The price of everything

R.I.P. Maestro

“Crony capitalism abounds when government leaders, usually in exchange for political support, routinely bestow favours on private sector individuals or businesses. That is not capitalism. It is called corruption.”

-       Alan Greenspan, writing for some reason in last week’s Financial Times, in an article amusingly entitled ‘Meddle with the market at your peril’.

Alan Greenspan, who may have died aged 326, was a failed lingerie salesman and serial fantasist who was accidentally appointed chairman of the US Federal Reserve.

Alan Stanford Ayn Rand Greenspan was born to lowly sharecroppers from Tupelo, Mississippi. The eighteenth of nineteen children, he was nearly harvested in the infamous Great Tupelo Child Organ Harvest of 1687 but escaped when it was observed that he had been born without any tangible evidence of a brain. From this point onward a degree in economics followed by a career in political lobbying was inevitable.

Greenspan was a keen percussionist in his early youth and in Gerry Rafferty’s ‘Baker Street’ he accompanied the late Bob Holness (playing saxophone) with an inspired triangle solo that reduced the other session players to tears. He was also a one-time door-to-door lederhosen salesman and an occasional practitioner of the Tibetan nose flute.

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Living off immoral earnings

“The reality.. is that banks.. support a thick layer of second tier executives, as well as legions of pen-pushing, meeting-loving, middle- and back-office workers who are paid multiples of their worth and contribution, especially compared with other industries.”

-       Financial Times’ Lex column, January 19th, 2012.

“Stephen [Hester, CEO of RBS] is being urged by a number of people to accept the bonus and I think he will”.. This person [an unnamed senior banker] added that if [Hester] turned down his bonus, it would “demoralise” staff members and would send a signal that they now effectively “worked for an arm of the civil service or a utility, rather than for a bank.”

-       Unnamed banker, playing the world’s smallest violin on behalf of Stephen Hester.

Erik Schatzker (Bloomberg News): “$1.6 billion in compensation [at Goldman Sachs] is still a lot of money.”

Nassim Taleb: “Anything above zero is too much money.”

Erik Schatzker: “Why zero ?”

Nassim Taleb: “Because it is a utility. Anything you bail out, you should not be earning more than a civil servant of corresponding rank. Period.”

-       Nassim Taleb on Bloomberg News, Oct 18^th, 2011.

Contender for leading meme of our time is the idea, fast becoming conventional wisdom, that capitalism is somehow experiencing a crisis. UK Prime Minister David Cameron (or his speechwriter) suggested last week that it is now the time to use the “crisis of capitalism to improve markets, not undermine them.” If we draw a straight line back in time from the current financial crisis to the dawn of the same crisis, few would dispute that it was, and is, banks carrying the smoking gun. It was banks that made questionable loans to flaky borrowers – sovereign as well as individual – and it is banks that required extraordinary levels of involuntary taxpayer support to keep them “in business”, that is to say, keep their senior executives in the manner to which they have become accustomed. Unfortunately, in saving the banks from themselves, sovereign governments have now largely destroyed their own balance sheets. There is not, and never was, a free or fair market for banks. A free market would have allowed insolvent banks to fail. A free market, for that matter, would have no need of a central bank dictating monetary policy: the genius of the market is that it is perfectly capable of pricing money and interest rates in the same way it makes a price, every day, without fail, for the value of Tesco plc, crude oil or wheat. If the Prime Minister were capable of framing the problem correctly, he would have said that it was now the time to use the “crisis of statism to introduce markets”. Instead, career politicians in the coalition, with no practical experience of any world other than the political, have been busily urging the rest of Britain to become “a John Lewis economy” of motivated employee shareholders. As Martin Vander Weyer asked archly in ‘The Spectator’, “Have you wondered why there’s only one John Lewis Partnership, Mr Clegg ?” But then criticising the Lib Dems (official financial policy: join the euro zone) for economic confusion is like criticising David Blunkett for being blind.

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The final countdown

“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.” Debt talks “have not produced a constructive response.”

-       The Institute of International Finance, January 13 2012.

 

“The war situation has developed not necessarily to Japan’s advantage..”

-       Japanese Emperor Hirohito after the atomic bombing of Hiroshima and Nagasaki, announcing Japan’s surrender to the Allies.

There is a terrible hubris at the heart of mankind. Like every other living thing on the planet we are products of nature, but we consider ourselves to be well above it. We are beset by regular reminders of our vulnerability, but quickly dismiss them off-handedly to a spiritual plane, calling them ‘acts of God’ as if to show that we could never have prevented them. In a significant essay for Foreign Affairs, ‘The Black Swan of Cairo’, Nassim Taleb shows how the efforts of our authorities to suppress volatility actually end up making the world less predictable and more dangerous.

“Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to “Black Swans” – that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.”

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A revolutionary road

“Some investors aren’t confident with what gold is backed by, as compared to something like the US dollar. Investors are comfortable that the US dollar is backed by the US government.”

-       CTV national news field reporter Bridget Brown. This channel should perhaps be called WTF ?

Sam Mendes’ 2008 film ‘Revolutionary Road’ is edited to maximise heartbreak among viewers. Its opening scene shows bright young things Frank (Leonardo DiCaprio) and April (Kate Winslet) falling for each other at a New York party. Without missing a beat it then cuts to April displaying a mediocre performance in a mediocre amateur drama, which Frank is only too willing to point out. By this stage they are already married, with children and a brooding mutual resentment. Whatever happened, we are urged by this brutal jump cut to ask, to love’s young dream ? The disenchantment foisted upon us by the slow death of honest, free market capitalism, and of any form of political integrity, has, by contrast, taken its time coming. But that disintegration and its accompanying, lingering sense of existential despair are just as sure. There has been profound change in the markets over the last decade alone, and none of it good.

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A beef quiz, and revisited Koo

“Like a Hitchcock film. You did not need to see the blood and gore and violence – the hint of it and the menace that pervaded the office was worse.”

 

-       Theo Zemek cheerily describes the atmosphere at New Star Asset Management.

 

Just as there are said to be no atheists in foxholes, try finding a long-term investor during a Crash, or even amid fears of one. We extend this thesis and welcome in the New Year by means of two Buffett-related behavioural anecdotes; one from the great man himself, the other courtesy of Sanlam’s Kokkie Kooyman.

From the 1997 Chairman’s Letter to the shareholders of Berkshire Hathaway:

“A short quiz. If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef ? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices ? These questions, of course, answer themselves.

“But now for the final exam: if you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period ?

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A Christmas Miscellany

“I stopped believing in Santa Claus when I was six. Mother took me to see him in a department store and he asked for my autograph.”

 

-       Shirley Temple.

I saw three tips

I saw three tips all failing, in

A dismal way, a dismal way

I saw three tips all failing, in

A dismal way in the morning.

 

And what was in those tips, you say ?

That dismal day, that dismal day

And what was in those tips, you say ?

That dismal day, in the morning.


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So long, and thanks for all the stress

“Helmut Schlesinger, the Bundesbank president in 1992, was asked why he disliked the precursor of the Euro, which was called the Ecu. He replied, “I have nothing against the Ecu apart from its name – I think it should be called the Deutschemark.”

 

-       Anatole Kaletsky, ‘The Euro Debate Gets Philosophical’, November 29, 2011.

So the UK doesn’t get to join the great euro zone leper colony. Oh well. Tant pis. Tja. As Captain Blackadder once said, we lost closer friends the last time we were deloused, and were more wounded the last time we clipped our toenails. If we could summon up the mental energy to care about Europe we might bother to cite the perhaps apocryphal British newspaper headline that once read:

“Fog in Channel; Continent cut off.”

As regular readers will attest, we have long approvingly cited the work of Albert Bartlett, emeritus Professor of Physics at the University of Colorado at Boulder. Professor Bartlett regards sustainable growth as a contradiction in terms, and has voiced at least two startling opinions on the topic:

“The greatest shortcoming of the human race is our inability to understand the exponential function.”

And he has asked,

“Can you think of any problem in any area of human endeavour on any scale, from microscopic to global, whose long-term solution is in any demonstrable way aided, assisted or advanced by further increases in population locally, nationally or globally ?”

Such views are unfashionable, of course (although some have referred to them as fashionably declinist) – we are somehow meant to believe that perpetual growth is not just desirable but essential, and that the planet can cope with an infinite number of people despite its obviously finite resources.

