As any child knows, an apology doesn’t count if you cross your fingers behind your back while making it.
Last week we saw the City version of this approach, when commodities giant Glencore finally gave in to shareholders and admitted it had got it wrong about its balance sheet. Well, sort of.
The company announced a programme to cut its debts by about $10bn, including raising $2.5bn of extra funds – essentially giving in to demands from investors. Still, chief executive Ivan Glasenberg’s statement on this enforced U-turn began with the word “notwithstanding”, before going to explain why he was right and shareholders were wrong.
The pretence that Glasenberg is still in control of events seems ingrained. His aides talk optimistically of the company spending this week consulting bankers to decide on what “the best structure” for the fundraising might be, though yet again Glasenberg may not get to choose.
If Glencore decides that the best structure involves a rights issue – and shareholders don’t want to take up their rights – it may have to opt for a placing. If it can’t place the shares, it may then be forced into an even more humiliating debt-for-equity swap. Glencore’s bankers will be quietly testing the market’s appetite for these options this week. Just don’t expect Glasenberg to like any of them.
We’re paid more, but still paying the price
In February, David Cameron said that Britain deserved a pay rise. For some, it arrived in July, when MPs got a 10% hike. For others, the increases have been more modest, but the country as a whole has at least been enjoying rising real wages.
That trend is expected to be shown to have been continuing when the Office for National Statistics unveils its latest labour market figures on Wednesday.
The Resolution Foundation thinktank predicts that average weekly earnings will have grown by between 2.7% and 2.8% in the three months to July, broadly in line with the figure of 2.8% recorded in April, May and June and the joint-fastest level of real pay growth in eight years. But we should take care not to spend it all at once.
Matthew Whittaker, Resolution’s chief economist, says: “After six years of falling real pay, this period of catch-up growth is very welcome for workers. But it may prove short-lived once inflation picks up.
“Even in the optimistic scenario in which wage growth remains above trend, it will be 2017 before the pre-crisis average pay level is restored.”
So, a decade of lost growth then.
Will Haldane make a Twitter of himself?
How succinct can Andy Haldane be? We will find out tomorrow, when the chief economist at the Bank of England answers questions via Twitter on “building real markets for the good of the people”.
That sounds like a worthy aim, albeit on a rather unlikely platform.
First, Haldane once gave a speech about the effects of technology on our brains in which he said: “Technological innovation, such as the world wide web, may have caused a permanent neurological rewiring, as did previous technological revolutions such as the printing press and typewriter. Like a transistor radio, our brains may be permanently retuning to a shorter wavelength.”
It was all a trifle too long for the City, which quickly distilled his thoughts into the more digestible: “Twitter makes you stupid.”
Second, Twitter doesn’t always appear to be the most suitable method for relaying some of the Bank’s more esoteric messages. On Friday, its website was promoting the publication of a new report called “Staff Working Paper No. 548: A heterogeneous agent model for assessing the effects of capital regulation on the interbank money market under a corridor system”. The title comprises 158 characters. Too long to tweet.
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