth.

I have had and continue to have reservations about the way Paul Burrell portrayed his relationship with Princess Diana, having read the first of his two books and viewed his TV appearances, and followed what happened at the Trial. His semi banishment to the USA where it appears he is doing financially well, seemed a fair outcome for everyone and I assumed that was the end of his influence in the UK over the life and death of the Princess and the future of the Monarchy.

The one hour programme on Channel Four on Thursday Paul Burrell: What Really Happened, is part of a new series with presenter Jacques Peretti. Now who is Jacques Peretti?. I am always suspicious about individuals who poke their noses into the lives of other people in such a public way and yet do not reveal much about themselves if my Internet and Wikipedia search is one indication. To-date his TV programmes have been about sex and the effect of Hitler upon popular Culture; he has written, produced and directed one programme in the IMD database, written and directed a second and produced two others before this new series which I understand will also cover Michael Jackson and Amy Winehouse. The list of references in the Guardian to his writing is more extensive both in subject and quantity.

The focus of this what really happened is the trial where Mr Burrell was accused of taking without authority some 300 odd items belonging to Princess Diana from her home. In the programme Mr Peretti seemed to me to be implying but then backtracking that the main reason for the original police raid was a tape which was said to have been made by the Princess when she visited a former employee of the Royal Family who claimed he was raped by one of its member’s. Mr Peretti also implied but also backtracked that a deal had been done in which Paul Burrell left the UK and limited what was subsequently said to the public in exchange for the memory recall of her Majesty reported to the court shortly before he was due to be cross examined. The programme also reminded of what Mr Burrell was reported to have said following his appearance at the Inquest. The programme ended with Mr Peretti posing the question: Did Mr Burrell know something which would blow the Monarchy out of the water or was he a clever bluffer?

Mr Peretti revealed that the outing of Mr Burrell’s alleged relationship with a man living in Australia had come from the Palace. However he also stated that the reason why the British media turned their fury on Mr Burrell was not out of deference to Palace wishes but because he had sold his story to only one Fleet Street (national) newspaper. Mr Peretti also obtained interviews with the father and brother of Mr Burrell who were both upset at the lack of contact, especially the lack of any invitation to visit in the USA. Mr Peretti arrived at the shuttered home of Mr Burrell to find a car pointedly outside the garage to signal that he was home but not for you. One assumes that the programme did contact Mr Burrell or his agent in advance at some point. The programme did not say if there had been a private meeting subsequently, if the visit outside the property and the non appearance had been pre arranged. I was left wanting to know more about Mr Peretti and his methods. Oh you cynical you.

I was left with the feeling that something is going on within parts of the establishment in which the future of Britain as a Monarchy after the Queen is being best questioned, tested, and alternatives planned.

I have watched four hours of American Idol over two days. What is said to be the biggest season so far is being compressed. The problem is that people have become bored with the preliminaries. We are not impressed by sights of thousands of people surrounding the auditions and most of us are embarrassed by the humiliation of those who cannot sing, and disinterested by those who know they cannot sing but see the programme as the opportunity for personal publicity. Most of us can see through the formula of carefully selecting most of the possible finalists for exposure, especially if they have a moving story to tell, they are young, have some quirk such as being the brother of the third runner up of the last series. Those behind the programme need to devise a new formula for the preliminaries.
As I walked to Smiths on Thursday I attempted to count the number of paces and estimate that the total for the outing was between 3250 and 3500 about a quarter of the activity required each day. I am determined to maintain this quantity while the weather continues to be cold. I mark my intake of nutrition fair to good.

I was interested by a series of articles in the Daily Mail by Paul McKenna on the subject of sleep. Foe those who want to have a normal sleep pattern of eight or so while it is dark the advice not to have naps during the day is obviously a sound one. Going to bed only when you are sleepy and not staying in bed getting worked up about not sleeping is advice I have been following with good effect. What continues to upset is when I am in the half and hall zone tired but unable to sleep and tired but unable to work or become engaged in something worthwhile

When one eats and drinks and what one eats and drinks are important factors but alas the rule not drink anything with caffeine some eight hours before bed time is a definite no no. My present diet is a good one a d I have banned Pepsi Coke. If I drink alcohol my body reaction follows the standard pattern of being sleepy and sometimes sleeping well on the settee in front of the TV and then I usually am fully awake and mentally active,

I agree with not trying to sleep just after I have watched something interesting on TV or completed a piece of writing and I sometimes do the washing up and sorting out of food for the following day but making a list is usually counter productive. My sleep environment is a good one, dark and quiet although the air surrounding the bed is sometimes too warm when I forget to switch off the hearing about an hour before retiring. However for me the problems are mental as well as physical,. I am sure the techniques and exercises outlined in the four articles of varying length and quality will be helpful to many. In my instance it is about management enable the maximum use of waking time and just with the issues of weight and exercise it is a question of will and application.

What went wrong with British financial institutions

Last night there was the first of a BBC 2 programme covering the bank crisis which led to the collapse of the financial system and economic meltdown around the world. The programme commenced with how the banking system came from China to Venice via Marco Polo where he had found that traders used paper, ‘flying money’ to represent the value of goods rather than transfer gold and silver. It was a short step from the use of paper money to want to charge interest and this posed a problem for the Venetian Christians, for as every Christian knows, money lending and charging interest was prohibited by Christ as recorded in the New Testament. The Venetians got around this by getting the Jewish Citizens to undertake the system for them which became established in the stalls at the Rialto hence the term Banco for Bank and which I understand is the word for stall. It was later that fixed premises were established to conduct financial matters of this nature in Florence, Lombardy. (Lombard Street in the City of London became one to the key address in the contemporary financial world).

