Any other business

The FTSE100 index stands precisely where it did in the first week of December 1999. Whichever way you look at it, shareholders — including pension funds — have had a rotten run on the economic rollercoaster of the past 15 years. So it’s reasonable to keep asking whether the rise in executive pay over that same period is justified: a report from the High Pay Centre says remuneration of the average FTSE100 chief executive is now at a multiple of 130 times (corrected from the report's original figure of 143 times) that of the average worker in the same companies. In 1998 that multiple was 47, indicating that top pay has almost tripled relative to workforce earnings while shareholder returns have stayed flat. Of course this argument is not that simple.

August is the season for conversation about career choices. Every holiday party seems to include new graduates or next year’s graduands in need of grown-up advice. Many yearn to be pastry chefs, having devoted their student years to watching The Great British Bake Off. Some want to be journalists, and I tell them it’s more fun than having a secure job with a decent income. Happily I’ve only met one young man this summer who wants to go into financial PR, the métier in which I believe Satan himself did his first internship.

Iain Conn, who will succeed Sam Laidlaw as chief executive of Centrica, would have been a dead cert for the top job at his current employer, BP, were it not for the Deepwater Horizon oil rig disaster in the Gulf of Mexico in April 2010. The subsequent PR fiasco terminated the BP career of the then chief executive Tony Hayward — who seemed crushed by the episode, but recovered to make a double fortune at Genel Energy and Glencore. Had Hayward served a full term, Conn (BP’s head of refining and marketing) would almost certainly have followed him. As it was, BP found it more politic to appoint an American, Bob Dudley, to repair relations in Washington while simultaneously arm-wrestling with the Kremlin-connected oligarchs who were BP’s co-investors in Russia.

‘Sanctions,’ said Kofi Annan, ‘are a necessary middle ground between war and words.’ Neither the EU nor the US will deploy troops or missiles to defend Ukraine against Russian-backed separatists, while Vladimir Putin basks in hostile Western words and turns them to domestic advantage. That leaves sanctions as the only means of seeking to influence him. But do they work? Evidence is not persuasive: in 200 cases studied by academics in Washington, from the League of Nations action against Italy’s aggression in Abyssinia in the mid-1930s to Russia’s assault on Georgia in 2008, sanctions were judged successful in one third of cases; in many of those, success was ‘partial’.

In a season obsessed with sport and personal misbehaviour — separately or in combination — the word ‘fixing’ immediately brings to mind ‘match-fixing’, as in ‘Two World Cup referees suspected’ of it, and ‘Former New Zealand cricketer banned for life’ for it, to pick at random from this week’s headlines. ‘Gold-fixing’, by contrast, is a phrase of which the City has been proud for almost a century. But the imminent demise of its historic gold-fixing system is yet another parable of changing times. Since September 1919, the price of gold has been ‘fixed’ daily by five of London’s leading bullion dealers. In the era when the dollar price per ounce was already set by the US Treasury, first at $20.

It was at the Mansion House dinner last year that a City gent two seats away announced himself to be the custodian of one of London’s ‘dark pools’. The phrase sounded pleasingly Tolkienian but his first explanation — an electronic exchange in which large share transactions are completed in total privacy — dispelled the charm. My reaction was sharp enough to make the Downing Street spin-doctor between us fiddle nervously with his Twitter feed. If institutional investors can shift blocks of stock on the quiet, without moving public markets, what happens to the normal process of ‘price discovery’ between buyers and sellers? Surely small investors are being ripped off? Sounds like another market abuse to me, I shot along the table.

‘Iraq turmoil sends crude oil prices to nine-month high’ is the sort of headline that used to send shivers down economists’ spines, especially if it appeared on the same page as ‘Europe faces gas shortage as Russia cuts Ukraine supply’. How worried should we be at the current turn of events in the energy world? Since Iraq’s new insurgency kicked off, the price of a barrel of Brent Crude has blipped from $105 to $115 — nothing to panic about — but the more pessimistic analysts are talking of a further $30 rise if Iraqi oil flows of 3.6 million barrels a day (representing about 4 per cent of global demand) are seriously disrupted.

‘The internet is broken,’ a corporate chieftain told me last week. It was an arresting remark, but he did not mean that his home Wi-Fi hub had gone down and required a jab with a paperclip, as mine frequently does. He meant that the entire web has become so insecure — so plagued by industrial-scale scammers, viral anarchists and, according to the US Department of Justice, Chinese military hackers — that it can no longer be trusted for any form of confidential data transmission, from online payments to state secrets. By way of confirmation, as I type, in comes an email with a toxic fake ‘invoice’ attached.

The postman at the door is stooped by his burden like an allegorical statue of Labour Oppressed by Capital. His wearisome, low-waged task is to deliver a copy of Thomas Piketty’s Capital in the Twenty-First Century — or perhaps multiple copies all round the town, since this breezeblock of a thesis on the iniquities of accumulated wealth stands second in this week’s bestseller lists, pipped only by the life story of someone called Guy Martin.

Do we really mean to kill investment banking, or are we trampling it by accident in a fit of righteous zeal? By ‘we’ I mean politicians, regulators and public opinion, and by ‘kill’ I mean rendering it unattractive or unviable for any shareholder-owned financial business except on the most limited scale — and as uncertain a career choice as, say, Liberal Democrat politics or freelance journalism. The announcement last week of a radical scaling back of Barclays’ trading and deal-making arm has stoked a debate that had been smouldering for some time; for background reading, I recommend recent articles by Philip Augar in the FT and Frances Coppola in Forbes.

A bouquet to Alison Kennedy, ‘governance and stewardship director’ at the Edinburgh-based pensions provider Standard Life, for leading the rebellion of Barclays shareholders against the bank’s decision to pay increased bonuses of £2.4 billion, far outstripping dividends to shareholders and despite a fall in profits. At last week’s AGM, 34 per cent of shareholders refused to endorse the board’s remuneration report after Kennedy declared herself ‘unconvinced’ that the bonus pot was ‘in the best interests of shareholders’ and warned of ‘negative repercussions on the bank’s reputation’.

'Care, respect, clarity and reassurance’ are what the Co-operative funeral service says it offers the bereaved, and the parent Co-op Group may soon find itself in need of just such support to help it come to terms with the resolution of the Co-op Bank. ‘Resolution’ is modern banking jargon for an orderly burial, involving powers vested in the Bank of England to transfer all or part of a troubled bank’s business to a private-sector purchaser, or (if the Treasury is so inclined) into temporary public ownership, or to force an accelerated insolvency procedure that ensures depositors are either paid out by the Financial Services Compensation Scheme or have transferred to healthier banks.