Hang on to your popcorn – this could be the final reel of the euro disaster movie
The good news is we’re in a new phase of the euro crisis. The bad news is we don’t know how it’s going to end.
In every good disaster movie, there’s a moment when bickering bureaucrats who have failed to tackle the threat — epidemic, earthquake, invasion — are sidelined to make way for the maverick (and unkillable) hero or heroine. A classic example comes in Independence Day (1993) with the sacking of spineless secretary of defense Nimzicki and the triumph of the computer nerd played by Jeff Goldblum, who figures out how to zap giant alien spacecraft. Now it’s happening for real, as bickering Eurocrats are elbowed aside by monetary special forces, no doubt with a wacky professor in tow.
BBC reporters have started pronouncing ‘default’ as ‘dee-fault’, as though their dialogue coach is Tommy Lee Jones. And there’s a nice twist in the fact that the cool new commander is IMF chief Christine Lagarde. In her previous post as French finance minister, she looked very much the outsider: the Americanised lawyer-lady at the court of King Sarkozy. By taking Dominique Strauss-Kahn’s job at the IMF, she has upset the phallocratic French establishment. Now she’s telling the whole of Europe what to do. ‘Guys, what you need is a Really Big Number. It worked for Hank Paulson when he rescued Wall Street in ’08; his people plucked “$700 billion” out of the air because it sounded big enough to stop the panic. You’ve f***ed up so bad you’re going to need €2 trillion. But that way you can write off Greece and bail out your banks as well.’ ‘Mon Dieu, madame. All of zem?’ ‘If you have to. Now let’s kick some butt…’
The climactic Sensurround struggle is approaching — though this is the kind of disaster that will surely have a sequel. Hang on to your popcorn buckets.
EasyJet founder Sir Stelios Haji-Iannou is embroiled in such a fierce set of arguments with the board of the airline in which he and his family still hold 37.5 per cent that he is rumoured to be starting a new one of his own, named FastJet. Since he stepped down as chairman in 2002, Stelios has been demanding that EasyJet should hold back on fleet expansion, oust board members he dislikes and pay better rewards to shareholders. Last week the board announced a special dividend that nets the Haji-Iannous £72 million, but he’s still not happy. In its earliest days, the EasyJet brand was inseparable from the genial public persona of Stelios himself, pressing the flesh on flights from Luton to Glasgow; now he seems to have mutated into his own angriest passenger.
Needed in defence
If I’m ever invited to become a part-time deputy chairman of Rothschilds, the extremely grand and family-owned investment bank, I shall accept with alacrity. So it would be churlish to criticise Sir John Rose, former chief executive of the aero engine maker Rolls-Royce, for doing just that. Rose is also busy advising an inquiry commissioned by Vince Cable and chaired by the economist John Kay into the impact of stockmarket ‘short-termism’ — the bouts of profit-taking and panic-selling in the shares of public companies which often make it difficult for them to pursue their strategic aims. No surprise, then, that he’s looking forward to an ambassadorial role ‘in a private company which… takes a long-term view’.
But in a week when BAE Systems announced 3,000 job losses in the north of England in response to cuts in public spending on military aircraft and equipment, we must hope Rose is also still planning to give some of his time to the promotion of Britain’s aerospace and defence sector, in which he achieved heroic status during his arduous 15-year tenure at the top of Rolls-Royce.
This is a sector in which, against the odds, Britain is still world-class. We export vastly more military kit and aircraft parts than we buy for our own use — unlike the motor industry, where (when exports and imports are balanced out) we produce roughly the volume of cars and parts that matches UK domestic demand. Despite current economic turmoil, worldwide orders for new civil aircraft are projected at 26,000 by 2029. But to hold on to our share of that market we need to maintain critical mass, research excellence and a skilled engineering workforce, all of which are threatened by cost pressures and defence cuts at home and abroad. Taking a long-term view, the British economy would gain more from Rose as a determined advocate for high-tech manufacturing than as a high-level door-opener for a City institution which hardly needs introductions.
Not only has UBS chief executive Oswald Gruebel resigned in shame after the ‘rogue trader’ episode which has cost his bank $2.3 billion, but there are reports that the building in which it took place, 100 Liverpool Street, on the edge of the Broadgate complex, may be knocked down. Built on the site of the old Broad Street station, Broadgate is the best of the City’s 1980s developments. But culture secretary Jeremy Hunt has refused to protect it with ‘listed’ status, leaving the way clear for its owners, British Land and Blackstone, to ‘refresh’ the whole estate and go ahead with a new £600 million block for UBS, which will be the largest building in the Square Mile.
I have observed here before that every City building I ever worked in has been demolished in the hubristic pursuit by bankers of ever more extravagant premises to match their egos. With its suddenly announced plan for a scaled-back, low-risk, ‘client-centric’ investment banking operation, you might think UBS would be better renting an office above a mobile-phone shop. But no bank is immune to this perpetual delusion of grandeur, not even — Sir John Rose might note — the unusually restrained house of Rothschild, which has just replaced its New Court headquarters in St Swithin’s Lane for the second time.
This article first appeared in the print edition of The Spectator magazine, dated October 1, 2011