He’ll be taking on a company that’s looking pretty rosy despite the slowdown in consumer spending – sales for the year to March 31 were up 16%, creating pre-tax profits of £13m. It does still have a huge amount of debt on its books though, after chairman Stefano Pessina, along with private equity firm Kohlberg Kravis Roberts, bought the company out for £12.4bn in 2007; the bill for that finance ran to £853m last year. At least Hornby is used to the after-effects of highly leveraged buyouts!

Pessina said he would invest £1bn in the company, and so far he’s been steadily pumping cash into establishing the Boots brand across the world, refurbishing and rebranding stores in areas like Scandinavia and the low countries. He also spent £184m on acquisitions last year, and is hoping the beleaguered Merckle family want to sell their drug wholesale business Phoenix.

It appears that Hornby’s constant moaning that HBOS was already crocked when he took the helm has proven persuasive – he must be relieved that the episode seems not to have scuppered his career. The established narrative places Hornby as merely being in the wrong place at the wrong time. The real blame has fallen either side of him – the disastrous assets and overextended position of HBOS being caused by James Crosby, and the massive losses at new owners Lloyds being thanks to the greed of Lloyds chair Victor Blank. In going to Boots, Hornby is back on familiar and less high-profile ground, having successfully headed up Asda in the 90s.

While Hornby has been rehabilitated, something tells me that Fred Goodwin might find it a little harder. Is he still hanging out with Jackie Stewart in Switzerland? Well, no-one really knows, and according to his spokesman, “Some of the guesswork so far has been pretty wide of the mark”. Goodwin also managed to further distance himself from the love of the British public by threatening to sue Viz for depicting him burning banknotes to stay warm. Let’s face it – this guy is never going to work again.

Of course, it’s not just jubilation at Blank leaving that prompted the faith in Lloyds. They also announced plans to raise £4bn that will pay off the preference shares bought by the government back in the excrement-fan days of last October – an investment opportunity that has sent the share price up. It’s also a sign that the government is beginning to retreat from its investments in banks – they’d originally pledged to take on all the shares from this issue, effectively swapping around preference shares for common shares, but now they’re only taking up 43% of them, and letting other investors in on the action. Lloyds is doing all this because it wants to stop paying the government the interest on preference shares, as it’s costing them £480m a year. 

Blank resigned because everyone was realising that no heads had rolled for the HBOS merger that saw Lloyds saddled with defaulting loans and toxic assets – they announced in February that HBOS lost £10.8bn last year. Rather than get slaughtered at the annual shareholder meeting, Blank stepped down, avoiding an ugly end to his career at Lloyds and also sparing Gordon Brown, relatively speaking, from any blushes – Brown had allowed the Lloyds/HBOS merger to go ahead without impediment from competition law after Blank schmoozed him at a Whitehall cocktail party.

As the FT notes today, UKFI, the Treasury body managing government stakes in banks, has not sided with Brown but instead has been listening to hesitance from investors over the quality of Lloyds’s leadership. But rather than publicly side with those investors, tantamount to “an open insult” to Brown, they diplomatically nudged Blank towards the edge and suggested that jumping might be an awfully fun thing to do.

Yesterday the FT’s Lex column suggested that Eric Daniels, Lloyds’s chief exec, “should not delay in preparing his own exit”, the suggestion being that a shareholder revolt against him would be inevitable as he and Blank are “inextricably linked” over the HBOS deal. But today there are suggestions from sources that Daniels could be safe: “Eric has some serious supporters out there”; “Eric is the right guy to make a success of this”; “Eric’s Sino-Germanic heritage suggests mystic power combined with ruthless efficacy, while looking like an exceptionally wise ape – this will surely be enough to survive”. That last one was me, but it’s true! Anyway, even Blank probably won’t leave for a good few months – posting a new chairman won’t be a quick task, and certainly won’t want to be seen to be rushed.

But just as we’ve seen with Goldman Sachs et al recently, a less competitive banking sector has thus far meant massive profits for the ones who have survived. As Pesto suggests on his blog, the sheer amount of assets that Lloyds now has as a result of the HBOS deal will eventually help it turn some massive profits once people stop defaulting and they’re not tied to the government any more. Some are calling the merger “the worst deal in British corporate history”, but thanks to that deeply irregular Brown-sanctioned waiving of competition rules, Blank gave Lloyds a once-in-a-lifetime opportunity to amass a huge chunk of assets, which could go on to make them (and therefore the taxpayer) a lot of money.

