成人快手

I am away from the mothership for a few days, but I could not resist beaming back a few thoughts about the remarkable speech given last night in New York by Mervyn King, .

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The governor of the Bank of England - which, let us not forget, is being endowed by the coalition government with direct, formal responsibility for making sure banks don't go bust (prudential regulation) - said:

"Of all the many ways of organising banking, the worst is the one we have today."

Crikey.

To coin a cliche, "tell us what you really think, Mervyn".

His analysis is one that will be immensely familiar to readers of this blog, namely that there is always a risk of financial and economic crises when banks turn short-term borrowings into long-term loans - because what he calls the "alchemy" of fractional reserve banking is only sustainable for as long as the lenders to banks believe that their money is safe, and that cannot be guaranteed at all times.

So the challenge for governments and regulators is to ensure that the costs of averting or curing these inevitable banking crises don't fall to a massive and unfair extent on taxpayers and society as a whole, rather than on the private beneficiaries of maturity transformation, the winners from the magical process of turning demand deposits into risky loans to households and businesses.

Or as Mr King puts it:

"What we cannot countenance is a continuation of the system in which bank executives trade and take risks on their own account, and yet those who finance them are protected from loss by the implicit taxpayer guarantees."

Here's his big point: when society cannot afford that lenders to banks should incur losses, whether those losses are for retail depositors or wholesale institutions, then bank executives will have a licence to take "heads they win, tails we lose" risks - which is unfair and unsustainable, as the 2008 banking crisis demonstrated.

What's to be done?

For Mr King, the recent Basel III accord - on boosting how much capital banks have to hold as protection against potential losses, on better aligning the maturity of liabilities and assets, and on how much liquid resource banks must retain to ward off the lethal impact of runs - is only a start.

To put it another way, it is a minimum set of standards that was necessary to obtain international agreement. But it's not good enough.

What might be good enough?

Well, Mr King says we need to look at highly radical reforms of the banking industry - each of which will probably strike terror into the hearts of those who run our biggest banks.

First, there are two complimentary proposals:

1) That retail banking deposits must never be used to finance risky loans, that the all-important payment system should be divorced from providing finance to businesses and even to households. These ideas have at various times been advocated by the economists Milton Friedman, James Tobin and John Kay - and have a champion in Parliament in the form of the Tory MP Douglas Carswell.

2) That loans to businesses and households should always be repackaged into pooled investments held by mutual funds, so that - in effect - there are no longer short-term liabilities funding long-term assets, there is no longer a mismatch between a demand deposit and a longer-term loan, there are simply investors prepared to take some risk in financing the economy. This model is associated with Professor Kotlikoff.

If banking were reconstructed along these lines, there would in theory no longer be any need for taxpayer guarantees for banks - because bank depositors would not be takings risk or placing bets on the solvency of corporate and household borrowers.

What would look like a more conventional reform look like for Mr King? Well, it would involve a massive increase in the amount of loss-absorbing capital that big banks have to hold, well above the new Basel III minimum of 7% of risk-weighted assets.

According to regulators, something like 30% of a big bank's liabilities would have to be equity or convertible into loss-absorbing equity, to stand a good chance of insulating taxpayers from the costs of bailing out a bank in a crisis (for those who care about these things, that 30% would consist of common equity, contingent convertible capital or CoCos and bail-in debt that turns into equity when regulators ordain that it must).

So although this may sound like a more conservative solution, it would be viewed with horror by most bankers - who would see it (wrongly, according to the likes of Mr King) as massively increasing their costs of doing business.

But Mr King has a final argument for the bankers who will inevitably argue that if the UK carries out all or any of these reforms in a unilateral way the costs to the vibrancy of the City of London and to the UK economy would be prohibitive.

He argues that there has been a massive overstatement of the wealth created by the UK's banks for two reasons.

First, he says the national accounting conventions wrongly attribute to banks all the benefits of providing finance, rather than sharing those gains with the recipients of that finance.

Second, and more importantly, the explosive growth in apparent "value" added or created by banks in the years before the 2008 bust stemmed in the main from taxpayer subsidised, anti-social risk taking: in an unsustainable way, banks lent far more than was healthy relative to their capital resources, because they knew that the state would pick up the bill when it all went wrong.

So which of these near total reinventions of banking does Mr King himself favour? Well on this, he is suddenly a little bit bashful.

But he is explicit that the status quo should not be an option. And he lobs a grenade at the commission set up by the coalition to make banking safe:

"In the UK we are fortunate. The Independent Commission on Banking was set up earlier this year. It has outstanding members. I am sure they will lead us to the right solution."

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• - What's this?

Here is probably the most revealing part of the speech that Rupert Murdoch gave last night in honour of Margaret Thatcher:

"I am something of a parvenu, but we should welcome the iconoclastic and the unconventional. And we shouldn't curb their enthusiasm or energy. This is what competition is all about. Yet when the upstart is too successful, somehow the old interests surface, and restrictions on growth are proposed or imposed.
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"That's an issue for my company. More important, it's an issue for our broader society".

Here's the point: Lord Saatchi introduced Rupert Murdoch by referring to a league table that rated the founder of News Corporation as the most powerful person in the world, more powerful even than the US president (and considerably more powerful than the British prime minister).

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Mr Murdoch - who has enormous commercial media interests in the US, the UK, Italy, Australia and Asia - chuckled at the flattery. But he still went on to say that he considers himself an arriviste, an outsider battling against powerful conservative and vested interests.

This is not a pose. He and his son James, who runs News Corp's European and Asian operations, genuinely see themselves as true-hearted crusaders in an economic war - and not as defenders of enormous, dominant market shares in newspapers, television and other forms of communication, which is how they are widely seen by others.

For them, the statistics of British Sky Television's 拢5.9bn and rising of British revenues, a fifth greater than the 成人快手's global revenue (whose large domestic element will stagnate by dint of government fiat), or News Corp's control of one-third of the British newspaper market are far less relevant than Sky's and News Corp's record of digital innovation.

They would simply deny that the market shares of their myriad businesses - which allow them to generate buckets of cash for investment in new products and services - might conceivably starve worthy competitors of the cash these competitors could employ in innovation that might be beneficial to consumers.

So, for the Murdochs, the opposition that has arisen in much of the rest of the media to News Corp's plan to acquire the 61% of BSkyB it doesn't already control is simply the wounded yelp of a threatened ancien regime.

And the Murdochs don't sit still when crossed. James Murdoch will have told Lord Rothermere, chairman of DMGT, owner of the Daily Mail, what he thought (and in no uncertain terms) of DMGT's participation in a public campaign to frustrate the Sky takeover.

Also, there is a conspicuous current example for the Murdochs of how they have to battle against prejudice, on a playing field tilted against them - which is the unexpected agreement this week between the 成人快手 and the government that the licence fee will be frozen in cash terms (at 拢145.50) until the end of 2016/17.

This is infuriating to News Corporation for two reasons: first the Murdochs thought they had another year to make the case for more radical reform of the 成人快手 and public-service broadcasting; second they know only too well how valuable it is for any organisation to have certainty about its future cash flows, which is what the licence-fee settlement has given to the 成人快手 for a lengthy six and a bit years.

The 成人快手's directors and senior managers, of course, don't see it quite like that. They point out that 拢340m a year has been added to the 成人快手's costs, largely through the transfer to the Corporation of financial responsibility for the World Service, which is equivalent to a cumulative 16% real squeeze in the 成人快手's resources.

And the 成人快手 has two other concerns: first that the convergence of the settlement with the wider public spending cuts creates the potentially damaging impression that the 成人快手 is just another arm of the state; second that licence-fee payers will now be paying for services outside the UK from which they derive no direct benefit, thus weakening licence-fee payers' sense that they only pay for what they get - which could in time undermine public support for the 成人快手.

But the 成人快手's discomfort probably provides only mild solace to the Murdochs. You can assume that the Culture Secretary, Jeremy Hunt, who was in the audience for Mr Murdoch's lecture last night (along with the Welfare Secretary, Iain Duncan Smith, and the 成人快手 Secretary, Theresa May) will know by now that the Murdochs believe he has been soft on the 成人快手.

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• - What's this?

If public sector workers facing and fearing redundancy after today's cuts itemisation are expecting sympathy and solidarity from the media, well I fear they may be disappointed.

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Because although the outlook is grim - with more than 40,000 defence job losses announced yesterday and perhaps half a million state positions at risk in toto - many journalists would argue that their own personal experience has been grimmer.

Whatever happens in the civil service, the police, the courts and so on, it probably won't be any worse than the recent axe-wielding at many newspapers and commercial television operations, which are only just recovering from the worst collapse in revenues in their history.

