This column comes from Puerto Pollensa in Majorca, my favourite off-season watering-hole. The hotel is full of elderly Daily Mail readers intent on making their gin-and-tonics last longer as they contemplate the news from home. Brexit is highly likely to mean ‘hard Brexit’ — departure without residual access to the single market or meaningful new trade deals with the EU or anyone else — and HM Treasury thinks that could cost £66 billion a year in tax revenues. The FTSE’s new all-time intra-day high was consoling for those with a portfolio tucked away, but an uptick in bond yields suggests equities are due for a sharp sell-off soon. And petrol prices are about to jump thanks to the weak pound and a belated Opec move to limit production.
But most painful of all for this middle-England holiday cohort is the thought that their Leave votes have delivered near-parity between the tourist pound and the euro — though that was always likely to be sterling’s trajectory, and as former Bank of England governor Mervyn King has pointed out, a more competitive exchange rate is a welcome stimulus at a moment of uncertainty.
Nevertheless, the denizens of the sun terrace prefer to blame last week’s sterling dive (not so dramatic against the euro as the dollar, but still stinging) on fat fingers, rogue algorithms and evil speculators. And from where they lie on their towels, it’s easy to imagine all that taking place behind the walls of La Fortaleza, the private peninsula a short snorkel across Pollensa bay that was the home of the wicked arms dealer Richard Roper in The Night Manager.
In real life it is one of the homes of the former Tory treasurer and seven-digit donor Lord Lupton, whose career illustrates nothing more sinister (if we draw a veil over the trade in peerages for party fundraisers) than the impervious luck of the City’s super-rich. Having survived the crash of Barings, where he began his banking career, Lupton made his fortune as European chairman of Greenhill, a Wall Street mergers and acquisitions firm which boasts as its biggest assignment the role of adviser to Fortis of Belgium in the 2007 three-way takeover of ABN Amro — which crippled both Fortis and RBS. Lupton went on to snap up La Forteleza in 2011 for a bargain €40 million, its previous British owner having tried to sell for €125 million in 2008, just as the financial crisis struck.
Fame conferred by The Night Manager would today make the 230-acre estate a must-buy for any self-respecting global villain, adding tens of millions to its sale price next time round. Combined with the Brexit devaluation, I reckon it must be worth at least 50 per cent more in sterling terms than it was a year ago. Capital breeds capital, as Thomas Piketty might say, while the rest of us are buffeted by the aftershocks of our imperfect democratic choices.
Speaking of which, who will be President Trump’s treasury secretary, and does it matter? After this week’s ‘locker-room’ revelations, the Donald’s odds of winning have clearly lengthened. But he ain’t out of the race yet — and seasoned Republicans of my acquaintance have been agonising for months over the question of whether to accept jobs in his White House team, or indeed whether to push themselves forward in the hope of influencing it towards sanity.
Would that effort be worth the potential pain and embarrassment? It’s indicative of the lame-duck nature of Obama’s second term that Jack Lew, the Treasury incumbent and equivalent of our Chancellor, is all but invisible: I had to Google him to see what he looks like. The last man to make a real public impact in the role was arguably the hyperactive Hank Paulson during the 2008 financial crisis. Far more attention routinely focuses on the Federal Reserve chairman and her (or his) interest rate decisions.
But still it matters who has the president’s ear on economic issues, and the current Trump favourite is said to be his campaign financier Steve Mnuchin, an ex-Goldman Sachs partner and associate of George Soros. Also mentioned (by Trump himself, that is) have been the stockmarket player Carl Icahn, private equity titan Henry Kravis and former General Electric boss Jack Welch — ageing big-ego billionaires with as many opinions about America’s ills as the candidate himself. Maybe Hugh Hefner of Playboy would have made that list too, if he hadn’t just passed 90.
As for Hillary, insiders expect her to find a senior role for the grizzled left-wing laureate of economic doom, Joseph Stiglitz — but more excitingly, they hope she will appoint the first female Treasury chief. The hottest possibility is Sheryl Sandberg, chief operating officer of Facebook, who once served as chief of staff to Bill Clinton’s treasury secretary, Larry Summers. Famed for lecturing other women on how to be as successful as she is, the self-promoting Sandberg has the disadvantage, in job application terms, that she would make Hillary look even older and dowdier. But let’s face it, whoever’s appointed to top jobs in Washington this winter, it will be a relief to most of us if it’s Hillary, faute de mieux, doing the appointing.
Is that a Samsung Galaxy Note 7 in your pocket, or are your pants on fire? The Korean manufacturer has halted production of its latest smartphone and advised anyone already an owner to switch off immediately, lest the thing’s battery explodes — as one did on a Southwest Airlines flight in the US, forcing the plane to be evacuated.
Meanwhile flights to Seoul are packed with crisis–management PR people — all carrying Apple iPhone 7s, sales of which are soaring at Samsung’s expense, or awaiting delivery of the rival Google Pixel device, due this month. Also set to gain is Huawei, the mysteriously rising giant of Chinese electronics. Exciting times — but as our Spectator Money tipster Robin Andrews regularly points out, the biggest prize surely awaits whoever perfects the safest and longest-lasting battery.
The post Hard Brexit, soft sterling and a glimpse of the Night Manager across the water appeared first on The Spectator.
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