Christopher Fildes

Ministers propose but markets dispose — the wraps come off Project Rubicon

Ministers propose but markets dispose — the wraps come off Project Rubicon

Apologies for absence. I was, indeed, away last week — in airports, in limousines, in meeting rooms booked under false names in secluded hotels, and in the engine-rooms of my financial advisers, urging the number-crunchers on. Secrecy was of the essence, as with all coups, and there can have been few so dramatic as this since Lionel de Rothschild backed Disraeli to scoop up the Suez Canal. Mine, too, represents a financial solution to a financial and economic problem with political overtones. This week the wraps will come off Project Rubicon. It will be a revelation to the money managers who are now scouring the world in search of trading opportunities. Conventional investment, as they know, is out of fashion. So far this century, shares have been boring at best, and bonds at today’s prices can only appeal to optimists, or pessimists. The money has flowed towards managers who promise something better — into the hedge funds and deployers of venture capital and private equity. Some of these promises will come unstuck, as we are beginning to see. There are not — there never can be — enough good things to go round. Some funds profited from the ‘convergence trade’ — buying (as it might be) Greek debt in the belief that when the drachma joined the euro, Greece’s credit would be thought to be as good as Germany’s. Now they are looking for a divergence trade, to bet on the same process in reverse. Project Rubicon can help them.

Top of the list

The idea now dawning over Europe is that its single currency may not, after all, be there for ever. It is losing the props that were supposed to shore it up; the Stability and Growth Pact, now more or less optional, and the constitution, less than that.

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