Jam on the doughnuts the new dispensation has winners as well as losers
CHRISTOPHER FII DES
What do you buy in a recession? Doughnuts? Well, someone must. Since 11 September the shares of Krispy Kreme Doughnuts have risen by 30 per cent, much to the joy of Tony Jackson at Charterhouse, who calls them an old favourite of ours', so I must be careful not to lunch there. Recessions are known to be good for sausagemakers — people trade down from fillet steaks — and this may work for doughnuts, too. There are winners as well as losers in the new dispensation which began two months ago with the attack on the World Trade Center. Gas-masks and anti-depressants have had a good run. Being handily placed for Afghanistan helps. so Thanksgiving has come early for Turkey, which need no longer worry about its finances. Argentina, on the wrong side of the world, has been allowed to drift to the brink of default. Perhaps it should offer to swap its debts for the Falklands. When it offered this deal in the 1830s, the British refused, saying that these islands were ours already, but the file might be worth dusting off, The incongruous presence of Vladimir Putin as a guest on the Bush ranch in Texas signals that the big winner is Russia: in the right place, and producing more oil than Saudi Arabia, which is beginning to look like a loser. Oil has been a loser, too. Reduced production and weaker prices suggest that the market's immediate worry is that there will not be enough demand to go round. Either that, or the Western world has learned how to run its cars on doughnuts.
Baskets and eggs
TOWERS are losers and bunkers — recovery sites, as we must now call them — are winners, How right Churchill was when he refused to let his backbenchers take a trial trip aboard the ill-fated Comet airliner: 'I think it unwise,' he explained, to put all my baskets in one egg.' The insurers were shaken to find so many different risks concentrated in the World Trade Center's two tall metal boxes. This will be the costliest loss in history and the only certain winners are, as usual, the lawyers. Lloyd's of London is in for £1.9 billion, the net loss that it will have to bear once it has successfully claimed on its own reinsurance. The gross figure — what it will have to pay out — has not been published but may be four times as much. The idea that a few thousand well
heeled 'names' could between them find this sort of money by selling their Old Rectories and pawning their cufflinks has been shown up as absurd. so it is just as well that most of Lloyd's risks are now borne by companies. We shall now be told that since 11 September premiums have rocketed, that the surviving insurers will have the chance to make money, and that the names must have the chance to join in. All they will do is to put up Lloyd's costs. Ring the Lutine Bell for them and let them go.
Don't panic, Captain
ALAN GREENSPAN, Wim Duisenberg, our own Sir Edward George — winners, or losers? Has this been a good market for central bankers? Certainly, when the attack came in, they could scarcely be faulted. Their job then was to stop the machinery from seizing up. That took experience as well as money, and both were on tap. Since then they have kept themselves busy by cutting interest rates, and their latest salvo brought the Bank's own rate down to 4 per cent — just where it was set when 'Rab' Butler as Chancellor brought it back into action half a century ago. Are these i-ate cuts good news or bad news? Are they pre-emptive moves to keep the world's biggest economies growing, or are they a succession of jabs at the panic button? The Bank has more than one eye on confidence. Its monetary policy committee
looks for a recovery next year stronger, Sir Edward says, than we expect — but that does not exactly explain why it cut its rate more steeply than anybody expected. Wounding as the imputation must be to any bank, its words and its figures do not agree.
Give and what?
GIBRALTAR is an unlucky loser. It has been caught up in the Prime Minister's peripatetic diplomacy, which brought him face
to face in Downing Street with Jose Maria Aznar, his opposite number from Spain. The new Spanish gambit is to assert that Gibraltar is a tax haven and therefore just the sort of place where Osama bin Laden might have a bank account. A tax haven is not the same as a money laundry, but never mind — Spain wants Britain to negotiate Gibraltar's tax policy for it and has found ways to make itself awkward. The Foreign Office would never wish to be awkward, let alone with a European partner which is next in line for the presidency. It prefers to negotiate in its usual spirit of give and — er, what was the other thing, Algy?
Miles high
AIRLINES have been heavy losers — some winged, others grounded — and British Airways has suffered with them, passing its dividend and seeing its share price halve in two months. In these difficult times I am pleased to offer its chairman, Lord Marshall of Knightsbridge, a helpful suggestion. He should reinstate the dividend but pay it in the airline's own currency: air miles. Lesser companies garnish their shares by offering warrants to buy more of them, maintaining that this goes down well and costs nothing. Air miles would achieve the same effect more tidily, their use can be strictly controlled (as those who try to use them find out) and BA might positively welcome overcrowding. A capital reconstruction should follow, with an offer of air miles for shares. The relationship between the two issues would be closely watched, and when the shares went to a premium, we would know that the airline was on its way up again. I wonder why its expensive advisers have not yet proposed this. Perhaps they all have enough air miles.
Feeding time
AIRPORTS may yet prove to be winners. They are shopping malls with runways tacked on to them, and their customers are now required to spend most of the day there. Compass, which caters at airports, reports that although fewer people are flying, those who do are eating more. I dare say that Compass is feeding them doughnuts. There will always be winners about, if you look for them.
Previous page
