Christopher Fildes

My racing correspondent, Captain Threadneedle, thought that banking and racing went together. He wanted Barclays to buy the Tote: perfect synergy, he thought, with matching systems, merged accounts, an overlapping customer base and a marketing slogan that would write itself: ‘You can bet on your overdraft with Barclays.’ He was, as we now know, before his time — and then the banks (Barclays included) took to betting on their own account, splashing out on doubles, trebles and accumulators, collecting piles of toxic betting slips and deservedly losing their boots. It has been left to Weatherbys, a very old name in racing, a new name in banking, to vindicate the Captain’s insight and to solve the equation.

Oh, dear, what a setback. The usual suspects have slipped through the net. They will have to be locked up in the Financial Services Authority’s waterside fortress for 42 days, while the investigators try again to find some evidence. These suspects are the short sellers: everyone’s favourite scapegoat. They are accused of rocking the banks’ leaky boats, of destabilising the stock market, of profiting from other people’s misfortunes, of driving share prices downwards to suit their own book. If it wasn’t for them, we should all be rich, or richer, at any rate, than we are now — or so we are led to believe. The textbook way to become a short seller is to borrow some shares and then sell them.

Christopher Fildes on international accounting standards   How gratifying. One set of rules for the whole world, and all of them springing from a fountainhead in Cannon Street, London EC4. There will have been no such display of global authority since the sun set on the British empire. Washington is warming to it. Brussels is restive. These are the rules that set the standards for companies reporting on their financial affairs to their shareholders. They come from the International Accounting Standards Board, and they are accepted in more and more centres where shares are traded, from London to Beijing.

My friend Herbie from the Last National Bank of Boot Hill understood about rogue traders. When another hapless bank owned up to losses ‘due to unauthorised trading’, he added: ‘They mean nobody authorised the guy to get it wrong.’ Now that a French trader called Jerome Kerviel has set a new record by losing £3.6 billion, Société Générale, whose money it was, is left to wonder how it happened and to search for some deep, dark conspiracy. It looks more like a familiar story with extra noughts on the end. A swashbuckling trader buckles when he should have swashed, and then tries to double up and cover up. The money all goes to the people on the other end of his deals.

25 October 1986 My friend the stockjobber closed his book, turned his back on his pitch, and walked with me off the Stock Exchange floor, down Throgmorton Street and into Bill Bentley’s fish house. We raised our glasses of Montrachet to the last of the good old days. On Monday he must quit the floor and settle down at his work-station, one of hundreds in a huge carpeted financial factory arranged, like all smart City factories, round an atrium. A deputy will man his pitch, empowered to deal on a modest scale, but not, like my friend, to make or lose on his own book a million pounds in a day. The big deals will come upstairs, to be made over the telephone and the screen, from atrium to atrium.

A sprig of the Pilkington family was saying goodbye to his hosts. ‘I’ve an early start,’ he explained. ‘I’ve got to be at the bloody glassworks in the morning.’ When he arrived, he found that the chairman, Sir Harry Pilkington, was there before him and had left a note on his desk: ‘My boy, it seems to me that your heart is not in the business...’. Family businesses need enough sprigs to allow for such pruning, and this one was a model. Then some stray aunts and cousins wanted a price for their shares. Now Pilkington is just another public company, and in Sir Harry’s place sits Sir Nigel Rudd, a serial non-executive chairman, Pilks is on the receiving end of a bid from Nippon Glass, and Sir Nigel’s board is recommending it.

This week’s message from the Confederation of British Industry: we’ll just die and then you’ll be sorry. I take this as more of a threat than a promise, but since it is all about pensions, anything is possible. Many (perhaps most) of the CBI’s member companies must now be stuck with underfunded pension schemes, the regulators want to set them a timetable for topping up their funds, and the CBI says that if this is taken literally, one company in every five will be put out of business. A perverse logic would work itself out: overstretched companies and underfunded schemes are always likely to go together. Companies like these would be required to find more cash in more of a hurry. They would also have to contribute loaded payments to the Pension Protection Fund.

Tutti possono sbagliare: we can all make mistakes, as the hedgehog observed, getting down from the hearth-brush. Whether our prickly Chancellor is a student of Italian proverbs, I cannot say, but he could learn from this one. In the five and half years since he auctioned half the nation’s gold reserves, the price of gold has doubled. He was bid rather less than $280 an ounce, the hammer fell, and he put the proceeds into dollars, yen and euros — but none of them has been as good as gold. Looking on as the price soared above $560, I could only reflect on the timing that caused him to sell at the lowest price on offer for two decades. He was, after all, under no pressure. Did he want to take a clever initiative, to cut a dash and to overshadow his neighbour in Downing Street?

Gordon Brown is a son of the manse, so he will have been brought up on the Parable of the Unjust Steward. As stewards have been known to do, this one, we are told, had been fiddling the figures, and realised that his accounts would soon be audited. When that day came, he knew, he would need friends — so now was the time to ingratiate himself with his customers. He hurried about to offer them rebates and discounts. Can it be that the Chancellor has borrowed this idea from holy scripture? First of all he sends me an entirely welcome tax rebate. Then he follows it up with a straightforward £400 bung. Half of it, he explains, is a winter fuel payment to help me pay my heating bill.