Even at the allegedly protected and sheltered 成人快手, there hasn't been a year since I joined in February 2006 which hasn't seen cuts and job losses (which will almost certainly be magnified in coming months as a result of the new shrunken budgets being imposed on the corporation).

So human nature being what it is, I fear journos will be pretty anaesthetised to the pain awaiting their state confreres.

What is striking about the private sector in general (as I and Stephanie have pointed out myriad times) is that the number of employees which companies threw on to the mercy of the market, during the worst recession since the 1930s, were far fewer than most economists had forecast.

Unemployment seems to have stabilised for now below 2.5m, less than 8% of the work force. That unemployment rate is far less than what most economists had expected from a peak-to-trough contraction of GDP of 6%, that has also left output today a tenth lower than it would have been in the absence of the slump.

What appears to have happened is that private sector workers have protected their jobs by showing great flexibility in the terms and conditions of their employment - taking pay cuts, agreeing to temporarily reduce hours worked, and so on.

A very big question for the public sector is whether both employers and employees can show similar imagination and flexibility, whose rewards were manifested only last week in Tata Motors' decision to save from extinction an important Jaguar Land Rover car plant in the Midlands.

It is also clear, from the record of the giant bank Royal Bank of Scotland, that compulsory redundancies can be kept fairly low, if the will is there. Over the past couple of years, RBS has announced 20,700 job losses in the UK and 26,700 worldwide - of which one in four have been compulsory.

All that said, there is a fundamental difference between the experience of the public and private sectors in the 10 years before the financial crash of 2007 which precipitated the Great Recession.

In that period, much of British industry was forced to become more competitive by the strength of the pound. So when the downturn came, there wasn't a huge amount of fat to remove. Also the workforce was probably inured to the imperative of maintaining competitiveness, and may have been psychologically prepared for cuts and changes in working practices.

By contrast, the public sector enjoyed eight or nine years of budgets expanding significantly faster than the rate of inflation. Which means that public sector staff may not be so prepared in an emotional sense for the shocks that lie ahead.

Arguably, therefore, the agony will be all the greater for state employees when they learn that they face at least five years of working harder with little prospect of greater financial reward.

Update, 1416: How realistic is it that private sector recruitment can make up for jobs lost in the public sector as a result of the cuts?

Well the chancellor confirmed today that he expects public sector job losses to be 490,000 or around 8% of all public-sector employment.

That is a substantial reduction in public sector employment. But it will take place over four years.

Now the private sector employs just over 23m people, almost four times as many people as the public sector.

So private sector employment needs to rise by "just" 2%, to absorb all the jobs lost in the public sector.

Which doesn't look absurd, so long as the economic recovery is sustained.

But there are three important caveats.

First not everyone made redundant by the public sector may be wanted by the private sector.

Second, those made redundant by the public sector will be in competition with those the government wishes to "encourage" off benefits and into work.

Third, in the past year employment of non-UK people has risen by 114,000, whereas employment of UK nationals has fallen by 15,000.

If growth in private-sector employment is to be celebrated by British people, those jobs need to go - presumably - to British people, which can't be guaranteed.

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How tough are the Ministry of Defence's cuts?

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Well, in the end they can't have been that severe, because I don't expect BAE Systems - which in the case of the UK can be described as our very own military industrial complex (to use that great Eisenhower phrase) - to issue any kind of profits warning, when it makes its interim management statement on Thursday.

What BAE loses in maintenance contracts on the decommissioned Harrier jets and assorted boats, it will make up (in part) putting catapults and "arrestor" gear on those bloomin' carriers (see my post of this morning) so that they can accommodate the conventional model of the Joint Strike Fighter.

Now you might assume that the cancellation of the Nimrod MRA4 programme, as announced by the prime minister, might be painful for BAE.

But what I see at BAE is mild bemusement rather than tears.

The point is that after eight years of delays and 200% inflation in the cost of each aircraft, the diminished fleet of nine reconnaissance aeroplanes is almost complete, at a cost to the taxpayer of more than 拢3bn.

As I understand it, one plane has already been handed over and another six are almost completed.

Work on the programme is about 90% completed.

There will be a cost to BAE, in that it would have received a contract to maintain the aircraft once it entered service. So a limited number of jobs at BAE that would have been created will now disappear.

But BAE has been paid to build this aeronautical white elephant - a kind of hi-tech Dumbo - which is the big bit of the contract.

If the plane is finished, why on earth is it being ditched by the government?

Well apparently there will be useful savings in running costs. I'll let you know how much, when I can quantify that saving.

So what will happen to these unbelievably wizzy reconnaissance and intelligence-gathering planes, which are equipped with more than 90 antennae and sensors and can scan an area the size of the UK for military threats every 10 seconds?

The MoD will take delivery of them. But officials say that they haven't yet decided what their fate will then be.

The Nimrods could be dismantled, or put in storage (they'd need a pretty big shoe-box).

And I suppose they could be sold - although I am told that's unlikely, because they were designed with the UK's particular defence needs in mind, especially its idiosyncratic nuclear submarine fleet.

That said, if you have a few billion squids lying around, and you fancy the latest in aeronautical cloaking and monitoring technology, I know a prime minister who might well be open to offers.

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When I ask senior military, as I did last night and last week, to construct plausible scenarios in which Britain's giant new supercarriers would be essential for the defence of the realm, these admirals and generals looks slightly embarrassed.

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When pushed, they mention the possibility of two great powers (not Iran) turning into serious enemies of the UK.

I won't mention the names of those countries (though you'll guess which they are), because those same military leaders hastily add: "of course we'd be insane to even think about going to war against them; we should be building permanent enduring alliances with them; and if we did find ourselves at war with them, the carriers would probably be sunk in five minutes".

As for cyber-attack and more conventional terrorism identified yesterday by the government in its national security strategy as the thoroughly modern threats we need to protect ourselves against, the carriers are about as much use as a bazooka would be for killing wasps.

In the end, the leaders of our armed forces - or at least those outside the navy - concede that they don't really need or want these two 65,000-tonne floating monsters, HMS Queen Elizabeth and HMS Prince of Wales, the joint cost of which was estimated at 拢3.9bn as recently as July 2008 and is now well over 拢5bn. If they end up costing less than 拢3bn each, it will be little short of a miracle - see my note Aircraft carriers' costs soar 拢1bn for more on this devastating inflation.

But, as you'll doubtless know from the agonised leaks about all of this, the contracts for the carriers were apparently written in such a way that it would have been more expensive to cancel them than to press ahead.

So the military is behaving a bit like a five-year old which originally asked for a bike for its birthday, but on the big day has decided that a Wii would be better. It is putting a brave face on the whole disaster, but can't really hide its disappointment.

In the run-up to the publication of today's defence review, David Cameron was asked by the chiefs to consider negotiating the substitution of frigates for the second carrier. However, when the PM consulted the navy on this apparently sensible option, the navy told him that the available frigate wouldn't do everything it would want it to do.

So under pressure from the navy, Mr Cameron agreed to press ahead with the second carrier.

So we'll end up with these vast floating platforms - each the size of three football pitches - which will carry only helicopters for the first few years. And when the planes for them are ready, the ones on deck will be very expensive American-made Joint Strike Fighters, not European/UK aircraft (Mike Turner, chairman of Babcock, argues that "marinising" the Eurofighter would have been a better bet for British industrial development).

Is there no case for the carriers? Well there is an old-fashioned Keynesian one, that constructing them will safeguard and create vast numbers of British jobs in the private sector. Plainly they provide very valuable work for BAE Systems, Babcock and Thales UK.

But the government can't really make this case with much conviction, since it argues that part of the point of cutting other large lumps of public expenditure is to create economic space for the private sector to flourish.

The one enduring mystery is quite how this astonishing mess was engineered. If ever there was a time and place for a formal investigation - by the National Audit Office - of who decided what and when, well some have argued to me that time is now.

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We have heard the reasons why the chancellor should reduce or delay his planned cuts in public spending - whose details will be announced on Wednesday - from the generals, senior police, university teachers, and the trade unions, among many others.

But apart from Tory and Lib Dem MPs and some economists, there haven't been many others urging George Osborne to stick to his budget pledge to reduce public expenditure by an unprecedented 拢83bn over the coming four years.

Until now.

, 35 business leaders say they "would encourage George Osborne and the Government to press ahead with his plans to reduce the deficit". They add that it would be a "mistake" to water down or delay the deficit reduction plan.

For what it's worth, I think their wish will be granted, come the announcement of the Comprehensive Spending Review on Wednesday.

I don't see any sign of the chancellor or the Treasury changing the round numbers for spending reductions that were published in the budget Red Book on 22 June (although achieving the first year cuts will not be easy, given that there is an element of "spend to save" in much of what the government wants to do).

