Markets ignore political monkey business

Tempers in the IFSC are getting somewhat frayed these days. Very frayed, in fact, and it has nothing whatsoever to do with Brazil or Russia or Japan or any of the far-flung places that have occupied so much of our time lately. The problem is much nearer to home. It is the IFSC car-park.

More prices are being made in how long it takes to get in and out of the car-park than in emerging-market debt at the moment. I mentioned in this column before that the construction of the Citibank building opposite has turned Commons Street into a building site adorned with the occasional mobile traffic light.

There is nothing more frustrating than sitting at one of these lights, waiting for it to go green, when there is absolutely nothing in sight. Fear of being squashed by a marauding JCB is what stops anyone breaking the lights, even though the temptation is huge.

However, this week the stress factor jumped dramatically as the builders (in that gentle way that they have) encroached still further into Commons Street and caused delays of up to 25 minutes in getting in and out of the car-park.

I know anyone waiting for a bus from Malahide (and looking despairingly at the empty bus corridor) will not easily sympathise with someone who has sat for 25 minutes in Commons Street. But it wasn't a good way to start Monday morning. And things were as bad later in the morning. It took 25 minutes to get out again. I'm not sure why a huge earth-moving object has to be parked directly outside the car-park, but then I'm not a builder. . .

Owing to the fact that I have been burning the candle at both ends the last few weeks, I haven't really immersed myself in the variety of cheques-made-payable-to-cash scandals, or the bringing-members-of-the-IOC-to-very-expensive-hotel scandals or pretty much any of the other get-lots-of-money-for-being-in-the-right-place-at-the-right-time scandals that seem to have taken over the newswires lately.

It is an interesting commentary on the commonality of monetary and fiscal policies these days that the activities of financial markets are pretty much divorced from domestic political difficulties.

Bill Clinton is in as much of a political mess as any democratically elected leader has ever been but it doesn't matter to the Dow, US consumers or the dollar. Bertie Ahern might need a visit to the hypnotist's couch to help recover lost memories of meetings, cheques and non-intervention in anything. But the ISEQ isn't bothered.

The International Olympic Committee (IOC) is in a complete mess and Juan Antonio Samaranch has had to resign as honorary chairman of La Caixa, one of Spain's leading savings banks, but who cares?

A few years ago, if the US president had been impeached, the market would have collapsed. If the Irish government was entrenched with the possibility of another election on the horizon, the punt would have taken the strain. But Mr Samaranch would have toughed it out back then, I guess.

However, in the much more globalised market place that we have today these events can be compartmentalised so that they don't affect the whole. Since monetary and fiscal policy in Western industrialised countries is so similar, the effect of losing a president, prime minister or director is pretty insignificant. The market is leading politicians, not the other way around.

All of the bad news stories of the past year - the ones that have sent markets temporarily into retreat - have been from eastern markets or emerging markets. The best efforts of Alan Greenspan, chairman of the US Federal Reserve, can't dent enthusiasm in the US, while the euro has merged European markets into an inferno of identikit equities. We have been looking east for our thrills and spills for a lot of the time, even if Latin America has taken pole position in the more recent past.

However, more problems lurk on the eastern horizon with the news that some Japanese financial institutions have been involved in creative dealing to hide bond market losses. Tobashi is the name given to the Japanese practice of shifting losses from one account to another and with the amount of losses lurking in some of the accounts right now, some shifting seems almost inevitable. But it has been the practice of deferring losses, shifting losses and generally not facing up to losses that has caused such problems in the Japanese financial system in the past. It seems beyond belief that they can engage in a spot of tobashi now and emerge unscathed. And who, exactly, do they think they are fooling? The same question could be asked, I suppose, in regard to the Irish cheques-for-anything situation.

I resent that miscellaneous politicians and councillors are alleged to have received cash payments for doing their jobs badly. It was very interesting to read Charles Haughey's 1980 broadcast to the nation in last Saturday's Irish Times. I remember that broadcast. At the time I had just moved into a flat and I knew exactly where every penny of my pay-packet went. Those being the days when I could burn the candle at both ends somewhat more enthusiastically than now, I used to burn it long but cheaply. Paying tax as a single person, and hitting the marginal rate somewhere barely above subsistence level, there wasn't an awful lot of room for belt-tightening. Yet that's what I and plenty of others were asked to do while forking out a huge chunk of our pay in taxes that were being ill-used.

They say we get the politicians we deserve but it's a terrible indictment of our society that pursuit of handouts, brown paper envelopes stuffed with cash, and shifting of vague sums of money in and out of nebulous accounts is what we ever deserved.

And when it comes to our investments do we get what we deserve? In an experiment to test the intellectual sophistication of orang-utans, a group of them are being paid an allowance of metal coins with which they are supposed to buy food. Zoologists will charge them for bananas or apples and the orang-utans must work out how many coins each item costs. The idea is to study changes in the relationships between the animals caused by the move to commerce and the interaction between them is hoped to give clues as to how the development of commerce affected prehistoric society in humans.

Presumably it won't be long before we discover that one of them has extracted payments from the others in return for unspecified, unasked for favours. Has opened an offshore account in the Cayman Islands. Has invested heavily in Internet shares. Has formed a consortium with orang-utans in a Japanese zoo. Has promised better living conditions in return for investment in Swinging Tyre Enterprises Inc. Perhaps George Orwell didn't get it too wrong after all. Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers.