Hot on the heels of the Alan Greenspan plan to help financial markets was the G7 scheme to protect economies from further potential crises. Britain has made much of the fact that the Chancellor, Gordon Brown, who is the current chairman of the G7 finance ministers, was the man of the moment as far as the plan was concerned. I suppose it's trying to find kudos where it can - of all the developed economies, Britain is the one that's nearest to gazing into the chasm of recession at the moment so it needs comfort from somewhere.
Anyway, the International Monetary Fund (IMF - which has taken quite a bit of critical comment over the past year) will provide a short-term line of credit for countries which pursue "strong IMF-approved policies". Since this usually means making draconian cuts in spending while having to pay over the odds for loans, one wonders whether the IMF will change its criteria for assessing an approved policy.
Apparently loans under the new facility will have rates of up to 500 basis points above the IMF's normal lending rate. The main plank behind the plan, though, is that the funds are supposed to arrive before a country gets into real trouble. And since the US has approved increases in its contributions to the IMF, the new fund will have additional dollars on which to draw. So countries like Brazil (which has been teetering on the brink of real trouble for the last couple of months) are first in line for a few dollars more from the man-with-no-name from the IMF.
The markets like this proposal. The markets like anything that smacks of international co-operation and something concrete going on. I don't think most market practitioners really care too much what the essence of the proposals are, once there's something that they can point to and say is progress. And if it can stave off a domino effect in Latin America everyone will be very, very happy.
All the same, commentators are quick to point out that we are nowhere near seeing the light at the end of the emerging-markets tunnel yet. While they might be getting out the samba equipment in Rio, the men in suits are stressing that the crisis is far from over.
Still, equity and credit markets both reacted well to the announcement and Venezuela even managed to issue a 10-year deutschmark denominated bond. Admittedly it was only 180 million deutschmarks (and it was a private placement), but a couple of weeks ago it would have been laughed off the stage for having the temerity to issue at all.
One of the points that came out of the G7 statement was that the balance of risk in economies has moved from an inflationary risk (even though a 3.3 per cent GDP number in the US last Friday rocked people back on their heels a bit) to worries about growth prospects. The G7 countries want to create the conditions necessary for domestic-led growth.
As I said, Gordon Brown was the broker for this deal and Britain could do with a healthy helping of domestic-led growth. My pals over there (who are not in financial markets) keep talking about job losses and a general sense of gloom around the place. Continued cuts in interest rates are seen as inevitable as growth forecasts have been pared back from around 1.5 per cent to 1.1 per cent for 1999. Once again, British industrialists are calling for sustained and significant rate cuts - but then British industrialists calling for rates cuts is like Irish farmers calling for more grants and subsidies.
Our wonderful location in the IFSC meant that I was able to get home with the minimum of fuss last week despite the farmers taking to the streets. I believe that the coaches which took them from the farms to the city were parked there all day (even though cars are clamped if they outstay their welcome). They can say that Dublin is their city too, but then so are the parking laws!
My colours have been pinned to the mast before on the farmer issue - I'm one of those people who believe they've complained too much and too often in the past and if things are bad now, well, my sympathies are somewhat limited. It gets back to the tax thing really - I remember being in a pub years ago when a farmer laughed at me for paying tax at all!
When it comes to tax, though, it isn't how much I pay that's the most depressing part (although it can be pretty depressing), it's how the money is spent. Which was why I was incensed to read the Government is spending over £14 million on consultancies this year. £14 million! To tell it what, exactly? If it's paying for all this advice, what on earth are the civil servants doing?
There was a very modern, eye-catching ad for jobs in the civil service last weekend for a range of positions, one of which was administrative officer. According to the ad, these people are engaged in "critical analysis and research work over a wide range of Government activities". Now it seems to me that my tax pounds are going to pay people to do a job which the Government is then outsourcing to some consultancy firm.
Looking at the salary scale of administrative officers (£15,043 rising to £27,027) it seems the consultants are probably charging an awful lot more. And to be an administrative officer you need to be a graduate, or a qualified solicitor or barrister or a qualified accountant or an undergraduate expecting to qualify with a first or second class degree.
So if all these brains are pouring into the civil service, why on earth is the Government spending £14 million on consultants?
I'd like to register my protest but I'm not convinced that talking to my TD would get me very far. And, let's face it, the PAYE worker isn't going to march down the streets, causing traffic chaos and costing business a few million in lost profits, because of the Government's spending on consultancies.
But £14 million could surely be put to better use. Although I suppose the Government would need another consultancy report to tell it what way it could best be spent.
Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers.