The Programme had commenced with the loss of the first Mars probe which resulted in the rocket space craft gaining speed instead of slowing as it approached the Red Planet and 125 million dollars disappeared into space. The cause was a communications human error by those ordering the craft and those making the craft misunderstanding the specifications. This reminds when in Cheshire 1971 1974 during the creation and development of the first social services department in the county, a new residential home for people with learning difficulties was purpose built and cloakrooms were included with wash basins but with without the toilets which had been intended.

Evans Davis, the well known BBC financial expert, and author and presenter of the programme, The City Uncovered, Banks and how to break them, used this example of rocket scientists losing the plot for two reasons as those who devised the complex trading systems on Wall Street became known as the Rocket scientists and in their case it was not a hundred billion dollars that was effectively wasted, but hundreds of billions. Was the 2007 and 2008 financial crash the result of human error, of greed or the system being too clever and too fragile for humans to master at this time?

Mr Davis then explained that how the banking system as it developed two arms which converged with the development of computerised technology. Most people are familiar with the activities of banks on the High street although it was not until my care mother was 90 and my birth mother 92 that they held cheque book accounts for the first time, having relied on the Post Office saving accounts when they first came to England and then the building society for the purpose of savings. For the every day payment of bills and settlement of monthly accounts they used cash which my birth mother kept in envelopes.

The High Street bank was regarded as one of the symbols of British steadfastness and security. You could deposit money from earnings for the regular payment of bills and through cheque books for one off expenditure items and transfers into savings accounts which earned interest. You could borrow money to buy a homes or a car although Buildings societies and specialist car loan firms where the more likely call for the average individual and family. Banks were seen more as places which handled the finance of businesses and large corporations and provided them with the funds for expansion and to covering operating expenses. The bank card and the credit card changed the position in relation to individuals and families.

The second development was previously explained in the Nial Fergusson Ascent of Money series that the investment banking system was established in France by a Scotsman, prior to the French revolution, trading in shares and then in stocks and currencies and how the merging of these two functions coupled with the use of increasing complex computerised mathematical systems created the present collapse.

The BBC 2 programme then looked at the collapse of banks, Northern Rock and Lehman Brothers, one a traditional building society which became a bank and then an investment and trading bank, and the other a traditional investment bank which became involved in the property mortgage business. The two former chief Executives have been called to account by the respective political bodies of their countries. Both financial institutions commenced in 1850, a significant period in the history of my maternal family in Calne, The Northern Counties Building Society was established in Newcastle with the purpose of taking deposits and lending out money for people to buy domestic properties. The Northern Rock as it became re-branded, remained basically doing this until 1997 when to had become a highly respected and significant employer in the North East.

At this point it is important remind the essential nature of this form banking which is to lend long and borrow short. The money is lent for long periods at a higher rate of interest than the banks is prepared to borrow money, which is short, that to take your savings with the promise to pay back on demand instantly, or with notice for which a higher rate of interest is paid, for a week’s notice, a month, a year or for longer but usually not for more than three to five years in the form of a bond and sometimes with an interest bonus designed to encourage the investor not to cash in before the required period. This however means that even though there is a flow of income from loans previously made should everyone who has lent short term seeks their money back, the bank in question could find itself insolvent because no bank or financial institution, or business for that matter likes to have capital in the form of cash, liquidity the technical term, held, and not earning some income

The banks also have share holders who expect dividends and the value of shares reflects the value placed on the bank by the financial market and which in turn is influenced by profits which the bank makes on the difference between the interest it charges and the cost of the cash it needs to issue further loans and ensure it can meet its operating costs and fluctuations between the level of income from investments and repayments and interests and the demand for new loans.

Given the principle of lending long which means it does not get its money back for decades, but it borrows short which means that if required to pay back suddenly and at less than long term value and with limited cash reserves banks are always at risk and vulnerable. This is not something generally appreciated by the public until recently, who I believe that the bank held the actual money which they had deposited with it.

Say a bank lends £100 million in mortgages to be repaid with interest in 20 years which will yield £200 million in total and does this every month. It has cash reserves of £10 million in relation to each month’s of new lending and capital assets but selling all its administrative buildings will mean the end of trading and take time to find a buyer and the if required because of an emergency the price obtained will be significantly less than at times of its making.
It order to finance new loans the bank has to borrow money which traditionally would come from money parked very short by businesses and public bodies such as local authorities, and individual savers.

Over the recent decade the volume of new savings was reported in the programme to have increased by 2% a year while the demand for new loans for properties increased from 10 to 15% approximately (I am not sure about these figures which I think applied in the UK rather than the USA), Moreover the banks had been searching for new ways to make themselves more secure especially as they were only allowed invest in the most secure of investments, I believe with a triple A rating which excluded investing is most if not all the stock market however much blue chip,

It is now appropriate to turn to Lehman Brothers which according to the programme commenced in 1850 as a store in Montgomery Alabama and which at the time of its collapse had a workforce of 28000, including 5000 in a tower at Canary wharf London. It had become one of great financial enterprises in the world, because early on in its history the brothers had started to trade in cotton, then moved into the railways, financing the once great store chains such as Woolworths, and into financing Hollywood Pictures with, RKO and 20th Century Fox, then the production of television sets and financing Intel the computer chip giant.

