Royal quiz


The Duke of Edinburgh is quoted in the papers today by someone he spoke to at a reception as follows:

‘He said they were absolutely useless, completely reliant on subsidies and an absolute disgrace.’

To which of the following was the beloved husband of the Queen — and in his youth  Prince of Greece — referring?

a) the royal family

b) Greeks

c) wind turbines

d) all of the above

2 Responses to “Royal quiz”

  1. Monima O'Connor Says:

    Dear Joe
    I’ve struggled to find where I could post comments to some of your writings and never managed to until now.

    Firstly, your remark above is really disrespectful, and I am appalled at the inference you make.

    Secondly, whilst you have a fair understanding of economics, alas you fail spectacularly in your grasp of financial markets. Anyone with substantial funds in savings has been absolutely crippled by low interest rates which has been prevailing since the concept of the single European currency became a reality. Interest rates in Italy, Greece, Spain etc were in the high teens if not higher, in the mid 1990s. Then as the drive to introduce the Single Currency took hold, interest rates in all the Euro hopefuls came down dramatically to match those prevailing in Germany and the disgraceful creative accounting that went on just to meet the Maastricht Criteria. None of this was accompanied by structural reform – just ‘free money’ with which they could have paid off their national debt but didn’t.

    When I was selling Eurobonds in the late 80s, Pension Funds needed a minimum return on capital of about 4 % as their overheads are humongous – what with all the quarterly reporting and mark to market valuations. It is well known that the countries are struggling to manage their long term pension liabilities as people are staying healthier and living longer than ever imagined by the actuaries.

    The only avenue to improve returns was for the City to devise a ‘safe’ investment yielding much more than could be earned annually through erstwhile safe investments such as blue chip FTSE dividends or government bonds. CDS and Credit Derivatives such as CDOs were duly invented. Most of them bore an investment grade credit rating issued by the international credit rating agencies so as to be eligible for pension funds and the like in which to invest. The credit rating was the icing on the cake. No saver worth his salt would put his money in a vehicle without a credit rating.

    This is the real reason behind the credit crunch. I wrote something about this for Open Europe but since you appear to be a Guardian reader, it is doubtful you would have seen it. Moody’s, Standard and Poor and Fitch are like teflon. Everyone turns their fire for the credit crunch on the bankers but it was the credit rating agencies who are the true villains. The very last thing Fred Goodwin said at the Hous of Commons Finance Select Committee was along the lines of ” every investment was rated by Moody’s or Standard and Poorts” if you don’t believe me, check it out.

    I sought to join your blog after having read your excellent China Dream. It mirrored absolutely my own beliefs, having lived and worked for an American investment bank in the region. Alas nothing you have written since on your blog has come close to its brilliance.

    • joestudwell Says:

      Joe says: the idea that the City invented new derivatives products as a ‘response’ to lower sovereign debt yields following the creation of the Euro area seems unlikely to me. I prefer Minsky’s argument that it is in the nature of the financial sector to forever find ways to stretch money, which essentially means discovering new mechanisms for leverage. It is quite obvious the credit rating agencies were party to the latest round of money stretching. I don’t think anyone disputes this. What is more important is that the current crisis proves the inability of the financial system to self-regulate. Indeed it proves the opposite — that the financial system needs very crude, very simple and very unfungible regulation. This is why my preference has been for the retail, utility function of banking to be hived off completely and operated on a non-profit, mutual basis in the interests of depositors and ‘real’ businesses seeking working capital. There would be intense competition between mutuals, but over a clearly and narrowly defined set of objectives. Such a system is entirely practicable, but would be such a radical departure from the status quo that it is inconceivable it will happen.

      As to being rude about Prince Philip, it doesn’t worry me unduly to make fun of someone whose own record of social propriety earned him the PR nickname The Duke of Hazard.

Comments are closed.

%d bloggers like this: