Turmoil in the global market affects us all

THERE's always a risk of writing about the state of the worlds' financial markets when they are in a high state of flux – like the Hibs and Hearts, what goes up can also come down.

Although as I write the London and New York stocks are recovering from falls earlier this week, they could be reversed by the time you open this page. That would leaving me with egg on my face, like some goalkeepers of either team I'll recoil from mentioning.

There are, however some fatuous myths that can be laid to rest irrespective of where the markets end up in the course of the next few months of the year.

The first is that the fall in share values is only of importance to the wealthy.

The second is that the Britain and Europe can protect itself from what is happening in the United States.

The third is that intervention by governments are the cure.

It is surprising that in these days of mass share ownership, employee-led management buyouts, large-scale private pension provision, some people are given to thinking that a slide in share values is not big news.

At the very least, people with little or no shares are likely to have a personal or company pension based upon the values of a share portfolio. This goes as much for people working in the public sector as in the domain of free enterprise.

Falling share values can wipe millions of a pension fund's value in a short matter of time. They can also effect company profits by depressing the markets and, by hitting the disposable income of savers (and especially people with endowment mortgages), they can hit consumer spending, damaging jobs and encouraging a spiral of despair.

You would have to live on Rockall eating seagulls to escape the consequences.

It is also believed that Britain, and Europe in particular, can be isolated from what is happening in the United States. Tell that to Northern Rock investors.

The collapse in sub-prime lending across the Atlantic (in other words, higher-risk lending) was always going to rebound on British and European institutions that had provided American institutions with the finance for these loans.

The expectation was always higher earnings, but with those high earnings came greater risks. Now that the US property bubble has burst the debts are being called in and some British companies are exposed.

British companies cannot escape changes in sentiment in a global market that is becoming more and more integrated. Look for even greater pressure on British property prices.

So why not intervene? Indeed, why not intervene in a co-ordinated fashion across the world? Changes in tax rates (fiscal policy) and interest rates (monetary policy) can be made, but they can just as often be the cause of the crisis as the cure, especially when the needs in one part of the world (such as slow growth in the USA) require entirely the opposite treatment from another (the fear of inflation in Britain and Europe).

As governments try to delay bad news or soften the blow by using taxpayers' money, the market corrections are distorted or delayed, making matters worse. So, the idea that more government intervention is needed is entirely misplaced.

By the time you've read this far,share performances – like Hibs and Hearts – could have gone way. Share slumps here or abroad matter though, and we should admit attempts to buck the market usually make matters worse.


Labour's in the mire again, but what's new?

CAN anyone Remember the days when backbench Tories were mired in sleaze for asking parliamentary questions or laying down motions and Labour said it was going to clean British politics up?

Ten years on and with another Labour Minister resigning to clear his name, the promise, like so many before it, has been shown to be at best a con and at worst a lie.

The irony that the sometimes huge funds involving all sorts of people in the Labour hierarchy that may yet touch Gordon Brown and even includes Snow White herself, Wendy Alexander, were for internal political campaigns matters little.

The bottom line is that if illicit donations can help buy power then they can help buy influence, and whether or not it's for an election to Party or Government office, they must be above board.

In Peter Hain it couldn't have happened to a nicer bloke than, well, Peter Mandelson.

Oh, I forgot he had to resign twice.

Next election, Labour should remember that what goes around comes around, and start living up to the standards they ask of others.


When it comes to food Glasgow's still reaching for stars

TODAY the Michelin Guide for the United Kingdom was published and it was generally good news in Edinburgh and the Lothians. Full marks to Edinburgh's three existing one-star holders, Martin Wishart, Tom Kitchin's eponymous restaurant in Leith, and Geoff Bland's Number One at the Balmoral Hotel.

It is maybe a surprise that neither managed to gain their second star and also that the Plumed Horse in Leith didn't make it into the fold after being ranked good enough when in Dumfriesshire before it moved to Edinburgh. Still, the gain of a Michelin star by Champany Inn will be seen by many as long overdue and takes the local total up to four.

We all have our favourites but what these restaurants represent is how Edinburgh's overall standard has climbed – helped not just by changes in customer demands but also by very keen competition that keeps them relatively affordable. Gone are the days when the only decent meal in town was at The Howtowdie in Stafford Street or Denzlers in Queen Street.

The Wee Restaurant at North Queensferry and Duck's at Le Marche Noir in Eyre Place have also been given a Bib Gourmand to suggest they are simmering just underneath the single star category. It's meant as an encouragement.

Meanwhile it's still all doom and gloom in Glasgow with no stars and no Bib Gourmands. Glasgow restaurateurs claim the Michelin Guide doesn't matter but you can bet they would be crowing from the rooftops if even just one of them could make the grade.

Hard luck chaps, but remember, it may only be January, but there's always next year!