Sir Alexander Belloc-Brayne takes the waters in Baden-Baden and reflects on the state of the global economy and international relations.
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August 2007
Summer is i-cumin’ in… Be that as it may, the Belloc-Brayne household is i-goin’ out… to take the waters at Baden-Baden. Lhude sing cuccu, you may think, considering the aqueous nature of our English summer this year. However, Lady Belloc-Brayne insists that there is a qualitative difference between the water that descends from the skies and the sort that bubbles up from the earth. There’s no arguing with that.
I must say that there is no sign of financial and natural disasters out here in Baden-Baden. Not exactly the eye of the storm, but Lady Belloc-Brayne says that the town has been spared on account of a visitation by the eleventh plague last year, in the guise of the England World Cup Association Football squad and its camp followers. Something in my water says that Her Ladyship is eyeing a permanent move to this particular corner of some foreign field where the Poor are not inevitably with us – no matter what it says in the Gospels. I am mentally rehearsing the case for our British domicile, which currently rests on the cost of putting our four-bedroom home on the market. However, Her Ladyship seems to be ahead of the game and is already talking in terms of our “two-bedroom-two-study” residence, which could well evolve into “student accommodation” if our Government goes all the way with the Home Inspection Pack.
Lady Belloc-Brayne and Nurse are dividing their time between the “Russian Quarter” that seems to have sprung up on the higher reaches of the Baden-Baden property market, and regular expeditions to the shopping precinct, with Sir Alexander in the traditional role of Paymaster General. Nurse is much taken by the local designer jewellery, known colloquially as schmuck – presumably after the fellows who buy it for their wives and mistresses. As a man of finance, I am taking a professional interest in the biometric credit card used in these parts, which relieves the elderly shopper in particular of the burden of recalling a PIN. Vorsprung durch Technik… Unfortunately, one needs to remember the finger that one has registered, which does occasionally create congestion at the tills. I have seen the future…
By the way and lest we forget, I can recommend a rather good local wine marketed under the Fatima label – which turns out to refer to the Christian name of a Frau Wimmer rather than to the daughter of the Prophet. Nevertheless, I am inclined to report my initial suspicions to the intelligence services lest the enterprise turn out to be a front for an Iranian-backed Shia cell (Badr-Meinhof, perhaps? Ha, ha!). I suppose that I am obliged to alert the Financial Services Authority too, under the letter of our money-laundering legislation. Anyway, well spotted, Belloc-Brayne! A “tied agency” at MI6 is surely yours for the asking. Our man in Baden!
Good to see the FTSE recovering bravely in our absence. I do declare that I am rather proud of our Bank of England for keeping its head while American and European central bankers engage in an undignified display of dove-eat-hawk monetary policy. Most impressed by our new Chancellor’s sphinx-like resolve to abide by the spirit of central bank independence. “Silence is as full of potential wisdom… as the unhewn marble of great sculpture“, saith Her Ladyship (after Huxley) – or, the way I see it, whereof one knows sweet sod-all, one must pass over in silence (after Wittgenstein).
We are all naturally saddened by the human casualties of the financial upheavals – notably Edward Cahill of Barclays Capital, who has fallen on his sword after the brutal junking of at least three of his SIV-lite funds by the debt-rating agencies, and Martin “Mr Sub-Prime” Finegold, who has lost his Midas touch and fallen on his arse instead. Her Ladyship suggests that I circulate a petition in support of Blackstone’s opposition to the Baucus-Grassley Bill that would have publicly-traded asset management and investment advisory services taxed as corporations, and which would have lopped $525m from its modest $2.27bn net income in 2006. Incidentally, word is that some pension fund trustees and private investors may sue the hedge funds for issuing misleading prospectuses and for general mis-selling – presumably on the grounds that they were never told that their investments could fall in value. Where is the Financial Services Authority when you need it?
Lady Belloc-Brayne is cheered by the generosity of Goldman Sachs and Barclays Capital, which have splashed out $3bn and £800m to shore up their aptly named Global Opportunities and Cairns High Grade funds respectively. I am, however, having difficulty getting Her Ladyship to accept the institutional logic of not extending the precedent to Prodigal Life mutual funds. As for Nurse’s concerns about her self-invested personal pension, I have been able to reassure her that, as an unfunded retirement benefit scheme (UFURBS), it is quite intact. Strictly entre nous, though, I am at a loss to understand why securitised loans should be known as Collateralised Debt Obligations, when the absence of collateral seems to lie at the root of the problem. Her Ladyship suggests that the “damage” is silent. That must be it!
I must say that folk in this neck of the Schwarzwald are remarkably calm about the European Constitution and seem genuinely nonplussed as to why we Britons should object to rule from Berlin via Brussels. The way I see it, the Reform Treaty is not so much a constitution as a reconstituted Schlieffen Plan – which did not require a referendum either, if I recall. Meanwhile, the locals are celebrating the news that Bundeskanzlerin Angela Merkel has topped the Forbes List of the world’s most powerful women for the second consecutive year, ahead of Chinese Vice President Wu Yi, Tamasek Holdings CEO Ho Ching, Condoleezza Rice, Pepsico CEO Indra K. Nooyi, Indian Congress Party President Sonia Ghandi and countless other distinguished harridans. Word is that Frau Merkel is currently in China promoting liberty, intellectual property rights, environmental conservation, flexible exchange rates and other ideas to which the Chinese Government is famously receptive.
I notice that there is quite a hoo-hah about the quality of our imports from the Middle Kingdom – no doubt an oblique attempt to erode its impressive trade surplus and divert attention from its pre-eminence in creative recycling, as manifested in such innovations as diethylene-glycol-enhanced toothpaste, eels raised on contraceptives and soy sauce made from fermented human hair. Yum, yum! Meanwhile, Her Ladyship tours the stores in search of the detergentless WasH20 launderer, which works by passing an electric current through the water– a technology that has no doubt has been tested on dissidents by the Chinese equivalent of our Health and Safety Executive.
Rather alarmed by a looming stand-off around the North Pole between the Americans, Canadians, Russians and Norwegians over oil deposits rendered exploitable by global warming. Can’t think why the Russians should lionise the Mir-1 crew just for planting a titanium-alloy flagpole on the Arctic seabed. Hardly Everest, is it! Word is that the Bolsheviks are beefing up their armed forces and conducting joint military exercises with the Chinese People’s Liberation Army – equally pointless, the way I see it, given that any conflict is more likely to erupt in the commodities and capital markets. Mind you, I fancy the Russians to hold a natural comparative advantage in the oil-extraction business, given their vast experience of labour relations in the Arctic Circle. We might have to send in our troops after all – perhaps on the pretext of bringing democracy to the polar bears and the ringed seals.
Must rush. Nurse has rediscovered her joie de vivre on hearing that our Baden-Baden visit coincides with Grosse Woche at the Iffezheimer race course, where one can easily find oneself rubbing shoulders with an Arab sheikh, a Russian oligarch or a hedge fund manager on the lookout for a safer investment.
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