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Liars led by junkies

“In my several decades as a financial and economics commentator – covering banking crises dating back to the early 1970s and the Latin American debt catastrophes of the early 1980s – I have never heard a sitting [Bank of England] governor talk in such apocalyptic terms about the parlous state of the global financial system.”

 

-       Alex Brummer, The Daily Mail.

So what precisely did our inflation-fighter-in-chief actually say ? Well, that euro zone instability had created

“an exceptionally threatening environment”

as falling government debt prices, softening confidence and distressed asset sales threaten to

“spiral”

into a systemic financial crisis. Also, the UK financial system was encouraged to continue building up capital to bolster against an

“extraordinarily serious”

situation not of its own making and which it could not resolve. Also,

“The crisis in the euro area is one of solvency not liquidity. And the interconnectedness of major banks means the banking systems and economies around the world are all affected. Only the governments directly involved can find a way out of this crisis.”

And

“If debt is not to [continue] exploding to ever more unsustainable levels, transfers will be required together with the plan to restore the competitiveness within the euro area. There comes a point where the creditors need to realise that the scale of the debt owed to them is so large that they may have to be part of the solution.”

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A new golden age

“The designers of the good ship euro wanted to create the greatest liner of the age. But as everybody now knows, it was fit only for fair-weather sailing, with an anarchic crew and no lifeboat. Its rules of economic seamanship were rudimentary, and were broken anyway. When it struck a reef two years ago, the water flooded one compartment after another.. European officials now recognise the folly of creating the euro without preparing for trouble. It would be wise to be planning now for what to do if it sinks.. Even now, after decades of “European construction”, many Eurocrats cannot conceive of the euro as a wreck. Those who have worked hardest to keep it afloat are exhausted and know it is not in their power to save it anyway.”

-       Charlemagne in ‘The Economist’, November 26th.

The business of investment for at least the past four years has been akin to conducting a detective inquiry: whodunit ? Just how did we end up in this mess ? To tackle one’s enemy, one first needs to identify it. In the popular conception, a myth gleefully adopted by politicians, it is all down to corrupt American investment banks, poisoning the collective well of global capital with subprime mortgage filth – what Professor Robert Vambery in this week’s Economist nicely if grimly refers to as adding three quarts of milk to a quart of sewage and creating four quarts of sewage in the process. And then the poison spread. It is a neat little tale but nowhere near sufficient to explain the extent of our current malaise. We can throw some mud in the direction of politicians, but that is a little like shooting the messenger; they have only been dispensing the bread and circuses and pension and welfare benefits on the never-never that everybody has been clamouring for. The culprit we find the most culpable, and which draws all these disparate threads of blame into one cohesive narrative, is a fundamentally corrupt money system.

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Splendid isolation ?

“Clearly, Field Marshal Haig is about to make yet another gargantuan effort to move his drinks cabinet six inches closer to Berlin.”

 

-       Captain Blackadder [Rowan Atkinson], from ‘Blackadder Goes Forth’, written by Richard Curtis and Ben Elton.

By some accounts, the general populace in Europe during July 1914 was largely unaware of the imminence of war until the end of the month. “Enjoying the warmth of a golden summer, Europe’s citizens turned their attention chiefly to news of more local importance.” And then a network of alliances, and events, exerted their inexorable gravitational pull, drawing what would become millions into a pan-Continental mincing machine. Archduke Franz Ferdinand had been assassinated on 28 June. Austria-Hungary issued an ultimatum to Serbia on 23 July, and issued a formal declaration of war on 28 July. Russia and Austria-Hungary mobilised on 30 July. Germany demanded that Russia demobilise on 31 July. Germany and France ordered mobilisation on 1 August. By way of response, “Stock exchanges panicked and many were closed.” But it was a bit late by then. As the saying goes, if you’re going to panic, panic early.

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What we do and why we do it

“We don’t get paid for activity, just for being right. As to how long we will wait, we’ll wait indefinitely.”

 

-       Warren Buffett.

