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Sunday, 22 October 2017

On Helmut, Dave, Saint Mario and rigidity

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Today, November 11, marks Remembrance Day here in the UK and is respected in many other countries as the day on the Armistice was signed in a railway carriage in Compiegne in 1918. Fifteen months ago, one couldn’t switch on the telly or the wireless without something about the Great War coming up. We are now 15 months into the 100 years+ period but it will not be until three years today that the centenary of the end of the conflict will be reached. By then, this year’s university freshmen will have graduated and will be looking for jobs. Three years is a very, very long time.

I was out of the office for most of yesterday although I did produce a column before I left the house in which I suggested that it would post probably be an uneventful day in markets and, having dined in London last night with two pretty senior characters, one from the sell-side and one from the buy-side, I was brought up to date and reassured that I had not been too far from the mark. There was, however, one piece of very sad news and that was the passing of former German Chancellor Helmut Schmidt.

Schmidt was not just another politician. He was a Social Democrat but more democrat than socialist and a towering presence in East-West relations during some of the darkest days of the Cold War. Ahead of him in the Chancellery was another huge SPD personality, Willy Brandt, who knocked the first dent into the iron curtain as he laid a wreath in Warsaw and fell to his knees in an act of apology and humility. Schmidt went on to drive “detente” forward and, I’d suggest, laid some of the early the foundations for the subsequent collapse of Communism.

Having served as Chancellor from 1974 to 1982 – few will believe this but I actually took part of my annual leave one year to go to Germany to work on one of his election campaigns – he graduated to become the grand and authoritative voice of political analysis and reason in Germany. His TV interviews were spectacular. He sat there chain smoking in a world where nobody was allowed to be seen lighting up in public and I recall him once running out and tapping a half full packet from off the interviewer who subsequently joined him in having a puff.

Well into his 90s, he was up to speed on social and political events around the world and his analysis and comment was as sharp as it gets. Looking at the Camerons, the Merkels and the O’Bamas, one cannot but conclude that they really did break the mould. A truly great citizen of the world has departed the planet and it is a very much poorer place for it.

Dave, the referendum and other dramas

Meanwhile, back in the Kindergarten, Dave “you may now call me David again” Cameron is making as big a mess of his “renegotiation” of Britain’s terms of EU membership as he can and is setting out to repeat the balls-up he created over the Scottish referendum… except that he was expected to win that one with ease and nearly lost it while in the EU case he is probably now starting out with a weaker hand. Ooops.

Incidentally, I ran into a piece of analysis the other day – I can’t remember where – which looked at the Crash of ’29 and the subsequent Great Depression and compared it with the current situation in the eurozone. It suggested that, above all, the inflexibility of the gold standard drove the global economy into the ground in the 1930s and that the “political will” to make the euro work is setting the scene for a comparable outcome in 21st Century Europe.

All the money in the world – Saint Mario’s “Whatever it takes” – cannot make up for the uncompromising rigidity which renders some economic areas systemically uncompetitive and condemns millions to the scrap-heap. I need to do a bit more thinking on this but I think there might be a point worth dedicating some more time to.

Meanwhile, Wednesday is rather sadly set to be just as exciting as Tuesday. Therefore, and if you have the time (or care to make it), I’d suggest digging out yesterday’s FT and reading the Patrick Jenkins and Martin Arnold article titled ” Beyond Banking: under attack on all fronts” before heading home and either hanging yourself (not recommended) or knocking back a bottle of Scotch (an all-round better idea), and then putting the house up for sale along with the kids and the dog and retiring to Gateshead where a four bedroom house can be had for the same money as a round of drinks in Canary Wharf…

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