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I cannot discern any sign that the Stock Exchange is ready to fight for its independent existence. A history of rebuffs and misjudgments may well have weakened its nerve. Instead its board now seems happier to play its suitors off against each other — not enough, tell me more, wait and see — until the auction reaches its climax with a recommended bid, and the directors can lie back and look happy. Efforts will then be made to assuage local feelings. We shall be told that in today’s global markets, ownership and nationality no longer count, that what matters is where the business is done and that it will still come to London. After successful bids, assurances like this are two a penny. Soon enough the new owners assert themselves and the realities of power become apparent. It is an old story, and runs to a predictable ending.
Hi, Hu He
I wonder whether Hu He, my unofficial Nobel laureate, is running out of elasticity. Central bankers may pride themselves on having mastered inflation, but I have long thought that the credit belongs to the Guangdong-based knicker manufacturer who, by undercutting the whole world, has brought prices down and kept them down. Now the Bank of England’s Inflation Report tells a different story. Since the spring, import prices have risen sharply, and our own surviving manufacturers have sighed with relief and hoisted their own prices more steeply than at any time for a decade. For years now, Hu He has had the rate of exchange on his side. The pound took off when it was towed upwards by the dollar and has yet to be towed down again. One symptom of this is that our trade in goods and services is deep in deficit. Mervyn King, the Bank’s Governor, would call this an imbalance. One of these days it will start to swing back into balance. Then controlling inflation will not be so easy or so boring as he likes to make it seem.
Damned fools’ day
Black Wednesday was the City’s longest day, and the best verdict was passed, far in advance, by Lord Melbourne: ‘What all the wise men promised has not happened, and what all the damned fools said would happen has come to pass.’ As a damned fool, at least for this purpose, I felt vindicated. All the wise men had told us that if only we followed our neighbours in signing up for Europe’s exchange rate mechanism and made this the cornerstone of our policy, all would be well. It wasn’t, and then came the day when the cornerstone was pushed out, ministers found their bluff called, their ammunition exhausted, their policies in ruins — at which point our affairs took an overdue turn for the better. The story has been told before, and the Freedom of Information Act has been used to tell it again, but the received wisdom has never recovered, and its defeat lingers on. Every so often assorted wise men urge us to follow our neighbours and sign up for Europe’s single currency. The Prime Minister urges them on, but has never yet nerved himself to put the question to a vote. All the damned fools are against him. They can remember what happened last time, when they turned out to be right.
Gricer’s Olympiad
A treat awaits the International Olympic Committee, here this week to assess London’s offer to stage the games of 2012 in the Hackney Marshes. My railway correspondent, I.K. Gricer, will take them on a tour of what they call the infrastructure. They will roll through the Thames Tunnel (engineer: Marc Brunel) on the East London Line, which may soon be extended to link Dulwich to Dalston Junction, though it will steer well clear of the Games. They will change at Shadwell for the Docklands Light Railway — passengers will be invited to stagger their hours so as to make room for the influx — or at Whitechapel for Moorgate. There they can inspect the site (built into a tower block) of a station on Crossrail. This east-to-west link is already a dozen years late, may never happen, and cannot now be ready by 2012. (Thameslink 2000, the north-and-south link, is also late, as its name would suggest.) From Moorgate, a short run round the Circle Line leads to the black hole in the Aldgate area — return tickets not guaranteed to be valid! Bob Crow and his merry men will then stage a traditional industrial inaction, which the IOC will love. As it happens, the only infrastructure project going flat out is the Channel Tunnel Rail Link, and London’s promoters hope to press this into service, though of course it would work even better if the Games were held in Paris. My correspondent wants to know what was wrong with Kensington Olympia.
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