CIAO AMICI MEI

It’s been a troubling week. We’ve traditionally prized ourselves on our sound government and our fiscal prudence. We’ve prized  our grown-up diplomacy. We’ve a seat near the very top of that G7 table. But we’ve been found wanting.

We’re in laughing-stock territory. It’s shameful.

Yet something I read – sorry I can’t remember who said it -  made me feel a lot better. They said that for the first time ever, living in Britain was like living in Italy. You know exactly what they mean - the economy’s in turmoil, the level of debt’s ridiculous, there’s upheaval at the top of an ever revolving leadership, there’s sleaze, corruption and no one takes us seriously yet……

People are crowding into restaurants, drinking good wine, laughing at the poor fools in government and getting on with life. As things get worse up there down here we’re having a party. 

Saluti!

They had Berlusconi we had Boris. 

They have Giorgia we have Liz. 

We are suddenly rather alike it would seem.

Hopeless, utterly hopeless, but at least we both get the important things right.

Food, drink and laughter. Especially laughter.

I was cheered by this because the alternative is to start taking the critical issue of Liability Driven Investment Funds very seriously indeed.

Liability Driven Investment Funds - what the hell are those?

Apparently these are critical to the health of Pension Funds.

Here’s how they’re described:

Every defined benefit pension scheme has promised to provide retirement income for its members.  To do so, a scheme aims to have sufficient assets  to cover its liabilities. This has led many pension schemes to adopt liability driven investment (LDI) strategies which aim to enable pension schemes to reduce risk and maintain or improve funding levels over time, increasing the probability that they will  achieve their ultimate objective.

To achieve this they rely on having big bags of Government gilts so as to maintain stability, security and safety in their portfolios. Because?

Because Government gilts and bonds are the safest thing we have so whatever else happens they are rock solid safe. Until a week ago, that is, when after that Mini Budget their values plummeted. 

Panic for Pension funds and their safety, security and stability.

And then someone took a rather harder look at these Pension Funds and found that many were performing really rather badly even before this LDI body blow with year on year declines across the board of 12% and on some of the big name funds declines of 50%. 

So feeling by now resolutely Italian - facciamo una festa-  I opened another bottle of Prosecco, slowly munched a couple of cicchetti and reflected on two things.

It seems virtually no one practising in the financial sector has ever heard about or knows anything about these LDIs yet  - sit down for a second - the value of UK Pension funds is between £2.5 trillion and £3 trillion ( yes, that’s the total size of the UK economy.)

And, excuse me, this is our money, money that we have lent to Pension Funds because they’re trustworthy rather like, say, the Mafia.

I’ve just remembered a 1984 song  by Bananarama with the refrain “Talking Italian” the first line of which is “Hopes dashed to the floor.” We should all listen to it, buy a Vespa and get over to Italy where the sun shines, the food’s exquisite and no one pretends they know what’s going on.

After all if the top financiers have never heard of the fund that’s causing so much anxiety in the markets we might just as well. 

WHAT ARE WE ACTUALLY SEEING AND FEELING?

When I first went into marketing I was fascinated by Ernest Dichter, the American psychologist, described as the “father of motivational research”. His analyses of why people did what they did and his books like “The Strategy of Desire” seemed more interesting than the quantitative beasts like Gallup and Nielsen, research firms that just counted stuff and produced voluminous documents.

He described his process as:

"I observe hidden clues; I listen with the third ear; I interpret. I see where others are too blind because they are too close to the trees. I find the solution….. I have acted as a discoverer, as a general on the battlefield of free enterprise."

A general on the battlefield, “yes” I said to myself, “that’s what I want to be.”

Now we live in more numerate times when the data is supposedly what drives our decision making. Over the past two years the media has contained a lot of data. Covid’s been defined by numbers…. (I hope you hear a “but” coming.) 

We in Brighton get a lot of Covid data - weekly rates of infection, hospital admissions, deaths and so on BUT I’m not sure what this means. Not really. My own experience is revealing. In the last year’s first wave of Covid I only knew few people who caught it. Currently I know at least 16 people who’ve caught it or are suffering from it. They are not hospital cases but are very unwell.

And at this point Government data contradicts my feeling that something is very much amiss. In just the same way, however loudly the Bank of England explains the absence of inflation, my own wallet says otherwise. And my own wallet is beginning to seem more reliable than the unflappable Governor of the Bank, Andrew Bailey. 

