After last Friday’s company Charity Day, the Fiver is back. This week we tour the globe and the news agenda with comment on time zones, tweets, trades and the thorny issues surrounding the state-owned banks. Thanks to Clare Coffey, David Chambers, Ross Gillam and Nick Woods for their contributions.
Economists often watch German manufacturing exports or Saudi Arabian oil production for signs about the health and direction of trends taking place in the global economy. The small island nation of Samoa is not well known for its economic significance but last week the country announced a move which says a lot about the global economy.
The Samoans have decided to move the zigzagging International Date Line to their east. The move which will take place later this year will bring the country a day closer to Asia and Australasia.
As a nation, the Samoan’s seem happy with change. In 2009 they decided to switch sides and start driving on the left of the road. The rationale for this latest decision is to put them in closer sync with the East. The FT described this as a “clear vote of confidence for the Asian century.”
The old adage that time is money seems appropriate.
Shares for everyone?
The British public should all receive a portion of the shares the government owns in RBS and Lloyds Banking Group when the time comes to sell them back to the private market. That was the view this week of the Centre for Policy Studies, which published a paper outlining the idea. The media inevitably picked up on the fact that doing this would also cause the City to lose out on around £1bn of fees for underwriting and processing the share sale.
So is it a good idea? Anthony Hilton in the Standard was broadly supportive, though he had reservations about whether the idea could actually work. From our point of view, anything that reintroduces consumers to the notion of share ownership, dividends and the wider sphere of personal finance has to be a good thing.
Clear as Westminster mud
Today’s report on injunctions by a committee of top judges has questioned the boundaries of reporting on statements made in the House of Commons and Lords. Committee chairman Lord Neuberger criticises MPs using parliamentary privilege to simply “flout” rules, supporting the report’s comments that reporting in the Lords or Commons can only be protected by parliamentary privilege where ‘summary is published in good faith and without malice’. This last comment challenges the free reign of journalists to report what they like, something many have argued is unfair and equates to a gagging order. Rather than drawing clarity on the issue, the report seems to highlight the just how blurry the current law is.
However, what is even less clear is what the rules should be on those who use social media to openly discuss injunctions. Journalists and the general public are just as likely, if not more, to search Twitter for the latest gossip and news rather than listen to statements in the Commons and Lords. With this in mind, businesses who want to bury bad news need to pay just as much attention to conversations online as they do at the despatch box.
Inflation targets – what is the point?
Official figures released this week announced that CPI has hit the heady heights of 4.5%, more than double the Bank of England’s target level. The Bank concedes it expects inflation to continue to grow this year, even hitting 5%.
In a speech last night, the Bank’s deputy governor for monetary policy, Charlie Bean (yes, Mr. Bean is a deputy governor!), admitted that the Bank had taken the decision to “accept a temporary period of above target inflation”. This therefore begs three questions: how long does a ‘temporary period’ last, on what criteria was this deemed ‘acceptable’ when there are millions of households struggling to make ends meet, and what is the point of a target if it is acceptable to fall flagrantly short of it?
Clearly Mr Bean and his colleagues are struggling to do their jobs. Is this because though the target is simple, they do not have the means to get there? Is their inaction, action? Do they have the requisite insight and tools to enable them to do their jobs? They say a bad workman blames his tools – and maybe our leading economic brains can justifiably say that the tools at their disposal have proven to be inadequate (hence the regulatory infrastructure changes to come) and therefore they are hamstrung as a result. However, the millions of households across the country can ill afford the wait or the expense of a ‘temporary’ period of crushing inflation.
Glencore – The saga continues
So the long wait may finally be over but the speculation remains as Glencore this week made its much anticipated IPO. Whilst much of the hype had centred on rumours of oversubscription, shares in the Swiss-based commodities trading company traded on a “conditional basis” between a high of 553.17p an increase of 4.4 per cent from the offer price – and a low of 530p.
With many investors hoping for an opening day rally of between 5-10% many were left feeling somewhat underwhelmed. Whilst many commentators may argue that the trading activity marks a normal stabilisation procedure, the debate around the wider issue of the somewhat sluggish European IPO market looks set to continue.
With this in mind it seems Glencore will continue to be under the spotlight until next Tuesday as the business moves to unconditional trading with the most positive projections suggesting the company will go straight into the FTSE 100, only the third time this has been achieved.
Either way with 5 of its executives set to become billionaires, perhaps it’s not all doom and gloom!