And while the cocktail party decision smacks of Labour being in thrall to the private sector, as well as being quite simply rash, the government is getting a healthy return on its investment. Whether a contracted banking sector starts to mean a less competitive atmosphere, it’s too early to say, but right now the government’s exit strategy is looking strong.

Their new wheeze to avoid this is to flog their exchange-traded funds (ETFs) business in order to get the buffer of capital it needs - ETFs are investment vehicles that behave like stocks, tracking the course of a stock market index, like the Dow Jones, but which don’t actually trade in the stocks held on it.

Their ETF business is called iShares – yes, even fund managers can’t help but stick “i” in front in things to make themselves sound personable and funky in a noughties kinda way. The sale could net up to £5bn, the same amount that the government is expected to charge them for the insurance scheme. Investors must think that Barclays are going to stay independent of the government because of this sale, because Barclays shares jumped after the news broke yesterday.

But there are few reasons why selling off iShares might not be a great idea in the long run for Barclays. Firstly, it’s a growing business that is trading in a still-popular investment strategy – Barclays would miss out on all that future revenue. Secondly, it’s looking like they may not get the price they want for it – amid the recession, large banks have the cash to buy it but are reluctant to use it, while other ETF managers simply don’t have enough money in the first place. The price could get driven down below the amount of capital Barclays need. And while there is potential for growth, right now it’s not happening – ETF assets fell $83bn in the first two months of the year. To sell amid such a slump would get Barclays a bad price for a potentially good company.

There are some, however, who are questioning the ongoing value of ETFs, and of iShares – a source who spoke to IFA Online said iShares had an “unsustainably strong reputation” and that “the perception of growth in this business” was greater than it actually will be. So maybe it’s actually a good time to sell, with ETFs potentially losing profitability over a longer term than expected.

But why sell it at all? Why not just sign up to the insurance program to restore their capital ratio to the 14.5% now being enjoyed by Lloyds? FT’s Alphaville puts in succinctly: “State-interference must be avoided at all costs since that would cost Barclays its lucrative tax avoidance business and also cost Messrs John Varley [chief exec] and Bob Diamond [president] their jobs.” While Gordon Brown wouldn’t necessarily get rid of Varley and Diamond – he explicitly preserved Lloyds’ chief Eric Daniels last week in the name of stability – the clever tax avoidance would certainly come to an abrupt end. Barclays is said to avoid £1bn in tax a year through Jenkins’ loophole dancing – if the government part-owned the bank they could kiss that revenue goodbye. And there’s also the little matter of Diamond and other employees losing their ongoing income from iShares stock options – Diamond made £7.76m from them in 2006 alone, though then again, if they believe that iShares could tank, maybe they stand to make more from selling on their stock to a buyer.

Sources the FT spoke to said that the sale of iShares didn’t have anything to do with trying to avoid the asset-insurance program, but we’re not sure whether to believe that. Would they really be able to get away with another rights issue, effectively handing over yet more equity to the Middle East? The Mail is claiming today that Roger Jenkins has gone back to his sheikh chums to get more capital, as well as to buy iShares and pass it on to a consortium of US-based ETF managers. A source told the FT over the weekend that Jenkins was putting something together as well. Watch this space to see exactly how this deal pans out.

A quick further explanation of shorting first. Normal share trading, or selling “long”, is buying shares at a low price and selling them for a higher price, and pocketing the difference; a short-seller however looks to profit from lower prices.

They borrow high-priced shares and sell them to someone else, and makes some money from that trade. Then when the price of those shares goes down, the short-seller uses that money to buy them back at the lower price and returns them to whoever they borrowed them from. In so doing, they pocket the difference between the high price they sold them for and the low price they bought them back for. Comprenday? Don’t worry if you don’t, all you need to know is that it’s about as far from an honest day’s graft as you can get.

John Paulson, now £300m richer.