In the 1970’s there developed on Wall Street the way, it appeared, of lessening the risks which all banks are subject if the short term borrowers come knocking for the immediate repayment of their money. There are three steps in the process. First the bank borrows wholesale from other banks rather than individuals, say £100 million and this enables the bank to loan out to buy houses say at an average of £200000, that is to 500 customers, on a monthly basis. Under the old model it would retain the property deeds so if the loans went bad it had the property to sell. It established rules which attempted to identify potential bad risks and ensure that the value of the property, bought if immediately resold would bring in more than was lost in failure to make repayments and the interest.

The new development which I believe is called C.O.D Collateral Debt Obligations (the collateral is the property and the debt the loan) were then sold. The programme gave the example of David Bowie who on reaching his early sixties decided to sell his expected royalties over the next ten years from his previous work, calculated on the basis of returns over the previous decade. He did so for £55 million in the form of bonds which those purchasing getting royalties and interest. He preferred to have use of the funds now, less than he would actually come in while those buying Bowie bonds were promised a higher capital return and interest.

What banks did was to do this with mortgage loans, but to do so using the latest computerised technology devised by mathematicians some of whom once worked on the space exploration, The programme revealed that the prospectus documents can run into two hundred pages, Moreover the C.O.D were not just single packages of all the new loans made in a month graded according to assessed risk levels but mixtures which each C.O.D offering a different mixture. Working out if the promised investment return was likely to be realised and if there were risks was difficult to impossible.

Everyone started to make money, lots of money because the sellers, were getting in money immediately not just for the value of the loans repaid but also the interest that would be paid in, but they offered the paper at discount to allow for some bad debts and that the money would be repaid long. The banks also got rid of the bad debt risk which became the responsibility of the of the purchaser of the “securitization“. The selling banks had increasing amounts of cash to make further loans, to pay higher dividends and to reward employees with higher salaries and bonuses some as much and more than the basic salary. Those buying the C.O.Ds such as Hedge Funds and Local authorities thought they were getting a good bargain because they were holding the paper for assets which when repaid with interest was significantly greater than their current market value. If individual defaulted the property market was such that the asset sold would be worth more than the outstanding debt. The person or company that borrowed the funds to buy property, often to rent out in the UK was also not worried because even if the receipts were less than anticipated the asset was increasing in such value if sold they would have profit over the debt.
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Then the situation became even more complicated as the financial rocket scientists worked out even more complex C.O.D which involved the reselling of packages of C.O.Ds known as C.O.D squares.

However even though there was a boom in getting loans for properties these were not enough to satisfy market demand and the profits and bonuses required. It was at this point the idea of giving loans to those previously denied them, called the sub prime in the USA was developed and using self certification of income, offering very low interest repayments over the first couple of years.

In 1997 Northern Rock became a bank with shares quoted on the stock exchange and all its savers were issued with shares which if sold gave a all profit. I was someone who had saved with Northern Rock and subsequently cashed in the shares. Northern Rock had a forceful creative shaper leader as Chief Executive who seized upon “securitization“, as they knew financial tool was called, and increased the banks share of the mortgage market from 2% to 17% making it the third largest mortgage lender in the UK. It offered a package of Mortgage for buying a home extra cash and a Credit card all with the same rate of interest.

Contrary to some media reports Northern Rock did not then issue loans to buy properties on the same basis as Lehman brothers and Bear Stems for example. What it did was to act as an agent for Lehman’s, for which it was paid a fee and therefore the high risk was taken by Lehman’s who made the funds available and by those who subsequently bought the C.O.D. Northern Rock was quite open about this saying in its annual report that among its services was to help arrange sub prime loans and self certified loans. It could therefore advise customers what to do if they did not meet the higher North Rock lending criteria.

A combination of developments created the crisis in individual banks. When banks offered a C.O.D they were offering a new paper security which was required to meet standards set by national governments through its regulatory agencies and with each security graded. The problem was that these regulation authorities were paid a fee not by the prospective purchaser for an assessment as we in the UK might use the A.A when buying a car or asking a valuer to assess a property under consideration, but by the seller; moreover instead of being able to lift the bonnet and inspect engine, or view the recent stock market history of a share or a stock, or examine the individual property being purchased, they were confronted with a detailed specification with mathematical formulas which it is now evident those creating them did not understand the risk. Next the banks themselves began to be buy the C.O.Ds thus getting profit twice. The profit from selling the C.O.D and the profit from buying it. Then the housing market plunged and those involved, the banks and their traders began to panic and rumours and fears bred fear not to be the one to be caught out first.

Then in September 2007 the great run on Northern Rock was created and the news programme showed lines of customers waiting outside its branches. One of the reasons why the customers became so visible was because of the shift away from lots of branches with lots of small and not so small savers to the issuing loans of via telephones, the internet and post buying in new money wholesale from other banks. I did this on my last loan and no face to face contact with anyone. Northern Rock was a target because of its runaway success, so when banks started to become more cautious about loaning money to other banks Northern Rock came under pressure and news of this led to demand to withdraw deposits and the government deciding to back depositors to a certain level leaving shareholders facing massive losses.

