The MT diary

Chill wind from Moscow; Wall Street doubts over City's future; Sarkozy goes off-piste.

by Howard Davies
Last Updated: 31 Aug 2010

The winter freeze was not the ideal background for the global-warming gurus to make their case at Copenhagen. Maybe that partly explained the uncertain outcome. The icy blast came, meteorologists told us, from Russia. The MT diary, which will spare no expense to put a body on the spot where the action is, can confirm that theory.

When I flew in to Moscow just before Christmas, the temperature was above zero. The Moskva river ran darkly but busily past the Kremlin, and it was a pleasant walk from my hotel to a Georgian restaurant. Always best in Russia, in my experience, to stick to food from the former colonies. It is hard to compose a digestible sentence with the words 'Russian' and 'cooking' in it.

The Georgians are not helped, following the spat two years ago, by an import ban on their wine (and on their fizzy water), but the restaurant had found a Greek brand called Georgora, a brave gesture of defiance to which the FSB turns a blind eye. The food was good, and the lights twinkled in the Christmas market as I strolled back to bed.

So I wandered out in the morning, coat open, gloves off, to be slapped in the face by a Siberian blast. The mercury had fallen from -3 to -27 overnight, and my effete Barbour was not up to the job. Even Muscovites, for whom 'isn't it cold?' is not the most imaginative conversation opening, talked about the weather all day, though it didn't prevent my hosts from walking me to an Uzbek caff, and getting lost on the way. Never mind, I'm sure the circulation will return to my hands before the cricket season starts.

Next morning, as I drove to the airport at dawn, the river was frozen over: in the same condition, in fact, as the Russian economy, which contracted by about 8% in 2009. I suspect the Russians, who bitterly think they imported an undeserved recession from the West, may see the export of Siberian weather as some kind of tit-for-tat.

The freeze reached New York just as I flew in. We Brits tend to think we are uniquely incapable of handling snow, but Kennedy grinds to a halt, too, at the slightest climatic provocation. My plane, already four hours late, sat on the runway for two more hours, waiting for a gate.

But the weather wasn't the main topic of conversation on Wall Street. The b-word (bonus) is where it's at. The Americans were just waking up to the fact that a good part of Alistair Darling's windfall levy would in effect be paid by their taxpayers. For US firms, overseas taxes reduce taxable income at home, and thus their contribution to paying off a ballooning federal deficit. Many in Congress can't understand why the Administration sits by and watches it happen.

Others on the Street are now wondering about the place of London in their future plans. The bonus tax, and especially the Conservatives' support for it, the comments on social uselessness, and the Bank of England's suggestion that if some activity left London it would be a price worth paying for greater financial stability in the future - all are contributing to a sense that, in the UK, the powers that be have fallen out of love with the financial sector. The dame has behaved quite dreadfully, of course, but is it really wise to give her the heave-ho, especially if there's no obvious substitute on the horizon? And in good years she has been a nice little earner.

One particular concern - not heard in Britain - was with George Osborne's comment that he would not reach a firm judgment on the windfall tax until he had seen it operate. A harmless and prudent observation, one might think. But in the wrong ears it sounds like a hint that if the tax works well it might become a long-term feature of the fiscal landscape, not a one-off.

The freeze, and Eurotunnel's exotic condensation problem, meant that the Continent was isolated for a while over Christmas, but France had reopened by the New Year, at least for those who can live with the frightening euro exchange rate. There, the financial sector's problems take on a different hue.

Nicolas Sarkozy presents his New Year wishes to the French in a 10-minute broadcast on all channels, a la Reine. There was no sign of Carla, and someone had wisely stapled his hands to a lectern, curbing the exaggerated gestures.

To the neutral observer, it was an impressive performance. After words about the relative insulation of la belle France, and the superiority of the French model of solidarite (a word for which we have no useful equivalent, just as the French have none for 'fair play'), he noted that the crisis had given us the opportunity to resolve some long-standing problems. The two he mentioned were bankers' bonuses and 'fiscal paradises', their nice phrase for offshore centres.

And he said - as if it were a done deal - that, following the Copenhagen conference, there would be a global Tobin tax on financial speculation to fund climate change adaptation in developing countries. Perhaps so, but it hasn't yet been explained in those terms in Washing-ton or London. It's interesting what secret intelligence you can pick up watching TF1 in a gite in Provence.

You can pick up other things too, such as a nasty case of food poisoning from an oyster bought too far from the sea. For a couple of days, the liquidity crisis returned with a vengeance, and all attempts at quantitative easing made no difference whatsoever.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Is it favouritism to protect an employee no one likes?

The Dominic Cummings affair shows the dangers of double standards, but it’s also true that...

Masterclass: Communicating in a crisis

In this video, Moneypenny CEO Joanna Swash and Hill+Knowlton Strategies UK CEO Simon Whitehead discuss...

Remote working forever? No thanks

EKM's CEO Antony Chesworth has had no problems working from home, but he has no...

5 rules for work-at-home productivity

And how to focus when focusing feels impossible.

Scandal management lessons from Dominic Cummings

The PR industry offers its take on the PM’s svengali.

Why emails cause conflict

And what you can do about it.