There’s an awful lot of iron ore in Australia. South America, too. The problem has been getting it out and shipping it to China, and such was the scale of its building boom that the price went from $25 a tonne in 2004 to $170 in 2010.

BHP, Rio Tinto and Vale grew fat on the profits. The money that was not wasted on empire-building acquisitions went into more production and now the first law of commodities – today’s shortage is tomorrow’s glut – has kicked in. The price is tumbling, and at $82 a tonne, is the lowest in five years.

Goldman Sachs’ Christian Lelong calls it the end of the iron age. The extra production out of Austalia is still cranking up, while the Chinese seem to have enough empty buildings for now, thanks. The miners have destroyed their profitability by overinvesting, as they always do.

It could get a lot worse. Capital Economics is forecasting $70 next year, uncomfortably close to its cost estimates of $50-$60 a tonne for Aussie ore delivered to China. The miners believe that the expensive Chinese mines will close, but this process may be too slow to stop the slide. Ivan Glasenberg, the boss of Glencore, is whistling cheerfully that the commodities supercycle is not dead, if only his competitors would stop ramping up production.

He’s the expert, and he can take comfort from Goldman’s distinctly mixed forecasting record, particularly with shares. In this case, though, Mr Lelong’s analysis looks pretty deadly.

You do what, exactly?

Johnathan Turrall is not a happy bunny. He’s a small entrepreneur frustrated at the behaviour of banks, and he has written to the FT to complain. In his case, Bank A turned him down as a customer because of fears about money laundering. There’s a happy ending, of sorts, in that he admits that Bank B has agreed to run the account for MetaLair, his nascent company.

MetaLair, in case you were wondering, is developing a “double spending proof fully centralised exchange mechanism enabling trustless exchanges between blockchains” [their italics]. Mr Turrall and Sussex University hope it could be the first decentralised cryptocurrency exchange.

Suddenly, you can see why Bank A might be apprehensive. Its money laundering people have probably heard of bitcoins but, like the rest of us, have only the vaguest idea of what they are. They might have read about how convenient bitcoins’ anonymity is for those who dislike audit trails or other forms of inspection of their activities. In short, it’s easy to see why they might not rubber-stamp MetaLair’s application.

This is surely symptomatic of a wider problem for banks dealing with small businesses. Start up a home-made jam business, and describing it to the bank is a piece of cake, so to speak. Explain that you’re developing a decentralised cryptocurrency exchange, and the small business department is already struggling.

Since the significant companies of the future will look more like web-based information businesses than purveyors of specialist foods, this is something of a roadblock to British prosperity and employment.

Bankers working in M&A, watching tech mega-deals being done without them, are learning the hard way that they need to understand this stuff. If the commercial banks really do want to develop the giants of tomorrow, their small business people will too.

Exam question

Here is a Bank of Scotland note. Sir Walter Scott is on the front and the Brig o’Doon on the back. It promises to pay the bearer five pounds, signed by order of the board by Dennis Stevenson as Governor. Candidates are invited to assess this note as a store of value and a medium of exchange, choosing one of the following answers:
a) at parity with Bank of England £5 note
b) at small discount (not acceptable to taxi drivers)
c) at small discount to Reserve Bank of Zimbabwe $1 trillion note
d) none of the above – hold and hope to operate a bear squeeze
Prize for the first correct answer: the Stevenson fiver.
Candidates are reminded that Lord Stevenson of Coddenham was Governor from 2006 to 2009, when he retired following, ahem, a reconstruction.
This is my FT column from Saturday
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