When The Chief Executive of Northern Rock was quizzed by a House of Commons Committee he was asked the question. When did you qualify as a banker? His reply was I did not qualify as a banker, and he could have added I trained as general manager and chief executive. I was reminded of the time at the International General Management Course attended in the mid 1980’s when asked if I was interested in becoming a Chief Executive of a local authority which then did not provide Social Services as one of its functions. I quickly thought about it and decided that I would stick to the knitting, doing what I had trained for and become an expert through long experience, but also decided to use the knowledge gained from the course to become a better manager and team colleague, and perhaps take on the challenge of a larger and better paid social service authority.

The former Chief Executive of the Northern Rock was also asked what could he have done, with hindsight, to have prevented the disaster and he was unrepentant, It was not his fault and this brought condemnation in the media. The former Chief Executive of Lehman’s adopted a different approach and admitted he spent his nights going over what happened and trying to identify where a different decision might have prevented the collapse. However this did not save him from the comment that he was regarded as the villain and not the victim, He and others are now to face a Grand Jury.

My understanding is that then reason why Bear Sterns was the first to nearly fail but was rescued and Lehman’s was allowed to fail is that they held more of the sub prime and self certified mortgages than other institutions and when the storm clouds gathered they were unable to offload as part of new C.O.Ds. I suspect the personality and approach of the both Chief Executive’s played their part, together the different approach of governments and different election time tables.,

But should the bankers alone be standing trial the media dock? The first question goes back to Pre Marco Polo Times and the fundamental point that what are people doing calling themselves Christian if one the of the main points made by Christ was that money lending for interest is wrong?

I am less convinced about the responsibility of governments whose functions is to provide for national security, to assist everyone to make money to provide for themselves and to provide help and care for those unable to look after themselves or their families. Given the economic failure of the communist/socialist model it is understandable if the democratic countries rooted in capitalism embraced financial innovations which appeared to eliminate boom and bust and to offer an ongoing economic growth which while enabling some individuals to become very rich provided the fund for the development of improving standards of living for everyone except at the lower 10 to 20% and with sufficient to also assist the less developed countries.

Similarly the function of Chief Executives and Boards of Directors is to protect and increase profits for dividends to the share holders. I can understand why traditional banks, especially those who were building societies became caught up the world of C.O.Ds and investment banking, and why investment banks became involved with the tradition functions of building societies and High Street banks and became involved in mortgage lending such has been the demand for mortgages.

I can also understand why salaries and bonuses escalated. If one successful firm pays x for the best managers, then it is inevitable that X plus 1 will be paid to attract the same calibre of managers to those firms seeking to achieve similar or better status and profitability.

Anyone who has lived in rented accommodation knows the difference in the sense of freedom to and the self confidence that paying to own property brings so, I have more sympathy with the USA approach to lend to the sub prime and for the right to buy local authority accommodation in the UK than I have for the development of the private landlord on either side of the Atlantic.

I also have sympathy with the position of the regulatory authorities and even for the financial rocket scientists who tried to work out systems which enabled everyone to make money while reducing risk. Individuals who knew what was going on and still went ahead or operated frauds clearly should be tried and judged as appropriate and when the crisis is over understanding what happened and where different choices might have avoided what has happened needs to be investigated in depth in order for everyone to learn for the future.

I am not in favour of scapegoating in principle I have argued that human beings tend to look for and need scapegoats to take away the blame from populations in general as in the Baby P case with the head of service, or the show trial which is the basis of the film- The Reader. However I also accept that the scapegoat can be a safety valve which prevents community disorder and revolution.

The emphasis has to be re establishing confidence and getting the economy moving forward again in concert with all other advanced economies. It struck me while writing that if the 28000 staff of Lehman’s had a total annual income with bonuses of only 100000$ that is close to 3 trillion dollars out of economy. A proportion of these will face loss of their main living accommodation and they will not longer be able to afford the other aspects of the current lifestyle, holidays, private education and medical insurance, new cars, lots of meals in restaurants and visits to top notch sport and entertainment events. But the 28000 at Lehman’s brothers is just the tip of job losses on both sides of the Atlantic and at 100000 job loess and then 1 million job losses one can begin to see the domino effect on economies.

Yesterday at Prime Minister’s Question Time the Conservative Party Strategy for the next 18 months before the next General Election became clear. Continually remind people who is to blame politically for the economic situation. not the bankers, the Hedge Fund managers and the public for borrowing too much, but the Government for not stopping what has happened. This is a valid attack if not fair because all government regardless of their party politics are in the same boat. It is a matter of debate if Barrack Obama would have become USA President if the financial crises had been delayed a year. Although in the .long run the absence from office may be upsetting to Republicans who would have been in the administration, from the longer viewpoint, they know that it will be difficult for a Democratic administration to survive the next four years and the worse it becomes the better politically for Republican party. The one difference is the personality of the next President, and if his party in Congress get behind him and his Ministers then an eight year term and further terms become a good possibility. Thus one can expect the Republicans to start to emphasise the political differences between them and the new administration.

This is the second prong of the Conservative attack. It is to argue that while Gordon Brown has set his stall out as a do something government, accusing the Conservatives of a do nothing party they are pressing him to show what his measures have achieved so far.

