Careful readers of my Barclays 'chutspah' contribution last Sunday who cared to make an investment on the basis of research, have been rewarded since then by over 100 per cent increase on their outlay.
The Barclays Marcus Agius' financial strategy has, for the time being, triumphed. His counting of Arab Gulf money was no doubt helped by his Maltese surname. He set in place an unorthodox money strategy based on the geopolitical fact that wealthy Gulf Arabs are natural allies of the West, menaced as they are with economic extinction by an Iran with nuclear capability which even denies the name of their homeland.
Northern Rock was a mismanaged fiasco this time round: counterparties stood by the banks as equity investors deserted. The blundering UK state has supplied funding and liquidity, but it is blundering heavily when it ascribes the main blame for what has happened recently to its banks to foreign influences. Prime Minister Gordon Brown should know that vague references to international malign banking conspiracies can do enormous harm at this stage.
Harold Wilson used to designate the banks as 'gnomes' of Zurich. His beloved and highly rewarded economist and minister, Lord Balogh, with whom I used to have naughty conversations on the relative merits of the various prime ministers, used to laugh at him. Brown should know that his vague comments are instilling fear in investors.
My Barclays angle was only voiced in the British press the following Tuesday. On the Monday, chairman Agius had a correct strategic idea. He made himself personally accountable for his bank's financial integrity along with his chief executive. This was a great move, worthy of the greatest name in English banking, which in the past was Rothschild, and in the future might be Barclays. They gave the market the numbers and the reassurance it wanted, and, in particular, supplied enough evidence to suggest that Britain's banks are on stable ground. The British public had won the leadership of a Napoleon of banking. It retained its calm amid a massive bank share price meltdown.
No lender in the UK suffered consequently a wholesale or retail run.
Econometrics can hardly transform into a mathematical formula the 'fear' now stalking the world equity markets. It is heaviest in the UK which combines an unimpressive prime minister with a track record of wonderful domestic virtue, and the understanding of a socialist do-gooder and economic blunderer. This fear, most of it unwarranted, has been mercilessly exploited by Wall Street hedge funds chief, among them the Paulson Fund which made at least $420 million short selling the Royal Bank of Scotland (RBS) - and this only since last September.
As of February 2004, Paulson has bets on declines of Lloyds and Barclays.
If Barclays has been a proven 'bang on the money' for investors, less hardworking investors can forget banks and listen to brokers' words in City of London wine bars. They all seem to agree that BP shares may yield 8.2 a year in 2009. BP can be a 'bang on the money' for those who have missed the Barclays bonanza of the last couple of weeks.
I notice on my Bloomberg screen that that bank is still showing about a 100 per cent profit on its price of two weeks ago.
This is proof that exaggerated claims that the UK is going down the plughole must be rejected contemporarily.
Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S and P.
johnazzopardivella@hotmail.com