As soon as the FSA allowed shorting again, some were in like a shot, like Lansdowne Partners, who brought an end to their two-year short position on Barclays shares, ending up with £100m. They also bagged £13m short selling stocks in insurance giant Aviva last week. And yesterday, New York hedge fund manager John Paulson added to the £100m he made from short-selling HBOS by scaling back his short position on Lloyds, bagging £200m.

Profits like these are unsettling, and there’s no doubt that short-selling can intensify stock market dips; these stories will no doubt trigger a fresh wave of demands that shorting be banned once more. Gordon Brown originally brought in the ban like a ruthless sheriff in a lawless town, saying he was going to “clean up” and stabilise the City via tighter regulation. Although US Treasury Secretary Tim Geithner said that preventing short-selling wouldn’t be “effective”, the US has announced it’s reinstating the uptick rule, a restriction on short selling, and bans have been recently extended in Australia, and potentially Japan. 

But the reality is that these bans didn’t prevent a fall in bank share prices, and now hedge fund managers are crowing about their “worthless” nature; on the uptick rule, one fund manager told the Wall Street Journal: “I think it’s a feel-good thing so Congress and everybody involved can act like they’re doing something concrete. I don’t think the short-sellers have made it any worse.”

It looks like financial stocks have bottomed out and are on their way up again, with the Nikkei finally hauling itself out of the gutter, and the FTSE rising 5% yesterday off the back of people buying bargain bank shares. Man Group and HSBC were amongst the biggest gainers, the latter jumping 14%, while Barclays managed to fend off speculation about it having to sign up to the government’s asset insurance program and rose 9%. US hedge fund Harbinger Capital must be wondering whether it picked exactly the wrong moment to go short on HSBC, as it revealed yesterday. But with markets this volatile, short-selling won’t end any time soon, and just wait til that inevitable Barclays announcement - the world will come crashing down once more, and hedge funds will get shorty accordingly.

He testified to MPs before the meeting, providing them with a memo that outlines what he sees as the failings of HBOS to assess risk (FT Alphaville has the transcript here). As James Crosby, the man who did the sacking, wasn’t there, Stevenson and Hornby managed to deflect much of the questioning – Stevenson pointed to a nine-month FSA probe into the case falling in favour of HBOS, Hornby denied the charge of “threatening behaviour” made towards Moore’s team.

But now the Tories have spotted the political mileage in all this, don’t expect the issue to go away. They’re now calling for a probe into Crosby, to ascertain what happened and whether he’s fit to be deputy chairman of the FSA and Gordon Brown’s advisor on mortgage risk; George Osbourne has called the charges “exceptionally serious”.

And man, are they serious. Choice cuts from the memo include:

- “I told the Board they ought to slow down but was prevented from having this properly minuted by the CFO.”
-  Saying that the situation was like the “Emperor’s New Clothes”, and that no-one dared speak up about the flaws in HBOS’s overextended model.
- Crosby alone chose to fire him, and alone chose Dawson as his replacement, against the wishes of other Chairmen.
- A section of a report that criticised “over-eager” sales culture cut out of the final version given to execs, with Moore criticised when he attached it as an appendix to another paper.
- Charles Dunstone, a non-executive chairman responsible for risk control at Halifax, saying he was friendly and sociable with Andy Hornby, the very man he should have a professional distance from and willingness to challenge. Moore also says: “Dunstone himself admitted to me and my colleague one day words to the effect that he had no real idea how to be the Chairman of the Retail Risk Control Committee!”
- Added to this, he said on Newsnight last night that the FSA wanted “a quiet life” and ignored his whistle-blowing.

Moore says he was subject to a gagging order after he settled with HBOS over unfair dismissal, but says that now the matter is of such public interest he’s broken it – I wonder how much money was involved there, and whether HBOS would have a legal case against him? Well, it’s all out in the open now, and we can expect every little bit to be picked over.

The whistleblower silenced, the crooked CEO determined to build his company bigger and bigger – it’s clear that “HBOS: The Movie” would be awesome. The potential for “YOU CAN’T HANDLE THE TRUTH!” is massive. Maybe get William Fichtner to play Andy Hornby?

UPDATE, 11.59: The FT reports that Crosby has seen the fast-massing anger against him, fallen onto his sword and stepped down as FSA deputy chair. That was easy!

