The Week UK 17.08.2019

52 CITY

THE WEEK 17 August 2019

Commentators

“Bear raiders” of the type currently attacking the London-listed

firm Burford Capital “don’t get the kindest press”, says Patrick

Hosking. Many view them as “evil, destructive, manipulative

parasites”–caterpillars that “alight on healthy plants and nibble

them to destruction, while fattening themselves up”. That’s

unfair. In many cases, these operators act more like dung beetles,

“carting away from the forest floor the stuff more credulous

investors have failed to identify as stock-market excrement”. In

other words, they’re “necessary creatures”. All the more so given

the “lopsided” nature of the market system, where “an army of

investor relations officials, brokers, investment bankers and long-

only investors” exists to “puff up share valuations and take the

sunny view”. The allegations in the Burford imbroglio are so

complex “it would takeateam of forensic accountants months to

get to the bottom of them”. But whatever the outcome, we should

be thankful for beetles. The handful of bear raiders areanecessary

“counterweight”, helping “to prevent even bigger losses later”.

It’s oftensaidthatint he modern economy“data arethe newoil”.

If so ,says Schumpeter, “data breaches should be treated like oil

spills”. Examining the legacy of 1989’s Exxon Valdez supertanker

disaster, which promptedamassive rethink in the oil industry, is

agood place to start. There are plenty of lessons here for “digital

firms floundering towards their own Exxon Valdez moment” –

witness the scarily large breach at US bank Capital One, where

“a misconfigured firewall” compromised the data of 106 million

customers. When the Valdez ran aground off Alaska, pouring out

250,000 barrels of oil, it prompted the worldwide replacement of

single-hulled ships with safer, double hulls. Exxon itself paid $3bn

(thenahuge sum) towards the clean-up and to settle legal claims.

But long-term, it reapedagiant dividend. “The disaster gave rise

to acult-like culture of discipline”, andanear obsession with

safety, that helped turn its corporate descendant, ExxonMobil,

into “the profit-making beast it is today”. Companies trading in

data –i.e. most big ones these days–take note. Cybercrime is

rising relentlessly–so“get ahead of the problem”.

News that the economy contracted for the first time in seven years

in the second quarter “could not beastronger warning” to the

Government not to “take further unnecessary risks with the

economy”, says the FT. True, the 0.2% contraction isn’t just

Brexit-related–factories are struggling globally. And some of

the weakness is “payback forastrong first quarter” when

manufacturers accelerated production to stockpile ahead of the

original exit date. Still, growth in the crucial services sector, which

accounts for 80% of UK output, is at “a crawl”, and business

investment is falling–“raising questions over whether Britain will

be able to rescue itself from the lowest productivity growth since

the financial crisis”. Against this backdrop, Chancellor Sajid

Javid’s “accelerated spending round” looks “sensible”–but it’s

essential the cash is used optimally. Rather than tax cuts for the

rich, the focus should be on raising productivity and improving

services. Ministers might bear in mind there is another way to

boost the economy: “avoiding the cliff-edge ofano-deal Brexit”.

Hey, what’s happened to shopping in New York, asks Edward

Helmore. Judging by “the empty storefronts on Fifth Avenue” –

and the “striking deterioration” of Manhattan’s other popular

shopping districts–what was once “one of the hottest markets

on the planet” is clearly “suffering”. Even Barneys, the famous

fashion emporium, is seeking bankruptcy protection. Inasign

of the times, the site of the recently closed Lord&Taylor

department store has been sold to WeWork, the office rental

company, and Amazon. The situation is much worse outside

Manhattan. According to Credit Suisse, “one in every four

malls in the US is projected to close” over the next five years;

remarkably, “the square footage of dead malls” already “covers

more land than the city of Boston”. Yet despite the growing

wasteland, this retail collapse may matter more to New York

because of its high reliance on tourist dollars. The city drew a

record 65.2 million visitors in 2018, the ninth annual increase,

who spent $44bn. Will they keep coming? There are still plenty

of other attractions but, for many, “New Yorkisshopping”.

Sir Malcolm and

Richard Walker

It’s further evidence

that Brexit disputes are

undermining even the

closest relationships, said

Liam Kelly in The Sunday

Times. Ina“harrowing

dispatch” from an Iceland

store, the chain’s managing

director, Richard Walker,

39, has bemoaned the

Government’s “lack of

clarity” onano-deal –

warning that “turbulence

will hit the most vulnerable

communities worst”. What a

contrast to the firm’s bullish

chairman, Sir Malcolm, 73,

doubles as Richard’s father.

Last week, he broke his

holiday in Mallorca to

express astonishment at the

way “the media and liberal

elite” are undermining the

PM’s negotiating hand. Sir

Malcolm thinks Rod Liddle’s

Brexit polemic,The Great

Betrayal,is“absolutely

brilliant” and has given his

sonacopy. “I’ll stop his

salary if he doesn’t read it.”

Alison Rose

If, as expected, Royal Bank

of Scotland insider Alison

Rose rambles her way to

the top job, she’ll become

“the first woman to lead one

of Britain’s major lenders”,

said The Observer. Long

considered “a shoo-in”,

Rose, 49, fought off late

competition from rivals

including HSBC’s Ian Stuart.

Directors were apparently

impressed by her “deep

knowledge of the lender”

and her plans for reshaping

it, said the FT. Rose began

her career with NatWest in

1992, saw it bought by RBS

in 2000, and survived the

ensuing destruction and

£46bn state bailout. Now she

has the chance to achieve

the perfect circle. If she

hangs on till 2024–the date

pencilled in for the sale of

the Government’s final stake

–the bank could be fully

privatised on her watch.

Shrinking

Britain sends a

Brexit warning

Editorial

Financial Times

The Exxon

Valdez of

cyberspace

Schumpeter

The Economist

In praise

of dung

beetles

Patrick Hosking

The Times

The shutters

come down in

New York

Edward Helmore

The Observer

City profiles