Even so, some will see it as striking and significant that the letter seems to re-cast British politics back in the mould that appeared to have been smashed by New Labour in 1997, that of a conflict between what used to be called capital and labour - in that many business leaders back the public spending cuts, and most trade unions oppose them.

In the letter, the bosses of companies including BT, Kingfisher, Asda, Carphone Warehouse, Microscoft UK, Whitbread, Alliance Boots, Diageo, Next, Hammerson and MITIE claim that "addressing the debt problem in a decisive way will improve business and consumer confidence".

They insist that "the private sector should be more than capable of generating additional jobs to replace those lost in the public sector".

And they argue that if the cuts are delayed, there would eventually be deeper cuts or greater tax rises, to meet the increased interest costs on national debt that would be 拢92bn higher - according to the Office for Budget Responsibility - under the plans of the previous Labour government.

Some of the signatories - such as Lord Wolfson, chief executive of Next, Paul Walsh of Diageo and Ian Cheshire of Kingfisher - are widely viewed as Tory supporters, who also signed a letter before the election calling on any new government to make the public sector more efficient.

But the intervention of others - such as the chief executive of BT, Ian Livingston, the founder and chairman of Carphone Warehouse, Charles Dunstone, the chairman of ASDA, Andy Bond, and the managing director of Microsoft UK, Gordon Frazer - will be seen as more surprising names.

Mr Dunstone, for instance, was a high profile business backer of Tony Blair's New Labour government.

The 34 businessmen and one businesswoman (Ruby McGregor-Smith, chief executive of the outsourcing conglomerate, MITIE) all say that the letter represents their personal views.

However the letter only carries weight because of the positions they occupy in the private sector. So there will be some who question whether this intervention in a highly charged political battle is appropriate for those running companies owned by pension funds and other institutions which look after the savings of millions of people with diverse affiliations and views.

The 35 also make one statement that will amuse many economists. They say "everyone knows that when you have a debt problem, delaying the necessary action will make it worse not better".

That may be true of individuals and even for most businesses. But there is a whole school of economists, largely those who call themselves Keynesian in some way, who would describe that statement as laughable.

They would argue that it was the application of prudent principles of personal finance to the level of the state that was to a large extent responsible for the severity of the Great Depression of the 1930s.

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It's been on my mind to point out that although there may be a rational argument for placing the holding companies of Liverpool Football Club into administration, that may be technically impossible as of this moment.

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How so?

Well, the restraining order issued by the court in Dallas on Wednesday contains the following clause:

"The defendants and their offices, agents, servants, employees and attorneys are temporarily enjoined from... taking any action to modify, pledge, sell, transfer, seize, foreclose or dispose of Plaintiffs' ownership in Liverpool FC."

So although today is the day in which Royal Bank of Scotland has said it wants its 拢240m (plus penalty charges) of debt repaid, on pain of placing LFC's holding companies into administration, as of now RBS can't actually exercise the threat of administration under UK insolvency procedures.

In other words, the Dallas court has castrated both Royal Bank of Scotland, as creditors of LFC, and New England Sports Ventures, deemed by the British courts to be the new contractual owners of LFC.

Which is messy, to put it mildly.

And here's another bit of messiness.

Let's say, as per David Bond's note of this morning, that one of the current co-owners, Tom Hicks, sells his shares to Mill Financial and persuades Mill Financial to hand over 拢200m-plus to repay the debts owed to Royal Bank and Wachovia.

Now if the money is wired to RBS from Mill Financial, RBS can refuse to see it as a wiping out of Mr Hicks' debts.

But if Mill Financial transfers the money first to Mr Hicks, Mill Financial is taking something of a risk, unless Mr Hicks transfers very substantial collateral to Mill.

It looks to me as though stalemate still characterises the current state of play - which is why so much hinges on whether the Texas court at 0700 local time (1300 UK time) lifts the restraining order and would therefore allow either the sale of LFC to NESV to be completed or RBS to put the business into administration.

Update 1305: So Mr Hicks and Mr Gillett have surrendered the restraining order, and the basic principle that national laws apply in property cases lives to fight another day.

Phew. I was beginning to worry that the Liverpool takeover spat was infecting and undermining the tenets of capitalism.

So where next?

Well the Red Sox owner, NESV, is racing to complete legal niceties so that it can transfer 200m squids to Royal Bank of Scotland and call it a deal.

But no-one thinks Mr Hicks has chucked in the towel - and there is a widespread assumption that he will somehow magic up 拢200m from Mill Financial to pip NESV to the post.

I would find this a preposterous notion, were it not that so much that has happened in this tussle has defied belief.

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Update 1601: So it鈥檚 all over. NESV is now the proud owner of Liverpool FC.

It would all feel like something of an anti-climax, if the previous owners weren鈥檛 planning to sue Royal Bank of Scotland and the club for around 拢1bn.

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• - What's this?

I'm about to disappear into an edit suite for a bit, to concentrate on matters other than Liverpool FC (yes, there is other stuff happening in the world - although nothing as absurd).

So this is where I think we are.

RBS is beginning to have doubts whether the 拢200m-plus from Mill Financial will turn up - and my contacts with Mr Hicks's people suggest that may well be a rational fear. No-one seems to believe that the high court will have any effect on the ability of Mr Hicks to frustrate the sale to NESV through the Texas courts.

What does that all mean? Well, I think it means that we're in a bit of the corporate universe characterised by what statisticians would call Knightian uncertainty. To put it another way, I have no bloomin' idea where this will end up.

One plugged-in bloke tells me NESV can't possibly win it now. Another whom I trust tells me NESV will ultimately emerge the victor.

What I think is that Royal Bank of Scotland has a hideous decision later today.

If there's no serious prospect of a clean takeover of Liverpool being effected in the next day or so, can it really justify extending the deadline for repayment of the bank debt?

Or is it now rational for RBS to put Liverpool FC into administration under insolvency procedures, so that it can take direct control of the sale process, strip Messrs Hicks and Gillett of any power to interfere, and pass Liverpool to the most credible new owner with the deepest pockets (which might be NESV, or might still be the Singapore tycoon, Peter Lim)?

Update, 1432: Peter Lim says he is withdrawing his offer to buy Liverpool, because it has become clear to him (he says) that "the board is intent on selling the club to NESV to the exclusion of all other parties, regardless of the merits of their bids".

He says that if the "circumstances" were to change, he might be persuaded to re-enter the fray.

Update 1749: OK, maybe Liverpool is back on course to be bought by NESV.

The high court has ordered Tom Hicks to withdraw the restraining order on the deal which he obtained from a Texas court.

He has until 1600 tomorrow (UK time) to comply.

Liverpool's management seems optimistic that - at last - the ownership uncertainty will be resolved in the way it wants.

But Mr Broughton and his colleagues have thought that before, and been disappointed.

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• - What's this?

Royal Bank of Scotland tells me that if it's true that Mill has taken the Hicks/Gillett shares and if Mill repays the 拢200m long-term debt owed by Liverpool FC (plus penalty fees) to RBS and Wachovia, then Mill is in the driving seat.

Once the debt is repaid, RBS's power ends.

At that point, the deal with New England Sports Ventures collapses.

Liverpool would have a new owner, Mill. And Mill will do with Liverpool what it pleases.

Update 1156: RBS feels its hands would be tied if 拢200m were to turn up in its accounts from Mill Financial.

At that point, its ability to determine the fate of Liverpool FC would be over.

What I cannot ascertain is what Mill would then do with Liverpool.

Is it buying to hold or buying to sell? And would there be any continuing relationship with Tom Hicks?

As and when I get answers, you will be the second to know.

Update, 1209: Liverpool's directors are due back in court at 1400, in an attempt - I am told - to somehow get around the Texas injunction on the sale to NESV.

So the race is on to see who can get the 拢200m into RBS's coffers faster - NESV or Mill?

After months of fearing they'd never get their money back, RBS must be laughing all the way to the...

Update, 1248: As I understand it, Liverpool's directors will try to get the UK courts to injunct Mr Hicks and Mr Gillett, to prevent them frustrating the sale to NESV via the Texas courts.

Sources close to Mr Hicks are confident that Liverpool's lawyers will not succeed.

Also, bankers at RBS are beginning to wonder whether the money from Mill Financial will actually turn up.

"It could have arrived any time in the past few months, so I see no reason why it should arrive today", said one.

I fear Liverpool will be stuck in limbo for some time yet.

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• - What's this?

I disclosed here last month that the Office of Fair Trading and Competition Commission would be merging to form a super competition regulator.

That will be confirmed later this morning.

And what will also be disclosed is that most of the OFT's consumer protection functions will be stripped out - in a way that the coalition government hopes will be seen as a manifestation of its determination to devolve power to local bodies.