Proceedings began with an encouraging round of apologies, with the word “sorry” and everything, but the sincerity of these were swifly undone by the frustration and irritation shown by those concerned throughout, as well as by the willingness to pass the buck onto the FSA and the ratings agencies. And despite claims from one committee member that the press just thinks the purpose of the meeting was public humiliation, and that they really want to get to the reasons why the banks needed bailing out, the committee nonetheless allowed elements of generic banker-bashing to come in and reduce the debate to a circuitous mess.

First up was an attack on bonuses, which seems to be what everyone wants if not what the financial sector needs. Stevenson was ruffled, saying they moved into “a culture of long-term holdings” for bonuses; meanwhile Fred blamed the States for bringing over a culture of high remuneration, telling of the “angst” within the industry over the issue – it sounds horrid!

But then before going after McKillop and Hornby, the focus shifted, as it became often wont to do, to a different tack, forming a sloppily moderated debate that failed to follow anything to a sound conclusion. This allowed the contrite and flustered foursome to get back on track. Stevenson in particular became totally slick, refusing to be drawn on “emotive phrases” and even chuckling when “backed into a corner”.

Hornby started out badly, shifting in his seat like he’d soiled himself and his voice breaking and lisping, but a moronic line of questioning from John Mann allowed him to get some confidence back. Mann asked them whether there was anyone “more brilliant” that could have been on the board (almost certainly, but quantifiable how?), before moaning to Hornby that HBOS had messed up his change of address form. I suppose it’s better than waiting on hold in a call centre queue, but a select committee really isn’t the best place to air customer service gripes, John. It sounded like Hornby called his comments “facetious” – it got drowned out by other chatter, but if he did say it, then fair play.

Mann then tripped up Hornby by using the acronym “JSA” for Jobseekers Allowance, an attempt at showing how out of touch Hornby is with the common man when Hornby has to ask what it means, but who on earth uses “JSA” anyway? It was totally weak and an utter waste of time. Mann tried to be a crusader like Henry Waxman, but was just running up to Hornby and pulling his pants down – momentarily satisfying, but ultimately he ended up looking pointless and immature. Get that guy out of here!

Hornby, despite constantly using the “it was like that when I got here” excuse that John Thain of Citigroup recently used, went on to acquit himself well later when he cites what he did to increase liquidity and pull back leverage, and also admits more could have been done.

McKillop was a mixed bag, looking nicely tanned but bewildered and shaken at one point, having to be prodded by the moderator to answer a question. He also looked very shocked, understandably so, at one MP asking him if he’d taken any legal advice over criminal negligence; and when asked how much RBS overpaid for ABN-Amro, he fumbled and replied: ”Everything we paid, basically”, before saying the buyout was a “bad mistake”. But he did well later when explaining the shift from highly leveraged products towards focusing on generating capital back in late ‘07. 

As for Goodwin, it looks like the training from News Of The Screws man Phil Hall paid off – he seemed the most sorted of the lot, and was probably the least questioned of all. He didn’t back down from the questions over RBS’s international operations impacting upon the British taxpayer, and traded in generic apologies like ”You have to try and predict the future and you don’t always get it right”. Back to the Batcave he goes!

So while the men themselves held their own, it was often thanks to inane and useless points of debate that kept getting returned to, like the banking qualifications of the four men and their boards, as if someone was going to say “yes, we hired them all from the smoking area of the local Tesco, dropped the ball on that one”. It doesn’t matter what these guys did at uni, they’ve all had years at the helm of multinational banks! Move it on!

Finally John McFall finally realised it was the complexity of the international market that messed things up and began asking about that, not the fact that Fred did law and not business for his BA, but not until about three quarters of the way through. But before the end, some bozo starts asked them whether the screw-ups were because they all got enamoured with their own pedigree and reputations, which they’re never going to admit to even it were true! Gah!

There was a long rally where the FSA got batted back and forth – the foursome accused of incestuous and lacking risk management, with them defending their positions, and saying it was the fault of poorly assessed credit ratings and that the FSA had been in a “completely open society” with them, to use Stevenson’s words. At least this was getting towards the meat of the debate, though the issues were never locked down. Eventually they thrash things out to the point where Hornby sums up the situation by saying that it was no-one’s fault, just through being “property based on one side, [with a] reliance on wholesale funding on the other”. Which we already knew.