This is a very dangerous strategy and potentially damaging not just for his party but to the country. It is potentially not just unpatriotic but reckless, As one previous President said at his inauguration there is nothing worse than fear itself. By continually criticising everything that the government is doing regardless whether it brings immediate result or does not, the Conservative Opposition leaders are at risk of ensuring that the action does not work by spreading fear and the lack of confidence. They may gain popularity in the media polls but at what long term price?

I did a little work and have not mentioned before that I have achieve 8000 work sets and officially one third of the project has been completed.

2008-2009 assessments

I have the suspicion that politicians on both sides of the pond and more significantly their economic advisers, failed to understand the nature of the financial monster they had created. My reasoning is that if they had they would have taken urgent steps to put the breaks on long before the crashing commenced.

I will not pretend that I understand what has happened and why but I am attempting to find out in order to establish where the responsibility rests. The more urgent interest is to understand the implications of what has happened and of what is being done

It is evident that Governments have been forced to do two things. The first is to finds ways to ensure the capitalist banking and financial system survives and re-establishes world wide confidence. Far from punishing investment bankers and other investment bodies the priority has been to ensure the services remain in London City and Wall Street New York to the present level and are not transferred elsewhere. Secondary has been the need to re-establish a working system in the UK and despite the appearance of measure to reflate the economy the government has set the tone by only offering loans at high rates of interests thus ending the era of cheap money, and oppressing banks to ensure they have a better relationship between their assets and borrowing which means taking as little risk as possible with new loans. Therefore business of all kinds and sizes are finding that they are unable to get working money because this is potentially only more bad debt, with the consequence of going into administration and putting hundreds of thousands out of work and which means less spending power, more drain on savings and more government expenditure on supporting individual families.

The second consequence is that Governments cannot proceed with their planned programmes and policies such as tackling environmental issues, reducing poverty and disease overseas, supporting the arts and experimental research. Everything is geared to maintaining employment and reducing dependency on governmental financial support to individuals and families.

I have only commenced to work through Robert Peston’s Who Runs Britain which begins by pointing out the impact of the creation of private equity firms, groups of perhaps two or three partners with a staff of one or two hundred whose function was identify suitable business for purchase where by a combinations of actions which involved selling off parts and streamlining the remainder they could then resell at sufficient profit, not just 10 or 50 or 100% but several 100%. They would make the partners not just rich but exceptionally rich billionaires with their there staff receiving six figure bonuses on top of six figure salaries. Tax Rules governing Wall Street New York and London City meant that the wealthiest only paid 10% back to the government and therefore they became even wealthier and more influential.

They achieve this by raising capital in two ways. Direct from investors who looked forward to above average returns on their investments and on comparatively cheap money from the lending institutions. The borrowing was not of millions but of billions. Much of the wealth was achieved by increasing the value of businesses through the share capital. The bonus paid to partners and staff was not just a cash dividend with the head of British Home Stores given himself one billion at one point but in shares and share options at prices which meant that with the increase in company profitability the share price rose and more gains could be paid. The providing of shares was the carrot to ensure managers worked even harder to increase the value of their company. Now staff sit around because no existing business is safe so funds have to be parked as safely as possible, and because no business is safe nor is the equity fund itself, so borrowing money for new speculations has also become non existent.

Alongside but interlinked were those funds which used the latest predictive and offsetting formula which attempted to eliminate the uncertainties of the ups and downs of share trading, the currency markets, and commodity futures such as oil and gold. Much of the activity was based on a significant level of gearing so that what the Hedge fund managers were doing was to buy the option to buy or sell for a fraction of the asset market price and they also borrowed several fold the asset value of the investor funds to increase the quantity of the options purchased. It is not just those who own, manage or invest in these funds who gained, but the lawyers and the accountants and money loaned earned interest and volumes of business earned bonuses.

One of the offsets which attempted to ensure that risk element was reduced has been to resell debt, money owed especially debt which was high risk, and this appears to have been the source the collapse of the financial pyramid. In the UK there was the great enthusiasm for buying properties to rent out not for income but for capital appreciation. Buy a home for £60000 and within five years it was beings sold for £180000. Borrow not £60000 but £75000 to make improvements and to cover for the gap between rental income and interest payments, so even if you only managed to pay interest rather than capital there was a tidy profit for minimum work, especially if you did this on a grander scale in terms of property value or number of properties and arrange for a property management company to sort out the lettings and the rent collection. But what if property values start to go down or people stop moving to improve their location and lifestyle. This was doing with homes what sued to be done with office space often unoccupied for year but nevertheless increasing in capital value. In The USA more than in the UK this enthusiasm for loaning money for people to buy proper was extended to those who had no hope of maintaining payments and had no collateral, including a secured job.

Back in the mid 1990’s I undertook assessments for the National Lottery Charities Board grant aid programmes and the details of individual assessments must remain confidential. For close on two decades as a local authority chief officer I had to struggle to master the financial system, especially the accounting system operated by my employers and its financial officers and which to a great extent was controlled by government economic and financial policy and practice, but it was only as a consequence of my national lottery experience that I learnt that the biggest shysters of all are the creative accountants and their companions in magical formulations- the auditors. One way of assessing the goodness of a charitable organisation is to first examine how much of the money raised is used to pay staff and fund their offices and professional life styles. To be registered as a Charity the national regulating board lays down guidelines about the ratio of administration costs to funds raised and used for charitable purpose. The art is to therefore to present administrative costs within these guidelines. The more expensive the accountant the cleverer the way the financial dealings can be presented to ensure that those running the organisation keep their incomes and offices, their hospitality and a status which attracts celebrities and politicians and media support which maintain public confidence and ensures a continuing income. One of the arts is to divide the organisation into different accounting units and spread the administrative costs between these units and a system of recharges. Then there is what is classified as revenue income and expenditure and what is capital and how debt is described and to some extent masked. What found through this work appears to be the common practice among those who managed funds exponentially. In fact my understanding is that the greater the funds and the image built the greater the scale of fraud. Unfortunately because on both sides of the Atlantic we like politicians who are common and like one us we pick people who are not match for those with greater intellect and in the UK and I assume the USA because of the way we recruit and reward our civil servants they also are not up to the task of identifying the con artists before they have created havoc.