So the Citizens Advice Bureau will be given the OFT consumer complaints line, Consumer Direct.

And the CAB will take on the OFT's role in championing consumers in their relations with the big energy and telecoms companies.

But when it comes to the OFT's highest profile work, such as challenging the way the banks charge for unauthorised overdrafts or the way that low cost airlines show their prices, that will devolve to local Trading Standards offices.

As for the OFT's consumer credit responsibilities, they'll go to the new Consumer Protection and Markets Authority that is being created from the break up of the Financial Services Authority.

It's a huge reform agenda and one which seems in tune with David Cameron's localism and Big Society visions. Does it make sense?

Well I'm not sure the consumer lobby groups, such as Which, or the business lobby, including the CBI, will be overjoyed.

Because the big question is whether local trading standards offices will have the resources or expertise to really challenge the behaviour of giant businesses.

There's a risk of balkanisation, that sees tight restrictions imposed on smaller companies but fails to check the anti consumer activities of the biggest businesses.

Also, it's slightly odd that the CAB will be asked to fight for consumers in their battles over gas bills, but not in their struggles over bank charges - where the CAB has tons of expertise.

And it's not clear that the CAB is the best place for Consumer Direct - in that 20% of the complaints it receives result in enforcement action by trading standards and the OFT.

The Business Department will publish a consultation paper on all this. I would expect something of a backlash against the blueprint and I doubt all of it will go through.

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• - What's this?

It really wasn't so long ago when Standard Chartered was the Clouseau of banks.

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When I was a banking editor some 20 years ago, the rule about Standard Chartered is that if it could go wrong, it would.

So I have had to pinch myself periodically over the past seven years, as its profits have risen in a straight line and its shares have soared.

Today Stan Chart's market value at a shade under 拢40bn is greater than Barclays' and Royal Bank of Scotland's.

Which is quite extraordinary when you consider that Stan Chart's balance sheet is less than a fifth the size of their balance sheets.

For this price differential to be rational, Stan Chart has to be able to safely sustain supra-normal growth in lending and fat profit margins for a very very very long time.

How likely is that?

Well, Standard Chartered is - by dint of its history - big in those parts of the world, such as India, Hong Kong, other parts of Asia, much of the Middle East and Africa, that have emerged relatively unscathed from the 2008 crash.

And Stan Chart has almost no business in the debt-hobbled West.

So it plainly has some big advantages over Barc and RBoS.

But just last weekend, and before Stan Chart launched its 拢3bn rights issue this morning, the bank's chief executive Peter Sands warned in Washington that regulators' determination to force all banks to accumulate capital could have a seriously depressing impact on the prospects for global growth - because banks would be forced to rein in lending to raise their respective ratios of capital to assets.

If he's right, that will have a negative impact even in the buoyant parts of the world that Stan Chart is lucky enough to call home from home.

But there is a more germane concern about both the rate of growth in places like India and China and the Standard Chartered share price - which is that they may both be manifestations of a new bubble.

That's the bubble pumped up by the unprecedented creation of new money in the UK, US and eurozone - which is leaking out via a new kind of carry trade, a search for capital gains rather than the search for yield of 2002-7.

Money is pouring into Asian assets, such as Stan Chart's shares, because they seem to offer growth potential at a time when western assets offer neither yield or decent prospects of capital appreciation (and are wasting as a result of competitive devaluations).

So here's the question. Is Standard Chartered's 拢3bn fund raising an example of safety first by a prudent bank, or a hubristic precursor to the acceleration of lending in markets that are becoming a bit too bubblicious?

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Credit where it's due. Britain's biggest banks appear to have made a serious effort to respond to the concerns that they are not providing enough financial support to small and medium size businesses.

The report of their Business Finance Taskforce, which will be published later today after bank bosses meet ministers to discuss their proposals, contains recommendations of substance, to improve the flow of credit and capital to the private sector, and also to provide a bit more confidence to smaller businesses that they have a right of reply and appeal if they feel mistreated by their respective lenders.

The proposals fall into three broad categories:

1) Initiatives to improve relationships with customers, which will include the provision of support for a network of business mentors, the establishment of a more independent and robust appeals process for businesses that feel poorly treated, and the creation of a new longer timetable for replacing existing credit;
2) New and improved sources of finance, including the creation of a new Business Growth Fund and help for mid-sized businesses to raise money on syndicated debt markets;
3) The collection of better business-lending data and the publication of clear information on what finance is available.

It's the Business Growth Fund which is the most eye-catching proposal. This will be a brand new institution which aims to make equity investments of between 拢2m and 拢10m in businesses with a turnover between 拢10m and 拢100m.

The fund is a response to the concern - which feels almost as old as capitalism itself - that the UK lacks appropriate institutions to provide risk capital to smaller (though not micro) businesses.

For as long as I can remember, politicians and business folk have agonised that the UK is at a significant economic disadvantage compared to Germany, because we have no equivalent of Germany's Landesbanken, the banks that provide longer term finance to small and medium size businesses.

And since these are the businesses that generate so much employment and wealth, it is a financing gap that is more urgent than ever to fill in Britain, given the looming squeeze on public expenditure and the expectation that the years of boom for the UK financial services sector are well and truly over.

The banks are pretty ambitious for their Business Growth Fund. They hope it will make something like 拢1.5bn of investments over a number of years, from a series of regional offices (as well as an HQ).

That can be seen as a serious commitment to help businesses with growth potential, in that those companies that take advantage of the new capital on offer should also be able to lever in additional debt finance.

The fund will take stakes in businesses of at least 10% and will hold them for about five years. The aim is to appoint a chairman by the end of the year and start assessing investments as early as next spring.

Interestingly the leading banks behind the report - HSBC, Barclays, Santander, Lloyds, Standard Chartered, Royal Bank of Scotland - will invite other financial institutions to invest in the fund, alongside them.

As a minister said to me last night, "I think we have had some kind of return for kicking the banks; this new fund looks as though it will play a useful role".

Does it mean that there'll be an easing of pressure on the banks from the Chancellor, George Osborne, and the Business Secretary, Vince Cable, for them to do more to help business?

I don't think so, because there is still a gap between ministers and banks on the nature of the problem as it affects the smallest businesses.

The taskforce's report sticks to the banks' line that they are providing enough credit facilities to small businesses - and that the problem is that unconfident businesses simply don't want to borrow right now, with the economic recovery not yet firmly entrenched.

By contrast, senior ministers believe that businesses are put off from requesting credit by their perception - which may or may not be accurate - that banks will charge them too much.

Against that backdrop, for me, the most striking admission in the report by the banks is that they may yet become seriously constrained in the amount of vital credit they'll be able to provide as demand picks up.

That's because, as you won't need telling, our banks became far too dependent in the boom years on raising finance in asset-backed bond markets which still haven't recovered properly.

As readers of this blog will know, just to maintain their current stock of lending, Britain's banks will have to refinance some 拢800bn of term funding and liquid assets between now and the end of 2012 - including the need to find not far off 拢300bn to replace the state-backed finance they received from the Bank of England's Special Liquidity Scheme and the Treasury's Credit Guarantee Scheme.

The taskforce report makes some suggestions about how to change regulations relating to asset-backed securities that they feel would help ease this looming funding squeeze. But there remains a serious risk that we'll soon be hit by Credit Crunch 2.

Perhaps for reasons of pride, the banks are not holding out a begging bowl - the report studiously avoids asking the government for an extension of the loans and guarantees they've received from taxpayers.

But the Treasury is painfully aware that if asset-backed bond markets don't perk up a good deal more in the coming few months, it will have to keep the banks on financial life support for a good deal longer than it would want.

Update 1155: It is important not to get too carried away with excitement about the potential of the banks' new Business Growth Fund.

I calculate that it will be able to provide risk capital to around 250 middling companies over a number of years (based on the banks' assertion that they'll provide 拢1.5bn of equity finance in individual lumps of between 拢2m and 拢10m).

As I've said, that will be seen as a useful contribution to the growth potential of a segment of the economy that has typically found it hard to raise capital. But it won't be transformative.

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Here are the details of the new offer to acquire Liverpool FC, which will be announced in a few moments by the billionaire Singapore businessman, Peter Lim.

He is offering 拢320m in cash for the club and its liabilities, compared with the 拢300m offered by New England Sports Ventures - which was accepted last week by Liverpool's chairman, Martin Broughton.

But what may excite Liverpool's fans is that Mr Lim is also saying he'll provide 拢40m in cash to Liverpool's manager, Roy Hodgson, to purchase players during the January transfer window.

Liverpool's board will find it difficult to ignore Mr Lim's new offer, raising yet more uncertainty about the ultimate fate of Liverpool FC.