The moderator admits that the proceedings “haven’t assuaged the public’s anger”, but could this have been any other way? All we could have reasonably expected from this was some soundbites, rather than any genuinely constructive measures. It has bolstered the case against complex financial instruments, the need for less AAA ratings, and a more responsible attitude to liquidity and capital ratios. But we didn’t really need this debate for bankers to realise they need to be more transparent and prudent, and it didn’t make the rest of us feel better. There’s more action tomorrow, with the promise of more bonus bashing. It’ll just be for our own pleasure, rather than securing the future of the country, so can we get Paxo in to do it? It might actually feel a bit satisfying, rather than this feeling of wasted opportunity.

Peston was blamed for the queues outside Northern Rock after he revealed the bank’s woes to the nation, as well as for the rise in HBOS’s share price after Peston revealed they were going to be taken over by Lloyds. More specifically, he was accused of being a pawn in some insider trading scam, with a mole feeding him information that would affect the markets. It was an accusation that George Osbourne ratified and then Peston, with typical aplomb, deflected with the Deripaska-Rothschild-Osbourne yacht scoop, while the FT defended Pesto to the hilt.

Still, the criticisms haven’t gone away. “Newspapers have the same sort of obligation as they do during a war”, said Simon Jenkins on the media’s role in the crisis, i.e. shut up and not “scare” people. Jenkins of course chose instead, on the day of the worst stock market fall in years, to romp up Cader Idris and uncork his babbling, Biblical prose. How responsible of him!

So Peston faced the committee yesterday, and he rebuffed the criticisms in a hyper-Pestonian manner. This was Pesto off the leash, allowed to roam free over vowels and clauses, a style described politely as “loquacious” by the Guardian and perhaps more accurately as having “sentences like giant sausages” by Quentin Letts in the Mail. “I know lots and lots and lots of people, including you, and, y’know, I talk to lots and lots and lots of people”, was his version of refusing to outline his sources. Slick.

The main thing is that Northern Rock was screwed even if Peston did create a run on it, something that the other journos at the hearing all concurred with. Jenkins’s wider notion of not reporting financial stories to maintain market stability is flawed too, as transparency moves to the front of the agenda. Jenkins, for his part, kept pretty quiet at the meetings, only piping up to tell the assembled committee kettles that they were black: ”By an extraordinary coincidence you have all five journalists here who predicted the credit crunch. What have you been doing all the time?” Well, at least they haven’t been telling people to “invest in sanity” and buy “shares in kindness, with a side bet on courtesy and brotherly love”. If only we’d just given Fred The Shred a nice big hug, then none of this horridness would have happened!

Peston, meanwhile, nailed the whole conundrum when he says that impact upon share price is “peripheral” to the provision of information to the masses. That’s what journalism is – can you remember that far back, Jenkins?

As the banks will have to pay a lot or cash and/or shares to the government, the shareholders can’t see when they’re ever going to get premiums again. So share prices tumbled across the banking sector, especially in RBS, where they collapsed 70% yesterday, leaving them a long way from their post-Natwest/ABN-Amro takeover pomp, where they were valued at £75m. They rallied this morning, but once the bargain-hunters deserted they’ve started sinking again. Lloyds and new bosom buddies HBOS lost big today as well, adding a 35% drop so far today to their 34% drop yesterday. The plummeting graph lines have instilled a subsequent loss in confidence in sterling, which has fallen to a seven year low against the dollar ($1.3934 to the pound). Fan on high, shit everywhere.

Former RBS chief Fred “The Shred” Goodwin, who scythed through the burgeoning workforce gained from endless takeovers, has been feeling the cold steel of rejection the last couple of days as the world points the finger at him. Gordon Brown refused to answer whether Fred should lose his knighthood, but he did lay into RBS for their involvement in subprime and their over-reaching in the ABN-Amro deal. The Glasgow Herald ran with the rather more unequivocal “Make Goodwin Pay For Disaster” – “A total of £45billion lost or written off. Shares at a 25-year low. Fears for thousands of jobs. No light at the end of the tunnel. Thanks a lot for nothing, Sir Fred Goodwin”. Former environment minister Michael Meacher said he should be “unceremoniously stripped of his knighthood”, while Vince Cable said: “He should never have been given a knighthood in the first place.” Taste shred, Fred!

