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Forecasting is always difficult, especially for the future, as the old saw has it. This difficulty does not seem to put off Mark Carney, who despite his record of failure, is set to try his luck again. The experts at Bond Vigilantes think he may have a “whatever it takes” moment on Thursday, cutting interest rates and ordering the Bank of England to buy more government debt.

Such moves, if we see them, would reflect the blue funk that has overtaken the Remainders since the referendum, rather than a logical reaction to events. There is no useful data about the impact of the vote on the behaviour of companies or individuals; people still want to buy Taylor Wimpey’s houses, while GlaxoSmithKline has decided that Britain is not a basket case after all. There was a conspicuous absence of teeth-gnashing or garment-rending in this week’s avalanche of corporate results.

Cutting Bank Rate from 0.5 per cent would be a futile gesture. The big banks have already inserted clauses warning commercial customers that they might be charged for holding their cash, provoking understandable fury. In the real world, halving the rate would make no difference to confidence or the plans of borrowers. As for more Quantitative Easing, the BoE already owns a third of the national debt. Buying more would drive down yields still further, intensifying the pain in the pension funds, and forcing companies to compete with the BoE to buy more “risk-free” bonds instead of investing in productive assets.

This is the economics of the madhouse. Our new prime minister and her chancellor have sensibly abandoned the misguided, impossible goal of balancing the state’s books by 2020. When her government can borrow at 1.5 per cent for 34 years, there is a golden opportunity to finance the thousands of capital schemes which produce a sufficient return to make the country richer over time. Nearly all of them are relatively small – road improvements, council housing, schools and clinics.

We do not need vanity projects. It is still not (quite) too late to avoid the financial disaster that is the Hinkley Point nuclear power station, and the new government can easily scrap HS2 in favour of upgrades to make the existing railways work better. None of this requires gesture rate-cutting or more QE. When the future is so obscure, masterly inactivity is often the best policy. This week we may see if Mr Carney can manage it.

Force the shareholders to decide

It is hand-wringing time again on executive pay. The latest waffle is served on behalf of the Investment Association. This trade body, there to protect the vested interests and privileges of highly-paid investment professionals, finds that boards should “explain why they have chosen their company’s pay level with consideration of relativities.”

That’s telling ’em. The explanation promises to be as complex as the package, and nobody – possibly not even the executives themselves – will understand either. Exhortation of restraint has had the opposite effect, as if talent at the top was as rare as world-class footballers.

Here’s a suggestion: no contract for a director should be binding on the company until shareholders have approved it in general meeting. The voting should also be transparent, to expose the block votes of the investment professionals. A few good men might choose not to serve, but the measure might at least slow down this runaway train.

Please don’t shout

Finally, a curiosity: a company is coming to the Aim market which is not a speculation in gas, oil or minerals, nor is it in financial services or some obscure corner of the technology market that normal mortals cannot hope to understand. Autins Group actually makes things – to reduce noise in expensive cars – and there’s not a trace of private equity.

Sales were £20m last year, profits £910,000 and with £14m of new money, the market is expected to value it at around £40m. Noise is one of the curses of the age, and products to reduce it have a fine future. Autin could be an attractive stock – provided its debut doesn’t make so much noise that the price runs away.

This is my FT article from Saturday

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