Update 1221: The bid battle for Liverpool FC has become slightly more complicated than three-dimensional chess, but I'll have a go at explaining the interplay of the offers on the table and the outcome of today's high court case.

If Royal Bank of Scotland wins the case - to the effect that the current US owners of Liverpool, Tom Hicks and George Gillett, had the right to change the members of the board under Liverpool's articles of association but were simultaneously in breach of their agreement with RBS - then in those circumstances a new board will be formed that will consist of the original members.

And as I understand it, in those circumstances the newly-constituted board - which would again include Christian Purslow and Ian Ayre - would be obliged under its fiduciary duties to consider Mr Lim's bid.

In which case, it would probably be obliged to accept his bid, pending the receipt of an improved offer from New England Sports Ventures.

However, if Liverpool's chairman, Martin Broughton, were to win on his argument - that Mr Hicks and Mr Gillett were acting beyond their powers in removing Mr Purslow and Mr Ayre - the old board would still be in place.

And if the old board were still in place, the agreement with New England Sports Ventures would hold. And Mr Lim would be out of the game.

Finally, if Mr Hicks and Mr Gillett were to successfully argue that they had the right to replace Mr Ayre and Mr Purslow with their appointees, Mack Hicks and Lori Kay McCutcheon, then all bets are off.

In those circumstances, Liverpool would probably be careering towards administration under UK insolvency procedures. And it would be up to Royal Bank of Scotland - rather than Mr Broughton - to decide whether to sell to Mr Lim or New England Sports Ventures.

Right now, Mr Lim's bid probably looks more attractive to RBS than the offer from New England Sports Ventures, because he is proposing to pay RBS and its US banking partner, Wachovia, up to 拢20m in penalty charges, compared with the 拢10m or so offered by his rival.

Mr Lim's revised improved 拢320m offer breaks down as follows: 拢200m to pay off the long-term debt provided by RBS and Wachovia (identical to what New England has offered); 拢20m to cover bank penalty fees; 拢60m in cash to pay off other bank debt and to provide working capital; and the assumption of 拢40m of other liabilities.

In addition, he would provide 拢40m for the purchase of new players.

For the avoidance of doubt, Mr Lim's new offer is identical to New England's in one respect: not a penny of his money would go to Mr Hicks or Mr Gillett, who continue to face the painful prospect of losing 拢140m.

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I wrote a few weeks ago that Vince Cable is minded to submit News Corp's planned takeover of BSkyB to Ofcom for review, on the basis that it would diminish so-called "plurality" in the British media (that's "choice" to you and me).

But the business secretary, who is not a political na茂f, knows that such a reference to Ofcom would cause strains within the coalition - because before the general election, team Cameron assiduously courted Rupert and James Murdoch, News Corp's dynastic bosses, and won the endorsement for the Tories of News Corp's British newspapers (including the thumbs up that counts most, that of the Sun newspaper).

Which is why I was intrigued to learn that Mr Cable recently said to the bosses of other media groups - or so I am reliably told, by one of them - "give me a reason to refer the bid".

That, I suppose, could be seen either as showing that Mr Cable genuinely has an open mind about the merits of the takeover, and wants as much information as possible before making his formal decision.

Or, for those who believe in conspiracies, it might be seen as a plea to other media groups for political cover, so that as and when Mr Cable does refer the takeover, he's able to say to the prime minister words to the effect of "sorry old chap, I had no choice, look at the pressure on me from the rest of the media industry".

Certainly the unprecedented alliance of the Telegraph Group, Daily Mail and General Trust (DMGT), Trinity Mirror, Guardian Media Group, the 成人快手, Channel 4 and BT creates an interesting conundrum for Mr Cameron, if he sees it purely in respect of low and dirty party politics (which I'm sure he won't).

Whose wrath does Mr Cameron most fear - the ire of Tory-supporting News Corp titles, or the wrath of the Telegraph and Mail papers, which also backed the Conservatives?

That said, for me, it's the economic implications of the outbreak of peace between these disparate media groups that is most fascinating.

Because their argument against the takeover by News Corp of Sky is not just about a reduction in plurality, a potential diminution in the number of voices in the media industry.

They are also arguing that News Corp with full control of Sky could become a dominant force in a competition sense, especially in news.

The background to all of this is the belated but rapid convergence of television, print and online news - all of which are coalescing around digital, online delivery. The black rectangular symbol of this coalescence is the iPad and its fast-multiplying tablet imitators.

What the Telegraph and DMGT, in particular, have noticed is that only a combined News Corp and Sky have all the bits: the TV, the online, the print.

What's more, Sky is poised to generate mind-boggling quantities of cash, according to analysts, which could be used to invest in the digitally converged delivery of news, at a time when most other news groups remain seriously strapped for cash.

In other words, News Corp is likely to have to fight two very tough and separate regulatory battles to secure Sky, as and when it formally notifies the authorities of its formal intention to bid.

First, it will have to make its case to Ofcom that the deal won't dangerously reduce plurality.

Second, its hope that it would easily win the competition arguments, as and when the Brussels competition authorities start to investigate, well, that hope may well be dashed. There must even be some prospect that aspects of the competition case could be repatriated to the UK, for scrutiny by the domestic competition authorities.

Perhaps the biggest problem for News Corp is that there is a clamour of voices shouting that the deal must be blocked, but very little public argument in favour of the takeover.

It would have helped News Corp's cause if British Sky Broadcasting and its respected chief executive, Jeremy Darroch, could stand up in public and argue the merits of combining his company with News Corp.

But he can't do that, because News Corp refused to pay the 拢8 per share price demanded by Sky's independent directors. Unless and until News Corp and Sky reach a concord on the price of the takeover, Mr Darroch and his colleagues cannot campaign for the takeover.

All of which, for the first time, makes me think that there is a chance that - after all the noise has subsided and the dust has settled - News Corp's ambition to raise its holding in Sky from 39% to 100% may yet be frustrated.

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The bidding contest for Liverpool FC may not be over.

I have learned that the runner-up in the contest, Peter Lim, a Singapore billionaire, is to approach Liverpool's board with a view to making a higher offer for the club.

听

According to sources close to Mr Lim, he was the Liverpool board's preferred bidder in the closing stages of the auction. He had discussions with Martin Broughton, Liverpool's chairman, and Christian Purslow, Liverpool's managing director, about how to announce his takeover, such was their apparent confidence that he would win the contest.

Mr Lim learned he wasn't the victor only a few hours before that the club would be sold to John Henry's New England Sport Ventures for 拢300m.

Mr Lim, who is being advised by the British firm of lawyers Macfarlanes and by the Wong Partnership of Singapore, still doesn't know why Mr Broughton went with New England Sports Ventures, owners of the Boston Red Sox.

He believes that in purely monetary terms, his offer was at least as attractive as Mr Henry's.

Mr Lim too was offering to repay all of Royal Bank of Scotland's and Wachovia's 拢200m of long term debt, to take on 拢60m of other debt, and to inject 拢40m of working capital.

What's more - and Mr Lim regards this as crucial - all the money being provided by him would come from his own cash resources. He is not planning to borrow any of it.

I understand he is also offering to provide tens of millions of pounds to Liverpool's manager, Roy Hodgson, to allow him to buy players when the transfer window opens in January.

According to executives close to Mr Lim, he was told by Mr Broughton that his ability to fund the takeover for cash, and the size of his cash resources, meant he was a more attractive owner than New England Sports Ventures.

Mr Lim was told that Liverpool's board was concerned that New England Sports Ventures would have to borrow to finance the takeover - raising questions about whether Liverpool really would break free from the financial shackles perceived to have been imposed by the current owners, George Gillett and Tom Hicks.

In the event, New England Sports Ventures have insisted it will not load up Liverpool FC with debt. But there are no guarantees that there won't be significant debt further up the corporate ownership structure of New England Sports Ventures - which could limit how much money Mr Henry and his colleagues can inject into Liverpool in the future.

Mr Lim is keeping a close eye on the court case, which starts tomorrow. The case is supposed to rule on whether Mr Broughton can sell Liverpool to New England Sports Ventures against the wishes of Mr Hicks and Mr Gillett.

The Singapore billionaire believes the judgement in that case may give him an opportunity to bid again, whatever Mr Broughton may wish. Mr Lim is also prepared to buy Liverpool should it ultimately collapse into administration under UK insolvency procedures.

According to sources close to him, he feels that he may have been shut out because New England made an offer to Royal Bank of Scotland to pay some of the 拢40m penalty fees the banks have demanded.

If that is the case, he believes Royal Bank may have done a poor deal, because he would be prepared to pay RBS and Wachovia more than the 拢10m or so which New England Sports Ventures is said to have put on the table.

