How times change: the ECB has become the very model of a modern central bank
Idon’t suppose many of my readers took part in the European Central Bank’s tenth birthday celebrations last week — but if I’m wrong about Jean-Claude Trichet’s taste in columnists, then bon anniversaire, monsieur le président, though I can’t quite bring myself to add beaucoup des retours heureux. It is remarkable how the standing of both the ECB and its French boss have risen in recent times: it makes me feel sorry for Trichet’s late predecessor Wim Duisenberg, the world-weary chain-smoker who bore both the brunt of market scepticism about the fledgling euro and the relentless machinations of Jacques Chirac aimed at displacing him in favour of any available Frenchman, but preferably Banque de France governor Trichet.
Well respected in his previous role as head of the Dutch central bank, Duisenberg became ‘Dim Wim’ to the ECB’s detractors, but clung to the presidential chair until late 2003 — when Trichet actually became available to elbow him out, having been cleared of fraud charges relating to a scandal at Crédit Lyonnais. But what a difference a crunch makes. The euro has strengthened as the world has lost confidence in the dollar, and that shift has been reflected in relative perceptions of central bankers — even to the extent of apparently reversing cause and effect: since ‘elder statesman’ Trichet took charge, says the Sunday Times, ‘the euro’s reputation has been steadily enhanced’. In the Duisenberg years, as the euro sank for reasons of sentiment that had little to do with the central bank, the ECB was seen as indecisive, lacking in authority and politically hobbled by comparison with Alan Greenspan’s mighty Federal Reserve and the ‘independent’ Bank of England. Now, Greenspan is blamed for fuelling the assetprice bubble with too much cheap money, and the Bank of England has been dented by Northern Rock and paralysis in the London inter-bank market. The ECB, by contrast, is lauded for its boldness in pumping liquidity into the money markets last autumn and thereby — the argument goes — cushioning the impact of the credit crunch on the Continent by comparison with the way it has hit the Anglo-Saxon economies. Trichet himself has attracted favourable comment for his firmness in declaring that, with euro zone inflation running at 3.6 per cent against a target of 2 per cent, the only way euro interest rates can move next is up. Attention to the strains placed on boom-bust euroeconomies such as Spain’s by membership of the single currency has correspondingly diminished. None of this has yet led to a return from the dead of the campaign for British membership of the euro, but as confidence in our own institutions continues to sink, stand by for a revival.
Incidentally, there was one Brit on the platform at the ECB party who might well be a Spectator reader: Sir Roger Norrington, who conducted the Chamber Orchestra of Europe in the anniversary concert.
Disaster brought by success
Speaking of europhiles: to Guildhall, for a dinner at which Niall FitzGerald, former chief executive of Unilever and now deputy chairman of Thomson Reuters, received the Woodrow Wilson award for corporate citizenship, chiefly for his work in Africa. It would be fair to say I have not always been FitzGerald’s greatest fan — I once wrote a Daily Telegraph leader which strove to connect his pro-euro stance with an alleged youthful flirtation with communism — but I admired his Guildhall acceptance speech on the theme of corporate social responsibility. Appropriately, he had unearthed a quote from Woodrow Wilson as president of Princeton, before he entered politics. The future occupant of the White House was commenting on the ‘bankers’ panic’ of 1907, in which economic collapse was only averted by the intervention of J.P. Morgan to support the banking system and drum up international credit for the US government: ‘We have just passed through an era in which men kept their legal obligations as well as usual and yet came near ruining the country; piled up wealth and forgot how to use it honourably; built up business and came close to debauching a Nation. . . The men who brought disaster upon business by success brought it because they paid no call of thought or wish upon their fellow-men. . . and attended wholly to their own business.’ Barack Obama would do well to use that if he’s brave enough to turn his rhetoric on Wall Street in the coming campaign.
Adair’s next step
It was a great pleasure to hear a new serialisation (by Michael Butt) of Anthony Powell’s A Dance to the Music of Time on Radio Four recently. For his devotees, Powell has never gone out of fashion, because life is full of moments when the past and the present connect in unexpected patterns — the essential plot device of the Dance novels. The Spectator’s summer party is perpetually fertile in this respect. Last year’s, with its oppressive presence of Brown henchmen, provided a perfect Powellian exchange with a writer who doesn’t get up to town much. Writer, pointing into the throng: ‘Who’s that bloke in a suit?’ Me: ‘New-ish cabinet minister. Very much on the up, I hear.’ ‘Really? Used to sell him drugs at university. Always wondered how he’d end up.’ A popular party game for Powell buffs has always been ‘Who’s Widmerpool?’: not who was Powell’s model for the ambitious and uncomfortably ever-present original, but who is the Widmerpool de nos jours? In my personal Dance, it cannot be anyone other than my old classmate Adair Turner, the former CBI chief and pensions expert who has been named as the new chairman of the Financial Services Authority. This has deflected him from his previous role as the government’s ‘climate change czar’, but he also popped up last week in our old boys’ newsletter, pictured in House of Lords robes as sponsor of the introduction into the House of the global-warming guru Lord (formerly Sir Nicholas) Stern. At school, both Turner and Widmerpool were crosscountry runners. Lord Widmerpool, as he eventually became, ended his days running naked through a wood as a member of a cult devoted to Harmony, the hippy-era equivalent of climate-change obsession. I wonder, does a similar fate await Lord Turner?
Previous page
