Fight or flight? I have the business solution book yourself into Dundictatin Park
CHRISTOPHER FILDES
We need to get the year off on the right foot with a suitable business idea, and I have come up with a corker. I shall open a retirement home for dictators. This will resolve their most intractable problem, and their enemies' and subjects' problems, too — and, of course, the timing is perfect. Unlike directors, dictators cannot expect to leave on full pension with a lump sum to compensate for loss of office. They face what is technically called a fight-or-flight dilemma. They know that if they were to stand down, they would be pursued by lynch mobs, guided missiles and arrest warrants from the International Court of Justice. No future in that, they think. Better to stay and, if need be, to fight. This difficulty now seems to inhibit his neighbours' attempts to get Saddam Hussein to retire — but if he could simply book his place at Dundictatin Park, all would be well. He would find himself based in a tax haven with a robust attitude to extradition — Djibouti, the Cook Islands, the Canton of Vaud? Caroline Doggart, author of the encyclopaedic Tax Havens and Their Uses, will advise me, Dundictatin's facilities would be luxurious — golf, polo, shooting, though not at the staff — and correspondingly expensive. Applicants for life membership would dig deep into their offshore bank accounts to purchase an annuity and lodge it with the management. It may be objected that these arrangements would let them off lightly, but I dare say that having to make a fourth at bridge with Kim Jong-Il, Robert Mugabe and Slobodan Milosevic would be sufficient punishment. Certainly Dundictatin offers a more practical and economical solution than those now on general offer, which amount to burning down the house to roast the pig, or the dictator.
Help the needy
IT IS just as well that the world's biggest economy never signed up for the Stability and Growth Pact. Its chances of growth, or indeed of stability, would have been much reduced. As things are, President Bush could feel free to treat his fellow citizens to $600 billion of tax cuts, which ought to cheer them up on a cold winter morning. Lower taxes on dividends will be of particular help to the shareholding classes, who have had such a rough time just lately. 'The persistent decline in share prices has result ed in a huge shortfall of wealth and revenue relative to expectations,' Goldman Sachs's economists say. 'These adjustments restrain economic activity and are far from complete.' Now the President wants to do what he can to make up for them. Aaaah.
Over the limit
ANY President or Prime Minister or Chancellor in France or Italy or Germany who wanted to follow this transatlantic example would find himself handcuffed. They are signatories, or their countries are, to the Stability and Growth Pact, which was meant to protect the euro from profligate governments. It sets limits to the amounts they can borrow, and now all three of them are up against the limits, or over them. Even if the Italians, with their gift for creative accountancy, hope to elude them, the Germans are stuck. Their budget deficit is not supposed to exceed 3 per cent of their total output of goods and services and last year it will have come closer to 4 per cent. They are being told off by the European Commission and made to stand in the corner, along with the Portuguese. Germany's creaking economy, which may now be back in recession, could use the relief that would come from cheaper money and tax cuts, but these are no longer within its government's gift.
Creak, ouch
THAT creaking noise from our own economy is coming from the bottom right hand corner, where the business of money is based. Jobs have been dribbling away and more will follow. Some City employers will have been waiting until the New Year before deciding how deeply to cut, and nothing that they can see now will encourage them to stay their hand. No wonder the CBI's survey this week talks of a gloomy winter for financial services — which
account for between 5 and 8 per cent of the British economy, depending on how you define them, and are its best export earner by miles. For a long time now the economy has been running at two speeds, with manufacture lagging and services racing ahead, but they may not now be able to keep up the pace. This sets posers for a Chancellor of the Exchequer with a budget due in two months' time, but one thing we already know that he will do: he will raise taxes.
The policy-maker
TO BE chairman of the policy and resources committee of the Corporation of London is more of a job than it sounds. A previous incumbent explained that he was the City's prime minister, with the Lord Mayor as its constitutional monarch, Dame Judith Mayhew, the purposeful lawyer from New Zealand who became chairman in 1997, has certainly lived up to that definition, and has still found time to be City and business adviser to Ken Livingstone as Mayor of London. Now she is stepping down (though she will serve for one more year as deputy chairman) and next week, in Guildhall, the committee must choose her successor. One name in the frame is that of Michael Snyder, the finance committee's chairman — but I am more curious to know where Dame Judith goes next. A return to the law might seem tame, but as soon as the unlamented Don Cruickshank moves over, she would make a formidable chairman of the Stock Exchange.
Rakes' regress
THE show of the week is in Paris, where two successive Governors of the Banque de France are up before the beak. Their offence, if such it proves to be, was to stand too close to Credit (or Debit) Lyonnais when that national champion embarked on its rake's progress. Somehow I do not expect that that they will finish up sharing a cell, but JeanClaude Trichet needs to be acquitted in good time to move to Frankfurt, where all has been fixed for him to take over from Wim Duisenberg at the European Central Bank:
The stocks were sold, the press was squared, The eurocrats were quite prepared. .
Just think of all the excitement that Mervyn King and Sir Edward George are missing.
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