"He never had a chance to negotiate directly with Royal Bank" said a source. "He was expecting to do so, after agreeing the takeover with the board".

Mr Lim has an estimated net worth of $1.6bn (拢1bn) according to Forbes Magazine.

He made his fortune in fashion, logistics and agri-business.

His interest in English football stems from his ownership of several Manchester United themed bars in Asia - which have persuaded him that there is huge global potential for making money from top flight English football.

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Sir Philip Green told me that if he ran his businesses the way the government does, the lights would go out.

听

What he says he's uncovered is a culture where there are grotesquely inadequate controls of spending on everything from mobile phones, to travel, to property and paper.

The budgets he looked at are worth 拢191bn in total - and he believes billions could be sliced off that, if the government did simple things like centralising purchasing and monitoring expenditure properly.

For example, he argues that the public sector is spending around 拢700m a year too much on telecoms alone.

It鈥檚 the many smaller examples of waste that some will see as shocking, such as that on a single IT contract, 400 private sector employees are being hired at a daily rate of more than 拢1,000 per day, for tasks that Sir Philip was unable to identify.

He also highlights:

1) the existence of 71,000 central government buyers, who can spend up to 拢1,000 a month using 鈥減rocurement cards鈥� without any checks or oversight;

2) in general, the government permits spending of up to 拢1,000 鈥渨ithout monitoring or authorisation鈥�;

3) 拢104m a year is spent on printing, with some departments paying 11p per leaflet while others pay 拢1.31;

4) there is 拢551m of annual travel spending by central government, with very little co-ordination of the purchases;

5) even more is spent on travel by the rest of the public sector, but the precise amount was impossible for Sir Philip to obtain;

6) some 拢38m a year is spent on 400,000 overnight hotels in London alone, with prices per room varying from 拢77 to 拢117;

7) some 拢84m goes on office supplies, with prices paid for ink cartridges varying from 拢86 to 拢398 and on paper from 拢8 per box to 拢73;

8) 拢61m is spent on laptop and desktop computers, from 13 different IT services providers, with no standard specification across departments and prices paid per laptop varying from 拢353 to 拢2,000.

9) one provider takes 98% of the 拢21m a year spent on mobile phones, which has nonetheless negotiated 68 different contracts with government departments - implying that the government is not benefitting from any economies of scale;

10) 拢25bn a year is spent on property, but only 6% of the entire estate is overseen by a central team;

11) the government is poor at taking advantage of break clauses in property leases, to rationalise use of office space.

That is just a selection of the myriad examples where Sir Philip believes the government can make very substantial savings, perhaps as much as 50%, on 拢191bn of procurement and property costs.

He is keen to point out that the savings he is suggesting would not involve a single public-sector redundancy: all of the squeeze would be on private sector suppliers (who probably won鈥檛 thank him).

Perhaps his most controversial recommendation - which he made in his interview with me but is not explicit about in the report - is that government departments pay their suppliers far too quickly.

He says that the norm in most departments is to pay suppliers in five days, compared with the standard 30 days payment period for most private-sector transactions, and 45 days demanded by some bigger companies (like his own).

If the government demanded a minimum of 30 days of credit from suppliers, it would save hundreds of millions of pounds in financing costs.

This would of course be painful for those suppliers, especially smaller companies.

The previous government made it a matter of explicit policy to pay suppliers as quickly as possible, to help them through the recession.

Sir Philip Green is saying that priorities should now change - and that the government should take advantage of its sheer size and credit-worthiness to extract the best possible terms from all those who sell to it (and never mind if they don鈥檛 like it).

Update 1430: I鈥檝e had a brief chat with Peter Gershon, who advised the previous government from 2000 to 2004 on how to make savings in procurement.

He says that he is supportive of Sir Philip Green鈥檚 central argument, that there should be more centralisation of purchasing by the public sector (or what Gershon calls more "aggregation of demand").

He says that in his work for the then Chancellor of the Exchequer, Gordon Brown, he put in place systems to facilitate the centralisation of purchasing.

But Brown did not order departments to centralise purchases.

And nor was there any serious move to standardise specifications for goods and services bought by different departments.

Different parts of government retained considerable discretion to choose different kinds of computers, and stationery, and mobiles phones, among others.

Which of course meant that their individual orders were smaller, and therefore there was less scope to yield savings from placing huge orders.

The corollary is that taxpayers arguably ended up paying more than was necessary to equip the public sector.

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Why did the government ask Sir Philip Green to look at whether he could find some significant savings in the costs of providing public services?

听

After all, the billionaire commuter between Monaco and London sells blouses, knickers, cuddly toys and table lamps; and the public sector educates our children and removes our gall stones.

Some would say that asking Green to advise on making the public sector more efficient is like asking the manager of a highly successful football team to run the Red Cross: it might work, but the difference in culture, scale and complexity between the business of government and the business of business presents significant challenges.听

There is logic, however, to seeking his counsel.

Green is a leading exponent of buying big businesses that have been losing ground, and then making a fortune out of them by improving their productivity - which means both cutting costs and growing sales. In fact, in the UK, he is the non-pareil of stabilising and extracting cash from retail brands that are going a bit brown around the edges.

Arguably, David Cameron and Nick Clegg can be seen as having executed a similar takeover, that of the debt-encumbered apparatus of the British state.

They would certainly argue that their need to cut public expenditure and improve the efficiency of public services is as great as his need was at Bhs,Top Shop and Burton to boost the return on sales and invested capital.

Or to put it another way, the driving forces for Green and Cameron/Clegg are the same: the imperative of reducing the burden of debt.

Green finances his takeovers with colossal amounts of debt that have to be paid off as quickly as possible; Cameron/Clegg inherited national debt that is rising unsustainably fast because of the huge gap between what the government spends on public services and what it receives from tax revenues.

So why not ask the private-sector maestro of paying off takeover debt how he thinks the gap between spending and revenues can be closed without damaging the quality of the services provided?

After all, many of the overheads of his businesses are the same as the public services' overheads: they include everything from property, to telecoms, to travel, to power, to IT, to paper clips.

We'll know tomorrow how much wasted spending he thinks can be eliminated in a sprawling public sector from eliminating unnecessary expenditure and striking better deals on necessary purchases.

There is however one cost of doing business, tax, that Green and most private-sector enterprises strive to cut - and where their effectiveness in doing so can be seen as running counter to the interests of the public sector.

He famously saved 拢300m in tax in 2005 on a 拢1.2bn dividend from his company, Arcadia - because Arcadia is registed as owned by his wife Tina, who is resident in the tax haven of Monaco.

These days he likes to accentuate the substantial tax paid to the Exchequer by his businesses.

But (to state the obvious) if all businesses and wealthy individuals could somehow be persuaded to devote less time and effort to minimising their British tax payments, rather smaller cuts in public services would be required to restore the health of the public finances.

Perhaps the enlistment of the likes of Sir Philip Green to advise on remaking the public sector will persuade business leaders that paying taxes represents reasonable value for money. We'll see.

Update 0800, 11 October: There is a paradox at the heart of the short preview - published overnight - of Sir Philip Green's recommendations to make the public sector a better buyer of goods and services.

He argues that the government purchases too little centrally, which means it doesn't use its buying power and doesn't get the keenest terms from suppliers of everything from travel, to IT, to telecoms, to stationery.

The retailing billionaire also says that the public sector doesn't take full advantage of its AAA credit rating - which implies, somewhat controversially, that it pays its suppliers rather quicker than it needs to do.

If ministers follow up on what he recommends, that'll help them close the yawning unsustainable gap between what they spend and tax revenues.

Who'll be the losers? Well in theory they'll be the private sector suppliers to government, who have both been arguing for the government to become more efficient and whose profit margins would be quite considerably squeezed.

I'll be getting more detail on all this in an interview with Sir Philip later this morning.

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For years I鈥檝e been banging on about the 鈥渉eadquarters effect鈥�, or the propensity of multinationals to favour their respective countries of origin when it comes to decisions about where to put new investment or where not to impose draconian job cuts.鈥��

For many, it鈥檚 one of the few respectable arguments against the British propensity to sell any company or asset to the highest bidder: the HQ effect implies that when a British plant is owned by a overseas company, it may be more vulnerable to being closed down if the going gets tough and may also be less well funded than operations in the company鈥檚 home territory.鈥��

Nice theory. But in the boom years from 1992 to 2008, the headquarters effect didn鈥檛 seem to be too serious a problem. The point is that when the UK economy and global economy were growing with only smallish dips and interruptions for 16 years, there were plenty of new opportunities for those made redundant by the corporate pruning and reshaping ordered by executives resident hundreds of miles distant.