But Nils Pratley in The Guardian is right in saying that it’s the wrong time for admitting wrongdoing or indulging in some Fred-bashing – what we need is confidence delivered via strong assertions from people like Stephen Hester that this plan is going to work, not that he’s really sorry about the ABN Amro thing, it won’t happen again.

The government needs to sail between the Scylla of overwhelming public and press outrage, and the Charybdis of shareholder desertion. We know the sums involved are going to be huge, and that value for the taxpayer must be considered, but if the government take too much shares or cash off the banks out of fear of a violent public reaction, then shareholders will lose too much faith and send the banks share prices down, pushing them towards certain nationalisation. It’s also foolish to call this a bad bank in all but name – potentially toxic assets can still be saved under the government’s scheme, rather than consigning them to certain taxpayer-fronted losses.

The government is trying to preserve a dynamic, competitive banking system that, despite its horrendous mistakes, could still lift us out of recession provided the government’s demands that lending be effected are properly enforced. A stagnant nationalised model is less likely to do that as swiftly or decisively.

So gather round and let the righteous indignation flow as Bad Idea gives you the top five most offensive recession-baiting parties!

5. Macquerie Bank

Well done to Morgan Stanley for cancelling their Christmas party, or at least doing a good job of keeping quiet about it - a party with TARP funds might have been a bit galling. Not so smart with the ol’ PR was Australia’s Macquerie Bank, who spent up to a million dollars on their Christmas bash just as it looks ready to announce job cuts. Four chartered boats packed with food and booze ferried 1000 guests around Sydney harbour, before rocking up to Cockatoo Island for a gothic-themed party featuring a live set by The Presets, and waitresses with vodka-filled water pistols. Classy!

4. Royal Bank of Scotland and HBOS

Scottish banks obviously got the lion’s share of the UK bailout pot, and that must have been a real hard knock to their confidence. What could cheer them up? A Rat Pack musical and Patrick Kielty respectively!

RBS was set to have a big bash in Hampshire, but then secretly moved it to its head office in Edinburgh to try and avoid public outcry, which didn’t really pan out. They spent £300,000 on a banquet, champagne, accomodation in a five-star hotel for everyone, and a theatre trip for the aforementioned musical. I can almost hear the drunken 4/4 handclapping and thigh-slapping; check photos of the lamefest here.

Meanwhile HBOS mirrored the rivals’ tedium with a banquet, champagne, accomodation in a five-star hotel for everyone, but imperceptibly heightened the awfulness by getting Kielty to make a bunch of credit-crunch-related gags. He said at one point, referring to the taxpayer-funded bacchanal beneath him, “Your secret’s safe with me!” Except it wasn’t, because the News of the World found out.

3. Lil Wayne’s Birthday

The Atlantan rapper has had a ridiculous year, selling over a million copies of his record “Tha Carter 3″ in a week, while sounding like an old lady with a cough syrup addiction, and the insanity reached a shameless peak at his birthday party in early October. An ice sculpture holding 30 bottles of Cristal! Another with $100 bills encased in it! A Louis Vuitton briefcase filled with a MILLION DOLLARS as a birthday present from his record label boss and good chum Birdman! Truly he is, in his own words, ”a young money millionaire, tougher than Nigerian hair”.

But for his 10-year-old daughter’s birthday last week, he kept it real and took her for a bowling party, which is just what I had for my 10th birthday. Except T.I. didn’t come to mine. And it wasn’t filmed with high-end professional equipment. But whatev.

2. Roger Jenkins’s Darfur Bash

The man Bad Idea loves to hate for his undisclosed Barclays bonuses, indulged in a little showboating philanthropy last month, with his £10m Darfur benefit last month held at his house.