I previously mentioned the last episode of the Ascent of Money in which Professor Niall Fergusson explained part of the reasons for the near collapse of the great financial pyramid created over the past three decades. I had hoped to look at the available earlier programmes on the Channel Four internet site but had difficulties as the programmes froze after the opening advertisements were completed. I managed to gain a viewing on the older laptop which uses Windows XP with the addition of a Plug in to the Microsoft media player. However for the Vista desktop I had to switch from my usual browser to another to use the Digital Management Licensing Diagnostic to copy pages of code which I then included in an email which after a couple of days led to the information that I also needed a plug in and was given the internet reference and where the relevant data information was transferred within second so I was able to watch the important programme which covers the development of the public liability stock company and market and the impact of Scotsman John Law and his Mississippi company which started maverick(criminal) pathway to Enron and John Lay.

In terms of the history and development of human beings it all started comparatively a short while ago with the formation of the Dutch East India Trading Company. According to Wikipedia and the TV programme the “ Dutch East India Company (Vereenigde Oost-Indische Compagnie or VOC in Dutch, literally "United East Indian Company") was a trading company, which was established in 1602, when the States-General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia. It was the first multinational corporation in the world and the first company to issue stock.[1] It was also arguably, the world's first megacorporation, possessing quasi-governmental powers, including the ability to wage war, negotiate treaties, coin money, and establish colonies.[2]

The Dutch East India Company remained an important trading concern for almost two centuries, paying an 18% annual dividend for almost 200 years. In its declining years in the late 18th century it was referred to as Vergaan Onder Corruptie which translates as 'Perished By Corruption'. The VOC became bankrupt and was formally dissolved in 1800,[3] its possessions and the debt being taken over by the government of the Dutch Batavian Republic. The VOC's territories became the Dutch East Indies and were expanded over the course of the 19th century to include the whole of the Indonesian archipelago, and in the twentieth century would form Indonesia.”

Its original trade was to bring species by quicker route by sea and the programme explained that although one voyage could pay for the construction of the shop, sea travel was hazardous and therefore owners got together to spread the risk and share the profit. One of the founders of the company each putting up 6000 Guilders saw this accumulated to half a million and an individual investor of 1000 guilders, issued with the first stock holding document, saw the value double and double and double again as soon as the company decided that it would not give cash to investors who wanted their capital but required them to sell to others.

This is where Scotsman John Law becomes relevant because according to the programme he was the brains behind the idea that if the public wanted shares in a successful company then why not raise more capital by issuing more shares as long as those in control owned the greater proportion of the overall share capital. Wikipedia says this of him

*John Law (usually pronounced Jean Lass by contemporary French) (bap. 21 April 1671 – 21 March 1729) was a Scottish economist who believed that money was only a means of exchange that did not constitute wealth in itself and that national wealth depended on trade. At one time he was considered little more than a colorful con man, responsible for the Mississippi Bubble and a chaotic economic collapse in France(which probably led to the French Revolution). Beginning in the 1960s his reputation has improved, to the point he is now considered by some to be one of the most important pre-Adam Smith economic thinkers and a successful economic policymaker whose work was undone by corruption and reactionism of the House of Bourbon. Law was a gambler and a brilliant mental calculator and was known to win card games by mentally calculating the odds. An expert in statistics, he was the originator of economic theories, including two major ideas: 'The Scarcity Theory of Value' and the 'Real bills doctrine'.

His believed that money is not an indication of wealth but a means to promote and it was the production of goods and their trading with trading which created real wealth. He is the first known economist to promote the idea of a national bank which excludes private investment and his exile to France and the problems experienced by the monarchy resulted in his being able to put this idea into practice and in 1718 the Royal Bank was created with its notes backed by the King. Law then created the Mississippi company with a prospectus and balance sheet which misrepresented the value of the company interests and where shares were issues again and again to raise more capital as the demand increased and their price rose within one year from 500 livres to 18000. The problem for the French Government and economy is that they bought into the company as a means of clearing the national debt but when the company collapsed so did the bank and the economy. At one point the Mississippi company is said to have “bought” all the government debt of 1.6 billion livres. This has to be compared which British South Seas company which acquired 80% of British Government debt of only 50 million pounds also in the 1720 and which led to what it known as the South Seas bubble.

