Chutspah (Yiddish for 'daring') is a word frequently on the lips of brokers on Wall Street and the City in London. It is a word replete with a particular universal stock exchange philosophy. In the last couple of years, chutspah has not been lacking on Wall Street, though it must be emphasised that the present credit crunch was caused mainly by downright Ponzi criminal and comic behaviour.
Such pyramid financial schemes have also been used in Malta. Exuberance - and not even the irrational exuberance once described by Alan Greenspan - caused the present financial troubles. Chutspah gives life to a stock exchange; downright criminality destroys it. Much that is happening these days on the world's stock exchange can help us understand the technique behind chutspah and help us make money.
Financial turbulence gives chances of money-making unheard of when boring normality reigns in the market. It explains the ever-widening gap between poor and rich nations. A country like the US can make money out of money. This is something which Zimbabwe cannot do.
Malta is not among the poor nations of the world, nor is it very rich. It has been growing richer since its independence was won for it by its highly deserving political class, with little help from other sectors of the population. There has been a doubling in real terms of GNP in this country over the last 20 years. It has proven financial expertise demonstrated by its extraordinary ability to ensure that in this week of financial turbulence, no harm has come to its foreign currency reserves.
Chutspah has no place in the management of the foreign currency reserves of a nation. We Maltese should be grateful for the guiding hand of the European Central Bank in the management of our reserves. It has given us admirable financial stewardship. We have not repeated the financial nonsense of the mid-1980s when Lm88 million were lost to our reserves in one stay - that is something over €700 million of today's money. A strong chutspah in private finance provides wealth and enjoyment to those who care to acquire it.
Barclays chutspah, which made for a 100 per cent increase in its share price, provided in the past week an incredible opportunity of a strategy which is showing signs of success.
The British government has been blundering egregiously in its efforts to right the financial ship of state. Barclays has told it plainly that it is prepared to pay it, if only it left it alone.
The behaviour of the present UK Labour government cannot be compared to the fire and brimstone which used to come out of Anuerin Bevan's mouth 50-odd years ago.
Gordon Brown is no economic monster; he is a blundering do-gooder, with a track record that includes the sale of a substantial part of the UK gold reserves at one of the lowest prices ever registered by the market. Had Brown set out to destroy the blood and sweat of the UK labouring class, he could not have done better. The present conclusion in UK banking is to be cured by daring financial engineering such as is being implemented by Barclays making use of the money of Gulf Arabs.
If an honest capitalism making use of idle money such as that of the Gulf Arabs is not working against global unemployment, it could rise to more than the 50 million being forecast by the International Labour Organisation (ILO). Banking needs chutzpah. Paper currency coming out of a lot printing press only becomes money when handed out in loans by a knowledgeable banker.
Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S and P.
johnazzopardivella@hotmail.com