In treacherous markets, it helps to have some core beliefs. The statement of investment intent most meaningful to us we first came across about 12 years ago. We make no apology for repeating it here. It’s contained within the late Peter Bernstein’s magisterial biography of risk, ‘Against the Gods’ (Wiley, 1998), which more or less tops our ‘required reading’ list for the engaged investor. It was the first time we came across the name Daniel Bernoulli, perhaps the first behavioural economist, who essentially said the following:

For a wealthy investor, the practical utility of any gain in portfolio value inversely relates to the size of the portfolio.

Or in plain English, if you already have a meaningful pot of capital, simply watch that pot. Bernoulli suggests, and recent award-winning behavioural financiers have proven, that most people are risk averse. We prefer gains to losses, for sure, but if we incur losses, the hurt tends to be felt twice as severely as the equivalent monetary gain. Since our clients are wealthy, our natural bias is to pursue capital preservation in real terms on their behalf. Capital preservation in nominal terms is easy, of course. We can just park our clients’ cash in a sound bank – if we can find one. But at an extraordinary juncture in market history, there are heightened risks even to sound banks, and there is, we believe, more than “usual” risk of a particularly unpleasant occurrence of inflation – indeed, a serious inflationary outbreak may be the only way of “resolving” the global debt crisis.

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Spoiler warning

“I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candour and a decision which the present situation of our people impel. This is pre-eminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today.. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.. In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone..”

 

-       From President Franklin D. Roosevelt’s Inaugural Address, March 4, 1933.

Just two years after ‘The China Syndrome’ lifted the lid on Spanish practices in the US nuclear industry, Jane Fonda and her production company, IPC Films, did a similar hatchet job on US banks with 1981’s ‘Rollover’. The Alan Pakula-directed film is certainly of its time (that is to say, paranoid and narrowly racist); environmental concerns have now segued into economic and financial malaise, with Arabs and their petrodollars as the enemy (if it could be remade today, and it probably couldn’t, the Chinese and the Renminbi would doubtless be replacing them). Investors with strong stomachs – and these days, that needs to be all of us – can watch the devastating final minutes here, as the US / global financial system is brought to its knees.

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A rush from sugar or a rush to gold ?

“We think we have an agreement, but we are not sure what it is.”

 

-       Negotiator at the Euro zone “crisis summit” last week, as reported in The Economist.

 

“You don’t have to be paranoid to be terrified.”

 

-       Ditto.

 

If a ballistics expert were so poor at his job that his artillery routinely fired missiles into the sea or, worse still, at his own men, he would soon be removed from office. He might perhaps be purged more dramatically, pour encourager les autres. No such logic would seem to apply, however, in either politics or economics in the west, where discredited practitioners of failed theories are allowed to pontificate and spend into absurdity. We cannot say with certainty what was spooking European investors prior to last week’s make-or-break summit (the 14^th such “crisis summit” in 21 months), but it seems plausible to argue that they were concerned about an unsustainable build-up of credit, credit risk and leverage. Happily, those concerns have now been put to rest, because the euro zone’s leaders have pledged more credit, more credit risk, and more leverage. To put it another way, Messrs Sarkozy and Merkel have bought more time, albeit time paid for with yet more borrowed money. A three ring circus of blind, incontinent clowns would have more class.

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Robot judges and the watched pot

“Gold – a six thousand year-old bubble”

 

-       Headline of an FT piece from 2009 by Willem Buiter.

 

There are still reasons to like Mel Brooks, and most of them are in ‘Blazing Saddles’. As with the output of other writers and directors, it’s always the early, funny ones that last. Brooks’ 1974 Western spoof happens to give us the perfect embodiment of the witless bundled morass of hugely conflicted high absurdity and outright surrealism that constitutes today’s financial markets and the major players within them (sovereigns as well as banking institutions). Take the sequence where new sheriff and gentleman of colour Bart is attacked by a raging mob. To divert them, he holds a gun to his own neck. Of course, in the face of such dramatic posturing, the townspeople have no choice but to back down.

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What colour is your lifejacket ?

“Manek: How I beat everyone during volatile summer”

 

-       Headline in ‘Investment Week’ extolling the performance of Jayesh Manek’s ‘Manek Growth Fund’, which has so far lost 23.6% during 2011.