Don鈥檛 those easy-come, easy-go years feel an era away? Today鈥檚 world is uncertain, shrouded and perilous. Which is why cross-border investment has diminished and why some multi-national businesses are putting safety first and staying a bit closer to hearth and home.鈥��

听

That said, few have taken the defence of the corporate home 鈥� a kind of corporate patriotism 鈥� quite as far as Siemens, in its recent agreement with its works council and the IG Metall workers鈥� union that it will never make any forced redundancies among its 128,000 German workforce.

Siemens鈥� German employees 鈥� not just this generation but all future generations 鈥� have been given a guarantee that their jobs are safe.鈥��

Now the traditional British or American critique of Siemens鈥� protection of German employees would be that it has surrendered a vital ability to respond to unexpected shocks by slashing jobs and thus costs.鈥�

That may be so. But Siemens employees in the UK tell me they have a different fear 鈥� which is that they鈥檙e now more exposed than they were to being fired: if Siemens wants to adjust its cost base, it鈥檚 the Brits in their hire-and-fire culture who will be volunteered for the boot.

This may be an unfounded fear. But given that Siemens employs just under 17,000 people in the UK, it鈥檚 as well to treat it seriously.鈥��

As it happens, I鈥檝e been contacted by employees of Trench UK - a small business that became part of Siemens in 2004 as part of the acquisition of a larger outfit - who are battling against Siemens' decision to close their operation down.鈥��

To be clear, the original threat to shut Trench 鈥� which will cease operating in September 2012 鈥� pre-dates the German job protection deal.鈥��

But, on the face of it, there are reasons to be troubled by the planned closure.鈥��

The point is that Trench UK seems to be a highly successful British-based manufacturing exporter 鈥� and there aren鈥檛 too many of those about.鈥��
It also operates in a part of the UK, Tyne & Wear, where private-sector exporters are a bit too thin on the ground.鈥��

Now Trench isn鈥檛 a huge business. It employs just 91 and can't be seen as of major strategic importance to the UK - although its existence probably supports a few hundred other British jobs.

But it is an important supplier to the National Grid as the maker of a specialist electrical product, called a Bushing, which connects transformers to cables.

The managers on Trench UK鈥檚 employee consultation committee tell me that turnover and profits have grown strongly over the past five years and that 70 per cent of output is exported.

Profit was more than 拢5m in 2009, up from almost nothing in 2005 鈥� and the past 12 months have delivered another record performance.

These managers say that they have a highly productive business, which has immensely loyal customers. They believe that Trench UK could be a small but useful contributor to Britain鈥檚 industrial revival.鈥��

So why is it on its way out? Well the managers鈥� conviction is that Siemens main motivation is to channel Trench UK鈥檚 orders through a larger but less successful Siemens plant in Cologne, Germany.

Which, if true, may well be a rational commercial decision by Siemens.

But we need to hope that Trench UK isn't some kind of last swallow of an economic summer.

Or to put it another way, the evidence suggests that the famous flexibility and openness of the British economy has helped to bring in investment over the past 25 years.

These putative advantages of investing in the UK persist. But if it鈥檚 easier to create and expand productive capacity in the UK than elsewhere in Europe (for example), it's also easier to shut up shop and go home.

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I've just interviewed Martin Broughton, chairman of Liverpool since April.

And what struck me was his confidence that he can sell the club from under its owners, Tom Hicks and George Gillett.

He told me that when he took the post of chairman, he received explicit undertakings that he was in charge of selling the club - and that Mr Hicks and Mr Gillett surrendered any right to block a sale to a bidder he deemed most suitable.

Those undertakings will now be tested in court, probably in the middle of next week.

But bankers tell me that if the courts rule against the transfer of Liverpool FC to the new ownership of John Henry and New England Sports Ventures, the sale will still probably go through - although via the ungainly mechanism of Royal Bank of Scotland putting Liverpool into administration (see my earlier post on how this would work).

So it looks like the parent company of the Boston Red Sox will be the proprietor of the Liverpool FC.

It is proposing to pay 拢300m, of which 拢200m would pay off the longer term bank debt provided by Royal Bank of Scotland and Wachovia of the US (three quarters of that 拢200m goes to RBS).

Another 拢40m would pay off other creditors, such as the local council.

And 拢60m would stay in the business as debt secured on the stadium plus working capital facilities.

Not even a brass farthing will go to messrs Hicks and Gillett, which means they stand to lose the 拢140m they've put into the club - and it's why they will do all they can to frustrate the deal.

If, as seems likely, the deal goes through one way or another, Liverpool will once again have relatively modest debts - around 拢60m -which, as I've said, should feel like something of a liberation.

And Mr Broughton told me he was confident that the new owner wouldn't simply take money out by foisting new borrowings on the club as and when financial markets recover sufficiently - though there aren't any cast iron guarantees to that effect.

Nor has he extracted a binding commitment to build the new Stanley Park stadium. But Mr Broughton pointed to the track record of John Henry in developing sporting facilities in an imaginative way.

Mr Broughton believes that Mr Henry wants to own Liverpool for what the Kop would see as the right reasons - namely to turn it again into a winning club on the field, as the sine qua non of commercial success.

Mr Henry's record at the Boston Red Sox - which has won two World Series under his ownership after decades of ignominy and failure - would make that a plausible assertion.

But although globalisation is increasingly a phenomenon in sport as well in finance, there are still huge cultural differences between sports clubs in different countries. Mr Henry will find much about Liverpool FC unfamiliar, even alien.

So perhaps astutely, Mr Broughton refused to make any prediction of when silverware would once more grace the Liverpool trophy cabinet, to follow the silver raining into Royal Bank of Scotland's coffers.

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Let's call it Kopside, the soap opera of Liverpool Football Club's attempts to find a new owner and avoid being placed into administration.

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With just 10 days left before Royal Bank of Scotland would seize control of the club as its main creditor, the club has announced that it is negotiating with two bidders it regards as credible, one of which is the owner of the US Boston Red Sox baseball team, John Henry.

These bidders are prepared only to offer between 拢250m and 拢300m, enough to pay off Liverpool's bank creditors, led by Royal Bank of Scotland - but not enough to provide any recompense to the club's current owners, Tom Hicks and George Gillett.

So in an apparent attempt to frustrate the takeover, Mr Hicks and Mr Gillett have sought to remove two Liverpool directors, Christian Purslow and Ian Ayre.

But their tactics are dangerous - because Royal Bank of Scotland has made it clear that if no takeover is agreed by next Friday, it will put the club into administration and then sell it to on.

RBS's resolve to do just that will have been reinforced by the disclosure that there are two bidders with the resources to pay off all long term debt.

As I've mentioned before, if Liverpool goes into administration Mr Hicks' and Mr Gillett's investment in the club of 拢140m or so would be totally wiped out.

Messrs Hicks and Gillett look as though they're perched precariously between the devil and the dark blue water - or are they being squeezed between the inhabitants of the Kop, who detest them, and the occupants of the Anfield Road Stand, who loathe them?

That said, the club's chairman, Martin Broughton, would like to avoid administration if possible - since the automatic deduction of nine points from Liverpool's derisory Premier League tally would make it difficult even for a revitalised Liverpool to break free of the relegation zone.

Update 0751: It now looks pretty certain that New England Sports Ventures will add the Reds to their stable of sporting assets, which include - as luck would have it - the Boston Red Sox.

What is unclear is whether John Henry's US sports conglomerate will buy Liverpool Football Club in a conventional transaction, as a going concern, or whether Liverpool will yet be forced into administration under insolvency procedures - and under those circumstances New England Sports Ventures would buy Liverpool from Royal Bank.

The uncertainty arises from attempts by the current owners, George Gillett and Tom Hicks, to block the deal - which would repay the 拢280m owed to RBS and the US bank Wachovia, but would deliver nothing to messrs Hicks and Gillett.

Because of the opposition to the deal of Mr Hicks and Mr Gillett, the ignominy of administration - which would see Liverpool lose nine Premier League points - remains very much a live option for this proud club.

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There are weighty and potentially painful implications for British banks from a on how to limit the risks to the Swiss economy of banks that are so big that they can't be allowed to fail.

The report matters to the UK for a number of reasons.

First, George Osborne's banking commission is looking at the same issue.

Second, the UK's Financial Services Authority and Bank of England have been on the same side as the Swiss Authorities in battling for the imposition of higher capital ratios for banks - as a protection against losses - in negotiations on the Basel Committee. There is considerable mutual respect and empathy between UK and Swiss regulators.

Or to put it in more concrete terms, like the Swiss, the FSA is determined to impose significantly higher capital requirements than the new Basel minimum on the UK's biggest banks.

What would be the implications of the adoption of the Swiss approach in the UK?

