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Why I welcome the collapse of Facebook’s currency

19 October 2019

9:00 AM

19 October 2019

9:00 AM

When Facebook announced details earlier this year of a global digital currency called Libra — backed by a roll call of other corporate giants — I declared myself a sceptic on the grounds that behind its libertarian sales pitch, the concept was really ‘a power-grab for cash balances and personal data out of the conventional banking system’. Furthermore, ‘since when did any project originated by Mark Zuckerberg and his pals have the good of the world as its prime objective?’

So I have enjoyed watching Libra start to unravel after the withdrawal from its ‘governing association’ of partners such as Visa, Paypal and eBay, and a warning from another, Vodafone, that the project will flourish only if it distances itself from Facebook (which was also criticised this week for paying only £28 million of corporation tax on £1.6 billion of UK revenues).

The idea that Libra will be a ‘stablecoin’ — designed for minimal volatility, unlike other cryptocurrencies — has cut little ice with critics. Meanwhile, central bankers warn that if Libra presses for regulatory approval in the US and the EU, it can expect fierce scrutiny in relation to issues such as data privacy, consumer protection, money laundering and tax evasion. If instead it goes to the scrapheap — alongside Dyson’s electric car, Neil Woodford’s equity income fund and most of Monday’s Queen’s Speech, to name several stories I haven’t got space for — I’ll call that a welcome victory for democratic, state-led financial order. The money we know may have moments of weakness, but it doesn’t need subverting by multi-nationals and billionaires.

High street hero

Hats off to Hays Travel, which has stepped in to acquire all 555 UK outlets of bankrupt Thomas Cook with the stated intention of reopening them and rehiring most of their staff. Given the widely announced ‘death of the high street’ and the switch online that helped kill Thomas Cook, it’s a contrarian move. But the travel agency founded 40 years ago by John Hays and his wife Irene in the back of his mother’s Sunderland childrens–wear shop has bucked industry trends to reach £1 billion of sales (as well as being renowned as a kindly employer). Hays himself says that for his branch staff ‘the web is their friend’, because customers research holidays online and then come in to book — whereas for Cook’s it was the enemy, because the online offer was always cheaper.


That sounds simple enough to rectify, but 70-year-old Hays faces a challenge attracting sufficient customers to cover suddenly multiplied overheads. If he succeeds, I hope this high-street hero wins a knighthood.

An envelope for Rico Back

When I wrote last week that short positions in UK shares held by leading hedge funds didn’t amount to a conspiracy to ‘short the country’, I omitted to mention one company that it might well seem unpatriotic to bet against: Royal Mail. Odey and BlackRock are among funds doing just that, the shares having already shed two-thirds of their value since May 2018. But investigation reveals nothing more sinister than a dim view of current management and the prospect of a pre-Christmas strike.

Last year’s share price peak followed news of the retirement of Canadian-born chief executive Dame Moya Greene, who I praised for doggedly restructuring the postal service while keeping the truculent Communications Workers Union onside. Her more rumbustious successor Rico Back is a native of Hamburg who commutes from his home in Switzerland and had to be paid a £5.8 million ‘golden hello’ to persuade him to move up from running Royal Mail’s parcels business, the European arm of which he originally built and sold to the group. Dubbed ‘Mr Greedy’ by the Daily Mail, he has alienated his workforce and won little support for costcutting plans in the face of falling letter volumes, weak productivity and low-cost competition in his only growth market, which is parcels. If union action disrupts the Christmas post, I suspect Back’s P45 may have to be delivered by hand. Meanwhile, shorting Royal Mail’s shares looks like a perfectly logical strategy.

No flight-shaming

On a plane to Knock in the wild west of Ireland — for some personal summitry, rather than a visit to the town’s Marian shrine — I read a robust defence of commercial aviation by Willie Walsh, boss of British Airways’s parent IAG, in response to Extinction Rebellion’s efforts to close down London City Airport. ‘People being able to see the world, travel for work, it clearly has generated huge economic value,’ he said — and my weekend in this magical but barren region put me entirely in sympathy with his view. Here is the National Famine Memorial at Westport, recalling the ‘coffin ships’ that were once the only transport for hungry emigrants; here is Derrygimlagh Bog, where Alcock and Brown crash-landed after the first non-stop transatlantic flight in 1919; and here is a hotel full of well-heeled Americans, finding and fertilising their Irish roots.

Aviation facilitates trade, friendship and personal fulfilment, as well as pilgrimage and escape. As Walsh noted in the same speech, it also carries environmental costs. But its contribution to global CO2 emissions (somewhere between 2 and 5 per cent) is much the same as is generated by the world’s computer data centres, servicing unfettered growth for the likes of Facebook and the mad industry of bitcoin ‘mining’, while airlines search for cleaner fuel and may one day replace kerosene with carbon-neutral ‘electro-fuels’ that actually use atmospheric CO2 as a raw material. So let’s have less of the flight-shaming — at least of the unprincely mass of commercial (rather than private) passengers. And let’s end, as usual, with a restaurant tip: O’Dowd’s Seafood Bar at Roundstone in remote Connemara offers a fine seafood platter and an Atlantic view to help you dream of wide horizons.

 


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