We noted recently that as the crisis has gone on, corporate philanthropy has got ever more fist-gnawingly embarrassing and misguided, and Jenkins’s party was no exception. Guests including Bono, Michael Caine and Trinny from Trinny and Susannah spent £10,000 a ticket to absolve themselves of sleb guilt for another year, though they didn’t ultimately wash the sheer WTF crassness of a BANQUET FOR DARFUR away. Of course, Rodge was helped enormously by the connections of his Bosnian wife Diana, who organised the bash alongside George Clooney, and exploited her Kid Rock connection to get him to play a set. Well, at least Kid makes a good advert for the very pressing need for humanitarian aid.

1. Palm Jumeirah Opening

But they all dim and lifeless compared with the most sublime middle finger to global financial meltdown yet, the opening of the Palm Jumeirah resort. Lest we forget, this is a resort that is a series of man-made islands forming the shape of a palm tree. A project that tells Mother Nature she’s too damn slow and non-representational when it comes to making land masses, and slaps something that looks like an exotic pubic shaving on the side of the Persian Gulf.

So when it came to announcing the opening of the thing, we couldn’t really expect sobriety or prudency. Instead we had synchronised pyrotechnics designed by the guys who did the Beijing Olympics, a light show that looked like a Klaxons video produced by Jerry Bruckheimer, Kylie Minogue getting £2m for singing some songs, LiLo and SaRo being all lipstick lesbiany, and Charlize Theron and Bobby De Niro eating a couple of the 4000 lobsters on offer. It was centered around a hotel that has “17 hectares of water park amusement” and an aquarium for 65,000 fish. It lasted four days, cost £15m, and could be seen from space. ”We wanted to dream, and then live that dream”, said one of the organisers. Wonder if they’re going to live the dream of permanently inflated property prices and a constantly employed migrant workforce?

All makes your set menu at All Bar One seem a little crunched now, doesn’t it? And if you think that’s bad, just wait til next year!

***

In solidarity with our recessed friends over in Silicon Valley, Bad Idea is having a break over the festive period. Expect normal blogging service to resume on Jan 5. Merry Christmas!

But right at this critical juncture, when Lloyds is voting on the merger, Sir Peter and Sir George are keeping quiet. Why? Because not only has both Alistair Darling and the trade union representing half of HBOS’s employees come out against an independent HBOS, but the mystery bidder the knights have been touting for months has forgotten to show up.

Alex Neil, the SNP politician who has basically been acting as the knights mouthpiece, was claiming as far back as September 21 that he had an elite team of bankers on board (including the knights) to organise a £6 billion bid for the Scottish part of HBOS. By November 6 Neil was claiming a mystery bidder was going to be announced within the next seven days. And now that crunch time has arrived? No deal.

So the save HBOS/Scottish nationalist junket can now only look to the governement for support. And Darling will only hand over billions of taxpayer pounds to plug the funding void that Neil promised to fill if the taxpayer is getting good terms. Darling has suggested he would only buy more equity in HBOS at its market share price (63p rather than 113p at terms agreed during the bailout), and at interest rates similar to market norms (i.e. the 14% the sheiks have been getting for their Barclay’s investment, rather than the 12% the treasury offered in the bailout). What’s wrong with that, eh? Sounds totally sensible to me.

Not to Neil though: “Once again the Treasury seems to be doing everything it can to inject doubt and frustrate alternate plans that could keep HBOS independent and safeguard competition and tens of thousands of jobs.”

What alternative plans were those again? And where are the knights?

UPDATE:

It appears Sir Peter has lowered his lance, calling a bid for an independent HBOS now “effectively improbable”.

With smaller companies like American Express forming bank holding companies so they can access some of the funds, the Fed is beginning to warn boutique insures and smaller lenders that the money is running low, and to force those asking for governement cash to also look for supplementary private funds. The WSJ reports today that Henry Paulson is expected to announce a new phase of the bailout this week, which requires institutions looking for government cash to raise an equal portion from private capital. The article reported Douglas Elmendorf, a member of the Obama transition team, as saying: “This idea has the great virtue of incorporating private-sector judgment on the viability and management of these financial firms.”

In other words, once the fundamentals of the banking system are stabilised, it shouldn’t be up to the government to pick winners and losers. Makes perfect sense to me, and perhaps will weigh on the debate about the HBOS/Llloyds un-merger, which currently seems bouyed by the idea that government money for bailouts is essentially to be treated like low hanging fruit.