Sir Alexander Belloc-Brayne anticipates a catastrophe in the City but is more forgiving than most on the condition of Government.
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November 2007
No warmth, no cheerfulness, no healthful ease…(no dosh)… November! I fear that a catastrophe looms in the City, where the bonus pools are forecast to fall by as much as 50% this year – save in Wealth Management, they say, where the Belloc-Brayne Model Portfolio is operating on the Micawberist expectation that something will turn up. I should add that Lady Belloc-Brayne still disputes the auxiliary hypothesis that a balanced household budget contributes to the sum of human happiness, hence the insistence on the traditional organic, free-range turkey for our Christmas table despite breach of the £100 barrier. Further down the food chain, a basket of 25 staple items at Asda, Tesco and Sainsbury’s is said to cost 12% more than at this time last year. Luckily our official inflation rate is 2.1% or we would really be in trouble.
No worst, there is none…. We now await the aftershock of the liquidity implosion in which the bond insurers (“monoliners”) face a credit derating while the liability underwriters brace themselves for $6bn worth of Directors & Officers and Professional Indemnity claims. I suspect, though, that the universal debtor will be giving thanks for the the life of Judge Christopher Boyco of the Ohio District Court who has blocked the repossession of fourteen homes on the grounds that Deutsche Bank cannot prove ownership of the mortgages which have been “pooled” and flogged off to Lord knows who. A Daniel come to judgment!
Meanwhile, I read that the Iranians and Venezuelans have been badgering OPEC ministers to price crude oil in any currency but the US dollar. Knife-edge stuff! All it would take to send the global economy into freefall would be for someone to name a teddy-bear after President Mahmoud Ahmadinejad. The way I see it, the greenback is on the verge of fulfilling its destiny as a “reserve currency” – behind the euro. Interestingly, bond spreads in the Latin quarter of the eurozone seem to be widening vis-à-vis Teutonic debt, just as our leaders prepare to consummate European constitutional union – an irresistible economic force meeting an immoveable political project, perhaps? And lest we forget, congratulations to the EU on the rejection of its accounts by the Court of Auditors for the thirteenth year running – a proud achievement as it nears its sixteenth birthday, albeit still two years shy of the age of criminal responsibility in Belgium.
But, soft! what light through yonder window breaks from the direction of the Low Countries, where human life is shown to be sustainable in the absence of a central government – a condition that may be of comfort to a Britain saddled with a paralysed Administration shadowed by an unready Opposition. Her Ladyship frets that secession by Flanders and Wallonia from the Belgian federation may embolden our rebellious Scots. The way I see it, our situation up North is containable thanks to an early retreat by the Nationalists on such election-winning promises as a three-year Council Tax freeze, waiving of student debt and a £2,000 first-time homebuyer’s grant. Nothing like a string of broken pledges to cement the Union of Great Britain and Northern Ireland.
I hear that BOE Governor King and Chancellor Darling are to be recalled by the Treasury Select Committee to explain conflicting testimony regarding their first emergency consultations over Northern Rock, in the light of confusion as to whether they took place before or after the depositors bolted. Her Ladyship scents a purging of the Augean stables in the Whitehall and Bank districts. Strictly entre nous, I have a small side-bet on Baroness Shriti “Shrieky” Vadera for Chancellor, ostensibly a junior Department for International Development apparatchik by day but said to be tasked with undoing Mr Darling’s CGT reforms and cutting backroom deals for Northern Rock.
Good to see the Virgin Branson emerging as the preferred bidder for The Rock. I am delighted that the Government has its eye on the ball and is ignoring distractions manufactured by counterbidders such as J.C. Flowers who complain that the Treasury does not return calls and hint that the auction has the transparency of a Blue Peter or GMTV premium-rate phone-in competition. Word from the bourse is that The Rock’s share price is defying gravity on the loyalty of small shareholders – to the chagrin of any number of short-sellers who may just be finding themselves at the sharp end of an accidental corner manoeuvre. Strictly entre nous, I am still confident that the Prodigal Group’s Barings-scale buy-out offer of £1 (financed out of a head-office whip-round) will yet win over The Rock shareholders – particularly if the Bank of England declines to waive £2bn worth of interest and the Treasury plays the nationalisation card.
I am inclined to treat our Government’s other difficulties as light relief from present tribulations. The way I see it, the matryoshka-style funding of New Labour is no more than an amusing lapse that is easily contained by our all-embracing money-laundering legislation – although one cannot be quite sure of Mr Abrahams’s true position in the nest. I suppose that an audit of our personal bank statements is advisable, if only to establish that the Belloc-Braynes have not become unwitting donors to the Labour Party. I must say that if I were applying to the Highways Agency for planning permission, I too would show modesty over the scale of my donations to the ruling clique. Ce n’est pas pecher que pecher en silence. I dare say that the return of £650,000 might prove a little painful for New Labour, which must surely be languishing close to the sub-prime debtors’ zone. Wonder if anyone would be willing to plug the financial void overtly? Silly question, Belloc-Brayne! What are taxpayers for?
I must say that I judge the HMRC “Datagate” outcry to be similarly overcooked. I am sure that the discs will turn up, just as my glasses and the car keys always do after the regulation panic attack. Nurse says that were she in charge of the search, she should be scouring the dives of Tyne-and-Wear (rather than the municipal dumps) where 25m sets of confidential personal records may conceivably have been mixed with standard hallucinatory audio-visual material for the after-work stimulation of bored 23-year-old IT personnel. Her Ladyship sees this affair as the culmination of a decade of slapdash government and fears that the data could fall into the hands of fraudsters. The way I see it, though, prior possession by the Revenue alone suggests that this may already have occurred, given rumours that the National Audit Office’s demand for sight of the entire database stems from distrust of the samples routinely submitted by HMRC.
In fairness, this episode is surely the unintended consequence of a laudable attempt to spare the taxpayer the £5,000 fee demanded by Electronic Data Systems (EDS) to make the data safe. I am delighted that HMRC is taking a similarly stern line with fund managers by demanding ISA subscriber details in plaintext to save the cost of decryption. Incidentally, I have a dim memory of the EDS role in the design of the tax credits computer system, which proved incapable of handling the volume of claims or doing the sums, leading to the clawback of overpayments from our poorest families – for which it was punished by placement on the list of contractors for the national ID card project. Harsh but fair!
There are, however, more convincing signs of governmental disintegration. Things fall apart; the centre cannot hold when a former Lord Chancellor threatens to sue the Cabinet Office for reneging on a six-figure pension. Word is that His Lordship wants a stipend of £104,000 in recompense for a “salary sacrifice” in office, but that the falcon cannot hear the Falconer, as it were. It seems to me that His Lordship has a strong case, albeit a touch reliant on his own statement to the House of Lords in 2004 on the subject of his pension entitlement. Can’t argue with precedent!
Must rush. Her Ladyship and I are expected at the local racing pigeon club to lend our support to protests against the declassification of its activities as a “sport”, which would render the loft liable to business rates. Her Ladyship suggests that we petition the Queen (in her capacity as benefactress of the Royal Pigeon Racing Association) to withdraw her patronage from HM Revenue & Customs. That’ll teach ‘em!