 

This is, at heart, a tale of one tragedy, or two films. Roy Ward Baker’s 1958 classic ‘A Night To Remember’ is a simple, heartbreaking gem – an account of the sinking of the Titanic, clearly told, putting on display the culture and ethics of at least one bygone age (1958 and 1912). And it has Kenneth More, who at least in cinematic terms is surely the finest Englishman who ever lived. James Cameron’s 1997 blockbuster is also a product of its time – gaudy but empty spectacle, grotesquely overbudgeted and even more bafflingly materially successful. And it has Leonardo DiCaprio, the fey, cat-faced boy who is almost crushed beneath Kate Winslet in a grotesquely shot coupling sequence devoid of any hint of romanticism. But the Titanic story also happens to be the perfect encapsulation of our ongoing financial crisis; as The Onion put it, in perhaps its finest ever satirical headline, “WORLD’S LARGEST METAPHOR HITS ICE-BERG”. The “unsinkable” triumph of hubristic faith in (financial) engineering over the natural world sets sail on its maiden voyage buoyed up by mass overconfidence, hits the maritime equivalent of a black swan, and a lot of people end up underwater. A few rich folk get soaked in the process, but it is the lower orders (and the Irish !) that really get stiffed. Plus ça change..

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Groundhog Year !

“If you are going to buy worthless banks then it makes sense to use worthless money to do it.”

 

-       Posting on The Daily Telegraph website in response to story ‘Bank of England hits the panic button’.

 

Harold Ramis’ 1993 film ‘Groundhog Day’ may well be the funniest thing to come out of the 1990s, apart from Vanilla Ice or New Labour. Bill Murray’s cynical weatherman finds himself trapped in a surreal existential crisis, and forced to live out the same day over and over again. Pretty soon he begins a plot to seduce his boss, Andie MacDowell, which gives rise to the following exchange:

Him: You weren’t in broadcasting or journalism ?

Her: Uh-uh. Believe it or not, I studied 19^th Century French poetry.

Him: What a waste of time !

Now we have something that trounces the original Bill Murray response. In the HBO movie version of Andrew Ross Sorkin’s ‘Too Big To Fail’ (a.k.a. The Last Days of Lehman Brothers), Paul Giamatti (playing The Ben Bernank) tells a roomful of politicians that he spent his entire academic career studying the Great Depression.

Him: What a waste of time !

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Received wisdom

“Mises was infinitely patient and kind with even the most dim-witted of us, constantly tossing out research projects to inspire us, and always encouraging the shiest and most awestruck to speak. With a characteristic twinkle in his eye, Mises would assure them: ‘Don’t be afraid to speak up. Remember, whatever you say about the subject and however wrong it might be, the same thing has already been said by some eminent economist.’”

 

-       From ‘Ludwig von Mises: Scholar, Creator, Hero’ by Murray N. Rothbard.

 

There is hope for all of us in the news that an experiment at CERN may have challenged Einstein’s theory of relativity. It suggests that deep-seated and long-cherished ideas can still be knocked off the pedestal of conventional wisdom. The process may take an age, but as Max Planck observed, Science advances one funeral at a time. If only the study of economics could evolve as quickly. Sadly, the mouthpiece of conventional economic wisdom, the Financial Times, continues to provide the oxygen of relevance to commentators like Martin Wolf, who if his latest article is any guide (“Time to think the unthinkable and start printing again”) has simply gone mad.

Future historians will not look kindly on those who continually and repeatedly advocated the wrong remedies – inflationary money-printing, or the issuance of yet more debt – to a problem in large part caused by unsound money and inordinate debt. Einstein himself defined insanity as doing the same thing over and over again and expecting different results.

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Literae humaniores

“God ! How men of letters are stupid.”

 

-       Napoleon Bonaparte.

 

 

The commentary will now be taking its summer holiday; regular, bitingly objective service will resume in early October.

Since the financial crisis slowly wove itself into the popular consciousness, we have tried, on occasion, to highlight our own hopes and fears via that tried and tested monitor of the financial commentariat’s blood pressure, the FT letters page. Not all of the following submissions were published. In fact so very few of them made it, the simple, hopeful act of their conveyance resembled nothing so much as the opening day of the Battle of the Somme. We (re)publish them here so that they can be shared for posterity and savoured on those vast sunlit uplands that will play host to random financial chatter once the current crisis abates. If it ever does.

