The MT Diary: Howard Davies

Picnics in the sky; a Baez encounter in Washington; Disney celebrates with Hong Kong.

Last Updated: 31 Aug 2010

Am I alone in thinking (as Telegraph letter writers are wont to ask) that the British Airways in-flight catering strike was a blessing in disguise? The food you could get with your coupons, from Pret a Manger or the Caviar House, was more than adequate. And the picnic atmosphere as we all unwrapped our goodies livened up day flights no end.

On a recent Chicago trip, there was a strong secondary market in surplus culinary assets: four pieces of sushi bought you a decent slice of carrot cake; a glass of Chardonnay was worth a couple of Godiva chocs; apples and oranges traded at par - disproving the old adage. The cabin crew cowered in their galleys, with only glasses of warm water to barter - and found few takers, oddly enough.

Some discount airlines run like this all the time, though not across the Atlantic. Maybe the Civil Aviation Authority should follow the FSA's example with stockbrokers and require unbundling of the services offered, so passengers (or customers, in BA jargon) could choose a catered seat or a picnic seat, and pay accordingly.

Light is another choice it would be nice to have when travelling. In Chicago I stayed at the W hotel - which is probably quite a fashionable designer sleeping facility. I say 'probably' because it was so dark you couldn't tell. There was no bulb over 40 watts in the whole place. Of course, in America's post-literate society no-one wants to read over a meal or a drink. I felt like a character from Dickens as I sat with my book propped between two candles.

So I arrived in Washington with a headache from a couple of days' peering at papers in the dark. There, during the IMF/World Bank meeting, there was barely room at the Inn. I stayed in Georgetown with friends who can afford at least 60 watts by the bedside. But there was a drawback to staying outside the security cordon. Washington effectively closed down on the Saturday and Sunday. An anti-war demonstration paralysed the area around the White House and the Mall. Taxis were rigorously excluded. So I walked the two miles to my meetings, past 150,000 cheerful and peaceful protesters, and past Joan Baez on the stage in the park singing Where have all the flowers gone?

I felt 18 again, until I got a blister from my new shoes, which were not made for walking, it turns out. Invited to move, or hobble along, by Washington's polite police, I splurged $10 on a T-shirt with photographs of the two Bushes and, underneath them, the legend 'Dumb and Dumber' - for my student son, you understand.

As usual at these talkfests, one topic comes to dominate the debates and the dinners. This year it was whether the US consumer-led boom can continue to haul the global economy along. Americans have entirely given up on saving and are spending their way into a massive balance of payments deficit, obligingly funded by the Chinese, who have now acquired over a trillion dollars of Treasury Bills.

The consensus seemed to be that this process has to stop at some point, and probably quite soon. There are already signs of a slowdown in the housing market. But will the adjustment be gradual or painfully abrupt?

That depends, say most US economists, on whether the rest of the world (now code for China) lets the process occur, and allows the US trade deficit to be cut back, or seeks to prevent it by refusing to let their currency appreciate.

Governor Zhou of the People's Bank addressed the big Saturday night dinner - speaking fluently in English from a few scribbled notes and answering unscripted questions without interpretation, his hands stuffed in his pockets. The message was clear - the Chinese hear what we say, and will do whatever they think is right for them.

It was a cool performance and it is hard to think of any central bankers, except Greenspan, Trichet and King, who could have matched it. Fazio of the Bank of Italy, under investigation by magistrates, can't now be seen in public. His Finance Minister sent him home from Washington (in the bank's private jet) on the grounds that he no longer speaks for his country.

In Hong Kong and Singapore (the early autumn is travel time in the university world), you sense the impact of the Chinese boom and the fear that it might end one day. But for now times are good. Singapore Slings are consumed with gay abandon in Raffles Bar, and Hong Kong hotel rates have gone back up again. Hong Kong has benefited hugely from the booming Pearl River Delta. But it's not all entrepot activity for mainland exporters. There is more serious value-added business afoot.

Disneyland opened in the week I was there. Prancing around in a Pluto outfit in Hong Kong's humid 90s must be one of the world's least desirable jobs - but certainly discreet. An ideal hiding place for Governor Fazio.

Back home, Mervyn King marked the 100th meeting of the Monetary Policy Committee with a convivial dinner for all current and former members. I just about qualify, having attended the first two meetings before I was exiled to the FSA. He told us that, over the next few months, he expected the Committee to...

(Ed: Sorry to cut you short - no more space: please don't overwrite in future.)

Howard Davies is the director of the London School of Economics.

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