Tuesday, 29 June 2010

Three weeks away

I have just com back to Ireland from three weeks abroad.

The trip included a weeks holiday in Italy, during which Finola and I visited the city of Bologna. This city is somewhere that may seem to pass through on their way to somewhere else, but I think it is well worth spending a few days there. One of the places we visited in Bologna was the basilica where St Dominic, founder of the Dominican Order is buried. But the entire centre of medieval Bologna is fascinating and the food is, of course, out of this world.

I also spent a day in Rome where I visited the basilica of San Clemente, which is built of the remains of two earlier churches which were excavated by a Longford born priest , Fr Mullooly , and is well worth seeing.

Before going to Italy, I spent time in Germany where I met Leo Dautzenberg, the Finance spokesman for the Christian Democrat party in the Bundestag. I also had briefings from the Irish Ambassador, Dan Mulhall and from senior figures in the Chancellors office and the Foreign Ministry.

Current arguments between Germany and other countries can only be understood if one understands German history in the 20th century. The inflation of the 1920s wiped out the German middle class. Families went from prosperity to penury in a matter of days. Just as Irish people have a horror of eviction dating from experiences in the 19th century, Germans have a horror of inflation. That is why they put such store on having a strong currency, and do not want to see countries solve their problems by printing more euros. As a people, Germans do not borrow much, and unlike Irish people , do not feel the need to borrow so as to buy their own homes.They are happy to rent.

I subsequently atttended a course in Stanford University in California for directors of public companies. One of the speakers was Mary Schapiro, Chairperson of the Securities and Exchange Commission.

Markets in shares in the United States have become much more complicated. Electronic trading has meant that shares can go up and down invalue by huge amounts ina matter of seconds. Big investors can hedge against losses to such an extent that voting shareholders in some cases might benefit from a fall in the value of the shares they own. All this makes life very difficult for the individual investor.

But a lot of the criticism of the “markets” is misplaced. Most players in the markets ultimately represent ordinary people through pension funds , insurance companies, and trusts. Their goal is to ensure that their clients do a bit better than everyone else. They would not be serving the interests of their clients well if they failed to take account of the possibility that stocks might fall in value, or that bond issuers might not be able to repay in full what they have borrowed.

I concluded my trip with a visit back to Washington DC. I was privileged to be invited to the 80th birthday of someone Finola and I got to know well during out 5 years in DC, Cardinal Theodore McCarrick. I also spoke at an event of the Atlantic Council.

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