The Ascent of money Programme then moved into the present time with the Enron Scandal. Wikipedia says this “ Enron Creditors Recovery Corporation (formerly Enron Corporation, former NYSE ticker symbol ENE) was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 (McLean & Elkind, 2003) and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of nearly $101 billion in 2000.[1] Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001 it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, sometimes called the "Enron scandal". Enron has since become a popular symbol of wilful corporate fraud and corruption. The scandal was also considered a landmark case in the field of business fraud and brought into question the accounting practices of many corporations throughout the United States. Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004 after one of the biggest and most complex bankruptcy cases in U.S. history. On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. Following the scandal, lawsuits against Enron's directors were notable because the directors settled the suits by paying very significant sums of money personally. The scandal also caused the dissolution of the Arthur Andersen accounting firm, affecting the wider business world.[2] In early 2007, Enron changed its name to Enron Creditors Recovery Corporation, to reflect its status as a (largely) asset-less shell corporation. Its current goal is to liquidate all remaining assets of the company. For most of 2007, Enron continued to operate under the name Enron Corp. by filing a Doing Business As, or "dba" certificate in Harris County, Texas. “ There are two elements of the Enron story which form a theme to this piece of writing. According to the programme, the top 140 executives were each given bonuses of 5.3 million dollars its collapse and indeed bonus cheques were being issued as its employees were given their redundancies notices. The Enron secret was to disguise the extent of its debts from £13 billion in the balance sheet to $38 billion and this was only possible through its accountants. The disguises of debts off the main balance sheet has been generally adopted by Governments, Local Authorities, Corporations, private investments and hedge funds for years and i deed there is much debate in banking and government circles that Banks should be able to permanently clear their current books of bad debts. What Enron did which enraged so many people was when it shares reached a market value of $90 its executives commenced to sell their personal holdings recommending everyone else to buy on the basis they the shared could expect to rise to £130 to $140.

Robert O’Harrow Jnr and Brady Dennis Washington Post Staff writers have published the first of their three part study of “Wall Street greed and Washington Blindness” and describe aspects of how Howard Sosin and Randy Rackson came together with Barry Goldman to develop their elaborate financial constructions from their experience in using interest rate swaps. It is only possible to understand interest rate swaps if you are a mathematician and know all about the money markets and Wikipedia just compounds one’s ignorance of both. My understanding is that their objective was to reduce or eliminate the risks that could arise from changes in interest rates over a longer term period that the life of existing swaps reported to be two to three years. For close on two decades the articles explains that their undertaking, the American International group provided the machinery to enable the greatest investments institutions such as Goldman Sacks and Merril Lynch, governments, municipalities and corporations “to free up cash, get rid of debt and guard against rising interests rates or currency fluctuations”

When the company was on the verge of collapse last September George Bush argued that e government could not allow the institution to fail and has provided a bail out of 152 billion, I repeat billion dollars, because the company was too entwined with the rest of the world economy, by implication that if it failed so did the world economy. The article states that many of the approaches adopted by AIG have been copied by financial bodies all over the world. Creating vast interlocking deals that no one except the originators fully understood, if they ever did, in terms of potential implications

The article explains that the three broke from their existing firm in 1987 and negotiated a contract deal with Greenberg at AIG in which they kept 38% of the profits with the rest going to AIG. They spent six months at first in a windowless officer with hired furniture creating the first all embracing computer programme which stored every piece of available information and continuously analysed so that they were in a better position than anyone else to see opportunities and of taking on risks which others did not see, but because they possessed information they were more able to protect themselves. In terms of their trading activities they concentrated on the futures market and on a risk management approach, hedging which involved in effect betting on whether the prices went up or down. The profit is possible if the gain from an individual trade is greater than the combined expenditure of both trades and allows of administrative overheads.

I do not know but I think it works like this. It began with the future market where produces, of oil crops, beef steak and such like enter into a futures contract to supply x quantity and x price. They have some certainty over future income, assuming they are able to deliver the quantity and quality stipulated and the purchaser is also able to plan ahead. The provider gains if the actual market price at the time of the agreed is less but loses if the market price has been higher. Although oil reached over $100 dollars a barrel recently is likely that vast quantity were sold contract for significantly, where as those who bought new contracts when the market was over $100 will be stunned that the current market price is half this.

What then happened si that he money manipulators and their investors decided they wanted to reduce the risk and make more money by two developments.

I go to commodities market through an approved dealer and but not an actual contract to say buy or sell 1 million barrels of oil at $75 dollars a barrel say six months, one year or longer away and because of the time gap the option price of both options is low say $10. If I have a contract to buy and the price drops markedly I do not exercise my right to buy and therefore only lose $10. It is jumps to sat £110 dollars then I will but and make profit of £35 dollars a barrel, and likewise if the contract is to sell However in reality the changes over a period of time are less dramatic and the margins of gains and loss smaller and I have to take account of the administrative costs of buy and selling or exercising the option. However as an investor, individual, bank, insurance firm, local government body I am not interested in just buy a few barrels of oil but talk in terms hundreds of thousands and millions of barrels.

The Hedge is to enter into contracts to buy and sell the same quantity over the same time period and to sell both options before their expiry. Say I but the option to buy and sell 1million barrels and the option to do this cost 2 x $10 million dollars. Say the price of one the options falls $9 dollars a barrel so I sell this as quickly as the trend is identified, limiting my loss on this trade to $1million plus the dealing charges. However because I have bought both sets of options my other trade is now selling for $12 dollars make $2 million dollars less charges and £1 million profit overall less charges. The margins are usually smaller than this, but with trades being made all day and every day, the profits accumulate over the losses. But there is risk involved

What Sosin and his colleagues worked out was a complex trading programme which incorporated all the available information and which identified the best points at which to sell and buy

The objective was to make money but reduce risks so every action they took was looked at in depth every day with attention paid to overall losses and as much as the overall gains. The kind of people involved were as much interested in producing the foolproof systems as it was in the making of money. This is not necessarily a good thing because of the tendency to become so involved in mastering, being ahead and winning the game, that the consequences of the game on everyone else is overlooked.

