Afternoon:
10°c
People might not want the credit crunch and the further malaise in banking squeezed off the front pages, but the collapse of the Doha round trade talks in Geneva is by far the most significant business event this week.
For five years the world has enjoyed growth the like of which it has rarely seen before, and the engine of that growth has been China - and the ability through trade to tap into the huge wealth creation taking place in Asia. If a trade deal cannot be struck after a period like that, when can it be?
But there is a darker side to this - one people don't like to acknowledge. The fact is that while all nations play lip service to the principle of free trade, they also keep their fingers crossed behind their backs.
No major country in the world shares our willingness to open its markets, and they mostly don't bother to deny it. Indeed, it is becoming almost respectable to be protectionist - witness the comments on the campaign trail of Hillary Clinton and Barack Obama. Trade negotiators are only human and they pick up on these things.
Given the way politicians think, one can quite imagine a trade negotiator might be pleased to return home with a failure on his hands. It is a lot easier to say he refused to be bullied into giving too much away, so the talks failed, rather than have to sell the idea to a fulminating press and public that he sacrificed his own country's short-term interests for the greater good - which is often what is needed for talks like these to succeed.
The trouble is that many of the easy wins in trade have already been achieved . Further progress involved upsetting much bigger domestic interests, often it seems farmers, who have votes and political clout.
As long as the current mood persists it seems unlikely there will be any more giant leaps forward in trade liberalisation, though there will probably be almost continuous attrition and a regularly reconstituted negotiating table.
The real danger though is not this lack of progress, but in fact that we will start to go backwards. The benefits of trade have been with us so long people have begun to take them for granted and think they can cheat and still keep the gains. That is why this week's breakdown is potentially so dangerous.
A pot of gold for good works
Banks have been in the news for all the wrong reasons recently, so it's good to be able to report something positive.
In 2004, Gordon Brown announced that he wanted to mobilise the unclaimed assets in bank and building society accounts where there had been no activity for 15 years, and use these funds for the wider benefit of society. It was estimated the banks would have £400 million of such funds. National Savings has much more - there is in excess of £1 billion in dormant post office accounts, premium Bonds and suchlike - but they are excluded from the cull on the grounds "that this money is government borrowing and is therefore already working for society".
One of the possible uses for this money is the Social Investment Bank, the purpose of which would be to provide financial expertise and backing to voluntary and third-sector organisations that seek to foster enterprise in areas of deprivation - mainly, though not exclusively, in the inner cities.
Its thesis is that these third-sector organisations do a huge amount of good work and operate in areas where existing private-sector banks would not find it cost effective. But they could do much more and operate on a whole new level of efficiency if they had sufficient financial expertise and access to capital. The Social Investment Bank would provide both.
We shall see if the new bank ever gets the money - the Treasury is only lukewarm. Meanwhile, however, the prospect has spurred the banks to make greater efforts to reunite such assets with their rightful owners - and with some success. Hence the good news.
The Halifax has announced that more than 7000 customers have received an average of over £2300 each - a total distribution of £16.6 million. But, even more astonishing, it still has 152,000 customers it has yet to trace who between them are entitled to a further £30.6 million.
S&P does the numbers again
Standard & Poor's has produced detailed calculations on the number of home owners likely to have negative equity if house prices keep falling. How does it know? Well, it appears it has data on all the individual mortgages within the asset-backed securities it rates which lie at the heart of the current financial crisis. Wonder if they've got it right this time.
