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Everyone’s a critic

Towards the end of the 1990s, if – and, more often than not, when – a taxi driver asked me what I did for a living, I would answer that I was a financial journalist. “Oh yeah?” the taxi driver would invariably reply. “How’s that different from a normal journalist?” And I would explain: “I didn’t kill Princess Diana.”

Before you start penning your letter of outrage, I should stress that I was genuinely not being facetious. In the months after August 1997, some cabbies really did feel it was their public duty to have a go at anyone connected with the car crash in Paris – even if only by trade. It’s funny how times change – in the last couple of weeks, I have reverted to saying I am just a journalist.

Trying to look beyond another one-word answer – that word being “Peston” – I am not certain why financial hacks are getting quite the level of criticism they are for somehow making the current economic crisis even worse. Surely, if there was an incentive to do anything other than report what is happening straight, it would be to exaggerate positively rather than negatively?

After all – and contrary to the admittedly reasonable presumption that “Huh, well at least you’ve got lots to write about at the moment” – the simple truth is that bad economic news invariably means smaller marketing budgets, less advertising, fewer pages in the financial press and, eventually, less chance of Baby Hannah getting that cool jungle gym for her first birthday. Heaven forfend.

Still, blame’s a funny thing – as the reaction to the suspension of dealing in the Arch Cru fund range as a result of illiquidity has demonstrated rather well. I am going to tread carefully now because, for a variety of reasons, passions seem to be running high on the subject. Still, a couple of general points can I hope be made without sparking off the email equivalent of handbags at five paces I have seen around.

First, diversification is good but not at the expense of liquidity. The fact that private equity is not exactly straightforward to shift in the current economic environment should not be provoking quite the level of consternation it appears to be in some quarters. It is not big or clever to blame an asset class.

Second, just because a fund resides in the cautious managed sector, that does not necessarily make it an appropriate fund for cautious investors – it really is the job of the investor or their adviser to make sure that is the case. It’s not big or clever to blame a label.

As a supplementary point, the Investment Management Association is not a police force. It is rarely seen carrying handcuffs and it has a good deal less control over what goes in which of its sectors than some people seem to think.

The IMA is basically reliant on the good faith of providers for funds to appear in appropriate sectors. The only sanction should companies not adhere to the spirit of sector definitions – trade bodies not yet being issued with tasers either – is to create a new sector and hope the relevant funds are switched into that. It’s not big or clever – at least in this instance – to blame the IMA.

Finally, there is the interesting question of innovation. I’ve read elsewhere how we shouldn’t criticise products for being innovative because innovation is a vital part of Her Majesty’s financial services industry. Well, up to a point, although I’d suggest our entire financial system has to some extent been brought to its knees by the undeniably innovative but wholly inadequate products some groups have dreamt up in recent years. Oh dear – not apportioning blame is harder than it looks.

“So who is to blame for this mess?” asked my cabbie as we drove up to my door. “The banks,” I replied. “And the politicians and the regulators and the ratings agencies and the analysts and the borrowers and, yes, the media. Everyone bears some blame and anyone who gets in this cab and tells you otherwise is wrong.” On reflection I didn’t tip the poor man nearly enough.

Julian Marr is editorial director of


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