Sir,

Peter Cave (Letters, October 3) contributes to the debate over the “unjustness” of inheritance tax which has occupied many recently. On the basis that taxation consists of plucking the maximum amount of feathers from the goose with the minimum of hissing, one has to question whether a tax that contributes such a paltry amount of revenue to the exchequer will outlive such justifiable indignation from Middle England.

Many taxpayers might question the “justness” of the government stealing a portion of their capital gains from property, a theft the (im)morality of which is compounded by being inflicted on the dead, and which may result in the original property being forcibly sold. I would suggest that inheritors are “more deserving” than any bureaucracy, and “the lucky result of property value increases” is irrelevant to this debate.

If inheritance tax amounts to a tax on rising real estate values, will the government write cheques to inheritors when house prices enter a protracted fall ?

Published: October 10 2007.

--

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Screwed

“..we in Britain are, to use a technical economic term, screwed. Economies across the whole world are struggling. Because nobody is spending money, even relatively blameless countries such as Germany, with low levels of debt and workforces who actually make things, are having a difficult time. Germany’s economy is predicted to contract by 5.4 percent this year. A banker explained it like this: ‘When your country’s economy depends on people buying a car every three years, and they decide that they’ll only buy a car every five years, you’re f*****. Off a cliff.’ So the German economy is f***** off a cliff. But it will recover, when people start buying cars again, and when it does, at least their underlying levels of debt are manageable. Something similar goes for Spain, where the ending of the property boom has caused a spike in unemployment to 17.4 percent, almost doubling in a year, or Ireland, which has contracted by a truly horrendous 8 percent and where people have gone from owning private helicopters to losing their homes in six months flat. All of these countries are in deep trouble. But there are four things you don’t want to have, going into the current crisis. 1. You don’t want to have had a boom based on a property bubble. 2. You don’t want to have a consumer credit bubble. 3. You don’t want to have an economy based on financial services. 4. You don’t want your government to have just gone on a massive spending spree. We have all four of those things that you don’t want.”

 

-       From ‘It’s Finished’ by John Lanchester, published in the London Review of Books, May 2009.

 

There’s apparently a Chinese proverb that says that a man who cannot smile should not open a shop. For this reason, from time to time, we try to leaven our commentary with some gallows humour, whistling as we jog, with increasing speed, past the churchyard. But our cousins in the financial media, free of the burdens of either regulation or the responsibility that comes with managing people’s life savings, can operate with impunity, having set the doom-o-meter all the way up to eleven.

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The end of the long con

“Around 2002, a developing country defaulted on its debt. Following protracted negotiations, agreement was reached that the bad debt would be replaced with a smaller amount of new good debt, with all investors losing around half their original investment. The country’s finance minister, accompanied by a vast retinue of assistants and bankers, embarked on a road show to sell the deal.

 

“In Tokyo, the meeting attracted a vast throng of aged Japanese retirees, who had invested their savings in the defaulted securities, on the recommendations of financial advisers to earn interest rates higher than those available in Japan. At the end of the minister’s presentation, a frail, ancient Japanese woman stood up and spoke. In a quiet steady voice, she explained the hardships that the loss had caused. She wanted to know “whether there was any chance she would see any of her money before her life ended.”

 

-       From ‘Extreme Money’ by Satyajit Das.

 

In July 2008, a bank in Zimbabwe cashed a cheque for $1,072,418,003,000,000 (one quadrillion, seventy-two trillion, four hundred and eighteen billion, three million Zimbabwe dollars). It had taken 28 years from independence for the former colony of Rhodesia to become an economic basket case.

“Inflation in Zimbabwe was 516 quintillion percent (516 followed by 18 zeroes). Prices doubled every 1.3 days. The record for hyperinflation is Hungary where in 1946 monthly inflation reached 12,950,000,000,000,000 percent – prices doubled every 15.6 hours. In 1923, Weimar Germany experienced inflation of 29,525 percent a month, with prices doubling every 3.7 days. People burned Marks for heat in the cold Northern German winter. It was cheaper than firewood. The butter standard was a more reliable form of value than the Mark. The German government took over newspaper presses to print money, such was the demand for bank notes. The abiding image of the Weimar Republic remains of ordinary Germans in search of food pushing wheelbarrows filled with wads of worthless money.”

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