It was only a short while after the operation went into business that Sosin is reported to have contacted AIG Vice Chairman to say they were entering into a contract with the Italian government for a $1 billion dollar interest swap about ten times the size of what was being done in general and the deal would produce a profit of around $3 million greater than the two other operations of AIG expected to achieve in a year. It is important to remember that the core function of AIG was insurance not speculative trading, the new trading arm under Sosin and his colleagues made $ 60 million profit n the first six months. They changed offices to Maddison Avenue. They also moved into currency, stocks and municipal bonds. They opened offices in London and Tokyo and set up a small bank in Paris.

However the honeymoon is reported not to have lasted long when first Sosin and his colleagues insisted on being paid bonuses up front on one deal even if took the AIG decades to achieve the profit which the bonuses reflected and the unease grew when on one deal $100 million was lost. It was more of a clash of cultures and temperament, so Sosin left with his crew taking a copy of the system with him while the former company under a new management negotiated a new deal with more of the profit to AIG and only half the bonuses on new long term deals taken up front with the rest paid over the time. I have once been to a casino once and where I watched rather than gambled and this was in 1965. I watched someone win and lose several thousands pounds within a short period of time. When he won say £100 he gave £10 chips (the currency was in fact francs) to the croupier and to his female companion, so on his way winning £4000 he gave the girl £400 and the croupier a similar sum. The girls friend and the croupier kept their share when he lost the rest. I have every sympathy with Greenberg the head of AIG when he decided to pay less up front and concentrate more long term and sustained profits.

who took the view that if girlfriend had been responsible for selecting the numbers . The croupier kept his bonus although the man lost all that he had won and kept for himself. He also had his income and reminds me of the position of deal traders, the lawyers and the accountants who job is to process and present the deal within the rules to ensure their legality and to minimise the taxation to governments. The girl friend picked the number so it could be argued she was entitled to some of the rewards and I do not know what was the amount of his original stake and whether this was more or less than what the girlfriend took away. My observation that evening was that the man was more interested in thrilling and pleasing his companion than in making or losing money and her grateful response, unless it was actually her money he was playing with may will have compensated him for any financial loss. I did note that the majority of the men were older, and fatter than one expected to see and that there appeared to be a higher proportion of outstanding looking, dressed, made up and younger women on the arms of many an older men who did live up to the Hollywood image.

According to the article the re-jigged arm of AIG found that others in the market were duplicating the approach so profit margins began to shrink and pressure was on to devise new and more complicated deals in new areas. The hedging and minimising of risk continued and overall profits increased from £140 million 1995 to $323 1998. However what the writer call the beautiful machine was about to crack.

I decided to end the writing at this point to finish my wheeling and dealing for the day. I use the Travel Lodge Motels and City centre Hotels because they are ideal for me. I love a double bed and quick access to the bathrooms as I wake during the night. The tea and coffee is adequate which I supplement by buying from the nearest store. There are Lodge Hotels close to Kings cross station and also at Croydon near the station so that I can travel by train to Kings Cross or coach to Victoria Station and cut out the hassle and cost of travelling by car, but equally the car provides greater flexibility and I can fill with the kitchen sink. There is usually standard TV but I can supplement this with wireless internet for £20 for a week’s use. However the best reason for using Travel Lodge is the price. Three times this year special internet offers have been made for as low as £9 a night or room where a last minute stop can cost as much as £120. I had previously obtained one trop to London with six nights for £54 5 x 9 and one at 19 and to-day by rising at 5.30 and being prepared with dates and options to fit around home games of County Champions Durham, the Whitley Bay Jazz festival and other personal commitments and interests I was able to arrange five new trips making a total of 31 nights at an average expenditure of £12 a night compared with the just before average price of just under £80 a gearing of 6 to 7 times less. I have not engaged in so many trips over such a short trip covering late spring and summer since 2004 when I visited former homes and places of work, went to Gibraltar and undertook family history searches in London and Wiltshire. However one only becomes 70 once, and in some respects I am amazed to be within a couple of months of this, although being sixty was bad enough and seventy is horrifying.

I turned my attention to another of the Ascent of Money programmes and to a Taggart as well as some food with the rest of the chicken into a Thai style stir fry all from packets with the fresh Thai vegetables vacuum packed, a Thai Style sauce and noodles at midday. There was Anchovies on Crackers with also Poachers Pickle and olives also stuffed with Anchovy as a tea time early evening snack and then a portion of meat balls and pasta in a tomato sauce. There was some ice cream and a banana and custard, but no alcohol. Tomorrow I shall spend New Years Eve on more study of the near collapse of modern capitalism, I shall cook the large joint of ham intended for Christmas as well as a small turkey crown planned for Christmas day. The fridge is nearly empty so I will go out fro some fresh fruit and fresh vegetables to make the intentions for the year. The freezer will continue to be used up as it needs a defrost and again I will review what is bought and what is not. Also need a table lamp for this room as the lighting is behind on to one side and a direct light on the keyboard would be helpful.