Well the likes of Barclays, Royal Bank of Scotland, HSBC and Lloyds might think that would be good news, in that the Swiss have opted against breaking up their two giant banks.

But I am not sure that's quite right, because what the Swiss authorities are implementing may massively increase the costs of doing business for their banks - and presumably the banks themselves will have to swallow some of that cost increase, rather than passing it on to customers in the form of higher fees and interest rates.

What is most striking is the calibration of the capital that UBS and Credit Suisse would have to hold.

There would be the absolute minimum of equity equivalent to 4.5% of risk-weighted assets, as per the new so-called Basel III minimum.

Then there would be a buffer of a further 8.5%, much bigger than the Basel III 2.5% buffer.

That 8.5% would consist of 5.5% common equity and up to 3% in so-called contingent convertible bonds, or CoCos. The investors in these bonds would see the bonds automatically converted into equity at the moment that the ratio of the banks' equity to risk-weighted assets were to drop below 7%.

And here's what may particularly alarm the UK's big banks: the Swiss banks are being obliged to hold CoCos equivalent to a further 6% of assets simply because they are big, in what the commission calls a "progressive component" in the capital requirement.

The relevant statistics of their bigness is that both UBS and Credit Suisse have total assets of around CHF1.5 trillion (拢977bn) and a share of the relevant Swiss markets of around 20%.

The commission says that UBS and Credit Suisse would have to hold even more capital if their balance sheets and respective market shares were to increase further - and they would be rewarded with a decline in the progressive component of the capital requirement if they were to shrink.

So what are the potential implications for Britain's big banks?

Well none of them hold equity and CoCos even close to 19% of assets - and only Lloyds has any CoCos at all.

So if the FSA were to adopt more-or-less the same capital approach as the Swiss, British banks would have to raise something of the order 拢200bn of new capital in the form of equity and CoCos. Which is a colossal sum.

Here's the thing. It's not clear that insurers, pension funds, hedge funds and the like have 拢200bn going spare that they would want to provide as risk capital to banks.

What's more, if the FSA were adopting the most prudent approach, it would discourage UK insurers and pension funds from buying this stuff and hope it was sold overseas, so as to insulate the UK financial system and economy from a UK banking implosion. But it would not be at all easy to persuade overseas investors to put 拢200bn into British banks.

As for the biggest investor in RBS and Lloyds, which is the British government on behalf of British taxpayers, I'm not sure the chancellor would want to inject a further 拢70bn odd into RBS and Lloyds at a time when money is tight.

Here's where the Swiss remedy could be particularly painful for British banks: there's an argument that the UK's too-big-to-fail institutions should hold even more capital than Swiss ones.

First, the gross assets of RBS, Barclays and HSBC are each between 50% and 60% greater in absolute terms than their Swiss rivals: their respective gross assets are all between 拢1.5tn and 拢1.6tn. Or to put it another way, they all have balance sheets significantly greater than the value of UK GDP.

As it happens, Credit Suisse and UBS are bigger relative to Swiss GDP than individual British banks. But that relative size disparity does not mean that rescuing an RBS or a Barclays would be significantly simpler and less dangerous for the British economy than rescuing a UBS is for Switzerland.

Second, Lloyds' market share in the UK - 30% of current accounts, 24% of mortgages, 23% of services to small businesses - would imply on the Swiss model that it should hold quite a lot of additional CoCos.

Nor is that the only pain being inflicted on Swiss banks. The commission say it is imperative that they put in place arrangements to ensure that in a crisis they can be "resolved" or broken up in a way that minimises the likelihood than any taxpayer funds will have to be injected into them - which, as I've pointed out before, will probably mean that it becomes more expensive for the banks to borrow (another increase in their cost of doing business).

What I'm driving at, in a meandering way, is that the management of Barclays, RBS, Lloyds and HSBC may be deluding themselves that a forcible break-up of their banks is the worst that could possibly happen to them - and that they've got to prevent such a dismantling at all costs.

The Swiss model of sanitizing mega banks, making them safe, would - for a transition period that could last many years - massively reduce the returns for shareholders and the remuneration of bankers.

In those circumstances, it might be rational for mega banks to voluntary break themselves up and shrink, to ward off the burden of additional capital requirements.

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I am escaping from the hell of central London on a day of tube strike, to what I hope will be the still-functioning metropolis of Birmingham.

That's where the Chancellor, George Osborne, will attempt to reassure delegates at the Tory party conference that his planned public-spending cuts, to be unveiled in higher definition on 20 October, are not as bad as they seem.

If implementation ushers in the kind of industrial action that has brought the capital to a standstill, the transition to a leaner, meaner, state may not be without trauma.

But I was particularly struck by :

"Let's put these cuts into perspective. Many businesses have had to make far great reductions than us in one year".

Hmmm. Is that so?

Well it's certainly not true in respect of the absolute monetary value of spending reductions, 拢83bn over four years (which include the unspecified cuts of 拢52bn that the previous government factored into its budget forecasts).

And nor is it true of the sheer variety and diversity of operations that will be pruned and axed: there's no private-sector conglomerate in the world that provides the dizzying number of services of the British public sector.

But what about the proportionate reductions: between 25% and 40% for most departments (excluding the protected health and overseas aid budgets, and the semi-protected defence budget, which "only" has to find 20% savings)?

Yes it's true that private-sector businesses, big and small, have periodically been obliged to slash overheads and costs to that degree.

There are typically two cases where that's happened:

1) where a business has been seconds from insolvency and creditors have demanded draconian cuts as the price of not putting the business into bankruptcy;

2) where some kind of commercial genius has taken control of a business and spotted how to radically re-engineer the delivery of a service or product.

Now is the UK in the first category? For all the imperative of reducing the public-sector deficit, probably not. I don't think George Osborne would say that the UK is one minute before midnight in a solvency sense.

What about the second category? Well for all the talents of ministers and civil servants, what they're not are the Google boys, or Lou Gerstner - saviour of IBM - or Jack Welch, who reinvented General Electric.

Also, quite apart from the skills gap between a typical British politician and messrs Gerstner and Welch, there's an interesting disparity of time frame: the reconstruction of GE and IBM were relatively organic processes which lasted the best part of a decade, punctuated periodically by big disposals, job losses, acquisitions and outsourcing.

So what's a better private-sector analogy for what Mr Osborne and Mr Cameron wish on the state?

Well, the cost-cutting programme at Royal Bank of Scotland looks relevant.

How so?

With the generous support of taxpayers, it has time to reconfigure itself to become more productive - so that in time it can generate the profits that would allow taxpayers to be repaid.

And it is well into a programme of three to four years to reduce costs by 拢2.5bn, involving the loss of around 30,000 jobs.

It's an enormous undertaking. But those 拢2.5bn of savings represent just 15% of so of running costs - less even than the relatively protected Ministry of Defence has to find.

One similarity between RBS and the classic public sector (some would argue that RBS is actually part of the public sector, with taxpayers owning 84%t of it) is that it was pretty flabby.

Its current directors say that the nickname of the previous chief executive, Sir Fred "the shred" Goodwin, was a misnomer. They insist he did relatively little shredding of costs as he expanded the balance sheet.

Even so, they say that the 15% cuts are at the limit of what they can achieve without impairing the quality of service they provide.

Which carries an unavoidable implication, which few private sector bosses dispute when I discuss it with them: if you're cutting up to 40% from a budget, either you have to stop providing certain services or the quality of services provided will suffer (or both).

Update 1505: So what did I take from George Osborne's speech to his party's conference?

1) The FATwa on banks is still in place. That's FAT for Financial Activities Tax, which he'll levy if banks pay humungous bonuses without providing sufficient credit to wealth-creating businesses. But he didn't specify either what an acceptable quantum of lending would be or what would be tolerable pay for bankers.

2) Much of his rhetoric was about directing public spending to those areas that will stimulate private-sector growth - viz transport infrastructure, medical research, "green" investment, and so on. This has to be more than a woolly aspiration: without an expanding private sector, to offset public sector shrinkage, we'll be back in recession before you can say "defence of the AAA rating". But the business people I meet here would much rather have a bonfire of planning controls, another Heathrow runway and immigration caps - which populist politics have deemed to be off limits for the coalition.

3) Osborne has no intention of simplifying his public sector reconstruction ambitions: reform of delivery and budget cuts are partners, not alternatives, he insists. But reform almost always brings up-front costs, which may be huge. Think about the IT for new GP commissioning of medical treatments, or rewards for private-sector contractors that help those on disability benefit acquire the confidence and skills necessary for work, or the redundancy costs of reducing the labour component in some service provision. I am very little the wiser about where Mr Osborne will find the funds for what is in effect a huge investment to secure desirable but intrinsically uncertain long-term productivity gains.

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