Here’s what the Office of National statistics said of the August inflation numbers:

“The increase ….is the largest increase ever recorded in the CPIH National Statistic 12-month inflation rate series, which began in January 2006; however, this is likely to be a temporary change.”

“Is likely to be?” We shall see. September is already looking like +3% with +4% on the cards.

In these transparent times great masses of data serve the same purpose as lying. They can contradict and confuse. Politicians and commentators have become skilled at choosing whatever data best serves to support their argument.

As things stand I sense (how I like that word: it’s a Dichter word) I sense like an animal smells something about to happen that the Covid spread is about to intensify through schools and universities and to us. Our mask-free, back-to-normal-society is in for a rude shock in its health and – if I’m right about inflation – its wealth. 

Meanwhile in the past week in politics the pantomime continues. “Behind you Gavin!” Commentators have described this reshuffle as a “strategic political distraction.” But the way ministers are moved around to positions they know nothing about has always baffled me. Imagine my alarm if, as I’d forged (or tried to forge) my way to being a Marketing General in the business battlefield, I’d been told: “Congratulations you’re the Finance Director now.”  

I loved this from James Poniewozik, the New York Times journalist:

“Politics has always been a mud fight – better that citizens jump in the trough than lose interest.”

No chance of that. Most people love mud fights and I sense this is going to a long winter of mud fights. Me? I'm putting on my uniform, polishing my medals and I’m off to the battlefield to join in.

MOMENTUM, PRIDE AND HOPE

I’m getting increasingly fed up with the negativity and obstructiveness that politics creates. The latest of course being the shut-down of government in the USA. On a more local level it has irritated or, on a bad day, infuriated me.

Brighton Pier now owned by innovating entrepreneur Luke Johnson

Take Brighton. We’ve lived here for 14 years. When we arrived I was thrilled with its potential. HSBC in a 2008 study of urban potential, nominated it as a city of the future thanks to its entrepreneurial spirit, high-tech culture and Universities. I could see Brighton as the leader in a silicon-coastline breakthrough. But then the glue of cynicism, small ‘c’ conservatism and torpor set in. Brighton seemed content to be stuck in, to me, an incomprehensible swamp of mediocrity. People spoke of the glorious past…Hannington’s the department store, Brighton Rock and the West Pier. The West Pier was for us a symbol of criminality, decay and  rusting nostalgia. Like an unburied corpse it rotted just off the sea front.

A depressing book called “Shitsville UK” characterises Brighton as activist, vegan and loony:

“Brightonians consume Hummus by the bucketful as a sacred devotion to remind them of Eden before animals died. They eat it with their beards.”

Soho House New York coming to Brighton

Something however has changed. Brighton is beginning to buzz. My vision was a decade ahead of its time.

We have a premier division football team (keep your fingers crossed), the best cricket coach in the world – Jason Gillespie - in charge of the county cricket team based in Hove, a great medical school, a hospital being renovated, the i360 which has become a magnet for some classy retail development, Brighton Seafront Regeneration working with Soho House to  create a series of 21st century attractions near the pier and in the just-out 2018 Good Food Guide there are 21 entries for Brighton up from 16 in 2017…we are on a gastronomic roll.

Just 1 of 21, MasterChef Professionals winner, Steven Edwards opens in Hove to rave reviews

But the best parts of the story are the ambitious plans to create a cultural centre around the Dome and Brighton Pavilion. Restoration and development work on the old Corn Exchange and the Pavilion Theatre, to be renamed the Studio Theatre, are well under way and this together with the other facilities will make Brighton an international arts centre that will attract the best and be a beacon of innovation and excellence.

The Brighton Corn Exchange – the theatre of the future – in construction

So there we have the evidence of what will make Brighton the second capital of the south – a real city of the future. A friend called me from Long Island saying how he missed cricket, liberal thinking and conversation. Should he, he mused , retire to Brighton? Of course he should.

We have the vision, momentum, energy,  pride (that quality historically derided as being an inauthentic emotion) and we have the hope that all this will accelerate. I’m asked if we aren’t “gentrifying” the place. I just don’t understand that word. We’re doing up our home and leaving a great legacy for the future. That should be something to be proud of shouldn’t it?

Anthony Seldon’s vision 2002 is not so far away from realisation within a few years from now