What though the spicy breezes blow soft o'er Buenos Aires, incompetence messes it up
CHRISTOPHER FILDES
The missionary Bishop Heber wrote a hymn about Ceylon: 'Where every prospect pleases And only man is vile.' On being told that this was unfair to his converts, he corrected 'Ceylon' in the second edition to 'Java', but his point stands: there is no prospect, however pleasing, that is beyond the power of human and governmental incompetence to mess it up. We have seen the Heber factor at work in our own green and pleasant land, we can see it today in Japan, where the government seems to have run out of ideas, good or bad, but for a proven test for the bishop to preach from, there is nothing to beat Argentina. Writing off $1,1 billion, which is more than three times its investment there, HSBC is only the latest bank to have learned this the hard way. Barings were there first. This was once the world's tenth largest economy, as prosperous as France or Canada, self-sufficient in fuel and food and wine, unravaged by warfare — so what got into it? The Heber factor. Twenty years ago, Argentina was one of the world's big four debtors. Ten years ago its inflation rate touched 5,000 per cent. A new regime sought to cure that by making the peso as good as a dollar, or trying to, but the act proved too hard to sustain. Roque Maccarone, the central bank's aptly-named governor, had to preside over the biggest default in history, with countless savers and pensioners among the losers locked out of their money. Now they are being encouraged to blame the gringos — foreign banks (such as HSBC) and the International Monetary Fund, which always serves as the scapegoat of last resort. I blame the Heber factor, myself. It is time for his hymn to go into another edition.
Next, eurification
WE could have told poor old Roque what happens when you tie your currency to someone else's. We joined Europe's exchange rate mechanism and tied the pound to the mark, in the trusting belief that the Germans would manage things for us. They managed things for themselves, and who shall blame them? In the end, the pound came untied, but now the mark has retired from the field and we are being urged to shackle the pound to the euro. At what rate of exchange? Oh, please raise your eyes to the grander picture and don't fuss about with these matters of detail. When the peso broke loose from the dollar, HSBC's Argentine bank had an arbitrary exchange rate imposed on it. Pesification, this process was called. It appeared to leave the bank with assets in pesos and liabilities in dollars, and cost IISBC over $500 million. What price eurification?
Standing orders
I AM going to commission my own report on the banks and their services. Why shouldn't the Competition Commission have some competition? Its 1,400-page tome has been taking up space on reinforced desks in Whitehall for many months now, and one of these days will crash on to my desk and the bankers' desks, rebuking them for their shortcomings and imposing codes of conduct on them. They will think themselves lucky if the Commission does not try to set their prices. While we all wait, the Financial Ombudsman has been rewriting the contracts between mortgage lenders and their customers, who will now get rebates or discounts. (What fun it is to be liberal with other people's money.) The Financial Services Authority never tires of telling its subjects what to do and how to do it, and, out on the sidelines, the Consumers Association is always good for a self-publicising whinge. The Gorst-Williams Report will be different.
Ask Jessica
THE name has a good Whitehall ring to it, and belongs to Jessica Gorst-Williams, known to me only by way of her writings, which fill me with a fearful joy. Find her in the Daily Telegraph's 'Your Money' section every Saturday, replying to readers who ask her to take up their cause against banks, insurers and other financial bureaucracies. She sets off into the hinterland, follows the paper-trail, brushes obstruction aside and comes back with trophies: apologies, flow
ers, hampers and cheques, which can sometimes be large ones. Her persistence is sure to set the bureaucracies quivering, and every so often her readers must tremble, too. She rounds on them. You signed the agreement, she tells them, and now you've broken it. You want me to spend all day on the telephone because you're too lazy to make your own calls. What makes you think your insurer should pay when you've given up paying the premiums? It's your fault. It is, sometimes, and at other times it is nobody's fault. I would find it refreshing to hear a regulator say this, or the Competition Commission. They prefer (as I sometimes observe) to treat the business of money, and even the business of life, as if they belonged to the Caucus Race in Wonderland, where everybody has won and all shall have prizes.
Reduced to clear
WELL, there goes the last truckload of gold. Gordon Brown has made the Bank of England sell 395 tonnes of it — half of our gold reserves — and this week saw the eighteenth and final auction. Instead we hold someone else's promises to pay, in dollars, yen and (you guessed it) euros. They have not added up to a brilliant trade, but with gold you have to take the long view, going back to King Croesus of Lydia. The prices we took were the lowest on offer for two decades. The last auction helped to raise the average, which implies that the market is moving up again. Tired of watching their shares fall and seeing their money earn microscopic returns in shaky banks, the Japanese are buying. I dare say that in Argentine pesos, the price has gone through the roof. In time of trouble — and such times are when countries need their
reserves nothing is as good as gold.
Whodunnit
THE People's Orient Express is stuck in a snowdrift, the sultry temptress, Jo Moore, has been stabbed in the back, and Sir Richard Mottram, cast against type as Hercule Poirot, is agitating the little grey cells. Already he has suspended the chef de train on full pay, and, as his mind turns to motives, he has the solution. Who on the train, so he asks, would have wanted to knife her? Answer: everyone.
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